KUALA LUMPUR: The slowdown in palm oil production may lead to a decline in inventory levels and positively impact global crude palm oil (CPO) price in the second half of the year, said analysts. 

According to the Malaysian Palm Oil Council (MPOC), CPO price will likely stabilise at RM3,900 per tonne this month. 

It said this was due to the expected drop in supply from Indonesia and Malaysia — the world's top two producers — in the second half of the year, coupled with an increase in exports.

However, it stressed that the anticipated price increase might hover around RM4,150 due to the United States' Agriculture Department (USDA) forecast of a surplus in oilseed production this year and in 2025.

"From January to May, Malaysia's CPO production increased by nine per cent year-on-year, or 626,000 tonnes, while exports rose seven per cent, or 393,000 tonnes," said MPOC.

By comparison, according to Indonesian Palm Oil Association (GAPKI) data. the country's CPO production fell by five per cent, or 647,000 tonnes, in the first quarter of the year.

Tradeview Capital Sdn Bhd fund manager Neoh Jia Man said the anticipated rise in exports indicated strong demand for palm oil, which was bullish for CPO price.

"We believe that stakeholders who consume a material amount of palm oil would seek to maintain an adequate inventory level and take advantage of the recent pullback in price to increase their stockpile.

"In addition, they could seek to diversify the supply sources or explore alternative vegetable oils," he added.

Neoh said the decline in Indonesia's CPO output was likely due to the El Nino phenomenon.

"It will have a material impact on global palm oil supply and coupled with the anticipated drop in output from Malaysia, we see upward pressure on global pricing." 

Meanwhile, MPOC observed that in the European market, the prices of rapeseed oil, sunflower oil, and soyabean oil increased by six, eight and seven per cent, respectively, in May, while CPO price fell by four per cent.

"As a result, the price premium of soft oils over palm oil increased from US$40 to US$115, which is expected to support the ongoing recovery of Malaysian palm oil exports," it noted.

Commenting on this, Neoh said the increased production and stockpile of oilseeds resulted in a greater availability of alternative vegetable oils.

"This will serve to cap the potential upside of CPO price as buyers could be encouraged to switch to cheaper alternatives.

"The broader availability of those alternative oilseeds will also temper the urgency by buyers to stockpile palm oil," he added.


Sumber : New Straits Times

KUALA LUMPUR: Malaysian palm oil leaders are welcomed to establish a hub in the Suez Canal Economic Zone to tap on the free trade agreements that Egypt has signed with its neighbours, Egyptian ambassador to Malaysia Ragai Tawfik Said Nasr said.

The Egyptian government has invited the Malaysian government and private sector to create a hub where the crude palm oil will be refined and distributed in Egypt and its neighbouring countries, he added.

Ragai Tawfik said the trade and investment between Malaysian businesses and counterparts in the Middle East, including South Africa will be facilitated by the strong network of FTAs that Egypt has signed with almost all of its neighbouring countries.

The FTAs include Greater Arab Free Trade Area (GAFTA), Egypt-Europe Union Free Trade Agreement, Common Market for Eastern and Southern Africa (Comesa) and African Continental Free Trade Area.

"This also includes the plan to serve the food industries in the SCZone that are dependent on palm oil as a manufacturing input. We had a long discussion with the Malaysian stakeholders, and we arranged site visits for a number of government officials and business leaders.

"We are hopeful that these efforts will succeed in the near future specially after the recent visit of Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani to Egypt," Ragai Tawfik told Business Times in an exclusive interview.

In his visit to Egypt, Johari highlighted that Egypt can be the North African gateway for Malaysia to offer significant opportunities for creating higher-value products from palm derivatives in sectors such as pharmaceuticals, cosmetics, processed foods, personal care and consumer brands.

According to Malaysian Palm Oil Council (MPOC), Malaysian palm oil accounted for 51.9 per cent of the Egypt's imports as of January 2024, surpassing Indonesian imports at 48.1 per cent.

Given these factors, MPOC believed Malaysian palm oil exports are positioned to maintain their robust performance throughout 2024.

On the efforts to strengthen bilateral trade and investment ties with Malaysia, Ragai Tawfik said Egypt had organised a number of successful online events that highlighted the business opportunities it offer to overcome the the lack of regular physical meetings between business people from both countries.

"(We also) raised awareness of the incentives that the Egyptian government is granting for the investors specially within the Suez Canal Economic Zone to many Malaysian companies," he added.

Beyond palm oil business, he pointed out that automotive, green energy, information and communication technology (ICT) industries could potentially enhanced the trade relations between both countries.

"We see Malaysia as an inspiring economic and industrial model. We aim to develop a stronger strategic partnership, especially in areas such as the advanced technology manufacturing and the Industry 4.0 applications in the manufacturing sector as well as data centres and ICT sectors," he said.

According to Ragai Tawfik, Malaysian carmaker Proton Holdings Bhd is currently involved in supplying the parts and technical support needed to its business partners in Egypt to begin assembling Proton Saga there by September this year.

"In the ICT sector, we would like to position Egypt as a hub for data centers and cloud computing in the Middle East, North Africa (MENA) region. Malaysia has recently succeeded to attract the giants like Google to build data centres and we learnt that Microsoft also are attracted to work in the country.

"As for green energy, the focus is to attract wind and solar power companies to work in Egypt as this sector is well-established and receives Egyptian government support, plus we already enjoy the strong natural sun and wind sources of power," he said.

Ragai Tawfik also emphasised the urgent need to reactivate the Egypt and Malaysia business council where Malaysia need to appoint a chairman.

He stated that such move will enable the business council to play its pivotal role in proposing initiatives that can enhance trade and investment between the two countries.

"We are looking forward to attract attention of the business community in both countries to the non-traditional business cooperation and opportunities which includes joint ventures and long-term business plans," he added.


Sumber : New Straits Times

KOTA KINABALU: Sabah-owned Sawit Kinabalu, through its subsidiary Kunak Lipids Sdn Bhd, is poised to revolutionise tocotrienols production as Malaysia’s first company to extract it from palm oil waste on a large scale.

This large-scale production is expected to commence in the first quarter of 2025 and is aligned with the government’s vision to foster economic and environmental sustainability in Sabah.

Kunak Lipids employs proprietary technology and high-precision equipment to capture tocotrienols from refined byproducts, reducing environmental waste and creating wealth, thereby contributing to the state’s economic and environmental goals.

Tocotrienols, a form of vitamin E, is used for a variety of health and therapeutic purposes due to its potent antioxidant properties.

Recognising the high demand for tocotrienols in China, Kunak Lipids, with support from the Malaysian Palm Oil Board (MPOB) and Palm Oil Research and Technical Services Institute Malaysia, identified significant market potential during initial marketing explorations.

Cosmetics manufacturers, in particular, are keen to obtain tocotrienols for their products.

Recently, Sawit Kinabalu, through Kinak Lipids, signed a memorandum of understanding with a Shanghai-based trading company, Boce Trade Service Company Ltd, to produce palm oil refinery byproducts and meet the Chinese market demand.

At the signing, Kunak Lipids was represented by its group managing director and chief executive officer Victor Ationg and Boce Trade Service Company Ltd by its general manager Qiu Rong Yu.

The ceremony was witnessed by Deputy Plantations and Commodities Minister Datuk Chan Foong Hin at Shangri-la Pudong Shanghai on June 13.


Sumber : The Star

PETALING JAYA: The plantation sector will likely see the impact of the hot and dry weather spell more towards the later part of 2024, but total production of the year will likely be higher year-on-year (y-o-y), helped greatly by the availability of adequate supply of labour to the sector.

Datuk Dr Ahmad Parveez Ghulam Kadir, director-general of the Malaysian Palm Oil Board (MPOB), told Starbiz the heat spell driven by the El Nino phenomenon became severe in the fourth quarter of last year (4Q23) and extended into 1Q24, adding that the impact of the weather phenomenon on oil palm yield is not immediate.

“The effect varies based on the severity of the event, with strong El Nino events often impacting yields significantly, while weak-to-mild events typically do not.

“The recent El Nino event, which strengthened at the end of 2023 and continued through early 2024, is considered strong and is expected to affect fresh fruit bunch (FFB) production by the end of 2024,” he said.

Despite that, crude palm oil (CPO) production is projected to continue to increase by 1.1% in 2024 to about 18.75 million tonnes, up from 18.55 million tonnes in 2023 and 18.45 million tonnes in 2022.

This growth in total production will be supported by the improvement in labour availability for the sector and better fertiliser application, he said.

Lower fertiliser prices compared to previous years have made it more affordable for farmers to apply the necessary nutrients to their crops, enhancing growth and yield.

“While weather conditions, particularly the ongoing effects of El Nino, will certainly influence production levels, the industry’s resilience and adaptive strategies play a crucial role.

“The combination of improved labour conditions and effective fertiliser use helps mitigate some of the adverse effects of El Nino, supporting a modest increase in production,” Ahmad Parveez explained.

Fundamentals for the sector remain strong. In May, CPO production hit 1.7 million tonnes, which was 13% higher month-on-month (m-o-m) and 12% higher y-o-y, which was above analysts’ expectation.

Ahmad Parveez said the improved labour situation ensures that harvesting and other crucial activities are conducted efficiently and on time, which is vital for maintaining and boosting CPO production.

Any negative weather impact was also neutralised partly by the lower fertiliser cost, which made it more feasible for planters to apply adequate amounts of fertilisers and are essential for the growth and yield of oil palms.

Better fertilisation application can help increase production, despite the challenges posed by the weather factor, he said.

Year-to-date, CPO production increased by 9.4% y-o-y to 7.26 million tonnes, offsetting the increases in exports that grew by 6.7% y-o-y to 6.3 million tonnes.

Production growth is set to continue. MIDF Research noted that although the mild El Nino peaked in April, the mixed dry-wet weather might be prolonged up to July, thereby improving estate activity ahead, particularly in terms of FFB evacuation processes and manuring activities.

The research firm expects CPO production to maintain its momentum in the remaining months, reaping the benefits of fertiliser application over the past two years.

RHB Research meanwhile stated with weather conditions having normalised since April to May in Indonesia, production in the world’s largest CPO producer should start to pick up in the coming months.

Indonesian planters continue to expect to see flattish-to-moderate output growth of 0-5% in 2024, it added.

From a CPO price perspective, the May MPOB data also showed exports for the month of 1.38 million tonnes were up 12% m-o-m and 28% higher y-o-y, which helped ensure stock levels growth saw a marginal increase to 1.75 million tonnes (up 1% m-o-m, 4% y-o-y) as increased domestic usage helped as well.

What’s important for planters is the palm oil exports are starting to show a rebound with destination markets seeking to shore up depleted edible oils stock levels.

The outlook for the April to June 2024 period suggests a rebound in imports by India, China and Pakistan, driven by the improved price competitiveness of palm oil after price rallies in competing vegetable oils like sunflower.

Indian importers are capitalising on the lower export prices available on the global market, following a significant reduction in its domestic stocks during 1Q24.

“This trend is expected to bolster India’s palm oil imports in the coming months. Similarly, China has begun to incrementally increase its imports of palm oil, soyoil and rapeseed oil to replenish its reduced stocks. This strategic move aims to stabilise the domestic market and ensure sufficient supply,” Ahmad Parveez said.

He believes that demand from these key markets will continue, thereby firming the price of CPO.

Furthermore, the current high crude oil prices at above US$80 a barrel are expected to further boost demand for palm oil, which in turn will support CPO prices.

Buyers may be having other ideas. Cargo surveyors Intertek and Amspec estimated palm oil exports for the first 10 days of

June had decreased by 20.4% and 21.6% m-o-m to 295,000 and 285,000 tonnes, respectively. This will likely pressure prices.

“We expect CPO prices to weaken over the next six-to-12 months on rising output. The key risk is a strong La Nina, which could affect global vegetable oil output and support prices. A mild La Nina could be positive for palm oil output, especially in Indonesia which has suffered due to El Nino last year.

“Indian buyers are price-sensitive and we think they may wait for prices to correct,” said Akash Gupta, director of credit research and analysis at Fitch Ratings.

TA Research noted Indonesia had implemented a reduction in palm oil export tariff in June, setting the reference price for CPO in June at US$778.82 per tonne, down from US$877.28 a tonne in May.

This adjustment would reduce the export tax for CPO to US$18 per tonne and the levy to US$75 a tonne, resulting in a reduction of export costs by US$49 per tonne compared to the previous month.

“We anticipate this may pose a threat to Malaysian palm oil exports, which are losing export competitiveness. If the production were to maintain its robust growth momentum, it would lead to resurgent palm oil stockpiles, which would potentially limit the CPO price increase,” the research house noted in a sector report.

It expects CPO prices in the coming months to be influenced by both palm oil production in Malaysia and Indonesia and weather patterns in the primary soybean-growing regions of Brazil and Argentina, where the La Nina weather could leave its mark the most.

TA Research added the US Department of Agriculture estimated global soybean production is set to hit a new record of 422.3 million tonnes, up some 25.3 million tonnes from 2023 and 2024 due to expanded planted acreage and average yield improvements.

Global soybean ending stocks for 2024 and 2025 are estimated at 128.5 million tonnes, up some 16.7 million tonnes from the previous year.

As such, MPOB anticipates firm CPO prices in 2024, ranging between RM3,900 and RM4,200 per tonne, helped by demand from key markets.

The benchmark three-months forward CPO futures contract on Bursa Malaysia Derivative yesterday last closed at RM3,930 a tonne, up RM14 for the day. CPO has been trading range bound between RM4,500 to RM3,500 in the past 23 months.


Sumber : The Star

MALAYSIAN palm oil producer Johor Plantations Group (JPG) and a shareholder expect to raise about RM735 million (S$211 million) in an initial public offering (IPO), putting the group on track to execute the country’s biggest listing in over two years.

JPG kicked off its IPO on Wednesday (Jun 12) with an offering of up to 875 million shares, representing a 35 per cent stake in the company, according to terms of the deal seen by Bloomberg News. The IPO exercise values the palm oil firm at RM2.1 billion.

The share sale is set to be the largest in Malaysia since Farm Fresh’s US$240 million offering in March 2022, data compiled by Bloomberg show. JPG’s parent – Kulim Malaysia, the plantations arm of Johor Corp, the development and investment business of the Johor state government – is also offering shares in the IPO, and will retain a 65 per cent stake in the company after the listing.

“We intend to diversify to meet our future growth aspirations by becoming a fully integrated palm oil producer through our venture into the downstream segment, which focuses on speciality oils and fats,” JPG managing director Mohd Faris Adli Shukery said in Kuala Lumpur.

Malaysia is the world’s biggest palm oil producer after Indonesia. JPG will be Johor Corp’s second unit to be publicly listed after healthcare division KPJ Healthcare, which is valued at RM8.56 billion.

The IPO comes as benchmark prices for palm oil traded in Kuala Lumpur disappoint analysts due to lukewarm demand. A strong US dollar, a tepid Chinese economy and concerns of a robust recovery in supplies from the world’s biggest growers have contributed to the weakness. Still, prices may be supported as adverse weather lowers yields.


Sumber : The Business Times