Need to bolster palm oil defence

Smear campaigns and non-tariff trade barriers are ruthless political tools in the world’s lucrative vegetable oils trade. Indonesia and Malaysia’s palm oil players must be more adept at positioning their roles if they want to grow their annual export earnings of US$40 billion, writes Ooi Tee Ching.

Sarawak Land Development Minister Tan Sri Dr James Jemut Masing has urged the Federal Government to be more effective in tackling smear campaigns and barriers to palm oil trade in Malaysia’s free trade agreement (FTA) negotiations with developed nations.

The US$50 billion (RM168 billion) global palm oil trade makes up almost 60 per cent of the world’s vegetable oils market.

The bigger the palm oil industry becomes, Masing said, the easier it is a target for smear campaigns by rivals via political means.

This is evident as Malaysia and Indonesia capture more market share in the vegetable oils trade, faster than rivals in Europe and North America. Their oil palm planters have had to endure false allegations of massive deforestation and land grabbing as well as lies about orangutan killings hurled by green activists.

Last year, Malaysia and Indonesia earned US$40 billion from exporting close to 50 million tonnes of palm oil, data from regulators of both countries revealed.

Masing warns of looming trade barriers under the guise of environmental protection.

“We must be more discerning. Otherwise, we would have an unacceptable situation where developed countries offer US$1 with one hand and deny us US$100 in business opportunities with the other.”

For the Trans Pacific Partnership Agreement and the European Union (EU) FTAs to be mutually beneficial, Masing said developed countries must not take trade-related measures such as carbon tariffs and border adjustment measures against products, services and investments of developing countries. 

Estates in Malaysia plant oil palm, rubber and cocoa trees to produce cooking oil, margarine, rubber gloves and cocoa butter for global trade. This is part of the same early-stage growth pattern adopted by every major developed economy in the world, from North America to Europe.

“Now, the very same people who have already achieved developed status cite fear that Asia’s development will cause ecological degradation. The EU argues against rainforest conversion for oil palm and rubber tree planting,” Masing told Business Times, here, recently.

In curbing oil palm expansion, European lawmakers and their sponsored green activists allege that the clearing of rainforest harms biodiversity and emits carbon dioxide into the atmosphere, worsening global climate change.

Many people believe World Wide Fund for Nature (WWF), Greenpeace, Friends of the Earth and Wetlands International are protectors of the world’s forests. 

“Are they bringing their own governments to justice for clear-cutting temperate forests? 

Are they lobbying for reforestation in their own countries? 

Are these activists completely altruistic and selfless in their devotion to the world’s forest, wildlife and indigenous people?” Masing asked.

He held up a book titled “PandaLeaks: The Dark Side of  the WWF”, written by Wilfried Huismann, which tells of hypocrisy and shady deals done behind the green façade. 

“I’m enhancing my knowledge on oil palm trade ethics by big traders like Wilmar, Bunge and Cargill, and green activists. I’m getting a better understanding of why barriers to palm oil trade are being erected.”

By criticising the virtues of oil palm planting and ignoring that economic growth leads to better environmental protection, he said it is questionable whether these green activists’ true commitment is to the environment or to the erection of trade barriers to benefit rapeseed farmers who are heavily-subsidised by the EU government.

He cited findings at  that tracks the EU Common Agricultural Policy (CAP) beneficiaries.

For the past 55 years, European farmers have benefited from an exceptional set of subsidies. From 1995 to 2015, the cumulative budget expenditures for these farmers is seen to surpass €900 billion (RM3.7 trillion).

The CAP acts like a tariff wall around the EU by blocking agricultural imports out while keeping prices higher in the EU. 

Although the EU had reduced subsidies to farmers in recent years, at an average of €55 billion a year, it remains the world’s largest agricultural support scheme. 

In contrast, oil palm planting is heavily-taxed.

In welcoming recent visits to Sarawak, the minister noted foreign journalists saw that oil palm planting have improved many villagers’ lives. 

“It is through the selling of fresh fruit bunches that smallholders can save enough money for their children to further their tertiary education. The state government has palm oil exports to thank for this,” Masing said.

In a separate interview from Jakarta, Indonesian Palm Oil Board chairman Derom Bangun said oil palm planters had long been victimised by trade barriers disguised as environmental protection. 

A frequently-used ploy to discredit palm oil-producing countries is to take satellite imagery of a small part of the country and magnify it as logged-over areas in an attempt to give an impression that the entire rainforest system is destroyed.

Derom said Indonesia’s oil palm industry consists only 5.6 per cent of landmass while forest area remains 51.7 per cent. Many of developed nations’ forest occupy less than 15 per cent of landmass.

To be fair, they should reforest to support mitigation of global warming, which is a collective responsibility of all nations. 

These activists’ strident criticisms have manifested into barriers to palm oil trade. Deforestation slurs sit oddly with the fact that oil palm is one of the world’s most sustainable crops. 

Oil World, a Hamburg-based trade journal, said oil palm is the world’s most efficient oil crop because one can harvest five tonnes of oil per hectare. This is 10 times more productive than soyabean planted in the United States and five times more than rapeseed, Europe’s main oil crop. 

The oil palm is seen as the national economic security crop for both Malaysia and Indonesia, Derom said.

The trees are cared for by millions of oil palm growers in both countries. At the same time, its nutritious cooking oil feeds billions of people in China, India and other developing nations.

Malaysian firms help Ebola-hit W. African nations

KUALA LUMPUR: The 20.9 million medical gloves pledged by 12 glovemaking and major plantation companies in Malaysia, continues to be despatched in batches to Ebola-stricken nations in West Africa, as the spread slows down.

Ebola is a deadly viral illness, first identified in 1976, which re-emerged a year ago in Guinea and spread to Liberia and Sierra Leone.

“Thousands of people in Guinea, Liberia and Sierra Leone are losing loved ones to Ebola. We are taking this pandemic seriously,” said Malaysia Rubber Gloves Manufacturing Association president Lim Kwee Shyan. 

“Much of the unfortunate deaths and suffering from Ebola is being avoided or at least mitigated with disposable gloves. We will continue to speed up the shipment for the balance medical gloves to be delivered to the affected African nations,” he told Business Times in a telephone interview yesterday.

The Ebola virus is spread through contact with bodily fluids. It starts with vague feverish symptoms, worsening until the patient begins bleeding from eyes, nose and mouth.

Among Malaysian glove companies extending a helping hand are Tekmedic Sdn Bhd, Top Glove Corp Bhd, Latexx Partners Bhd, Brightway Sdn Bhd, Careplus Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd, Koon Seng Sdn Bhd, YTY Group, Adventa Bhd, WRP and Qube.

The glove companies  source natural rubber from four plantation giants, namely IOI Corp Bhd, Sime Darby Bhd, Felda Global Ventures Holdings Bhd and Kuala Lumpur Kepong Bhd (KLK).

Last week, Liberian President Ellen Johnson Sirleaf lifted the state of emergency imposed to control an Ebola outbreak that has ravaged the country.  She reportedly said the move did not mean “the fight is over”, although numbers of new infections were no longer increasing.

Sirleaf said night curfews would be reduced and weekly markets could resume across Liberia.  Preparations are also made for the re-opening of schools.

The World Health Organisation (WHO) confirmed the death toll from the virus is now 5,177 people, almost all of them from Liberia, Guinea and Sierra Leone. 

“We’ve donated 5.7 million rubber gloves worth US$155,000 (or RM502,200) as part of our commitment to help Liberia fight the Ebola virus disease. 

The gloves shipment, packed in three containers, arrived at the Port of Monrovia on October 31,” said a Sime Darby spokesperson. 

On-going quarantine and disease prevention awareness programmes are also being carried out with Sime Darby’s workforce of almost 3,000 there.

KLK, which also operates in Liberia via its unit, Equatorial Palm Oil plc (EPO), donated US$110,000 (or RM356,400) worth of medical gloves through the initiative of the Malaysian government to the countries infected by this deadly disease. 

EPO had also directly contributed US$15,000 worth of disinfectant and medical supplies such as isolation gowns, thermo flash, surgical gloves, mouth covers and shields. These are distributed to doctors, nurses, patients and the communities in Liberia.

A KLK spokesperson said, “We are implementing precautionary measures at all our operating sites in accordance with the government guidelines. "Even though there are no instances of Ebola on or around our operations at Palm Bay and Butaw estates, we will continue our efforts as we believe that with the right understanding and processes in place, this virus is avoidable and containable.”

Common ground

KUALA LUMPUR: INDONESIA Palm Oil Board (IPOB) or Dewan Minyak Sawit Indonesia, the umbrella body of Indonesia’s palm oil sector, wants to join hands with Malaysia to fight smear campaigns that intend “to kill the growth of oil palm plantings.”

As a step towards this initiative, IPOB, provided it gets government approval, wants to follow Malaysia’s example of establishing a dedicated funding to promote benefits of oil palm planting and create better awareness on palm oil nutrition.

“We want to promote Indonesia’s palm oil industry on a global level. We have the same spirit as Malaysia in opening up markets that are increasingly hindered by non-tariff trade barriers and protectionism,” said IPOB chairman Derom Bangun.

Oil palm planting and palm oil exports provide developing nations a path out of poverty. The growing of oil palms, the world’s most-efficient oil crop, is helping the people of Malaysia and Indonesia to improve their standard of living. 

Indonesia and Malaysia supply affordable and nutritious cooking oil and margarine to billions of people in developing nations such as China, India, Pakistan, Bangladesh and Vietnam. 

According to Oil World trade journal, Malaysia and Indonesia are expected to export the bulk of the 56 million tonnes of palm oil traded worldwide this year. In the last five years, Malaysia earned between US$15 billion and US$20 billion (RM50 billion and RM70 billion) a year from palm oil exports.

Indonesia earns around US$15 billion annually from palm oil shipments. 

“Our palm oil promotional diplomacy and market access advocacy are done on an ad hoc basis currently,” Derom told Business Times on the sidelines of the Oils & Fats Congress 2014 held here recently. 

“We’re seeking a meeting with Agriculture Minister Andi Amran Sulaiman on this matter, among other things. 

“We hope that by formalising a dedicated funding mechanism sourced from oil palm plantations and small planters in Indonesia, we can drive these programmes more effectively with Malaysia in the international market,” he said. 

Derom was responding to Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron’s suggestion recently that Malaysia is looking to Indonesia in jointly tackling smear campaigns and barriers to palm oil trade. 

Derom said insidious smear campaigns on palm oil has one clear objective, which is to kill the growth of oil palm planting and reduce consumption in the global market. “Deliberately reducing consumption of palm oil will only harm our farmers’ livelihoods and our means of getting out of poverty. We must address this unfair discrimination and trade oppression more effectively,” he said.

Oleo exports to surpass RM11b

KUALA LUMPUR: Malaysia’s oleochemical exports are expected to climb 20 per cent to surpass RM11.2 billion this year, thanks to the manufacturers’ efforts in upgrading their fatty acids and fatty alcohol throughput.

Malaysian Oleochemical Manufacturers Group president Tan Kean Hua said, since 2010, major oleochemical manufacturers have upgraded their fatty acids and fatty alcohol throughput to leverage on economies of scale.

“To date, our members are churning out 2.8 million tonnes,” he said at the sidelines of Oils & Fats International Congress 2014, here, recently. 

Following Turkey-based Evyap Sabun’s RM500 million  investment in a 400,000 tonne-a-year oleochemical plant in Johor, Malaysia now has 19 oleochemical companies. They produce basic oleochemicals such as fatty acids, fatty alcohols, esters and refined glycerine.

Specialty chemical manufacturers, higher up the value chain, process these basic oleochemicals further and formulate them into toothpaste, soap, dishwashing liquid, laundry detergent, industrial lubricants and even food emulsifiers.

Since January 2013, the restructuring of the crude palm oil (CPO) tax to match that of Indonesia has levelled the playing field with Indonesia and allowed Malaysia’s palm oil exports to be more competitive.

“As long as the investing climate here is on equal footing with our neighbour, we’re able to produce and ship out more from Malaysian shores,” Tan said.

Malaysia has decided to lift the CPO tax for the four months between September and December, while the Indonesian government let the existing CPO tax structure run its course.

As palm oil prices is averaging below US$750 (RM2,512) a tonne, it is attracting zero duty in Indonesia.

“Since CPO price is currently trading below tax thresholds, the effect of lifting the CPO tax or letting it run its course is the same. Both Malaysia and Indonesia are not taxing CPO exports as long as they are trading below RM2,250 and US$750 a tonne, respectively,” he said.

But what if the CPO price were to surpass the threshold levels of RM2,250 and US$750 per tonne? 

Tan pursed his lips and tactfully replied, “as palm oil downstream investors, we urge the government to be very careful and mindful about maintaining a level playing field with that of Indonesia."

“All we ask for is for an equal chance to compete. Malaysia’s tax gap between crude and refined palm oil must mirror that of Indonesia’s. This is vital for the survival of Malaysia’s billions of ringgit of palm oil downstream investments,” he said.

According to the Malaysian Palm Oil Board, the country exported RM8.53 billion worth of oleochemicals in the first nine months of the year. “I think this year, we should be able to do 20 per cent more than last year’s RM9.30 billion,” he added.

It's a sin to kill a mockingbird

"It's a sin to kill a mockingbird." A well-respected veteran in the palm oil industry looked puzzled when I mentioned this quote, a few days ago. We were having lunch at a Japanese restaurant, his favourite, when I asked if he had read a book titled 'To Kill A Mockingbird' by American author Harper Lee.

"What is a mockingbird? How do you spell it?" he asked.

I explained to him that a mockingbird is a creature that sings beautifully for the benefit of others and never harm anyone.

Atticus said to Jem one day, "I’d rather you shot at tin cans in the backyard, but I know you’ll go after birds. Shoot all the bluejays you want, if you can hit them ... but remember, it’s a sin to kill a mockingbird.”
That was the only time I ever heard Atticus say it was a sin to do something. And I asked Miss Maudie about it. “Your father’s right,” she said. “Mockingbirds don’t do one thing except make music for us to enjoy.
"They don’t eat up people’s gardens, don’t nest in corn cribs, they don’t do one thing but sing their hearts out for us.
"That’s why it’s a sin to kill a mockingbird.”

These lines from Chapter 10 are the source of the novel’s title; the idea of “mockingbirds” as innocent people who are frequently misunderstood, discriminated and bullied out of jealousy, prejudice, racism, bigotry, arrogant assumptions and ignorance.

Anyone who tries to hurt "mockingbirds" is actually committing a sin because these kind-hearted souls have done no harm but make the world a better place for those around them.

This novel is set out in the 1930s at a small southern state of USA, when the main form of prejudice was racism. The author lays down the moral of her story with the main characters, Atticus Finch and his young daughter Scout and teenage son, Jem.
In this novel Scout and Jem learnt from their father to be courageous in protecting the innocent, kind-hearted souls metaphored as "mockingbirds". There are two in this novel.

The first is Tom Robinson, a black man who did nothing to deserve trouble except try to help a young girl who seemed desperately lonely and seemed in need of his help. In an ironic exchange for that innocent act of kindness, he was wrongly accused of rape.

The entire premise of false allegations against Tom and Atticus's decision to defend him is about this theme of killing mockingbirds. It is a lawyer's job to defend his client no matter what; it is even more important when that client is unequivocally innocent but being prosecuted simply because he is black.
It is a sin to turn a blind eye on bullying and hateful racism. It is a sin to kill a mockingbird. Atticus steadfastly defended Tom. He argued that if the jury succumbed to popular sentiment and pronounced Tom as guilty, the black man's death can be equated to “the senseless slaughter of songbirds by hunters and children.”
The other mockingbird is Boo Radley. Like Tom, Boo had never done any harm but acted with a good heart to others, especially the Finch children. 

A recluse who rarely sets foot outside his house, Boo was a haunting mystery to Jem, Scout, and Dill. They imagined Boo as a very tall monster who ate squirrels and cats. They also conjured up visions of him having rotting teeth and an ugly scar across his face.

An unlikely symbol of goodness shrouded in initial creepiness, Boo secretly left little gifts for them in a knot-hole of a tree trunk. He was actually trying to befriend Scout and Jem.

A painfully shy man, Boo's innocence and kind-hearted acts were constantly overwhelmed by prejudiced half-truths inculcated by ignorant folks.

Scout finally understood humanity when she asked her father that in making fun of reclusive Boo Radley, just because he is different from others, would be “sort of like shooting at a mockingbird.”

In spite of being the subject of ridicule among townsfolk, Boo was quietly watching over Scout and Jem, like a guardian angel. 

He mended Jem's torn trousers and placed a warm blanket over Scout. Boo proved to be a loyal friend when he courageously saved them from being murdered by the vengeful Bob Ewell.

When Scout realised Boo had rescued her and her brother from being killed, that was when she saw him as a real person.

As Scout learnt how easy it is for many to misunderstand the reclusive Boo, she repaid his kindness by protecting him from prejudice.
In today's context, the mockingbird is the palm oil industry. The businessman seated across the lunch table asked ... so, when the uninformed public chants along with the critics in condemning palm oil ... it's like ignorant children killing the mockingbird?

I nodded. He blinked despairingly. An air of solemnity descend upon us. We drank our green tea in silence.

Meeting demand

EDIBLE OIL SUPPLY: Malaysia and Indonesia must accelerate oil palm plantings to avoid acute shortage, warns analyst

KUALA LUMPUR: HAMBURG-BASED ISTA Mielke GmbH executive director Thomas Mielke has warned that developing nations will face acute shortage of cooking oil in the next few years if Indonesia and Malaysia continue to slow down their oil palm plantings.

“We must not be lulled into believing the green activists’ skewed ideology. We must differentiate between perception and reality. 

"The truth is, there is a huge discrepancy between the supply and demand of certified sustainably produced palm oil. We have 10 million tonnes of this oil but the demand is only a fraction of that.”

Mielke, a well-respected and authoritative vegetable oil analyst, appealed to the public to wake up and smell the coffee.

In addressing an audience of some 500 at the Oils and Fats International Congress 2014, here, yesterday, he said in the last 10 years, the global oil palm planted area had only added 7.5 million hectares.

“This is so small compared to soyabean’s increment of 27.2 million hectares, rapeseed’s 8.8 million hectares and sunflower’s 4.3 million hectares.”

In the last 25 years, global palm oil consumption had expanded threefold. Rapeseed oil purchases, however, only increased by 2.5 times and soyabean oil’s popularity just doubled. 

As global palm oil usage increased in the last two decades, so did trade rivalry. Hence, the smear campaign against the oil palm industry.

Oil palm plantation companies face relentless false allegations spread by well-funded green activists. Damning accusations of air pollution, forced labour and land grab in Indonesia, Papua New Guinea and Liberia are wrongly hurled at these corporates.

“Consumers must reject green activists’ protests against the expansion of oil palm plantings. We must not be misled by perception. The current bearish sentiment is not fundamentally justified. The market is in transition,” Mielke said.

Yesterday, the third-month benchmark for crude palm oil contract on Bursa Malaysia Derivatives Exchange fell RM56 to close at RM2,252 per tonne. 

“China oilseed output has declined to a 15-year low. Agricultural land is scarce and India’s population continues to multiply. In order to satisfy the daily oils and fats need of an increasing global population, Indonesia and Malaysia must accelerate the planting of more higher yielding oil palms,” he said.

In 2010, the world population was 6.92 billion. By 2020, the figure is estimated to expand to 7.72 billion. As the developing world progresses, the rising middle class’ changing diet for tastier snacks and confectionery will fuel demand for more edible oils. This can only be realistically met by palm oil.

“Every year, the world’s hunger for edible oils grow by an additional five million tonnes. Since oil palm is, by far, the most productive oil crop, we must pick up the pace of planting oil palms. If not, the world will face edible oil shortage by 2020,” he added.

Palm oil exports to exceed RM61b

PETALING JAYA:  Malaysia’s palm oil exports for the year is expected to be better than last year’s RM61.36 billion as the commodity’s prices have improved and exporters are shipping out more volumes of oil.

For the first nine months, Malaysia has shipped out RM47.62 billion worth of palm oil products.

Palm oil futures prices have been averaging at around RM2,430 a tonne, slightly higher than last year’s RM2,380 a tonne.

“This year, we should do slightly better because palm oil prices are averaging at a higher level and we’re producing more oil. 

"I’m maintaining this year’s crude palm oil output at 19.5 million tonnes, which is slightly higher than last year’s 19.22 million tonnes,” said Malaysian Palm Oil Board economist Ramli Abdullah.

Yesterday, the third-month benchmark for crude palm oil contract on Bursa Malaysia Derivatives Exchange fell RM56 to close at RM2,252 a tonne. 

He said palm oil prices are likely to trade range-bound and unlikely to dip below RM2,000 a tonne for the rest of the year as many oil-consuming countries have started to restock on this kitchen staple.

Ramli was speaking at a seminar organised by the Palm Oil Refiners Association of Malaysia, here, last week. Also present was INTL FCStone senior risk manager Ryan Long.

He urged the mid-sized plantation companies, who cannot afford their own team of traders, to subscribe to INTL FCStone’s offer of fundamental and technical market intelligence, forecasting, historical databases, news and econometric analysis of edible oils. 

“We can help those mid-sized oil palm companies to manage their business risks. We can help hedge their position for a fee. These businesses are exposed to the volatility of palm oil prices. Risk cannot be eliminated, but we are here to help manage it,” he said.

Coffee and creamer are best friends!

Some people like their coffee black but I love mine milky.

Whether it is Arabica (highland) or Liberica (lowland) coffee beans, I like it drowned in creamer or milk.

:) Just so you know .. there's specialty palm fats in coffee creamer.

A couple of months back, my friend from Singapore met up with me at an oil palm estate in Johor to learn how tree breeders come up with designer seeds.

After the visit, we were treated to a delightful stint of premium coffee. It tasted so good she bought a few packets of Paloh Liberica Coffee. She also gave me a packet. Yay!

More recently, we met up again at an edible oils and fats traders' event. This time, it is at the ballroom of a hotel in Petaling Jaya, Selangor. We were seated at the same table. It's nice to catch up with friends.

As we parted ways to go to the washroom, a banker approached me and commented my friend is very beautiful and attractive. 

I found it strange that he didn't approach her directly and compliment her in person.

When he asked for the telephone number of my hot-looking friend, I blinked, "well, she usually spends time with younger men who can really move and shake the market."

He was stunned. Tick, tock, tick, tock, tick, tock ... 

I guess it didn't help when I stared back at him dead-panned. After what seemed like an eternity of awkward silence, I quipped, "it's coffee time." 

January 2015 start for MSPO

PETALING JAYA, Selangor (Bernama): THE Malaysian Sustainable Palm Oil (MSPO) sustainable palm oil certification scheme will be implemented in January, said the Plantation Industries and Commodities Ministry.

Its minister Datuk Amar Douglas Uggah Embas said the MSPO standard and certification would also be the basis for the global branding of Malaysian palm oil.

“The principles and criteria under the MSPO is finalised and field trials have also been completed,” he said at the Palm Oil Refiners Association of Malaysia (Poram) annual dinner, here, over the weekend.

He said Malaysia’s refining industry had been at the forefront of the export market and is working hand-in-hand with the plantation, milling, oleochemical and biodiesel sectors to generate more value added income for the country.

“Currently, there are 58 palm oil refineries in operation with a total annual refining capacity of 26.1 million tonnes,” Uggah added.

Of the 17.6 million tonnes of palm oil processed by the refineries last year, crude palm oil accounted for 15.9 million tonnes, while crude palm kernel oil made up 1.6 million tonnes, he said.

Despite the challenges faced by the refining industry, Uggah assured that his ministry would implement measures to ensure the sector remained competitive and viable.

“We will continue to work with Poram to address these issues, including facilitating better market access through ongoing Trans-Pacific Partnership negotiations and the Malaysia-European Union Free Trade Agreement,” he said.

Palm oil experts see continued price recovery

KUALA LUMPUR: OIL palm planters were a little happier at the recently-concluded Palm Oil Trade Seminar (POTS) 2014 when experts gave hopeful outlook on palm oil prices.

Hamburg-based ISTA Mielke GmbH executive director Thomas Mielke started off his forecast of palm oil pricing by assuring planters not to be carried away by bearish sentiment. “Price recovery is fundamentally justified.”

He explained that palm oil, which is mainly used for food, is increasingly influenced by petroleum prices as countries all over the world look to excess edible oils as substitutes to depleting fossil fuels.

“If crude oil prices were to fall to US$75 (or RM245.20) a barrel or lower, palm prices could drop, too. This would trigger the swing factor ... the demand in the energy sector that is not mandated,” said Mielke. 

With sustained demand for cooking oil and margarine from the global food industry, Mielke thinks palm oil prices are unlikely to drop below RM2,000 a tonne in the next couple of months.

He expects palm oil futures to climb further and trade between RM2,300 and RM2,500 a tonne by the first quarter of 2015. 

Yesterday, the third month benchmark palm oil futures on Bursa Malaysia Derivatives gained RM50 to close at RM2,263 a tonne.

This year, world production of palm oil is likely to rise to a record high of 59 million tonnes from last year’s 56 million tonnes. 

Mielke, a well-respected and authoritative vegetable oil analyst, once again, rejected calls by green activists for a moratorium on oil palm plantings.

“The environmental activists like to pretend or dream of a world without palm oil. It would be terrible for consumers, especially those in developing countries where two thirds of the world population resides. The truth is, we cannot replace palm oil, at least not in large volumes,” he said.

Jupiter Securities chartist Benny Lee said price recovery has already begun. “Palm oil prices are likely to be on the uptrend, supported by the strengthening of the US dollar and implementation of the B7 biodiesel mandate in the country.”

Godrej International Ltd director Dorab Mistry was also optimistic when he said the worst is over. “Planters can look forward to better times. I think palm oil is likely to trade in a range of RM2,100 to RM2,300 a tonne in the next several weeks.

“In December, I expect futures to rise steadily as production declines begin to bite and stocks decline. However, given the current macro economic outlook, I do not expect a runaway bull market. I think prices are likely to appreciate to RM2,500 a tonne by March next year,” he said. 

I'm smiling again

The clock is ticking and it is getting late in the evening. I'm grumbling to myself that I'm having to work night shift today. 

That means I would be crawling through the jam-packed streets to get back to office by dinner time. Uuugghh!

I was suddenly "woken" from the monotony of listening to speakers after speakers delivering their speeches when a newly met friend gave me a packet a chocolate. Yay!

This is the first time in my career as a journalist covering a palm oil conference when I'm suddenly surprised with a packet of crunchy chocolate wafers.

This newly met friend was rushing to get back to Singapore and he graciously gave me this lovely gift made from palm specialty fats.

It brought a smile to my face. Today's conference coverage is not so boring after all.

FGV sells more biodiesel to China

KUALA LUMPUR (Bernama): Felda Global Ventures Holdings Bhd (FGV) is expanding its biodiesel business in China with the second shipment of 6,000 tonnes of palm oil methyl ester (PME) to Dongguan Port, Guangdong.

The company successfully made a maiden shipment of 6,000 tonnes of PME to Nansha Port, Guangzhou, last month.

Group president and chief executive officer Mohd Emir Mavani Abdullah said the first shipment was a highly significant development for FGV’s biodiesel ambitions.

“By successfully penetrating the China market, FGV is on track to achieving its biodiesel global growth targets.

“China is one of the biggest biodiesel markets in the world. Given its huge energy requirements and reliance on biodiesel imports, we can meet this demand by virtue of being Malaysia’s largest PME exporter,” he said in a statement yesterday.

FGV currently accounts for 31.59 per cent of Malaysia’s PME exports, he said, adding biodiesel trade between China and Malaysia is poised to rise, based on the former’s rapidly growing interest in renewable energy.

From January to August, China had imported 590,777 tonnes of biodiesel from around the world.

The usage of PME is gaining popularity because the growing of the feedstock is sustainable from its economic, environment and social aspects. Fossil energy balance, which is the ratio between renewable energy output and fossil energy input is a good factor to compare biofuel sources. 

Topping the list is PME with a fossil energy balance of 9. This means that a litre of palm oil biofuel contains nine times the amount of energy as that required for its production. Sugar cane has values ranging from 2 to 8. Other feedstocks such as rapeseed, soya and corn have values which fall between 1 and 4.

When it comes to yield productivity, sugar cane and palm oil rank the highest. Sugar cane yields 6,000 litres of biofuel per hectare (l/ha), followed by oil palm and sugar beet (5,000-6,000 l/ha) but palm oil is superior as it has 27 per cent higher energy content (30.53 MJ/l) than ethanol from sugarcane (24MJ/l). 

Moderately efficient feedstock’s such as corn, cassava and sweet sorghum yield 1,500-4,000 litres of biofuel per hectare( l/ha). Rapeseed, wheat and soya are the least efficient, yielding less than 1,500 l/ha.

Joint efforts to tackle palm oil trade barriers

KUALA LUMPUR: MALAYSIA, in welcoming the inauguration of the Jokowi administration, looks to Indonesia for continued efforts in poverty alleviation by jointly tackling smear campaigns and barriers to palm oil trade. 

Indonesia President Joko “Jokowi” Widodo unveiled his Cabinet line-up recently to govern Southeast Asia’s biggest economy and the world’s big supplier of coal, rubber, palm oil and mineral ores. 

“As main producers of palm oil, contributing to the world’s food security, Malaysia is on the same page as Indonesia in developing agriculture in a way that balances the needs of people, planet and profits,” said Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron on the sidelines of the Palm Oil Trade and Seminar, here, yesterday. 

“We were informed that our ministry will be seeking to continue bilateral talks to address the opening of markets that are increasingly hindered by non-tariff trade barriers and protectionism,” he added.

A business-matchmaking session between palm oil buyers and suppliers, chalking up more than 100 appointments, was arranged in conjunction to this gathering of some 400 trade delegates.

“Oil palm planting and palm oil exports provide developing nations a path out of poverty. The growing of oil palms, the world’s most efficient oil crop, is helping the people of Malaysia and Indonesia to improve their standard of living,” said Yusof.

On striking a balance between the needs of people, planet and profits, Yusof said many tend to overlook that oil palms, just like other trees in the forest, contribute to carbon sinking. In times of surplus, excess palm oil also serves as an alternative to depleting fossil fuel.

Oil palm planting allows Indonesia and Malaysia to supply affordable and nutritious cooking oil and margarine to billions of people in developing nations such as China, India, Pakistan, Bangladesh and Vietnam. 

According to Oil World trade journal, Malaysia and Indonesia collectively export the bulk of 56 million tonnes of palm oil.

In the last five years, Malaysia earned between US$15 billion and US$20 billion (RM50 billion and RM70 billion) a year from palm oil exports. Indonesia Palm Oil Commission reportedly said the republic earns US$10 billion annually from palm oil shipments.

Malaysia’s annual palm oil exports worth US$20 billion support two million jobs along the sprawling palm oil value chain.

Despite its positive attributes, Yusof said the oil palm industry continued to face discrimination. “Environmental activists continue to dictate certification criteria and lobby for the European Union Renewable Energy Directive which discriminates against palm oil. This discrimination is against rules laid down by the World Trade Organisation.”

I'm smiling

I usually go to this place, that has a green mermaid logo, for coffee.

:) Just so you know ... there's healthy palm specialty fats in latte.  

People in the service industry, especially retail, are trained to be skillful in the art of making customers feel special. 

After I placed my order, the barista whipped out his marker pen and asked for my name. I smiled and replied, "today, I'm Snow White."

His eyes widened and he chuckled. "So, where are all your seven dwarfs?" he asked.

That got me laughing. Today's a special day for me. Love this!

Smile! You're on camera

I've put up a posting before on synchronised swimming and palm oil. This time, it is featuring Team Malaysia synchronised swimmers. Aged 15 to 25, these group of girls diligently undergo gruelling training of six hours a day, six days in a week at the Bukit Jalil Aquatic Centre, Selangor.

Synchronised swimming -- an aquatic sport that fuses flexibility, balance, endurance, strength and … palm oil? Yes, one of the critical elements of synchronised swimming that captures the judges' attention is the make-up.

Unknown to many, water-proof cosmetics such as lipstick, moisturiser, hair gel and sun bloc are oleochemical derivatives, which in turn are processed from palm oil.

To last for a whole performance — equal to at least four laps up and down the Olympic size pool — synchonised swimmers' water-proof make-up have to be “strong” enough to withstand a tough beating underwater. To get the right look ...

1. Apply a layer of primer on their eyes to help the eye shadow stay on.
2. Then apply layer after layer of shadow, caking it on so that it is bright and doesn’t get washed after one dunk in the pool.
3. Then come the layers of eyeliner and mascara — the more the better — to make their features stand out.

Synchronised swimmers also slick back their hair using super-sticky gel, made from oleochemicals. This gooey stuff helps keep their silky mane at bay throughout the competition. It only melts away after 30 minutes of hot shower.

Beneath these bright layers of make-up and pretty smiles are hours of insane athleticism exerted day-in-day-out to make synchronised swimming look delightfully easy on the eyes.

Bursa Malaysia Bull Run 2014

The New Straits Times is covering this event because parent Media Prima Group is the new partner of Bursa Malaysia's charity marathon. It takes place today in the heart of Kuala Lumpur.

Media Prima Television Network chief executive officer Ahmad Izham Omar and his chief operating officer Seelan Paul are there in their running shoes.

Among the more "sporting" representatives from publicly-listed plantation companies at this charity run are Felda Global Ventures Holding Bhd and Sime Darby Bhd.

Bursa Bull Charge tracks a 5km run following Kuala Lumpur’s Capital Market Trail, a route throughout the Central Business District that passes the headquarters of many of Malaysia’s capital market players in our community, a reminder of the sustainability of the marketplace.

The run categories include a 1.5km CEOs Run, a 5.0km Individual Run and a Corporate Relay Run.

Among the 1,300-odd enthusiastic participants from the capital market community include government agencies, regulators, brokers, listed companies, traders, remisiers, trading partners and the media. There's a special category of relay run among young executives.

Key sponsors are Maybank Investment Bank, SapuraKencana Petroleum Bhd, YTL Corp Bhd, IJM Corp Bhd, Berjaya Corp Bhd, Protasco Bhd and PESTECH Sdn Bhd.

At one point, Bursa Malaysia chief executive officer Datuk Tajuddin Atan's "running mate" is CIMB Group Holdings Bhd acting chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz. 

Tajudddin said this is part of the stock exchange’s initiatives towards building financial literacy, especially among young executives.

“This inaugural Bursa Bull Charge is a physical demonstration of marketplace inclusiveness that we have been working hard at building up and hopefully, reach out to the wider community. This is one way for Bursa Malaysia to raise awareness and remind us of our responsibility to give back and invest in local communities,” he said.

"We recognise the role of young executives as future leaders and entrepreneurs. By involving them in the Bursa Bull Charge to run alongside CEOs and captains of the industry, we hope young executives would feel inspired of the possibilities and opportunities available in the marketplace, be it a career or in building wealth”, said Tajuddin.

All proceeds raised from the Bursa Bull Charge will be channeled to charity while Bursa Malaysia and the sponsor partners will absorb all costs incurred in organising the run.

CBIP: Good order flow for Modipalm mills

Subang Jaya: CB INDUSTRIAL Product Holding Bhd (CBIP), which holds the patent for constructing Modipalm mills, said its current order book of some RM500 million will keep it busy for another 18 months.

CBIP managing director Lim Chai Beng said while low palm oil prices were slowing oil palm estate owners’ investments, orders were still coming in for mill upgrades.

“We’re getting orders, although there may be slight delays here and there. Out of the RM500 million orders to put up new mills and upgrade old ones, 70 per cent are from outside Malaysia.

“Old mills in Malaysia need to be upgraded and our Modipalm technology has been proven to minimise oil loss. This helps contribute to better oil extraction rates at the mills,” Lim said after the company’s extraordinary general meeting held here yesterday. 

CBIP shareholders approved the company’s plan to issue 1-for-1 bonus shares and free warrants.

Lim said oil palm planters have everything to gain if they upgraded their conventional mills to an automated Modipalm. Its continuous steriliser system is compact, he said, as it took up less space, fuel and labour; produced more and higher quality oil; and therefore, the overall impact is kinder to the environment.

At a Modipalm mill, there is no need for tractors and hydraulic skid-steer loaders or wire-rope winches to move the fruit-cages around. There is also no need for monorail hoists to lift the cages to the threshing machine. 

This means less machinery to maintain and, in two shifts, the Modipalm mill needs only 30 workers, or half the staff strength to operate a conventional 60-tonne mill processing 300,000 tonnes of fresh fruit bunches in a year.

“Fewer workers also means less houses to be built on the plantation. So, you see, with tremendous improvement in safety and minimal oil wastage it is worthwhile to upgrade to a Modipalm mill,” Lim said.

On CBIP’s other sources of income, executive director Mak Chee Meng said the company’s oil palm landbank in Indonesia totalled 65,000ha, of which about 10 per cent is planted up. 

In Malaysia, CBIP has a joint venture with Tradewinds Group, with its portion of investment amounting to 7,500ha.

“We’re now working hard to top up the landbank in Indonesia. We may be slow (in land acquisition) but we are sure in our investments because we go through all the legal compliance step by step,” Mak said.

Smallholders urged to apply for replanting grants

KUALA LUMPUR: Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas urged smallholders to apply for replanting grants to replace ageing oil palms with higher yielding seedlings.

Last Friday, Prime Minister Datuk Seri Najib Razak, in his 2015 Budget speech, announced that RM41 million had been allocated for smallholders to embark on new plantings and replanting of their unproductive rubber and oil palm trees.

Smallholders are those who own 40ha or less. 

When asked on the portion for the replanting of oil palms, Uggah said the allocation worked out to RM7,000 per hectare for oil palm land in Peninsular Malaysia and RM9,000 a hectare in Sabah and Sarawak. 

This subsidy is meant to raise the annual national oil yield, which has been stagnating at below four tonnes a hectare over the last two decades.

It is hoped that by 2020, the annual fresh fruit bunch yield would improve to 26.2 tonnes a hectare from 21 tonnes currently. 

In response, Malaysian Palm Oil Association chairman Roy Lim Kiam Chye urged the government to extend and top up replanting grants for all oil palm planters and not just the smallholders.

“Incentives to accelerate replanting at current low prices will ensure future competitiveness of the industry. The replanting grant is good for the smallholders but what about estate owners? They need to replant, too,” he added.

Last Friday, the government also took a pre-emptive measure to extend the crude palm oil (CPO) export duty exemption until December.

“Although it is a good gesture from the government, it is common knowledge that at current price levels, CPO export duty is already zero. With the current global edible oils supply situation, prices are not likely to rise significantly to trigger the duty factor,” he said. 

Lim added that the exemption had levelled the playing field for Peninsular Malaysia exporters against those in Sabah and Sarawak. “If we look deeper, zero export duty has somewhat dented the advantage of producers in Sabah and Sarawak as they no longer enjoy the 30 per cent discount on duty.”

Maybank Investment Bank senior analyst Ong Chee Ting concurred with MPOA, saying Malaysia’s palm oil exports can be freely exported during these high production months until the end of the year. “It aims to quickly flush out incoming supplies to help a more sustained CPO price recovery next year.”

On price forecast, Ong said CPO had lost its price competitiveness due to the recent slump in crude oil price and narrowed price discount to competing soyabean oil.

CPO price, therefore, needed to trade lower at RM2,000 per tonne to stimulate demand and flush out incoming supplies during these peak production months, Ong said.

“We think CPO prices will be under near-term price pressure to stimulate demand. We expect CPO prices to continue trading sideways at between RM1,900 and RM2,200 per tonne until early December. Hopefully, it closes the year above RM2,400 per tonne,” he added.

‘FGV ending pursuit of NBPOL’

This is written by my colleague Zaidi Isham Ismail.

KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) will not pursue the acquisition of New Britain Palm Oil Ltd (NBPOL) after Sime Darby Bhd’s fresh RM5.63 billion offer for the planter.

A reliable source said FGV will not counter offer as it will be too expensive. “No, they will not continue to bid for NBPOL as it’s too pricey,” the source told Business Times. 

After Sime Darby pulled out of the deal, FGV took the opportunity to bid for NBPOL but now that Sime Darby has made an about-turn, FGV will not push for it any more.

Sime Darby launched a general offer to buy all shares in NBPOL for £7.15 (or RM37.52) each last Thursday, less than two weeks after it had turned down the chance to buy Kulim (Malaysia) Bhd’s 48.97 per cent stake in the London-listed NBPOL.

Sime Darby’s offer is a 30 per cent premium over Kulim’s previous offer of £5.50 a share to increase its stake in NBPOL.

“This acquisition is conditional upon Sime Darby obtaining 51 per cent voting rights in NBPOL,” said Sime Darby president and group chief executive Tan Sri Bakke Salleh last week.

NBPOL owns about 80,000ha of oil palm plantations, more than 7,700ha of sugarcane land and a further 9,300ha of grazing pasture in Papua New Guinea. It also owns 12 mills and two refineries — one in Port Moresby and the other in Liverpool, the United Kingdom.

Pricey offer for NBPOL justified

KUALA LUMPUR: SIME Darby Bhd may be paying a lot for New Britain Palm Oil Ltd (NBPOL), but this is justified by the latter’s valuable assets, analysts said.

Affin Hwang Capital calculated that Sime Darby's general offer price of RM5.6 billion for all NBPOL shares works out to be an enterprise value per planted hectare of RM84,200 for the Papua New Guinea-based planter.

Although this looks high when compared with Felda Global Ventures Holding Bhd’s proposed acquisition of Asia Plantations’ estates in Sarawak, Affin Hwang said NBPOL has a better oil palm age profile, higher fruit yield and plantable reserves of 22,000ha.

The research house is positive on Sime Darby for seeking board and management control in NBPOL, and had upgraded its rating on the conglomerate. It thinks Sime Darby’s shares can rise to RM9.31.

MIDF Research, too, is positive on Sime Darby buying NBPOL despite the £7.15 (or RM23) offer price representing a 85 per cent premium over NBPOL’s last closing price on Wednesday.

“NBPOL is one of the best performing palm oil companies in the world with consistent fresh fruit bunch yield of more than 23 tonnes per hectare,” it said yesterday.

While it valued Sime Darby’s shares at RM9.70, MIDF Research has kept a “neutral” stance on its overall performance due to the risks of other businesses not performing well. 

Sime Darby's net gearing is seen to be manageable. “We believe Sime Darby is able to increase its borrowings without jeopardising its credit risk,” said MIDF Research.

Hong Leong Investment Bank (HLIB), meanwhile, has recommended a “hold” call and maintained Sime Darby’s target share price at RM9.75. It noted that the high price tag of £7.15 per NBPOL share is justified, given the scarcity of sizeable brownfield plantation landbank. “NBPOL estates are seen to be a good platform for Sime Darby to expand into PNG’s palm oil industry,” it added.

HLIB said the acquisition would only raise Sime Darby’s net gearing from 0.22 times to 0.44 times. “Earnings-wise, we estimate that the acquisition will add 2.5 per cent to Sime Darby’s forecast earnings in the next financial year.”

AmResearch Sdn Bhd has maintained a “buy” call on Sime Darby while valuing the conglomerate’s shares at RM10.58. It viewed Sime Darby’s offer as “pricey” at 22 times of next year’s forecast earnings but admitted that this price tag had to be attractive enough to obtain a controlling stake of at least 51 per cent in NBPOL.