Africa (Jan – May) 2020

Malaysian Palm Oil Exports Performance to Sub-Saharan Africa Region
(Jan – May 2020)
A Review on MPO Export Performance

Table 1: Top Importers of Malaysian Palm Oil from Sub-Saharan Africa

 Jan-May 2020
Jan-May 2019
Diff Vol.
Nigeria113,531130,798 (17,267)(13.20)
Ghana104,05148,970 55,081112.48
Mozambique88,136103,413 (15,277)(14.77)
South Africa84,785117,274 (32,489)(27.70)
Togo84,26751,735 32,53262.88
Kenya75,03441,236 33,79881.96
Tanzania65,07972,858 (7,779)(10.68)
Madagascar53,30813,385 39,923298.27
Angola51,15969,197 (18,038)(26.07)
Benin46,28062,743 (16,463)(26.24)
Mauritania36,86641,905 (5,039)(12.02)
Cote D’Ivoire21,18910,636 10,55399.22
Congo, Dem Rep. Of21,16519,784 1,3816.98
Senegal18,36518,447 (82)(0.44)
Guinea15,84347,906 (32,063)(66.93)
Niger15,57210,746 4,82644.91

Source : MPOB

For the period of Jan-May 2020, total import has risen slightly by 3.51% to 922,491 MT from 891,224 registered in Jan-May 2019. In terms of product breakdown, CPO/CPL dominated with 47.87% of total imports or 441,469 MT. If April was a good month for MPO exports to Sub-Saharan Africa, May 2020 proved to be a much better month with an export volume of 206,568MT. On a month to month basis, the region imported 206,638 MT of MPO in May 2020 compared to 178,024 MT in May 2019.  The rise in imports from the region can be attributed to higher imports by countries such as Ghana, Kenya, and Madagascar.

Despite the expected lower demand for palm oil due to the Covid-19 pandemic, countries in Sub-Saharan Africa imported substantial amounts of Malaysian palm oil in the month of May 2020. Ghana was the largest buyer of MPO last month with 33,229 MT compared to just 4,951 MT in April 2020. RBD palm olein with 342,871 MT of import volume contributed about 37.17% of total MPO import into the region (Figure 2).

Nigeria is the top importer of MPO in the region with 113,531 MT. However, this volume represents a drop of 13.2% compared to Jan-May 2019. The bulk of Nigerian MPO imports are in the form of CPO/CPL for its refineries. The decrease in MPO import by Nigeria amid the novel coronavirus outbreak and combined with a historic crash in oil prices, putting pressure on Nigeria budgets and public spending. Ghana MPO imports have increased significantly by 112% to 104,051 MT from 48,970 MT a year earlier. Improvement in the MPO imports is due to a larger intake of CPO/CPL from 37,412MT in Jan-May 2019 to 85,640 MT during Jan-May 2020 as CPO import from Indonesia drop to a very minimum level.

Other countries in the region that have shown considerable increase in MPO imports include Togo and Kenya. Togo MPO imports increased by 62.88% to 84,267 MT while Kenya imports upped by 81.96% to 75,034 MT. Bulk of MPO imports into these two countries are in the form of CPO/CPL as Indonesia is unable to fulfil their CPO requirements. Indonesia CPO exports to Kenya dropped from 52,000 MT to 29,000 MT while Malaysian CPO/CPL exports to Kenya increased from 30,625 MT to 67,824 MT. Another country that shows increase in MPO import is Madagascar. Most Malaysian palm oil imports from Madagascar are in the form of CPO/CPL which has grown from 7,353 MT to 39,952 MT during the Jan-May 2020 period. For the record, last year Madagascar imported about 53,000 MT of Indonesian palm oil, but so far there is no record any Indonesian palm oil import into this largest island in Africa. The increase in MPO import can also be attributed to growing domestic demand driven by changing tastes and the growth in the food processing industry.

MPO imports into South Africa recorded a 27.70 % percent decline in Jan-May 2020 compared to the same period last year. South Africa’s strict lockdown began on 27 March, sharply limiting freedom of movement and slowing an economy already in recession with plunging crude oil and commodity prices.  Since South African Rand has been weak for some time, it has affected their purchasing power and therefore it has affected palm oil demand in the country. The lockdown measures have battered the economy of Africa’s most industrialised nation, which was already in recession before the virus, owing mostly to power cuts by its public utility company, Eskom. Despite essential commodities like palm oil do not encounter much disruption at the port and in the distribution chain, ports are running at a slower pace due to extra health safety measures. In the face of a deteriorating economic situation, South Africa partly lifted a two-month-old coronavirus lockdown in early June, letting people outside for work, worship, exercise, shopping, and allowing factories to run at full capacity to try to revive the economy.

The slower import trend is also observed in several other countries such as Mozambique, Tanzania, Angola, and Benin where MPO imports have dropped somewhere in-between 10% to 26%.  As the Covid-19 pandemic takes hold in the region, many governments have tightened borders, restricted trade and gatherings. Its impact is already wreaking havoc on the production and movement of goods and raw materials in, out and around the region.

Figure 1: Monthly Export of MPO to Sub-Saharan Africa (MT)

Based on last year’s trend, the period between May to June is the time when the region imported the least amount of Malaysian palm oil. However major importing countries in the region such as Nigeria, Ghana, Mozambique, and Kenya are expected to import and consume significant amount of palm oil in the coming months to replenish diminishing stocks and resurging of demand post-Covid-19 pandemic. Import of CPO/CPL is expected to increase quite substantially especially if prices continue to remain low.

Figure 2: Breakdown of MPO Exports (%) Jan-Apr 2020

Source : MPOB

Crude palm oil/olein and RBD palm olein are 2 majors MPO palm oil products exported into the region with each product made up of 48.4 % and 37.1% respectively. CPO imports have increased significantly by 48.81% compared to the same period last year. Among major importers of Malaysian CPO/CPL are Nigeria (97,304 MT), Ghana (81,599 MT), Mozambique (76, 771 MT), and Kenya (67,825 MT).  On the other hand, RBD palm olein imports have reduced by 20.65% to 342,871 MT from 432,114 MT registered during Jan-May 2019. Major importers of RBD palm olein from the region include Tanzania (45,828 MT), Angola (44,124 MT), Benin (36,301 MT), and South Africa (33,753 MT).

However, despite the lower import of RBD palm olein and cooking oil by the region, Malaysian CPO import has increased quite significantly by 48.81 percent. This can be attributed lower CPO price in Feb-May 2020 period and Indonesia has been unable to export more crude palm oil to the region as Indonesia has to fulfil its domestic requirement and demand from other CPO importing countries .

Table 2:  Breakdown of MPO Exports Products to Sub-Saharan Africa (MT)

PRODUCTJan-May 2020Jan-May 2019Diff (MT)Diff (%)Jan-Dec 2019
RBD PL342,871432,114(89,243)(20.65)907,680
RBD PO22,21141,494(19,283)(46.47)83,225
RBD PS28,90532,199(3,294)(10.23)64,651
Cooking Oil54,94360,811(5,868)(9.65)107,807

Source : MPOB

For the month of June 2020, the region is expected to import around 180,000 MT to 200,000 MT of palm oil. Since the Malaysian government announcement of 100% exemption on crude palm oil export duty, Malaysia can expect higher CPO exports to the Sub-Saharan Africa region as its CPO export prices will have a competitive advantage over other exporting countries.

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