Malaysian Palm Oil Export to Sub Continent Region
(Jan – Aug 2020)
A Review on MPO Export Performance
Table 1: A Review on MPO Export Performance (MT)
| No. | Country | Jan-Aug 2020 | Jan-Aug 2019 | Diff (Vol) | Diff (%) |
|---|---|---|---|---|---|
| 1. | India | 1,176,274 | 3,597,564 | (2,421,289) | (67.3) |
| 2. | Pakistan | 751,096 | 702,336 | 48,760 | 6.9 |
| 3. | Bangladesh | 217,736 | 41,396 | 176,340 | 426.0 |
| 4. | Sri Lanka | 98,101 | 52,421 | 45,680 | 87.1 |
| 5. | Afghanistan | 53,954 | 49,126 | 4,828 | 9.8 |
| 6. | Uzbekistan | 26,902 | 36,081 | (9,179) | (25.4) |
| 7. | Kazakhstan | 10,606 | 14,472 | (3,866) | (26.7) |
| 8. | Maldives | 4,326 | 4,377 | (50) | (1.2) |
| 9. | Nepal | 2,201 | 3,921 | (1,720) | (43.9) |
| 10. | Turkmenistan | 944 | 573 | 371 | 64.7 |
| 11. | Kyrgyzstan | 463 | 865 | (402) | (46.5) |
| 12. | Tajikistan | 0 | 244 | (244) | (100.0) |
| 13. | Bhutan | 0 | 0 | 0 | 0.0 |
| Grand Total | 2,342,603 | 4,503,375 | (2,160,772) | (48.0) |
During Jan-Aug 2020 period, MPO exports to the Sub-continent region recorded 2.34 million MT against 4.50 million MT which was registered during the same period of last year (refer to Table 1).
The decline is largely attributed to lower MPO exports to the biggest buyer in the region, India. During Jan-Aug 2020 period, total MPO exports to the country went down to 1.18 million MT from 3.60 million MT recorded during the same period last year (refer to Table 2). The restrictions on the importation of refined palm oil since January this year has greatly impacted the amount of palm oil export from Malaysia going into the country at least during the first 6 months of 2020.
However, MPO exports started picking up in July and August 2020 when exports were increasing. With the bilateral relationship between the two countries improving, Malaysia started to export more CPO to India as Malaysian companies were reportedly able to offer competitive prices taking advantage of the fully exemption from export duties that includes for CPO as announced by the Malaysian Government on 5 June 2020.
| TYPE OF PRODUCTS | Jan-Aug 2020 | Jan-Aug 2019 | Diff (Vol) | Diff (%) |
|---|---|---|---|---|
| RBD PL | 6,541 | 2,154,994 | (2,148,453) | (99.7) |
| CPO | 1,068,734 | 1,216,657 | (147,922) | (12.2) |
| CPS | 4,995 | 83,196 | (78,201) | (94.0) |
| PFAD | 74,222 | 71,093 | 3,129 | 4.4 |
| CPL | 3,997 | 30,368 | (26,370) | (86.8) |
| PAO | 7,982 | 26,961 | (18,979) | (70.4) |
| OTHERS | 9,803 | 14,295 | (4,492) | (31.4) |
| TOTAL | 1,176,274 | 3,597,564 | (2,421,289) | (67.3) |
Pakistan, another important market for MPO in this region, has been consistently importing palm oil from Malaysia so far in 2020. Total MPO imports rose by 6.94% to 751,096 MT during Jan-Aug 2020 period from 702,336 MT registered during same period last year; although a decrease of almost half in MPO imports was recorded in August 2020 when 59,737 MT was imported, against 115,689 MT imported a month earlier (refer to Table 3). The largest import has been RBD palm olein accounting for 64% of total imports of MPO by Pakistan. The volume of import has apparently shifted to RBD palm olein which is registering an increase of more than 60% while CPO exports have been declining at the rate of 62% on year-to-year basis.
| TYPE OF PRODUCTS | Jan-Aug 2020 | Jan-Aug 2019 | Diff (Vol) | Diff (%) |
|---|---|---|---|---|
| RBD PL | 479,651 | 292,604 | 187,047 | 63.9 |
| CPO | 66,163 | 172,734 | (106,571) | (61.7) |
| CO / DPL | 94,251 | 130,244 | (35,993) | (27.6) |
| RBD PO | 77,483 | 74,836 | 2,647 | 3.5 |
| PAO | 17,473 | 20,134 | (2,661) | (13.2) |
| OTHERS | 16,075 | 11,785 | 4,291 | 36.4 |
| TOTAL | 751,096 | 702,336 | 48,760 | 6.9 |
Under normal circumstances, Malaysian CPO competes with the discounted price of Indonesia RBD palm oil, which at times is either at par or lower than the price of CPO offered by Malaysian suppliers. However, in the past few months, the prices offered by Malaysian suppliers have been almost at par with those of their Indonesian competitors. The abolishment of export duty on CPO in Malaysia triggered a lot of interest among the physical refiners in Pakistan. However, the spread between CPO and RBD has come down drastically and at the current price spread of USD 5–10 per MT, the CPO refining is not viable for local physical refining industry hence a decline in the imports of CPO in Pakistan.
Bangladesh is another country that has recorded a remarkable MPO imports during Jan-Aug 2020 period after registering an increase of 176,340 MT which brings the total to 217,736 MT from only 41,396 MT during the same period last year (refer to Table 4). The significant growth can be contributed to the price competitiveness of MPO vis-à-vis Indonesian palm oil (IPO).
Table 4: MPO Exports to Bangladesh by Type of Products (MT)
| TYPE OF PRODUCTS | Jan-Aug 2020 | Jan-Aug 2019 | Diff (Vol) | Diff (%) |
|---|---|---|---|---|
| RBD PL | 197,481 | 21,724 | 175,756 | 809.0 |
| RBD PO | 9,051 | 452 | 8,599 | 1,904.3 |
| CO / DPL | 2,596 | 3,625 | (1,029) | (28.4) |
| CPL | 2,557 | 2,750 | (193) | (7.0) |
| RBD PS | 2,262 | 95 | 2,167 | (2,293.2) |
| PFAD | 1,360 | 1,360 | 0 | 0.0 |
| OTHERS | 2,430 | 11,391 | (8,960) | (78.7) |
| TOTAL | 217,736 | 41,396 | 176,340 | 426.0 |
Source : MPOB
In addition, demand for palm oil started to pick up in anticipation of the month of Ramadan where increasing requirements for palm oil would come from the food preparation industry. Competitive price of RBD olein at C&F level vis-a-vis its other competitor such as CDSBO has also contributed to the increase of MPO export into Bangladesh at least during the first 5 months of 2020. However, it has been reported that MPO has been losing its price competitiveness since June 2020 due to discounted prices which are being offered by competitors, thus shifting the buying preference to more competitively-priced palm oil.
Other country such as Sri Lanka also saw its palm oil imports from Malaysia increased notably. Total MPO exports reached 98,101 MT during Jan-Aug 2020, 87.1% higher compared to the same period last year. The country’s higher edible oils requirements against the backdrop of insufficient domestic production of oils and fats has led to higher palm oil imports. Some of the palm oil is also being re-exported to India as local traders taking advantage on the Free Trade Agreement (FTA) between the two countries that enables Sri Lanka to export their products to India at zero duty.
Among the countries in the Central Asian region, Afghanistan appeared to be the most important MPO buyer up to August this year. MPO exports to this country have increased by 9.8%, registering a total of 53,954 MT during Jan-Aug 2020 period as Afghanistan continues to be relying on edible oils imports to fulfil domestic needs. However, MPO exports to Uzbekistan and Kazakhstan continue to be on decreasing trend registering a drop of 25.4% and 26.7% respectively. The global Covid-19 pandemic is having a negative impact on these countries’ economies that also saw local edible oil consumption took a tumble with the closure of restaurants due to nationwide lockdowns.
Chart 1: Breakdown of MPO Exports (MT)
Source: MPOB
In terms of breakdown, the biggest product being exported to the region during Jan-Aug 2020 period is crude palm oil (CPO) accounting for 43% of total exports. After CPO, RBD palm olein is another major palm oil product exported into the Sub-Continent region, accounting for 30% of total exports. These two palm oil products accounted for 79% of the total MPO exports to this region. Among the major importers of Malaysian CPO are India (1,068,734 MT), Pakistan (66,163 MT) and Sri Lanka (4,650 MT). Major destinations for Malaysian RBD palm olein include Pakistan (479,651 MT), Bangladesh (197,481 MT) and Sri Lanka (14,913 MT). Exports of RBD palm oil, crude palm olein (CPL) and PFAD registered a total increase of 40.8% compared to the same period last year. The rest of palm products recorded reductions with the highest being crude palm stearin (CPS), RBD palm olein (RBD PL) and hydrogenated palm oil (HPO).
Table 5: Breakdown of MPO Exports (MT)
| PRODUCT | Jan-Aug 2020 | Jan-Aug 2019 | Diff (Vol) | Diff (%) |
|---|---|---|---|---|
| RBD PL | 711,968 | 2,493,118 | (1,781,150) | (71.4) |
| CPO | 1,139,546 | 1,406,363 | (266,817) | (19.0) |
| CO / DPL | 149,803 | 179,846 | (30,043) | (16.7) |
| RBD PO | 117,895 | 97,970 | 19,926 | 20.3 |
| CPS | 4,995 | 83,196 | (78,201) | (94.0) |
| CPL | 82,524 | 70,622 | 11,903 | 16.9 |
| PFAD | 76,074 | 73,455 | 2,619 | 3.6 |
| PAO | 25,566 | 47,260 | (21,694) | (45.9) |
| RBD PS | 17,357 | 21,848 | (4,491) | (20.6) |
| HPO | 4,247 | 15,843 | (11,595) | (73.2) |
| Others | 12,627 | 13,855 | (1,229) | (8.9) |
| TOTAL | 2,342,603 | 4,503,375 | (2,160,772) | (48.0) |
Source: MPOB
After recording a substantial purchase of MPO in July 2020, India has placed itself as the second largest MPO buyer at the end of July 2020. Pakistan and Bangladesh have also demonstrated consistency in the purchase of MPO into their countries. As most businesses especially the HoReCa (hotels, restaurants and catering) sector resuming their operations, the demand for palm oil which is widely being utilised in the food industry is foreseen to be rising. In this regard, MPO exports are expected to remain stable in this region in the coming months. However, price competitiveness will be the major decision-making factor for procurement of palm oil especially in the major markets.
For more info please contact Mrs Azriyah Email : azriyah@mpoc.org.my
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