Palm Oil Exports May Hit RM60 Billion This Year


palm oil exports may expand by 20 per cent to touch RM60 billion this

year, thanks to higher average palm oil prices and improving global


Palm oil futures prices are now averaging at RM2,500

per tonne, higher than last year’s RM2,250 per tonne. The latest data

from the Malaysia Palm Oil Board (MPOB) shows that palm oil exporters

have shipped out almost 11 million tonnes for consumption in the global

food industry. This is 6 per cent growth from a year ago.

In an

interview with Business Times, Malaysian Palm Oil Council (MPOC) chief

executive officer Tan Sri Yusof Basiron said apart from Asia, Russia and

the Middle East, more palm oil shipments are going to Western nations.

Here are some excerpts from the interview:

BT: Do you think Malaysia’s global palm oil exports could surpass last year’s RM49.59 billion? If so, by how much?


This year, Malaysia’s crude palm oil output is not likely to change

much from last year. Dry weather caused by El Nino and tree stress in

the early part of the year has slowed down crude palm oil output. In the

first eight months of this year, output only grew by a mere 1.7 per

cent to 11.1 million tonnes. This has limited palm oil available for


The current limited supply trend is expected to

continue for the rest of 2010 as the Indonesian government has imposed

higher export duties on its palm oil shipments.

As more

rapeseed, soya and corn oil are burnt as renewable energy in Europe, the

US and Latin America, more palm oil is being imported to make

margarine, mayonaise, cheese spread and chocolate.


strong economic growth, including our Asean neighbours, and recovering

economies in the Middle East, will spur our palm oil exports by between

10 and 20 per cent. So, it (Malaysia’s palm oil exports) should be

within the range of RM55 billion to RM60 billion.

BT: Is Russia an emerging market for Malaysia’s palm oil?


From January to August 2010, we shipped 104,971 tonnes to Russia, 5 per

cent more than in the same period last year. Russia is a major consumer

of oils and fats, but it is not able to grow enough oil crops to feed

its 145 million population.

Last year, Russia imported some 446,000 tonnes of palm oil. This is almost 60 per cent of its total oils and fats imports.

Palm oil is becoming popular in Russia because it is the most suitable and economical raw material to make soap and detergent.


In the last five years, Malaysia had exported more palm oil to Ukraine.

But in the first eight months of this year, volume plunged by 62 per

cent from a year ago. Why?

Yusof: The drastic decline in our exports to Ukraine is caused by two factors.

Ukraine’s monthly vegetable oil production are at record high levels

in the 2009/2010 marketing year. The Eurozone debt crises and Ukrainian

currency devaluation may also have an influence on the demand for palm


Despite the dismal numbers this year, it must be

highlighted that palm oil remains the bulk of Ukraine’s vegetable oils


According to Oil World, from January to June 2010,

palm oil imports from Malaysia and Indonesia accounted for 96 per cent

compared with 93 per cent in the same period a year ago. Just like in

Russia, people in Ukraine use palm oil to make margarine, mayonnaise and

other variants of bakery fats.

BT: Palm oil exports to the

Netherlands – the gateway into Europe – fell in 2007, 2008 and 2009.

Will 2010 see a further decline?

Yusof: Malaysia’s palm oil

exports to the Netherlands went up 15 per cent to 697,503 tonnes in

January-August 2010, compared with 608,808 tonnes in the same period

last year.

Exports to the European Union (EU) also recorded a

16 per cent increase to 1.32 million tonnes in January-August 2010

compared with 1.14 million tonnes in the same period last year.

Going forward, we expect EU-27 nations (including the Netherlands) to

remain dependent on palm oil imports to make up for the shortage of

vegetable oils in the food sector as a result of higher usage of

domestic rapeseed oil and sunflower oil in its biodiesel sector.


Last year, Malaysia’s palm oil exports to the US fell 18 per cent to

0.86 million tonnes. What led the decline? Will this year’s exports to

the US able to top the one million-tonne mark?

Yusof: Since

2005, Malaysian palm oil shipment to the US soared as a result of the US

Food and Drug Administration compulsory ruling on trans fat labeling in


The US baking industry turned to palm oil to rid its

products of trans fat, which is common in partially-hydrogenated

vegetable oils. Malaysia’s palm oil exports peaked at more than a

million tonnes in 2008.

Last year, however, the local vegetable

oil industry in the US, namely the American Soybean Association, came

up with other trans fat-free alternatives and raised the competition for

palm oil.

Despite such challenges, we still see good

prospects. Until August, more than 700,000 tonnes of palm oil reached

the US shores. For the full year, it should touch a million tonnes.

Malaysia has, for more than 30 years, been the major supplier of palm

oil to America.

Source : Business Times

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