GOLDEN CHANCE FOR PALM OIL

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GOLDEN CHANCE FOR PALM OIL
  • New Straits Times
  • 17 Jun 2020
  • The writer is Malaysian Palm Oil Board director-general.
The Malaysia Palm Oil Board says the country’s palm oil inventory is unlikely to hit three million tonnes by year end as predicted by some industry players.

Palm oil is reliable in supply and its versatility both in food and non-food applications as well as competitive price advantage will give it huge opportunities in the post-Covid-19 global market.

PALM oil has important roles to play in the global Covid-19 pandemic fight. The sector offers some solutions to the nation’s concerns about food supply due to border closures and countries banning certain food exports.

As one of Malaysia’s main economic sectors, it supplies food for domestic consumption as well as fulfilling global demand.

Due to its significant roles, the government allowed the oil palm industry — its whole production chain, harvesting, milling and processing of palm oil — to operate during the Movement Control Order period, but with precautionary measures undertaken to prevent the spread of Covid-19.

Palm oil, being the most traded and affordable edible oil, will have a significant role to play once the pandemic subsides.

Palm oil is reliable in supply and its versatility both in food and non-food applications as well as competitive price advantage will give it huge opportunities in the post-Covid-19 global market.

The Malaysian Palm Oil Board (MPOB), the government agency entrusted to serve the country’s oil palm industry, has already put in place several strategies and plans to ensure the industry remains competitive in the global market during and after the pandemic.

The strategies include commercialising higher-yielding oil palm for food security. MPOB has successfully developed a new breed, CPS2, which is a shorter and compact clone with a slow height increment as well as having a short frond.

With a shorter frond, CPS2 is suitable for high density planting and the oil palm is able to extend its economic lifespan due to its slower growth. This means, more palms can be planted per area leading to higher productivity.

The gradual opening of the economies around the globe will lead to an increase in the demand for the nation’s palm oil.

The sector is showing signs of recovery as the Covid-19 pandemic begins to wane. This is aided by the tax exemption provided under the Economic Recovery Plan (Penjana) announced recently, which sees a 100 per cent exemption on the export duty of crude palm oil (CPO), crude palm kernel oil and processed palm kernel oil from July 1 to Dec 31.

This initiative under Penjana will encourage industry players to sell more palm oil and improve their income.

In addition, the country can increase its CPO export, particularly to major vegetable oil consumers such as India, China and Pakistan.

India has decided to increase its import of vegetable oil to 1.14 million tonnes this month from the April-May monthly average of 865,000 tonnes.

Indian importers have inked contracts with Malaysian suppliers for the June/July delivery of 200,000 tonnes of CPO.

MPOB hopes that India will again emerge as a valued customer for the nation’s palm oil and is looking forward to better export numbers in the second half of the year.

MPOB is also not expecting Malaysia’s palm oil inventory to hit three million tonnes by year end as predicted by some industry players. Hence, a bullish CPO market can be expected soon.

I have been seeing a resurgence in Malaysia’s CPO prices since the middle of last month and this upward trend will likely continue.

MPOB is expecting the CPO price to average RM2,500 per tonne this year.