OILS & FATS INTERNATIONAL FEBRUARY 2019 â–ª VOL 35 NO 2
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HEALTH
Tackling acrylamide
EUROPE
Rapeseed: king of the crop Cover feb19.indd 1
06/02/2019 12:20:44
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CONTENTS
OILS & FATS INTERNATIONAL
IN THIS ISSUE – FEBRUARY 2019
FEATURES China
Plant & Technology
23
Global round-up of projects
The latest projects, technology and processing news around the world
NEWS & EVENTS
Health & Nutrition
25
Tackling acrylamide
18
Spurning US soyabeans
Comment
China and the USA have agreed a 90day in their trade war but how likely is Beijing to resume soyabean imports?
3
Germany
With new EU legislation setting benchmark levels for acrylamide in food, how can businesses reduce levels of this chemical and what is the role of frying in its formation?
Rapeseed: king of the crop
Germany is one of Europe’s top oilseed producers and rapeseed is among the top five products in the country’s agricultural sector
News
4
Indofood withdraws from RSPO
Biofuels
Biofuels News
27
10
Path to a sustainable future The biodiesel industry has evolved from using food crops as feedstocks to waste streams from vegetable oils and fats
Transport & Logistics
20
Preparing for new low-sulphur rules
30
Structural change ahead Brazil’s grain traders must adapt to logistics and storage challenges or face exiting the market
EU settles Argentine biodiesel trade dispute
Biotech News
12
China approves five new GM crops for importing
Renewable News
14
BASF pulls out of FDCA joint venture deal with Synvina
Transport News
16
Panama Canal in deal with Itaqui port
Diary of Events
16
International events listing
Statistics
32
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Contents feb19.indd 1
Statistical data from Mintec
OFI – FEBRUARY 2019
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EDITOR'S COMMENT
OILS & FATS INTERNATIONAL
VOL 35 NO 2 FEBRUARY 2019
EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gabriel Day gabrielday@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com
Preparing for new low-sulphur rules As our industry looks ahead to what 2019 will bring, an important global regulation that may be under the radar for some of us is set to have a major impact on our market. On 1 January 2020, the sulphur cap for marine fuels will drop from 3.5% to 0.5% in areas outside current emission control areas (ECAs) – essentially affecting everywhere around the world apart from the existing Baltic Sea, North Sea, North American and US Caribbean ECAs, where the sulphur limit is 0.1%. Because the shipping sector is the highest emitter of toxic sulphur oxide in the transportation industry, these limits have been set by the UN’s International Maritime Organization. In order to comply, ship owners must either use low-sulphur fuel, install scrubbers on their ships to clean up emissions, or switch to alternative fuels such as liquefied natural gas (LNG). “This is going to be a major change for our industry,” says Jonathan Daw, a director at EA Gibson Shipbrokers.
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A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000 Printed by Pensord Press, Gwent, Wales
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The regulation will affect the world’s entire shipping fleet of some 60,000 vessels, including those carrying oilseeds or vegetable oils – from the Handysize to Panamax ships which transport the 90M tonnes of oilseeds traded annually, to the medium range chemical tankers moving the some 50M tonnes/year of vegetable oils traded globally. A very small percentage of ship owners are installing scrubbers, but at around US$2-4M a piece and a month of down time to install them, it is a prohibitive cost for the majority of owners. Most will turn to using low-sulphur fuel (gas oil or middle distillates), and although previous concerns about fuel shortages are unlikely to come to pass, pricing will be a big issue, says Richard Matthews at EA Gibson. “Global demand for bunker fuel in 2020 will be around 4M barrels/day and 3–3.5M barrels of this will need to be replaced with gas oil or 0.5% compliant fuel.” This surge in demand will push up fuel prices which, in turn, will hit freight rates. Matthews says that high sulphur fuel prices – currently around US$350/tonne – are projected to fall to US$280/tonne in January, while gas oil prices are set to hit around US$580/tonne. If fuel costs rise by US$200-300/tonne, ship owners cannot absorb this. “The shipping market is already quite depressed, with the trade war between China and the USA affecting volumes,” says Daw. “Ship owners are not doing well and the new regulation will increase their running costs. They will try and pass on these costs to charterers, and charterers will try and pass it on to their customers in the food and biodiesel market.” How these costs are spread out between the different operators involved, the price of low-sulphur fuel itself (also dependent on petroleum prices and competing demand from other industries such as those for jet fuel) cannot be predicted precisely. But Daw believes that freight rates will go up in the last quarter of this year and moving into 2020, with a period of instability for 6-12 months. The market will then settle, but with higher freight rates. It is a scenario that many of us in the trade need to prepare for. Serena Lim – serenalim@quartzltd.com
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Feb comment.indd 1
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NEWS IN BRIEF ARGENTINA: Chinese agribusiness giant COFCO International has closed its Argentine edible oil processing plant as it struggles with the effects of the country’s recession and the US-China trade war, Bloomberg reports. “A significant reduction in local demand, unfavourable market conditions and rising idle capacity” had led to the closure of the Legitimo plant, in Lanus, Buenos Aires, COFCO said in a statement on 4 January. The plant refined soyabean and sunflower oil. CANADA: Agribusiness firm Richardson International announced on 18 December that it had agreed to buy Wesson, Conagra’s US retail brand of canola and vegetable cooking oils. The Wesson facility is located in Memphis, Tennessee. Financial terms of the acquisition were not disclosed and the agreement is expected to close in the first quarter of this year. Richardson is Canada’s largest agribusiness and is a worldwide handler of grains and oilseeds, as well as a vertically integrated processor and manufacturer of oats and canola-based products. Conagra Brands is one of North America’s leading branded food companies.
Indofood withdraws from RSPO following audits on plantations Indonesian food firm Indofood has withdrawn from the Rountable of Sustainable Palm Oil (RSPO) certification scheme after allegations of labour violations and an audit of its oil palm plantations, just-food reported on 30 January. The decision was made following RSPO auditing of two of Indofood’s Indonesian plantations, after allegations made by the Rainforest Action Network (RAN), International Labor Rights Forum and the Indonesian labour rights body OPPUK in November last year, just-food wrote. Indofood operates its oil palm plantations through its subsidiary, IndoAgri Resources. US food and drink giant PepsiCo, which is partnered with Indofood, said that it held consultations with the company over the accusations. "PepsiCo and our Indonesian joint venture decided some time ago to no longer receive palm oil from IndoAgri, owner of PT Lonsum," PepsiCo told just-food. The RSPO sanctioned Indofood in November
for 20 violations of its principles and criteria, as well as 10 violations of local labour laws related to its palm oil facilities. A 17 January letter from Muhammed Waras, head of sustainability at Lonsum, to RSPO chief executive Datuk Darrel Webber, read: “We are not in agreement with some of the [RSPO] findings from the audit carried out from 4-7 June. "We have therefore decided to concentrate our sustainability journey and practices through implementation of the mandatory Indonesian Sustainable Palm Oil standards." PepsiCo said in its statement to just-food: “We are very disappointed to learn of IndoAgri's attempt to withdraw PT Lonsum from the RSPO. This is unacceptable and inconsistent with our policy and commitments on sustainable palm oil. We support the RSPO's Complaints Panel process and continue to urge IndoAgri to act immediately to resolve the identified issues and strengthen their palm oil policy.”
ADM to acquire Gleadell
US agribusiness giant Archer Daniels Midland (ADM) signed a deal on 17 January to acquire the remaining 50% stake of Gleadell Agriculture Ltd UK, which it currently owns with French agricultural cooperative group InVivo.
Gleadell is a UK trader and exporter of oilseeds, grain and pulses and the agreement includes its wholly-owned subsidiary, Dunns (Long Sutton) Ltd, one of the UK's largest pulse and agricultural seed processors. “ADM will merge Gleadell and Dunns with ADM Arkady – ADM’s UK destination marketing business– and ADM Direct UK – ADM’s specialist combinable crop origination business – to create ADM Agriculture Ltd.
“The transaction will increase the origination, storage and destination marketing capabilities of ADM, allowing it to serve as the trader partner of choice for even more farmers and customers,” ADM said. Gleadell Agriculture is a leading supplier of combinable crops and exporter of grains, oilseeds and pulses. The deal was subject to regulatory review and was set to close at the end of the first quarter of 2019, ADM said.
IBM and Galpagro to use blockchain technology in olive oil production IBM Spain and Galpagro, a company focused on high yield olive groves, are introducing blockchain technology to trace all stages of extra virgin olive oil production and distribution, reported Olive Oil Times on 21 January. Blockchain technology is a high security sophisticated data holding platform which can be accessed by anyone to view. Digital data is separated into blocks, connected by a digital chain, which shows transaction information from owner to owner. The transaction information is very difficult to tamper with, providing more transparency in the value and legitimacy of a product. 4 OFI – FEBRUARY 2019
General News NEW.indd 2
Olive Oil Times said the first extra virgin olive oil with full blockchain tracing would be available this year, originating from some of the plots of Finca El Valenciano in Seville, Spain. The Olive Trace initiative would provide detailed information on every transaction and company involved in the production process of the oil. After scanning a QR code, anyone with access to the blockchain could view all the transactions through an app, such as the location of the olive trees, the olive variety, pressing in the mill, production, packing, distribution and placement on supermarket shelves.
“The system is therefore interesting not only to consumers, but also to olive growers, producers and packers,” the report said. IBM had been focusing on the food sector to incorporate blockchain technology to help assure quality and to avoid olive oil fraud, Olive Oil Times said. Last May, Spain also saw the launch of Olivacoin, a company that created hardware to provide a payment platform for buyers and sellers of olive oil, using cryptocurrency. Blockchain technology was originally developed as a core component of the cryptocurrency, Bitcoin, serving as the digital public ledger for it. www.ofimagazine.com
07/02/2019 09:23:08
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NEWS
Huawei arrest hitting Canadian canola The arrest of a top Huawei executive is slowing canola shipments through Chinese ports, the South China Morning Post (SCMP) reported on 6 February. Meng Wanzhou, Huawei chief financial officer, was arrested on fraud charges on 1 December after a US extradition request. Since then, Beijing has detained two Canadian diplomats and the drug sentence for a Canadian national has been changed to the death penalty. A senior Canadian grain company official told Commodity News Service Canada: “If
the conflict isn’t resolved, (canola) will be the obvious target, and that’s a deep concern to everybody.” The SCMP reported a dozen traders with direct knowledge of sales in Canada and China saying the shipping pace of canola had slowed noticeably since Meng’s arrest. Canadian canola had taken longer to clear Chinese customs and permits needed to import GM crops, including canola, had become more difficult to obtain, traders said. "One Chinese canola crusher who had
cargo arrive at the end of December said it took more than 20 days to clear customs, about twice the usual time, as authorities carried out more thorough inspections related to GMOs," the SCMP wrote. "Another Canadian trader said he was not aware of any Canadian export company booking a new canola shipment to China since Meng’s arrest." China bought around US$1.9bn worth of Canadian canola every year, which represented 90% of China's total canola imports, the newspaper said.
IN BRIEF
Volatile 2019 for Chinese food and agribusiness
EU/USA: EU imports of US soyabeans have doubled in the first half of 2018/19 compared to the previous marketing year, according to a recent report by Germany’s Union for the Promotion of Oil and Protein Plants (UFOP). In the first half of the 2018/19 marketing year, the EU imported 6.95M tonnes of soyabeans, an increase of 12% from the previous year. The USA remained the EU’s main supplier with volumes of US imports increasing to 5.2M tonnes this season from only 2.3M tonnes in the previous year, German market researcher, Agrarmarkt Informations-Gesellschaft mbH (AMI) said in the UFOP report. According to UFOP, US soyabean imports have increased so rapidly because of the ongoing USA-China trade war, which led to China imposing 25% tariffs on several US imports, including soyabeans. Additionally, the statistics showed that the EU’s second largest soyabean source, Brazil, has had rapidly decreasing exports over time. The EU imported 1.9M tonnes of soyabeans from Brazil in 2016/17, 1.8M tonnes in 2017/18 and 1.3M tonnes from July to December 2018/19, UFOP said.
The food and agribusiness sector in China will continue to be volatile in 2019 as it faces a slowing economy beset with uncertainties, including US-China trade negotiations, tightening consumer wallets and a manufacturing slowdown, according to a new RaboResearch report. “China’s food and agribusiness sector is also confronted with potential disruptions from diseases and ongoing structural changes as a result of industry consolidation, environmental policies and rapidly changing consumer trends,” said Ping Chew, head of RaboResearch Food & Agribusiness – Asia. In the soyabean market, Rabobank said factors to watch were the progress of trade talks between the USA and China and weather conditions in South America. China had started to buy US
6 OFI – FEBRUARY 2019
General News NEW.indd 3
soyabeans again after the two countries declared a 90-day ceasefire in their trade war, the report said. “State-owned firms are reporting purchases of around 5M tonnes of US soyabeans. It is expected that the beans were purchased to replenish state reserves on behalf of the Chinese government." The 25% tariff China had imposed on US soyabeans meant the gross margin to import US beans for crushing were negative CNY700
(US$103)/tonne. "Chinese crushers will not have the incentive to buy US soyabeans until the punitive tariff is abolished.” The Rabobank report said effective 1 January, the Chinese government removed the import tariffs on alternatives to soya meal for animal feed including rapeseed, sunflower meal and palm meal. If China and the USA did not reach agreement after their 90-day truce, a full-blown trade war could develop.
Cargill to invest US$200M for expansion in Pakistan Global agricultural commodity company Cargill announced on 17 January that it would be investing more than US$200M over the next three to five years in Pakistan. “Our strategy includes expansion across our agricultural trading and supply chain, edible oils, animal feed, meat and dairy businesses, while ensuring safety and food traceability,” the company said. Cargill said it would bring “world class” innovations to the growing dairy industry in Pakistan while also supporting Pakistan’s economic development and contributing to local employment.
A rising demand for edible oils, backed by evolving consumption patterns and a growing market for animal feed driven by sustained progress in the poultry industry, was also being seen in the country. "Finalising one of our first investments in the agricultural supply chain in Pakistan is our top priority,” said Imran Nasrullah, country head, Cargill Pakistan. The announcement comes after the Pakistan Nation Shipping Corporation laid out plans in November to build a new terminal in Karachi to ease pressure on the country’s only dedicated grain and oilseed facility at Port Qasim. www.ofimagazine.com
07/02/2019 09:23:10
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NEWS IN BRIEF WORLD: Vegetable oil prices, including those for palm oil, are set to rise by US$50-100/tonne by June, according to LMC International chairman James Fry. "Prices of crude palm oil (CPO) and other oils depend on the outlook for palm oil stocks. Stocks will fall until mid-year, which will lift the CPO premium over Brent [crude oil price], especially if Indonesia maintains its heightened pace of biodiesel use," Fry told the Pakistan Edible Oil Conference (PEOC) in Karachi on 19 January. “If this occurs, there is an upside of US$50-100 for oils by June,” Reuters reported Fry as saying. Crude oil benchmarks set the floor price for vegetable oils, he explained. Benchmark palm oil prices had dropped to three-year lows thanks to high inventories and low demand. Palm oil was last up 1.1% at 2,223 ringgit (US$540.88)/ tonne on 19 January. Southeast Asian palm oil stocks reached highs last year but were expected to come down in the next few months in line with seasonal production trends. UK: The Department of Health and Social Care (DHSC) has launched a public consultation on government plans to restrict price promotions for food and drink products that are high in fat, sugar and salt (HFSS), FoodNavigator reports. The consultation was announced on 12 January as part of the government’s childhood obesity plan, published in June 2018. The DHSC’s plan includes proposals to reduce children’s exposure to the marketing of unhealthy food in stores, television and online; restrict the sale of energy drinks; introduce calorie labelling; and encourage physical activity. 8 OFI – FEBRUARY 2019
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Norway's stand on palm biodiesel could affect EU-Malaysia trade Norway's stand against palm biodiesel would adversely affect bilateral trade relations between Malaysia and the European Free Trade Association, says Malaysia’s Primary Industries Minister Teresa Kok. A Norwegian parliamentary decision made on 3 December and set to come into effect in 2020 called for the government “to formulate a comprehensive proposal for policies and taxes in the biofuels policy in order to exclude biofuels with high deforestation risk”. “We view this as unfair and unjust, going against free and fair trade, and is certainly not
something we will take lightly,” said Kok in a statement on 28 December. Malaysia’s last round of trade negotiations with the EFTA was in May 2017, Reuters said. Earlier in December, Kok had spoken out against the French Parliament for excluding palm oil as an approved biodiesel feedstock, suggesting the move went against free trade. Malaysia and Indonesia exported around 90% of the world’s palm oil and had criticised the EU in early 2018 for backing a decision to ban palm oil in biofuels from 2021, Reuters wrote.
EU plans to develop plant proteins to support demand A European Commission (EC) report on plant proteins has proposed several strategies to develop production in an economically and environmentally sound way, World Grain reports. Commissioner of agriculture and rural development Phil Hogan said: "Due to a variety of market and climatic factors, European protein crop production is not sufficient to cover growing demand." According to the EC, demand for plant proteins in Europe amounts to about 27M tonnes of crude protein in 2016/17, and the EU imports around 17M tonnes/year of crude protein, 13M tonnes of which is soya-based. The report – adopted by the EC on
22 November – presented policies and new proposals that could help support the development of protein plants in the EU, including: • Supporting farmers grow plant proteins with the proposed Common Agricultural Policy (CAP) by including them in national CAP strategic plans. • Nurturing competitiveness through research and innovation from research programmes, and doubling the budget of the Horizon Europe programme for 2021-27. • The EC paying €200M in 2019 to fund the promotion of the benefits of plant protein. • Increasing the sharing of knowledge/best practice in supply chain management.
Call made for EU to regulate junk food adverts The World Obesity Foundation (WOF) is calling for the EU to regulate adverts that target children on online video games, social media and other digital platforms, reports just-food. The London-based organisation of more than 50 regional and national obesity bodies compiled a dossier of “powerful targeting techniques that track children's online behaviour – including their browsing history, location, preferences and 'likes' – being used by advertisers to persuade children to purchase foods and drinks high in fat, sugar and salt". WOF was now proposing regulations for EU policy makers to adopt while also calling for greater coopera-
tion across national boundaries to minimise cross-border marketing techniques, justfood wrote on 17 December. Hannah Brinsden, head of policy at the WOF, said: "Of the 53 countries in Europe,
only half have taken any steps to limit marketing of foods high in fat, sugar and salt (HFSS) to children, eight years after World Health Organization recommendations were published. “Of these, few countries have regulated and even fewer have addressed digital marketing. Meanwhile, evidence shows that introducing restrictions would reduce purchase and intake of these HFSS foods, and thus contribute to reducing body mass index (BMI) and millions in cost savings. "It's time for governments to seize the moment and develop statutory regulations to safeguard children from the unrestricted power of junk food advertising." www.ofimagazine.com
07/02/2019 09:23:13
BIOFUEL NEWS
EU settles Argentine biodiesel trade dispute Argentina and the EU have reached an agreement to end their long-running trade dispute over exports of biodiesel from the South American country to the bloc, the Argentine Ministry of Foreign Affairs said on 30 January. The deal established price and volume limits to be announced next month, the ministry said. Two weeks earlier on 14 January, the European Commission (EC) had announced that it was willing to accept a deal with Argentine biodiesel producers, allowing them to avoid proposed anti-subsidy duties of 25-33.4% that were due to come into force on 28 February, Euractiv said.
IN BRIEF FRANCE: French energy group Total says the French National Assembly’s decision to exclude palm oil as a biofuel feedstock could put its La Mède biodiesel refinery at risk. On 19 December, the assembly voted to end tax incentives for adding palm oil to diesel fuel as of 2020, and agreed to treat palm biodiesel as a regular fuel so it cannot count towards EU renewable energy targets. Total chief executive Patrick Pouyanne told Le Figaro newspaper that the decision cast doubt on the viability of the 500,000 tonnes/year plant and its overall profitability. SINGAPORE: Finnish renewable fuels producer Neste annnounced on 12 December that it would extend its capacity in Singapore by up to 1.3M tonnes/year, bringing its total capacity in 2022 close to 4.5M tonnes/year from its current 2.7M tonnes/ year. Neste president and CEO Peter Vanacker said the expansion would give Neste more production options for its products including renewable diesel, renewable aviation fuel and raw materials for polymers and chemicals. 10 OFI – FEBRUARY 2019
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“To find a solution to the commercial dispute, the Argentine Chamber of Biofuels (CARBIO), with the support of the national government, offered a price and volume commitment to allow the restart of exports,” CARBIO said. The foreign ministry said it expected Europe to ratify and settle on the details of the agreement in the days ahead. Euractiv said that the deal could help bolster Argentina’s soyabean and biodiesel sector. The European Biodiesel Board (EBB) welcomed the deal, saying it showed the EU recognised that Argentine export taxes had unfairly distorted the international market.
Under the agreement, Argentine exporters would be allowed to export up to about 1.2M tonnes/year of biodiesel without paying duties, the EBB said. The EC began investigating Argentine and Indonesian biodiesel imports in 2012 and imposed anti-dumping duties in 2013, but then had to remove most of them in September 2017 after losing challenges at the World Trade Organization and the European Court of Justice. The EBB then requested further investigation into the countries’ alleged subsidies of their biodiesel industries, with the EC announcing on 6 December that it had begun an anti-subsidy process against Indonesia.
EPA to finalise higher E15 rule before summer The US Environmental Protection Agency (EPA) said on 25 January that it would complete a proposal to expand sales of higher E15 ethanol blends in time for summer, despite delays from the US federal government shutdown. “I still think we can get the rule done in time,” Reuters reported Bill Wehrum, the agency’s assistant administrator for air and radiation, as saying. US President Donald Trump had promised farmers and biofuels producers that his admin-
istration would lift a long-time ban on summertime E15 sales to help boost demand for the corn-based fuel. The ban had been imposed over concerns that E15 contributed to smog in hot weather. Research had since shown that the 15% blend of ethanol into petrol may not increase smog relative to the E10 blend sold all year round, Reuters said. The EPA had been tasked with finalising the rule before June to have it in place for the summer driving season but its
workers were furloughed as a result of the US government shutdown from 22 December-25 January. The shutdown – the longest in US history – stemmed from an impasse over Trump’s demand for US$5.7bn in funds for a US-Mexico border wall. Reuters said farmers and biofuel producers had been lobbying to end the E15 ban to bolster demand, but the petroleum industry was opposed to a policy that would raise ethanol’s share of the fuel market.
EU clears US soyabeans for use in biodiesel
The European Commission (EC) has decided that US soyabeans can be used in EU biofuels as part of its push to strengthen trade relations with the USA. In a statement on 29 January, the EC said the recognition of US soyabeans for use in biofuels was valid until 1 July 2021, but it could extend the date provided the USA met the sustainability criteria to be set in new EU rules
from 2021 to 2030. Currently, the USA exported soyabeans to the EU for animal feed but the soyabean oil was shipped back because the EU did not allow it to be used for fuel, according to Reuters. Should the EC decision proceed, this rule would be changed. According to Claus Keller of German commodity analytical company FO Licht, EU biofuel producers used an estimated 400,000 tonnes of soyabean oil for biofuel production in 2018, compared with 5.9M tonnes of rapeseed oil, the EU’s main feedstock. “I think the EU move will be positive for US soyabean sales prospects to the EU but it will not open a floodgate,” Keller said, adding that other factors would also influence the sale of US soyabeans, such as US-China trade talks and possible duties on Argentine biodiesel. The EU imported about 14M tonnes/year of soyabeans for animal feed, and the USA was the EU’s main supplier, accounting for a 75% share of the EU’s soya imports, Reuters said. www.ofimagazine.com
05/02/2019 10:00:40
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BIOTECH NEWS IN BRIEF CANADA: The planted area for genetically engineered (GE) crops in Canada fell by 2% in 2018 from the previous year because of a decreased soyabean area, according to a US Department of Agriculture report on 12 Decemeber. In the marketing year 2018/19, the overall decrease of 13% was the result of the soyabean planted area growing 9% in Ontario, but decreasing by 6% in Manitoba and 52% in Saskatchewan. The report said that in 2018, Canada planted about 12.2M ha of GE crops, mostly soyabeans, corn, canola, sugar beets and alfalfa. USA: On 11 December, a US district court judge approved the US$1.51bn settlement that Syngenta reached earlier this year over the sale of its Agrisure Viptera and Duracade corn seeds, concluding years of lawsuits. Syngenta introduced the two GM corn strains for the 2011 US growing season before China approved them. China then stopped importing US corn in November 2013. Plaintiffs said the rejected imports lowered commodity prices and cost farmers as much as US$3bn. Syngenta had asserted it did not need approval from China for the corn since it already had US approval.
China approves five new GM crops for importing China has approved five genetically modified (GM) crops for import after its first face-toface talks with the USA on 7 January since the two countries agreed a 90-day truce in their trade war, reports Reuters. “It’s a goodwill gesture toward the resolution of the trade issue,” said a Chinese representative of a US agricultural industry association. “It’s been in the system for a long time but they chose today to release this good news,” he added, declining to be identified. The GM products that China has approved are DowDuPont
Inc’s DP4114 Qrome corn; DAS-44406-6 soyabean, known as Enlist E3; the SYHT0H2 soyabean developed by Bayer CropScience and Syngenta; BASF’s RF3 canola; and Bayer-owned Monstanto’s MON 88302 canola. China also extended import approvals for 26 other GM crops by three years. However, five other products were not approved, including GM alfalfa products developed by Monsanto and two DowDuPont soyabean traits. Reuters said the USA had been demanding that China change its GM crop import
application process to make it more transparent, timely and based on scientific methods, as many products had been stuck in the regulatory process for years. US farmers had been anxiously waiting to decide which seeds to plant this spring as they did not widely plant varieties not approved by China. China bought 60% of US soyabeans before the trade war, when Beijing imposed a 25% import duty on US soyabeans on 6 July in response to US tariffs. However, it had so far only bought 5M tonnes of the 2018 US soya harvest.
USDA releases plan to label GM products
The US Department of Agriculture (USDA) issued rules on 20 December for the labelling of genetically engineered foods, Reuters reported. “The National Bioengineered Food Disclosure Standard ensures clear information and labelling consistency for consumers about the ingredients in their food,” Agriculture Secretary Sonny Perdue said in a statement. Labelling would come into force on 1 January 2020 or a year later for small companies. The
mandatory compliance date is 1 January 2022. ‘Bioengineered’ foods must be disclosed using text, a symbol or an electronic or digital link including QR codes, said just-food. Small food manufacturers or small packages may also use options such as a phone number or web addresses. Soyabean oil and other highly processed ingredients were exempted from mandatory labelling. Reuters said the details of the new standard were more than two years in the making, with consumer groups pushing for more transparency and food companies claiming the labelling system would be costly and confusing. Some consumer groups criticised the USDA, because the required term “bioengineered” was not a common enough phrase to see on labels, preferring “GMO” or “genetically engineered” instead.
Monsanto’s patent battle in India referred to High Court Monsanto’s ongoing legal battle in India to uphold its patent on GM cottonseed has been referred to the Single Judge Bench of the High Court, who will rule on patentability after hearing expert evidence. Monsanto has been in a legal battle for years with Indian seeds companies, led by Nuziveedu Seeds Ltd. In November 2016, a Single Judge Bench of the High Court restrained Nuziveedu from selling Bt cotton seeds 12 OFI – FEBRUARY 2019
Biotech news feb19.indd 2
using the trademark of Monsanto or its Indian partner Mahyco Monsanto, according to GMWatch. However, a Division Bench of the Delhi High Court overturned the order in April 2018, ruling that certain items such as seeds, animals and plants cannot be patented under Indian law. Monsanto appealed against this ruling. On 8 January, the Supreme Court ruled that it was incorrect for the Division Bench
to rule on patentability without expert evidence. “The Supreme Court felt that the issue of whether Monsanto’s patent is valid or not under the Patents Act would need to be determined by the Single Judge,” Nuziveedu told Hindu Business Line. “The court has held that the validity of Monsanto’s patent can only be judged after evidence is led by both parties and at the final, and not the interim, stage.” www.ofimagazine.com
05/02/2019 09:34:54
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OFI – FEBRUARY 2019
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RENEWABLE NEWS IN BRIEF GERMANY: Chicago-headquartered Vantage Specialty Chemicals Holdings announced late last year that it had agreed to buy speciality surfactants producer LEUNA-Tenside GmbH (LTG). Located in Leuna, LTG is focused on small volume, niche products including anionic and nonionic surfactants and emulsifiers based on naturally-derived ingredients for use in personal care, soap and detergent, industrial cleaning, lubricant and coating products. “The acquisition of LTG provides us with a strategic manufacturing footprint in Europe, with products and chemistries that are similar to ours,” said Tiffany Kyllmann, chief strategy officer of Vantage. LTG is the third acquisition Vantage has completed since global private equity investment firm HIG Capital acquired it in October 2017. Vantage has six manufacturing facilities and 13 formulation laboratories in 14 countries across the USA, Latin America, South Africa, Europe and Asia. WORLD: The global market for soya-based chemicals and materials is projected to grow at a CAGR of 7.03% to reach US$29.896bn by 2023 from US$19.887bn in 2017, according US market research firm Research and Markets. “Soya-based chemicals and products are increasingly being utilised in many established commercial products such as bioplastics, biodiesel and cosmetics,” the report said. Geographically, North America held a significant market share due to increasing consumption of soya-based chemicals and materials in the region. “In the last decade, industrial and non-diesel use of soya oil in the USA rose by more than 50%.” 14 OFI – FEBRUARY 2019
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BASF pulls out of FDCA joint venture deal with Synvina German chemical group BASF has pulled out of its Synvina joint venture deal with Dutch biotech firm Avantium, which was aiming to build the first commercial-scale furan-2,5-dicarboxylic acid (FDCA) plant in Antwerp, Belgium. On 27 January, Avantium said it had regained the intellectual property, people and assets for its YXY technology, paying BASF €13.7M (US$15.7M) for its equity
interest in Synvina and €3.7M (US$4.2M) for the assets acquired by the joint venture in the last two years. Synvina was formed in 2016 to commercialise Avantium’s YXY technology, which catalytically converts plant-based sugar into FDCA, the main building block for plastics such as the new polymer polyethylenefuranoate (PEF), which can be used in food and beverage packaging, automotive applications
and carpet and textile fibres. The two companies had disagreed with BASF’s interpretation of their joint venture agreement. In January 2018, Avantium announced a two to three-year extension of its pilot phase, which it said should postpone BASF’s final assessment of its investment. However, BASF maintained the final assessment should be made in the fourth quarter of 2018 as originally envisaged.
Project offers ‘one-stop shop’ to produce PLA Three process technology and equipment specialists have formed a partnership to promote the production of sustainable plastics made from polylactic acid (PLA). “PLA is a bio-based and biodegradable polymer that can replace petroleum-based plastics in a wide range of applications,” said Sulzer Chemtech, on 6 December “Different stages are required to convert sugars from crops into lactic acid, lactide and subsequently PLA.” The Swiss separation and mixing technology firm is working with Belgium’s Futerro – a technology provider for lactic acid and lactide production – and TechnipFMC, a leader in subsea, onshore/ offshore, and surface projects with growing activities in bioplastics and green chemicals. Sulzer said the three firms
PLA is a bio-based polymer that can replace petroleum-based plastics
were offering a fully integrated package to the agricultural, chemical and fibre industries. “PLAnet offers a ‘one-stop shop’ for customers interested in PLA production. It supports the construction of plants of any size, including facilities with a throughput of up to 100,000 tonnes/year.” In the PLAnet partnership,
Futerro’s technology focuses on the production of lactic acid and raw lactide from sugar or biomass; Sulzer contributes the process for the purification of lactide and its polymerisation to obtain PLA; while TechnipFMC acts as technology integrator to deliver front-end engineering design packages.
Oxiteno expects more US demand with new plant opening Latin American surfactants manufacturer Oxiteno is banking on growing US demand for its lineup of surfactants and speciality chemicals, with the official opening of its new alkoxylation plant in Pasadena, Texas last year, says happi magazine. The 170,000 tonnes/year unit plant adds to Oxiteno’s existing footprint in surfactants, ethylene oxide and derivatives in Latin America and would produce a wide range of non-ionic surfactants and specialty alkoxylates serving key markets such as agrochemicals, home care, in-
dustrial and institutional cleaning, personal care, oilfield chemicals, paints and coatings. Oxiteno said it had invested around US$200M over six years in the plant including site acquisition, plant construction and R&D facilities. “The strategic US Gulf location allows easy access to key raw materials, logistics, and a specialised workforce.” Oxiteno is one of the world’s largest ethoxylates producers, with production units in Brazil, Mexico, Uruguay and Venezuela. www.ofimagazine.com
05/02/2019 09:41:49
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OFI – FEBRUARY 2019
15
TRANSPORT NEWS
Panama Canal in deal with Itaqui port The Panama Canal Authority (PCA) signed an agreement late last year with Brazil’s Port of Itaqui to promote the shipment of grains and other cargo through the canal, World Grain reports. The port, located in São Luis in the northeastern state of Maranhão, is Brazil’s closest port to the Panama Canal. “This agreement is very important to enable the handling of grains to Asia through the canal, providing even more competitiveness to Itaqui,” said Ted Lago, president
IN BRIEF CHINA: China’s COFCO International announced on 20 December that it is partnering with Archer Daniels Midland Company (ADM), Bunge, Cargill and Louis Dreyfus Company (LDC) to standardise data and digitise global agricultural shipping transactions. The project, first announced in October, is focused on the development of automated grain and oilseed post-trade execution processes, which would significantly reduce costs and resources usually needed to move documents around the globe. COFCO sources, handles, processes, trades and transports grains, oilseeds and sugar around the world, and is the overseas agriculture platform of COFCO Corporation, China’s largest food and agriculture company. USA: Oil and gas giant Shell and sustainable aviation fuel supplier SkyNRG have begun the supply of aviation biofuel to KLM, SAS and Finnair at San Francisco Airport (SFO), the companies announced on 6 December. The fuel – made from used cooking oil – is produced by US renewable fuel supplier World Energy at its Paramount refinery in Los Angeles. It will be supplied through SFO’s current refueling facilities and can be used by the airlines without modification to their fleets. 16 OFI – FEBRUARY 2019
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of the Maranhão Port Administration Co. According to the PCA, the agreement would promote the use of Panamax locks for grain transit from northern Brazil to markets in Asia. It would allow joint marketing activities and the sharing of information on trade flows between the canal and Itaqui port to maximise future improvements and possible modernisation. The PCA said Brazilian grain exporters were enjoying a substantial rise in shipment volumes. Vessels transporting
grains, oilseeds and other dry commodities accounted for about 22.2% of the Panama Canal’s total ocean-going commercial transits from 1 October 2017 to 30 September 2018. The agreement comes after the PCA reached an agreement with the Brazilian Association of Soybean and Corn Producers of Mato Grosso (Aprosoja) in March 2018 to conduct joint marketing activities and exchange information that would benefit trade flow and future improvements.
Brazil railway projects ready for bidding soon
Brazil’s Ferrogrão and FIOL railway projects, which will serve the country’s central grain belt, will be ready for bidding this year or early 2020, reported Reuters on 21 January. The Ferrogrão grain railway will take about 10 years to build and run from Sinop in the southern state of Mato Grosso, to Miritituba Port on the Tapajos river, according to the head of Brazil’s Investment Partnerships Programme (IPP) Adalberto Vasconcelos. From Miritituba, barges would transport cargo along the Amazon river to world markets.
The FICO and FIOL railways would connect Brazil’s farm belt to the North-South railway line and Atlantic ports, with capacity to transport 8M tonnes/year of grain. Vasconcelos told Reuters that the government was aiming to reduce reliance on roads to transport grain by building more railway lines and getting current operators to invest in expansions. By 2025, Brazil hoped to increase the amount of cargo moved by rail to 31% from 15%. Brazil’s recently elected President Jair Bolsonaro, who took office on 1 January, was boosting the IPP programme to speed up improvements to the country’s deficient infrastructure, which added to the cost of exporting Brazilian soya, Reuters said. The IPP programme is tasked with attracting private investment into Brazil’s infrastructure. Vasconcelos said that the mining company Vale SA and logistics firm Rumo SA were also expected to sign early renewal of rail concessions this year. To improve air travel for tourism, farming and the oil industry, 20 airports would also be auctioned on 15 March.
US soya can benefit from containerised shipping Containerised shipping of soyabeans will open the door for US farmers to access new Asia-Pacific and European markets, according to the Illinois Soybean Association (ISA). Farmers had sown more soyabeans than corn for the first time in 35 years last spring, the ISA said late last year. And with the two countries’ ongoing trade war leading to China spurning US soyabeans, American farmers were storing more of their harvest. ISA trade analyst Eric Wood-
ie said the association saw a major opportunity in this trade shift. “Containerised shipping offers several benefits for the US soyabean industry. It better meets the needs of customers who want to purchase smaller quantities, minimise their inventory investment, purchase soyabeans with precise product attributes or seek fast turnaround of their orders to increase time-to-market and/or maintain quality. “Containerised shipping can
also benefit producers, cooperatives and small suppliers who cannot fulfil demand for large shipments via bulk vessels. In fact, by 2019, the global container market demand is projected to increase nearly 5% over just three years.” The ISA said Illinois was the top soyabean producing state in the USA and was well-positioned to capitalise on containerised shipping for international soyabean export because of its access to ocean containers returning empty to the country. www.ofimagazine.com
05/02/2019 09:45:32
DIARY OF EVENTS 20-22 February 2019
17-19 April 2019
11-12 June 2019
20-23 October 2019
Fats & Oils International Conference - Exhibition Lalit Hotel, Mumbai, India www.otaiwz-foic2019.org/ index
21st Practical Short Course: Advanced Technologies in Oilseed Processing, Edible Oil Refining and Oil Modification Istanbul, Turkey www.smartshortcourses.com/ oilprocess21/program.html
IGC Grains Conference 2019 London, England https://www.igc.int/en/ conference/registration/ regform.aspx
17th Euro Fed Lipid Congress Seville, Spain https://veranstaltungen.gdch. de/tms/frontend/index. cfm?l=8455&sp_id=2
11 June - 13 June 2019
9-10 November 2019
Globoil International JW Marriott Marquis Dubai, UAE www.teflas.com
2019 Advanced Biofuels Conference Omaha, USA. www. advancedbiofuelsconference. com/ema/DisplayPage. aspx?pageId=Home
5-8 May 2019
12-15 June 2019
2nd AOCS China Section Conference: Health, Advanced and Value-Added Utilization Guangzhou, China www.aocs.org/networkand-connect/membership/ sections#china-section
110 AOCS Annual Meeting & Expo America’s Center Convention Complex, St Louis, USA www.annualmeeting.aocs.org
EFPRA Congress 2019 La Baule, France www.efpra.eu/ efpra-congress-2019-france/
14-17 May 2019
30th Nordic Lipid Forum Symposium Horsens, Denmark https://lipidforum.info
28 February-1 March 2019 Fatty Acid & Lipid Analysis Course Dundee, UK https://www.huttonltd.com/ events/falac 4-6 March 2019 Palm & Lauric Oils Conference & Exhibition (POC) 2019 Kuala Lumpur, Malaysia www.pocmalaysia.com 11-12 March 2019 20th Practical Short Course Advanced Oilseed and Oil Processing - Palm & Seed Oil Quality Management Guadalajara, Mexico www.smartshortcourses.com/ oilprocess20/program
28-30 April 2019
th
The 9th ICIS World Surfactants Conference Jersey City, USA www.icisevents.com/ehome/ index.php?eventid=200178918
18-20 March 2019
21-22 May 2019
2019 International Biomass Conference & Expo Savannah, USA www.biomassconference. com/ema/DisplayPage. aspx?pageId=Home
MCPD Esters and Glycidyl Esters – Symposium 2019 Berlin, Germany https://veranstaltungen.gdch. de/tms/frontend/index. cfm?l=8620&sp_id=2
1-3 April 2019
3-5 June 2019
World Bio Markets 2019 Passenger Terminal Amsterdam, the Netherlands www.biobasedworldnews. com/events/world-bio-markets 4-5 April 2019 3rd Sustainable Oils & Fats International Congress The National Horticulture Society of France, Paris, France www.fat-associes.com/en/ home 10-11 April 2019 Black Sea Grain 2019 Intercontinental Hotel Kyiv, Ukraine www.ukragroconsult.com/ bsg/2019/en/conference www.ofimagazine.com
Diary page.indd 3
CESIO 11th World Surfactant Congress Infinity Hotel & Conference Resort, Munich, Germany www.cesio-congress.eu
12-15 June 2019
16-19 June 2019 15th GCIRC International Rapeseed Congress Berlin Congress Center Germany www.irc2019-berlin.com 23-28 June 2019 FOSFA Advanced Course Egham, Surrey, UK www.fosfa.org 8-13 September 2019 FOSFA Basic Introductory Course Egham, Surrey, UK www.fosfa.org
5-6 June 2019 25-27 September 2019
Oleofuels 2019 Venice, Italy https://www.wplgroup.com/ aci/event/oleofuels
Globoil India Mumbai, India www.teflas.com
10-12 June 2019
5-11 October 2019
2019 International Fuel Ethanol Workshop & Expo Indianapolis, USA www.fuelethanolworkshop. com/ema/DisplayPage. aspx?pageId=Home
18th AOCS Latin American Congress and Exhibition on Fats, Oils and Lipids Foz do Iguacu, Brazil www.meetings@aocs.org
19-21 November 2019 International Palm Oil Congress & Exhibition (PIPOC) 2019 Kuala Lumpur Convention Centre, Malaysia http://pipoc.mpob.gov.my 9-12 February 2020 World Congress on Oils & Fats 2020 International Convention Centre, Sydney, Australia http://wcofsydney2020.com 8-10 March 2020 10th International Symposium on Deep-Frying Hagen, Germany http://www.dgfett.de/index. php 26-29 April 2020 2020 AOCS Annual Meeting & Expo Montreal, Canada www.annualmeeting.aocs.org 20-23 September 2020 18th Euro Fed Lipid Congress and Expo Leipzig, Germany www.eurofedlipid.org/ meetings/leipzig2020/index. php
For a full events list, visit our website www.ofimagazine.com
OFI – FEBRUARY 2019
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06/02/2019 12:22:44
CHINA Despite the 90-day truce agreed by China and the USA in their ongoing trade war, some analysts believe Beijing is unlikely to resume its reliance on US soyabeans Jens Kastner and Ed Zwirn The USA and China agreed a 90-day truce in their bilateral trade war, including a halt to any additional tariffs, at the G20 meeting in early December but sourcing patterns are not going to become business-as-usual any time soon for China’s soyabean sector.
Chinese trade tariffs
China – the world’s largest soyabean importer – slapped retaliatory tariffs in July 2018 on a range of US goods, including soyabeans, for which tariffs were lifted from just 3% to 28%. This was in response to tariffs imposed by the Trump administration, which accused the Chinese government of failing to prevent intellectual property violations. China traditionally relies on American suppliers for around one-third of its soya, and Chinese importers reacted to the new tariffs by shifting mainly to Brazil, importing a whopping 91% of China’s overall soyabean imports of 50.48M tonnes in May-October 2018 from that country. This was in line with the two stages of export policy set by the Chinese Ministry of Commerce prior to the G20 meeting. From October 2018 to February 2019, China would be mainly importing soyabeans from Brazil, and only if Brazil cannot supply all Chinese demand, would a small volume be imported from the USA. For the second stage, from March 2019 beyond, the Ministry of Commerce expects supply to benefit from good harvests in Brazil and Argentina, while South American countries and nations along the ‘One Belt One Road’ corridor will increase soyabean planting – diminishing anticipated Chinese demand for US soya still further.
Reliance on the USA
Regardless of whether the USA and China resolve their trade differences in general and over soya in particular, Kerstin Brolsma, a business analyst with China Market Research Group in Shanghai, is doubtful whether China would want to resume reliance on US soya supplies: “It remains to be seen how extensively and 18 OFI – FEBRUARY 2019
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Spurning US soya how quickly China will reduce its now politically disadvantageous reliance on US soyabeans, but early indicators show that China is determined to quickly lessen reliance on US soyabeans for the soyabean crusher and soya feed sectors by reducing the percentage of soya found in hog feed, using government reserve soyabean stock, and switching to other oils like rapeseed and cotton seed, among other things,” she tells Oils & Fats International. Moreover, “in the interim, the majority of Chinese soyabean crushers show no signs of going out of business, as they are currently using beans from Argentina and Brazil as well as beans from Chinese government stockpiles,” she adds. That said, domestic supplies may not be that reliable, offering some short-term hope to American exporters. In early September, severe frost occurred in China’s northeast, causing significant adverse impact on soyabean yields and soyabean quality. The Hebei region in Heilongjiang province, which accounts for 16.7% of the country’s soyabean acreage, was the most affected, recording a year-on-year drop in production of 49%, in turn leading to an 8.2% reduction in national soyabean production, according to Chinese-language daily newspaper Qi Huo. As many traders are unable to tap into local bean sources, they have trans-
ferred to other producing areas to collect beans, with logistic shifts translating into increased costs. “Business profits are declining compared with earlier this year,” Brolsma says. Nevertheless, China’s domestic soyabean oil stocks were still historically high in the last week of November, at 1.78M tonnes, attributable to the slower speed of oil mills because of swelling soyabean meal inventories under slow shipment as well as stops for maintenance, according to a Chinese-language post-G20 analysis by Beijing-based agricultural information provider Tianxia Liang Chang Technology. But the analysis pointed out that demand will increase gradually after mid-December with the start of the peak season of small food gift bag production before China’s Spring Festival (its New Year). In addition, the volumes of soyabeans arriving in major ports, including Hong Kong, are too small for the coming months.
The G20 summit and the future
Indeed, Tianxia Liang Chang Technology estimates that the 21.22M tonnes of imports scheduled to arrive in NovemberFebruary represents a steep drop of 34% compared with the same period last year. While this would drive up prices, it is still unclear how the results of the G20 meeting will feed into the equation. www.ofimagazine.com
05/02/2019 09:28:28
CHINA
oyabeans “The White House stated that China agreed to purchase US agricultural products immediately, but will the soyabean import tariff immediately recover to 3%?” the analysis asks. When and if this tariff will fall is as yet unclear: “If it is determined that the soyabean import tariff will return to 3%, then Chinese buyers are likely to increase the purchase of soyabeans from the US West, because shipping from there only needs 20 days to China,” predicts the analysis. However, Chinese buyers will still tend to buy Brazilian new season soyabeans for the longer term, it suggests – that is, for deliveries after March next year. Similarly, Peter Peverelli, founder of Netherlands-based Eurasia Consult, which focuses on China’s food and beverage industries, notes that the public discussions by Chinese agricultural experts and economists at Tongji University, in Shanghai, and the Chinese Academy of Sciences, in Beijing, convey the expectation that while supplies might tighten in the short term, because American soya exports are falling, there always will be enough to crush. “What is not stated, but can be read between the lines, is that sources do not foresee any increase in local production,” Peverelli tells Oils & Fats International. In the USA, producers and exporters of soyabeans say they see a slim opportunity www.ofimagazine.com
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for renewed trade arising from the trade thaw with China, although the 90-day window leaves precious little time to resolve the knotty issues at stake. Beyond the relief from the temporary avoidance of a tariff escalation was the news which came out of the G20 meeting that China will resume purchases of some American agricultural exports, among them soya, some 30M to 35M tonnes of which gets sold to China in a ‘normal’ year, US Agriculture Department Deputy Secretary Stephen Censky said at the Iowa Soyabean Association on 13 December. The announcement on that date by the US Soyabean Export Council that China, which had not bought any US beans so far in 2018, had now bought 1.5M to 2M tonnes of American-grown beans was encouraging to producers. Censky said it was “just a start” towards the volumes needed for this export market to recover. As it stands, the United States Department of Agriculture (USDA) November forecast projects soyabean inventories to double, to 25bn tonnes, by August 2019. An American Soybean Association (ASA) communiqué says the group was “encouraged” by the news of the Chinese purchases and is calling for a permanent solution to the tariff disputes that have hit the Sino-American soyabean trade. Davie Stephens, ASA president and a soya grower from Clinton, Kentucky, says: “This is positive news for our growers and for US-China trade relations. American soyabean farmers prosper when they have access to international markets, and our trade relationship with China is critically important to our industry. “The news of resumed sales represents a positive step under the current 90-day agreement to suspend new tariffs and negotiate on trade issues agreed to by President Donald Trump and President Xi Jingping. Beyond the sale announcement, it is vital that this 90-day process results in lifting the current 25% tariff that China continues to impose on US soyabean imports. Without removal of this tariff, it is improbable that sales of US soyabeans to China can be sustained.”
released in July, said that this 20% drop in soyabean prices – if sustained – would cost Missouri more than US$72.6M in lost economic activity over a year, with businesses and workers losing US$21.2M in earnings. As a result, Stephens says it is “critical” for US agriculture secretary Sonny Perdue to move forward with his commitment to announce the second half of market facilitation programme payments aiding hard-pressed growers. When the USDA initially calculated the harm incurred by the tariffs on soyabean prices, it assumed that China would still purchase at least 50% of the 32M tonnes of US soyabeans it bought in 2017. With sales nowhere near that amount, “it is critically important that we see additional [government-funded] purchases and actual deliveries, and for the USDA to make a payment on the second half of 2018 soyabean production,” Stephens says.
Conclusion
While US crushers have benefitted from the trade war, both sides have suffered billions of dollars in losses in the agriclture, auto and technology sectors. US crushers have enjoyed an increased domestic supply of soyabeans, crushing 5.08M tonnes of soya for oil in September 2018, compared with 5.09M tonnes in August 2018 and 4.36M tonnes in September 2017, USDA data shows. However, the US and Chinese economies each lose about US$2.9bn annually due to Beijing’s tariffs on soyabeans, corn, wheat and sorghum alone, says Purdue University agricultural economist Wally Tyner. “It’s something that’s crying for a resolution. It’s a lose-lose for both the United States and China.” ●
By Jens Kastner in Taipei and Ed Zwirn in New York of International News Services
Problems for farmers
Even if the trade war is ended, American soya growers will nonetheless face some tough challenges, needing to see the reopened markets reverse the price falls that have occurred since the trade war began. Stephens said the roughly US$2/bushel drop in soyabean prices experienced since last May continues to harm soyabean farmers. Analysis from the Commercial Agriculture Programme of key soya production state Missouri,
The 20% drop in soyabean prices since last May will cost Missouri losses of US$72.6M in economic activity. OFI – FEBRUARY 2019
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05/02/2019 09:28:30
GERMANY
Rapeseed is in the top five agricultural products of Germany, with a total planted area of around 1.225Mha for 2018/19
Rapeseed: king of the crop Germany is one of Europe’s largest producers of oilseeds and rapeseed is among the top five poducts in Germany agriculture. However, the country is set to see its lowest rapeseed output in 15 years due to dry weather Ile Kauppila
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B
eing the largest economy in Europe, it comes as no surprise that Germany is either the leader or among the top players in many European industries. Oilseeds are no different, and while Germany faces stiff competition from countries such as France, Poland and the UK, the country is among the largest producers, importers and processors of oilseeds on the continent.
Germany’s need for oilseed
The undisputed top crop in the German oilseeds complex is rapeseed. According to data from the German federal statistics office Destatis, rapeseed is among the top five products in the entire German agricultural sector. Only wheat, barley and silage maize stand above it in acreage and the same three, plus potatoes, overtake it in production. Winter rapeseed accounts for practically the entire German rapeseed harvest. Destatis says that in 2018/19, Germany’s total rape planted area stood at 1.225M ha, of which 1.223M ha consisted of winter rapeseed. This planted area produced a yield of 2.990 tonnes/ha for the entire rapeseed total, while winter rapeseed yields were negligibly higher at three tonnes/ha. This yield translates into a total production of 3.666M tonnes of rapeseed, of which 3.659M tonnes was
winter rapeseed. While such production numbers – according to a September 2018 report by French agro-economic research and analysis bureau and consultancy Stratégie Grains – rank Germany as the second largest rapeseed producer after France not only in the EU28 but also in Europe, production and yields have been decreasing for the past few years. Germany’s total rapeseed production has fallen by nearly 20% from the 4.579M tonnes recorded in 2016, while yields are decreasing by more than 13% from 3.45 tonnes/ha in the same year. At the same time, the rapeseed planted area has fallen by 7.5% from 1,325ha in 2016, which may in part explain the lower production. In addition, Stratégie Grains data shows rapeseed production falling in all of EU28 during the same period – with the sole exceptions of Belgium and Ireland – which means Germany is following a regional trend, brought on by the Europewide heatwave in the summer of 2018.
Rapeseed market
Falling domestic rapeseed production in Germany has not translated into increased imports, says Stratégie Grains. According to the agency, in 2017/18, Germany imported 4.35M tonnes of rapeseed from EU28 and 1.204M tonnes from outside OFI www.ofimagazine.com – MONTH 2018 1
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GERMANY the EU, totalling 5.554M tonnes, a record high for Germany. In 2018/19, imports fell to 4.339M tonnes from EU28 and 1.032M tonnes from outside EU, totalling 5.371M tonnes and marking a decrease of roughly 3.3%. The total German rapeseed supply, therefore, also decreased from 10.195M tonnes in 2017/18 to 9.761M tonnes in 2018/19. However, the lower supply did not prove an issue for the German oilseeds processing industry. Stratégie Grains data shows that demand also decreased slightly, from 9.461M tonnes in 2017/18 to 9.244M tonnes in 2018/19. In the latter time period, German rapeseed crushers represented 8.96M tonnes – nearly 97% - of the total demand, while the remaining 171,000 tonnes went into animal consumption where compound feed consumed 50,000 tonnes and other on-farm uses 122,000 tonnes. Along with imports, German rapeseed exports dropped as well between 2017/18 and 2018/19. In the year prior, Germany exported 121,000 tonnes of rapeseed to EU28 and 8,000 tonnes to destinations outside the EU, bringing total exports to 129,000 tonnes. In 2018/19, total imports fell by 12% to 113,000 tonnes, of which EU28 destinations accounted for 109,000 tonnes and extraEU destinations for 4,000 tonnes. Within the EU28, the Netherlands is the top destination for German rapeseed with 34,000 tonnes (down from 54,000 tonnes in 2017/18). Poland is the second largest EU importer, at 24,000 tonnes (up from 18,000 tonnes in 2017/18). Imports to other destinations are significantly lower in quantity, with Denmark at 15,000 tonnes and France, at 10,000 tonnes. According to Stratégie Grains in September 2018, EU rapeseed prices have been in decline for the past few months. “Since 23 August, EU rapeseed prices are in decline. Indeed, Ukrainian ships are entering EU en masse, competing aggressively with the local commodity. “On the world market, prices barely changed over a month, with the worsening crop outlook in Australia offset by an upward harvest forecast in Canada. Hence, prices in Germany were down by €7-12/tonne between 23 August and 20 September,” However, the German oilseed and protein plant association Union zur Förderung von Oel- und Proteinpflanzen (UFOP) noted in early November 2018 that rapeseed oil prices are again increasing in Germany.
around sunflowerseed, albeit a minor one that pales in comparison to the European sunflower powerhouses of Bulgaria, Hungary, Romania and Ukraine. The sunflower planted area has stayed roughly the same in Germany at 17,00018,000ha between 2015 and 2018, but in 2018/19 the area increased to a full 20,000ha, according to Stratégie Grains. Yields have also increased from 1.92 tonnes/ha in 2015/16 to 2.13 tonnes/ ha in 2018/19, although 2017/18 saw still slightly higher yields of 2.2 tonnes/ha. However, the higher yield in the year prior was not reflected in final sunflower seed production, which has grown each year
since 2015, reaching a high of 43,000 tonnes in 2018/19. This meager domestic sunflowerseed output does not, however, come anywhere near to satisfying German demand for the seed, which grew from 488,000 tonnes in 2017/18 to 505,000 tonnes in 2018/19, says Stratégie Grains. As domestic sunflower production in Germany cannot satisfy demand, the country imports most of its sunflower seed. Total imports grew from 433,000 tonnes in 2017/18 to 471,000 tonnes in 2018/19. Out of the total imports, 450,000 tonnes are from within the EU, while 21,000 tonnes were sources u
Sunflowerseed imports
Germany has also developed an industry 2 OFI – MONTH 2018 www.ofimagazine.com
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GERMANY u from outside of the bloc. Within the EU, Hungary is Germany’s main source for foreign sunflowerseed, with imports of 112,000 tonnes in 2018/19. At second place is Bulgaria with 96,000 tonnes, followed by France (83,000 tonnes) and Romania (57,000 tonnes). With both the increased domestic output and imports, total German sunflowerseed supply grew from 515,000 tonnes the year prior to 541,000 tonnes in 2018/19. The increase is significant as in 2017/18, the final German sunflowerseed stock ended the year with a deficit of 8,000 tonnes. With more available seed in 2018/19, the country had a surplus of 1,000 tonnes.
Biodiesel as consumption driver
According to a US Department of Agriculture (USDA) GAIN report from September 2018, rapeseed oil is one of the key drivers in the European – and German – rapeseed market, as it is primarily used for biodiesel production. According to UFOP, Germany is the leading European biodiesel producer, with 3.1M tonnes produced in 2016. Statistics service Statista notes that by 2017, German biodiesel production had increased to 3.293M tonnes, making it the world’s third largest biodiesel producer in the world, admittedly far behind the USA and Brazil. In the EU, says UFOP in its ‘Report on Global Market Supply 2017/18’, rapeseed oil is the number one biodiesel feedstock, holding a 44% share of all feedstocks in 2017. German rapeseed crushers produced 4.1M tonnes of rapeseed oil in 2016. Of this, roughly 1.2M tonnes went into food uses, while another 1.2M tonnes went into the engineering sector. Roughly 930,000 tonnes were exported. The increasing biodiesel production, says Stratégie Grains, has translated into higher crush margins, which average €39/ tonne on 2018/19 deliveries in Germany. This level, however, is below soyabean crush margins in northwestern EU countries, which the agency predicts is set to penalise German rapeseed crushers. Going forward, the USDA says EU rapeseed crush is forecast to decrease with reductions in Germany and the Netherlands in particular. “A key driver of the market is weak demand for rapeseed oil as a feedstock for biodiesel production. There is an oversupply of rapeseed oil in the EU, particularly due to the increased competition with cheap imported soyabean oil methyl ester and palm oil methyl ester,” the agency points out. “There is great uncertainty on the rapeseed oil market and most of it comes 22 www.ofimagazine.com OFI – FEBRUARY 2019
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‘According to UFOP, Germany is the leading European biodiesel producer, with 3.1M tonnes produced in 2016’ from developments on the EU biodiesel market. Changes in EU biofuels policy through the Renewable Energy Directive (RED) have already led to lower use of rapeseed oil for biodiesel in recent years and the outlook remains negative since political support for rapeseed oil as a primary biodiesel feedstock is declining. There is strong competition with animal fats and recycled oils as well as crude oil prices affecting profitability of producing rapeseed oil. The potential of rapeseed oil is also limited through strong competition from other vegetable oils as well as from biodiesel imported from Argentina.”
Difficult weather ahead
Indeed, the USDA is not alone in forecasting difficult times for the German oilseeds sector going into 2019. A report by Reuters in November 2018 notes that dry autumn weather has led to decreased rapeseed sowings not only in Germany, but also in France and the UK, while Poland’s planted area is projected to remain unchanged if not shrink. UFOP estimates that the German planted area for winter rapeseed in 2018 will fall by as much as 18.1% to only around 1M ha and that an additional 100,000 ha may have to be replanted. Such a prospect would reduce the German rapeseed planted area to only 900,000 tonnes. While increased outputs elsewhere in the world should keep world rapeseed markets balanced, the EU could oilseeds-wise be facing a lean year. Reuters quoted an unnamed German rapeseed trader as saying: “Even at this early stage of the season it looks like the EU could face a reduced rapeseed crop in 2019. I think the EU will need larger imports of rapeseed and other oilseeds, such as soyabeans, to meet its needs in 2019.” Agreeing with the German trader, the USDA – as early as in September 2018 – forecast that Germany could become a net importer of grains in 2019 due to drought impacts. The German Ministry
for Food and Agriculture projects that the country’s rapeseed output is set to fall to its lowest in 15 years. To compensate for the lack of rapeseed, the country is likely to sharply increase imports of soyabeans and soya meal, for which the USA would be primary source, says the USDA. “To alleviate the tight forage situation, affected [German] federal states may allow farmers to use areas registered as Ecological Focus Areas under the EU’s Common Agricultural Policy for forage production after completing a minimum non-use time of eight weeks,” the USDA writes. Julia Kloeckner, Federal Minister of Food and Agriculture, proposed in August 2018 a joint federal/state aid programme worth around €340M for farmers whose existence is threatened.
EU policies as obstacles
On the topic of the EU, the European Parliament in November 2018 approved new targets for renewables, energy efficiency and second-generation biofuels as it confirmed a provisional agreement reached on its revised REDII. The plan will require renewables to account for at least 32% of the EU’s final energy consumption by 2030, mandates a 32.5% increase in energy efficiency by 2030, and requires each member state to present a 10-year integrated national energy and climate plan by the end of 2019 and every 10 years thereafter. UFOP, however, is critical of REDII, saying that climate protection in the transport sector and European agriculture will be the “ultimate losers”. “For years, European agriculture has been struggling with surpluses and price pressure on international markets. This pressure will increase in the face of this resolution, because biofuels from cultivated biomass, such as rapeseed, grain and others will be limited to the level of sales in 2020,” says UFOP. The association also argues that the EU’s decision to phase out palm oil-based biofuels seems unlikely to be implemented due to political and trade pressure from Indonesia. Predicting any possible changes to EU policies is as hard as predicting if weather patterns will develop in a more favorable direction in the future. As the USDA notes, much depends on the outcome of the European Commission’s new trade inquiry into Indonesian biodiesel, which might result in the reintroduction of anti-dumping taxes and generate more demand for European rapeseed oil. As it stands, the German rapeseed industry - if not the entire oilseed complex – can only try to prepare for stormy waters. ● Ile Kauppila is OFI’s former assistant editor OFI www.ofimagazine.com – MONTH 2018 3
06/02/2019 09:31:40
www.dsengineers.com
PLANT & TECHNOLOGY
Global roundup of projects Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world
Photo: Crown Iron Works
Crown announces upgrade for biodiesel manufacturers
Minnesota-based oilseed processor Crown announced on 17 December a new process upgrade for biodiesel manufacturers called Advanced Catalyst Reduction and Economisation (ACRE). ACRE allows biodiesel processing plants to run at a lower operating cost with higher efficiency through adding a third transesterification reaction step. The ACRE processing innovation currently running in multiple plants was yielding good results, seeing yields of over 40% and saving 3 cents/gallon, said Crown. ACRE is also designed to reduce acid usage and increase manufacturing uptime while also being able to be retrofitted into any unmodified Crown plant. The processor also comes with less moving parts, making it easier to repair. Crown is building a new innovation centre in Blaine, Minnesota, which is expected to be up and running this year. Customers will be able to simulate plant-processing operations within a controlled environment to support trials and customer trainings.
JAZADCO to build biodiesel plant Saudi Arabia’s Jazan Energy and Development Company (JAZADCO) announced on 17 December that it is forming a joint venture with Delante Trading Corp to build a US$50M biodiesel plant in King Abdullah www.ofimagazine.com
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Economic City. The plant will produce 45,000 tonnes of biodiesel from residues of edible oil and other raw materials, with commercial operations expected to start in 2020. OFI – FEBRUARY 2019 23
Serving the Vegetable Oil Industry From Basic Engineering to Full Turnkey Project Single Point Responsibility through EPC or EPCM+® with guaranteed: ✔ Process Performances ✔ Time Schedule ✔ Budget
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Reliability through Experience 06/02/2019 15:08:10
NEWS PLANT & TECHNOLOGY IN BRIEF CANADA: American alternative energy company Benefuel announced on 11 December that it would be site searching and holding talks with interested parties for the company’s next biodiesel facility, in response to British Columbia (BC)’s climate change plan. “BC’s Low Carbon Fuel Standard and climate change strategy have made the province a very attractive jurisdiction to locate a biodiesel facility,” said Rob Tripp, CEO of Benefuel. “Our company and our shareholders are committed to building a world class biodiesel facility in Canada.” The new plant, capable of producing 150M litres/year of biodiesel, would produce a fuel with a negative carbon intensity score and be capital efficient. The project would reduce greenhouse gas emissions by more than 550,000 tonnes/year, which was equal to roughly 10% of British Columbia’s 2030 target reduction for transportation, Benefuel said. JAPAN: Biotech company euglena plans to start mass production of bio jet fuel and biodiesel made from waste oil and algae after completion of its Yokohama refinery plant, Nikkei reported on 2 November. The refinery will produce 125,000 litres/year of bio jet fuel and biodiesel, rising to 250,000 litres/year by 2025. Partnering with aviation group, ANA Holdings, euglena plans to supply ANA’s commercial international flights departing from Japan by 2020. Mitsuru Izumo, euglena’s chief executive, said that by 2030, the plan was to create three more new refinery plants to produce 1M kilolitres of fuel, either in Japan or abroad. 2 OFI 24 OFI––MONTH FEBRUARY 2018 2019
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Gevo to use Shockwave process for corn oil production at its facility
Shockewaves’ LLC’s new thermodynamic corn fractionation process is expected to come online early this year at American renewables firm Gevo’s Luverne, Minnesota facility. Gevo entered into two separate operating leases and service agreements last year with Iowan Shockwave to install the corn fractionation process technology at Lurverne. The process is expected to improve profitabili-
ty by lowering the cost of ethanol and isobutanol production, increasing the number and value of feed and protein products, producing corn oil for food use and helping lower the plant’s carbon footprint. Gevo is also planning to debottleneck production and optimise the facility’s energy and equipment infrastructure to use less fossil fuels. Gevo CEO Patrick Gruber said the firm planned to use sustainable, low carbon intensity, non-food corn as a raw material at the plant. “We will process the corn, upgrade the protein and make it suitable to go into higher-value feeds and the food chain. The corn oil we plan on producing with the Shockwave process is expected to be food-grade rather than fuel-grade. “Once the protein and oil are sufficiently captured, we will process the residual carbohydrates, fermenting them to low carbon intensity ethanol and ultimate isobutanol once we fully build out our Luverne site,” said Gruber. The Shockwave process is a front-end corn fractionation platform that uses high velocity air and pressure changes to fractionate solid materials, providing a low-cost approach to separating the corn kernel into its various fractions, said Gevo.
Cellana sells algae demonstration facility to Cyanotech Hawaiian algae-based products developer Cellana is selling its Kona Demonstration Facility (KDF) to fellow algae firm Cyanotech as the former is moving into larger scale production. The US$30M KDF facility, co-located with Cyanotech’s site at the Natural Energy Laboratory of Hawaii Authority (NELHA), was built to develop and validate Cellana’s ReNew Algae algae platform for non-GMO algae strains rich in omega 3 oils, proteins, pigments, polysaccharides and fuel-grade oils said Cellana on 7 September. Over seven years, Cellana had produced more than 10
tonnes of ReNew algae at KDF for processing and testing of multiple high-value biomass components, including its commercial algae strain KA32. “KDF was designed to allow Cellana to identify, develop and demonstrate commercially significant yields of algae strains for large-scale commercialisation,” said Martin Sabarsky, Cellana CEO. “This mission has been successfully accomplished with Cellana’s leading strain of algae, KA32, and so this is a great opportunity to reduce our current operational expenses,” he added. In April 2018, Cellana signed
a letter of intent with POS Bio-Sciences to commercialise high value EPA omega 3 oils produced from KA32 biomass. Due to the collaboration with POS Bio-Sciences, in addition to Living Ink Technologies and Neste, Cellana in May 2018 secured US$27M in funding to construct a new, larger commercial algae facility located adjacent to KDF. The proposed new facility was projected to produce 700800 tonnes of KA32 algae, and Cellana said it also had a further US$100M earmarked in possible loans for further expansion if the new plant proved successful.
New renewable diesel plant on US West Coast Phillips 66 and Renewable Energy Group announced plans on 1 November to construct a large renewable diesel plant on the US West Coast to produce renewable diesel fuel using REG’s BioSynfining technology. The companies expect to make a final investment decision in 2019 and start production at
the facility in 2021, if the plans are approved. “REG is excited to be working on a project that has the potential to significantly expand biofuel production in Washington State and provide low carbon fuel markets with products that are in significant demand on the West Coast,” said REG CEO Randy Howard. www.ofimagazine.com www.ofimagazine.com
06/02/2019 15:08:15
HEALTH & NUTRITION
Tackling acrylamide New EU legislation that came into force in April last year sets benchmark levels of the carcinogen, acrylamide, in various foods such as chips and crisps. What can food businesses do to lower acrylamide levels and what is the role of frying in its formation? Serena Lim
N
ew European Union legislation that came into force on 11 April 2018 has meant that all businesses that manufacture food or prepare and serve it to customers must understand the potential risk of the carcinogen acrylamide and take steps to reduce it. Acrylamide is a chemical substance formed when starchy foods with higher levels of the amino acid, asparagine, are cooked at high temperatures above 120°C in processes such as frying, roasting, baking, grilling and toasting. The substance has the potential to cause cancer and is found in a wide range of foods including roasted potatoes and root vegetables, chips, crisps, toast, cakes, biscuits, cereals and instant coffee. Acrylamide develops as a natural by-product in food through the Maillard reaction, a form of non-enzymatic browning where a chemical reaction occurs between reducing sugars (aldoses such as glucose but not fructose/ketoses) and amino acids to create a food’s characteristic flavour, colour and smell. Temperature is the most important factor in acrylamide formation. Long frying times but a low temperature cause less acrylamide than a high temperature and short frying time. It is not possible to eliminate acrylamide from foods but actions can be taken to reduce levels. The new EU legislation passed in 2017 sets ‘benchmark’ levels for acrylamide in various products and describes practical measures to mitigate its formation. Businesses that manufacture food or
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prepare and serve it to customers in a retail or food service setting must be aware of the potential risk of acrylamide; take steps to reduce its formation and build these into their food safety management procedures; take samples to monitor levels where appropriate; and keep records of mitigation measures, says AAK Food Service. The legislation sets out benchmark levels for acrylamide in different products such as 40 microgrammes(μg)/kg in baby foods, 350μg/kg for biscuits and cookies, 750μg/kg for potato crisps, 850μg/kg for instant soluble coffee and 300μg/ kg for most breakfast cereals, except for maize, oat, spelt, barley and rice-based products, for which the benchmark level is 50% lower. The aim is for food businesses to achieve acrylamide levels as low as reasonably achievable below these benchmark levels. The European Commission (EC) will review the levels every three years, with the aim to gradually set lower levels.
Cancer risk
The first report of the presence of elevated levels of acrylamide in food came in April 2002, when the Swedish National Food Administration announced that acrylamide had been found at higher levels in starch-containing foods cooked at high temperatures, such as potato products and bread. Following the announcement, the World Health Organization said it would organise an expert consultation to determine the
full extent of the public health risk from acrylamide in food. The UK Committee on Mutagenicity (COM) suggested in 2006 that acrylamide could damage DNA, stating “there is no level of exposure to this genotoxic carcinogen that is without some risk”. In 2013, the EC introduced ‘indicative values’ for food groups most associated with acrylamide. These were a guide rather than regulatory limits. In 2014, the European Food Safety Authority (EFSA) supported the CoM’s views and, in an opinion adopted in 2015, the EFSA’s Scientific Panel on Contaminants in the Food Chain confirmed that acrylamide in food potentially increased the risk of developing cancer for people of all ages. As it is not possible to establish a safe level of exposure for acrylamide to quantify the risk, the EFSA has used a ‘margin of exposure’ approach, which provides an indication of the level of health concern posed by a substance’s presence in food. Acrylamide has a margin of exposure of 100 compared with a value of 100,000 for both aflatoxins and nitrosamines, which are therefore 100 times less dangerous.
Acrylamide in oil
Acrylamide is not found in cooking oil but if starchy food like potatoes are fried in oil and that oil is reused, then acrylamide levels can build up. According to AAK Food Service, it is the crumbs and fine particles of food that are u OFIOFI – FEBRUARY – MONTH 2018 2019 251
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HEALTH & NUTRITION u left in the frying oil after cooking that may
contain and continue to create acrylamide in the hot oil. “If the frying oil is not skimmed or filtered out, the crumbs and fine particles of food may stick to the next batch of food, raising acrylamide levels.” According to food chemist Dr Christian Gertz of Germany’s Maxfry GmbH, acrylamide levels are not influenced by the use life of frying oils. “You can produce fried products in a fresh oil with a high level of acrylamide and vice versa. The main factor is the applied temperature and frying time.” UK food safety firm Klipspringer recommends that cooking oil should be replaced when it reaches a 25% total polar compound (TPC) level. “There isn’t a direct correlation between acrylamide and TPC levels but it’s widely acknowledged that oils with a high TPC level also contain higher levels of acrylamide,” it says. The 25% TPC level is a rough guide as the limits in Europe are different, according to Gertz. In Switzerland, for example, the level is 27%, while it is 24% in Germany. “In reality, the problem is much more complex,” says Gertz. “TPCs give only limited information on the real status of an oil. In industrial practice, for example, it can be found that production with oils that have way less than 25% leads to products of low quality and off-flavours. Levels of 12-18% can already be a problem depending on the application and product, such as pastries, for example.” Klipspringer outlines a few pieces of advice for any business in the food industry that cooks with oil, or cooks food containing acrylamide: • Abide by the new standards • Cook food at lower temperatures for less time and fry at a maximum temperature of 175°C • Cook food to a maximum light golden brown colour • Check the levels of TPC in oil and discard at 25%.
Formation in frying
The most important condition affecting acrylamide formation during frying is temperature. “In chemistry, a rough rule of thumb is that the speed of a reaction doubles in steps of 10°C. A critical temperature for deep frying is 175°C. From that point on and higher, the formation of acrylamide increases exponentially,” says Gertz. According to Gertz, S Klostermann and Parkash Kochar in their study, ‘Deep 2 OFI 26 OFI––MONTH FEBRUARY 2018 2019
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frying – the role of water from food being fried and acrylamide formation’, frying is basically a dehydration process in which oil acts as transfer medium for heat. After food is immersed in oil, a sharp superficial crust region is immediately formed. The thickness of the crust increases with the frying time to about 0.3mm-2mm. Heat is transferred from the frying oil to the core centre of the food via the crust region. Water is evaporated at the moving boundary. After the boundary zone is dehydrated, water migrates from the food outwards to the walls to replace what is lost during heating. Behind this front, the temperature within the food is about 100-104°C, representing the temperature change from water to steam. The temperature in the crust remains at the boiling point of water. When frying potato crisps, the crust region enlarges quickly and the core zone disappears. The lack of water to be evaporated makes the pressure drop, and the heat transfer raises the temperature of the material to above 100°C very quickly. At the moment, when no more water can escape through the crust, the temperature increases and reaches a point above 120°C, when acrylamide starts to form. This reaction is at its optimum between 170OC to 180OC.
Mechanism of formation
Comparing different oils and fats
The role of silicone additives
Different oils and fats have different abilities to transfer heat to food as they contain different quantities of substances such as mono- and diglycerides, or short or middle chain fatty acids. In Gertz’s 2014 paper, ‘Fundamentals of the frying process’, palm olein and beef tallow were found to contain more polar components – such as mono‐ and di‐acylglycerols or medium chain triacylglycerols – than oils such as rapeseed oil, sunflower oil, or groundnut oil. It is possible that more polar compounds reduces the surface tension between the oil and food surface. The surfactant theory of frying suggests that as oil degrades, more surfactant materials are formed, causing increased contact between oil and food. These materials lead to better heat transfer at the oil-food interface, meaning the water in the food evaporates faster and the time the temperature exceeds 100-104OC is shorter. This suggests that frying with palm olein and tallow can give a higher level of acrylamide in comparison to vegetable oils like sunflower or rapeseed if no attention is paid to the frying time.
According to Gertz, a number of theories have been proposed to account for the mechanism by which acrylamide is formed in fried food. “In experiments with asparagine, it has been confirmed that asparagine is the nitrogen source for acrylamide,” he says. Asparagine is found abundantly in wheat, corn, potatoes, green beans and peanuts. Heating of asparagine alone does not efficiently produce acrylamide but, combined with reducing sugars and some fat degradation (oxididation) products, the formation of acrylamide is accelerated. Other factors which may influence the reaction include the potato variety, temperature, product moisture and acidity. Gertz says that in discussions about possible pathways to the formation of acrylamide in deep-fried products, it has been assumed that acrylamide is formed via glycerol by oxidation of acrolein to acrylic acid, which reacts with ammonium coming from amino acids. Another possible mechanism describes acrylic acid arising directly from the decomposition of two common amino acids, alanin and aspartic acid. Acrolein is also formed in various concentrations in the oxidation of linolenic acid (not via glycerol), depending on the kind of cooking oil heated and the temperature applied to the oil. Silicone is legally permitted in Europe as additive E900 and is often used as an anti-foaming agent in frying oils and fats. According to Gertz, the role of silicone in acrylamide formation is not clear. “It is evident that heat stabilising agents (not simple antioxidants) added to vegetable oils rich in linolenic or linoleic acid – such as rapeseed, sunflower and soyabean – help to reduce the formation of oxidised reaction products, which can act as a partner in the Maillard reaction “Unfortunately, the standard antioxidants butylated hydroxyanisole (BHA) and butylated hydroxytoluene (BHT) do not have this effect.”
Conclusions
Acrylamide formation during frying depends on many conditions, the most important being temperature and frying time. The formation of acrylamide in fried food can be decreased by lowering frying temperatures to below 175°C. However, this does not necessarily reduce acrylamide concentration in fried products unless all process parameters are taken into account. ● Serena Lim is the editor of OFI www.ofimagazine.com
06/02/2019 09:34:36
BIOFUELS
Path to a sustainable future The development of biodiesel has evolved from first-generation technologies utilising food oil as a feedstock, to second-generation use of waste streams from vegetable oils and fats to tackle sustainability issues Marc Kellens
Make the most of your oil!
Acrylamide reduction with the help of Maxfry® Reducing acrylamide means making deep-frying time shorter and the temperature lower. The ingredients of Maxfry® turn simple vegetable oils into powerful frying oils with superior stability and much-improved heat transfer. This allows fried products to be crisp and perfectly cooked despite the mild temperature and short frying time. The vegetable ingredients of Maxfry®: No allergens, genetically modified raw materials or synthetic antioxidants.
A
s the world confronts the effects of global warming, various solutions are being explored, developed, and some applied, to control further escalation and possibly reverse the negative effects. We all know there is no “one fix all” solution to counterattack the effects of our petroleum and coal-based energy economy on the environment and our daily life. Today, we increasingly produce more CO2-neutral energy from various sources, such as solar, wind, thermal or hydropower. To satisfy the energy needs of humanity, all that will not be enough and some even believe a return to nuclear power is needed to make a clear difference in the short term. Biomass provides a good source for energy but that should not u www.ofimagazine.com
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More information on www.maxfry.com
06/02/2019 12:36:36
BIOFUELS FEATURE
Figure 1: World biodiesel market and trade, 2010-2027
u come at the expense of the environment in general. More promising is the utilisation of various waste biostreams, especially from agro industry, for energy. Biofuels is one of the actual solutions to reduce our petroleum dependency if produced in a sustainable way. Today, the most common biofuels are bioethanol, mainly from cane sugar or corn (some 100M tonnes/year) and biodiesel from vegetable oils and animal fats (some 40M tonnes/year). The USA is the biggest producer and consumer of bioethanol, while the EU is more biodiesel-oriented.
Food for fuel
The food for fuel debate has forced the biodiesel industry to look for alternative biomass sources. Waste oil streams, like used cooking oils, waste animal fats and even algae and jatropha being typical examples. The fact is that society today cannot simply cut its energy demand, so it needs to continue to use its current energy sources more efficiently while at the same time investing in renewable and emission neutral sources to fulfil its future needs. The term “biodiesel” broadly refers to biodiesel fatty acid methyl ester (FAME), hydrotreated vegetable oil (HVO) and biofuels made from vegetable oils in petroleum refineries. In 2016/17, world biodiesel production amounted to just over 34M tonnes with Europe in a clear leadership position. World biodiesel production is expected to continue to increase, despite the decision by the EU to gradually phase out firstgeneration biodiesel by 2030. This is because Southeast Asian countries like Indonesia and Malaysia are stimulating the 2 OFI 28 OFI––MONTH FEBRUARY 2018 2019
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production of first-generation biodiesel from locally produced palm oil with government mandates.
Origins of biodiesel
For decades, biodiesel was linked with vegetable food oil being converted into FAME, making it suitable for blending with petroleum diesel. This biodiesel is often called first-generation biodiesel. It started in the 1990s in Europe to support agro industry, where energy crops were grown for non-food purposes. Several first-generation biodiesel plants were built, running mainly on rapeseed oil as a feedstock. However, interest declined and further expansion stopped in the mid1990s. Some biodiesel plants continued to process rapeseed oil, especially in Germany and France, mainly because of continuing local political support. The negative impact of uncontrolled CO2 emissions prompted governments to focus on renewable fuel, especially for the transport sector, in a second biofuel wave in the early 2000s, this time more explosive and more worldwide. Hundreds of biodiesel plants were built in a time span of less than 10 years in all corners of the world. The feedstock of choice became palm oil and soyabean oil as they were abundantly available and cheaper than rapeseed oil. Over 40M tonnes/ year of additional capacity was erected in a short time span but full production was never reached because of ethical concerns over using food oils for fuel and the questions raised about long-term sustainability.
Initial problems
By 2010, the second first-generation biodiesel wave also faded as governments
Source: OECD-FAO Agricultural Outlook 2018
– under pressure from social media and consumer groups – felt they were subsidising a biodiesel industry at the expense of the food industry. Additionally, insufficient control and the existence of some loopholes in US subsidy policies and EU laws to encourage the production and use of biodiesel, resulted in the infamous “splash and dash” controversy. This brought a halt to the explosive firstgeneration biodiesel demand and, hence, growth. From 2010 onwards, the food for fuel debate triggered a change from the use of food oils to waste oils for biodiesel, particularly driven by extra incentives (double counting), which led to another smaller wave in the traditional biodiesel industry. Used cooking oils, animal fats and vegetable oil refinery byproducts such as acid oils and fatty acid distillates, are today in big demand. However, these so-called second-generation biodiesels still represent only a fraction of the biodiesel currently produced. In Europe, which produces and consumes close to 13M tonnes of biodiesel, about 20% of its biodiesel originates from waste oils and animal fats. But rapeseed oil still accounts for the majority of EU biodiesel.
HVO demand
Whereas the growth in first- and secondgeneration biodiesel production today is rather low in Europe and the Americas, the opposite is true for HVO biodiesel. More hydrotreating plants are being built to convert waste streams from vegetable oils and animal fats into a high quality renewable fuel, especially suitable for aviation, which FAME biodiesel is not. Apart from being used on its own as drop-in or jet fuel, HVO can be also www.ofimagazine.com www.ofimagazine.com
06/02/2019 12:36:37
BIOFUELS FEATURE
Biodiesel critics
The anti-palm oil and soyabean campaigns launched by various consumer and environmentalist groups in recent years, has had its impact on the biodiesel industry, especially in Europe. In Asia and Latin America however, new large first-generation biodiesel plants of up to 1,500 tonnes/day capacity are still being built to provide biodiesel for the local market. Indonesia made the use of biodiesel blended fuels compulsory for all vehicles and heavy machinery from 1 September 2018 (now 20% and 30% from 2020
Improvements in palm oil
With the efforts of the palm oil industry to increase the food quality and food safety of palm oil (due to concerns over 3MCPDs and GEs), new food quality standards are to be expected in the near future, which will result in more non-food palm oil being segregated by palm oil mills. This Bioethanol
could result in up to 10-15% of all crude palm oil becoming unsuitable for food use. These low-grade palm oil feedstocks are ideal for biodiesel and should be promoted accordingly. Biodiesel technologies are also evolving as biodiesel standards are becoming more stringent and feedstocks more difficult to process. Various add-on technologies are available today in the market to make the biodiesel process more cost-efficient and improve biodiesel quality. Hydrodynamic cavitation is a typical example, to lower catalyst consumption and increase conversion efficiency at the same time. Apart from improving conventional biodiesel technologies which make use of various catalysts like sodium methylate (the most common catalyst), new processes are being tested, making use of enzymes and in some case, no catalyst at all. A promising example is the mixed super critical fluid reactor technology (MSCF) from Inventure which allows conversion of almost any waste oil feedstock into its methyl ester form without the need of a catalyst.
The future of biodiesel
Biodiesel, together with bio-ethanol, will continue to dominate the biofuels market for the next 10 years. Only time will tell when second-and third-generation renewable fuels will take the pole position in the biofuels market. A lot will depend on how the political world deals with environmental challenges such as climate change. ● Dr. Ir. Marc Kellens is the global technical director of DeSmet Ballestra
World %
EU28 %
USA %
Palm oil
31
27
–
USA
46.19
EU28
12.61
Soyabean oil
27
5
46
Brazil
22.44
USA
6.21
Rapeseed oil
20
48
11
EU
4.08
Brazil
3.30
Used cooking oils
10
14
15
China
2.49
Indonesia
3.15
Animal fats
7
4
13
India
1.63
Argentina
2.66
Distillers corn oil
–
–
15
Canada
1.38
Thailand
1.16
Others
5
2
–
Thailand
1.02
Singapore
0.99
Argentina
0.70
Malaysia
0.55
Colombia
0.34
Colombia
0.55
Australia
0.20
China
0.44
Paraguay
0.16
India
0.13
ROW
13.50
ROW
2.33
Total world
94.12
Total world
Source: Oil World
Biodiesel source
onwards), amid efforts to reduce the current account deficit in its economy, by saving billions of dollars in petroleum diesel imports. At the same time, it is supporting its palm oil industry, which today is internationally criticised because of concerns over deforestation and global warming. With last year’s diesel use of close to 40bn litres from which only some 7-8% is biodiesel today, and close to 60bn litres by 2028, the local biodiesel industry, currently producing some 3.5bn litres, will have to radically increase its biodiesel production if it wants to achieve the mandatory government targets of 30%. Similarly, in Malaysia, the government decided last December to raise the minimum biodiesel content in diesel from 7% to 10%. The B10 biodiesel programme will be implemented in the transport sector and other subsidised sectors in stages and will be mandatory from February 2019. But in these regions, there is also a clear shift to waste oils and fats. The palm oil processing industry produces a lot of side streams with no food value, which are ideal feedstocks for biodiesel. Typical examples are the palm fatty acid distillates (PFAD) from palm oil refineries, high fatty acids crude palm oil (HFCPO), and palm sludge oil (PSO), by-products from palm oil mills.
Figure 2: World biodiesel source, 2016 www.ofimagazine.com www.ofimagazine.com
marc kellens 2.indd 3
Million MT
Biodiesel
Million MT
34.08
Source: Oil World
blended with off-spec petroleum diesel to improve its combustion parameters. In the USA and Europe, a clear shift towards HVO is observed, with the installation of large oil pretreatment and hydrotreating facilities. In contrast to first generation biodiesel, where the main players are active in the vegetable oil processing industry, the HVO industry is more controlled by the petrochemical industry, with Neste, ENI and Total in Europe, and Diamond Green Diesel and Renewable Energy Group in the USA. Today, about 15% of renewable biodiesel produced is HVO (some 5M tonnes in 2017), and there are clear indications that by 2020/21 a 50% increase is expected (up to 8M tonnes). HVO currently has a 60% market share in Europe, 25% in the USA and another 15% in Asia, but the USA is quickly catching up. More HVO production is expected in the Asian region in the near future, especially as more waste oils become available in the local markets through better collection and selection.
Figure 3: World bioethanol and biodiesel production, 2016 OFI OFI - FEBRUARY – MONTH 2018 2019 293
06/02/2019 12:36:39
TRANSPORT & LOGISTICS
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T
ext - use the character style
Feature Intro Byline
pallette for the drop cap
Structural change ahead B
Figure 1: Estimated on-farm storage in Brazil 30 www.ofimagazine.com OFI – FEBRUARY 2019
BrazilRabobank.indd 1
Source: Conab, Rabobank
After some years of great soyabean and corn success, Brazil’s grain traders are facing challenges in logistics and storage that will force them to either adapt their practices or exit the market Victor Yoiti Ikeda
razil has been the largest soyabean exporter in the world since 2012, and the country has additionally become the second-largest corn exporter. This relevance in the global oilseed and grain trade has led trading companies to enter and/or to intensify their positioning in the Brazilian market, including strategic access to origination and investments in logistic facilities, says Rabobank in a recent report, ‘Migraines & Oilseeds – How Structural Changes Are Required for Brazil’s G&O Traders’. Nonetheless, after an initial ‘euphoric’ period, the industry has faced several challenges, resulting in margins well below the average 3% seen from 2010 to 2015. Despite some specific issues, such as a 2016 crop shortfall, structural changes have also been taking place – and these are consequently pressuring trading companies’ results. Companies are therefore expected to review their business models and some players will leave the market, leading to consolidation in the Brazilian origination market.
Negative margins
Significant declines in soyabean and corn yields in the 2015/16 season (October 2015-September 2016), a result of weather problems, were one of the main
factors behind pressured margins for trading companies in 2016. The lowerthan-expected availability of production resulted in higher competition for grains, and – in some periods of the year – some companies paid penalties, given the ‘take-or-pay’ agreements with logistics operators. Despite larger record production and exports in 2016/17, most trading firms also faced difficulties in 2017. Once soyabean and corn prices declined in 2017 (13% and 32% y-o-y, respectively, in Brazilian real terms), farmers decided to hold onto grains, rather than sell them at low price levels. As a result, there was a delay in the commercialisation of the 2016/17 season, and most trading firms reduced their origination margins in order to stimulate farmers’ sales. Given all of these specific factors during some periods in the past two years, soyabean and corn prices in Brazil’s inland were significantly above export parity prices – clear evidence of negative margins for trading companies, says Rabobank.
Changing structure
In addition to these specific issues in 2016 and 2017, it is worth mentioning that structural changes in the market have OFI www.ofimagazine.com – MONTH 2018 1
06/02/2019 09:38:52
also been pressuring trading companies’ margins – and they will be the main challenge the sector faces in the coming years. First, there was a wave of mergers and acquisitions (M&A) activity over the past decade, as international businesses (often Asian) invested in Brazil in order to gain more access to grain origination. Second, some farm input distributors also entered the Brazilian origination sector as competitors/players, mainly focusing on barter operations when farmers pledge a volume of crop production to a company in exchange for fertilisers or agrochemicals. As a result, stronger competition along the origination sector has been pressuring companies’ margins. Aside from these more competitive market-pressuring margins, most larger trading companies invested in logistics facilities. After a period of huge investments in port expansions, overcapacity now exists, especially in the so-called ‘Northern Arc’ ports. This has resulted in an intense battle across trading companies when it comes to sourcing ever increasing grain volumes – given their high fixed costs in these new assets and allowing capacity for third parties. This has resulted in low utilisation rates, especially in the Northern Arc. In addition, internal logistics dynamics have changed in order to improve the efficiency of inland grain transport. Some trading companies have faced significant penalties in long-term agreements with strict ‘take-or-pay’ transport clauses, and they are now reassessing their commitment to long-term volumes with logistic providers (mainly railway operators), after facing challenges to meet the agreed volumes.
More on-farm storage
In the past, the lack of infrastructure (such as on-farm storage capacity) and high finance needs – mainly during the huge expansion in the Central-West region 20-30 years ago – resulted in an attractive business model for trading companies. They offered financing to farmers, thereby locking in farmers for long periods and guaranteeing grain origination volumes. However, the situation now sees yet another structural change to the market, as farmers’ dependency on trading companies is far lower now than it was before. As banks and equity increased their shares in farmer financing, farmers’ dependency on traders’ finance decreased considerably, compared to the 1990s and 2000s. On-farm storage capacity has also 2 OFI – MONTH 2018 www.ofimagazine.com
BrazilRabobank.indd 2
Figure 2: Grain and oilseed export capacity and utilisation in the Northern Arc, 2017
increased in the past few years, supported by the Program for Construction and Expansion Warehouse (PCA), launched by the Brazilian government in 2013, in which 12bn real (US$2.9bn) was released at subsidised interest rates over the past five seasons. According to Conab, Brazil’s national supply company, on-farm storage capacity increased from 15.6M tonnes in 2010 to 24.3M tonnes in 2017, a 55% rise. Such a steep increase (mainly on larger farms) since 2010 provides farmers (especially in the Centre-West) more flexibility when it comes to their sales timing and volumes, reducing predictability for trading companies in terms of periods of origination. Last but not least, the transparency and speed of information has also created a structural change in the market. Nowadays, farmers benefit from having access to CBOT prices in real time. They have a better understanding of price formation and concepts of basis, port premiums, and US dollar future contracts.
Impacts
As a result of these changes, consolidation
Source: SECEX/MDIC, Rabobank
TRANSPORT & LOGISTICS
will be inevitable, given the number of registered trading companies (240) in the Brazilian origination sector. In addition to normal M&A transactions, some companies will simply leave the market and sell their assets (such as warehouses) at market price. The key success factors for trading companies should include large scale, access to competitive financing (tier 1 banks, external funding, and/or intercompany loans), multi-export corridor exposure, good understanding of local agriculture, and sophisticated credit risk and market controls (offtakers). Trading companies might review their business model in Brazil. The traditional strategy of financing farmers and offering storage capacity to growers is losing pace. Alternatives to increase the engagement/loyalty of farmers will be essential to the business going forward. ● This article is based on the report ‘Migraines & Oilseeds – How Structural Changes Are Required for Brazil’s G&O Traders’, written by Victor Yoiti Ikeda, grains & oilseeds analyst at RaboResearch Food & Agribusiness OFI –www.ofimagazine.com FEBRUARY 2019 31
06/02/2019 09:38:54
STATISTICS Biodiesel whs DE (L)
STATISTICAL NEWS FROM MINTEC Sunflower seed and sunflower oil
Sunflower oil prices have been rising since December 2018 as a result of strong global demand. Global consumption is projected to rise 1% y-o-y in 2018/19. Sunflower oil is expected to see high production levels, mainly driven by record production from Russia and the Ukraine where 2018/19 production is up 8% and 6% y-o-y respectively. Russia’s growth is the result of a higher harvest area which was expanded in 2018, combined with a higher expected yield. The EU also saw high production levels, and 2018/19 is expected to see a 2% y-o-y rise. Consequently, there is an increased expectation of global ending stocks rising by 21% compared to the previous season. This could see prices starting to fall in Q1 2019.
Wholesale biodiesel prices, Germany (€/litre) Rapeseed ‘00’ Euronext Paris (L) (DH-3)
Unleaded fuel and ethanol
Crude oil prices have been rising throughout January due to supply disruption, resulting in a price increase of 10% m-o-m. In addition, OPEC-led cuts in production have caused Saudi Arabian oil exports to fall, while US sanctions on Venezuelan oil have also raised concerns over supply. The rise in the crude oil price between January-September 2018 drove Brazilian factories to divert sugarcane towards ethanol prodution, with the ethanol mix in Brazil’s Centro Sul region rising from 53% during the 2017/18 season to 64% for the current season.
Rapeseed prices, Euronext Paris (€/tonne) Sunflower oil fob NW Eur (L) (DH-3)
Rapeseed and rapeseed oil
Rapeseed oil prices have only risen slightly between December and January amid tighter global supplies. Although not a large rise, rapeseed oil continues to trade at a premium compared to alternative oils. Rapeseed oil production is the only one of the top four vegetable oils seeing a fall in ending stocks for 2018/19, down 6% y-o-y. This is supported by smaller production from some of the main producers, with EU production forecast to fall 5% y-o-y this season, the lowest in the last five years. Sunflower oil prices (US$/tonne)
Prices of selected oils (US$/tonne) 2017
Sept 18
Oct 18
Nov 18
Dec 18
Soyabean
829.0
744.4
746.7
722.1
707.7
718.8
Crude palm
690.0
570.3
582.2
522.8
526.5
585.5
Palm olein Coconut Rapeseed Sunflower
Jan 19
661.0
569.0
578.0
555.5
533.5
576.4
1,537.0
915.4
856.5
780.6
824.0
814.5
855.0
841.7
869.6
830.3
810.8
826.7
800.0
712.1
703.7
670.8
679.5
694.2
1,250.0
874.5
805.7
718.2
752.9
799.6
Average
946.0
747.0
735.0
686.0
691.0
717.0
Index
224.0
177.0
174.0
162.0
164.0
170.0
Palm kernel
32 OFI – FEBRUARY 2019
Stats feb 2019.indd 1
Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world's most prestigious brands to make informed commercial decisions. Tel: +44 (0)1628 851313 Email: sales@mintecglobal.com Web: www.mintecglobal.com
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