OFI January 2018

January 2018 Vol 34 No 1 www.oďŹ magazine.com

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THE B USI NE SS MAG AZ IN E FOR TH E OILS AN D FATS IN D UST RY

CONTENTS VOL. 34 NO. 1 JANUARY 2018

NEWS & EVENTS 2

Glyphosate row 2

LAURIC OILS

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Coconuts of the Caribbean

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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 Tel: +44 (0)1737 855000 Fax: +44 (0)1737 855034 E-mail: oilsandfats@quartzltd.com Printed by Pensord Press, Gwent, Wales

Tackling labour, yield and image issues

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The story of the underdog

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China bets on Ukraine

PLANT & TECHNOLOGY

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Plant and equipment round-up

1943-2018 The Koole company began in 1943 as a one-man operation. Cornelis Koole Sr. transported oils and fats from Schipluiden in a small 40-tonne barge, the ‘Nooit Volmaakt’.

Nowadays all terminals and activities are branded under the name Koole Terminals. In 2018 we exist 75 years and therefore created an anniversary badge. This combines the old brand logo of the ship as well as the current logo showing the storage tanks.

Koole Terminals is a leading independent storage company in North-West Europe head-quartered in the Netherlands.

The company operates eight tank storage terminals and an own fleet of twelve barges and three coasters. Koole Terminals

@oilsandfatsint

Renewable Material News

Clariant and Huntsman drop plans for US$20bn merger

PALM OIL

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Transport & Logistics News

PHOTO: AUTOCRAZE

CORPORATE:

Biotech News

EU approves five-year glyphosate extension

PRODUCTION: Production Editor: Carol Baird E-mail: carolbaird@quartzltd.com

Biofuels News

Disputed EU biofuels rules progressing

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Assistant Editor: Ilari Kauppila Tel: +44 (0)1737 855157 E-mail: ikauppila@quartzltd.com

News

Wilmar to buy Cargill facilities in Malaysia

FEATURES

EDITORIAL:

Comment

14

Diary of Events

16

International Market Review

36

Statistics

has a total storage capacity of over 2.0 million cubic meters handling a wide range of liquid bulk products including edible oils and fats, mineral oil products, waxes, (oleo-) chemicals, biodiesel and other liquid products which are being stored and handled in Rotterdam, Zaandam, Amsterdam, Nijmegen, United Kingdom and Poland.

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Mr. Robert Guijs, Commercial Director +31 (0) 613 340 360, r.guijs@koole.com Mr. Edwin Dominicus, Commercial Manager +31 (0) 612 835 180, e.dominicus@koole.com Mr. Sidney Snijders, Account Manager +31 (0) 651 178 600, s.snijders@koole.com Mr. Hermann de Vries, Customer Services Manager +31 (0) 653 328 645, h.devries@koole.com

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Oils & Fats International

1 OFI – JANUARY 2018 www.ofimagazine.com

Contents.indd 1

11/12/2017 12:58

NEWS

COMMENT

Glyphosate row W

ith the EU deciding to extend the licence on the weed killer, glyphosate, for five years (see Biotech News, p10), controversy has erupted over an influential World Heath Organization (WHO) cancer agency’s report on the herbicide.

Glyphosate is the world’s most widely used herbicide and is used on crops such as soyabeans, corn, canola and cotton, which are genetically engineered to be immune to it.

Some 8.6bn kg of the herbicide have been used worldwide since its introduction in 1974, making it the most heavily applied weed killer in the history of chemical agriculture, according to the 2016 paper, ‘Trends in glyphosate herbicide use in the United States and globally’.

Glyphosate is the key ingredient in Monsanto’s Roundup weed killer, and the company is facing multiple lawsuits in the USA, with at least 184 plaintiffs in California claiming that exposure to RoundUp gave them a form of cancer known as non-Hodgkin lymphoma.

The plaintiffs have cited a March 2015 report from the WHO’s International Agency for Research on Cancer (IARC) which concluded that glyphosate probably causes cancer in humans.

However, an October Reuters investigation now claims that the IARC cherry-picked information in order to come to that conclusion, editing out references that the pesticide did not cause cancer in animals.

The IARC stands behind its conclusions and says the differences between its draft and published document centre around a review paper co-authored by a Monsanto scientist, which it says did not provide enough information for independent evaluation.

The IARC report is significant because it is the only major agency which links glyphosate to cancer.

The US Environmental Protection Agency, the European Food Safety Authority, a joint United Nations Food and Agriculture Organization of and WHO panel and the European Chemical Agency have all concluded that glyphosate is unlikely to pose a cancer risk to humans.

Monsanto is not just facing trouble on the glyphosate front. Farmers are also complaining that its new dicamba herbicide is causing significant damage to crops (see Biotech News, p10).

The glyphosate row highlights not just health, but farming issues.

Farming at stake

There have been vocal protests in France, where farmers have argued that glyphosate is vital to their business. The herbicide is usually applied before crops are sown to control weeds, minimising the need to plough soil, which reduces soil erosion and carbon emissions.

Those of us with even the most humble garden know that the battle against weeds and pests is ongoing and prolonged. We may choose not to use pesticides or insecticides but that’s not a practical choice for farmers, whose harvests and livelihoods are at stake.

There are farmers who are opting for non-GM crops because they are paid more for them, or to avoid GM labelling, and there are also question marks over whether GM crops are truly more productive, particularly as weed resistance to herbicides grows.

These are the sorts of issues that will not go away for all the companies consolidating in the seed and farm chemicals sphere.

ChemChina’s US$43bn purchase of Syngenta was completed in June 2017 and the US$130bn DowDuPont merger in September.

BASF bought Bayer’s seed and herbicides units for US$7bn in October, conditional on Bayer’s US$66bn purchase of Monsanto going through.

The companies will want to avoid sensation-grabbing headlines such as ‘Frankenstein Foods’ and ‘Terminator Seeds’, and must carefully handle public concerns, while still developing the best products for farmers. w

Wilmar to buy Cargill facilities in Malaysia

W

ilmar Kuantan Edible Oils, a Malaysian edible oils subsidiary of Asian agribusiness group Wilmar International, has entered into an agreement to purchase Cargill’s edible oil facilities in Malaysia.

The facilities, owned by Cargill’s Palm Plantation subsidiary and located in Kuantan, included a palm oil refinery and a neighbouring storage facility, Wilmar said in a statement on 20 November 2017.

Yee Chek Toong, Wilmar country head of Malaysia, said the acquisition marked the company’s first presence on Peninsular Malaysia’s east coast.

“The facilities are a good fit with our refining business and will strengthen our sales and distribution network in Malaysia.

Besides serving the local market, the facilities’ strategic location in Kuantan Port is an advantage for regional exports,” he said.

The sale was expected to conclude by the end of 2018 once it had received all relevant authority approvals and certain conditions undefined by Wilmar were fulfilled. t On 13 November, Wilmar International released its earnings report for the third quarter (Q3) of 2017, indicating lower net profits despite improving business in the oilseeds and grains segment.

The firm reported a net profit to US$370M for the Q3 that ended on 30 September, marking a 6% decline from US$392.2M in the same period in 2016.

Revenue improved slightly,

rising 0.4% from US$11.08bn in Q3 2016 to US$11.13bn due to increased sales in oilseeds and grains, which were still not enough to offset weaker results in tropical oils and sugar.

Wilmar reported that its oilseeds and grains segment generated pre-tax profits of US$253.7M in Q3 2017, up 2.2% from US$248.1M in 2016 due to high crush volumes and good crush margins.

“We expect the good performance in the oilseeds and grains segment to continue into the fourth quarter, with crush margins and volume anticipated to remain positive,” said Wilmar chair and CEO Kuok Khoon Hong.

Tropical oils registered a large drop in pre-tax profits, falling 51% from US$169.3M in Q3 2016 to just US$83.1M in 2017, mainly due to lower processing margins, Wilmar said.

The poor processing results were partially offset by higher production yield – up 12% to 5.2 tonnes/ha from 4.7 tonnes/ ha – and better production volumes in fresh fruit bunches, which increased 12% to 1.032bn tonnes.

Khoon Hong said the performance of Wilmar’s other business sectors was expected to be satisfactory going into the fourth quarter, carried by good economic performance in key Asian countries.

“We will continue with our expansion plans, especially in oilseeds and grains, including customer products,” he said.

Bunge shuffles organisation structure

G

lobal agribusiness and food firm Bunge has announced an organisational and leadership reshuffle as part of its ongoing US$250M competitiveness programme to improve its market standing.

The company said on 15 November it would simplify its structure by turning its current five operating companies into three regional operations – North America, South America and Europe/Asia.

The operating regions would be supported by centralised global corporate functions – including finance, HR, IT and legal – while the global head of agribusiness, food and ingredients and sugar and bioenergy business segments would lead strategy, value chain maximisation, cross-region customer relationships and risk management.

2 OFI – JANUARY 2018 www.ofimagazine.com

Comment and News.indd 1

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NEWS

FDA looks to revoke soya protein’s heart health claim

F

aced with conflicting research, the US Food & Drug Administration (FDA) is proposing to withdraw the authorised health claim of soya protein lowering the risk of developing heart disease.

The proposal was the first time the agency had deemed it necessary to consider revoking an existing health claim due to inconsistent results from latest scientific studies, the FDA said on 30 October.

The FDA said its authorised health claims reflected well-established relationships based on “the most robust level of scientific evidence”.

“While some evidence continues to suggest a relationship between soya protein and a reduced risk of heart disease – including evidence reviewed by the FDA when the claim was authorised in 1999 – the totality of currently available scientific research calls into

question the certainty of this relationship,” said Susan Mayne, director of FDA’s Center for Food Safety and Applied Nutrition.

Some studies published after the authorisation of the health claim had shown inconsistent findings regarding soya protein’s reducing effects on ‘bad’ low-density lipoprotein (LDL), according to Mayne.

The FDA said that if it ended up revoking the authorised health claim, it would still allow soya producers to make a qualified health claim as long as there was sufficient scientific evidence to support the claims of reduced risk of heart disease.

A qualified health claim requires a lower scientific standard of evidence than an authorised health claim and it requires the industry to use qualifying language that explains the limited evidence between the product and the claimed health benefit,

according to FDA guidelines.

Ron Moore, president of the American Soybean Association (ASA), said there was still evidence linking soya protein to reduced heart disease risk and that it was important to remind consumers that soya could be a part of a heart-healthy diet.

“In a time when heart disease is the number one cause of death both in the USA and the world, we can’t afford to discourage people from taking steps to improve their diets with heart-healthy ingredients,” Moore said, adding that the ASA was disappointed with the FDA’s proposal.

FDA has opened a 75-day comment period on the proposal and is encouraging producers to share their opinions on the matter.

In the meanwhile, manufacturers will be allowed to keep making the current authorised health claim until FDA makes its final decision.

T

he Food Safety and Standards Authority of India (FSSAI) is adding regulations on the reuse of vegetable oil in frying into the country’s food safety legislation.

The FSSAI had released notification that it had finalised the rules after holding a feedback period, FnBnews wrote on 16 November. The new rules would come into force on 1 July 2018.

Current legislation only had general guidelines to avoid reheating and reusing cooking oil, but the new rule would prohibit the use of cooking oil that had accumulated more than 25% of total polar compounds (TPC), FSSAI said.

Repeated use of the same oil in frying caused changes in the oil’s physiochemical, nutritional and sensory properties while also producing TPCs that had been linked to adverse effects on human health, the FSSAI added.

Uresh Verma, spokesman for Indian oil producer Puri Oil Mills, said the FSSAI move was helpful for implementing and monitoring edible oil quality in order to provide the highest quality fried foods to consumers.

“Measuring total polar materials is the most predominant indicator and scientific measurement

PHOTO: PIXABAY

India to monitor vegetable oil reuse in food frying

for oil quality. They are widely used in many international markets, where the oil quality is strictly regulated,” Verma told FnBnews.

“With this move, the apex regulator will be able to monitor oil quality as it wants to ensure that a quality experience is provided to consumers and international-level quality standards are maintained,” he added.

Ruchi Soya to sell 51% stake to Devonshire Capital

I

ndian edible oils firm Ruchi Soya Industries has signed a deal to sell a majority share of its business, along with its branded edible oils operations, to Devonshire Capital.

Devonshire was set to acquire a 51% share in Ruchi, while also buying a 100% share of Ruchi’s packaged oils business for Rs4,000 crore (US$615.5M), The New Indian Express wrote on 3 November.

“This strategic investment

by Devonshire will enhance the value of our business and provide

an effective solution to resolve our outstanding issues with the banks, financial institutions and operational creditors,” said Ruchi CEO and managing director Dinesh Shahra.

“We are optimistic of an early completion of this restructuring exercise after all necessary approvals from the lenders and legal formalities,” Shahra continued.

Rushi Soya’s enterprise value stood at approximately Rs6,700 crore (US$1bn) with its debt at Rs5,923 crore (US$911M) at the

end of September, according to Bloomberg.

Two international lenders – DBS Bank India and Standard Chartered Bank – filed independent insolvency cases against Ruchi Soya in September at the Mumbai bench of India’s National Company Law Tribunal.

Ruchi was also one of 28 companies on the Reserve Bank of India’s second defaulter list for bankruptcy proceedings under the country’s Insolvency and Bankruptcy Code, according to Bloomberg.

IN BRIEF INDIA: Global food and agribusiness Cargill will invest US$240M over the next five years in its Indian operation.

The added investment would be in Cargill India’s core businesses including edible oils, cocoa and chocolate, starches and sweeteners, and animal nutrition in India, The Hindu Business Line reported on 6 November.

In India, Cargill sold edible oils under such brands as Nature Fresh, Gemini, Sweekar, Leonardo Olive Oil and Rath, and the Sunflower brand of hydrogenated fats.

BOLIVIA: On 11 December, US-headquartered global agribusiness Archer Daniels Midland Co (ADM) agreed to sell its Bolivian oilseeds operations to Peruvian Inversiones Piuranas SA. The sale included ADM’s soyabean and sunflower oil and meal processing facility in Santa Cruz de la Sierra, together with nine grain storage silos and ADM’s Bolivian distribution network, ADM said in a statement.

ADM would keep operating the Bolivian facilities until the transaction closed, which was projected for the first half of 2018, subject to regulatory approvals.

The company, which is one of the largest agri processors and food ingredient providers in the world, employed approximately 400 people in Bolivia.

3 OFI – JANUARY 2018 www.ofimagazine.com

Comment and News.indd 2

18/12/2017 10:15

NEWS

INDONESIA: The Indonesian government has launched a rejuvenation programme aimed at improving productivity on more than 9,000ha of oil palm plantations in 12 districts in North Sumatra province.

The country’s President Joko Widodo said the government – through the People’s Palm Oil Replanting Programme – would provide funding for farmers to replant trees, Antara News reported on 27 November.

In October, Indonesia carried out a similar programme in South Sumatra on 4,100ha of plantations.

WORLD: Global olive oil production is poised to increase by 12% in the current crop year, according to the International Olive Council (IOC).

This season’s production, calculated from September 2017 to August 2018, was expected to rise to 2.598M tonnes from the 2.302M tonnes harvested in the past year, the Olive Oil Times wrote on 12 October.

The results would still fall under the five-year average of 2.671M tonnes.

DENMARK: Palsgaard A/S reported on 24 October that it had completed development of the world’s first palmfree, powdered emulsifier for industrial cakes, targeted at manufacturers who wished to remove palm oil ingredients from their products entirely.

The company said powdered emulsifiers simplified production, saving time and energy compared with gels and paste forms, as they only needed a few minutes of preparation.

USA: The US Food & Drug Administration (FDA) is proposing to extend the deadline date given to food companies to implement its new nutrition and serving size labels from 26 July 2018 to 1 January 2020 for companies with US$10M or more in annual sales.

Producers with less US$10M in sales would get another year until 1 January 2021.

The delay proposal came after complaints from food producers that they would not have enough time to update their products.

Collusion evidence too ‘vague’ in Unilever South African case

T

he Competition Tribunal of South Africa has asked the country’s Competition Commission to provide more evidence in its collusion case against Unilever, granting the company a breather in the margarine lawsuit.

The tribunal said the commission needed to file more material to clarify its case against Unilever, which the commission earlier this year ordered to pay a fine equalling 10% of its local turnover, FOX Business reported on 7 November.

The commission alleged that between 2004 and 2013, Unilever colluded with oils and fats firm Sime Darby Hudson & Knight, striking a deal in which Sime Darby refrained from producing spreads in small packages, thus leaving the market sector to Unilever and driving up oil and fat prices.

In 2016, Sime Darby agreed to pay a US$2.5M fine for anti-competitive behaviour and to invest in a new packaging facility where it would produce the smaller sized oil and fat products it had previously

shunned. In Unilever’s case, however, the consumer goods company asked the tribunal in September to order the Competition Commission to amend its complaint, which Unilever said lacked specificity and was confusing.

The tribunal agreed, calling the commission’s referral “vague and embarrassing”.

The tribunal said Unilever was not at the moment looking to dismiss the case, provided that its request to amend the complaint was fulfilled.

The commission had until 22 November to submit additional materials and to explain which agreements it was relying on to make its allegations, after which Unilever would have 20 days to respond.

In September, Unilever announced it would sell its South African spreads business to South Africabased investment holding company Remgro for ZAR11.9bn (US$896M) in exchange for acquiring Remgro’s 25.75% share in Unilever South Africa Holdings.

Slovenia introduces regulation for 2% trans fat limit

S

lovenia has submitted a decree proposal to the European Commission (EC) restricting the amount of trans fats allowed in oils, fats and processed foods sold in the country.

The decree – sent to the EU in early November – would limit the proportion of trans fats in all vegetable oils, fats and fat emulsions and foods containing such ingredients to 2g per 100g of the food’s total fat content, Food Navigator reported on 2 November.

The restrictions would not apply to animal fats and oils or food containing them, nor to foods where the presence of trans fats

PHOTO: PIXABAY

IN BRIEF

was a natural consequence due to them containing animal-based fats. If approved, the Slovenian government would give companies a 12-month buffer period once the decree came into force, after which products not complying with the new rule would have to be pulled from the market.

The regulation was on hold until 22 January in order to give the EC and EU member states an opportunity to comment on any possible trade barriers that could result from the regulation, Food Navigator said.

Slovenia was the latest European country to restrict trans fat content in food, joining Austria, Denmark, Iceland, Latvia and Lithuania, which had similar 2% trans fats limits.

According to the World Health Organization, cardiovascular diseases – to which trans fats have been linked as a contributing factor – were the leading cause of death in Slovenia.

India dramatically increases import duties on oils

T

he Indian government has dramatically increased the import taxes on various edible oils by 60% to 100% after the country’s farmers expressed economic concerns about cheap imports.

The Soybean Processors Association (SOPA) of India had been demanding restriction on imports due oilseed prices plummeting below the minimum support price (MSP) level and the crushing industry facing stiff competition due to low-cost imports, reported The Economic Times of India on 18 November.

The import duty on crude soyabean oil increased from 17.5% to 30%, on refined soyabean oil from 20% to 30%, on crude palm oil from 15% to 30%, on RBD palm oil from 25% to 40%, on crude sunflower oil from 12.5% to 25%, on refined sunflower oil from 20% to 35%, on crude canola/

rapeseed/mustard oil from 12.5% to 25% and refined canola/rapeseed mustard oil from 20% to 35%.

SOPA chair Davish Jain told The Economic Times that the Indian government increased the duties slightly in August, but the association kept lobbying for a larger tax hike.

“Unless Indian farmers are supported against cheap oil imports, our whole oilseed economy will suffer badly and may even collapse in the case of soyabean,” Jain said.

“As the prices of all oilseeds fell below the MSP and a sense of deep distress and despondency was setting in the minds of the farmers, the government finally saw the logic in our requests,” he added.

SOPA would now begin to examine medium- and long-term profitability strategies.

4 OFI – JANUARY 2018 www.ofimagazine.com

Comment and News.indd 3

18/12/2017 10:15

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NEWS

Unilever sells spreads business for US$8bn nglo-Dutch food and personal care concern Unilever sold its spreads business – including well-known brands such as Flora and I Can’t Believe It’s Not Butter – on 15 December to New York-headquartered global investment firm KKR. The €6.825bn (US$8.04bn) deal was part of Unilever’s profitability programme launched in April that aimed to sell off the spreads business to allow the company to improve its bottom line and accelerate sustainable value creation, Unilever said in a statement.

According to The Guardian, the sale of Unilever’s spreads unit, which represented 7% of its global business, was the biggest leveraged buyout in Europe in 2017.

“This announcement marks a further step in reshaping and sharpening our portfolio for long-term growth,” said Unilever CEO Paul Polman.

IN BRIEF SPAIN: ADM Capital Europe’s new Cibus Fund has acquired a majority stake in Spain’s Olivos Naturales (Innoliva), one of Europe’s largest extra virgin olive oil (EVOO) producers.

Innoliva produces 9,000 tonnes of EVOO annually and has pioneered a super-high density cultivation method at its olive groves, Global Aginvesting reported on 27 October.

UAE: Japanese trading house Mitsui will acquire a 30% stake in Dubai-based agri trader ETG Group for US$265M, aiming to expand its presence in Africa.

ETG would buy back shares from founders Pembani Remgro Infrastructure Fund and Standard Chartered Private Equity, and transfer them to Mitsui by March 2018, GAI News said on 21 November.

ETG is active in originating and trading sesame seeds, pulses and other agri products, alongside fertilisers, agrochemicals and seeds.

USA: Global agribusiness cooperative CHS on 1 December closed two US soyabean processing facilities and a technology development centre.

The facilities included a textured soya protein plant in Hutchinson, Kansas; a soya crushing and meal and flour facility in Creston, Iowa; and an Innovation & Technology Center (ITC) in Eagan, Minnesota, World Grains wrote on 5 December.

PHOTO: NEMO’S GREAT UNCLE, FLICKR

A

“I am confident that under KKR’s ownership, the spreads business with its iconic brands

will be able to fulfil its full potential,” he added.

Among the Unilever spread brands included in the sale were Becel (pictured), Blue Band, Country Crock, I Can’t Believe It’s Not Butter, ProActiv and Rama.

Johannes Huth, head of KKR EMEA, said the company would continue following Unilever’s sustainable sourcing policies, including working towards sourcing 100% sustainable palm oil by 2019.

Other brands still held by Unilever – which in September sold its South African spreads business to Remgro – include detergent brand Persil, Knorr food products, Lipton teas and Ben & Jerry’s ice cream.

In February, Unilever dismissed an unwanted US$143bn takeover offer by American food giant Kraft Heinz after making clear it had no intention to sell off its whole business.

Sabah chooses RSPO certification to secure exports

T

he Malaysian state of Sabah is aiming to verify all its palm oil as Certified Sustainable Palm Oil (CSPO) by 2025 in order to secure exports to the EU. Achieving the certification would make the state the first in the world to adopt CSPO, The Malaysian Insight wrote on 3 November.

The decision to adopt the Roundtable on Sustainable Palm Oil (RSPO)’s CSPO certification over the domestic Malaysia Sustainable Palm Oil (MSPO) scheme was made to ensure compliance with EU plans to establish a single CSPO scheme for palm oil and other vegetable oils entering the EU market, said Sabah forestry director Sam Mannan.

The EU called for the CSPO requirement to be put into place in April, when it also announced a phaseout of vegetable oil-based biodiesel by 2020.

The enactment of EU requirements could be vital to Sabah – located at the northern tip of Borneo island – which produced 30% of Malaysia’s palm oil supply, with 12.8% of its coming from smallholders.

The decision was also partly based on Sabah’s

experience in the 1990s, when it failed to acquire the Forest Stewardship Council certification for six months, bringing EU imports of Malaysian timber screeching to a halt and costing the state’s forestry industry millions of ringgit.

According to Mannan, the decision to choose CSPO over MSPO was the state’s own business, as due to an agreement made with the Malaysian government in 1963 on its special rights, land matters came under state authority.

“Forestry in Sabah and Sarawak is 100% under their respective governments. So we choose [the certification] that we believe is best for the state,” he said.

Vice president of the EU Asia-Pacific Parliamentarians’ Conference on Environment and Development Marcus Mojigoh said on 30 October that the EU would be ratifying the CSPO decision in November.

However, the EU delegation to Malaysia denied in a statement that the resolution would be ratified, saying it was non-binding in nature.

Number of certified RSPO oil palm smallholders falls

T

he Roundtable for Sustainable Palm Oil (RSPO) has released its 2017 impact update, reporting an increase in total number of certified farms but a decrease in the number of certified smallholders.

In the report, RSPO said that as of 30 June 2017, 3.2M ha of oil palm plantations in 16 countries were certified by the organisation, marking a 14% increase over the last reporting period.

Indonesia and Malaysia topped the list of most hectares certified, but other countries had been making progress in this regard, RSPO said, with a 10% increase in grower membership.

In South America, RSPO certified plantation area increased by 11%, while African farmers certified an additional 22,773ha – a relatively small number but a 70% increase within Africa.

In general membership, RSPO reported growth of 16%, with the number of members increasing to 3,422 compared with a year ago.

The association noted that support for smallholders, who played a significant role in the global palm oil supply chain, was lacking and more needed to be done to help them farm the plant in a sustainable manner.

By mid-2016, smallholders produced 40% of the global palm

oil supply, but there had been a 12% decrease in the number of RSPO certified smallholders since the last report, with more specific statistics of a 38% and 25% decrease in Indonesia and Thailand, respectively.

The drop was due to the expiration of licenses of seven independent smallholder groups in the two countries during the reporting period.

To address the issue of smallholder support, the RSPO finalised its Smallholder Strategy during the reporting period, which aimed to create a supportive environment for smallholders to achieve sustainable livelihoods.

6 OFI – JANUARY 2018 www.ofimagazine.com

Comment and News.indd 4

18/12/2017 10:15

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BIOFUELS NEWS

Disputed EU biofuels rules progressing

T

he European Union’s plan to phase out crop-based biofuels by 2030 and palm oilbased biodiesel by as soon as 2021 as part of its Renewable Energy Directive (RED) revamp is moving through its various committees, but no common understanding has yet been reached.

The Environment Committee (ENVI) of the European Parliament proposed to remove all food-based biofuels from the European fuel supply but, in a vote on 23 October, members of the parliament (MEP) decided to spare some fuels, such as bioethanol and crops grown on marginal land, from the phase-out, wrote Fuels and Lubes on 25 October.

MEPs also voted to increase the overall advanced fuels target to 9% of total fuel supply by 2030, while rejecting a general overall target for the transport sector, which would have required the use of food-based biofuels.

The Industry, Research and Energy Committee (ITRE), in a 43-13 vote, affirmed on 28 November a report to reinstate a 2030 target of having 12% of Europe’s transport fuel supply consist of renewable fuels.

CHINA: China National Cereals, Oils and Foodstuffs Corp (COFCO) has transferred two of its biofuel subsidiaries, COFCO Biofuel Holdings and COFCO Biochemical Holdings to a sister company – COFCO Bio-chemical Investment Co – for HK$8.6bn (US$1.1bn) in a restructuring effort to streamline operations, Caixin reported on 25 October.

The transferred interests included the production and sale of corn ethanol in addition to feed ingredients and crude oil.

The company shuffled the subsidiaries as part of an ongoing restructuring process with a goal to form 18 more focused firms and to avoid crosssector company ownership, a COFCO employee told Caixin.

FRANCE: French oilseed processor Saipol, part of the Avril Group, plans to drastically reduce its biodiesel production and seed crushing in 2018 due to an influx of Argentine biodiesel into Europe.

The production cut, scheduled to start in February 2018, would affect all of the company’s five esterification plants in France, Saipol said on 6 October.

Production of rapeseed biodiesel would be cut by 60% with output falling from 1.3M tonnes in 2017 to a projected 700,000 tonnes in 2018.

The ITRE had a leading responsibility in revising the RED, but biofuels fell under the jurisdiction of the ENVI. The directive proposal will next be sent for debate at the Council of Ministers, after which it will be moved into three-way talks with the European Commission and Parliament in January.

The proposal has been opposed internationally as well, with Malaysia saying after the ITRE vote that should the EU ban palm oil biodiesel, it would mark a “step backwards” in trade relations, Bernama news agency wrote on 30 November.

“Taken together with the vote from the European Environmental Committee (ENVI) in October 2017, this clearly shows the EU intentionally plans to restrict the import of palm oil biofuels,” said Datuk Seri Mah Siew Keong, the Minister of Plantation Industries and Commodities.

He added that the Malaysian government was ready to take “every necessary action” to protect the country’s oil palm farmers and the security of its palm oil sector.

US EPA releases final renewable fuel volumes for 2018

T

he US Environmental Protection Agency (EPA) released renewable fuel usage volumes for 2018 on 30 November.

The volumes are only marginally higher than those in 2017, with the exception of cellulosic ethanol, which had its volume decreased.

The total renewable fuels volume rose from 19.28bn gallons in 2017 to 19.29bn gallons, with biomass-based diesel volume lifted from 2bn gallons to 2.1bn gallons and advanced biofuels from 4.28bn to 4.29bn gallons.

Cellulosic ethanol requirements decreased from 311M gallons in

PHOTO: GAGE SKIDMORE

IN BRIEF

The committee also added another 10% obligation for fuel suppliers to blend in lowemission fuels but, at the same time, voted to prevent member states from using crop-based biofuels.

A clause to ban palm oil biodiesel was also included in the report.

However, the Transport Committee voted against the phase-out on 9 November, with two MEP groups, the centre-right European People’s Party (EPP) and the Socialists and Democrats, criticising it as “flawed and scientifically unfounded”.

In the aftermath of the Transport Committee’s vote, Pekka Pesonen, representative of the European agriculture groups Copa and Cogeca, told Biodiesel Magazine it underlined divisions in the Parliament around the biofuels question.

“The rejection of the overall report provides a strong political signal that the biofuels issue is complex, and that finding a common view among the different parliamentary committees and at plenary level will be extremely challenging,” Pesonen said.

US EPA ADMINISTRATOR SCOTT PRUITT

2017 to 288M gallons.

“Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and the EPA

by upholding the rule of law,” said EPA administrator Scott Pruitt.

However, the National Biodiesel Board (NBB) said Pruitt had disappointed US biodiesel manufacturers by failing to respond to their calls for growth.

The ethanol trade group Renewable Fuels Association (RFA) said it was happy with the announced volumes and called them a “marked improvement” over earlier proposed targets, but was “disappointed” that the final rule was not more aggressive in the areas of advanced biofuels, such as biodiesel.

USA: Argentina, Indonesia guilty of biodiesel dumping

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he US Department of Commerce’s (DoC) International Trade Administration (ITA) has made a preliminary ruling that Argentine and Indonesian biodiesel was dumped into the US market at unfair prices.

For Argentina, the DoC calculated preliminary dumping rates of 54.36%-70.05%, while for Indonesia, the calculated rate was 50.71%, the agency said in a 23 October statement.

Based on the determinations, the DoC said it would instruct the US Customs and Border Protection to collect cash deposits from biodiesel importers based on the calculated rates.

Doug Whitehead, chief operating officer at the National Biodiesel Board (NBB) – which was the petitioner in the DoC investigation – said he was pleased with the preliminary findings.

“The law is clear and violations of trade law shouldn’t be ignored at the expense of the

livelihoods of thousands of Americans employed or affected by biodiesel,” he said.

Final determinations on the anti-dumping duties are due on 3 January 2018, with issuance of antidumping orders scheduled for 19 February in cases where the DoC determines dumping has taken place.

In 2016, Argentina exported 1.48M tonnes of biodiesel worth US$1.2bn to the USA, an increase of more than 123% in volume from the approximately 660,000 tonnes in 2015, the DoC said.

Indonesian exports to the USA in 2016 totalled 370,969 tonnes, up 56% from 236,832 tonnes in 2015.

The NBB filed a petition on 23 March asking the DoC to impose anti-dumping and countervailing duties on what it called unfair dumping of biodiesel into the USA by Argentina and Indonesia.

8 OFI – JANUARY 2018 www.ofimagazine.com

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11/12/2017 13:01

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BIOTECH NEWS

EU approves five-year glyphosate extension he European Union has voted for a five-year extension to the license for the weed killer glyphosate – a major component in Monsanto’s Roundup herbicides (pictured) – after two years of bitter debate.

The binding vote on 27 November, which saw 18 countries vote in favour, nine against and one abstaining, came just weeks before glyphosate’s current license was set to expire on 15 December, Nature wrote on the day of the vote.

The herbicide has caused controversy since a 2015 study by the International Agency for Research on Cancer (IARC), part of the World Health Organization, found that the substance was “probably carcinogenic” and that there was “convincing evidence” that it caused cancer in laboratory animals.

However, an October 2017 report by Reuters claimed that IARC had disregarded a major study, published in November, that found no link between glyphosate and cancer in humans due to it being unpublished at the time.

Carried out as part of the Agricultural Health Study (AHS) tracking the health of farmers and their families in the US states of Iowa and North Carolina, the study found no association

IN BRIEF CHINA: COFCO International has agreed to sell the seeds business of its Dutch subsidiary Nidera to Swiss agribusiness group Syngenta AG. COFCO acquired Nidera in February 2017, but accumulating losses, alongside accounting issues at its Latin American operation, drove COFCO to start looking into divesting parts of it, Reuters wrote on 6 November.

Nidera’s seed operations – including sunflower and soya – were based in Argentina and Brazil.

MEXICO: Mexico has revoked Monsanto’s permit to commercialise its GM soyabeans in seven Mexican states.

The revocation, brought on by detection of modified soya in unauthorised areas, followed a 2016 suspension of the same license, according to Reuters on 24 November.

Monsanto rejected the claim, saying that Mexico’s agricultural sanitation authority had not carried out an analysis of how the soya was sown.

The sales of the GM soya were blocked in the states of Tamaulipas, San Luis Potosí, Veracruz, Chiapas, Campeche, Yucatán and Quintana Roo.

PHOTO: MIKE MOZART, FLICKR

T

between glyphosate and “any solid tumours of lymphoid malignancies overall, including nonHogkin Lymphoma”, Reuters wrote on 9 November.

There was some evidence that glyphosate could increase the risk of acute myeloid leukemia among the highest exposed group, but the study said the association was “not statistically significant”.

Other studies, such as those by the European Food Safety Authority and the

European Chemicals Agency, have concluded that there was little if any evidence that glyphosate was carcinogenic in humans.

Despite the official EU decision to extend the license, some countries – including France – were moving forward with their own restrictions to the use of the substance.

French president Emmanuel Macron tweeted after the vote that glyphosate would be banned in the country as soon as an alternative was found and, at the latest, after three years.

Génon Jensen, executive director of the European NGO Health and Environment Alliance, said in a statement that the EU had failed European citizens.

“Ignoring well-founded concerns about glyphosate’s impacts on human health and the European evaluation process will further damage the image of the EU at a time of already high distrust,” he said.

The pro-glyphosate industry was not happy either, as the EU rejected an earlier suggested 10-year extension.

Manufacturers’ association, the Glyphosate Task Force, said the vote “categorically ignored scientific advice and was mainly influenced by public opinion and driven by politics”.

Monsanto offers farmers cashback to use herbicide

U

S agrichemicals firm Monsanto is offering US soya farmers a cash incentive if they agree to use its controversial dicamba-based herbicide in the 2018 planting season, Reuters reported on 11 December.

The company was offering US$6/acre on the US$11/acre price of XtendiMax if used on Monsanto soyabeans engineered to resist the weed killer.

However, US states had so far launched 2,708 investigations related to dicamba up to midOctober, according to statistics from the University of Missouri.

Farmers had complained that dicamba-based herbicides had caused massive crop damage after evaporating from fields and drifting to crops not resistant to them.

According to BASF – which is in the process of acquiring Monsanto for US$63.5bn – dicamba is safe when properly applied.

In 2016, the US Environmental Protection Agency (EPA) approved the herbicide for use on dicambaresistant crops until 9 November 2018. The EPA has now mandated special training for farmers using dicamba herbicides, who will need

to keep records proving they have complied with label instructions.

As a result of the EPA mandate, several states were exploring restricting or banning dicamba.

North Dakota said in early December that it planned to forbid dicamba after 30 June 2018 and when temperatures surpassed 29.4°C, while Missouri intended to finalise restrictions on XtendiMax after banning BASF’s dicamba herbicide Engenia statewide from 15 July 2018, said Reuters.

The training requirement was expected to drive up the costs of using dicamba.

USA scraps proposed biotechnology regulations change

T

he US Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) has withdrawn a proposed rule change to its biotechnology regulations put forward by the outgoing Obama administration in January 2017.

The proposal – withdrawn after a comment period due to several companies and scientists voicing their opposition – would have changed APHIS’ current ‘regulate first, analyse later’ approach to one that would have required identifying a potential risk before regulating a crop, wrote Genetic Literacy Project on 7 November.

“It’s critical that our regulatory requirements foster public confidence and empower American agriculture while also providing industry with an efficient and transparent review process that doesn’t restrict innovation,” said US agriculture

secretary Sonny Perdue.

“To ensure we effectively balance the two, we need to take a fresh look, explore policy alternatives and continue the dialogue with all interested stakeholders, both domestic and international,” he added.

APHIS would be re-engaging with stakeholders to develop an alternative.

The American Soybean Association (ASA) said it supported the effort to revise the biotech rules, but said that if the change had gone through as written, it would have stifled innovation and increased the regulatory burden on the industry.

Secretary Perdue called for the eventual new rule to be both “flexible and adaptable” to ensure new biotech innovations secured food sustainability in the face of growing global population.

10 OFI – JANUARY 2018 www.ofimagazine.com

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TRANSPORT & LOGISTICS NEWS

GNT to improve storage facilities in Ukraine

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he European Bank for Reconstruction and Development (ERBD) is lending US$20M to Ukrainian grain supply and export logistics group GNT to improve procurement and storage of agricultural commodities.

“Ukraine, which is currently harvesting over 60M tonnes/year of grain, increasingly requires modern grain handling facilities and logistical solutions as insufficient, old infrastructure is no longer able to meet the demands posed by record yields,” the ERBD said on 27 October.

The loan would allow GNT to meet a growing demand for modern infrastructure and to provide better links with local farmers to maintain processing volumes at its newly expanded grain terminals, the ERBD said.

In November 2015, the ERBD helped

finance the expansion of GNT’s grain terminal at Odessa port in southern Ukraine through the installation of grain storage, cleaning and drying facilities. GNT is currently one of the few operators providing terminal services to third parties in the port of Odessa.

The EBRD is the largest international financial investor in Ukraine, having committed almost €11.7bn (US$13.86bn) through 384 projects since it started operations in the country in 1993.

A day before its GNT announcement, the ERBD said it was supporting AstartaKyiv, Ukraine’s largest vertically integrated agricultural holding listed on the Warsaw Stock Exchange, to improve its logistics with the introduction of innovative storage facilities.

A seven-year loan of up to US$25M would be used to construct, extend or acquire grain and sugar storage facilities in the Poltava and Khmelnytsky regions of Ukraine.

Astarta–Kyiv is a vertically integrated agroindustrial holding specialising in sugar and agricultural production. Its agricultural business focuses primarily on the cultivation of sugar beet, grains and oilseeds (corn, sunflower and soyabean), the production of sugar and related products (molasses and granulated beet pulp) and milk production.

In the Poltava region, Astarta operates a soyabean processing plant with a crushing capacity of 220,000 tonnes/year and annual production capacity of up to 160,000 tonnes of meal and 40,000 tonnes of oil.

Nibulon begins expansion of transhipment terminal

U

krainian grain trader Nibulon has started expansion of its Mykolaiv transhipment terminal in southern Ukraine with new grains and oilseeds storage facilities.

Having received a construction permit at the end of October, specialists began preparatory works at the site sitting on the Southern Buh River, alongside site planning and ramming piles, World Grains reported on 27 November.

In total, six silos of 7,200 tonnes each would be mounted at the site, with total grain capacity reaching 173,000 tonnes upon completion, which

was scheduled for February 2018. The Mykolaiv terminal would be able to store seven different crops and ensure continuous transportation of agri products along the river, the company said.

In addition to upgrading the Mykolaiv site, Nibulon in August announced it was planning to build at least 10 additional transhipment terminals on Ukraine’s rivers, including the Southern Buh and Dnipro.

The projects have been partly funded by a US$100M loan from the International Finance Corporation (IFC), a World Bank institution.

Cargill plans consortium for bid in Brazilian soya railway

T

he Brazilian unit of international agri trader Cargill is planning to form a consortium to invest US$4.3bn in a railway project that would connect central Brazil’s soya- and grain-growing regions to waterways in the north of the country.

Possible partners in the consortium to support the construction of the Ferrogrão railway to the Port of Miritituba included Amaggi, Archer Daniels Midland (ADM) and Bunge, Cargill

Brazil’s president Luiz Pretti told Reuters on 4 December.

Stretching over 1,100km, Ferrogrão would help Brazilian farmers avoid transporting their products by truck, which relied on partially dilapidated roads and was a heavy contributor to Brazil’s emissions (see ‘Blazing the rail through Brazil’, OFI November/ December 2017).

The Brazilian government planned to issue a 65-year operating license for the railway,

which was intended to have the capacity to move 42M tonnes of grains annually, but no official model for the project had yet been finalised, Reuters wrote.

In addition to the Cargill-lead effort, a group of Chinese stateowned firms were also planning to form a consortium to bid for the operating license.

Cargill planned to invest 500M reals (US$153) in Brazil, 70% of which was earmarked to go into infrastructure projects.

IN BRIEF LATVIA: The newly modernised Ventspils Grain Terminal was officially opened on 3 November with a warehouse able to store 30,000 tonnes of agricultural products, including oilseeds, and a new building for carrying out loading/unloading operations, said World Grain. The ice-free port of Ventspils was one of the leading deep water ports of the EU on the east coast of the Baltic Sea, the report added.

CHINA: The government is planning to subsidise grain transport and storage facilities.

According to the National Development and Reform Commission, facilities to load and receive grains along railways and ports for main waterways could receive funding of up to US$15M, Reuters said on 24 November.

Logistic parks with more than 100,000 tonnes of capacity offering storage, processing and inspection services would also be subsidised.

11 OFI – JANUARY 2018 www.ofimagazine.com

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R E N E WA B L E M AT E R I A L S N E W S

WORLD: The global detergent market value is expected to reach US$205.2bn by 2025, according to a report released on 28 November by Grand View Research, which puts CAGR at around 4.9% from 2017 to 2025. Rising penetration of washing machines in developing economies was expected to propel growth with powder detergents seen as the biggest product segment in the market, accounting for over 31% of total revenue in 2016.

Grand View Research said the top brands of the laundry detergent market included Tide, Purex and Surf and the four companies which controlled the laundry detergent industry were Procter & Gamble, Unilever, Church & Dwight and Henkel.

USA: On 18 October, Croda International marked the latest expansion at its Atlas Point site in New Castle, Delaware, with a plant that will produce renewable, bio-based non-ionic surfactants.

“This expansion of the Atlas Point facility enables Croda to use bioethanol derived from natural feedstocks for the manufacture of its renewable surfactants,” the company said.

Croda’s new range of non-ionic renewable surfactants, marketed under the Eco brand, can be used in cosmetic and hair care products in the personal care industry, lubricants and coatings in the automotive industry, airand floor-care products in the cleaning industry, as well as drilling fluids in the oil industry.

EUROPE: Speciality chemicals producer Clariant has launched a new renewable surfactant for hand dishwashing liquid detergents based on European sunflower oil and glucose.

The GlucoPure Sense branded surfactant did not carry any irritant labels, was free of ingredients sourced from the tropics and achieved comparable performance to traditional surfactants, Clariant said in a statement on 12 October.

The product consisted of 100% renewable sunflower oil and glucose and had a Renewable Carbon Index score of more than 96% and active matter of between 50-55% oleyl glucamide.

Clariant and Huntsman drop plans for US$20bn merger S

wiss speciality chemicals firm Clariant and American chemicals and surfactants producer Huntsman have called off their proposed US$20bn merger after encountering scepticism from a part of their shareholder base.

The deal would have created the world’s second biggest speciality chemicals company, behind Germany’s Evonik, according to Fortune (see also OFI Renewable Materials News, June 2017).

According to joint statement by Clariant and Huntsman on 27 October, the merger – originally agreed on in May – was terminated due to activist investor White Tale Holdings increasing its Clariant stake to more than 20%. White Tale, alongside other shareholders, had opposed the deal on the grounds that it would destroy shareholder value.

“We believe that there is simply too much uncertainty as to whether Clariant will be able to secure the two-thirds shareholder approval that is required to approve the transaction under Swiss Law,” Clariant CEO Hariolf Kottman and Huntsman

CEO Peter Huntsman said.

Due the unclear status of the merger, the companies jointly decided to scrap the merger plans and continue operations as separate entities.

The termination agreement did not impose contract break fees on either party, which in Clariant’s case meant the company did not have to pay the US$210M deal breakage fee nor the US$60M extraordinary general meeting non-approval fee.

The merger, which the boards of both companies had considered the best available option in the face of a challenging global chemicals market, had been scheduled to close by the end of 2017.

In the edible oils sector, Huntsman supplies the home and personal care industries with surfactants based on renewable oils, including products such as castor oil ethoxylates, fatty acid alkanolamides, fatty alcohol alkoxylates and various ethoxylates.

Clariant supplies the edible oil industry with its Tonsil brand bleaching earth.

Goodyear uses soya oil to improve tyre performance

G

lobal tyre and rubber manufacturer Goodyear has introduced the first commercially available passenger car tyres made out of a new all-weather performance-enhancing soyabean oil-based rubber compound.

The new Assurance WeatherReady branded tyres, developed by a team of Goodyear scientists and engineers with support from the United Soybean Board (USB), hit stores in September, the company said in a statement.

The new tread compound, which used soyabean oil, gave the tyres the advantage of being softer at lower temperatures, which increased their grip on the road surface in dry, wet and

PHOTO: AUTOCRAZE

IN BRIEF

winter conditions, Goodyear said.

Company tests showed that the soyabean oil rubber mixed more easily in the silicareinforced compounds used in manufacturing certain tyres, which also improved production efficiency and reduced energy consumption.

The tyre firm developed the

new compound with partial funding from the USB’s soyabean checkoff programme, which supports the US soyabean industry.

“Businesses looking to use soya, even if for sustainable purposes, want to see not only a price-competitive product, but one that functions the same or better than their original product,” said John Motter, USB chair and soya farmer from Jenera, Ohio.

“When we started working with Goodyear more than six years ago, it was just an idea, a way to build demand for soyabean oil.

Now, we have a tyre that shows what soya can do on the road,” he added.

Sunflower oil capsules used to fix road potholes

R

esearchers at the University of Nottingham (UoN) in England are developing a technique to make fixing pothole-ridden roads easier, with the help of sunflower oil capsules.

Headed by Alvaro Garcia, lecturer at the faculty of engineering at UoN, the scientists used the spherification technique to create caviar-like sunflower oil capsules that could be placed in the asphalt used to pave roads, the UoN said in a statement on 18 October.

When the road begins to crack, the capsules would break and the released oil would soften the asphalt around it, causing it to stick back together, thus preventing the asphalt from deteriorating further.

Garcia said he got the idea to develop the

capsules after watching an episode of the Spanish version of the Master Chef TV show, where a contestant used a similar method in cooking.

According to Garcia, this new Capheal technology could withstand the mixing and compaction processes in road paving without significantly affecting the asphalt’s properties.

“More importantly, we found that the cracked asphalt samples were restored to their full strength two days after the sunflower oil was released,” Garcia said.

He estimated that the technology could increase a road’s lifespan by at least one-third from 12 to 16 years while costing approximately the same as other common additives used in asphalt paving.

12 OFI – JANUARY 2018 www.ofimagazine.com

Renewable news.indd 1

11/12/2017 13:02

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13 OFI – JANUARY 2018 www.ofimagazine.com

D IARY OF EVEN TS

Bursa Malaysia to host POC2018 M

ark your calendar from the 5-7 March 2018. The 29th Annual Palm and Lauric Oils Conference & Exhibition: Price Outlook 2018/2019 (POC2018) will be held at the Shangri-La Hotel, Kuala Lumpur, Malaysia.

Conference rates for POC2018 are:

NORMAL RATE: t RM3,000/US$820 – Bursa member rate t RM3,200/US$870 – Non-member rate WALK-IN RATE: t RM2,600/US$710 – Bursa member rate

The 29th Annual Palm & Lauric Oils Conference & Exhibition: Price Outlook 2018/2019 oin POC2018 and be part of the global congregation of the palm and edible oils industry professionals at the 29th Annual Palm & Lauric Oils Conference & Exhibition: Price Outlook 2018/2019 (POC2018). This event will be held from 5-7 March 2018 in Kuala Lumpur.

The event will uphold its core aim of providing valuable interaction opportunities between delegates to discuss trade

16-17 JANUARY 2018 6 ICIS Asian Oleochemicals Conference VENUE: Kuala Lumpur, Malaysia CONTACT: ICIS, UK Tel: +44 20 8652 3887 E-mail: Events.Registration@icis.com www.icisconference.com/asianoleo18 th

19-20 JANUARY 2018 3rd Pakistan Edible Oils Conference (PEOC) VENUE: Movenpick Hotel, Karachi, Pakistan CONTACT: PEOC Secretariat, Pakistan Tel: +92 51 486 4368 E-mail: info@peoc.com.pk www.peoc.com.pk

22-23 JANUARY 2018 Fuels of the Future 2018 VENUE: CityCube Berlin, Germany CONTACT: Markus Hartmann, German Bioenergy Association (BBE) Tel: +49 228 81002-22 E-mail: hartmann@bioenergie.de www.fuels-of-the-future.com

IPPE International Rendering Symposium VENUE: Georgia World Congress Center, Atlanta, USA CONTACT: National Renderers Assocation, USA Tel: +1 703 683 0155 E-mail: renderers@nationalrenderers.com www.ippe18.mapyourshow.com/7_0/ sessions/session-details.cfm?ScheduleID=18

5-6 FEBRUARY 2018

EARLY BIRD OFFER: t RM2,600/US$710 – Bursa member rate t RM2,800/US$760 – Non-member rate

J

1-2 FEBRUARY 2018

possibilities and market trends in order to keep abreast of the latest price forecasts that will impact their respective businesses, the organisers say.

Thought provoking inputs from speakers and discussion and analysis between delegates are key takeaways that will continue even after the event.

Event sponsors can maximise this platform to further elevate their corporate visibility and promote their respective products and services to the delegates at POC2018, the organisers say.

For sponsorship enquiries and other information, please contact: POC2018 Secretariat Email: poc@bursamalaysia.com Website: www.pocmalaysia.com

25-26 JANUARY 2018 Lipids & Cosmetics VENUE: Bordeaux, France CONTACT: Cosmetic Valley France E-mail: sgodet@cosmetic-valley.com www.lipidscosmetics.sciencesconf.org

1-2 FEBRUARY 2018 19th Practical Short Course: Advanced Oil Processing – Palm, Palm Kernel and Coconut Oil Processing and Food Applications VENUE: Bogotá, Colombia CONTACT: ID&A VOF, Belgium Tel: +32 51 311 274 E-mail: info@smartshortcourses.com www.smartshortcourses.com

1-3 FEBRUARY 2018 Globoil Delhi 2018 VENUE: JW Marriott Aerocity, New Delhi, India CONTACT: Teflas, India Tel: +91 22 6223 1245 E-mail: events@teflas.com www.globoilindia.com

See our full list of industry events at: www.ofimagazine.com

International Symposium on Sunflower and Climate Change VENUE: Toulouse France CONTACT: INRA Toulouse, France E-mail: sunflower-symposium2018@inra.fr www.symposium.inra.fr/sunflower-2018

6-8 FEBRUARY 2018 GOED Exchange 2018 VENUE: Benaroya Hall, Seattle, USA CONTACT: Global Organization for EPA and DHA Omega-3s, USA Tel: +1 801 746 1413 E-mail: exchange@goedomega3.com www.goedexchange.com

7-8 FEBRUARY 2018 Lignofuels 2018 VENUE: Amsterdam, Netherlands CONTACT: Dimitri Pavlyk, Active Communications International, UK Tel: +44 203 141 0627 E-mail: dpavlyk@acieu.net www.wplgroup.com/aci/event/ lignocellulosic-fuel-conference-europe

22-23 FEBRUARY 2018 Fatty Acid and Lipid Analysis Course VENUE: Dundee, Scotland CONTACT: James Hutton Institute, UK Tel: +44 1382 568 568 E-mail: info@huttonltd.com www.huttonltd.com/lipid-course-bios.aspx

5-7 MARCH 2018 Price Outlook 2018/2019 (POC2018) VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: POC2018 Secretariat, Malaysia Tel: +603 7727 8458 E-mail: poc@bursamalaysia.com www.pocmalaysia.com

18-20 MARCH 2018 NIOP 84 Annual Convention VENUE: Hyatt Regency Indian Wells Resort & Spa, Palm Springs, USA CONTACT: National Institute of Oilseed Products, USA Tel: +1 202 591 2461 E-mail: niop@kellencompany.com www.niop.org th

14 OFI – JANUARY 2018 www.ofimagazine.com

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DI ARY O F E V E NT S

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I NTE RN ATION AL M ARKET REVIEW

Hopes and fears for oil demand CHART: JOHN BUCKLEY

FIGURE 1: CRUDE VEGETABLE OIL PRICES, MONTHLY AVERAGES (US$/TONNE)

The coming season promises strong growth for soyabean oil production and consumption but mixed fortunes for palm oil, which faces uncertain demand, particularly from the EU. Meanwhile, rapeseed oil faces flattening demand. John Buckley writes

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China’s effect on soya The mixed fortunes are reflected in the variable pricing trends seen across the vegetable oil sector over the past months. Palm oil has struggled to hold earlier gains while soya oil has been notably stronger, with the Chicago Board of Trade (CBOT) futures contract’s front month recently trading near its best levels of the year at over US¢35/lb or about US$780/tonne.

Along with heavy import buying of soyabeans

by China and less-than-ideal conditions for Latin American sowing and early crop development (but probably improving now in both Brazil and Argentina), low palm oil prices have kept CBOT soyabeans at higher prices than this season’s giant supply suggested around the end of the last season.

The US Department of Agriculture (USDA) has been forecasting Chinese soyabean imports to grow more slowly this season, by just 3.5M versus last season’s 10M tonnes, to total 97M tonnes. However, other observers think that underrates potential.

China’s own trading and food processing giant, COFCO, sees demand nearer 100M tonnes.

US soyabean export shipments and sales got off to a slower start than last year, partly due to China

reducing demand while it absorbed a build-up of port stocks of soya oil from its predominantly mealdriven crush. Chinese internal bean prices had also dropped to a one-and-half-year low on reports that the state might cut its recently more generous price support for expanded plantings.

So far this season, China has taken about half the USA’s soyabean exports but trade has been picking up recently after Chinese trade delegations pledged to buy more. Chinese consumption of soya oil is expected to grow by over 1M tonnes or about 6.4% in 2017/18 to some 17.4M tonnes, accounting for about 31% of world soya oil usage and 44% of the global annual increase in demand.

Behind China comes the USA with a projected 436,000 tonne consumption increase (+4.8%), the bulk of which is expected to be in biodiesel use, officially forecast at a new record high of 3.175M tonnes. This forecast might grow still as the US government introduces protective tariffs against foreign competition from imports of Indonesian palm and Argentine soya-based biodiesel.

Other increases expected in soya oil demand include India (+300,000 tonnes or 5.6%), a gain that might be overrated as this largest importer (forecast 4.1M tonnes or 36% of the world total) raises its import duties for vegetable oils across the board.

India’s current soya oil import projection is 700,000 tonnes. In contrast, Brazil’s consumption has been forecast by the USDA to grow by just over 100,000 tonnes this season but its government has said it wants to raise output of biodiesel by over 30% next year, implying a far bigger gain.

Along with a few hundred thousand extra tonnes going to smaller consuming countries, aggregate global demand for soyabean oil should be adequate to absorb projected new supplies without a burdensome stock build-up.

Soya will also supply the bulk of this season’s estimated growth – 83% of a total 14.5M tonnes – in global oilseed meal consumption. Even so, and unlike grains, CBOT soya futures prices show hardly any forward premium over the next two years. This is not so surprising perhaps for a market in which

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nalysts have been offering mixed demand outlooks for the leading vegetable oils in the recently-started 2017/18 oil marketing year. These include strong growth in soyabean oil consumption in foods (China) and biodiesel (mainly the USA and possibly Brazil as well) but uncertain prospects for the most traded oil, palm.

The latter is still expected to see further growth in origin countries’ biodiesel consumption but, for diverse reasons, could lose demand from some of its top import customers.

Global demand growth for rapeseed oil seems to be flattening out with the fizzling European biodiesel boom and a potential downturn in China.

After strong expansion in recent years, sunflower oil looks on the edge of a consumption setback, mainly due to smaller than expected crops in the previously fast-expanding former Soviet Union, where growers’ margins have declined. But after larger harvests, cottonseed, peanut and palm kernel oil are all expected to gather some extra demand, mainly in their own growing regions.

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global stocks are seen rising by around one-third over the four years from 2014/15 to 2017/18.

Big soya supply continues This season’s soyabean supply – production plus stocks – offers plenty of leeway for crushers to step up supply if product demand has been underrated.

The USDA surprised markets in November when it kept its US crop yield forecast unchanged at 49.5 tonnes/ha when the industry expected a significant reduction. It was the second month when yield exceeded forecasts and, after the harvest area estimate was raised as well, meant the USA stayed on track for a bigger crop than last year’s recordbreaking 116.9M tonnes, with the current forecast at 120.4M tonnes. Moreover, a preliminary estimate from the USDA puts its 2018 plantings even higher at 36.8M ha versus this year’s 36.5M ha.

Rising production costs are reported to be cutting into Brazilian farmers’ profits, already squeezed by much lower domestic bean prices – partly due to its strong currency earlier this year.

Analysts maintain soya still offers a better return than grains, its main competitor. This is the reason why in the last four years, Brazil has added 20M tonnes to its crop.

Brazil’s planting has recently caught up with last year’s pace after a slow start, but the USDA still sees its crop 6M tonnes down on the year at 108M tonnes. However, some local estimates range up to – even beyond – last year’s 114M tonnes, which is supplemented by a record near 25M tonnes of carryover stocks, 6M tonnes more than last year.

Argentina’s next crop is forecast about 1M tonnes under last year’s 58M tonnes, but it too has an extra 5M tonnes of starting stocks.

Argentine exports have been slowed recently by farmers holding stocks for a better forward price, reducing domestic crush and potentially slowing meal and oil flows out of the world’s largest soya product exporter, but it should catch up as the season progresses. No shortage of South American supplies is foreseen at this stage.

In October, reports of lower than usual proteins

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I NT E RN ATION AL M ARKET REVIEW

Soviet countries, especially Ukraine, which looks likely to have a lot more to export this season, especially to west European crushers. The total could go higher if Canada raises its 19.9M tonnes crop estimate.

Canada’s canola crush is currently forecast stable this season and has, so far, almost kept up with last year’s pace, despite a recent steep increase in costs of the oilseed. Export demand was reported to have reached its best level on record in October. Higher US soya oil prices may help bolster canola crush margins, depending on how the Canadian dollar performs. Canada’s domestic consumption of rapeseed oil has been growing at about 50,000 tonnes/year and is expected to reach 990,000 tonnes this season, a large chunk of which is going to the fuel industry.

A 1.6M tonne increase in this year’s EU crop is expected to enable a slightly larger crush and to cut import needs by about 500,000 tonnes without further denting carryover stocks, which fell sharply to an unusually low 1.2M tonnes at the close of 2016/17. EU rapeseed oil consumption is meanwhile seen flat at 10.3M tonnes as the big gains seen in the biodiesel sector in earlier years fizzle out. That said, sunflower oil may not continue the recent expansion of its share in the food oil market as the Ukrainian crop, an important supplement to EU supply, is turning out considerably smaller than expected. This may lead to less competition for rapeseed oil on that front.

Early pointers to 2018’s European rapeseed crop suggest it will probably not advance much, maybe even struggle to reach 2017’s level as rain-prevented plantings in second largest producer Germany and dryness in some states offset potential gains in top supplier France. Ukraine has meanwhile sown its main winter rapeseed crop on a slightly larger area than planned, auguring well for 2018 supplies. Australia’s crop, on the other hand, has had problems with irregular rainfall and could drop by up to one-third to some 2.8-3M tonnes, translating into fewer exports to help dispose of the Ukrainian crop.

World rapeseed oil consumption growth is seen flat this season with offtake in China – the largest consumer outside the EU bloc – falling significantly.

India slapping on higher import taxes could disrupt rape oil trade as well, although the country was earlier expected to raise intake to about 430,000 tonnes this season to supplement consumption of around 2.7M tonnes. w 87X128-agosto 2017.pdf 1 22/8/17 17:11 John Buckley isMINCLEAR OFI’s market correspondent

in newly harvested US beans sparked talk of foreign crusher demand being diverted more to Latin American supplies, but that story seemed to have died down in early December. So far, US crush is doing well, recently reaching its best levels since 2007. US exports are down slightly so far this season, despite China and others buying more recently, as the market waits to see how the Latin American crops shape up. If all goes well, trade can be expected to shift down south as the season progresses – especially if a weaker Real gives Brazil a more competitive edge.

Concerns for palm oil demand Malaysian palm oil has recently been quoting remarkably similar levels to those seen this time last year – about US$20-US$30 either side of $650/tonne based on Bursa Malaysia’s nearby crude palm futures. The market did enjoy a brief burst of strength in late September as production trends indicated output was already peaking – both seasonally and in terms of its recovery from last season’s El Niño-linked droughts.

October output turned out better than expected, helping to accumulate an annual total 13% or almost 1.9M tonnes ahead of the same period last year.

November output was expected to be fairly strong too, possibly even rising slightly or not dipping much seasonally. Indonesia’s output has also been reviving rapidly, enabling it to boost exports by over 40% so far this year.

However, producers face a considerable challenge from multiple developing risks to future export trade. Proposed EU curbs on imports of palm oil and its use in biodiesel, along with other vegetable oils, head the list. The EU Parliament wants environmental and sustainability regulations that go much further than the standards being adopted by the Asian palm industry and producers fear this will impact European trade severely. Th EU’s forecast palm oil use is 6.5M tonnes in 2017/18. As of yet, there is no sign that the EU intends to relent on its plans, although threats of trade retaliation from the Asian suppliers might give officials pause for thought as the proposals move from the EU Parliament to Commission and national voting level.

Asian palm exports are also under threat from top buyer India slapping on much higher import duties to protect its own oilseed producers and processors.

The crude palm tariff doubled to 30% and refined oil jumped from 25% to 40%. Opinions vary on the extent to which this might affect Indian imports that had been predicted by the USDA at 9.5M tonnes this season.

Meanwhile, demand growth of the third largest palm oil importer – China – has stalled and gone into decline over the past two years as it increasingly meets growth in its vegetable oil consumption with oil crushed from imported soyabeans. As a result, China’s current season palm oil imports are forecast at only 4.8M tonnes compared with 5.7M just three years ago.

Palm oil also faces unprecedented trade competition from record supplies of soya oil and, in some countries, growing preference for sunflower oil.

Malaysian exporters have also been challenged repeatedly this season by their own strengthening ringgit currency, making the oil more expensive for many importers in developing countries.

Fortunately for producers, some markets are still growing. Notably, Pakistan and Bangladesh are between them expected to take about 4.7M tonnes this season versus 4.3M last year. The Philippines, Turkey, Vietnam and some Middle Eastern countries are also taking more. But if global output does expand by the 4.5M tonnes expected by the USDA and others, demand will need to grow far more to avoid stock build-up.

While this year’s yields have recovered less rapidly than expected, the conditions – including better weather and maturing higher-yielding plantations – are in place for a more decisive increase in 2018. But, depending on its strength, a developing La Niña could bring flood disruption or yield-boosting rains. Potential for extra demand is still being touted within the producing countries themselves. Indonesia is expected to raise use from 8.57M to 9.05M tonnes and Malaysia from 2.74M to 3.57M if biodiesel expansion plans materialise – although that may require expensive government subsidies.

It is also possible that soya oil prices could become less competitive if they continue responding to increasing biodiesel demand as global energy markets continue to revive amidst Organization of the Petroleum Exporting Countries (OPEC) and other crude oil production curbs. Overall, though, demand for palm oil does not look likely to justify a sustained price rally.

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Improved rapeseed supply With the northern hemisphere’s main rapeseed/canola crops now in, the supply position is looking slightly better than in the late summer, pointing to a 1.8M tonne or 2.5% increase on the year. Most of that is in Europe and the former

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LAU RIC OILS

One disaster after another in t of its former self. Now the re

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oconuts have traditionally been an essential part of agriculture in the Caribbean islands. They are farmed for food and their husks can be used to produce fibres and other construction materials. However, in the 1950s and 60s, the major application for which the Caribbean coconut crop was used was the production of copra and subsequently coconut oil.

To produce copra, the coconut’s meat must be extracted from the shell and dried. The dried coconut flesh is then pressed or dissolved with solvents to extract the oil, producing as a byproduct a high protein, high fibre mash, which can be fed to ruminants.

In the Caribbean, this traditional method was used to process the coconuts farmed at large monoculture plantations.

The industry was, at the time, an important contributor to the economy, the Caribbean Agricultural Research and Development Institute (CARDI) says in its ‘Coconut Industry Development for the Caribbean: Towards a Shared Vision and Road Map’ workshop report. It improved foreign exchange earnings for the region, alongside rural employment and livelihoods, particularly by providing jobs for rural women.

Mangled markets But come the 1990s, the coconut industry in the Caribbean was all but decimated. The decline, which started in the 70s and continued through the 80s, was not caused by any single factor.

Instead, it was the end result of various different developments coming together throughout the region.

One of the primary ones – according to CARDI – was the sudden availability of cheap vegetable oils, produced through modern high tech methods and processing systems. Coconut oil, the traditional cooking oil of the Caribbean, simply could not compete due to it still being laboriously produced by hand.

Jose Antonio Flaquer of the Dominican agri association Junta Agroempresarial Dominicana gives the example of the Dominican Republic in CARDI’s report.

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ther in the past 50 years has left the Caribbean’s coconut industry less than a shadow ow the region is trying to make a comeback into the business. Ile Kauppila writes “In the 1960s, the Dominican Republic coconut industry was heavily reliant on copra and coconut oil production,” Flaquer explains “No vegetable oils were imported and the country produced all its needs for oils from peanuts and copra in a 50-50 ratio. By the 1990s, imported vegetable oils accounted for 98% of the market.”

Another major impact was the poor publicity coconut oil received at the time. Coconut oil is comprised mostly (82.5%) of saturated fatty acids, which have been linked to increased levels of low density lipoprotein (LDL) cholesterol – or ‘bad’ cholesterol – in the blood.

Additionally, the high saturated fat content could contribute to weight gain and obesity with regular use.

While coconut oil also positively impacts the levels of ‘good’ high density lipoprotein (HDL) cholesterol, several health organisations around the world, including the US Food and Drug Administration (FDA) and the World Health Organization (WHO), have recommended avoiding its use in cooking.

Coconut oil’s tarnished reputation diminished global demand, which, together with decreased local use, spelled doom for the oil’s marketability (see Figure 1, page 20).

Disease and decay In addition to plummeting markets, a more natural adversary turned its gaze on Caribbean coconuts.

A plague of various diseases has swarmed over the islands several times over the past five decades, leaving behind devastated plantations filled with dead trees.

It was in the 1950s, says Wayne Myrie of the Jamaican Coconut Industry Board, when the lethal yellowing (LY) disease was first noticed in areas of limited economic importance in Jamaica. LY reached the island’s main plantation areas in the 1960s and over the following 30 years, it destroyed approximately 8M coconut palm trees, impacting the livelihoods of 8,000 farmers.

More recently, the red palm mite (RPM) was spotted for the first time in 2004 and has since spread across the islands. “In Trinidad and Tobago, yield losses in excess of 75% have been recorded

and heavy losses have been seen in other Caribbean countries,” says Simon Eden-Green from UK consultancy ECG Consulting. Between 2005 and 2011, production of coconuts in Trinidad and Tobago declined from 4.6M nuts to 50,000 nuts.

Other diseases that have ravaged the region are the red ring (RR) disease, spread by the coconut palm weevil and the nematodes it carries, and bud rot, a fungal infection that necrotises and rots the palm’s leaves, causing them to slough off the tree.

To add insult to injury, the Caribbean’s coconut palms are also approaching the end of their lifespan.

According to CARDI, coconut palms hit their prime productivity at around 20-30 years of age. In the Caribbean, however, large numbers of trees are more than 50 years old. As venerable seniors, the palms no longer produce enough coconuts to feed the industry and little replacement planting has taken place.

On top of the poor market situation, disease and aging trees, CARDI lists a limited gene pool of coconut varieties as a major challenge for the industry. The small genetic variety means it is difficult to breed more productive varieties that are resistant to the rampaging diseases. Poor field husbandry practices and lack of farming knowledge have also made it easier for disease to spread, and lack of business and marketing support means that whatever little is produced is not marketed efficiently.

Hope on the horizon But although the situation seems dark, not all is lost.

During the 2013 Caribbean Week of Agriculture, CARDI gathered experts and stakeholders in the Caribbean coconut industry together to devise a road map to reinvigorate the ailing plantations.

Together, they identified several avenues and methods for expanding the potential of coconuts.

Despite the diminishing production of, and demand for, coconut oil, the consumption of other coconut-derived products has soared. Within the last decade, applications in soaps, virgin coconut oil (VCO), health products and coconut water have caused demand to grow by 500%, according to World Atlas.

CARDI agrees, noting that health and wellness

benefits associated with coconut products outside of coconut oil’s food use present strong new market opportunities for the Caribbean.

Within the greater global market, CARDI notes, are three promising segment. According to the association, Caribbean coconut farmers could attempt to get their foot in the door in products that require large volumes of both green and dry coconuts (such as coconut water and milk), products for small but growing markets suitable for artisanal production (VCO, flavour enhancers) or high end products such as cosmeceuticals and nutraceuticals.

Coconut water, in particular, could prove a lucrative option. The water is marketed as a healthy and refreshing drink and the demand for it keeps growing, particularly in developed countries.

Market research firm Technavio estimates that, between 2016 and 2020, the global coconut water market will grow at a compound annual growth rate (CAGR) of 27%, while the International Trade Centre (ITC) estimates the market value to reach US$4bn by 2019. Demand is so massive that the Caribbean – and even Asia, which is responsible for 70% of global coconut output – could run out of coconuts.

Coconut oil is not out of the game, either.

Caribbean Agribusiness (AgriCarib) says that the high price of petroleum-based fuel some years back ignited a renewed interest in the use of coconut oil as a biofuel feedstock.

Although oil prices have since fallen, coconut oil is also receiving increased attention from the beauty and cosmetics industries. According to AgriCarib, coconut oil could relieve dry skin and improve skin smoothness by removing the outer layer of dead skin.

To be able to make use of these new market opportunities, the CARDI workshop drafted recommendations and a road map to kickstart Caribbean coconut production. Improving access to quality planting materials and widening the coconut gene pool were marked in the plan as some of the most important hurdles to clear. Included in this step is the establishment of a gene bank in at least one Caribbean country.

The meeting also called for a quality assurance system to be implemented in order to improve V

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SOURCE: APCC

LAU RIC OILS

FIGURE 1: DEVELOPMENT OF VEGETABLE OIL MARKET SHARES, 1960-2010

the island and conducted training with regional farmers, processors and producers.

In addition, says Robin, the project managers are also looking at the pest and disease situation and are working on providing clean planting materials.

Training has centred around IPM methods and CARDI is planning to carry out experiments all over the Caribbean. In LY-ravaged Jamaica’s case, the experiments will be carried out on select plots.

As the EU project’s end is drawing near – scheduled for 2018 – Robin says CARDI has applied for an extension and that the response has been positive so far.

He hopes that this means the Caribbean will have coconut activities going on for the next four or five years.

Valuable variety

V yields and product quality. Integrated pest management (IPM) was also flagged as a crucial step in reinvigorating the industry and prevent it from being destroyed by disease yet again.

Additional steps in the plan are increasing R&D efforts for new niche products, seeking increased funding and improving industry clustering and capacity building.

Foreign funding Despite setting out a clear plan on what to do, the Caribbean producers are going to need outside funding to get production going again. Luckily, it is not only the Caribbean islands themselves who would like to see their plantations become productive once more.

According to data from the Observatory of Economic Complexity (OEC), Europe is the second largest importer of coconut oil at 35% of the global total, just barely behind Asia at 36%. And, as it turns out, Europe would like to keep its coconut supply steady.

In order to improve Caribbean coconut production, the European Union (EU) partnered in 2015 with CARDI and ITC to start the €3.5M (US$4.1M) ‘Coconut Industry Development for the Caribbean’ programme, financed under the 10th European Development Fund.

The programme has been implemented in the CARIFORUM countries, comprising Belize, Dominica, Dominican Republic, Guyana, Jamaica, St Lucia, St Vincent and the Grenadines, Suriname,

and Trinidad and Tobago.

“The four-year programme,” says the EU, “has the goal of enhancing farming productivity, business capacity and the competitiveness of small scale farmers and enterprises along the coconut value chain. To do this, the project will undertake interventions to address four key areas that currently prevent the sector from achieving its full potential.”

These four areas include regional cooperation, productivity and sustainability, market information and risk management.

Among the measures the European bloc wants to take are increasing regional market integration by improving cooperation between stakeholders, improving soil fertility and pest and disease control, making access to market information and advisory services more available to small producers and improve smallholder capacity for risk planning, particularly on market and climate risks.

These areas correspond with those identified as needing improvement by the 2013 CARDI workshop.

Since its conception, the project – carried out on the ground by CARDI – has conducted workshops and provided training to small scale farmers.

Indeed, the project has reached the farmers instead of turning out to be just pretty words on paper, according to Gregory Robin, CARDI country representative for Jamaica.

In an August 2017 interview with the Jamaica Observer, Robin said that under the EU programme, CARDI and the Jamaican Coconut Industry board have established nurseries on

Despite the progress, much remains to be done to bring Caribbean coconut production up to a global standard. Improving the genetic variability of the Caribbean coconut stock and finding varieties that are resistant to the various diseases in the region is an ongoing project.

Without it, any new nurseries would risk crashing and burning like their predecessors in the 70s and 80s, not only because of disease but also because of poor production on a global scale.

“We are looking at moving germplasm from Africa, Brazil, Mexico, Southeast Asia – wherever we can find improved germplasm,” Compton Paul, the EU programme’s regional coordinator told Jamaica Gleaner.

“We have sent some people to Mexico. We are also sending people to Brazil to look at the varieties that are available there and how we can get those varieties into the Caribbean region.”

Bringing in new varieties is not without its issues.

While they might be resistant to the current diseases in Caribbean, they could bring with themselves new pests or disease from outside of the region, which could prove just as devastating. CARDI’s plan for more R&D to improve the varieties is therefore imperative.

The groundwork is nonetheless being laid out and, while it will still be years before the Caribbean can even begin to compete with Asia, the door to a better future is open.

Much depends on the countries’ ability to attract foreign investment to fuel their R&D efforts, but with the tremendous coconut demand and short supply, it would be a mistake to waste the Caribbean’s potential. w Ile Kauppila is the assistant editor at OFI

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PALM OIL

With palm oil celebrating its 100th anniversary of production in Malaysia, the industry must tackle stagnant yields, labour shortages and a negative image as it maintains its position as the world’s top traded vegetable oil. Serena Lim reports from the PIPOC 2017 congress

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alm oil free labels should be banned in Europe once health and sustainability rules are in effect, according to Olivier Charrier, global president of marketing and innovation for Nutella at Ferrero International.

Charrier was speaking at the International Palm Oil Congress and Exhibition (PIPOC) on 14-16 November 2017.

The Italian chocolate and confectionery producer uses around 160,000 tonnes/year of palm oil, accounting for around 0.3% of global palm oil consumption, the congress heard. Ferrero’s hazelnut Nutella spread accounts for a 20% share of the company’s business.

“We have been using palm oil for the last 50 years and we will never give up palm oil as it is essential to our recipe,” Charrier said. Palm oil gave Nutella the right texture, was neutral in taste and did not become as rancid as other vegetable oils.

Among the seven Nutella ingredients, including sugar, cocoa and milk, palm oil led the way in terms of sustainability. All the palm oil used by Ferrero was segregated in terms of supply, Charrier said.

With various food scandals in the past decades, consumers did not trust the food industry any more, and palm oil had a very negative image in Europe, he added.

The number of palm oil free products had doubled in Italy alone from 34% two years ago to 64% currently, totalling some 738 products including biscuits, spreads and bakery goods.

“We are facing an extremely vicious cycle. Food manufactures and retailers advertise palm oil free products so consumers become more convinced that palm oil is bad. So more retailers make the claim.

“If you put all the palm oil free products together, the level of advertising spent on them is five times the amount that Coca-Cola spends on advertising.

“So far, we have failed to collectively address palm oil’s image in Europe.”

In the short term, the industry had to be bold against palm oil smear campaigns.

In June last year, Ferrero won a court case against Dutch retailer Delhaize over its claims that its palm oil free Choco spread was ‘healthier’ and more environmentally friendly when the Brussels Court of Appeal ruled that the claims were unverifiable.

Charrier said the Roundtable on Sustainable Palm Oil (RSPO) rules should be tightened so that RSPO members could not use use palm oil free claims, as this undermined the RSPO’s mission.

The industry should also positively leverage EU moves, such as likely proposals in 2018 to mitigate the process contaminants – 2,3-MCPD esters and glycidyl esters – found most often in refined palm oil; and the European Parliament’s resolution

THE MALAYSIAN PALM OIL INDUSTRY FACES A SHORTAGE OF LABOUR TO CUT AND HARVEST FRESH FRUIT BUNCHES

Tackling labour, yield and image issues in April 2017 for the EU to introduce a single certification scheme for palm oil entering the EU market and to phase out the use of unsustainable vegetable oils in biofuel production by 2020.

“If and when these EU developments become effective, palm oil can be positioned as the best in class in terms of edible oil, as 100% deforestation free and with no or low 3-MCPDs and GEs.” Palm oil free labels would then become meaningless and the EU should ban all palm oil free claims, he said.

Crop apartheid Carl Bek Nielsen, chairman of the RSPO board and chief executive director of Malaysia’s United Plantations, said the palm industry had to show tangible signs of taking sustainability seriously but called on the EU and NGOs to stop the ‘crop apartheid’ against palm oil.

He said palm oil was not the only oil to be used in biofuels in the EU but legislation was targeting palm biodiesel.

He called on the black sheep in the industry to stop their practices but said poor agricultural practices could be found in any country if you looked for it. “It is time to take the searchlight off palm oil,” he said.

Bek Nielsen pointed out that the world’s total land bank amounted to 13.4bn ha. Of this, 37% or 5bn ha was agricultural land. Of the 5bn ha of

agricultural land, two-thirds went to pasture and one-third or 1.55bn ha was available for crops. Oil palms accounted for 19M ha or 0.96% of the crop land, yet contributed to a third of global edible oils production.

In 2016, 204M tonnes of oils and fats was produced, the world population was 7.3bn, there were 1.7bn middle class people, and each hectare of land needed to provide food for 4.5 people.

By 2050, there would be 9.8bn people, 5bn middle class, each hectare of land must provide for 6.5 people, and a conservative estimate of 350M tonnes of oils and fats needed to be produced.

Bek Nielsen said 50% of all global palm oil was produced by smallholders (those farming less than 100 acres) and the industry employed 4M smallholders worldwide, one million of them in Malaysia. “It is an important crop for farmers.”

He also said that many retailers were not delivering their part in the sustainability equation.

About 12M tonnes/year of RSPO certified palm oil was now produced, but only 6M tonnes purchased.

Stagnant yields and labour shortages Stagnating yields and labour shortages was a challenge brought by up several speakers at the PIPOC congress.

“Increasing yield is fundamental to our industry,” Bek Nielsen said.

Palm oil had the highest oil yield per hectare v

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SOURCE: OIL WORLD/MPOB, CIMB, PIPOC 2017

PALM OIL

FIGURE 1: ANALYSIS OF GLOBAL PRODUCTION OF 17 OILS AND FATS (2006-2016)

oils and fats supply, and palm oil 24.8%. This had changed in 2006-2016 with palm accounting for 28.6% and soya 25.3% (see Figure 1, above).

In Malaysia, production growth had come from increases in planted area, rather than rises in yield.

Palm oil accounted for 52% of global vegetable oil exports in 2016, compared to 39% in 1996.

Malaysian palm oil production was estimated at 19.4M tonnes in 2017.

A potential negative impact for palm oil exports was India’s introduction of higher import duties in mid-August 2017. These rose from 7.5% to 15% for crude palm oil (CPO) and from 15% to 25% for refined palm oil.

“This is negative for CPO as the higher duties will make palm oil less competitive in India against other edible oils,” said Ng, who gave a CPO price forecast of RM2,800 (US$680)/tonne for 2017 and RM2,700 (US$656)/tonne for 2018.

Malaysian biodiesel

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at some 4.15 tonnes/ha, with United Plantations achieving 5.86 tonnes/ha. This compared to yields of 1.2 tonnes/ha for rapeseed oil, 1 tonne/ha for sunflower oil, and 0.5 tonnes/ha for soyabean oil.

However, while the EU’s rapeseed oil yield had risen 45% and US soyabean oil yield had increased by just over 50% between 1990-2016, Malaysian palm oil yield had only risen 5% in that period, not taking into account the sharp yield decline in 2016 due to the drought effects of the El Niño weather pattern.

Dr Kushari, director general of the Malaysian Palm Oil Board (MPOB), said yields in some areas were actually decreasing because of labour shortages and emerging diseases.

“We are living on borrowed time,” Thayaparakanthan Ramachandran, head of plantation advisory and mechanisation at Sime Darby Plantations, said. “There is an urgent need to review current management practices to reduce physical efforts. No one wants to do a manual job.”

The minimum wage of around RM1,000 (US$243)/month may need to triple to attract foreign workers.

In oil palm harvesting, fresh fruit bunches (FFBs) need to be manually cut from trees, and the bunches collected by workers, either with wheelbarrows, mechanical buffalos or mini tractors.

Ramachandran said mechanisation, automation and changing work practices were the only options for the industry to move forward.

In Malaysia, the workforce ratio was 16% locals and 84% foreign workers, and 80% of labour costs went towards harvesting and collecting FFBs, which was carried out three times a month.

Before mechanisation could be introduced, the infrastructure had to be improved by levelling harvest paths and widening and levelling terraces.

A block harvesting system where workers are confined to one area was key, along with harvesting gangs where roles were specialised, such as the cutting and pruning.

Azman Ismail, head of the Techno Economics Research Unit at the MPOB, said most foreign workers came from Indonesia. “Plantations in

Indonesia offer comparable wages to Malaysia and working environments and living conditions need to be improved to attract workers here.”

As of September 2017, 77% of the oil palm industry’s workforce came from overseas, with the number rising to 95% for harvesters and collectors.

The total workforce numbered 527,091 in 2016, not including independent smallholders, or more than one million if they were included. The total labour shortage at September 2017 was 40,063, mostly for harvesters and field workers.

The land-labour ratio, not taking into account the labour shortage, was one worker to 11.3ha, or 1:10.6ha including the shortage.

Global supplier Fadhil Hasan, board member of the Indonesian Palm Oil Association, said Malaysia and Indonesia accounted for around 85% of total world palm oil production, which had grown at around 4%/year in the past six years, up from 52.6M tonnes in 2011/12 to 64.25M tonnes in 2016/17.

Indonesia’s production was 36.5M tonnes in 2016/17 and projected to rise to 38.5M tonnes in 2017/18.

Its average annual palm oil production growth was trending down, from 10% between 2005-2010, to 8% from 2010-15, and 3% from 2015-2020.

This was due to a moratorium on licenses to open new plantations and the productivity gap between smallholders and private plantations.

Production targets were 40M tonnes for 2020 and 46-47M tonnes for 2025 and there was an ambitious replanting target of 165,000ha/year.

Key factors to watch for in the future were the EU’s plan to end the use of palm oil based biodiesel in 2021, as the bloc currently used about 3.5Mm tonnes of palm oil for biofuels. The USA could also impose anti-dumping duties on palm biodiesel.

Ivy Ng, head of Malaysia research and regional head of agribusiness at CIMB Investment Bank, looked at edible oil trends between 1996-2006, when soyabean oil accounted for 23.5% of global

U R Unnithan, president of the Malaysian Biodiesel Association (MBA), said current installed biodiesel capacity in Malaysia was 2.05M tonnes, based on the capacity of the MBA’s 17 members. Total CPO stocks consumed by Malaysia’s biodiesel mandate now exceeded well over 1.5M tonnes.

“The National Biofuel Policy was launched in 2005 too create a totally new demand for palm oil and the Biofuel Industry Act was enforced on 1 August 2008.”

Unnithan said biodiesel was linked to the diesel market, with a correlation between CPO and diesel prices. “When palm oil is cheaper than gas oil, palm methyl ester (PME) is competitive and there is huge opportunity to export.” When CPO prices rose above gas oil prices, then the export market collapsed, unless supported by local mandates.

PME consumption had increased every year with the wider rollout of Malaysia’s mandates.

Malaysia saw export growth between 2006-2009 when CPO prices had good parity with gas oil.

The export market collapsed in 2010-2012 when palm oil prices shot up, with the palm oil/gas oil price gap widening between 2013-2014.

In 2011, the mandate to incorporate 5% biodiesel in diesel fuel (B5) was rolled out, creating a secondary market which saw local consumption increasing. B7 was introduced in 2015, and B10 was approved by Malaysia’s cabinet in May 2016.

“Many countries have moved beyond B7 into B10,” Unnithan said.

Indonesia had B20, Argentina B10 and Colombia B10. Colombia produced 1M tonnes of CPO, 60% of which was used for biodiesel.

“Malaysia is well poised to move to B10,” he said.

Trials had shown that no engine modifications were required and some vehicle makers, such as Mercedes, had accepted the mandate, although others remained silent.

Unnithan said export prospects for palm biodiesel looked poor because of the lack of parity between palm and gas oil prices and the negative image of palm oil, with new sustainability criteria, particularly in the EU. The export duty structure for vegetable oils and biodiesel also created another major distortion in the PME market, with individual countries adjusting their export tax structures so that biodiesel became cheaper for exports.

“Biodiesel is going local and the local mandate is key for survival of this industry,” he concluded. w

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C H IN A

The story of the underdog

C

alled by some the most underappreciated member of the oilseeds and vegetable oils family, castor oil has a lot going for it. Despite the toxic dangers that lurk in castor seeds, the oil is used as a raw material for a whole slew of industrial products and in cosmetics and medicine.

Perhaps one reason for the relative obscurity of castor oil is the fact that its production is extremely centralised. The global castor oil market is dominated by India, whose output is nearly unmatched. Yet, in the shadow of the giant others dwell, either producing castor oil themselves or processing it, as India exports most of its castor seed and oil. One country that does both production and processing is China, where the castor industry is showing signs of defiance to the Indian hegemony.

What is castor oil?

Castor oil is a natural plant oil, obtained from the seeds of the castor plant, known as Ricinus communis by its scientific name. The castor plant is native to the Ethiopian region near the horn of Africa but, by the 18th century, it had become naturalised in many parts of the world. Today, it is commonly found in tropical and warm temperate regions around the world, growing practically in any warm area with well-drained soil and sufficient nutrients and moisture. In southwest USA, the plant grows a bit too well and is considered an invasive weed.

The plant produces spiny green-to-red capsule-like fruits, which splits into three sections upon reaching maturity, forcibly ejecting the castor seeds from within.

China’s castor seed production has been on a downward trend, but it now plans to reverse the situation. Ile Kauppila writes The seed is also called – slightly misleadingly – a castor bean, although it is not a true bean.

Castor seeds are extremely toxic due to the presence of ricin, a deadly water-soluble protein.

Castor is one of the most poisonous plants in the world, with 70g of ricin reportedly being enough to kill an adult weighing 80kg. This potency makes ricin 6,000 times deadlier than cyanide.

The oil itself, however, is non-toxic as upon crushing, the ricin is left in the seedcake or meal.

The oil is a pale yellow liquid, with a very distinct taste and odour. It is widely used in a great variety of industrial applications, ranging from the manufacture of nylon, soaps, lubricants, and hydraulic and brake fluids to paints, perfumes and pharmaceuticals.

Production picking up China is the world’s second largest single producer of castor seed, responsible for 5% of global total production. In 2017, Oil World estimates that China’s output will equal roughly 40,000 tonnes.

Although China might be the second best, the country cannot hold a candle to India, which alone produces a whopping 85% of global castor seed supply.

While any

castor producer has miles of catching up to do in the race for the industry throne, India’s position as the king is not unshakable in the long run. Nirmal Bang, an Indian online share trading and broking firm, says in its ‘Castor Seed Market Analysis and Outlook 2017’ that India is likely to witness a decline in its castor output. One of the reasons is farmers changing to other more lucrative crops, which saw the country’s total castor hectarage drop by 24% in 2016-17.

Another reason possibly shaking India’s position could be a rising China. Although China’s castor seed production has fallen by more than 84% from 2012 to 2016 – from 227,000 tonnes to 36,000 tonnes – the downward spiral may be reversing in the coming season (see Figure 1 on following page).

According to a presentation titled ‘Chinese castor industry’, presented on 18 February at the Global Castor Conference 2017 by Hengshui Jinghua Chemical Co, one of China’s largest industrial consumers of castor oil, 2017-18 production of castor seed in China could reach an estimated 100,000 tonnes, up nearly 178% from the 36,000 tonnes in 2016. Hectarage is also projected to increase to 39,000ha, which – while still significantly smaller than the 93,500ha in 2012 – is the highest since 2013.

There are three primary reasons for the increased production.

Hengshui says that the Chinese government has reduced financial subsidies given to food crops. The price of major food crops has also been

PHOTO: ADOBE STOCK

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declining globally since 2015, which caused a decrease in the crop size of several food crops, such as corn. Compared to corn’s profit yield of CNY9,900 (US$1505)/ha, castor is expected to yield CNY10,710 (US$1629)/ha, making farming the oilseed more profitable for Chinese growers, particularly in the main castor growing regions of the northeastern Xinjiag and Yunnan provinces.

In addition, Hengshui states that the castor industry is receiving increased flows of capital, not only from the government, but also from large enterprises and wealthy traders. The increased amounts of capital will allow castor seed producers to develop both farming methods and seed varieties, in order to purchase more land. The third cause behind Hengshui’s projected increase in castor seed production is the mechanisation of planting and harvesting, which the company says is currently under field evaluation.

Big plans for imports Demand for castor oil in China is projected to remain high, driven mostly by industrial applications.

According to Nirmal Bang, the generally growing Chinese economy will also fuel demand for castor.

“Considering the fact that India’s production and export numbers remain unmatched, a stronger economy in China will bolster the demand for castor oil,” the firm says in its report, adding that fall in production in both India and Brazil have limited the availability of castor seed. Hengshui agrees with the projection, saying that the demand for castor oil in China is expected to grow 8% in 2017.

To feed its ever-growing thirst for castor, China has traditionally imported most of its oil from India, which is to be expected, given that the country produces the vast majority of the global castor supply. Hengshui data shows that in 2016, China imported 41% of Indian production. In total, China imported 257,000 tonnes of castor oil in 2016, which both Hengshui and Nirmal Bang say represents a 12.9% increase from the 228,000 tonnes in 2015 (see Figure 2 on page 28).

Hengshui attributes the increase in imports to China’s economy, which is growing at a rate of 7%/ year. The economic growth translates into more industrial production and a growing demand for, and consumption of, castor oil.

Additionally, the falling domestic production between 2012 and 2016 has forced the country to rely more on imports. Nirmal Bang projects that this trend will continue in 2017 and projects that

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SOURCE: HENGSHUI JINGHUA CHEMICAL CO

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FIGURE 1: CHINESE CASTOR SEED CROP SIZE AND PRODUCTION

Crop size (KHA)

Seed produc<on (KT)

250 200 150 100 50 0

2012

2013

2014

Chinese castor imports from India will grow by another 8-10% during the year.

Hengshui, however, sees the situation differently.

While in the past years, 80% of China’s castor oil has come from India, from 2017 onwards China will be less reliant on India, the firm argues. It projects that with the increased profit yields from castor, more and more farmers will begin to plant the oilseed, thus bringing about the forecast increase in domestic production, which translates into a diminished need for imports.

China is also planning to increase its imports from other countries, particularly from Myanmar.

The Southeast Asian country has a tropical monsoon climate well suited for the cultivation of castor and there is a history of castor planting in Myanmar.

Hengshui, together with the Yunnan Castor Research Institute, set up a castor demonstration plantation in 2016 to “gradually recover the country’s castor industry”. Currently, the castor planted area in Myanmar is 6,670ha, according to Hengshui, which produces approximately 15,000 tonnes of seed. Production is projected to increase in the 2017 season.

In addition to Myanmar, China also wants to increase castor planted area in Africa and establish the continent as one of its four main castor import regions, the other three being India, Malaysia and Myanmar. Pakistan and Cambodia are also on China’s import list and the country would like to see their production expanded as well.

2015

2016

2017*

Putting the oil to use Consumption of castor oil China has been growing steadily over the past couple of years. From 2012 onwards, when annual Chinese castor oil consumption was 260,000 tonnes, use of castor oil declined somewhat, coming down to 208,000 tonnes in 2014, a 20% decline. Since 2014, however, consumption has picked up again, reaching 240,000 tonnes in 2015 and 271,000 tonnes in 2016. In 2017, Hengshui expects consumption to keep growing, reaching a high of up to 293,000 tonnes (see Figure 3 on page 28).

Four companies accounted for 168,500 tonnes, or 62% of total consumption, in 2016. They were Hengshui Jinghua Chemical (73,500 tonnes), Casda Biomaterials (45,000 tonnes), Tianxing Biotechnology (35,000 tonnes) and Shandong Dongying Shunli Chemical (15,000 tonnes).

Among the different applications for which castor oil is used in China, the largest is the production of sebacic acid, which consumed 55% or 150,000 tonnes of the country’s entire castor oil supply. Castor oil is the primary raw material in the production of sebacic acid, a naturally occurring dicarboxylic acid that, in its pure state, is a white flake or a powdered crystal. Approximately 40% of Chinese annual sebacic acid production goes into making polyamide resin, which is further processed into nylon, with the rest divided between the production of esters and adhesives (30%), coolants

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SOURCE: TRADE ESTIMATES

FIGURE 2: MONTHLY CASTOR OIL IMPORTS TO CHINA (2013-2016)

SOURCE: HENGSHUI JINGHUA CHEMICAL CO

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FIGURE 3: ANNUAL CASTOR OIL CONSUMPTION IN CHINA (KT)

350 300

308 260

250

245

240

271

293

200 150 100 50 0

2012

2013

2014

(20%) and other products (10%).

China is the world’s largest sebacic acid producer.

Its output covers more than 95% of the global market, according to Hengshui. The conversion ratio of castor oil into sebacic acid is approximately 2:1, with 1.9 tonnes of castor oil yielding one tonne of acid. Byproducts of sebacic oil production include sectol alcohols, fatty acid and glycerine, which are widely used in the alcohol, plasticiser, paint and other industries.

In 2016, China exported 47,100 tonnes of sebacic acid, approximately on the same level as 2015 exports, says Hengshui, which is China’s larges manufacturer of the product. However, in the last quarter of 2016, environmental concerns caused the Chinese government to impose a limit on industrial production, which brought parts of the sebacic acid industry to a halt. At the end of the year, out of the 10 manufacturing enterprises in China, only six were operating.

However, Hengshui believes that the producers will improve their factories and upgrade their equipment to meet the governmental requirements.

“It will help the whole industry be more green and healthy,” the company says.

After sebacic acid, the lithium 12-hydroxystearate – or 12-HSA – industry is the second largest consumer of castor oil in China. Production of 12-HSA uses up 12% of the total supply, equalling 32,500 tonnes.

As with sebacic acid, China is one of the main

2015

2016

2017*

producing countries of 12-HSA, with six major producers residing in the country, including Shandong Tianxing and Neimengu Tonghua.

The chemical is a vital, non-substitutable material in the production of lithium base grease.

Approximately 85% of the 12-HSA supply is used to make curing agents and densifiers, says Hengshui, with 10% going towards producing surfactants and the remaining 5% towards other applications.

Hengshui projects that economic development in China and globally will rapidly increase the consumption and production of lubricating greases, thus boosting the demand for 12-HSA. In addition to the two largest applications, China uses castor oil in the paints (8% or 22,500 tonnes), printing and dying (7% or 17,500 tonnes), adhesives (6% or 15,000 tonnes) and other industries (12% or 33,500 tonnes), says Hengshui. The latter category includes, among others, the beauty/cosmetics and medical sectors, where castor oil is popular.

In medicine, castor oil is used internally as a powerful laxative and externally as a topical lotion or a pack or poultice for various skin conditions.

In cosmetics, it is used as a tonic to improve hair growth and counter hair loss. Various other industrial uses include the production of motor oils, plastics, insecticides and insulation materials.

Stumbling blocks The Chinese castor industry is, however, facing

two issues that could prove a stumbling block for its recovery. The first one is the weakening yuan against the US dollar. The CNY/USD exchange rate has climbed from around 6.15 in January 2015 to a record high of 6.96 in January 2017. The rate has been coming down since and, at the time of writing, was hovering in the region of 6.5, with a slight upwards peak.

Nirmal Bang notes that Chinese imports of castor oil were higher when the yuan was stronger against the US dollar. The weakening currency could be one of the drivers behind the Chinese government’s decision to funnel funds into castor cultivation and slower imports would spell good news to Chinese farmers due to an increased domestic demand.

However, if the Chinese castor crop ends up being lower than expected, the weak yuan will make it expensive for castor oil refiners, such as Hengshui, to plug the hole left in the oil supply.

Another problem facing the industry is China’s constant large-scale environmental woes. Problems with smog and air pollution were so bad at the end of 2016 in the north of China – where the country’s major castor oil processors are located – that the local government adopted a series of measures to limit industrial production.

The order had an impact on castor processing, says Hengshui, particularly on the sebacic acid industry, which saw its output drop by nearly 40% year-on-year. The lower production tightened the supply of the acid and drove prices higher.

However, Hengshui believes that the increased investment in castor (not to mention a possible fear of being driven out of business) will motivate producers to upgrade their plants with more environmentally friendly equipment in order to meet new government guidelines.

Forecast for the future If the trend of the past 10 years continues, China’s manufacturing industry will keep developing quickly. The rapid advancement, according to Hengshui, will cause castor oil – a speciality product – to be applied in more fields and application, thus increasing the demand for the oil. The company also projects that relevant industries in China will upscale their production and install more automation and high-tech equipment, further increasing the consumption of castor oil.

As a result of rising demand and consumption, China’s domestic castor seed and oil production are expected to get new wind under their wings. Despite the increased local production, Hengshui projects imports to rise as well from all over the world, with India maintaining its place as the number one source of castor oil in China.

Nirmal Bang’s view corresponds with Hengshui’s.

The trading and broking firm says large stocks of castor oil in both China and the second biggest importer the EU, backed by a rally in export prices, may result in a slowdown of Indian imports.

China’s castor oil industry stands at a precipice where progression into either increased domestic production or further reliance on import seems possible. Much will depend on how the projected production increase within China in the 20172018 season turns out. Nonetheless, industrial development will keep demand high in either case and it seems unlikely China would not find some way to feed its castor oil processors.

Ile Kauppila is the assistant editor at OFI

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T RAN SPOR T & LOGISTIC S

PHOTO: COFC0

China bets on Ukraine China is Ukraine’s second largest market for sunflower oil exports and Chinese companies are investing heavily in Ukrainian infrastructure in order to secure future food supplies. James Brooke writes

W

ith a US$12 trillion economy, eight times Russia’s, China is emerging quietly as Ukraine’s top economic partner of the future. Betting that Ukraine is on track to become a world food power, China is starting to invest heavily in Ukraine’s infrastructure, dredging harbours and building bridges, highways and grain silos.

What drives the investment? In the last five years, Ukraine’s food exports to China haVE increased fivefold to US$1bn. Today, China, the world’s largest importer of food, is Ukraine’s top destination for food exports.

Chinese investment is designed to guarantee reliable supplies of Ukrainian grain and food to feed China’s 1.4bn people.

Last year, Ukraine displaced the USA as the top supplier of corn to China. By 2030, as farm yields grow steadily, Ukraine could also replace the USA as the world’s top exporter of grains.

Chinese investment is concentrated on the Black Sea coast, Ukraine’ commercial interface with the outside world. The story starts in Odessa, where China occupies the city’s largest foreign consulate, a three-story building with a commanding view of the port.

Ukraine’s first cement highway In July 2017, a Chinese company signed a contract to build the first half of a 200km Chinese-financed cement highway east from Odessa. Built by China

CHINESE COMPANIES ARE INVESTING IN UKRAINIAN INFRASTRUCTURE, WITH COFCO – CHINA’S LARGEST FOOD PROCESSOR AND TRADER – INAUGURATING A 20 SILO GRAIN HANDLING COMPLEX IN MYKOLAIV AS IT CONTINUES OPTIMISATION EFFORTS IN WAREHOUSING, PROCESSING, LOGISTICS AND DISTRIBUTION AROUND THE WORLD, INCLUDING IN ROMANIA (PICTURED)

Road and Bridge Corporation, this US$100M artery will be Ukraine’s first cement highway, built to take the weight of fully loaded grain trucks.

The first stop will be at Yuzhny Port, Ukraine’s busiest and deepest port. There, in an US$80M project, China Harbor Engineering Company started dredging the 7km access channel in July.

Chinese dredges are deepening depths in front of berths by 30%.

These two companies, China Road and China Harbor, are subsidiaries of China Communications Construction Co., Ltd, a mixed state and private company.

Farm gates to docks From Yuzhny, the new cement highway will continue 100km further east to Mykolaiv, Ukraine’s last major port before the Crimean peninsula.

There, COFCO – China’s largest food processor and trader – inaugurated a 20-silo grain handling

complex in 2016.

The complex is capable of receiving 120 railcars and 120 trucks per day. The US$75M shipping complex is considered the largest completed Chinese investment in Ukraine to date. By purchasing the land for silos and shipping berths, COFCO bought its own Ukrainian stevedoring company, Danube Shipping-Stevedoring Company.

To held feed grain to the silos in Mykolaiv, Chinese Eximbank was set to approve a US$330M loan for the construction of a 1km bridge over the Dnipro River at Kremenchuk late last year.

This modern highway bridge will ease a bottleneck for trucks taking grain from the Poltava, Kharkiv and Sumy regions down to Mykolaiv port, about 320km south of the crossing.

“China has identified Ukraine as a strategic partner,” said Ruslan Osypenko, CEO of the China Trade Association in Kyiv. “Infrastructure investment is seen as most important -– road and v ports and airports.”

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T RAN SPOR T & LOGISTIC S

UKRAINE Odessa

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Mykolaiv

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China eclipses Russia What is happening in Ukraine is a part of a wider phenomenon. China is moving quietly, but firmly, into the economic space that was dominated in the last century by Russia.

In a historic marker, China’s per capita income surpassed Russia last year, and China has 10 times as many ‘capitas’ than Russia.

“In a number of post-Soviet countries, China

hasn’t simply joined the top three major suppliers of goods, but already occupies first place, having displaced Russia” reads the report, ‘The Chinese Strategy of Mastering the Post-Soviet Space and the Fate of the Eurasian Union’, issued in July by the Institute of Economics of the Russian Academy of Sciences.

Referring to nations once controlled by Moscow, it concluded: “The role of Russia in this regard in a number of states is shrinking.”

China’s primary goal in Ukraine is to lock in food supplies for decades to come. The country is already Ukraine’s largest market for flour and sunflower cooking oil.

Between January and July 2017, Ukraine exported US$524.5M worth of food products to China, mostly grain, sunflower oil, flour, confectionery and dairy products, according to Interfax-Ukraine.

China is the second largest market, after India, for Ukrainian sunflower oil exports.

Between September 2016 and May 2017, Ukraine exported 1.53M tonnes of sunflower oil to India and 461,000 tonnes to China, accounting for 35% and 10% of exports respectively, according to figures from Ukrainian oils and fats association, UkrOilyaProm.

For the total 2016/2017 marketing year (September 2016 to August 2017), Ukraine exported 584,000 tonnes of sunflower oil, 53,000 tonnes of soyabean oil and 2,400 tonnes of rapeseed oil to China.

“The global market condition, especially a strong demand from China and India, will be key drivers of Ukraine’s oil market,” says UkrOilyaProm.

The list of food products approved by China’s sanitary control agencies is also growing. Last year, it included beef, dairy, sugar beet pulp and animal feed.

Also approved in September last year was sunflower cake.

The General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) agreed protocols for sanitary and biosecurity requirements for exports of sunflower cake.

Ukrainian producers will be able to supply

One Belt, One Road

T

he Silk Road Economic Belt and the 21st Century Maritime Silk Road, better known as the One Belt and One Road Initiative (OBOR), The Belt and Road (B&R) and The Belt and Road Initiative (BRI) is a development strategy proposed by China’s president Xi Jinping in 2013 that focuses on connectivity and cooperation between Eurasian countries in order to boost trade and stimulate economic growth.

China hopes to achieve this by building massive amounts of infrastructure connecting it to countries around the world, with estimates that it is spending some US$900bn in projects planned or underway.

The strategy underlines China’s push to take a larger role in global affairs with a China-centered trading network as it looks to open up new markets in the face of slowing economic growth.

The plan involves more than 60 countries, representing a third of the world’s total economy.

At the heart of the initiative is the creation of an economic land belt (Silk Road Economic Belt) that includes countries on the historical Silk Road through Central Asia, West Asia, the Middle East and Europe, well as a maritime route (21st Century Maritime Silk Road) that links China’s port facilities with the African coast, pushing up through the Suez Canal into

IMAGE: MCKINSEY & CO

the Mediterranean.

The land belt has six overland corridors comprising the:  New Eurasian Land Bridge, running from Western China to Western Russia  China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia

 China–Central Asia–West Asia Corridor, running from Western China to Turkey  China–Indochina Peninsula Corridor, running from Southern China to Singapore  China–Myanmar–Bangladesh–India Corridor, running from Southern China to Myanmar  China–Pakistan Corridor, running from SouthWestern China to Pakistan

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T RAN SPOR T & LOGISTIC S

sunflower meal to China after their plants are inspected by Chinese specialists, UkrOliyaProm says.

This year, Ukraine expects to win approvals for eggs, poultry, berries and honey.

Another lane in ‘One Belt – One Road’ China also sees Ukraine as an alternate, if lesser, east-west route in its US$1 trillion ‘One Belt – One Road’ cargo transportation strategy.

“Ukraine is a very important hub on the Eurasian continent,” China’s ambassador to Ukraine, Du Wei, told Ukrinform news agency recently. “We have included Ukraine in the first group of 65 countries that will take part in building the general concept One Belt – One Road.”

The impact can be seen in two Ukrainian ports west of Odessa. Here, China has identified ports that can be used to funnel Chinese goods into the European Union (EU), China’s second largest export market after the USA. At Chornomorsk, China Communications Construction is embarking on a US$50M project to upgrade the Soviet-era rail and ferry link at this port, formerly named Illichivsk after Lenin’s patronymic.

From Chornomorsk, ferries depart three times a week for the 1,250km trip across the Black Sea to the Georgian ports of Poti or Batumi.

“Why a Chinese company? We think they will bring cargo,” Viktor Dovhan, deputy infrastructure minister for European integration, said in an interview. “Our problem is one way. The trucks

come back empty.”

Last year, Chinese Harbor, the company dredging Yuzhny port, submitted a bid to dredge and deepen Chornomorsk port.

“The dredging project is aimed at creating optimal conditions for allowing modern bulker ships with a deadweight of up to 80,000 tonnes and Post Panamax Plus container ships,” Raivis Veckagans, the head of Ukraine’s Sea Port Authority, told Interfax, referring to what is expected to be a US$3.5M project.

Chinese barges on the Danube?

About 200km south of Chornomorsk, at Izmail, Ukrainian Danube Shipping Company signed a memorandum last year to rebuild its river fleet in partnership with another Chinese state company, China National Technical Import & Export Corporation.

In a US$50M Chinese-financed project, the Chinese will build 40 barges and rebuild 21 tugs for the Ukrainian company.

Building rail locomotives In Ukraine, a major bottleneck for moving grain from farm to port is Ukrzaliznytsia, Ukraine’s poorly managed and underfunded railroad.

One priority is upgrading 275 of the railroad’s locomotives over the next five years. Undermining this task are separatists controlling Ukraine’s sole locomotive manufacturer, Luhanskteplovoz.

Here, China Railway Construction Corporation,

the world’s second largest construction and engineering company, has signed a memorandum of understanding to build and rebuild locomotives in Ukraine.

“They have three Ukrainian Railways sites in mind: Dnipro, Zaporizhyia, Stryi,” Dovhan, the deputy infrastructure minister said.

False starts for Ukraine-China China’s new role in Ukraine came after a share of false starts. A US$3bn plan to build a deep water container hub in Crimea fell through, a US$7bn energy credit has gone unused, millions of dollars have disappeared from a Yanukovych-era corn sale and from a credit to build a light rail line from Kyiv to Boryspil.

Now, bilateral relations seem to have matured.

“We believe that together we can implement joint projects in Ukraine, and Ukraine will appear as a logistic hub on China’s Silk Road map,” Dovhan, the deputy infrastructure minister, told the Belt and Road Forum for International Cooperation in Beijing last May. Months later, promises are becoming facts on the ground. Chinese barges are dredging Yuzhny, Chinese road graders are arriving to work on the cement highway, and Chinese state company executives are preparing to sign contracts this fall for the new bridge at Kremenchuk and the renovation of the Danube shipping fleet. w James Brooke is the editor of Ukraine Business Journal

Connecting Companies and Creating Business

E D I BLE OI LS • Palm Oil

• Corn Oil

• Soybean Oil

• Palm Kernel Oil

• Sunflower Oil

• Coconut Oil

• Rapeseed Oil

• Peanut Oil

• Cottonseed Oil

• Rice Bran Oil

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P LAN T & TEC H N OLOGY

Plant and equipment round-up PHOTO: ADM

Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world IN BRIEF GERMANY: German engineering firm GEA has introduced a new generation of its GEA RSC clarifiers, aimed particularly at vegetable lecithin production.

Vegetable lecithins are byproducts of soyabean, sunflower and rapeseed oil production and they are widely used in the food industry as natural emulsifying agents.

The new GEA clarifiers provided high process control and product quality with special features, the company said in an 11 September statement.

Among the features were a hydrohermetic feed protecting product from exposure to high shearing forces and a hydrohermetic vapour seal, which prevented vapour in the inlet space from causing turbidity in the oil.

ADM adds non-GM soya processing capacity to two German facilities

G

lobal agribusiness Archer Daniels Midland (ADM) has expanded its non-GMO soyabean crushing and processing capacity at two facilities in Germany, located at Straubing and Spyck.

The added capability at the site in Straubing (pictured) would allow it to serve ADM’s soyabean meal customers and support local farmers in increasing the region’s soya output, the company said in a statement on 9 October.

“The decision to invest in the production of non-GMO high-protein soya meal is a logical step after the successful implementation of non-GMO soyabean processing at the site in May 2016,” said ADM general manager of European soyabean crush Jon Turney.

“The demand for non-GMO soyabean meal from European soyabeans is steadily growing.

With the production of this meal, ADM will be able to better meet the needs of its poultry feed customers, as well as the dairy and pig feed markets,” he added.

The Straubing facility’s expansion follows ADM’s July change from crushing rapeseed and sunflower seed to soyabean at its mill in Spyck near the Dutch border.

USA: French engineering and construction firm Air Liquide has signed an agreement with agribusiness giant Cargill for the construction of a new biodiesel plant in Kansas, USA. The state-of-the-art plant, to be located in the city of Wichita, would have a production capacity of 278M litres/year, Gasworld reported on 24 November 2017.

The agreement marks a further step in the collaboration between the two companies. Air Liquide has already built six biodiesel plants for Cargill worldwide.

Air Liquide said its Lurgi biodiesel technology provided a complete oleochemical production chain, with a wide range of plant options designed to maximise efficiency, improve product quality and minimise operating costs and environmental footprint.

The changes were part of ADM’s longterm strategy to expand its European soya processing plant network, reported World Grain on 26 July.

“The extended soyabean crushing capacity in Spyck will help us meet customer demand as the European non-GMO soyabean market continues to grow,” Turney told World Grain.

“We are committed to growing the soyabean industry in this region, and we are working hard to help farmers in France and along the River Danube see the value of growing soyabeans within their rotation,” said Rene van der Poel, ADM commercial manager for oilseeds in Germany.

John Grossman, president of European crush and origination at ADM, said the move to processing non-GMO soyabeans was part of the company’s growth plan.

“It is a great achievement for the team in Spyck to execute this latest step in our growth strategy, both on time and on budget. Flexible crush capacities, scale and carefully managed production costs per unit all remain key to our ongoing success in the region over the long term,” said Grossman.

German biodiesel company starts constuction of new algae biomass facility

A

ustrian biofuels company BDI – Bioenergy International is constructing a new facility to implement its site-independent and fully enclosed algal biomass cultivation technology.

The plant will be operated through BDI’s newly established BioLife Science subsidiary.

Construction of the €1.6M (US$1.88M) Hartberg plant was set to begin at the end of 2017 at the Ökopark Hartberg/Steiermark, BDI said in a 17 October statement.

Developed after several years of research,

the technology to be utilised at Hartberg was BDI’s first venture into industrial algae production, with the aim to produce algaebased additives for the food supplement and cosmetics industries.

BDI’s technology was not tied to the features of the site of implementation and could facilitate constant production of high-quality algae biomass, the company said.

The fully closed system could eliminate all external negative influences and therefore

32 OFI – JANUARY 2018

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enable rapid growth of the algae.

“High purity and quality of the algae products are of utmost importance for our future clients.

We want to position ourselves as a reliable premium producer,” said BDI member of the board Edgar Ahn. BDI planned to produce natural astaxanthin – a red colouring agent used as an antioxidant – as the first product at the new plant, due to a trend of moving towards biological alternatives in the food and cosmetics sectors. v

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P LAN T & TEC H N OLOGY

Fuel from olive oil wastewater PHOTO: ADOBE STOCK

Nordic renewable diesel project moving forward PHOTO: ST1

v

F

innish energy company St1 is continuing its series of investments to begin production of renewable diesel by 2020 at its Gothenburg, Sweden, refinery (pictured).

The latest move in the plan came on 4 October when St1 signed an agreement on an engineering design package and license agreement with Danish catalysis firm Haldor Topsøe for a renewable diesel production unit.

The construction of the plant was still subject to a final investment decision after the design for the plant was due to be completed in early 2018 and after obtaining the required environmental permits, St1 said in a statement.

The engineering design agreement came after a €40M (US$47M) investment in July for a hydrogen unit, which represented the first step in St1’s Gothenburg programme that aimed to eventually produce 200,000 tonnes of renewable diesel annually.

“Renewable diesel production in Sweden will perfectly complement out commitment to reduce fossil CO2 emissions in line with our vision. We still make most of our profits from fossil energy, which will enable us to invest substantially, on several fronts, in developing renewable energy production, such as advanced renewable fuels, geothermal heat and wind power,” said St1 Nordic CEO Kim Wiio.

St1’s long-term advanced renewable fuels strategy sought to competitively fulfil the 2030 regulations planned within Finland, Norway and Sweden, where the company was active.

Swedish St1 Sverige’s CEO Hilde Wahl said the three Nordic countries had the world’s most ambitious renewable fuel targets and therefore investing in renewable diesel production in Gothenburg was a “logical” move.

“However, forthcoming EU legislation, particularly concerning feedstocks, is casting a long shadow of political uncertainty, which is making the investment decision difficult. A flexible feedstock base is therefore the only feasible alternative for us when planning the plant,” Wahl said.

In addition to renewable diesel, St1 was continuing the development of its Cellunolix advanced lingo-cellulosic ethanol technology, with its first plant to manufacture the fuel in the commissioning phase in Kajaani, Finland.

The company also signed in 2016 a letter of intent to construct a second Cellunolix plant in Hønefoss, Norway, and operated five other ethanol plants, one of which was co-located at the Gothenburg refinery, producing an annual 5M litres of ethanol from bakery waste.

A

team of researchers from France’s University of Haute-Alsace have developed an environmentally-friendly process that could transform hazardous olive mill wastewater (OMW) into biofertiliser and bioenergy.

During olive oil processing, olives are crushed and mixed into water, with oil being extracted from the mixture and the dirty water and solids discarded as OMW, according to ACS News on 28 September.

The OMW – of which 36bn litres are produced annually in the Mediterranean countries – was difficult to dispose of, as pumping it into waterways could contaminate drinking water and harm aquatic life, while pumping it into fields damaged the soil and reduced yields.

Mixing the OMW with solid olive waste and waste wood created a burnable fuel, but it carried dangers of air pollution and was too costly for widespread implementation, the scientists, led by associate professor Mejdi Jeguirim, said.

Enzymatic biodiesel milestone reached in India

T

he Indian United Biodiesel (UB) subsidiary of Californian renewable fuels and biochemicals firm Aemetis has reached a production milestone of 1M lbs (453 tonnes) of advanced enzymatic biodiesel from lowgrade waste feedstocks.

Produced at a 50M gallon (227.3M litre) capacity plant in Kakinada, Andra Pradesh, the fuel was produced from high-free fatty acid (FFA) waste oils, including brown grease, lowgrade used cooking oil (UCO), palm fatty acid distillate and other waste plant oils, UB said in a statement on 5 October.

UB developed the patent-pending enzymatic biodiesel process technology, designed and built the process reactors and was now converting the feedstock into biodiesel.

“Through our internal development of pretreatment processing of low quality waste oil feedstocks, we were able to unlock the advanced enzymatic biodiesel technology potential for commercial viability,” said Sanjeev Gupta, UB managing director.

“Using enzymes in our unique process technology opens new feedstock opportunities

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Instead, the research team embedded OMW into cypress sawdust, which was readily available in the Mediterranean, before drying the mixture and collecting the evaporated water, which they said was safe to use for irrigation in fields.

The de-watered OMW-sawdust mixture underwent a pyrolysis process, in which it is subjected to high heat in an oxygen-less environment, causing it to decompose into charcoal and combustible gases instead of burning.

The gas was condensed into bio-oil that could be utilised in further OMW-sawdust processing to fire the driers, while the charcoal pellets could be used as a fertiliser after being infused with potassium, nitrogen and other nutrients extracted during the OMW-sawdust pyrolysis.

Tests carried out by the research team found that using the pellets as fertiliser significantly improved plant growth when compared to non-fertilised plants.

that will increase profitability,” he added.

The high-FFA feedstocks were typically not economical to convert into biodiesel, but the Aemetis technology lowered production costs due to the pre-treatment conversion process using less energy and fewer chemicals, according to the company.

Additionally, the low-grade feedstocks cost only about one-third of the price of traditional feedstocks and had less price volatility as alternative market avenues for them were limited, which Aemetis anticipated to have a positive effect on its profit margins.

The process technology also had a low capital cost, which could allow for its widespread and low-cost adoption throughout the biodiesel industry.

The waste oils were delivered to the Kakinada plant by BP Singapore, which also sold the produced biodiesel forward to Europe and the USA, as per a three-year contract between Aemetis and BP Singapore signed in May. Aemetis filed a patent for the pretreatment process used by UB in April 2017.

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P LANT & TE CHNOL OGY

www.dsengineers.com

DuPont to sell Iowa ethanol facility

D

uPont Industrial Biosciences, part of DowDuPont, is selling its Iowa, USA, cellulosic bioethanol plant as part of the firm’s post-merger restructuring effort into a speciality products company.

In a statement on 2 November, DowDuPont said that as part of its plan to create a leading speciality products firm, it was making a shift in its participation in the cellulosic biofuels market, which included the sale of the 30M gallon capacity facility.

“While we still believe in the future of cellulosic biofuels, we have concluded it is in our long-term interest to find a strategic buyer for our technology,” the company said.

“We will continue to participate in the overall biofuels market through speciality offerings, including biofuel enzymes and engineered yeast solutions that improve yield and productivity for biofuel producers,” the company said.

DuPont broke ground at the plant converting corn stover into cellulosic ethanol in November 2012 and a grand opening ceremony was held in late October 2015.

DuPont and Dow Chemical Co completed their merger in September 2017 and the merged company now plans to split into three, creating an agriculture company, a materials science company that would retain the name Dow, and a speciality products company.

New straw ethanol plant in Romania

S

peciality chemicals firm Clariant plans to build a new cellulosic ethanol facility in southwest Romania to serve as the flagship plant for its Sunliquid technology.

The announcement of the plant followed the company’s September 2017 signing of the first technology license for Sunliquid with Slovakian ethanol producer Enviral, Clariant said in a 31 October statement.

The plant would have an annual production capacity of 45,000 tonnes and convert approximately 227,000 tonnes of locally sourced cereal straw into bioethanol, with co-products used to generate renewable energy.

Clariant aimed to carry detailed engineering studies before starting construction in 2018, with first batch of production projected for 2020.

The company was also transferring all Sunliquid-related costs and activities from its Corporate Costs department to the newly established Business Line Biofuels & Derivatives starting January 2018.

Clariant’s Sunliquid technology offered a completely integrated process design for the production of cellulosic ethanol, built on established process technology.

SDIC to ramp up ethanol production

C

hina’s State Development & Investment Corp (SDIC) is looking to become the country’s leading biofuel producer, with a goal of reaching an annual 4-5M tonne ethanol output in the next three to five years.

China announced in September that it planned to introduce ethanol into the country’s fuel supply by 2020 in order to boost industrial demand for corn and to alleviate its crippling environmental problems, Reuters wrote on 20 October.

SDIC had in October started construction of its first ethanol plant, with a production capacity of 300,000 tonnes, in the Liaoning province in northeastern China by the North Korea border.

The company also signed a framework agreement in November to build another 3bn yuan (US$452M) facility in Heilongjiang province, with an annual capacity of 600,000 tonnes, according to The Times of India.

The Heilongjiang facility would use 1.85M tonnes/year of corn and employ 3,000 people, SDIC said.

In addition, SDIC was planning a further five ethanol plants in Heilongjiang and Jilin provinces and intended to purchase additional, existing facilities.

China currently produced less than 2.5M tonnes of ethanol annually and it would have to significantly ramp up its production to meet projected demand of 15M tonnes/year by 2020, Reuters wrote.

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STATISTIC S

CRUDE PALM OIL PRICES, 2013-2018 (US$/MT)

STATISTICAL NEWS FROM MINTEC Palm oil Palm oil prices have fallen 18% in 2017 as production continued to recover from difficulties caused by El Niño in 2016. Price drops in the first quarter of 2017 were driven by speculation over bumper crops from January’s harvests, alongside the falling price of competitor soyabean oil.

By mid-2017, prices began to rise as – despite increasing production – high demand resulted in low stocks. Further upward pressure was applied to pricing during September as production fell below expectations and markets anticipated a seasonal downturn in crops towards the end of the year. However, prices began to fall again in December as forecasts for 2018 pointed towards a normalisation of yields for the second season in succession.

In the 2017/18 season, global production is forecast to rise 7% y-o-y to 66.8M tonnes and ending stocks are expected to increase 17% y-o-y to 9.9M tonnes.

PRODUCTION OF PKO AND COCONUT OIL, 2013-2017

CRUDE COCONUT OIL & PKO PRICES, 2013-2018 (US$/MT)

Palm kernel oil Palm kernel oil prices fell during 2017, but remained unstable throughout the year. During January 2017, prices reached a five-year high as a result of lower production following El Niño in 2016.

However, prices fell from March following signs of good production, mirroring palm oil pricing. Prices began rising again in July as coconut oil developed large premiums against its main competitor palm kernel oil, resulting in increased demand from the oleochemical sector.

Coconut oil Coconut oil prices followed a downward trend in 2017 but remained volatile during the year. Limited supplies have been the main driving factor for prices, as buyers and sellers struggled to source the oil, despite high costs. World production of coconut oil is expected to rise only 1% y-o-y to 3.4M tonnes in 2017/18, allowing little recovery of stocks.

PRICES OF SELECTED OILS (US$/TONNE) 2016

Aug 17

Sep 17

Oct 17

Nov 17

Dec 17

Soyabean

801.0

849.4

872.4

830.2

868.3

851.3

Crude Palm

692.0

677.7

720.1

704.0

718.8

685.8

Palm Olein Coconut Rapeseed Sunflower

660.0

654.2

692.1

669.5

680.0

653.4

1,446.0

1,519.8

1,501.0

1,381.0

1,536.3

1,508.3

815.0

871.8

888.3

880.0

894.5

879.4

835.0

809.8

811.5

804.5

800.7

793.8

1,252.0

1,135.9

1,306.7

1,296.0

1,401.1

1,359.2

Average price

929.0

931.0

970.0

938.0

986.0

962.0

Index

220.0

221.0

230.0

222.0

234.0

228.0

Palm Kernel

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 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

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