OFI January 2021 by Quartz Business Media

OILS & FATS INTERNATIONAL JANUARY 2021 â&#x2013;ª VOL 37 NO 1

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PALM OIL

Riding the price rollercoaster

CHINA

World port leader

Cover Jan.indd 1

02/12/2020 13:49:23

CONTENTS

IN THIS ISSUE – JANUARY 2021 FEATURES

Rendering

Palm Oil

Sustainable pet food

The USA uses around 1.5M tonnes of rendered protein to produce pet food, helping to reduce food waste

NEWS & EVENTS

Indonesia focus

As the world’s top producer of palm oil, Indonesia’s growth is trending down

Photo: Adobe Stock

Global round-up of projects

The latest projects, technology and processing news around the world

Photo: Adobe Stock

Coconut Oil

Comment

2 Photo: Adobe Stock

Photo: Adobe Stock

Plant & Technology

Keeping up with demand Industry leaders says urgent action is needed to promote a sustainable coconut sector

Transport & Logistics

Riding the price rollercoaster

China: world port leader

Despite the COVID-19 pandemic, palm oil prices have rebounded. Will they stay high and what lies ahead in 2021?

China is the world’s second largest importer of edible oils, with some of the most well-developed ports globally

US-China trade reset?

News

Louis Dreyfus sells large stake to Abu Dhabi firm

Biofuels News

Repsol to build HVO unit at refinery in Cartagena

Renewable News

Neste to buy Bunge Rotterdam refinery

Transport News

Hapag-Lloyd suspends US container shipments

Biotech News

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EPA approves dicamba herbicides

Diary of Events

International events listing

International Market Review

Edible oil values rebound

Statistics

World statistical data

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Contents Jan 2021.indd 1

OFI – JANUARY 2021

07/12/2020 10:35:59

EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 37 NO 1 JANUARY 2021

US-China trade reset? With US president-elect Joe Biden set to take oﬃce on 20 January, what will crucial America-China trade relations look like?

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068

Under the Trump administration, the world’s number two economy and America’s top trading partner was cast as a bogeyman and blamed for the coronavirus pandemic, the US trade deﬁcit, IP theft, opioid addiction, spying, military aggression and much more, says Time magazine. The trade war between the two nations hit world economic growth and took its toll on American farmers, with China cutting back on purchases of US soyabeans. Most commentators believe that US policy towards China will be less confrontational under the Democratic president.

PRODUCTION:

“The trade war, currently on pause, may also be dialled back as a Biden team reconsiders the tariﬀ-based strategy of the last four years,” says Sean Randolph, senior director at the US Bay Area Council Economic Institute.

Production Editor: Carol Baird carolbaird@quartzltd.com

However, relations are not expected to revert to their pre-Trump status.

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A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000 Printed by Pensord Press, Gwent, Wales

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Comment Jan.indd 1

“Under Barack Obama, the USA was already losing patience with trade and investment restrictions in China,” Randolph says. “There is a remarkable degree of agreement among both parties that a harder line with China on trade and market access was overdue.” The upshot is that a Biden administration can’t look soft on China and there will be continued scrutiny of Chinese investment in US technology firms, human rights abuses in western Xinjiang province and the erosion of freedoms in semi-autonomous Hong Kong, Time says. However, with trillions of dollars and global stability at stake, the superpowers will look to find common ground where possible, such as in global health and climate change. Biden has pledged to move the USA to a zero-carbon emissions scheme by 2050 and his climate plan proposes spending US$2 trillion on renewable energy infrastructure. In August, he stated that “a Biden-Harris administration will advance renewable energy, ethanol and other biofuels to help rural America and our nation’s farmers”. Renewable diesel derived from feedstocks such as used cooking oil could also receive a boost as its development is supported by some players in both the oil and green energy industries, says a Reuters report. The USA consumes around 21M barrels/year of renewable diesel, compared with 4.1M barrels/day of conventional distillate fuel oil, according to US Energy Department data. And many petroleum refiners announced plans this year to convert facilities for renewable diesel production, supported by state incentives (see pages 10 & 30). A Biden administration will support ‘buy America’ policies but is still expected to be more collaborative and invest more in global relationships, including rejoining the Paris climate accord and the World Health Organization. It will bring a less confrontational and more predictable US regime, something which will make life easier for all its trading partners. Serena Lim serenalim@quartzltd.com www.ofimagazine.com

02/12/2020 13:55:19

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NEWS IN BRIEF VENEZUELA: Global agribusiness giant Cargill has agreed to sell its Venezuela unit for an undisclosed sum to local company Grupo Puig and a group of investors represented by Phoenix Global Investment, Nasdaq reported from a Reuters news item on 10 November. The sale would affect all of Cargill's activities in the country, including plants that produced flour, pasta, cooking oil and animal feed, the company said. According to Reuters, many overseas firms had struggled to survive in the country due to a drop in consumer spending power following years of inflation and economic contraction.

Louis Dreyfus sells large stake to Abu Dhabi firm Global agribusiness Louis Dreyfus Company (LDC) has agreed to sell a large stake in the company to Abu Dhabi-based holding company ADQ, the companies announced on 11 November. The main Louis Dreyfus Company Holdings BV (LDCH) business would sell a 45% equity stake in the LDC unit, the companies said. This would be the first time in the private company’s 169-year history that it would operate with ownership outside the family, World Grain wrote on 11 November. “The transaction constitutes a milestone in a decade-long strategy envisioned by the supervisory board, which started with the consolidation of LDC’s parent company’s shareholding,” said Margarita Louis-Dreyfus, chairperson of the LDCH supervisory board. The transaction price was not disclosed but the companies said a minimum of US$800M

would be invested into LDC. The agreement is subject to customary closing conditions and regulatory approvals. “As one of the world’s leading agri-commodities and food companies, LDC represents a strategic investment opportunity for ADQ,” said ADQ CEO Mohamed Hassan Alsuwaidi. ADQ’s portfolio includes food and agriculture, energy and utilities, healthcare and pharma, and mobility and logistics. The group said its investment in LDC further strengthened its food and agri portfolio including Silal, which aimed to diversify food sources and increase locally-grown, raised and manufactured food. Earlier in 2020, ADQ also signed an agreement to acquire a 50% share in Al Dahra Holdings, a multinational company specialising in animal feed and food commodities.

US dairy giant Land O’Lakes is selling record amounts of butter as consumers cook more at home during the COVID-19 pandemic, Bloomberg reported on 30 October. Land O'Lakes expected butter sales to reach 124Mkg136Mkg in 2020, an increase of more than 20% from a normal year, said CEO Beth Ford. This had more than offset a decline in food services as lockdowns across the USA cut demand from restaurants, which usually accounted for 15%-20% of the firm's business. “Often times, even for the retail business, what you do is you make a lot of butter be-

Photo: Adobe Stock

Record butter sales due to increased home cooking

Increased home cooking has led to a rise in butter sales

cause it’s peak milk production time, and you store it for the key season,” Ford was quoted as saying.

“But the buying was so strong that we didn’t do that, because we were selling right off the line.”

Profits at Land O’Lakes increased five-fold in the third quarter to US$66M and by 22% year-to-date, a company statement said. Dairy markets had fluctuated during 2020 as prices fell due to COVID-19 and then surged as the US Department of Agriculture (USDA) stepped in to buy for its Farmers to Families Food Box programme, Bloomberg said. Ford expected that demand to continue during the autumn and winter. Demand could also face challenges due to some consumers avoiding large seasonal gatherings in an effort to maintain social distancing.

India cuts import duties on CPO in bid to curb inflation The Indian government cut import duties on crude palm oil (CPO) from 37.5% to 27.5% in an effort to curb food inflation, AgriCensus reported on 26 November. The change came into effect on 27 November, with Palm Oil Analytics owner Sathia Varqa saying that it would lead to Indian refiners buying more CPO while Malaysia outflow of CPO would see a very sharp increase in December. "December is the last month of zero 4 OFI – JANUARY 2021

General News Jan.indd 2

export tax on crude products in Malaysia,” he added. CPO prices had surged 11% since the start of 2020 to US$895/tonne due to a lack of foreign labour, COVID-related movement restrictions, and heavy La Niña rainfall causing production levels to fall and stocks to shrink to a four-year low, AgriCensus said. India’s import duties on sunflower oil and soya oil were left unchanged despite the

fact both products were seeing even larger price increases. The reduction in CPO import duties came despite the Soybean Processors Association of India (SOPA) and the Solvent Extractors’ Association of India (SEA) calling on the government not to proceed. The trade associations said a cut would affect the local oilseed sector which the country was trying to expand to cut its reliance on vegetable oil imports. www.ofimagazine.com

03/12/2020 11:34:48

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NEWS

AP report alleges plantation abuses Allegations made in an Associated Press (AP) article about abuse in the palm oil sector are completely and categorically banned under the Roundtable on Sustainable Palm Oil’s (RSPO) certification standards, the association said on 19 November. The allegations of sexual harassment and assault are also being investigated by the secretariat of the Council of Palm Oil Producing Countries (CPOPC). The AP report had focused on the alleged brutal treatment of women in the production of palm oil, including sexual abuse, ranging from verbal harassment and threats to rape, Market Beat reported on 18 November. As part of its investigation, the AP interviewed more than three dozen women and girls from at least 12 companies across Indonesia and Malaysia. Reporters also

interviewed nearly 200 other workers, activists, government officials and lawyers. In a statement on 23 November, the CPOPC said it would be looking into the allegations as a matter of urgency. “The secretariat is appreciative of investigative journalism to highlight issues in the palm oil industry but questions the selective reporting by Associated Press reporters. The statements from a few unconfirmed interviews were selected as an intentional slur to harm the image of palm oil as a whole.” The RSPO said that while the report focused on women, the organisation strived to ensure that its standard recognised and protected the human rights of men, women and children. “These allegations are in no way representative of our standard, and we condemn such conduct. If incidents like these are happening within our certified

members’ concessions, we will investigate immediately. These appear to be selective cases that we are unable to verify without additional details, which so far, the AP or another party have yet to provide.” The RSPO urged any organisation or agency that had additional information about the allegations to submit a confidential complaint via its complaints system or its Human Rights Defender hotline. CPOPC said it would be recommending that the affected palm oil producing countries investigate the reported cases and it would be sharing the results of its own investigations. Market Beat said the AP report was part of a wider in-depth look at the industry that exposed widespread abuses in the two countries, including human trafficking, child labour and slavery.

Speciality chemical company Croda Health Care has signed a five-year deal with US pharmaceutical giant Pfizer to supply high-purity lipids used in the manufacture of its COVID-19 vaccine, Croda announced on 10 November. The contract is for the supply of novel excipients for use in the vaccine, which has shown to be more than 90% effective. Excipients are used in vaccines to aid the manufacturing process, to protect, support or enhance stability, or for bioavailability or patient acceptability. Novel excipients are excipients that are being used for the first time in a drug product or by a new method

The Pfizer/BioNTech vaccine is said to be 94% effective against COVID-19 for those over 65 years

of administration. Croda’s recently acquired subsidiary Avanti Polar Lipids

Photo: Adobe Stock

Croda to supply lipids used in Pfizer COVID vaccine

(Avanti) specialises in the development of high-purity lipids to produce research and clinical

trial quantities of excipients. Prior to, and since, the August 2020 acquisition, Croda and Avanti had been working together to refine the processes involved in achieving the volumes of high-purity excipients required by pharmaceutical customers. The five-year Pfizer contract awards Croda an initial supply contract for four component excipients used in the production of the vaccine candidate for the first three years of the contract. Pfizer and BioNTech were expecting to produce up to 50M vaccine doses in 2020 and up to 1.3bn doses by the end of 2021.

Scramble ahead for soyabean and corn planting area A surge in global and Chinese demand would deplete stock levels and drive a clash between the soyabean and corn sectors, AgriCensus quoted Bunge’s former CEO Soren Schroder as saying in a report on 18 November. Following eight years of global surpluses and limited market volatility, the agriculture sector was “back in a powerful way” and was set for firm prices on tight stocks due to a shift in demand from China, Schroder said during an online interview for the Global Grains Geneva conference. 6 OFI – JANUARY 2021

General News Jan.indd 3

“Corn and soyabeans are set up for several years of a very dynamic tug of war between soyabean acreage and corn acreage. It will be more than one growing season to get back to a surplus.” Strong global demand, not only driven by China, with marginal reductions in output levels had caused world stock levels to shrink, he said. In addition, China’s economy had been able to rebound quickly from COVID-19 and it had rebuilt its pig herd following the African swine fever outbreak.

That dynamic had boosted Chinese import demand for soyabeans and corn, while stocks of corn in China were expected to be lower than had been originally reported. China was expected to import around 25-35M tonnes/year of corn as long as surging price levels did not bring demand rationing, Schroder said. “That means we have to tap into another 3-5M ha of land somewhere in the world, on top of the ongoing 4-5M ha that the world needs outside of China to fill the ever-growing demand.” www.ofimagazine.com

02/12/2020 18:26:25

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NEWS SWITZERLAND: Swiss blockchain agri-trading platform and fintech company Cerealia reported on 10 November that its blockchain-based agriculture trading platform is now live. The new online international trading platform allowed traders to post bids and offers, negotiate, and sign contracts using ‘one click’ electronic signatures, with all the events being recorded simultaneously on blockchain. Traders could also make use of the company’s execution module to help streamline the process. “Our digital-brokerage platform is transformational for physical agri-trading as traders can now be 100% certain they really did the trade, against traditional over-the-phone brokerage. Instantly, they have digitally signed contracts and blockchain-registered records “forever”, said Cerealia CEO Andrei Grigorov. The launch was only the first phase of the company’s development, said Cerealia CTO Jaime Delgado. “Cerealia is a financial technology company and we are already working on a much more sophisticated, marketplace, with deeper use of blockchain and artificial intelligence,” he said. The launch followed a series of pilot transactions involving firms from Algeria, Brazil, Japan, Turkey, the UAE and Ukraine.

Cargill boosts segregated palm oil capacity in USA Global agribusiness giant Cargill announced on 11 November that it is expanding its segregated sustainable palm oil capacity in North America. From December 2020, all production from the company’s Charlotte, North Carolina refinery would be solely dedicated to providing segregated palm oil certified by the Roundtable for Sustainable Palm Oil (RSPO). “We are now positioned to supply North American food manufacturers with sufficient quantities of segregated RSPO-certified product to meet their sustainability commitments,” said Reid Kinde, North American commercial leader for Cargill’s global edible oils business. Cargill had previously offered its North American customers

mass-balanced sustainable palm oil. Segregated palm oil must be kept separate from commodity palm oil supplies and be traceable throughout the supply chain. It must be produced on RSPO-certified sustainable palm oil plantations, refined at RSPO-certified facilities and used by a RSPO-certified manufacturer. Cargill said it had been supplying RSPO-certified palm oil since 2005, and was now reaching customers in Europe, Mexico and Australia. The latest expansion of its supply chain reflected growing demand for ethically-sourced palm oil, it said, with the RSPO reporting that sales of certified palm oil had increased by 13% in 2019.

Olive oil suppliers join IBM blockchain

Photo: Adobe Stock

IN BRIEF

IBM Food Trust uses blockchain technology to track, trace and store data in the supply chain of olive oil

Spanish olive oil cooperative Conde de Benalúa and Argentinian olive oil supplier Rolar de Cuyo have joined the IBM Food Trust’s blockchain network, Ledger Insights reported on 11 November.

The companies joined Tunisia-based producer CHO and Italian family-run oil mill I Potti de Fratini in the network. IBM Food Trust’s platform aims to trace the supply chain of olive oil to ensure quality

and authenticity. The lack of traceability in olive oil production enabled manufacturers to falsely claim, for example, that the oil was extra virgin, Ledger Insights said. IBM Food Trust uses IBM blockchain technology and IBM Cloud to track, trace and store data in the supply chain of olive oil. By scanning the QR code on the bottle, consumers can access the information on a product – from getting to know the farmers and workers to whether its olives were processed to the standards required to be labelled extra virgin olive oil. Producers can use the platform to easily share information with permissioned parties.

Neste responds to palm oil sustainability violation claims Companies in Neste’s supply chain could be connected to at least 10,000ha of deforestation between January 2019 to June 2020 and around 13,000 fire alerts in 2019, claims a 5 November report by Profundo, commissioned by Friends of the Earth Netherlands. The report recommended that the Finnish renewable fuels producer should stop using palm oil, palm fatty acid distillate (PFAD) and other vegetable oils for biofuels and disclose the feedstocks used in each of 8 OFI – JANUARY 2021

General News Jan.indd 4

its individual production plants. Neste responded by saying that credible allegations on sustainability violations were taken seriously and always investigated. "The report highlights some cases that have already been investigated and closed as the companies were not found to have been involved in the claimed actions.” However, the report also introduced some new claims concerning its suppliers which it would start investigating. Neste said all its contracts with renew-

able raw material suppliers included strict terms on sustainability and all its palm oil and PFAD suppliers were additionally required to be RSPO members. Upon learning about credible serious allegations concerning its suppliers, Neste said it put all further purchases from those suppliers on hold while the cases were investigated. It would also terminate contracts if its sustainability requirements had been breached and progress to resolve the issues had not made in a reasonable time. www.ofimagazine.com

07/12/2020 08:56:29

BIOFUEL NEWS GABON: Singapore multinational Olam Palm is set to produce biofuel from palm oil in Gabon after receiving regulatory approval, Energy Mix Report reported. The plant would be located on a 5ha site in the southern zone of Libreville, the report said on 25 November. “The site was chosen because it offers easy access for importing equipment and exporting by-products from palm oil processing.” Olam Gabon operates three oil palm plantation areas in Gabon in a 60:40 joint venture with the government with a total concession area of around 200,000ha. It also operated a 200 tonnes/ day consumer oil packaging unit and a 750 tonnes/day palm oil refinery, according to Energy Mix Report. BRAZIL: Soya imports are now being accepted for biodiesel production following a resolution by the Brazilian National Energy Policy Council, Biodiesel magazine reported on 24 November. The new policy reflected the government’s growing concern over rising consumer inflation. It created an exemption to legislation that mandated that all biofuels sold at Brazilian Agency of Petroleum, Natural Gas and Biofuels (ANP) auctions had to be made from locally produced oils and fats. This meant imported raw materials could now be used in biodiesel auction notices.

Repsol to build HVO unit at refinery in Cartagena Spanish energy company Repsol is set to build the first plant in Spain for the production of low-carbon advanced biofuels including hydrotreated vegetable oil (HVO) at its Cartagena refinery, the company announced on 22 October. Due to be operational in 2023, the 250,000 tonnes/year €188M (US$219M) facility would produce HVO, bio jet fuel, bionaphtha and biopropane from recycled raw materials. It would include the commissioning of a hydrogen plant that would fuel a new hydrotreatment unit. Repsol said the plant, which would use Axens Vegan technology, was in line with its commitment to become a net zero emissions company

by 2050. The company was planning to double its production of HVO to 600,000 tonnes by 2030, half of which would be produced from waste before 2025. Repsol also announced in August that it had produced its first batch of bio jet fuel for aviation in the Spanish market at its Puertollano refinery. The European Union’s revised Renewable Energy Directive (REDII) proposes a minimum of 14% renewable energy in transportation by 2030 and Spain has established a stricter target of 28% renewable energy in transportation for 2030 through its Integrated National Plan for Energy and Climate (PNIEC).

COVID shutdowns hit feedstock supply Oil refiners are facing a drop in used fats for use as biofuel feedstocks due to restaurant closures during COVID-19 lockdowns, Bloomberg reported on 21 November. US refiners, including Phillips 66, Marathon Petroleum, HollyFrontier and Valero Energy, were developing renewable diesel plants running on a mixture of used cooking oil (UCO), discarded animal fat from abattoirs and soya and corn oils. At least 10 projects were planned over the next few years in the USA, according to Credit Suisse Group. However, if all of the plants were built, the demand for raw materials could rise seven-fold to about 40bn pounds/year by 2025, according to price reporting agency Jacobson Market Intelligence. UCO and US beef fat or tallow, accounted for 64% of

Photo: Adobe Stock

IN BRIEF

the feedstock used to make renewable diesel last year in California, one of the world’s biggest markets for renewable diesel, Bloomberg said. OpenTable forecast that one in four US restaurants would go out of business, leading to a drop in UCO supply. Stratas Advisors forecasts that the cost of tallow will

rise by about 20% in the next five years, while UCO would become 16% more expensive. Meanwhile, Phillips 66 was currently converting its San Francisco refinery into one of the world’s largest renewable fuel plants, producing more than 680M gallons/year, with operations due to start by 2024, Bloomberg said.

Asian trade agreement removes biofuel and feedstock tariffs A new free-trade agreement (FTA) between 15 Asia-Pacific countries will phase out tariffs on a range of biofuels and feedstocks although existing trade flows would limit the immediate market impact, Argus Media reported on 16 November. The Regional Economic Comprehensive Partnership (RCEP) was signed on 15 November by Australia, China, Japan, South Korea, New Zealand and the 10 members of the Association of Southeast Asian 10 OFI – JANUARY 2021

Biofuel news Jan.indd 2

Nations (Asean) group. Most biofuels trade by these countries was done externally as a lack of regulatory support meant biodiesel and feedstocks were generally sold to Europe, Argus Media said. Ethanol was mostly imported from the USA, Brazil or Pakistan, which were likely to remain the lowest cost suppliers, limiting the impact of the RCEP on trade flows within the region. The FTA would see China’s biodiesel

duties dropping to zero from 6.5% after 10 years but used cooking oil (UCO) rates remaining at 10%. Indonesia would phase out UCO and biodiesel duties by the first and 15th years respectively from the agreement’s implementation, from current levels of 5%. In Malaysia, rates were already at zero for most products but some HS codes that incorporated UCO would be cut to zero from 5% one year after the agreement took effect. www.ofimagazine.com

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OFI – JANUARY 2021

RENEWABLE NEWS

Neste to buy Bunge Rotterdam refinery Finnish renewable diesel producer Neste is set to acquire a refinery in Rotterdam from global agribusiness giant Bunge for €258M (US$306M), the companies announced on 3 November. A Bunge Loders Croklaan (BLC) joint venture, the refinery plant is located next to Neste’s existing biorefinery and comprises a pre-treatment facility, tank farm, jetties and has a pipeline connection to Neste’s site. The company said the acquisition offered further pre-treatment capacity and terminal infrastructure to handle its increasingly complex waste and residue feedstocks, and supported further growth in production capacity beyond 2023. Bunge said it would lease back the facility from Neste in a phased transition

IN BRIEF SLOVENIA: US biotech chemical firm Genomatica has signed a deal with European nylon manufacturer Aquafil to build a demonstration scale facility to produce the largest quantity of 100% renewable nylon-6 ever available, Bio Market Insights reported on 24 November. Genomatica’s production process uses an engineered microorganism that ferments the sugars found in plants to make a chemical intermediate for nylon-6. Under the deal, Aquafil would build and operate the demonstration plant in Slovenia, where it would convert Genomatica’s biobased precursor to nylon-6 yarns, films and engineered plastics. Initial volumes of bio-nylon ingredients would be available in the latter half of 2021, the report said.

through to 2024, with the plant’s full pre-treatment capacity available for processing Neste’s feedstock by the end of 2024. Neste president and CEO Peter Vanacker said Neste was committed to increasing the share of waste and residues in its renewables feedstock mix to 100% by 2025. The transaction was expected to close in the first quarter 2021, subject to approvals. Neste said it would be expanding its renewables annual production capacity from 3.2M to 4.5M tonnes by the first quarter of 2023, with 1.3M tonnes provided from the expansion of its Singapore facility. The company had been active in the Netherlands since 2011 when its Rotterdam facility for renewable products started operation.

Earlier in 2020, the company acquired a terminal in Rotterdam for storing, refining and blending renewable waste and residue-based raw materials. In 2019, Neste opened a new office in Hoofddorp, in greater Amsterdam, which serves as the global hub for its renewable aviation business. ▪ Neste announced on 5 November that it would be working with South Korean chemical firm LG Chem to develop the biopolymers and biochemical market globally and, more specifically, in LG Chem’s home market. LG Chem would produce renewable polymers and chemicals by replacing fossil feedstock with Neste’s renewable hydrocarbons, produced from bio-based raw materials such as waste and residue oils and fats.

BASF reports progress on sustainable PKO German chemical giant BASF says it is making progress towards reaching its commitment to source 100% certified sustainable palm kernel oil (PKO). In its fourth Palm Progress Report published on 28 October, BASF said it had purchased 140,400 tonnes of certified sustainable palm kernel oil (CSPKO) during 2019, representing around 83.5% of total volume, a rise of almost 14% compared to 2018. In addition, BASF said it had also been able to achieve traceability for 90% of its global palm footprint of 382,000 tonnes back to the oil mill level. BASF uses palm oil and PKO to produce ingredients for cosmetics and home and personal care products, as well as food ingredients. “While we are working

BASF uses palm and palm kernel oil to produce ingredients for comestics and home and personal care products Photo: Adobe Stock

towards reaching our 2020 commitment, we are further committed to foster sustainable palm by expanding our commitments to significant intermediates based on palm oil and palm kernel by 2025,” said Ralph Schweens, BASF

president care chemicals. BASF first made its Palm Commitment in 2011, and this was later extended in 2015, to procure all its oils from Roundtable on Sustainable Palm Oil (RSPO)-certified sources by 2020.

Solvay opens second solvent plant using glcerine feedstock Belgian chemical firm Solvay reported on 15 October that it had inaugurated its second plant exclusively dedicated to the manufacture of its bio-based solvent, Augeo, increasing production capacity from 6,000 to 20,000 tonnes/year. The solvent is derived from glycerine (a by-product of biodiesel production), which Solvay said could be used in fragrances, personal care, household and institutional 12 OFI – JANUARY 2021

Renewable news.indd 2

cleaning products; paints and varnishes; and in the agribusiness and oil and gas sectors. Solvay said the product line had been created by its Brazilian researchers in response to its global objective to generate 15% of its revenue from either bio-based or recycled-based materials by 2030. The new plant had been installed at the company’s industrial complex in Paulinia, São Paulo province, Brazil, and was already

operating at full capacity, serving customers on different continents. “The USA is the primary market for the product manufactured in Paulinia, accounting for more than 30% of exports, followed by Europe, Asia, and Latin America.” Solvay said its sustainable solvent had been certified by the Vegan Society, paving the way to new niche markets, such as vegan personal care or home care products. www.ofimagazine.com

03/12/2020 08:52:41

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OFI â&#x20AC;&#x201C; JANUARY 2021

TRANSPORT NEWS IN BRIEF WORLD: Global agribusiness giant Bunge said on 7 October that it had joined other major trading companies to become a signatory of the Sea Cargo Charter Initiative, which is designed to evaluate if shipping activities are in line with adopted climate goals. UN agencies estimate that the international shipping industry carries around 80% of world trade flows and is responsible for 2-3% of global greenhouse gas emissions annually. The shipping of crude oil, coal, iron ore, grain and other bulk commodities made up over 80% of global seaborne trade, Bunge said. “Bunge is committed to finding ways to reduce our environmental footprint on both land and sea,” said director of global logistics Marcio Valentim Moura. The 17 founding signatories of the Sea Cargo Charter include Anglo American, ADM, Bunge, Cargill Ocean Transportation, COFCO International, Dow, Equinor, Gunvor Group, Klaveness Combination Carriers, Louis Dreyfus Company, Norden, Occidental, Ørsted, Shell, Torvald Klaveness, Total and Trafigura.

Hapag-Lloyd suspends US container shipments German international shipping and transportation company Hapag-Lloyd has told exporters it is suspending overseas agricultural container shipments from North America, which is likely to affect US shipments of soyabeans, World Grain reported on 23 October. “Hapag-Lloyd has been one of the most reliable and dependable carriers for rural, inland ag shippers, so this announcement is devastating and shocking,” said Bob Sinner, president of North Dakota-based SB&B Foods and chair of the US-based Speciality Soya and Grains Alliance (SSGA)’s competitive shipping action team. The move would disrupt the food supply chain, Sinner said, noting that consumption of soya goods had been strong during the COVID-19 pandemic and worldwide inventories were low. Hapag-Lloyd delivered 878 shipments of US bulk soyabeans overseas between 22 October 2019-25 September 2020, according to global trade data company Panjiva. The majority had

been shipped to Japan, Indonesia, Hong Kong, Taiwan and Malaysia, as well as to Thailand and South Korea. During that period, there had been 172 shipments of identity preserved (IP) nonGMO food-grade speciality soyabeans. “Companies in those countries rely on us for their food manufacturing,” Sinner said. The decision by Hapag-Lloyd had been driven by unprecedented demand for higher-value North American consumer imports by containers from Asia at premium prices, World Grain said. Hapag-Lloyd had reportedly decided it needed to quickly reposition empty containers back to Asian shipping centres, even if this meant forgoing hauling food and agriculture products back to manufacturers overseas. SSGA said the decision ‘could cause major hardships within the entire US agriculture community’, particularly exporters in the Minneapolis-St Paul region as there was a frequent shortage of inbound containers to meet demand.

FGV expands palm oil storage capacity Malaysian palm oil producer FGV Holdings Berhad (FGV) announced on 16 October that it had expanded its storage capacity due to increased biodiesel demand. The expansion was also aimed at fulfilling the government’s B20 biodiesel mandate for the transport sector, FGV said. Six new vegetable oil storage

tanks had been added to the company’s facilities – four in Pasir Gudang, Johor, with a capacity of 10,400 tonnes and two in Port Klang, Selangor, with a capacity of 5,200 tonnes. Nine additional tanks with a capacity of 20,000 tonnes were currently under construction in Tanjung Langsat, Johor. “Moving forward, FGV plans

to expand its bulking business overseas,” said FGV Group CEO Dato’ Haris Fadzilah Hassan. FGV operates its bulking and storage business through FGV Johor Bulkers, which handles 25% of Malaysia’s total palm oil exports. It also operates two storage warehouses for palm kernel expellers, palm kernel shells and grains.

Strikes may threaten exports from Argentine ports A lack of progress in wage negotiations by oilseed workers and grain receivers in Argentina could put the country’s grain export programme at risk, AgriCensus reported on 13 November. Salary negotiations involving crushers’ union FTCIOD, the San Lorenzo Oil Workers Union (SOEA) and the grain receivers union Urgara had stalled, potentially leading to a nationwide strike, the local crushing and exporters chamber Ciara-CEC said. A nationwide strike against the backdrop of COVID-19 could put the coun-

14 OFI – JANUARY 2021

Transport news Jan.indd 2

Oilseed workers and grain receivers are negotiating for salary increases and better working conditions Photo: Adobe Stock

try’s grain export programme at risk, the chamber said. “The low water levels of the Paraná River added an addi-

tional unforeseen factor that caused, for several months, incremental costs of ship loading, delays, strandings and

price penalties for Argentine products,” Ciara-CEC added. Grain receivers had carried out sudden local strike actions, bringing delays to grain terminals operated by ACA, AMD and Louis Dreyfus and others. Earlier strikes in October had also affected crushing activities nationally, apart from plants and grain ports in San Lorenzo, Santa Fe province, which operated under a separate union. In October, Urgara and FTCIOD signed a deal to coordinate future strikes and jointly negotiate salary increases and better working conditions.

www.ofimagazine.com

03/12/2020 12:04:14

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OFI â&#x20AC;&#x201C; JANUARY 2021

BIOTECH NEWS

EPA approves dicamba herbicides The US Environmental Protection Agency (EPA) has granted five-year registrations for three dicamba herbicides, DTN reported on 27 October. EPA administrator Andrew Wheeler announced the decision to approve new five-year registrations for two dicamba products – XtendiMax and Engenia – and extend the registration of an additional dicamba product on 27 October. A fourth dicamba over-the-top herbicide, FeXapan, had not been included in the latest registration decision, DTN said. In 2018, approximately 41% of US soyabean hectarage was planted with dicam-

USA: New West Genetics announced in September that it had launched a new line of hemp varieties for row crop farmers. The Abound line was backed by seven years of R&D by breeders with experience in traditional crops such as canola and corn, and contained both male and female plants, producing high-CBD flowers and grain, the firm said, “The costly manual labour required for feminised-only hemp seed production is not a scalable option." Using existing farm machinery to direct seed and harvest hemp was also a game changer for the industry and farmers,” said New West Genetics president Wendy Mosher. New West combines traditional breeding and modern genomics to create non-GM, proprietary hemp seed.

limiting the scope that states had to add further restrictions to the federal labels. Wheeler said the additional label changes should address problems with the original 2018 registrations that had been cited in a federal court’s decision to cancel the XtendiMax, Engenia and FeXapan registrations. The court had said that the EPA had failed to take into account the herbicides’ risk of adverse effects to the environment. Agriculture and commodity groups expressed relief at the EPA decision, with the American Soybean Association saying that dicamba was one of many tools integral to the success of soya growers.

Yield10 in omega-3 camelina agreement US agricultural bioscience company Yield10 Bioscience announced on 12 November that it is working with UKbased Rothamsted Research on the development of advanced technology to produce omega-3 oils in camelina. Yield10 signed an agreement with Rothamsted to support the institute’s Flagship Programme, which comprises the plant-based production of omega-3 (DHA+EPA) nutritional oils that closely mimic the composition of southern hemisphere fish oil, an important ingredient in aquaculture feed. Omega-3 oils were also essential for human nutrition, with demonstrated benefits in heart health, Yield10 said. Rothamsted is a leading non-profit research centre that focuses on strategic agricultural science and, over the last decade, science director Johnathan Napier had led a team to demonstrate the production of DHA+EPA oils in

Photo: Rothamsted Research

IN BRIEF

ba-tolerant seed, according to the EPA. “Farmers now have the certainty they need to make plans for their 2021 growing season,” Wheeler said. All three registrations included new measures to ensure the products could be used effectively while protecting the environment, including non-target plants, animals and other crops not tolerant to dicamba. Rules to manage off-site movement of dicamba included the prohibition of overthe-top application on soyabeans after 30 June and cotton after 30 July. Labelling and directions for use would also be simplified. The EPA also announced that it was

camelina seed, carry out field trials, and conduct feeding studies using the DHA+EPA camelina oil in different fish species, including salmon. Under the agreement, Yield10 will provide support to Prof Napier’s ongoing research including further DHA+EPA trait improvement, field testing and nutritional studies. “Yield10 shares our vision for developing camelina as a commercial crop for omega-3 oils based on a land-based route to production,” said Prof Angela

Karp, Rothamsted director and CEO. “Successful commercialisation of this technology could have significant benefits, offering sustainable production of an oil essential for nutrition and wellness to consumers, as well as providing crop diversification to growers.” Yield10 is also developing improved camelina varieties for the production of nutritional oils, proteins and PHA biomaterials, as well as field-testing novel yield traits in canola.

Bayer reports US$11bn loss and higher Roundup settlement bill German chemicals giant Bayer is facing higher legal charges for cancer claims relating to its weedkiller Roundup and US$10.82bn for impairments on agriculture businesses, much of it related to its 2018 Monsanto acquisition, Reuters reported on 3 November. The company said the write-downs, driven by weaker demand from farmers due to low biofuel prices, plus an increase of 16 OFI – JANUARY 2021

Biotech news Jan.indd 2

about US$750M in the costs of settlement terms with US plaintiffs over Roundup, had resulted in a loss before interest and tax of €9.4bn (US$11bn) in its third quarter. “The impact of the (coronavirus) pandemic is placing additional strain on our crop science division. We are also facing negative currency effects”, with a massive depreciation of the Brazilian real weighing heavily on business, Bayer chief financial officer

Wolfgang Nickl was quoted as saying. Bayer had agreed a US$11bn Roundup agreement with US plaintiffs’ lawyers in June but a judge had taken issue with a side arrangement on future cases that might yet be lodged. Addressing those concerns would increase costs to around US$2bn over the original US$1.25bn plan. Bayer said 88,500 of 125,000 glyphosate claims had been agreed in principle. www.ofimagazine.com

03/12/2020 08:59:09

DIARY OF EVENTS 5-7 January 2021 Palm Oil Trade Fair & Seminar (POTS) Digital 2021 (Online) https://potsdigital.vfairs.com/en

20-22 April 2021

10-11 June 2021

12th Palmex Indonesia 2021 Medan, Indonesia http://palmoilexpo.com

Mineral Oil Contaminants in Food Berlin, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=10614

18-22 January 2021

2-5 May 2021

Fuels of the Future (Online) www.fuels-of-the-future.com/en

AOCS Annual Meeting & Expo (Online) https://annualmeeting.aocs.org

18-21 January 2021

9 June 2021

National Biodiesel Virtual Conference & Expo (Online) https://www.biodieselconference.org/

Oleofuels 2021 Marseille, France https://www.wplgroup.com/aci/event/ oleofuels/

21 June 2021 20th International Sunflower Conference Novi Sad Serbia https://www.isasunflower.org/newsevents/news/article/20th-internationalsunflower-conference-novi-sad-serbia1%EF%BB%BF

27-29 January 2021 Globoil India 2020 Taj Convention Centre, Goa, India www.globoilindia.com 25-26 February 2021 OFIC 2021 Kuala Lumpur, Malaysia http://mosta.org.my/events/ofic-2021 14-16 March 2021 87th NIOP Annual Convention Tucson, Arizona, USA https://niop.org/annual-convention 23-24 March 2021 Biofuels International Conference & Expo www.biofuels-news.com/conference/ biofuels/biofuels_index_2020.php 29 March-1 April 2021 World Bio Markets (Online) The Netherlands www.worldbiomarkets.com 14-15 April 2021 Black Sea Grain 2021 InterContinental Hotel, Kyiv, Ukraine https://ukragroconsult.com/en/ upcoming-conferences/ 20-21 April 2021 5th International Symposium ‘Dietary Fat and Health’ Frankfurt, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=9072

Information correct at time of going to press For a full events list, visit: www.ofimagazine.com www.ofimagazine.com

Diary Jan.indd 1

OFI – JANUARY 2021

07/12/2020 10:41:04

INTERNATIONAL MARKET REVIEW

Edible oil values rebound

Edible oil values have bounced back â&#x20AC;&#x201C; and more â&#x20AC;&#x201C; from their mid-year, COVIDdepressed lows, some reaching levels not seen for eight years. Our chart of monthly averages (see Figure 1, right) shows palm oil prices up by as much as 45%, soyabean oil by 34%, rapeseed oil by 23% and sunflower oil up by 42%. The rise comes despite constantly faltering rallies in energy markets on each piece of negative COVID news (curbing biofuel demand) and ongoing lockdowns still eroding use in eating-out outlets. A key factor in the price recovery

John Buckley Jan.indd 2

Source: John Buckley

Edible oil prices have recovered from their mid2020 year lows caused by the COVID-19 pandemic as a result of concerns over the supply of palm and rapeseed oils John Buckley

Figure 1: Crude vegetable oil prices (US$/tonne) has been a raft of crop setbacks and/ or concerns. These have centred on rapeseed, the output of which has stalled for several years, and the top internationally traded palm oil.

The latter has seen slower than expected production this year due to weather and COVID-19 lockdowns. Sunflower production after recent years of record crops, has also disappointed.

07/12/2020 14:54:01

INTERNATIONAL MARKET REVIEW On the bearish side, global consumption of vegetable oils is expected to rise by only about 2.8% this season. That is better than the 1.5% for recently-ended 2019/20 (suffering the brunt of the COVID demand shock) but under the previous season’s 3.6%. Yet, even with record soyabean oil production, fresh oils and fats supplies still can’t keep up. Soyabean oil is expected to contribute about 2.4M tonnes more to world vegetable oil supplies in the new season started 1 October – a slightly larger share than in recent years. Palm oil may also add 2.4M tonnes, well under the 4-5M tonnes annual growth the market had got used to. Despite rapeseed stock draw-downs, its oil output has stagnated while sunflower oil output, after recent years of solid growth, has now gone into reverse (down 2.2M tonnes or 10%) after lower than expected crops in key exporters Russia and Ukraine and former top supplier Argentina. Among major producers, only Europe’s sunflowerseed crop seems to have done reasonably well, despite summer heatwaves and droughts. The forecast is around 9M tonnes, only slightly below the average of recent past years.

John Buckley Jan.indd 3

With no growth in groundnut, coconut, palm kernel and cottonseed oils, net global vegetable oil production is only expected to increase by about 2.2M tonnes in the 2020/21 season that started on 1 October, less than half the forecast rise in consumption. So stocks will drop, both in absolute terms and in relation to demand, to their lowest level for some time. Whether prices continue rising will depend on several factors. These include whether faltering palm oil demand recovers. Palm prices could have risen even more if not for constant nagging doubts about imports holding up amid the ongoing COVID crisis. In top importer India, for example, where rising household consumption of edible oils has only partly compensated for the collapse of ‘outside’ use, home consumers have been switching to more competitive soft oils. As a result, while India’s palm oil imports dropped 23% to 7.2M tonnes in the just-ended 2019/20 season, soya oil imports rose by 9.4% to 3.4M tonnes and sunflower oil by 7.2% to 2.5M tonnes. Third largest palm oil buyer China is also estimated to have cut use by 9.4% in 2019/20 to around 6.4M tonnes and,

like India, used more soya oil (+7.6% at 17.1M tonnes). A surprise perhaps, was number two importer, Europe, which – despite all its negative noise about palm’s environmental/nutritional record – held its share steady at around 9M tonnes. While Indonesia’s own use of palm oil has been rising in biofuels – and demand has more or less held steady – world consumption flattened out for 2019/20 in total. The US Department of Agriculture (USDA) thinks palm oil consumption will start to recover in 2020/21, (by 3M tonnes or 2.6%) but much depends on how soon COVID recedes with the advent of vaccines – and how palm’s large number of developing country customers react to its huge rise in cost (and soya oil’s growing competitiveness). The price outlook for palm oil will also depend on production – whether a now odds-on La Niña lasting several months – plus COVID lockdowns on labour – will exaggerate the usual seasonal yield drop over the winter months. Palm oil is also exposed to a still volatile global energy, constantly oscillating between encouraging and disappointing COVID signals about world fuel demand. u

07/12/2020 14:54:01

INTERNATIONAL MARKET REVIEW stock. Meanwhile, its own crush is seen rising by 8.2% in 2019/2020 – the main reason for world crush rising 12.6M tonnes or 4.1%.

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Figure 2: World vegetable oil consumption (million tonnes)

That now seems to be deterring producers, especially top supplier Indonesia’s plans to use more palm oil in biodiesel. Indonesian use in total is estimated to have risen to 14.4M tonnes in 2019/20 from just 9.1M four years ago. Demand in 2020/21 is seen rising to 15.2M tonnes but the government’s more ambitious plans to use a 40% mix in diesel, subsidised by higher export taxes, now seems to have been mothballed. Indonesia’s palm body GAPKI estimated 2020’s palm oil output would drop to 46.02M tonnes from 2019’s 47.11M tonnes, resulting in an 18% fall in exports. The country is also expected to account for 20% of world demand, 5.5M tonnes more than next largest user, India. By December last year, India had cut imports of Malaysian palm oil by 52% and Europe by 8%. China had imported 20.5% more but Malaysia’s total exports were still down 8% for the year. With production 4% lower, stocks looked unlikely to rebuild soon unless demand falters further. Looking further forward, the extra moisture from La Niña could boost 2021 production, especially in Indonesia where one analyst predicted a 7% increase.

Soyabean oil supply

Soyabean oil supply growth this year is being boosted by larger Brazilian and US crops but the latter has not performed as well as expected. Third largest soyabean producer Argentina hoped to recover from a crop decline earlier in 2020 but might be challenged by dry weather linked to an expected long La Niña – some crop estimates are as much as 5M tonnes under the USDA’s 51M tonnes. Brazil still hopes for around 133M tonnes (7-9M tonnes more) but is also under a dry weather threat. Beyond the Latin American harvests, the soya focus turns back to US 2021 sowing plans. CBOT soya futures have seen a huge rise since last spring, when, amid a far less promising export outlook they looked ready to pierce US$8/bushel. 20 OFI – JANUARY 2021

John Buckley Jan.indd 4

Source: John Buckley

Rapeseed and sunflower oil

The near price has recently been as much as 42% higher and, a year hence, will stay close to US$11. The USDA’s seasonal projections, meanwhile, see farmers earning 21% more this season than last. Futures for maize, soya’s main rival for cropland, have also risen by 40% but their farm price projection is up by only 12.4%. Prices have plenty of room to shift again in the coming months but this currently seems an incentive for US soya farmers, expected by some observers to add several million extra acres next year. The USDA recently gave the soya price a big boost when it predicted the September 2021 US soyabean carryout stock would drop to a multi-year low of just over 5M tonnes compared with the previous season’s 14M tonnes. It wasn’t so long ago that lost China business and a record crop faced the US market with a potential pricedepressing 30M tonne surplus. Five million tonnes is a wafer-thin safety cushion if anything goes wrong with Latin American weather or the next US crop. Other important points to note are: • About 35% of US soya oil consumption goes to biodiesel. The USDA expects crushers to get 16.4% more for their oil this season and 18.5% more for meal. • Brazil has been forced to import soyabeans from some neighbouring countries to control rising domestic prices feeding higher inflation. Rumours that some US soyabeans had gone there were unconfirmed. • The massive turnaround in US exports may be sustained beyond the seasonal window of ‘between crops’ Latin America if the Biden presidency heralds a less belligerent stance towards China. Constant port labour stoppages in Argentina may also help US soya product exports. • China is expected to import 100M tonnes of soyabeans versus last season’s 98.5M tonnes. The country’s soya consumption is recovering as cuts to pig herds caused by African Swine Fever ease. China is also said to want to build a 2M tonne soyabean oil security

Rapeseed oil has suffered from weather reducing crop potential in the former Soviet countries (key suppliers to Europe) and declines in Europe’s crop due to weather and farmers cutting planting in the wake of pesticide bans. No early recovery in EU supply is anticipated, keeping the onus on Ukraine, Russia, Australia and Canada to help fill Europe’s rapeseed oil deficits. By the end of September, the EU had already accounted for 40% of Ukraine’s exportable surplus. Ukraine planted its 2021 winter rapeseed crop amid strong demand and short domestic supplies, inflating prices. But hopes of a higher planted area may have been hindered by lack of rain. Rapeseed therefore faces its smallest global crop in eight years and its second smallest carryover stock of the last decade. The biggest declines in this season’s rapeseed stocks are in Europe and Canada, at around 1M tonnes each. European markets have been relatively slow reacting to the tightening supply outlook. The average cif Hamburg price in the 2019/20 season has only been some 4.6% higher than in 2018/19. World supply is tightening despite top buyer China halving intake from Canada over a political dispute. China consumes about 8M tonnes/year of rapeseed oil (about 20% of its total vegetable oil use) and is expected to import 1.7M tonnes of the oil in 2020/21, as well as 2.5M tonnes of the oilseed. Its own production is estimated this year at 13.3M tonnes of rapeseed and almost 6M tonnes of oil. Winnipeg rapeseed futures have recently traded at multi-year highs amid strong Canadian crush and export demand. With the country’s own Grain Commission reporting exports up almost 50% for the season to date, even that figure starts to look conservative. As for sunflower oil, in Europe, the product nowadays plays a larger role, accounting for some 4.7M tonnes or about a third of all the bloc’s food use of vegetable oils versus under 3M tonnes each for palm and rapeseed oils and 2.5M tonnes for soyabean oil. Amid zero supply growth, Europe’s sunflower oil consumption is seen stable but if other oil prices firm up further, sunflower oil will have to follow suit as a favoured oil in many food sectors. ● John Buckley is OFI’s market correspondent www.ofimagazine.com

07/12/2020 14:54:02

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PALM OIL Global demand for palm oil will be led by increases in per capita income and population. As the world’s top palm oil producer, Indonesia’s growth is trending down, while biodiesel will take up an increasing share of domestic consumption Fadhil Hasan Indonesia and Malaysia are the world’s major suppliers of palm oil, accounting for about 85% of global production. The remaining 15% come from countries such as Thailand, Nigeria and Colombia. Global palm oil production has expanded by around 5% annually in the past six years, up from 52.6M tonnes in 2011/2012 to 74.5M tonnes in 2018/2019 on the back of productivity improvements, favourable climate conditions and area expansion, especially in newly producing palm oil countries. Long-term demand will be led by population growth, an increase in income per capita, increased consumption in developing countries and expansion of palm oil usage. Factors pointing to positive prospects include growing food demand from countries such as Bangladesh, Pakistan and the USA; and stable exports to China, India and the EU. Growing fuel demand and the mandatory use of biodiesel (in some cases palm oil-based) in countries such as Indonesia, Malaysia, Thailand, EU and the USA are other positive factors for the palm oil industry. Palm oil is the cheapest edible oil and has the highest yield per hectare among all vegetable oils. However, the industry is threatened by increasing costs of production, stagnating productivity, trade restrictions among importing countries and a negative public perception.

Indonesian production slows

As the world’s number one palm oil producer, Indonesia’s growth rate is trending down. The country’s average annual palm oil production growth was 10% from 20052010, 8% in 2010-2015 and 3% in 20152020, according to the US Department of Agriculture (USDA). Overall, production is expected to maintain only a slow expansion of 3%/ year in the 2020-2027 time frame. A moratorium on the issue of licenses 22 OFI – JANUARY 2021

Indonesia 2 pages.indd 2

Indonesia focus to open new plantations, reduced price incentives, extreme weather patterns, a productivity gap between smallholders and private plantations, and negative publicity relating palm oil to environmental, health and child labour issues will continue to impede production expansion. Declining seed sales in the past five years further confirms low production growth prospect in 10 years’ time. Oil palm seed sales have fallen from 171M seeds in 2012, to 103M seeds in 2014, to 52M seeds in 2016, according to the Indonesia Oil Palm Seed Producer Association. As the number two palm oil producer, Malaysia’s production expansion is also trending down, with much slower growth performance compared to that in Indonesia. Malaysia’s average annual palm oil production growth rate was 3.2% from 2005-2010, 2.3% from 2010-2015, 0.7% from 2015-2020, and is projected at 1% from 2020-2027, according to the USDA. Future production of palm oil will be challenged by various issues including a low replanting rate resulting in a high proportion of old crops and stagnant productivity. Malaysia also faces labour shortages to harvest oil palm and the land

available for new plantings is very limited. In contrast, other producing countries with good land supply should be in a good position to compensate for low growth prospects in Indonesia and Malaysia. Foreign direct investment (FDI) in terms of capital and technology will play a pivotal role in supporting production expansion in this new frontier. However, the lack of price incentives, uncertain socio-political conditions and high labour costs in South America – such as in Brazil – will limit the FDI flow into these countries in the medium term. In light of all the challenges, palm oil production in other producing countries is projected to grow at 2-3% annually from 9.5M tonnes in 2017 to 12.8M tonnes in 2027, which is considered insufficient to compensate for the production slowdown in Indonesia and Malaysia.

Consumption trends

World consumption of palm oil has expanded at an annual growth rate of 5.3% within the 2011/2012-2016/2017 time frame on the back of growing populations and incomes, increasing fuel use and price competitiveness. India, Indonesia and the EU are the major consuming countries, followed by u

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07/12/2020 08:37:17

AF_ROSEDOWNS_OFI_HALFPAGE_CORPORATE.pdf

02/12/2020

14:05

CMY

www.ofimagazine.com

OFI â&#x20AC;&#x201C; JANUARY 2021 23

Forecast Produksi, Domestic Use dan Export 2025

PALM OIL

65 60 55 50

45 40 35 30

25 20 15 10

5 0 2019

2020

2021

2022

2023

2024

Food and Others

Biodiesel

Biohidrocarbon

PLN*)

Palm Production

Export

2025

Figure 1: Forecast for Indonesian palm oil production and exports (million tonnes) u China and Malaysia. Indonesia is not only the world’s largest palm oil producer, it will also become the largest consumer due to its B20 mandatory blending programme. China will experience flat consumption growth due to a moderation in its GDP growth. Despite various negative campaigns against palm oil, the EU remains a stable export market. For the 2017-2027 period, growing fuel use, population growth especially in developing countries and emerging demand from new importing countries such as Pakistan, Iran and Bangladesh, will be positive factors leading to palm oil consumption growth. On the other hand, China’s slowing economic growth and more intense negative campaigns against palm oil could slow the consumption pace. Building on such mixed factors, palm oil consumption is predicted to expand at a slower pace than in the past five years. LMC International predicts global palm oil demand to grow by 3.1%/year within the 2015-2025 time frame.

Palm oil prices

Since 2007 when many countries launched mandatory biofuel programmes in which palm oil is a biodiesel feedstock, the price of palm oil has closely correlated with the price of fossil fuel. As a result, the price of fossil fuel becomes an important factor in determining palm oil prices. Projections of palm oil production and demand indicate excess demand between 2017-2027, suggesting an uptrend in prices. Crude oil prices are also expected to stay firm in the decade to come, providing incentives for a stable-to-gradual increase of crude palm oil (CPO) prices. The April World Bank Commodity Markets Outlook confirms a moderate 24 OFI – JANUARY 2021

Indonesia 2 pages.indd 3

increase (an annual growth of 2.3%) in palm oil prices from US$639/MT in 2018 to US$743/MT in 2025.

Indonesian production, exports

Indonesia’s palm oil production is expected to increase over time and is expected to reach 60M tonnes in 2025, while exports are set to decline as domestic usage increases, mainly due to the country’s biodiesel programme (see Figure 1, above). Industrial usage will remain relatively stable while biofuel use will increase significantly. The export of palm oil products has grown from 27.46M tonnes in 2015 to 35.83M tonnes in 2019, with oleochemicals and biodiesel showing the most significant growth. In 2019, China was Indonesia’s top export market, taking in 8.14M tonnes. This was followed by other markets (7.72M tonnes); EU (5.74M tonnes); India (5.16M tonnes); Africa (3.02M tonnes); Middle East (2.48M tonnes); Pakistan (2,23M tonnes); USA (1.51M tonnes); and Bangladesh (1.38M tonnes). Indonesia’s domestic consumption of palm oil products has risen from 8.31M tonnes in 2015 to 16.73M tonnes in 2019. The main area of growth has been for biodiesel, with demand rising from 794,000 tonnes in 2015 to 5.81M tonnes in 2019. Oleochemical use nearly doubled from 544,000 tonnes in 2015 to 1.056M tonnes in 2019. Domestic consumption of palm oil for food use has grown steadily from 6.971M tonnes in 2015 to 9.860M tonnes in 2019.

Looking ahead

Indonesia’s production of palm oil in 2020 is expected to be about 1.5% lower

Source: F Hasan, 17th Global Oleochem Summit 2020

palm oil to er time will reach onnes t decline c used ainly due program. sage able while ases y over

than in 2019. The impact of the El Niño weather pattern in 2019 led to a fall in fresh fruit bunch quality. Combined with low prices, this led to a 30-40% fall in smallholder maintenance and application of fertilisers. The country’s production and export activities continued to operate as normal in 2020 despite the COVID-19 pandemic but with health protocols in place. The palm oil industry was unaffected by social distancing measures as it was included in the ‘essential economic activities’ category. However, labour movement was restricted. Overall demand for palm oil in 2020 has declined, mainly due to the economic impact of COVID-19. Consumption in 2020 was lower due to falling demand from both the biofuels and food industries. This fall was a result of the global economic slowdown and the difficulties in fulfilling mandatory biofuel programmes in several countries as the gap between the price of CPO and fossil fuel widened. China experienced regional quarantines making port access difficult. In India and Pakistan, the uncompetitive price of palm oil led to a drop in demand. India also implemented new regulations that hampered palm oil imports. Despite the widening gap between CPO and fossil fuel prices, Indonesia will continue to implement its biofuel programme although mandatory B30 blending has been delayed due to increased costs in covering the difference between fossil fuel and diesel prices. The government has taken measures to guarantee the country’s B30 programme by increasing the palm oil export levy, lowering margins for biofuel producers and allocating a Rp.2.87tr budget for replanting and a smallholder programme. It is predicted that Indonesia’s production and export of CPO will reach 43.7M tonnes and 27.5M tonnes respectively in 2020, a decline of about 1.5% and 3% from previous years. However, in 2021, production and export will recover to about 48.5M tonnes and 30M tonnes respectively. Expected stock increases, along with lower prices, means that CPO prices are expected to average around US$500550/tonne. In this regard, the B30 programme plays an important role in stabilising the price of palm oil. ● This article is based on a presentation made by Fadhil Hasan, executive director of the Indonesian Palm Oil Producers Association (GAPKI), at the Enmore 17th Global Oleochem Summit in Xiamen, China on 15-17 July 2020 www.ofimagazine.com

07/12/2020 08:37:18

PALM OIL are justified, will we face a large price correction or will they persist?”

Global palm oil landscape

Palm oil accounts for 32% or some 75M tonnes of the 234.4M tonnes of oils and fats produced globally (see Figure 1, below), said Ng. It also accounted for 57% or 54M tonnes of the 95.5M tonnes of oils and fats traded worldwide in 2019. Indonesia and Malaysia are the main global producers of palm oil, accounting for 58% (43M tonnes) and 26% (19M tonnes) of global production respectively in 2019. Indonesia was also responsible for 55% (29.7M tonnes), and Malaysia 34% (18.36M tonnes) of world palm oil exports in 2019. Global demand is split into 70% for food (52.5M tonnes), 20% for biodiesel (15M tonnes) and 10% for oleochemical and other uses (7.5M tonnes).

Riding the price rollercoaster

Photo: Adobe Stock

Weather and rainfall

Ng, regional head of agribusiness Despite the global COVID-19 research at CGS-CIMB. pandemic, palm oil prices “We have had a global pandemic that has disrupted everyone’s lives and have rebounded. Will they affected many people’s livelihoods, and remain high and what will yet palm oil prices have remained immune to economic chaos,” McGill said. “The palm oil landscape 2021 production and demand Global question is whether these high prices look like? Serena Lim

www.ofimagazine.com

Palm oil prices.indd 2

Malaysia 26%

Production

Others 9%

Exports

Guatemala 2% 75.6m MT

Indonesia (58%) + Malaysia (26%) = 84%

54.0m MT

Malaysia 34%

Indonesia 58%

Imports

Indonesia 55%

Indonesia (55%) + Malaysia (34%) = 89% India 19%

Others 52%

54.4m MT

EU 16%

China 13%

India (19%) + China (13%) + EU (16%) = 49%

Figure 1: Global palm oil landscape, 2019

SOURCE: MPOB, CGS-CIMB RESEARCH

OFI – JANUARY 2021

Source: Ivy Ng, CGS-CIMB

The year 2020 has been a remarkable and volatile one for crude palm oil (CPO) prices, Dr Julian McGill, head of Southeast Asia at LMC International, told the Virtual POC2020 conference on 27-28 October. Hovering around US$550/tonne in January 2019, the price drifted slowly downwards for the next six months before rising rapidly due to more severe drought concerns in Indonesia, to hit a level of more than US$700/tonne in January 2020 (see Figure 2, p26). Then came COVID-19 lockdowns, leading to prices bottoming out in April 2020. Surprisingly, however, prices rebounded, reaching almost US$700/tonne in October. CPO prices are on track to record their best year since 2017, added Ivy

Others 12% Thailand 4%

A key factor for the palm oil outlook is weather and rainfall, McGill said. Rainfall was around 60% below average levels between June-September 2019, with immediate impacts on oil palms including fresh fruit bunch (FFB) failure and reduced yield and crude palm oil (CPO) output. “It was also clear that the severity of the water deficit would have a lagged impact on yields 12 months later with lower output from drought-strained trees.” There were also lower prices in 2019 and, therefore, less fertiliser application, with an expected effect on later yields. However, a year later in June 2020, floods arrived with rainfall at one point 80% higher than normal, washing away roads and creating logistical difficulties in CPO and FFBs to mills. inmoving 2019 Indonesian production in 2020 fell by u

07/12/2020 08:44:34

u 5% compared to the previous year. Malaysia saw an output similar to 2019’s (see Figure 3, below). McGill said this was the first time Indonesia had underperformed against Malaysia. “We have become used to seeing Indonesian output at a structurally higher Monthly Malaysian crude palm oil price, US$/tonne level than Malaysia.” However, as Indonesia’s palm oil industry

has declined,” McGill said. “This means that in the future, Indonesia is going to rely more and more on yields to determine output growth and we can’t expect to see the year-on-year growth in the way we have seen in the past.” Nonetheless, 2021 would see an improvement in palm oil production because the La Niña weather pattern – which brings higher rainfall – meant there would be no problems with insufficient rain.

had expanded, plantations had moved further south into Kalimantan, south Sumatra and Papua, which were further away from the optimal equator area. Indonesia had also had the benefit of quite large volumes of palm oil coming from new areas reaching maturity. “That growth has now slowed as restrictions to new plantings and low prices have meant that expansion in area

The palm oil price rollercoaster

Source: McGill, LMC International, Virtual POC

Malaysian crude palm oil price (US$/tonne)

750 700 650 600 550 500 450

… has reduced palm oil output substantially 400

Jan-19

Apr-19

Jul-19

Oct-19

Jan-20

Apr-20

Jul-20

Oct-20

BMD third position

Year on year change in Malaysian and Indonesian palm oil production

2020 in hindsight – are palm oil prices too high?

25%

Source: McGill, LMC International, Virtual POC

20%

10% 5% 0% -5% -10%

2. COVID-19 only palm 2001 reduced 2003 2005 2007 2009 oil 2011exports 2013 2015 briefly 2017 2019 -15%

Indonesia

Malaysia

Monthly exports of crude and refined palm oil from Indonesia and Malaysia by destination

Figure 3: Year-on-year change in Malaysian/Indonesian palm oil production

2.0

6.0

1.5

4.5

1.0

3.0

0.5

1.5

Jan 18

Jul 18 World

Jan 19

Jul 19

China, India and EU

Jan 20

Jul 20

0.0

Rest of World

26 OFI – JANUARY 2021

Palm oil prices.indd 3

Production of palm oil in both Malaysia and Indonesia has continued despite COVID-19 lockdowns last year. Malaysia introduced movement control orders from 13 March-28 April but the palm oil industry was allowed to operate as it was considered an essential industry, Ng said. The Sabah state government ordered oil palm estates in up to six districts to suspend operations from 25 March-10 April, with around 75% of estates affected between 1-10 April, leading to an estimated 100,000 tonnes of production loss during the 10 days. More recently, Sabah state was placed under a conditional movement control order from 13-26 October and Selangor, Putrajaya and Kuala Lumpur were also placed under conditional movement control orders from 14-27 October but there was no impact on fresh fruit bunch output (FFB) output as plantation activity was considered essential, Ng said. However, Malaysian producers have been impacted by labour shortages due to a freeze in foreign worker permits. In Indonesia, protocols such as temperature checks and movement controls were introduced to prevent the spread of COVID-19 among workers but there were no plans to reduce workers’ hours or activities.

Demand and exports Total palm oil exports (million tonnes)

7.5

0.0

COVID impact on production

2020 in hindsight – are palm oil prices too high?

2.5

Source: McGill, LMC International, Virtual POC

Year on year change in output

15%

Indonesian and Malaysian exports of palm oil by destination (million tonnes)

PALM OIL

COVID-19 initially impacted palm oil demand due to lockdowns and the decline in eating out. However, palm oil exports only fell briefly, McGill said. China, India and the EU were the main markets for palm oil, and exports to these three countries fell more dramatically, with India and China’s strict lockdowns and restaurant closures hitting palm oil use in frying and catering (see Figure 4, left). India’s imports of palm oil products (RBD palm oil, CPO + CP olein + CPKO) fell to a low of 335,000 tonnes in March 2020 compared with 802,000 tonnes in March 2019 but rebounded to 734,000 tonnes in August 2020, Ng added. However, consumption returned once www.ofimagazine.com

07/12/2020 08:44:36

PALM OIL

Rising share of biodiesel in palm oil usage

Biodiesel effect

Another key factor in determining future palm oil demand will be the price spread between crude petroleum oil prices and vegetable oil prices. With diesel prices down and CPO prices high, it becomes uneconomical to blend palm oil into biodiesel, according to Ng. Indonesia expanded its biodiesel mandate to a 30% blend from 20% effective 1 January 2020. “B30 could translate to an incremental www.ofimagazine.com

Palm oil prices.indd 4

(m tonnes) 100.0

10-year CAGR : 5.6%

60.0 40.0

37.7

20.0

42.6

2007

2008

65.3

62.6

60.9

71.5

10-year CAGR : 18.0%

2009

2010

9.0

7.0

4.9

4.1

3.4

2.3

1.4

59.5

57.8

52.4

47.9

46.4

45.2

2011

2012

Total palm oil usage

2013

10.1 2014

2015

2016

14.3

11.1

10.7

8.6

2017

2018

40% 28%

30% 25% 20% 15% 10% 5% 0%

14% 4% 2007

16%

2008

32%

16%

17%

2013

2014

29%

31%

17%

2016

2017

22%

21%

13%

10%

2009

2010

2011

17.7 2019

Palm oil used as biodiesel feedstock

45% 35%

77.6

Source: Oil World, CGS-CIMB, Ivy Ng, Virutal POC

80.0

2012

Palm oil's share of feedstock used for biodiesel

14%

2015

35%

20%

2018

39%

23%

2019

Palm oil used in biodiesel as a % of total palm oil consumption

SOURCE: OIL WORLD, CGS-CIMB RESEARCH

Figure 5: Rising share of biodiesel in palm oil usage

Global palm oil production prospects 68.3

80.0 70.0 60.0 50.0 40.0

63.1

59.5

1.2 2.4 3.9 2.1

1.6 2.6 4.8 2.6

1.4 2.5 4.1 1.8

36.8

33.5

77.4 1.4 2.8 5.3 3.1

74.3

75.7

1.3 2.7 5.0 2.8

1.3 2.7 5.1 3.1

43.0

43.7

43.0

45.0

74.7 1.3 2.7 5.2 3.0

32.4

30.0 20.0 10.0

20.0

17.3

19.9

19.5

19.8

19.5

19.8

2015

2016

2017

2018

2019

2020F

2021F

Malaysia

Indonesia

Thailand

C&S America

Africa

Others

SOURCE: MPOB, OILWORLD, CGS-CIMB RESEARCH

Figure 6: Global palm oil production prospects (million tonnes)

demand of up to 2.5M tonnes for CPO, or 6% of Indonesia’s output. Something to watch out for is whether B30 can be sustained, as the CPO funds to support Indonesia’s biodiesel programme may not be sufficient due to the wider CPO premium over gas oil,” Ng said. McGill added that Argentina and Brazil had already lowered their biodiesel mandates because they could not fund their biodiesel programmes at such high costs.

Future prospects

Despite the huge shock from COVID-19 on people’s eating habits and livelihoods, vegetable oil prices rallied from June 2020, said McGill. “COVID-19 reduced palm oil demand, but only in China and India and during a period of relatively low CPO availability. Once the lockdowns eased, demand returned.” The virus also led to lower diesel, and therefore, biodiesel usage but the use of vegetable oils in the USA and EU rose to

Source: MPOB, Oil World, CGS-CIMB, Ivy Ng, Virutal POC

lockdowns were lifted and India and China also resumed imports in order to replenish stocks. India also started buying palm oil from Malaysia again in May after a four-month diplomatic row over Indian government policy on Muslims, McGill said. “In addition, food use is not the only use for palm oil,” McGill said. “There is biodiesel as well.” According to Ng, the use of palm oil in biodiesel as a percentage of total palm oil consumption has risen from 4% in 2007 to 23% in 2019 (see Figure 5, right). “COVID-19 lockdowns dramatically reduced travel, resulting in much lower demand for jet fuel, gasoline and diesel,” said McGill. As biofuels were mostly blended with transport fuel, this reduced biofuel demand worldwide. While jet fuel demand remained low, the fall in diesel demand was not so dramatic as the fuel was used in heavy goods vehicles which continued deliveries. “In a surprising twist, the reduced availability of waste feedstocks (such as used cooking oil and animal fats) in the USA and EU meant that demand for vegetable oil methyl esters actually increased,” McGill said. When looking at feedstocks for US biodiesel, for example, corn oil fell because it is a co-product of ethanol production, which also decreased. The availability of yellow grease or used cooking oil (UCO) declined because people were not eating out as much. Animal fat feedstock also declined due to COVID-19 outbreaks at slaughterhouses and meat packing plants. “The remarkable impact has been that soyabean oil use in biodiesel has increased,” McGill said. The situation in Europe was similar but more extreme because of the EU’s policy of double-counting waste biodiesel feedstocks. Because UCO became less available due to the fall in eating out, 1M tonne of UCO biodiesel feedstock needed to be replaced by 2M tonnes of vegetable oil, increasing demand for vegetable oil for biodiesel, and palm oil usage, McGill said.

compensate for the lower availability of waste feedstocks. “Droughts in 2019 followed by floods in 2020 have meant lower Indonesian palm output while droughts in the Black Sea region have also limited sunflower and rapeseed production. The result of this has been to keep prices elevated.” As for 2021, Ng expects Indonesian palm oil production to recover by 2-3M tonnes (see Figure 6, above). “Overall, we project global palm oil supply will be lower by 1M tonnes in 2020 before recovering by 2.7M tonnes in 2021.” A rebound in global GDP post COVID-19 and low stocks in consuming countries boded well for palm oil demand in 2021. Ng said demand was expected to drop by 2M tonnes in 2020 before growing by 3M tonnes in 2021. A widening CPO price discount against other edible oils supported demand, with Chinese imports and Indonesian usage of palm oil for biodiesel being key factors to watch out for, she concluded.  Serena Lim is the editor of OFI OFI – JANUARY 2021

07/12/2020 08:44:36

RENDERING

Sustainable pet food The USA uses around 1.5M tonnes of rendered protein meals to produce pet food for dogs and cats, helping to reduce food waste magazine article on the report. “The rendered protein and fat ingredients that pet food manufacturers use are highly sustainable. Rendering reduces food waste by transforming otherwise unused portions of an animal into safe and nutritious pet food ingredients.”

Ingredients breakdown

The DIS report analysed 2018 US retail dog and cat food sales at an estimated value of US$30.3bn, including all forms of pet food such as dry/kibble, moist, wet/ canned and treats.

Figure 1: Ingredients used in US dog and cat food 28 OFI – JANUARY 2021

Pet food 1.5 pages.indd 2

Source: Decision Innovation Solutions

Over two-thirds of American households own a pet and US pet food manufacturers used 1.5M tonnes of rendered protein meals as ingredients with a value of US$563M in 2018, according to a report prepared for the Institute for Feed Education and Research, North American Renderers Association (NARA) and Pet Food Institute published in March last year. Rendered protein meals are the third most important pet food ingredient by volume in the USA, according to the report by Decision Innovation Solutions (DIS), entitled ‘Pet Food Production and Ingredient Analysis’ (see Figure 1 below). “The United States is the largest and most sophisticated pet food market,” the NARA said in an April 2020 Render

The ‘reverse engineering’ of ingredients from the retail product labels identified 542 standardised food ingredients used in dog and cat foods. Among the 542 ingredients, 280 were aggregated into nutrient groups such as animal protein, animal fat, plant protein, plant carbohydrate and fruit and vegetable crop ingredients, with animal protein ingredients comprising a majority of the total number of ingredients. According to the report, the total amount of food ingredients used in US pet food manufacturing was 8.65M tonnes with an ingredient value of US$6.9bn. Farm and mill-based ingredients totalled 4M tonnes, valued at US$1.39bn or 46.8% of the ingredient tonnage but only 20.1% of the ingredient value (see Figure 1, left). This category included whole grains (barley, corn, oats and wheat), mill feeds (such as malted barley, corn gluten feed, corn meal and rice flour), soya products (such as soyabean meal and soya protein concentrates), fruits and vegetables, dairy and egg products, root products, vegetable oils (such as soyabean oil, canola oil and coconut oil) and sweeteners. Fresh and frozen meat and poultry products, including poultry by-products and organ meats, totalled 2.1M tonnes, valued at US$3.2bn, or 24.6% of tonnage and 46.7% of ingredient value. Rendered protein meals totalled 1.5M tonnes, valued at US$563M, or 17.8% of tonnage, but 8.1% of ingredient value. Other ingredient categories included animal and poultry fats, fishery products and ingredients, broth from animal and poultry products, minerals and other additives, and water.

www.ofimagazine.com

03/12/2020 13:26:29

RENDERING Animal-based ingredients Looking in more detail at animal-based ingredients for pet foods, meat and poultry was the largest ingredient in terms of tonnage and value (1.3M tonnes and US$2.75M respectively), (see Table 1, right). However, poultry meal, animal meal, animal fat, fish meal and poultry fat were also important ingredients, totalling 1.8M tonnes and worth US$716M. Rendered protein meals are made primarily from by-products of beef, pork, lamb, chicken and turkey production. The rendering processing takes a variety of animal and poultry by-products of relatively low value and turns them into higher-value feed products with a relatively high protein content. “There are 1.5M tonnes of rendered protein meals in pet foods with a value of US$563M,” the report said. Meat and bone meal is the most used rendered protein ingredient in pet foods at 635,652 tonnes, valued at US$184.6M. Other significant rendered protein ingredients include chicken by-product meal (353,608 tonnes, US$126.9M value), chicken meal (192,370 tonnes, US$69.1M value)

Commodity type

Tonnes

US$ value

Meat and poultry 1,333,248 Broth 166,851 By-product and organ meat 501,413 Poultry meal 768,949 Animal meal 715,130 Animal fat 232,174 Fish meal 59,050 Poultry fat 56,862

$2,794,604,543 $834,255,514 $294,733,555 $276,747,695 $211,345,820 $125,003,968 $74,495,363 $28,431,210

Total 3,833,678

$4,639,617,668

Source: ‘Pet Food Production and Ingredient Analysis’ report, 2020

Table 1: US total pet food animal-based ingredients, volume and value and poultry by-product meal (190,023 tonnes, US$68.2M value). There were 31 ingredient groups from animal and poultry processing and/or rendering used in pet foods identified in the DIS report. The term, ‘Slaughter/rendering’, is used for this category since some of the products can be sourced directly from animal and poultry processing facilities and some of the same products can be sourced from rendering facilities. The leading ingredients by value were beef (244,113 tonnes, US$1.2bn value), lamb (86,375 tonnes, US$690M value) and chicken (854,988 tonnes, US$650M value).

Sustainable

•

Reducing food waste

“With pet owners’ growing interest in the sustainability and carbon footprint of their pets’ food, we feel it is important to highlight that the rendered protein ingredients in their pets’ food is not only nutritious but is also helping to reduce food waste,” said NARA president Nancy Foster in the Render article. “While about half of an animal isn’t eaten by people, that food provides proteins that our pets crave due to the high nutrient content. Rendering takes that material, which would have otherwise been wasted in landfills, and transforms it into the safe and nutritious pet food that dogs and cats need.” 

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Pet food 1.5 pages.indd 3

OFI – JANUARY 2021 29

03/12/2020 13:26:32

PLANT & TECHNOLOGY

Global round-up of projects

IN BRIEF USA: A new soyabean crushing plant will be built in Iowa by Shell Rock Soy Processing (SRSP), a partnership between US farmer-owned Mid-Iowa Cooperative and Mid-Iowa CEO Mike Kinley. Once operational in 2022, SRSP would crush 38.5M bushels/year of soyabeans, Mid-Iowa said on 13 October. Pending state and local approvals, the plant would be built at the Butler Logistics Park northwest of Shell Rock. Mid-Iowa would help originate soyabeans for the plant, which would produce 847,000 tonnes/year of soyabean meal for livestock feed markets, 462M pounds/ year of crude soybean oil, and 77,000 tonnes/year of pelleted soyabean hulls. The meal and hulls would be used in livestock feed rations. The soyabean oil was suitable for a range of applications, including the human food sector.

Diamond Green Diesel set to double capacity at Norco site US renewable diesel producer Diamond Green Diesel (DGD) is set to double the production capacity of its 275M gallons/year Norco plant to 675M gallons/year, Biomass magazine reported on 3 November. The Louisiana facility converts inedible oils and waste fats into renewable diesel fuel using Honeywell technology. Expansion was currently underway and on track to be completed in 2021, Biomass magazine said. The joint venture between rendering firm Darling Ingredients and Valero Energy Corp had also received the necessary air permit for its proposed DDG III renewable diesel plant in Port Arthur, Texas, WFMZ reported on 27 October. “Our timeline to construct an additional 400M gallons of renewable diesel production in Port Arthur is on schedule,” said Darling Ingredients CEO Randall Stuewe. A final investment decision was expected to be made early this year. “As we meet this investment decision timeframe, we believe that DGD III would be operational in 2024,” Stuewe said. DGD said it was the North America’s largest

Photo: Diamond Green Diesel

Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world

renewable diesel producer and that it would have a renewable diesel capacity of 1.1bn gallons if the DGD III project went ahead. Honeywell said its Ecofining technology – jointly developed by UOP and Eni SpA – was currently in operation at four commercial-scale facilities, including two in the USA and two in Europe.

CVR proposes renewable diesel project US petroleum refining company CVR Energy is planning a renewable diesel project at its Kansas site, Reuters reported on 3 November. The proposed 132,000 barrels/day Coffeyville facility would be dependent on the firm’s success in producing renewable diesel at its Wynnewood plant in Oklahoma, the refiner said to Reuters. CVR said it had excess hydrogen capacity and a high-pressure hydrotreater at Coffeyville that could be repurposed for renewable diesel production, pending approvals. The firm said it was converting a hydrocracker at Wynnewood to produce renewable diesel and

it could receive feedstock as early as May 2021, and begin processing by the following July. Crude oil processing at the plant would fall from 75,000 to 55,000-59,000 barrels/day. “If market conditions change materially, then we would have the option to return the unit to hydrocarbon service fairly easily at minimum cost,” CVR chief executive David Lamp said. If refining margins remained weak, the refiner planned to install a pre-treatment unit at Wynnewood to process lower carbon-intensity feedstocks such as inedible corn oil, animal fats and used cooking oil.

Preem plans to convert Lysekil refinery to produce renewable fuel Renewable raw materials had been conveted for the first time to Swedish Environmental Class 1 diesel at renewable transport fuel producer Preem’s refinery in Lysekil, the firm announced on 11 November. “This is part of a larger project aimed at rebuilding the existing Synsat plant for the large-scale production of renewable fuels,” 2 OFI 2018 30 OFI––MONTH JANUARY 2021

P&E.indd 2

the firm said. “To begin with, 5% rapeseed oil will be combined with the fossil raw material for a limited period.” The aim was to produce up to 950,000m³/year of renewable fuel at the facility by 2024. “We are now embarking on a comprehensive restructuring of the refinery and it is gratifying to be able to start Lysekil’s journey

toward becoming a biofuel refinery,” refinery manager Aad van Bedaf said. Upon completion, the plant would be able to receive 40% renewable raw materials, with the prospect of reaching higher levels. Investment decisions were planned for the summer of 2021 and the company expected the plant to be operational by 2024. www.ofimagazine.com www.ofimagazine.com

03/12/2020 12:35:43

PLANT & TECHNOLOGY

Cargill to build multi-waste biodiesel plant Global agribusiness giant Cargill is building a US$150M multi-waste biodiesel plant in Belgium, the company said on 22 October. The new waste and residues-based facility will be built at the company’s existing integrated oilseed crush and Bioro biodiesel site in Ghent. Construction of the 115,000 tonnes/ year plant was due to begin in October 2020, with a scheduled opening date of June 2022. “The new facility will be the first plant in Europe capable of processing all kinds

of feedstocks, including acid oils from vegetable oil refining, liquid residues from industrial processes, and even the fat recovered from sewage sludge from local municipalities,” said Roger Janson, president of Cargill’s agricultural supply chain across Europe, the Middle East and Africa. Using technology supplied by BDI-BioEnergy International, the plant will process all types of liquid waste oils and fats, including by-products from food processing, waste from the food industry, and nonfood crops grown on marginal land.

“The plant will utilise recycled products that would have previously been disposed of or used for low-value applications,” said Cargill Biodiesel managing director Alexis Cazin. “In certain sectors such as transportation, developing high blend solutions for trucks or significantly reduced carbon marine fuel for shipping can only be achieved using this waste processing technology. Advanced biodiesel from waste and residues will provide concrete, cost effective solutions.”

EOL to double production at Erith site Packaged oils producer Edible Oils Ltd (EOL) is set to increase production at its Erith bottling plant by around 50% following a £23.6M upgrade, the company announced on 20 October. A major producer of packaged oils for the retail sector, the UK company is a 50/50 joint venture between leading food and drink group Princes and global agribusiness giant Archer Daniels Midland. Producing over 100M litres of cooking oil/year, the Erith site forms the hub of EOL’s cooking oil production and bottles the leading brands of Crisp’n’Dry, Flora and Mazola Corn Oil. The site also packs corn, rapeseed and sunflower oils for customer own brands. The plant is adjacent to one of the largest seed oil crush-

EOL has three sites which specialise in the bottling and packing of edible oils – Erith and Belvedere, UK and Szamotuły, Poland Photo: EOL

ing and refining complexes in Europe. “We have overcome some significant challenges posed by the COVID-19 pandemic to reach this point, and we are now ready to deliver state of the art equipment, better energy efficiency and increased production capabilities,” said EOL commercial director

Kim Matthews. The site would remain fully operational during the upgrade, which would include a new production line and palletising solution. EOL is a leading supplier of both branded and customer own brand bottled oils and white fats to the UK and mainland European markets.

Pacific Ethanol to sell or repurpose idle plants Renewable fuel producer Pacific Ethanol announced on 26 October that it is planning to sell or repurpose idle plants as part of its change in focus, which included a change of corporate name and a re-focus on its speciality alcohols and essential ingredients interests. “Our company was founded to supply low carbon renewable fuel for the transportation market. While we will continue to participate in that market, transportation fuels are no longer our primary focus,” said Pacific Ethanol CEO Mike Kandris. The company recently obtained ISO 9001 certification for its largest speciality alcohols production facility and it said it would be pursuing additional qualifications to expand its supply range in the consumer goods market. www.ofimagazine.com

P&E.indd 3

During the past nine months, the company had increased production of speciality alcohols used in consumer products while reducing fuel grade ethanol production. The company’s production mix shifted from approximately 85% fuel grade ethanol and 15% speciality alcohols used in consumer products during 2019, to approximately 50% each for the three months ended 30 September 2020. Going forward, the company said it would focus on speciality alcohols and essential ingredients for four key markets: health; home and beauty; food and beverage; and renewable fuels. As part of the realignment, the company said it would be selling or repurposing its Magic Valley, Stockton and Madera fuel-grade ethanol distilleries, which were idled earlier this year.

IN BRIEF USA: US oil refining firm Continental Refining Company (CRC) is set to convert its Somerset oil refinery to crush soyabeans and produce biofuels, the company announced on 18 November. If the project is approved, CRC’s parent company Hemisphere said production at the Kentucky site would be expected to begin by October 2021. The US$25M plans would include the installation of a soyabean crushing, biodiesel refining and blending facility. CRC plans to produce Ultra Low Sulphur Diesel (ULSD) , biodiesel ranging from B6 to B100, high protein fibre meal for animal feed, soyabean oil for industrial use and crude glycerine. The crushing facility would process nearly 3M bushels/ year of soyabean while its biodiesel refining division would produce 18.9M litres/ year. “Like many rural parts of America, the Pulaski County region has industries and institutions that rely on diesel fuels. And because Kentucky is ranked 15th in the nation for soyabean production, the region also has the raw materials and technology to make biodiesel at a scale that reflects the local and regional demand,” said Hemisphere CEO Demetrios Haseotes. OFI – JANUARY 2021

03/12/2020 12:35:44

COCONUT OIL The coconut oil industry is struggling to keep up with a surge in global demand and industry leaders say urgent action is needed to promote a sustainable sector Gill Langham Coconut oil has a wide range of uses in the food, personal care and industrial sectors and the growing adoption of virgin coconut oil (VCO) in food and drink production is driving the market. As well as being a food ingredient, VCO also has the potential to be used as an immune system booster against COVID-19, according to the International Coconut Community (ICC), an intergovernmental organisation of coconut producing countries. “The COVID-19 situation has increased the demand for VCO in the Philippines, in particular among those with mild infections,” says Dr Fabian Dayrit, chairman of the ICC Scientific Advisory Committee on Health. The global virgin coconut oil market stood at US$2.7bn in 2018 and was forecast to reach US$4.7bn by 2024, an industry report by Report Buyer says. Meanwhile, coconut oil prices were hovering around US$1,000/tonne in September 2020, according to Index Mundi, and a Market Watch report projected that the global coconut oil market would reach US$5.5bn by 2026 from US$4.3bn in 2020. However, the coconut sector is struggling to keep up with global demand. Coconut farms tend to be monoculture and increasing tree senility raises concerns for the future. In terms of coconut oil, global production in 2019/20 is projected at 3.62M tonnes, according to forecasts by Statista. This figure has remained relatively unchanged since 2017 when production was 3.61M tonnes, according to the ICC. “The market is expanding at an exponential rate, especially for high value products, and production is decreasing,” said Dr Pons Batugal, chairman of the ICC’s Technical Working Group and president and board chair of the Farmers Community Development Foundation International (FCDF). Speaking at a webinar hosted by the Coconut Coalition of the Americas (CCA) on 8 October 2020, Dr Batugal joined a panel of industry experts to discuss 32 OFI – JANUARY 2021

Coconut oil GL.indd 2

Keeping up with d the current status of the sector and the challenges it faces. “The industry and coconut farmers both need to be urgently assisted to make the coconut industry sustainable,” he said. “Any actions we take to improve the sustainability of the industry should be science-based, technically feasible, financially viable for the user, socially acceptable and environmentally safe.” The objective of such initiatives should be to help farmers increase yields and productivity, reduce production costs, reduce field losses and help them to obtain a fair market price, he said.

Global challenges

Lower production is mainly due to palm senility (the global average of ageing palms is about 50%), typhoons, pests and diseases, drought and a lack of quality materials. “If we don’t replace our senile coconut palm, there is going to be a further decrease in production in the next five to 10 years,” said Dr Batugal. Action needed to rebalance the world coconut situation included replanting 655M senile palms, increasing yields and farm productivity and expanding coconut hectarage, Dr Batugal said. To increase

yields, large-scale replanting was needed using early-bearing, high yielding and disease resistant varieties.

The market

Coconut palm is grown in over 90 countries on around 12.1M ha of land, producing around 69M nuts/year, according to the ICC. The global export value of coconut products in 2019 reached US$11.6bn. The coconut is predominantly a smallholder crop with 92% of businesses run as small operations with farmers growing less than two hectares per family, the ICC said. The Philippines and Indonesia are the world’s largest producers of coconuts and exporters of coconut-based products. Other producers include Malaysia, India and Vietnam. In terms of coconut oil, the Philippines produced more than 1.3M tonnes and exported 951,353 tonnes in 2018, while Indonesia produced 1M tonnes and exported 677,699 tonnes, according to figures in the ICC Coconut Statistical Yearbook 2018. The area under coconut in the Philippines was 3.63Mha in 2018 with an estimated 347M bearing coconut trees. In

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07/12/2020 08:48:07

COCONUT OIL

Photo: Adobe Stock

The coconut is predominantly a smallholder crop – 92% of businesses run as small operations, with farmers growing less than two hectares per family

h demand Indonesia, the coconut plantation area has declined from around 3.65Mha in 2013 to 3.42Mha in 2018.

Palm/coconut debate

Coconuts are a multi-product resource, have a low environmental impact and do not generally require pesticides and herbicides. However, the sustainability of the coconut industry has been the subject of recent debate after a study stating that coconut oil production posed a threat to biodiversity five times greater than palm oil. This sparked a heated discussion on social media. Critics of the paper, published in Current Biology in July 2020, accused the authors of promoting dubious statistics and attempting to whitewash palm oil production. The study said around 12.3ha of land were used to cultivate coconut palms compared with 18.9M ha for palm oil. However, coconut oil had a much better reputation, according to lead author Erik Meijaard, who directs Brunei-based consulting company Borneo Futures and chairs the Palm Oil Task Force of the International Union for Conservation of Nature (ICUN). That reputation wasn’t deserved, www.ofimagazine.com

Coconut oil GL.indd 3

Meijaard and others wrote in the twopage document. The authors calculated the number of species under threat from the cultivation of seven vegetable oil crops and divided those by the global oil production for each crop. Coconut threatened 20.3 species for every 1M tonnes of oil produced, they reported, while for olive oil and palm oil, the figures were 4.1M and 3.8M species respectively. Later the figure for coconut oil was revised to 18.3. “The outcome of our study came as a surprise,” Meijaard said. The reason was that coconuts were primarily grown on tropical islands, “many of which possess remarkable numbers of species found nowhere else in the world,” he said. In its response to the article, the ICC said the paper was limited as its conclusions were based only on commercially-traded coconut oil and ignored the fact that a significant amount of the coconut harvest is used locally in food, drink and other household products. “The coconut is a smallholder crop. Thus, unlike other large-scale plantation crops, there is no need to destroy forests that kill indigenous crops and animals to establish crops,” the ICC statement said. According to the ICC’s Dr Dayrit, the comparison between coconut and palm oil was a “false comparison”. “I do not doubt that the palm tree is very productive but comparing it with the coconut based on oil production alone is misleading and plays into the hands of the palm industry,” he said.

Working together

All the speakers at the CCA webinar agreed that collaboration across companies and countries was the key to sharing sustainability solutions. “It’s about building a coalition of leading brands and buyers of coconut products that want to support sustainability and transparency,” said Keith Agoada, co-founder and CEO of digital global marketplace Producers Market. The ICC is active in R&D networking and knowledge and technology transfer programmes. A number of global companies have launched schemes with other businesses and organisations to improve the sustainability of the coconut oil sector. One such partnership between BASF, Cargill, Procter & Gamble (P&G) and the Deutsche Gessellschaft für Internationale

Zusammenarbeit (GIZ) developed a project for certified sustainable coconut oil production in the Philippines and Indonesia. The Sustainable Certified Coconut Oil (SCNO) production scheme trained more than 4,100 coconut farmers in Good Agricultural and Processing Practices (GAP) as well as Farm Management practices between November 2015 and October 2019. About 1,600 farmers also received additional training and had been certified against the Rainforest Alliance Sustainable Agriculture Standard. Certified coconut farmers harvested more and productivity was 26% higher in comparison to non-involved farmers. The first Rainforest Alliance Certified coconut oil was produced in 2018 with the support of the SCNO partnership. “We have reached an important milestone on the way to establish certified sustainable supply chains and improve the livelihoods of smallholder farmers,” said Ina Boos, BASF project manager, sustainable certified coconut oil. Coconut oil is an important ingredient for leading chocolate and cocoa product company Barry Callebaut Group which is aiming to have 100% sustainable ingredients in all its products by 2025. “Sustainability in the coconut sector is an important concern to us. This is why we initiated the Roundtable on Sustainable Coconut and Coconut Oil, with our partner USAID Green Invest Asia in 2019,” the company’s director of global ingredients sustainability Oliver von Hagen said. “A key result of the roundtable is a Sustainable Coconut Charter, a common approach to sustainability in the sector.”

The future

The ICC says it will continue to work with its members to improve the sustainability of the entire coconut sector. Initiatives include inter-cropping, improving yields, coalitions, educational schemes and the creation of coconutbased ecotourism sites. Dr Batugal stressed that the benefits of any sustainability schemes should benefit the farmers as well as the wider industry. “The coconut farmers are the foundation of the industry. We need to develop a holistic approach and integrate all the interventions, if possible, within the farming communities.” ● Gill Langham is the assistant editor of OFI

OFI – JANUARY 2021

07/12/2020 08:48:07

TRANSPORT & LOGISTICS

China: world port leader

China is the world’s largest consumer, the second largest producer, and the secondlargest importer of edible oils in the world. Patterns of edible oil consumption in the country have changed in recent years with increased urbanisation, improved standards of living and an emphasis on food safety. Palm, soyabean, rapeseed and sunflower oils are the most commonly consumed edible oils in the country. According to the US Department of Agriculture (USDA), total edible oil imports in China are forecast at 11.5M tonnes for the 2020/21 marketing year ending in September, down 3.1% from an estimated 11.9M tonnes in 2019/20, based on a higher forecast soyabean crushing volume. Imports of palm oil, the leading imported oil, are forecast at 7.1M tonnes for 2020/21 against an estimated 7.2M tonnes in 2019/20. Palm oil imports are expected to remain stable based on the price advantage of palm oil compared with other imported oils. In recent years, China’s domestic production of soyabean, rapeseed and peanut oils has been sufficient to meet demand, allowing for little import growth. In China, cooking oil distribution and sales are mostly concentrated within four companies which hold some 63% of the cooking oil market share. The four top firms are Wilmar International ( through its subsidiary Yihai Kerry), state-run food processing group COFCO, Shandong Xiwang Food company and Sinograin Oils. Smaller domestic companies comprise the remaining market share. In one of the most recent significant investments, Wilmar announced in October 34 OFI – JANUARY 2021

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As the world’s second largest importer of edible oils, China has some of the most well-developed ports globally, with leading facilities in Shanghai, Nanjing and Huangpu Sunder Singh that it was investing CNY10bn to build the largest food complex in China’s eastern region. The industrial park located in Jiangsu’s Lusi port will include an edible oil refinery and facilities to crush oilseeds. The project will target the almost quarter of a billion consumers in China’s rich Yangtze River Delta, a market that includes Shanghai, Nanjing and Hangzhou.

Palm oil imports

China is the world’s second largest importer of palm oil after India. During January-August 2020, China imported a total of 3.725M tonnes of palm oil from the two leading global producers, Indonesia and Malaysia. Malaysia’s palm oil exports to China accounted for 49.6% of total palm oil imported into the country, while Indonesia accounted for 49.9% of the imports. Palm oil imports from Malaysia increased by 438,747 tonnes or by 31.1% to 1.85M tonnes during the January-August 2020 period due to a decline in Indonesia’s palm oil exports. Indonesia’s palm oil market share dropped from 71.8% to 49.9% for the same period. The fall was a result of the country’s higher domestic usage of palm oil in biodiesel sector due to the implementation of its B30 blending mandate on 1 January 2020. In China, demand for palm oil is primarily driven by its use as cooking oil, as a major

ingredient in instant noodles and in the production of cosmetics. Given its increasing usage in the total edible oil sector, China has in recent years made forays into moving upstream in order to secure its palm oil supply. The Tianjin Julong Group, for example, has developed over 20,000ha of palm plantations in Indonesia. The Chinese Academy of Tropical Agricultural Sciences is also trialling growing oil palms in Hainan province. There are several palm oil trading companies in China and distribution channels are well developed. The three major regions where palm oil is imported, processed and sold are in the north, east and south of the country. North China comprises Tianjin and its neighbouring cities, as well as Shandong province. East China encompasses Shanghai and its neighbouring cities such as Zhangjiagang, Taixing and Ningbo. The South China region includes Guangzhou and its neighbouring cities such as Haungpu, Shenzhen and Xiamen. The three regions import 24%, 34% and 34% of palm oil respectively, making up to 92% of the country’s total palm oil imports.

Sunflower oil use grows

The import of sunflower oil in China has increased gradually in recent years due to its rising popularity, as well as better margins in the market. In 2019, www.ofimagazine.com

07/12/2020 08:52:28

TRANSPORT & LOGISTICS sunflower oil imports into China increased significantly by 74.8% to 1.23M tonnes, overtaking soyabean oil imported in that year. From 0.72M tonnes recorded in 2014, sunflower oil consumption in China has increased at a CAGR of 13.7% in five years, recording the fastest growth among all major vegetable oils. China’s imports of sunflower oil hit an all-time high in April 2020, reaching 251,000 tonnes. During the first five months of 2020, China imported a total of 432,780 tonnes of sunflower oil from Ukraine. Sunflower oil has claimed a higher share of China’s oil for food use over time and is expected to account for roughly 6% of the country’s food oil use in the 2019/20 marketing year, double its share in 2012/13.

Soyabean and rapeseed oils

With a consumption of 15.89M tonnes of soyabean oil in 2018/19, China was the largest consumer of the oil globally. However, the country’s soyabean oil imports are limited as it produces a large volume of the oil through its domestic crushing of soyabeans. In 2018/19, China imported 783,000 tonnes of soyabean oil, while domestic production totalled 15.23M tonnes. Large-scale pig farming practices are expected to drive rising demand for soya meal for animal feed in coming years, creating high availability of soyabean oil and spurring higher imports of soyabeans. During January-September 2020, China imported a total of 74.53M tonnes of soyabeans, an increase of 15.5% year-onyear, according to Reuters. The ‘first phase’ of the US–China trade deal, under which China agreed to buy up to US$50bn in American farm products, is expected to bring more soyabean into China from the USA in the rest of the year, which is expected to create a sufficient stockpile of soyabean oil in the domestic market. China is also a significant importer of rapeseed oil. Most of these imports are from Canada. However, for the last two years, rapeseed oil imports have fallen dramatically as a result of a trade and political dispute between the two countries since a Huwei executive was arrested in Vancouver in December 2018 on a US extradition request. This has hampered Canadian rapeseed oil shipments.

Major import ports

China has some of the best and most well-developed port facilities in the world. According to data from the World Shipping Council, in 2018, six Chinese ports www.ofimagazine.com

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(Shanghai, Shenzen, Ningbo-Zhousan, Guangzhou, Qingdao and Tianjin) were among the top ports in the world on the basis of volume of shipments. China has 34 major ports and more than 2,000 minor ports. The former are mostly sea ports (except for ports such as Shanghai, Nanjing and Nantong along the Yangtze River and Guangzhou in the Pearl River delta) opening up to the Yellow Sea (Bo Hai), Taiwan straits, Pearl River and South China Sea. Minor ports lie along the major and minor rivers of China. Most of China’s major cities are also ports or are facilitated by a port nearby. Shanghai Port is the busiest port in the world in terms of cargo tonnage and comprises a deep-sea port and a river port. The port covers an area of 3,619.6km2 at the mouth of the Yangtze River. It is situated in the middle of the 18,000kmlong Chinese coastline. Shanghai port has topped the United Nations Conference on Trade and Development’s 2019 ranking of the world’s best connected ports. The port of Shanghai is a critically important transport hub for the Yangtze River region and the most important gateway for foreign trade in China. It serves the Yangtze economically developed hinterland of Anhui, Jiangsu, Zhejiang and Henan provinces with its dense population and strong industrial base. Wusongkou, Waigaoqiao and Yangshan are the three main container port areas of the Shanghai Port. The Shanghai International Port Group (SIPG) is responsible for operating and managing the public terminals in the port. SIPG handles domestic, national and international cargo transportation. It is also responsible for maintaining, manufacturing and leasing containers, as well as building, managing and operating port facilities. Shanghai Port handled 43.6M twentyfoot equivalent unit (TEU) containers and 542.46M tonnes of cargo in 2019. Shanghai Waigaoqiao Vegetable Oil Tank Area & Port is the dedicated zone for edible oil imports through Shanghai port. In addition to palm oil, Shanghai Port is a destination for sunflower oil imports into the country. Nanjing Port is located in Jiangsu province, along the middle and lower reaches of the Yangtze River. It is about 270km away from Shanghai. The port is located at the junction of economic development strategy zones on the Yangtze River and in eastern coastal China, connecting the east and west, and southern and northern part of China. Robust physical infrastructure in and

around Nanjing Port enables it to serve more than 10 provinces or cities in the central plains, eastern China, southern China and northern China. The port internationally connects nearly 200 ports in more than 80 countries and regions. In 2017, 2018 and 2019, Nanjing Port was the largest palm oil importing port in China. In 2019, Nanjing imported 2.103M tonnes of palm oil, worth a total of US$1.21bn. In addition to palm oil, Nanjing Port accounts for around 20% of total sunflower oil imports into China. Huangpu Port is located in Guangzhou, the capital of Guangdong province. The port of Huangpu is operated by the Guangzhou Port Group, a state-owned company, and previously served as a trading port known as the “Silk Road on the Sea”. Currently, Huangpu is the largest comprehensive port in south China, with an international maritime trade reach of over 300 ports in over 80 countries. In 2019, 1.901M tonnes of palm oil were imported through Huangpu port, worth a total amount of US$1.04bn, according to the China Chamber of Commerce of I/E of Foodstuffs, Native Produces and Animal By-products (CFNA)). Tianjin Port is the largest man-made sea port in mainland China. It is 160km from Beijing and 60km from the city centre of Tianjin. The port spans a total area of 100km2 and has four main areas – Tianjin East Port, Tianjin North Port, Tianjin South Port and Haihe River Port. Tianjin North Port is mainly used for shipping container services; Tianjin South Port for bulk and liquid cargoes; and Haihe River Port for cargo vessels below 5,000 tonnes. Recently, China’s National Development and Reform Commission and Ministry of Transport jointly issued guidelines to speed up Tianjin’s development to become an international shipping hub in north China. In the first seven months of 2020, Tianjin Port Group reported 251M tonnes of cargo throughput, an increase of 4% yearon-year. Shenzen Port is the collective name for a number of ports along parts of the Shenzhen coastline in Guangdong Province. These ports form one of the busiest and fastest growing container ports in the world. Shenzhen Port is one of the top ports in China and third in the world behind Singapore. The Port of Shenzen is the second busiest port in China and third in the world with a TEU traffic of 27.7M. ● Sunder Singh is a freelance journalist OFI – JANUARY 2021

07/12/2020 08:52:28

STATISTICS STATISTICAL NEWS

estimate

Production of oilseed crops (million tonnes)

USDA

Soyabean is leading oilseed crop

According to US Department of Agriculture (USDA) estimates, global production of oilseeds in 2020/21 will total around 597M tonnes, up 4% year-on-year, UFOP reports. Soyabean is the world’s most important oilseed crop, accounting for 61% of total oilseed production. Soyabean farming has expanded heavily over the past few decades, especially in North and South America, in order to meet the growing demand for feed protein. At 363M tonnes, the current crop year’s soyabean harvest is expected to be larger than ever. Global rapeseed production is expected to decrease marginally to 69M tonnes due to harvest declines in major rapeseed producing countries such as Canada, China and India, according to Agrarmarkt Informations-Gesellschaft. Global rapeseed production increased 14% over the past decade and as much as 85% compared to the year 2000.

EU Commission

EU sunflower seed crop below average

estimate

EU-27 sunflower seed production – area and crop

The EU-27’s 2020 sunflower seed output was smaller than the previous year due to yield losses in Romania and Bulgaria, UFOP reports. The EU produced an estimated 8.9M tonnes of sunflower seed in 2020, a 13.4% decline on the year and a 6% decrease compared to the five-year mean. Compared to 2019, the sunflower area grew 2.4% to 4.4M ha, 6% more than the five-year average. The poor EU harvest figure was due to declines in yield, with average yield amounting to 20 decitonne/ hectare, a 16% fall from 2019. Romania and Bulgaria – the EU’s two largest sunflower seed-producing countries – did not receive sufficient rainfall initially in the season, and then suffered excessive rains in October, which hampered and delayed their harvests.

John Buckley

World vegetable oils balance

World vegetable oils balance (million tonnes)

Prices of selected oils (US$/tonne) Soyabean

Mintec

Jun 20

July 20

Aug 20

Sept 20

Oct 20

Nov 20

718.2

812.2

835.0

872.4

869.1

946.9

Crude palm

603.4

641.0

692.1

740.7

752.9

855.6

Palm olein

592.7

610.5

670.8

723.1

723.2

811.8

Coconut

936.9

913.0

988.1

1,037.5

1,105.8

1,396.2

Rapeseed

853.6

921.5

935.4

924.3

913.4

988.0

Sunflower

804.3

784.9

842.6

977.3

985.6

1,117.7

Palm kernel

740.9

726.9

785.0

818.8

830.7

1,104.9

Average

750.0

773.0

821.0

871.0

883.0

1,032.0

Index

178.0

183.0

195.0

206.0

209.0

244.0

OFI – JANUARY 2021

Strategie Grains estimates a tighter situation mainly for palm oil and soyabean oil in November 2020 compared to October 2020, Lipsa’s November 2020 market report says. The consultancy also estimates that world stocks of the four main oils would drop 3.3M tonnes in 2020/21. Lipidos Santiaga (Lipsa), Spain, produces vegetable oils and fats for food, animal feed, technical and biofuel applications The Union for the Promotion of Oil and Protein Plants represents companies and associations involved in the production, processing and marketing of oil and protein plants in Germany

Mintec provides independent insight and data to help companies make informed commercial decisions. Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com

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