OFI May 2019 by Quartz Business Media

OILS & FATS INTERNATIONAL M AY 2019

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V O L 35 N O 4

SHORTENINGS Customising new solutions

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CONTENTS

OILS & FATS INTERNATIONAL

IN THIS ISSUE – MAY 2019

FEATURES Central Asia

Shortenings

A role for high oleic soya

The US soyabean industry has worked to develop new shortenings utilising high oleic soyabean oil

NEWS & EVENTS

Eastern Europe

New players in oilseeds While the growing of oilseeds in Central Asia has previously been underdeveloped due to the area’s mountainous terrain, several countries in the region are now looking to boost production

Comment

3 22

Shortenings

Snapshot of Romania

News

Romania is becoming an increasingly important producer and exporter of oilseeds thanks to its position on the Black Sea and the advantages of being an EU member state

Global projects round-up The latest projects, technology and processing news around the world

Commodity Trading

Customising new solutions Today’s shortenings cannot merely replace partially hydrogenated oils but must offer better functionality as well

Biofuels drive demand growth The recent POC2019 conference in Malaysia focused heavily on rising palm oil demand and combating the negative image the industry faces

China widens ban on Canadian canola as trade tensions grow

Biofuel News

Plant & Technology

A good deal?

China to review DDGS anti-dumping tariffs

Biotech News

US jury awards over US$80M in first US Roundup test case

Transport News

Traders may invest in Brazil highway

Renewable News

Vantage to acquire Textron Plimon natural oils business

Diary of Events

International events listing

Statistics

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Statistical data from Mintec

OFI – MAY 2019

29/04/2019 10:37:10

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EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 35 NO 4 MAY 2019

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gabriel Day gabrielday@quartzltd.com +44 (0)1737 855157

A good deal? Back in 2016/17 when the world’s major agrichemical ﬁrms were busy merging and acquiring each other, Germany’s Bayer agreed to buy US biotech corporation Monsanto for some US$63bn in the largest takeover in German history. While publicly backing its decision, Bayer is now holding the bag for billions of dollars in potential damages after losing two US court cases where plaintiﬀs have claimed they contracted non-Hodgkin’s lymphoma from using Monsanto’s Roundup glyphosate-based weedkiller (see Biotech News, p10).

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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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Bayer has lost more than 60% of its value since acquiring Monsanto, according to Bloomberg, and it faces more than 11,000 Roundup cases in the USA. One of Bayer’s largest shareholders, Deka Investment, has attacked the company’s management for underestimating the legal risks of its takeover. “It’s quite drastic when a takeover triggers such value destruction and reputational damage so quickly,” Deka’s head of sustainability and corporate governance, Ingo Speich, told Reuters. “There can be no talk of a successful takeover any more.” At Bayer’s AGM on 27 April, 55.5% of its shareholders voted against the management board, down from 97% support last year. When the Bayer/Monsanto deal was finalised in June last year, it created the world’s largest seeds and pesticides company. Some analysts said Bayer’s hand was forced by other major agrichemical deals occurring as a result of falling crop prices and lower demand for seeds, herbicides and pesticides. So the Big 6 in agrichemicals and crop biotechnology became the Big 3, as ChemChina bought Swiss agribusiness Syngenta, Dow Chemicals and DuPont merged, and Bayer bought Monsanto. Bayer continues to defend its herbicide, citing scientific studies and agencies, such as the US Environmental Protection Agency and European Chemicals Agency, which have found that glyphosate is not likely carcinogenic to humans. The one exception is the World Heath Organization, which classified glyphosate as “probably carcinogenic to humans” in 2015. Glyphosate is the world’s most widely used herbicide, sprayed on crops such as soyabeans, corn, canola and cotton, which are genetically modified to be immune to it. Bayer says glyphosate is indispensable for modern agriculture. But for a company whose motto is “science for a better life”, being linked to cancer and negligence is not ideal. And glyphosate is not the only product over which Bayer faces litigation. Scores of growers across the US Midwest have filed court claims over alleged damage to soyabeans, cotton, fruit trees and vegetable crops after spraying Monsanto’s Dicamba weedkiller last year. Several US states and cities have sued Monsanto, claiming that it hid the risk to humans and wildlife of polychlorinated biphenyls (PCBs), banned in 1979 in the USA. Bayer also faces thousands of lawsuits from women claiming bleeding, pain or organ damage over its contraceptive Essure device, which it has pulled from all countries. Time is going to tell whether Bayer can sustain all these potential hits to its reputation and bottom line, and whether its Monsanto acquisition was a good deal. Serena Lim – serenalim@quartzltd.com

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May comment.indd 1

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NEWS BELGIUM: Global agribusiness giant Cargill announced on 4 March that it plans to acquire Smet, a leading Belgium-based supplier of chocolate and sweet decorations to the food service and confectionery markets. Cargill had its own cocoa bean sourcing operations for buying, handling and exporting cocoa beans in Brazil, Cameroon, Côte d’Ivoire, Ghana and Indonesia. The transaction was expected to close in the first half of 2019. INDIA: Indian consumer goods company Patanjali Ayurved has increased its bid for bankrupt edible oil business Ruchi Soya, the Financial Express reported on 13 March. “We have revised our bid to INR43.5bn (US$626.1M) from our earlier offer of INR41.6bn (US$606.1M),” said Patanjali spokesperson S K Tijarawala. Ruchi Soya entered a corporate insolvency resolution process in December 2017. In August last year, cooking oil business Adani Wilmar emerged as the highest bidder for Ruchi Soya with a INR60bn (US$875M) bid but withdrew from the bidding process because of delays in the completion of Ruchi’s insolvency, the Financial Express said.

China widens ban on Canadian canola as trade tensions grow China is no longer accepting canola imports from Viterra Inc, the second Canadian grain trader to have its registration cancelled as a result of trade tensions between the two countries. China’s General Administration of Customs made the announcement on its website on 26 March, effective immediately, World Grain reported. The announcement came days after the Canola Council of Canada (CCC) reported on 21 March that the initial ban on imports from Richardson International had widened, with Chinese importers “unwilling to purchase Canadian canola seed”. China cancelled Richardson’s registration on 1 March, with officials citing concerns over insect infestation as the reason. However, there is speculation that the move is linked to Canada’s arrest of Meng Wanzhou, vice president of Chinese technology firm Huawei.

Meng, who is the daughter of Huawei’s founder, was arrested on 1 December at the request of US tax authorities. “We’re disappointed that differing viewpoints cannot be resolved quickly,” World Grain quoted CCC president Jim Everson as saying. “Under the circumstances, Canadian canola seed exporters who normally ship to China have no alternative but to supply customers in other countries.” World Grain said China was a major market for Canadian canola, taking 40% of all canola seed, oil and meal exports. The CCC said seed exports to China were worth US$2.7bn in 2018. Everson urged the Canadian government “to continue to intensify efforts to resolve the situation”. “Canadian ministers and government officials have responded quickly to Chinese concerns, however, technical discussions are unlikely to lead to an immediate resolution.”

Ferrero to acquire Kellogg’s cookie brands Global confectionery group Ferrero announced on 1 April that it had agreed to buy the cookie, fruit snack, ice cream cone and pie crust businesses of Kellogg Company for US$1.3bn. The acquisition – expected to close in the second half of the year – includes the Keebler and Famous Amos cookie brands, Fruity Snacks, and Keebler’s ice cream cones and pie crust products. Ferrero will also acquire six US food manufacturing facilities and a leased manu-

facturing plant in Baltimore, Maryland, as part of the deal. CNBC said that in the past two years, Ferrero had built up its presence in the USA, buying Ferrara Candy Co for US$1bn and Nestle’s US candy business for US$2.8bn. The latest deal was part of Ferrero’s US strategy to buy and modernise neglected brands within broader food companies. The Italian group released a “better Butterfinger” candy bar last year with a new recipe with no hydrogenated oils, Eater reported.

Ferrero uses around 160,000 tonnes/year of palm oil, Oliver Charrier, Nutella global president of marketing and innovation, said in November 2017.

Source: Frenzeelo

IN BRIEF

Historic flooding in Nebraska to hit soya and corn planting decisions Major flooding in the Nebraska, USA is hitting grain transport and would affect soya and corn planting decisions in mid-April, World Grain reported on 25 March. US President Donald Trump declared on 21 March that a major disaster existed in Nebraska and ordered federal aid to supplement state, tribal and local recovery efforts in areas affected by severe winter storms, straight-line winds and flooding. “What we have is practically every river in the state of Nebraska affected by this event,” said Steve Nelson, president of the Nebraska Farm Bureau. He said the flooding would affect mostly 4 OFI – MAY 2019

General news.indd 2

corn and soyabeans as little wheat was planted in the flood-affected areas. “In most of the area we’re talking about, you would have early planting normally beginning about mid-April through midMay,” he said of corn and soyabeans. However, fields may not be dry enough for planting during that 30-day period and farmers could wait until early June to plant corn or wait until July to plant soyabeans. “If planting gets delayed, there’s a later window to plant soyabeans,” Nelson said, adding that yield reductions would be “considerable.” With both trucks and railways used

to move grain, the flooding had affected transportation with at least 15 bridges on the state highway system washed out or damaged, and major disruptions to the BNSF Railway service, World Grain added. Reuters also reported on 22 March that the flooding had shut down some 13% of the USA’s ethanol production capacity, with plants in Nebraska, Iowa and South Dakota forced to shut down or scale back production. The Reuters report quoted three traders who said that about 100,000-140,000 barrels/day of the 1.06M barrels/day of US ethanol capacity had been taken off line.

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NEWS

GrainCorp creates new oilseed business Australia’s GrainCorp will be spinning off its malting business and integrating its grains and edible oils operations into a new business called New GrainCorp. “The proposed demerger would enable both MaltCo and New GrainCorp to pursue independent operating strategies, with discrete capital structures, and attract investors with different priorities,” the company said in a press release on 4 April. New Grain Corp would become a domestic and international grain handling, storage, trading and processing company

with operations in Australia, New Zealand, Ukraine, Asia and North America. New GrainCorp’s storage and logistics infrastructure assets comprised 145 country receival sites, with 20M tonnes of storage capacity and seven export terminals. After the demerger, New GrainCorp would continue to engage with potential buyers for either all or parts of the company, including Long-Term Asset Partners, which made a takeover offer of US$1.69bn in December last year. The company said New GrainCorp

was expected to benefit from a range of initiatives which would increase EBITDA by A$55-80M (US$40-57M)/year, including expanded footprints in Canada, Ukraine, and India; expansion in organics; improvements in stock management; grain cost reductions; new rail contracts; supply chain integration and improved asset utilisation. The news of GrainCorp’s demerger comes just weeks after it announced on 4 March that it had agreed to sell its Australian Bulk Liquid Terminals business to ANZ Terminals Pty Ltd for some US$246M.

IN BRIEF

Barry Callebaut pledges sustainable coconut oil use

UK: The City of London is banning junk food in adverts on its public transport system to tackle childhood obesity, Olive Oil Times reported on 20 March. The ban – which took effect on 25 February – prevents food and drinks that are high in fat, sugar or salt (HFSS) appearing in advertisements on the Transport for London (TfL) network. The profiling model used would produce a score for a product based on its nutritional contents in 100g to determine whether or not it was a HFSS product, meaning cooking ingredients such as olive oil would face the advertisement ban, wrote Olive Oil Times.

Global cocoa and chocolate products leader Barry Callebaut has pledged to use sustainable coconut oil as part of its Forever Chocolate commitment for 100% sustainable ingredients by 2025. “Coconut oil is an important ingredient for our customers, used in many ice cream applications and confectionery fillings,” Barry Callebaut said on 2 April, a month after the company and the US Agency for International Development organised a roundtable on sustainable coconut and coconut oil. “It is estimated that around 50% of the world’s coconut trees are beyond their most productive years. "Combine this with falling prices and coconut farmers face a cycle of stagnating yield, low income and an in-

EU: The EU Commission is forecasting a 6% decline to 11.5M ha in its total oilseed area for the 2019 harvest, UFOP reported on 26 March. The Commission said increases in rapeseed yields were expected to offset the decline in area and projected a harvest of 19.9M tonnes in 2019. Sunflower production was expected to fall slightly by 0.7% to reach 10.1M tonnes, which would still exceed the long-term mean by 7%, UFOP wrote. The soyabean area would remain at about 1M ha, with a crop estimate of 2.9M tonnes. 6 OFI – MAY 2019

General news.indd 3

ability to invest in their farms.” With over 80 representatives, the roundtable meeting was attended by companies representing over 50% of the global coconut oil supply and included some of the largest buyers and processors in the sector, Barry Callebaut said. The meeting showcased initiatives to address sustainable sourcing, transparency and investment challenges in the Philippines and Indonesia,

the world’s largest producers of coconut oil, with 95% of global coconut harvested by smallholder farmers. In separate news, Barry Callebaut announced that it had inaugurated a new cocoa grinding unit in Abidjan, Côte d'Ivoire on 29 March as part of a CHF55M (US$55M) investment that would increase its cocoa bean processing capacity by more than 40% in the country.

COFCO to double oilseed purchases in Black Sea region Chinese agribusiness giant COFCO International announced plans to double its grain purchases in Black Sea-producing regions as part of an initiative to increase its reach in grains and soyabeans procurement, the Financial Times (FT) reported on 26 March. COFCO chairman Jingtao Chi said that the company planned to double the volume of grain it sourced from Ukraine and Russia this year compared to last year, as part of aims to serve markets beyond China and reach a goal of sourcing more than 60M tonnes/years of grains and oilseeds by 2022, from 40M tonnes/year currently, the FT wrote. COFCO – the China National Cereals, Oils

and Foodstuffs Corporation – is the overseas agriculture business platform for COFCO Corporation. It sources, stores, handles, processes, trades and transports grains, oilseeds, cotton and coffee around the world. FT wrote that COFCO’s early interest in becoming an international trader to rival the ABCD traders – ADM, Bunge, Cargill and Louis Dreyfus – was initially greeted with skepticism as it struggled to integrate its 2017 acquisitions of Dutch grain trader Nidera and the Noble Group's agricultural unit. However, it was progressing in building operations outside China, with just 2030% of the 106M tonnes of grains and oilseeds it moved last year going to buyers in China. www.ofimagazine.com

29/04/2019 11:09:02

BIOFUEL NEWS

China to review DDGS anti-dumping tariffs China’s Ministry of Commerce has conﬁrmed that it will start reviewing its anti-dumping tariﬀs on US imports of dried distillers grains with solubles (DDGS), a byproduct of biofuel production used as a feed ingredient, Reuters reported on 15 April. The ministry said it would “review whether it is necessary to continue to impose anti-dumping and anti-subsidy measures on imported DDGS from the United States,” according to a statement posted on its website. DDGS is used in animal feed as a substitute for corn or soya meal. As a high-pro-

IN BRIEF THAILAND: State-owned oil and gas company PTT Plc has agreed to buy 100,000 tonnes of crude palm oil (CPO) to produce biodiesel for export in a move to shore up prices and use up 400,000 tonnes of existing stock, the Bangkok Post reported on 14 March. Last year’s volume had left a surplus of 500,000 tonnes and the government had increased the methyl ester content of biodiesel to 20%, as well as using CPO to generate electricity.

tein byproduct of corn ethanol production, it forms a key part of proﬁts for biofuel producers. The USA is the world’s top exporter of DDGS and China the top buyer. In January 2016, China launched an anti-dumping probe against imports of US DDGS following complaints from Chinese producers that US DDGS was being sold at prices “below normal value”, hurting the domestic industry. The country imposed 33.8% tariﬀs on US DDGS in September that year and Chinese DDGS imports in 2016 fell 55% from 2015, to total 3M tonnes, according to Reuters.

In January 2017, China raised the anti-dumping duties on US DDGS to between 42.2-53.7%, with anti-subsidy tariffs ranging from 11.2% to 12%. The tariffs were meant to be in force for five years. The commerce ministry said the new review should be completed in a year. It comes amid trade talks between Beijing and Washington to end their ongoing trade dispute, which has seen both countries impose tariffs on each other’s products, including soyabeans and edible oils. A 90-day truce that took effect on 1 January saw China pledge to increase its imports of US farm goods, Reuters wrote.

Palm biodiesel exports to China and EU surge Surging biofuel demand from China and Europe has led to palm methyl ester (PME) exports from Indonesia and Malaysia climbing by more than 30% in the first quarter of this year, the Malaysian Reserve reported on 8 April. This was mainly due to the widening gap between the price of palm oil and Brent crude oil, which had jumped 27% in the first three months of the year, the report said. “China started buying and the flows are seen to be healthy in the next several

months”, although that would still depend on diesel prices, said Heather Zhang, an analyst at consultancy ﬁrm PRIMA. “The arbitrage opened in February with the plunging prices, which makes palm more attractive to European buyers versus other feedstock such as waste-based biodiesel.” The increased exports were a rare bright spot for Malaysia and Indonesia, as they saw palm prices falling by more than 8% in the past two months amid concerns over the size of stocks and lacklustre demand,

the Malaysian Reserve wrote. The price slide wiped out gains made in January, and also came as the European Union (EU) moved to cap the amount of palm-based biofuel that can be used in the bloc. Shipments of PME from Malaysia and Indonesia to Europe probably climbed more than 30% to 145,000 tonnes in ﬁrst quarter 2019, Zhang said. The Malaysian Reserve said China’s PME imports grew almost 50-fold to 751,056 tonnes last year, thanks to the low price.

EU biodiesel imports nearly tripled in 2018 against 2017, when anti-dumping tariﬀs on the fuel from Argentina and Indonesia were removed, says Germany’s oil and protein plants association, UFOP. “Whereas biodiesel imports from Argentina and Indonesia only played a secondary role in previous years, things have changed profoundly since October 2017,” UFOP said on 28 February. The European Commission imposed anti-dumping duties on Argentine and Indonesian biodiesel in 2013 but had to remove most of them in 2017 after losing challenges at the World Trade Organization and European Court of Justice. 8 OFI – MAY 2019

Biofuel news May.indd 2

Source: Eurostat, AMI

Argentina/Indonesia lead to tripling of EU biodiesel imports

UFOP’s ﬁgures show that in 2017, EU biodiesel imports totalled 1.165M tonnes, with Argentina accounting for 356,000 tonnes and Malaysia taking a 387,000 tonne share. (see Figure, above). However, in 2018, the EU’s biodiesel imports nearly tripled, totalling 3.329M tonnes,

with Argentina accounting for 1.648M tonnes, and Indonesia taking a 785,000 tonne share. In contrast, the EU imported just 545,000 tonnes of biodiesel in 2016, with Malaysia supplying the majority share of 285,000 tonnes. UFOP said that although the EU was the world’s biggest

producer of biodiesel, with an output of 13M tonnes including hydrotreated vegetable oil, production capacities had not been used fully for many years. “We fear that in the case of Indonesia, pending EU proceedings will result in a tradebased compromise. The reason is that the EU has launched an initiative for resuming negotiations with members of the Association of Southeast Asian Nations and the EU must have something to oﬀer.” Following a European Biodisel Board request for further investigations, the EU reached an agreement on Argentine biodiesel imports in January but its investigation into Indonesia is still ongoing. www.ofimagazine.com

29/04/2019 08:54:17

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OFI – MAY 2019

BIOTECH NEWS IN BRIEF USA: Calyxt Inc announced the launch of a gene-edited high oleic soyabean oil for the US market which will be sold to the food service industry for frying and salad dressings, as well as sauce applications. “Calyno oil contains approximately 80% oleic acid and up to 20% less saturated fatty acids compared to commodity soyabean oil, as well as zero grams of trans fat per serving,” Calyxt said in a press release on 26 February. The company said the oil – produced via gene editing – had up to three times the fry life compared to commodity oils, providing a more sustainable product. The oil was sourced from Calyxt high oleic soyabeans grown over 13,700ha of land in Upper Midwest region. According to Forbes, Calyxt was originally formed in 2010 as a subsidiary of French biotech company Cellectis. Scientists used the gene-editing TALEN technique to engineer the high oleic soyabean in 2014, and the company had other gene-edited foods, such as high fibre wheat and reduced browning potatoes, in the pipeline. Gene editing edits a plant’s existing genome, compared with traditional genetic modification (GM), where foreign DNA is inserted into the organism.

Jury awards over US$80M in first US Roundup test case A 70-year-old Californian resident has been awarded more than US$80M in damages after a jury ruled that Roundup, the weedkiller produced by German chemical firm Bayer, had been a ‘substantial factor’ in giving him non-Hodgkin’s lymphoma. The US District Court in San Francisco awarded Edwin Hardeman compensatory damages of US$5.3M and punitive damages of US$75M on 27 March. The trial was the first US “bellwether” or test case aiming to reach a large-scale resolution over glyphosate-based Roundup. More than 760 of

the 11,200 Roundup cases in the USA had been consolidated in Hardeman’s case. Last year, California groundskeeper Dewayne Johnson was awarded US$78M in damages and another Roundup trial was under way in Oakland, California, Bloomberg said. A spokesman for Bayer – which acquired Monsanto last June for US$63bn, and its Roundup brand – said the company would continue to defend the herbicide. The company planned to appeal the latest verdict, according to the Bloomberg report. Bayer had lost more than 60% of its value since acquiring

Monsanto and some analysts believed settling lawsuits over Roundup could cost more than US$5bn, Bloomberg said. The jury in Hardeman’s case found that Bayer had failed to warn of the product’s risks and had acted with negligence. ▪ A French appeals court ruled on 11 April that Bayer’s Monsanto was legally responsible for the ill health of a farmer who inhaled vapour from its Lasso herbicide in 2004, reported BBC News. Paul Francois’ case had been ongoing since Monsanto was first found legally responsible for poisoning him in 2012. Lasso was banned in France in 2007.

New ‘bee safe’ pesticides may still cause harm New pesticides regarded as safe for bees could be causing harm to these vital pollinators when combined with fungicides being applied to crops, reported the Independent newspaper on 11 April. In 2013, the EU introduced a partial ban on three neonicotinoid pesticides – clothianidin, thamethoxam and imidacloprid – widely used on crops including rapeseed and maize, but linked to global bee declines. The ban was widened to all outdoor use in April 2018. The Independent wrote that flupyradifurone, sold by German chemical firm Bayer under the brand name Sivanto and authorised by the EU in 2015, had been marketed as a safer insecticide. However, a study by University of California scientists found that exposing honey bees to realistic doses of flupyradifurone, in combination with a common fungicide, led to abnormal behaviour and death in many of the

bees tested. Along with flupyradifurone, the EU also authorised another pesticide, sulfoxaflor, in 2015. The Pesticide Action Network said both chemicals were so similar to neonicitinoids that it was wrong to consider them separately. Sivanto was available in Greece, Italy, the Netherlands and the USA, the Independent said.

Bolivia allows planting of GM soya to make biodiesel Bolivia has authorised farmers to plant a GM soyabean as part of a project to produce biodiesel, Spanish news agency EFE reported on 20 March. The authorisation calls for planting 250,000ha with GM soya to be used exclusively to make biodiesel and includes roughly US$2bn in public funds for the necessary infrastructure and machinery, according to Hydrocarbons Minister Luis Alberto Sanchez. 10 OFI – MAY 2019

Biotech news.indd 2

EFE wrote that Bolivian Institute of Foreign Trade (IBCE) data showed Bolivia spent around US$900M on imports of conventional diesel fuel. IBCE director Gary Rodriguez said producing its own biodiesel would reduce Bolivia’s need to import conventional diesel. Planting the drought-resistant HB4 strain of GM soya could boost yields for growers by 20-30% from the current average of 2,500kg/ha, according to Fidel Flores, the

representative in Cuatro Cañadas, Santa Cruz, of the National Association of Oilseed and Wheat Producers (Anapo). Associations representing small and large producers in Santa Cruz had jointly declared an agricultural emergency in the region, pointing to damage affecting more than a third of the soya crop planting. Destruction due to drought, floods and other causes had already cost more than US$168M in losses, the associations said. www.ofimagazine.com

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OFI – MAY 2019

TRANSPORT NEWS

Traders may invest in Brazil highway Brazilian commodities giant, the Amaggi group, and the world’s big four ‘ABCD’ agricultural traders could make a joint bid to operate a road connecting Brazil’s oilseed belt to northern ports, while also considering an investment in a parallel railway, Reuters reported on 11 March. Archer Daniels Midland Co (ADM), Bunge Ltd, Cargill Inc, Louis Dreyfus Co and Amaggi had commissioned a study on operating a 968km stretch of the BR-163 highway for 10 years, according to infrastructure and logistics business development firm EDLP. The highway was the main route to northern ports responsible for 28% of Brazilian soya and corn exports in

IN BRIEF NETHERLANDS: HES Botlek Tank Terminal (HBTT) announced on 11 April that it had contracted SJR Tank Construction to supply six biofuel storage tanks. The tanks were due to be installed in August at HBTT’s terminal at the Port of Rotterdam. HBTT said the six tanks represented the latest investment in its tank storage. Capacity was doubled to 490,000m3 in 2017 and the new tanks increased its total storage capacity to 510,000m3. HBTT stores and transships liquid bulk products including clean petroleum products and biofuels.

2018, according to Reuters. EDLP director Roberto Meira said the plan – with a proposal for handing over the BR-163 highway to private investors – would involve convincing the government to offer a 10-year concession on the road, shorter than the typical 20-30-year tenure on projects currently approaching auction. The shorter tenure would allow for oilseeds and grains shipped by truck to be migrated to the proposed Ferrograo rail line that would run a similar route to the BR-163 starting in 2025, Meira said. In January, the government’s privatisation secretary had said that the Ferrograo rail project could be ready for bidding this

year or early in 2020. Meira said the grain traders could invest in both the road and the rail projects, although the bidding could attract other investors. The firms hoped that making the investments would cut costs and remove the uncertainty of trying to move crops up north without a railroad, he added. Amaggi is active in large-scale soyabean production and trading in Brazil. It transports crops from the northwest regions of Mato Grosso and southern Rondônia via the Northwest Export Corridor; and also operates in the Tapajós Corridor in a joint venture with Bunge to transship crops between Miritituba and Barcarena in Pará state.

AFGRI to expand storage in South Africa

South Africa’s AFGRI Group Holdings (AGH) is creating a commodity/grain storage platform to expand the country’s current storage capacity from some 4.7M tonnes to 6M tonnes in the near future. “This will allow us to not only cater for grain storage,

but to expand into the storage of other types of commodities,” said AGH CEO Chris Venter on 8 April. AGH is an investment holding company with interests in food, agriculture and financial services, operating in 11 African countries as well as

Western Australia. Through Philafrica Foods, it owns and operates maize and wheat mills; an oilseed crushing, extraction and refining plant; and animal feed plants. Venter said the creation of the strategic storage platform vehicle, AFGRI Grain Silo Company Proprietary Ltd, had been made in collaboration with a consortium of leading South African institutional investors to enable the growth of grain storage capacity in South Africa and on the continent, and to strengthen food security in the region. AGH’s current 4.7M tonnes of grain silos and bunker complexes are spread across six provinces in South Africa.

European Commission urges IMO to change ‘scrubber’ rules The European Commission (EC) is urging the International Maritime Organization (IMO) to change its rules under which liquid effluents can be discharged from marine ‘scrubbers’ into the sea. The use of ‘scrubbers’ or exhaust gas cleaning systems (EGCS) is expected to grow as a result of the IMO’s global 0.5% sulphur cap on marine fuel, coming into effect on 1 January 2020 (see Editor’s Comment, OFI February 2019). The EC would like the IMO’s Marine Environment Protection Committee to consider its proposal when it meets in May. “The operation of ships installed with EGCS – particularly in port waters, coastal areas or ecologically sensitive areas – is 12 OFI – MAY 2019

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expected to lead to a degradation of the marine environment due to the toxicity of water discharges,” the EC said in a draft submission to the IMO on 8 February. The EC would like current guidelines harmonised, defining the areas and conditions under which liquid effluents from scrubbers can be discharged into the sea. Ship & Bunker wrote that the EC was concerned that current guidelines did not address the discharge of certain metals or specify discharge criteria specific to certain geographical areas. As a result, some areas like Singapore and Fujairah had introduced their own rules for scrubber wastewater discharge, and a patchwork of different rules could

emerge without further guidance. “By adopting measures applicable to all ships, the IMO will limit the proliferation of local or regional measures, which … could contribute to the administrative burden on crews,” the EC submission said. “A uniform measure will also limit the risk of prosecution and detention of ships in the context of port state control inspections.” However, the Clean Shipping Alliance 2020 – representing over 30 commercial and passenger shipping firms – said the EC was needlessly creating concerns at a time “when there are already issues in the maritime industry regarding the future availability, suitability and costs of fuels and the effects on global trade and shipping.”

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RENEWABLE NEWS IN BRIEF GERMANY: German oleochemicals firm Oliqem GmbH announced on 1 March that it was changing its name to Golden Agri-Resources (GAR) Germany, completing its integration into GAR, which bought it in 2013. GAR is a leading Indonesian oil palm plantation company with operations in palm oil processing and refining, and production of palm-based products such as cooking oil, biodiesel and oleochemicals. USA/INDIA: US renewables firm Gevo Inc announced on 9 April that it had signed a deal with Indian process engineering company Praj Industries to commercialise the production of renewable isobutanol from sugar-based feedstocks such as juice, syrup and molasses from sugarcane or sugar beets. Praj will provide engineering and construction services to customers using a process design package incorporating Gevo’s proprietary isobutanol biocatalyst. In addition, Gevo also agreed that Praj would commercialise Gevo’s renewable hydrocarbon products in India, including its alcohol-to-jet fuel and isooctane. The first step would involve Praj setting up a pilot plant to introduce Gevo’s technology to potential customers, Gevo said.

Vantage to acquire Textron Plimon natural oils business US-headquartered Vantage Specialty Chemicals has agreed to buy Textron Plimon SLU, a producer and processor of natural oils for the personal care, food and chemical industries. “Located in Granollers, Spain, Textron is focused on supplying high quality, natural oils out of a new, state-of-the-art manufacturing facility that sources oils and seeds from all over the world,” Vantage said in a press release on 4 April.

Textron’s portfolio includes cosmetic oils, food oils, bismuth derivatives, cosmetic ingredients and preservatives. “This strategic combination builds on Vantage’s existing leadership position in jojoba oil and further establishes Vantage and Textron as premier providers of natural oils for personal care and food,” said Vantage CEO Andy Harris. Serge Rogasik, senior vice president of Vantage’s personal

care business, said the acquisition – expected to close by June – would create a global leader in the increasingly demanding world of traceable and sustainable natural oils for personal care. Textron is the fourth acquisition Vantage has completed since private equity firm HIG Capital acquired it in October 2017. In 2018, it agreed to buy speciality surfactants producer LEUNA-Tenside GmbH.

Bio-glue model from bee saliva and flower oil

Researchers at the US Georgia Institute of Technology are looking at how bees combine their own saliva and flower oil to carry pollen, as a model for a bio-inspired glue. “A bee encounters not just wet and humid environments but windy and dry surroundings as well, so its pollen pellet must counteract those variations in humidity while remaining

adhered,” said Carson Meredith, a professor at the institute’s School of Chemical and Biomolecular Engineering. “Being able to withstand those kinds of changes in humidity is still a challenge for synthetic adhesives.” The institute published a study on 26 March in the Nature Communications journal describing how a bee’s own salivary secretions, produced from drinking nectar, coated pollen grains, allowing them to stick together. The second ‘glue’ ingredient was a plant-based oil that coated the pollen grains, called pollenkitt, which helped stabilise the nectar’s adhesive properties and protected it from humidity. “It works similarly to a layer of cooking oil covering a pool of syrup,” Meredith said. “The oil separates the syrup from the air and slows down drying considerably. “We believe you could take the essential concepts of this material and develop a novel adhesive with a water-barrier external oil layer that could better resist humidity changes in the same way,” he added.

Danimer to open canola biopolymer plant in USA in September US bioplastics producer Danimer Scientific – which produces a polyhydroxyalkanoate (PHA) biopolymer from canola oil – says its new manufacturing plant in Kentucky, USA is expected to open in September, the Western Producer reported on 4 April. “The amount of inquiries and people reaching out to us, looking for sustainable alternatives [to plastic], has grown exponentially,” said Richard Ivey, marketing manager for Danimer, which holds 125 patents in 20 countries for its PHA fermentation technology. The company had been retrofitting a 14 OFI – MAY 2019

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plant in Kentucky, which would produce bioplastic resins or pellets that could be used to make items such as food packaging, drinking straws, cups, bottles and bags. “Customers can use (the pellets) … in existing equipment to make their (plastics),” Ivey said. “That’s something we’ve invested heavily in … formulations that will work in existing equipment.” Danimer – which had partnerships with global food giants PepsiCo and Nestlé – had developed a biodegradable potato chip bag in collaboration with PepsiCo, and signed a deal with Nestlé in January to

develop biodegradable plastic bottles, the Western Producer wrote. The company combined its PHA polymer with other bio-polymers to manufacture its bioplastic pellets. For the next few years, Danimer would be focusing on refining its process and proving the technology could work on a commercial scale, the report said. The canola oil for the plant would likely come from canola growers in the US southeast. Ivey said it required about one pound (0.45kg) of canola to produce one pound of PHA. www.ofimagazine.com

29/04/2019 09:04:49

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OFI – MAY 2019

CENTRAL ASIA Prior to the beginning of the 2000s, production of oilseeds in the vast area of Central Asia was underdeveloped, mainly due to mountainous terrain. However, the region is now looking at becoming a centre of oils and fats production in Asia in the coming years Eugene Gerden

entral Asia is a region that stretches from the Caspian Sea in the west to China in the east, and from Afghanistan in the south to Russia in the north. With a population of 70M, the region may become a new centre for oils and fats production in the next few years, mainly through rising production of oilseeds. Several regional governments have recently stressed the need to ensure regular supplies of oilseeds and oils for the domestic market and for export . Prior to the 2000s, the production of oilseeds and edible oils in Central Asia was largely undeveloped, mainly due to mountainous terrains, which hindered growing activities. However, the situation has changed in recent years, with a significant increase in demand for high-quality vegetable oils and fats. This has mainly been due to the rise in the local population’s purchasing power, coupled with the introduction of new technology in the countries’ agricultural sectors. According to Olzhas Tursunkulov, a senior manager of Syngenta Kazakhstan, the annual consumption of vegetable oils in Central Asia is estimated at about 1M tonnes and continues to grow. This is significantly higher than total production in the region, which last year amounted to 660,000 tonnes. As a result, a significant volume of oils and fats must be imported.

Kazakhstan

Kazakhstan – one of the most economically developed Central Asian countries – is the leading producer of vegetable oils and fats in the region. The country accounts for more than 80% of Central Asia’s total oilseeds area. According to the Kazakh Ministry 2 OFI 16 OFI––MONTH MAY 2019 2018

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New players in oi of Agriculture, annual vegetable oil production in the country ranges from 340,000 to 360,000 tonnes but should increase significantly in the next two to three years. Kazakhstan’s total oilseeds area stands at about 3M ha and has increased almost five-fold in the last six years. According to recent statements of an official spokesman of Kazahkstan President Nursyltan Nazarbayev, the country has the potential to increase its oilseed area to 5M ha by 2022-2023. Sunflower accounts for almost 864,000ha of Kazahkstan’s 3M ha of oilseeds, most of which is grown in eastern Kazakhstan. According to Kazakh government plans, particular attention will also be paid to increasing rapeseed and rapeseed oil production. Kazakh Ministry of Agriculture figures show that, over the past five years, the country’s rapeseed area has expanded by 40%, compared with 2013, with most sowing areas located in northern Kazakhstan. The area under flax will also be expanded. Currently, flax occupies

about 35% of the total oilseed area in Kazakhstan, and the plan is to grow this share in the next few years. In the meantime, Kazakhstan is not the only country in Central Asia planning a significant increase in oilseed production and processing.

Uzbekistan

In January, the Uzebek government announced plans to expand the country’s oilseed sown area seven-fold. It said this would help increase vegetable oils and fats output so the country could start exports. Currently the total oilseeds area in Uzbekistan is estimated at 150,000ha to 160,000ha. Like Kazakhstan, sunflower accounts for most of the sown area, followed by rapeseed and flax. According to the Prime Minister of Uzbekistan, Abdulla Aripov, one way to increase oilseed production is by creating conditions to consolidate the industry. Unlike Russia, where most oilseed production and processing has been carried out by large agricultural holdings, Uzbekistan and other Central Asian states mostly have individual farming enterprises, www.ofimagazine.com

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CENTRAL ASIA Almaty, the largest city in Kazahstan, is located in mountainous area of southern Kazakhstan, where the terrain has hindered oilseed production

n oilseeds mostly of small and medium size. The Uzbek government set up the Association of Fat and Oil Industry Enterprises of Uzbekistan (Uzegmoisanomaut) in 2017 to help the country increase local production. According to Aripov, in addition to the association’s establishment, a new state strategy to grow the Uzbek oils and fats industry will soon be developed. The new strategy involves the implementation of more than 30 investment projects, worth more than US$350M, between 2019 to 2022, and the development of a raw materials base. This should bring the level of the industry’s utilisation up to 90%. The majority of funds to implement these plans will be provided by the state, while the rest will come from both domestic and foreign investors.

country’s oilseeds area and to create conditions for a significant increase in vegetable oil production. Currently, the production of vegetable oils in Turkmenistan remains relatively low, not exceeding 100,000 tonnes. However according to the president, these figures should increase by three to four times at the beginning of 2020. As part of these plans, particular attention will be paid to increasing cottonseed oil production, a significant part of which will be for export. According to the Turkmenistan Ministry of Agriculture, current domestic capacities for the daily production of cottonseed oil is around 300 tonnes. However these figures should grow around 1.5 times by 2019- 2021. Implementing these plans will be achieved through building new production plants and expanding existing facilities. Cottonseed is currently the main raw material for the Turkmenistan oil and fats industry. However, local authorities are planning the expansion of sown areas under sunflowers and other crops. The large-scale production of olive oil is also planned in the southern part of the country, where there is a subtropical climate. Several hundred hectares of olive trees are to be planted in this region

by the end of the year. Turkmenistan Deputy Prime Minister Chary Gylijov has confirmed that there are also plans to increase sunflower oil production, saying that two plants for sunflower oil production, with a combined capacity of 24,000 tonnes, will be officially commissioned in the country this year.

Tajikistan

Another country in Central Asia which is ready to expand its oils and fats production in the coming years is Tajikistan. Currently, Tajikistan has enough capacity to process oilseeds within the country but its main problem is that most of its facilities were established in the Soviet era and are in need of modernisation. The lack of modern processing facilities has been one of the major problems for the Tajik oils and fats industry. However, local authorities have reportedly said they would like to invest US$150M in the technical modernisation of the industry in the next two to three years. The annual production of vegetable oils in Tajikistan is estimated at about 100,000 tonnes. However, the local government plans to create conditions to double these figures by 2021. ● Eugene Gerden is a freelance journalist

Turkmenistan

Although agricultural development has never been considered a priority by the government of oil-rich Turkmenistan, President Gurbanguly Berdimuhamedov instructed the national government at the beginning of the year to expand the www.ofimagazine.com

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OFI – MAY 2019

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SHORTENINGS Today’s shortenings cannot be mere replacements of partially hydrogenated oils but must offer better functionality as well Charlotte Atchley With the phase-out of partially hydrogenated oils (PHOs) in the USA, innovation in shortenings is no longer linked to just replacing them but is now driven by improving today’s alternatives. “Now, these new shortenings must compete on their own merit instead of as a PHO replacement,” said Frank Flider, consultant for Qualisoy. This means shortenings must have better functionality, a healthy profile, clean labels, or a sustainable base oil. “Shortening manufacturers are juggling a lot of balls right now looking for the right shortenings to meet the various needs of the bakers,” Flider said. This trend will eventually lead down the road to customisation. To meet specific shortening needs, suppliers are diversifying their base oils and hard stocks while using tools such as blending and interesterification to come up with the right solution.

Functionality first

First and foremost, a shortening must be functional. Depending on the application, those functions may be different, but shortenings need to be stable and easyto-use. They must work well in the baker’s process, maintain structure and quality throughout the baked good’s shelf life and meet consumer expectations in taste, texture, appearance and quality. “Even with PHOs behind us, some of the existing challenges or key needs remain,” said John Satumba, North America R&D director, global edible oil solutions, Cargill. “Bakers still want reliable supply, consistency in the fat system, ease-of-use and high stability for a long shelf life.” Without physical and oxidative stability, shortenings cannot perform in a formulation and will lose some shelf life. They have to stay solid at room temperature and remain solid in the dough until they reach the oven, where the high heat puts them to work. If the shortening melts ahead of the oven, it cannot do its job. “The future of shortening product development may take into consideration 18 www.ofi OFImagazine.com – MAY 2019

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Customising new solutions improvement in functional attributes, which increases the working temperature range to overcome firm or soft consistencies,” said Tom Tiffany, senior technical sales manager, oils, ADM. “With the use of high-oleic oils, modification techniques such as enzymatic interesterification and optimal crystallisation conditions, positive strides in functionality are being developed.” An example is the blending of higholeic soyabean oil with palm oil and palm fractions. “This reduces the amount of saturates of palm oil, thus making it less firm and widening the process temperature range,” Tiffany explained. “Also, by using high-oleic soybean oil, the oxidative stability is maintained to help address shelf life concerns.” ADM’s second generation of soyabean oil-based shortenings also features a wider working temperature range through enzymatic interesterification of high-oleic soyabean oil with fully hydrogenated soyabean oil.

Industry solutions

Today’s shortenings must meet high standards on all fronts, according to Roger Daniels, vice-president, R&D and innovation for Stratas Foods. Stratas uses its proprietary Flex crystallisation process to produce a non-PHO high oleic soyabean shortening which has versatility across baking, icing and donut

applications, Daniels said. Bunge Loders Croklaan’s portfolio of shortenings, with palm, soya and high-oleic oils, provides bakers with a wide range of temperatures and other functional needs. “Bunge’s shortenings are made with high oleic soyabean oil, offering greater stability and functionality in tough applications like icings and donuts,” said Mark Stavro, senior director of marketing, Bunge Loders Croklaan. The company also offers its PhytoBake shortening for improved rollability and longer shelf life in tortillas, which can also be used in cookies, pie crusts, cakes and other baked goods. Functionality and stability can certainly be improved through blending and interesterification, but emulsifier technology can also be employed. “If removing PHOs took away a lot of critical functionality, the use of high diglycerides, or distilled diglycerides, has brought it back,” said Jim Robertson, product management director, emulsifiers, Corbion. “When you combine a healthier, unsaturated oil with the binding capability and accelerated crystallisation provided by Trancendium, Corbion’s high-diglyceride solution, you get the structure, flavour and texture needed for baking applications. You also get low levels of saturated fat and good oxidative stability, which means a better product shelf life.” u OFI www.ofi – MONTH magazine.com 2018 1

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OFI – MAY 2019

SHORTENINGS u

Taking aim at fat

Once a shortening is fulfilling its job in a formulation, bakers may look to improve the Nutrition Facts Panel and take aim at the fat. “One thing we’re clearly seeing now is a drive toward healthier options,” Satumba said. “For some, this means reducing overall saturated fat content.” Bunge’s PhytoBake shortening has replaced saturated fat with phytosterols, reducing saturated fat by up to 50%. AAK’s Essence line of shortenings is made from a blend of palm-based hardstocks and liquid oil, is nonhydrogenated and lower in saturated fat compared with all-purpose shortenings. “With a hardstock, you can design a shortening blend to give the functionality and structure needed in bakery applications while reducing total saturated fat,” said James Jones, vicepresident, customer innovation, AAK USA. “Depending on our customers’ processing parameters, nutritional requirements and desired finished product attributes, we can modify the hardstock to liquid oil ratio to produce the ideal shortening for them.” Stratas has developed its Superb Select 1020 Shortening, which lowers saturated fats by more than 40% and eliminates hydrogenated fats. The shortening is made from a non-PHO soyabean oil and also satisfies another need bakers have: cleaning up the label.

Clean labels

A growing segment of US consumers are also concerned with issues such as a clean ingredient list and sustainably-sourced ingredients. For some bakers, having a clean label is the next challenge they face. With shortening, clean label concerns seem to have fallen on the word ‘hydrogenation’. Fully hydrogenated oils do not contain trans fats but PHOs do, and both oils seem to have been lumped together in consumers’ minds. That link appears to be weakening, however. “Some companies don’t want the term hydrogenation on their label, so they focus on palm oil hard fat,” Flider said. “What we find in surveys, though, is that a consumer wanting something sweet isn’t super concerned about hydrogenation. That’s less of a priority to them, and the connection between the word hydrogenation and trans fat is weakening.” With hydrogenation becoming less of a concern, formulators are turning their attention to the antioxidants used to maintain the shelf life of shortenings and finished product. Formulators can lean on natural antioxidants instead of employing synthetic ones to make their ingredient 2 OFI 20 OFI––MONTH MAY 2019 2018

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lists more appealing. “In some cases, antioxidants can be removed completely by formulating with high-oleic oil, whether its soya, canola or sunflower, while maintaining a moderate level of saturation,” Tiffany said. Some shoppers also look for products made from sustainable ingredients, or those that are grown and harvested in a way that does minimal harm to the land or farmers who own and work those fields. In the case of palm oil, bakers can rely on organisations, such as the Roundtable on Sustainable Palm Oil (RSPO), to meet these concerns. “More often than not, providing sustainable palm oil products is relatively simple as it does not alter the properties of the finished shortening, just the supply chain and documentation,” said Rick Cummisford, director of quality, Columbus Vegetable Oils.

Customisation for the future

From straight PHO replacement to other challenges such as improved functionality, a better nutritional profile and cleaner labels, each baker’s priorities are different. To meet these varying needs, shortening suppliers are creating customised solutions for bakers. “One size does not fit all,” said Rudy Nava, customer innovation applications specialist at AAK. “There are many specialised shortening needs coming from bakeries today. They need their products to deliver consistent high quality with

FDA ruling on PHOs The FDA determined that partially hydrogenated oils (PHOs) are not ‘Generally Recognized as Safe’ (GRAS) in 2015. PHOs are the primary dietary source of artificial trans fats, which are linked to an increased risk of heart disease. The FDA set a deadline of 18 June 2018 as the date from which manufacturers cannot add PHOs to foods. However, it extended the compliance date for products produced before 18 June 2018 to 1 January 2020. The FDA also denied a food additive petition from the Grocery Manufacturers Association to approve certain limited uses of PHOs. To allow time for reformulation, the agency has extended the compliance date for these petitioned uses until 18 June 2019, and until 1 January 2021 for these products to work their way through distribution.

texture, flavour and colour attributes that set them apart from the competition.” “More shortenings have been developed to fit more specific needs, from the sharp melt point profile needed for frying pastries to the cold temperature hardness to provide the perfect crust for pies,” Cummisford said. “Function in the finished product and customer process is only one part of the whole equation,” he continued. “Other factors include cost, stability, labelfriendliness as well as softer aspects such as organic and non-GMO sourcing, sustainable sourcing or natural.” Blending hard stocks and oils or using enzymatic interesterification can address gaps that exist if a baker were to use a single source of fat or oil for his or her shortening, Tiffany explained. “Palm oil alone at times can form a very firm shortening, which can create difficulties in mixing,” he said. “By blending palm oil with soybean oil, the solid fat content and crystallisation tendency of the shortening improves to allow for more uniform mixing.” The company has also addressed the same issue with a line of soyabean oilbased interesterified shortenings that are also less firm than palm-based options. When working on customising a shortening, it’s important the ingredient supplier has a thorough understanding of how the elements of fat can be blended or interesterified to find the right ratio. It’s also important to understand the baker’s finished product goals. “Many companies use the addition of vegetable hard fat or saturated fat to provide the structure needed to replace PHOs in shortening,” said Steven Council, customer innovation manager, AAK USA. “A technique employed more recently to produce shortenings from vegetable oils is to blend fully hydrogenated oils with unsaturated soft oils and then interesterify them.” This process allows formulators to use the benefits of the hard fat structure of fully hydrogenated oils with the pliability of the softer oils in one shortening. The array of shortening solutions for bakers today is vast, from palm- and soya-based to new high-performance options. This diversity in base oils, as well advancements in blending and interesterification, have enabled ingredient suppliers to deliver custom, applicationspecific shortening solutions to bakers. ● Charlotte Atchley is senior editor at Baking & Snack magazine. This article is published courtesy of Sosland Publishing Company, Baking & Snack www.ofimagazine.com

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SHORTENINGS

A role for high oleic soya The US soyabean industry has worked to develop new shortenings utilising high oleic soyabean oil Gabriel Day Food manufacturers have been working to develop healthier alternatives to partially hydrogenated oils (PHOs) since the US Food and Drug Administration (FDA) revoked their “generally recognized as safe” status in June 2015. The FDA’s long-awaited ban, introduced due to PHOs’ link to heart disease, gave food manufacturers three years to remove the ingredient from their products. Since then, a great deal of work has gone into trying to find suitable functional substitutes to PHOs, including blends of liquid oils and hard stocks and interesterified oils with fully hydrogenated hardstocks, Qualisoy oil expert Frank Flider told Oils & Fats International. “Some functionality was achieved, but overall, these products were severely lacking in terms of oxidative stability and melting characteristics – they just weren’t good enough. Much of the functionality of PHO shortenings came from the trans fatty acid, elaidic acid, which is the trans form of oleic acid and has a melting point exactly halfway between oleic acid and stearic acid.” Undettered, Qualisoy – which represents all sectors of the US soyabean industry – worked to develop applications for high oleic soyabean oil, which it says contains no trans fats, and has a lower saturated fat content and three times the amount of beneficial monounsaturated fatty acids (MUFAs) compared to conventional soyabean oil. Qualisoy carried out functionality tests, in collaboration with fats and oils supplier Stratas Foods, to show that US-grown, high oleic soya-based shortenings are a good ingredient for frying and baking, thanks to its heat stability and neutral flavour.

Tests on pastries and crusts

Flider said Qualisoy’s first prototypes were made in 2015 and tested on doughnuts. “Back a number of years ago when they first announced the PHO ban, Time Magazine had a tongue and cheek article with the top five [foods] that would never be the same, and top of the list were www.ofimagazine.com www.ofimagazine.com

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Figure 1: Comparison of puff pastry shortenings doughnuts,” Flider said Tests were also carried out on puff pastries, with soya-based baker’s margarines formulated with high oleic soyabean oil, conventional soyabean oil or combinations of the two. “We hypothesised that a 50/50 mix of oleic and stearic in a shortening might approach the functionality of PHOs,” said Flider “Also, it was deemed necessary to reduce the polyunsaturates (PUFAs) as much as possible in order to get the oxidative stability normally seen with PHOs. The only real possibility of getting this type of a ratio while achieving low PUFAs was to utilise a high oleic liquid phase such as high oleic soyabean oil. Our hypothesis turned out to be correct – studies determined that high oleic shortenings came closer to PHO functionality than any other system attempted.” Qualisoy said that the ideal puff pastry should show an even layer and height, which it maintains after baking. The experiments conducted showed that palm-based baker’s margarine produced the pastry with the least amount of height, resulting in pockets rather than layers. Whereas, butter-based pastries showed the greatest height but toppled over after baking (see Figure 1, above). However, puff pastries made with high oleic soyabean baker’s margarine produced the ideal height and had the conventionally desired honeycomb layers. The margarine also maintained better plasticity under both cool and warm temperature conditions compared to alternatives. Similar to the puff pastry study, pie crust shortenings were also tested at both refrigerated and room temperatures. In the study, high oleic soyabean shortening

produced pie crusts with the most desired characteristics and also proved to be versatile, performing equally as well under hand-rolling and a pie press. Additionally, the ingredient performed as well as, or better than, PHOs. In terms of mouthfeel, Qualisoy wrote that high oleic soyabean shortenings reduced moisture uptake in the pie crusts, preventing them from becoming damp. Conventional soyabean shortening was comparable to high oleic soyabean shortening in this respect. Flider described the functionality of high oleic soyabeans compared to high oleic sunflower oil as “100% interchangeable”. “Both are incredibly great high stability oils with a lot of functionality. “In terms of availability to the world market, of course, high oleic sunflower oil is much more available than high oleic soya. In the US market, we’re getting pretty close to being able to approach the volume of sunflower production.” As for the future, Flider says high oleic soyabean oil shortenings are already available from a number of companies and with consumers increasingly demanding cleaner labels and sustainably-grown products, the market should grow. “The US planted area of sunflower is about 550,000-570,000ha and high oleic soya is only a couple years from that.” Flider said about 150,000-160,000ha of high oleic soyabeans are currently planted in the USA. “We expect by 2021 to be over 500,000ha and we’re shooting by 2028 to have 6.5Mha planted in the USA, which would make it the fourth largest row crop in the country.” ● Gabriel Day is OFI’s assistant editor OFI OFI – MONTH – MAY2018 2019

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EASTERN EUROPE

Snapshot of Romania

The port of Constanta is regarded as a commodities trading hub for Romania and its neighbours

Romania is becoming an increasingly important producer and exporter of oilseeds thanks to its position on the Black sea and the advantages of being an EU member state Gabriel Day Strategically located on the Black Sea, Romania has its own small, yet strong stake, in the oilseed industry, especially in sunflowerseed production. The country is one of the main sunflower producing countries in the EU – along with Bulgaria, France, Hungary, Italy and Spain – and it is also the EU’s highest sunflowerseed exporter, accounting for 17% of total EU sunflowerseed exports in 2017, with a market price of US$622M, according to a 2017 report from the Observatory of Economic Complexity (OEC). The country’s port of Constanta sits on the Romanian coast, enabling Black Sea shipments. Romania and Bulgaria are the only EU countries located on the Black Sea. However, while Bulgaria exported US$473M worth of sunflowerseed in www.ofi 22 OFImagazine.com – MAY 2019

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2017 and US$194M worth of rapeseed, Romania’s combined exports of rapeseed, sunflowerseed and soyabean was worth US$1.32bn, according to the OEC.

Sunflowerseed is key crop

Romania’s total oilseed area stands at just below 2M ha. According to Oil World, its oilseed production for 2017/18 was 4.5M tonnes (see Table 1, p24). Its total edible oil production in 2017 was 683,600 tonnes, out of the EU’s total production of 3.5M tonnes (see Table 2, p24). Sunflower was the leading oil produced, with production reaching 253,600 tonnes in 2017 (see Table 3, p24).

Sunflowerseed is Romania’s top oilseed crop, with a US Department of Agriculture’s (USDA) Global Agricultural Information Network (GAIN) report forecasting a 2.4M tonne harvest for 2018/19. Sunflowerseed exports for 2018/19 were projected at 1.47M tonnes. “In terms of destinations, there is a clear preference for EU countries, such as France (128,000 tonnes), the Netherlands (90,000 tonnes), Spain (65,000 tonnes) and Portugal (30,000 tonnes),” the 2017 GAIN report said. “The major buyer outside the EU was Pakistan (29,500 tonnes).” In terms of domestic consumption, sunflower oil accounts for 90% market share

Figure 1: Romanian regions with countries that have edible oil manufacturing facilities OFI www.ofi – MONTH magazine.com 2018 2

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EASTERN EUROPE in terms of oil used for food purposes. Sunflower oil consumption totalled 253,600 tonnes in 2017 compared with the second highest consumed oil – rapeseed, at 122,500 tonnes, according to Oil World figures (see Table 3, p24). “Similar to sunflower meal, half of sunflower oil production is use for domestic consumption while the other half is exported,” the GAIN report said. In the 2017/18 marketing year, sunflower oil production was forecast at 338,000 tonnes and exports estimated at 125,000 tonnes, with Spain, South Africa, Italy and France being notable buyers. Rapeseed is an increasingly popular crop among Romanian farmers and annual production ranges between 1.5-2M tonnes. Production for 2017/18 was forecast at 1.75M tonnes by GAIN, with exports being the main driver for farmers. EU states are the main recipients of Romanian rapeseed with 1.3M tonnes of rapeseed exported in the first five months of 2016/17. “In the case of rapeseed oil, the main purpose is for biodiesel, for which a volume of some 120,000 tonnes was utilised, with the country’s biofuel blending volume rising to 6.5% from 5% in 2016,” the GAIN report said. The balance of 35,000-40,000 tonnes of rapeseed oil is exported, mainly to France, Germany and the Netherlands. Soyabeans remain a minor crop in Romania, with some 285,000 tonnes of forecast production in 2017.

Poland’s per capita consumption in the same year was about 19.7kg, with Slovakia at 16.1kg and Czech Republic at 16kg. The edible oil industry is worth an estimated €230M (US$261M), of which €185M (US$210M) is the value of the domestic market, with €45M (US$51M) being the value of exports, according to the ‘Palm Oil Market in Romania’ report by the Indonesian Embassy and marketing firm Visionwise. “Just over half of the processed edible oil produced in Romania is distributed for household consumption, while the rest is used as ingredients in other industries, mainly in the food sector.

“Products derived from processing are used in various fields including animal feed, soap, cosmetics, textiles and chemicals.” The industry has developed rapidly in the past few years, with concentration increasing dramatically with the entrance of large international players, especially from the USA, which currently account for more than two-thirds of the country’s edible oil production, the report said. “The industry is an oligopoly, as the top four players control 80% of the market in terms of value and volume. The most important players are Bunge, Argus, Cargill and Agricover,” the Visionwise report said. u

Production and consumption

Romania produces around 550,000 tonnes/year of edible oil but, while having an oilseed crushing capacity of 1.6M tonnes/year, its utilisation rate is only around 40%, according to the EU’s Special Accession Programme for Agricultural and Rural Development (SAPARD), which was replaced in 2007. The edible oil industry in the country is focused more in the eastern, southern and north-western regions, with facilities built around an abundance of raw materials, according to the Romanian research firm Interbiz Group. The counties in these regions with manufacturing facilities are Iasi, Vaslui, Galati, Constanta, Ialomita, Dolj, Bucuresti, Bihor and Satu Mare (see Figure 1, previous page). Romania’s per capital consumption of edible oil has grown from some 23.8kg/ capita in 2013 to 29kg/capita in 2017, according to Oil World statistics. “In 2004, the consumption of edible oil was around 12kg/capita, similar to the level in China and below the European average,” the report said. Comparatively, 3 www.ofimagazine.com OFI – MONTH 2018

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EASTERN EUROPE Palm oil potential

palm oil imports, with an import value of US$45.8M and an export value of US$518,000. This is relatively low compared to most other EU member states. A good proportion of imported palm oil is dominated by the brand OLINA, which is distributed by Romanian vegetable oils supplier Render Com. “The benefits of palm oil are little known in Romania,” the Visionwise palm oil report said. “The trend seems to have been that

Romania’s consumption of palm oil is small although leading producer Malaysia believes this could rise in coming years as demand for oils and fats increases. A Business Review report in 2012 said that Romania imported 4,800 tonnes of palm oil in 2011. In 2017, the National Institute of Statistics (NIS) recorded that Romania accounted for only 0.14% of global Crop

2017/18

2016/17

2015/16

2014/15

2013/14

365

263

262

203

151

Sunflowerseed

2,400

2,032

1,786

2,050

2,100

Rapeseed

1,800

1,730

1,090

1,360

661

4,568

4,029

3,142

3,616

2,916

Soyabeans

Linseed Total

Source: Oil World Annual 2018

Table 1: Romanian oilseed crop production (‘000 tonnes) Production

2017

2016

2015

2014

2013

Soyabean oil

50.3

57.7

42.9

34.8

36.6

Sunflower oil

387.5

326.1

403.2

360.4

304.4

Rapeseed oil

144.4

134.0

131.6

122.0

87.1

Butter as fat

10.2

10.0

9.4

8.9

8.2

Lard

76.1

77.3

76.6

75.1

72.3

0.9

1.1

1.0

0.9

14.1

14.2

14.0

683.6

620.4

679.0

616.4

523.6

3,549.0

3,262.0

2,896.0

3,204.0

3,165.0

Linseed oil Tallow & Grease Total EU total

Source: Oil World Annual 2018

Consumption

2017

2016

2015

2014

2013

Soyabean oil

34.4

40.2

35.4

26.9

Sunflower oil

253.6

256.6

235.9

198.8

195.2

Rapeseed oil

122.5

105.7

105.8

95.4

85.3

Olive oil

4.6

5.9

4.8

4.7

4.5

Palm oil

47.6

47.5

50.0

52.0

59.3

Palmkern oil

0.2

0.1

Coconut oil

2.8

2.9

3.1

3.0

3.2

Butter as fat

19.0

18.8

16.3

14.2

13.0T

Lard

73.4

74.5

74.1

73.3

73.6

Total

570.0

561.8

536.8

481.0

477.4

Source: Oil World Annual 2018

Table 2: Romanian oils and fats production (‘000 tonnes)

Table 3: Romanian oils and fats consumption (‘000 tonnes) 2017

2016

2015

2014

2013

Soyabean oil

Exports

20.6

25.9

14.9

7.1

12.9

Sunflower oil

168.6

125.8

187.9

192.7

191.5

Rapeseed oil

29.9

39.3

35.3

30.0

21.4

Table 4: Romanian edible oils exports (‘000) www.ofimagazine.com 24 OFI – MAY 2019

romania 2.indd 4

Source: Oil World Annual 2018

people started using it out of curiosity because of the low price per unit, and then discovered some benefits that are now passed on through word of mouth.” Perceived attributes of palm oil were its durability as it oxidises more slowly, its odour-free properties, and that it is absorbed into food at a smaller extent compared with other types of oil. “Malaysian producers forecast that demand for palm oil will go up in the region, promoting it as a cheaper alternative to most edible oils. Demand should grow because palm oil is used for confectionery, pastry, dairy and cosmetic uses, and fuel for renewable energy,” Business Review wrote. Malaysia also views Romania’s port of Constanta as a gateway into the Eastern European market, according to the Business Review report. Former Malaysian Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said in the report that Romania was the ideal gateway to neighbouring countries like Bulgaria, Hungary, Serbia and Ukraine, and Malaysian companies were interested in shipping palm oil into the region through Constanta.

Black Sea hub

The port of Constanta is regarded not only as a hub of commodities trading for Romania, but for its neighbours, according to Cédric Mayor, chief trader of Swiss grain and fertiliser trader Ameropa. “This partly makes it the busiest port in the Black Sea,” he told World Grain in December 2018. In June 2017, Ameropa opened its new Chimpex terminal at the port, adding 200,000 tonnes to its existing 300,000 tonnes of storage capacity. The Chimpex berth can handle up to 10 shipping vessels at one terminal and demonstrates the company’s long-term strategy to build exports from the region, says Mayo “Romania is an EU country but it’s part of the Black Sea,” he explains. “Its prices are similar to prices in Ukraine and Russia. The country is also exciting because agriculture is still developing, with a huge potential for yields to improve along with agricultural techniques.” Mayor says it is important to note that Constanta is not only of Romanian origin but a hub for the whole Balkans. “From Constanta, we ship from Slovakia, Hungary, Serbia and Bulgaria all the way down the Danube,” he told World Grain. Constanta is the biggest port in the whole Black Sea and the most efficient, Mayor says. “Our terminal being the OFI www.ofimagazine.com – MONTH 2018 4

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EASTERN EUROPE 2,500

1,500 1,000 500 2014/15

2015/16

Sunﬂower production

2016/17 est

Rapeseed production

2017/18 fcst Soyabean production

Figure 2: Romanian oilseed production (‘000 tonnes) biggest among the newest terminals, is the most efficient as well.” The Chimpex terminal can load a Panamax vessel in two days. “It goes from 3,000 to 5,000 tonnes right up to a 71,000 tonne intake,” Mayor says. “We loaded 10 of those to Vietnam two years ago, a combo of wheat and corn. “The efficiency of the terminal and the port is way above Russian ones because

you will never see a 15-day line up at Constanta except with winter conditions, ice and so on. That gives us a very nice advantage on trade, but also for a consumer, who knows when his wheat will come, what time at the port, when it’s going to leave. It is rather diﬀerent with other Black Sea ports,” he told World Grain. “We have experienced 40 days waiting in front of Nikolaev with a

Source: National Institute of Statistics

2,000

sunflowerseed vessel for a French crusher. That is never happening in Constanta.” In addition to the Chimpex grain terminal, Ameropa also acquired an inland grain storage facility in 2016 in Carpinis, which has total storage capacity of 56,000 tonnes. “It’s railway access provides a key logistical advantage and good connection with western Europe and with our Chimpex terminal,” the company said.

Conclusion

With its position on the Black Sea and the advantage of being an EU member state so its farmers are supported under the EU’s Common Agricultural Policy, Romania is becoming an increasingly important producer and exporter of oilseeds and grains. With the port of Constanta, Romania has become a main trading hub for agricultural commodities, serving neighbouring Bulgaria, Hungary and Serbia. It is a conduit to the outside world for much of southeastern Europe and is an important supplier of sunflowerseeds to other EU countries, as well as destinations further afield. ● Gabriel Day is OFI’s assistant editor

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OFI – MAY 2019

25/04/2019 09:41:07

NEWS PLANT & TECHNOLOGY

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

GEA wins contract to build olive oil mill in Saudi Arabia

BRAZIL: Biofuels producer GranBio plans to resume commercial operations at its 82M litres Bioflex 1 cellulosic ethanol plant located in Alagoas by the end of January, Biofuels Digest reported. The plant is expected to produce 30M litres of ethanol this year and 50M litres in 2020. Bioflex 1 came on stream in 2014 but operations were halted in 2016 due to complications in the sugarcane load’s pretreatment. The plant extracts bagasse and sugarcane straw to produce cellulosic ethanol. INDIA: Biochemicals producer Petron Scientech Inc’s BiochemUSA has signed a memorandum of understanding with the Gujarat government to develop a US$433.9M biorefinery that produces ethanol, biodiesel, animal feed and corn oil using biomass and corn as feedstock, Biofuels Digest reported on 31 January. The zero-liquid discharge facility would use 1M tonnes/year of corn and 300,000 tonnes/year of biomass. The plant would create 2,000 jobs and be ready for commissioning within 24-30 months. 2 OFI 26 OFI––MONTH MAY 2019 2018

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Source: GEA

IN BRIEF

German food production technology firm GEA has won a €3M (US$3.4M) contract from the Saudi National Agricultural Development Company (Nadec) to build and supply the industrial equipment for a large olive oil mill in Saudi Arabia. The mill would be located in the Al-Jouf region and was part of a Nadec project involving 5M olive trees from a single farm of 3,000ha. “The order is the second phase of an ongoing project that will enlarge the existing plant built in 2016,” GEA said. It would involve civil engineering, automation engineering, processes and the equipment required to manage the olive oil plant. GEA was leading the project, which included several Spanish machine manufacturers.

“We were able to offer Nadec a differentiated and integrated solution from the hands of a single supplier,” said Rafael Cárdenas, head of the center of excellence for olive oil of GEA in Úbeda, Spain. “The cooperative relationship between Nadec and GEA’s Olive Oil Center of Excellence began in 2014. “This project is a very good example of GEA’s ability to deliver large projects anywhere in the world and provide high added value to customers since not only the equipment but also the knowledge of the process is key” said Alvaro Martinez regional head of western Europe, Middle East and Africa for GEA. Nadec was one of the largest agricultral and food processing companies in the Middle East and North Africa, GEA said.

Algae World to construct facility in Bangladesh Algae World Inc, USA, plans to build an indoor algae growth facility in Bangladesh to focus on pharmaceuticals, nutraceuticals and biodiesel. The subsidiary company of KYN Capital Group announced its construction decision on 9 January. Algae World produces algae for food, fuel and pharmaceuticals using its patented feeding system. www.ofimagazine.com www.ofimagazine.com

25/04/2019 10:49:59

PLANT & TECHNOLOGY

www.dsengineers.com

Coshocton Grain to build soyabean processing plant Ohio grain company Coshocton Grain has begun construction on a new soyabean processing plant at its site in Coshocton, reported World Grain on 11 February. The company’s CEO, Rhoda Crown, told the Coshocton Tribune that the firm was looking to process an average of 3.36M bushels/year of soyabeans to produce 81,000 tonnes of soyabean meal and 12,600 tonnes of soyabean oil. “We were looking to take the company in a new direction and have more emphasis on the bean deliveries versus the corn

deliveries,” Crown said. “The beauty of the facility is that you have a soyabean processor and corn processor in the same county. I don’t know that there is another county in Ohio that would have both like that.” Crown said the company expected to use a third of the available soyabeans in Coshocton and seven surrounding counties, while the soya meal it produced was expected to be used by dairy, swine and poultry farmers within a 120km radius. The facility is expected to be operational by July.

Serving the Vegetable Oil Industry Source: Aemetis

Aemetis to upgrade Indian biodiesel and glycerine plant

US biofuels and renewable chemicals company Aemetis announced on 10 January that it had completed a two-year upgrade of its Kakinada, India biodiesel and glycerine plant (pictured above). The plant now had the annual capacity to produce 165,000 tonnes of biodiesel and 18,000 tonnes of glycerine, with the average price of biodiesel sold in 2018 standing at US$900/tonne, and US$1,000/tonne for glycerine, Aemetis said. “The upgrade includes a pre-treatment unit to process lower-cost and waste feedstock into oil, and expansion of boiler and other utility capacities to enable full production of 50M gallons (189M litres) of biodiesel and bio-oil while simultaneously operating the biodiesel, pre-treatment and glycerine refining units.” “The Aemetis team in India is executing a rapid increase in production and revenues this year to meet growing domestic market demand for biofuels,” said Eric McAfee, chairman and CEO of Aemetis. “As the only US company producing biofuels in India, Aemetis built and has now fully upgraded our India biodiesel and refined glycerine plant to use low cost feedstocks.” The company said the 2018 India National Policy on Biofuels raised the target for domestic biodiesel consumption from currently less than 1% to 5% of the approximately 25bn gallons (94bn litres)/year of petroleum diesel consumed. In mid-2018, the Goods and Services Tax on biodiesel was reduced from 18% to 12% to encourage the usage of biodiesel. In addition, the Indian government recently issued a purchase requisition for some 260M gallons (984M litres) of biodiesel for 2019 to be supplied by domestic biodiesel producers, Aemetis said. u www.ofimagazine.com

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OFI – MAY 2019

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PLANT & TECHNOLOGY NIGERIA: A planned cassava-based ethanol production facility that would process 300-400 tonnes/day of cassava in Ondo state is expected to be commissioned soon, Biofuels Digest wrote on 19 March. Local press reported that the project came about after the state governor’s visit to China last year, where a memorandum of understanding was signed between the Ondu State government and the Linyi Municipal Republic, Biofuels Digest said. The Nigerian Tribune wrote that the plant could provide employment opportunities for youths in the state. SINGAPORE: Investment holding firm USP group announced on 20 February that it had agreed to biodiesel manufacturing subsidiary, Biofuel Research Pte Ltd, to investment firm AJ Shanaya Venture Pte Ltd. AJ Shanaya was also interested in acquiring 100% of Biofuel Research for a consideration of US$4.4M, USP said. USP CEO Kan Bright Pan said the group would be exploring new markets and opportunities, as well as investing in research to increase its product range. The statement said a definite conditional sale and purchase agreement would be signed no later than 30 March.

PKN looks at co-treating vegetable oils or used fats on industrial scale PKN will assess its experience with co-hydrotreating vegatable oils on an industrial scale and the transposing of REDII into national law, to decide whether or not it will build a standalone HVO unit by 2020. REDII gives more prominence to second-generation biofuels made from waste materials.

Polish refiner PKN ORLEN is launching an operational biofuels programme to prepare for the EU’s new renewable energy directive (REDII), a statement said on 18 December. PKN plans to use its existing refinery units in Płock, Poland and Litvínov, Czech Republic to take co-hydrotreatment to an industrial scale by co-feeding vegetable oils or used fats with petroleum distillates into refinery units to produce diesel oil with hydrotreated vegetable oil (HVO). “We expect the role of renewable energy in the transport sector to rise, and we consider REDII a key driver of the fuels market in the future. We are intent on preparing our business for these changes as best we can.” said Armen Artwich, member of the management board of PKN for corporate affairs. To go ahead with the programme, PKN must adapt its refineries to receive the new component and to organise raw material supply logistics.

Source: PKN ORLEN

IN BRIEF

Pertamina and Eni to develop green refinery Indonesian state-owned energy company PT Pertamina said in a statement on 31 January that it had signed an agreement with

Source: Pertamina

Italian oil company Eni SpA to develop a green refinery in Indonesia and to process a palm oilbased fuel mixture in Italy, Reuters reports. The refinery in Indonesia would produce fuel derived from crude palm oil (CPO). The agreement would also allow Pertamina to process CPO at Eni’ refinery in Italty to produce hydrotreated vegetable oil (HVO), which can be used as a mixture in diesel fuel, Reuters wrote. The two companies were also in talks to potentially produce HVO in Indonesia. They agreed to conduct studies into potentially converting three Pertamina refineries to produce palm-based biodiesel. Additionally, the companies agreed to discuss collaboration in waste transformation processes and biomass development processes. Eni has been operating in Indonesia since 2001.

BASF to expand plant capacity for biodiesel catalyst German chemicals firm BASF announced on 8 April that it was increasing production capacity by 30% at its sodium methylate plant in Guaratinguetá, Brazil. The increased capacity from 60,000 tonnes to 80,000 tonnes was set to come on stream in 2020. BASF said that sodium methylate was a catalyst that provided a sustainable solution for the production and use of bio28 OFI – MAY 2019

MAY P&E.indd 4

diesel, while also supporting higher yields and low preparation costs. “Brazil is an important and significant market for biodiesel and corresponding catalysts,” the company said. “Customers’ demands and requirements have been evolving to accomplish the environmental and economic strategy of the country, supporting the local agriculture and biofuels production.”

BASF said its Guaratinguetá site was also located close to Brazil’s leading biodiesel producers and Santos port, providing it with a logistical advantage for exports to the region. “We will invest to join our customers in their fast growth and to support their future requirements.” said Alejandro Heine, vice president of BASF Industrial Chemicals South America. www.ofimagazine.com

25/04/2019 10:50:04

COMMODITY TRADING

Biofuels drive demand growth The recent POC2019 conference in Malaysia focused heavily on rising palm oil demand and combating the negative image the industry faces Gabriel Day Sustainability, biofuel blending mandates and combating the negative public narrative on palm oil were the key issues highlighted at the Palm and Lauric Oils Price Outlook Conference and Exhibition (POC2019) in Malaysia from 4-6 March. Malaysian Minister of Primary Industries Teresa Kok told the conference that the government was fully committed to implementing strategies to keep the industry competitive, thriving and sustainable amid all the issues and challenges. “In light of these initiatives, the Malaysian Sustainable Palm Oil (MSPO) certification compliance has been made mandatory from 1 January 2020.”

Feeding the population

Carl Bek-Nielson, vice chair and chief executive director of United Plantations Berhad, explained that by 2050, the global population would be 10bn, with www.ofimagazine.com

poc2019.indd 2

the number of middle class at 5bn (3bn in 2018). He said world food production had to increase 70% within the next 30 years to ensure adequate food supplies by 2050. Looking at the bigger picture, Bek-Nielson said that of all global agricultural land (5bn ha), oil palm only took up 20M ha (0.4% of global agricultural area), while accounting for 35% of total oils and fats production and more than 55% of all net exported oils and fats today. “There are three figures I would like you to remember. Palm oil, today, occupies 0.4% of the total area under agriculture, it has accounted for less than 5% of the total deforestation from 1995 to 2015 and it could cater for just over 35% of the world’s population calorific requirement. So in terms of a food crop, palm oil is right up there in terms of its importance.”

Outlook and mandates

Regarding the outlook for palm oil this year, the industry expects to see a growth in demand, partly down to rising biofuel mandates. Dr James Fry, chairman of LMC International, said that Malaysia had introduced its B10 biodiesel programme for its transportation sector in December; Colombia, its B10 programme in March last year; Thailand, its B20 for heavy vehicles and Indonesia was looking at a potential B30 later this year and direct burning of crude

palm oil (CPO) for power. “By far the most important thing is biofuel demand at the moment”, Fry said, which would increase CPO demand by 1.5M tonnes this year. Fry forecast palm oil prices of RM2,240/tonne (US$548) to RM2,360/ tonne (US$577) this year. Thomas Mielke, executive director of Oil World, added that global palm oil output was expected to reach 75.26M tonnes for 2019, a small increase from the 72.48M tonnes produced in 2018. Mielke also stated that biodiesel production in both Indonesia and Malaysia was expected to rise in 2019 to 7.5M tonnes in Indonesia and 1.4M tonnes in Malaysia, thanks to higher mandates in both countries. Mielke estimated that worldwide, 18.3M tonnes of palm oil would be used for biodiesel production in 2019, an increase from 15.1M tonnes last year. He also projected that global production of biofuel for 2019 would reach 44.07M tonnes, the highest producers being the EU, Indonesia and the USA. According to Mielke, palm oil was undervalued at the end of February and prices were expected to rise. Fry said that the palm oil market was currently in a very odd situation with regards to production cycles. “Up until 18 months ago, it was perfectly normal for the Malaysian cycle and the Indonesian cycle to be the same. Suddenly they are u OFI – MAY 2019 29

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Source: Thomas Mielke, Oil World

COMMODITY TRADING

2019 *

2018

2017

2016

2015

13.50

13.30

13.55

12.68

12.37

USA

7.43

7.19

6.15

6.21

4.72

Argentina

2.20

2.50

2.87

2.66

1.81

Brazil

5.17

4.68

3.75

3.33

3.46

Colombia

0.60

0.57

0.54

0.51

Singapore

1.20

1.12

1.05

0.99

0.87

Indonesia

7.50

5.20

2.92

3.18

1.22

Malaysia

1.40

1.14

0.72

0.51

0.67

Thailand

1.55

1.42

1.21

1.12

1.14

44.07

40.43

35.83

34.11

29.60

World

Table 1: World production of biodiesel (M tonnes) u out of phase with one another; Thailand and Colombia have the same basic cycle as Malaysia. The only one similar to Indonesia is Papa New Guinea.” Regions towards the south of the equator had seen the strongest recoveries from the effects of the El Niño in 2018, driving production growth in Indonesian and Papa New Guinea. The more southern regions in 2018 saw a year-on-year output growth of 20%-25%, whereas output only rose 0%-5% in the more northern regions. However, he added: “This cycle is similar to the big El Niño of 1997 and 2001 but has never went as low as in those years. Technically we’ve had a weak El Nino but it doesn’t look as if it’s anything more.” Overall, growth in the eight largest producers of crude palm oil (CPO) was slowing down, Fry said. The eight countries were expected to produce about 71M tonnes of CPO this year, a growth rate of 2.8M tonnes, and a decline from 5M tonnes in 2018. However, Mielke showed that com30 OFI – MAY 2019

poc2019.indd 3

Source: Thomas Mielke, Oil World

Figure 1: Monthly prices of crude palm oil, fob Indonesia (US$/tonne)

* Forecast

peting oilseeds had been increasing their yields over the past 15 years; sunflowerseed up 53%, rapeseed up 26% and soyabeans up by 18%. Mielke predicted a slowdown in Malaysian palm oil production growth, from 3M tonnes/ year in 2005 to 2018, to 2M tonnes/ year in 2018 to 2025, and finally to 1.7M tonnes/year in 2025 to 2030.

Soyabeans face weak year

But while palm could see a possible rise in demand, soyabeans face a weak year. Fry said he did not believe the current administrator of the US Environmental Protection Agency (EPA) was interested in the production of biofuels, demonstrated by giving “waivers” to many refiners, cutting their biofuel use and slashing renewable identification number (RIN) value. A RIN is a serial number assigned to a batch of biofuel to track its production, use and trading, as required by the EPA’s Renewable Fuel Standard. Fry’s figures showed the market value of RINs decreas-

ing by US$200/tonne for soyabean oil in late 2018 since the end of 2017, along with the price of biodiesel itself. This had indirectly affected the export price of palm oil. As the price of soyabean oil fell by US$200/tonne since early 2016, the price of gas oil increased US$500/ tonne in the same time. Fry stressed how the lowering demand for biofuel created a cap on the CPO FOB price, which fell to a 12 year low last year. In China however, Mielke expects a decline in soyabean imports and crushing by about 7M tonnes, regardless of a possible trade deal with the USA. Mielke said the declining trend was set by meal demand and partly influenced by the rise in African swine fever in China. The Chinese had overfed soyabean demand over the last few years and was now correcting this, meaning the trend was unlikely to change. Global soyabean meal demand was poor and world soyabean crushings would, at best, stagnate, according to Mielke. “If Chinese crushings are declining by more than 7M tonnes, they will require more imports of palm oil, probably approaching about 6M tonnes.” Mielke said. This was part of Chinese efforts to broaden its sources of oils and fats to manage the impact of its ongoing trade war with the USA. According to Mielke, China was expected to import 950,000 tonnes of soyabean oil and 5.8M tonnes of palm oil in 2018/19, a dramatic increase from the previous year, to compensate for smaller domestic production from reduced soyabean oil crushings.

Disruption in India

Being the world’s largest importer of palm oil, agribusiness specialist and independent expert G Chandrashekhar put forward an interesting point of view on India’s relationship with Malaysia. He said Malaysia should not be surprised if India went beyond raising custom duties, and urged the market to expect some disruptions due to the stress the Indian agricultural industry was currently under. India was currently facing low farm-gate prices and domestic farmers protesting over this. He suggested that Malaysia form a twoway partnership with India rather than use the country as merely a market for bulk palm oil exports. “I would think Malaysia must go beyond servicing India as a supplier of bulk palm oil. There are several challenges that the Indian government faces, and there are ways to strike a partnership with India and work with Indian policy makers.” ● Gabriel Day is the assistant editor of OFI www.ofimagazine.com

29/04/2019 11:35:26

DIARY OF EVENTS 14-17 May 2019

12-15 June 2019

4-5 September 2019

29-30 October 2019

The 9 ICIS World Surfactants Conference Jersey City, USA www.icisevents. com/ehome/index. php?eventid=200178918

30th Nordic Lipid Forum Symposium Horsens, Denmark https://lipidforum.info

6th High Oleic Oils Congress Lisbon, Portugal http://higholeicmarket.com/ hoc-2019/

Organic & Non-GMO Forum Minneapolis, Minnesota, USA www.ongforum.com

16-19 June 2019

5 September 2019

15th International Rapeseed Congress Berlin Congress Center Germany www.irc2019-berlin.com

Black Sea Oil Trade Hilton, Kyiv, Ukraine http://bsg.ukragroconsult. com/bso/2019/en/ conference

86th NRA Annual Convention Park Hyatt Aviara Carlsbad, California, USA www.nationalrenderers.org/ events/convention/

17-19 June 2019

8-13 September 2019

The 9th International Conference on Algal Biomass, Biofuels and Bioproducts Embassy Suites, Boulder Colorado, USA www.elsevier.com/events/ conferences/internationalconference-on-algal-biomassbiofuels-and-bioproducts

FOSFA Basic Introductory Course Egham, Surrey, UK www.fosfa.org

2nd AOCS China Section Guangzhou, China www.aocs.org/networkand-connect/membership/ sections#china-section

25-27 September 2019

19-21 November 2019

Globoil India Mumbai, India www.teflas.com

23-28 June 2019

5-11 October 2019

International Palm Oil Congress & Exhibition 2019 Kuala Lumpur Convention Centre, Malaysia http://pipoc.mpob.gov.my

FOSFA Advanced Course Egham, Surrey, UK www.fosfa.org

18th AOCS Latin American Congress and Exhibition on Fats, Oils and Lipids Foz do Iguacu, Brazil www.meetings@aocs.org

21-22 May 2019 MCPD Esters and Glycidyl Esters – Symposium 2019 Berlin Germany www.dgfett.de/meetings/ aktuell/berlin2019mcpd 31 May 2019 Odessa Shipping Dinner Odessa, Ukraine http://grainandmaritime.com/ about-osd.html 3-5 June 2019 CESIO 11th World Surfactant Congress Munich, Germany www.cesio-congress.eu 5-6 June 2019 Oleofuels 2019 Venice, Italy www.wplgroup.com/aci/ event/oleofuels 10-12 June 2019 2019 International Fuel Ethanol Workshop & Expo Indianapolis, USA www.fuelethanolworkshop. com 11-12 June 2019 IGC Grains Conference 2019 London, UK https://www.igc.int/en/ conference/registration/ regform.aspx 11-13 June 2019 2019 Advanced Biofuels Conference Omaha, USA www.advancedbiofuels conference.com 12-15 June 2019 EFPRA Congress 2019 La Baule, France www.efpralabaule2019.com www.ofimagazine.com

Diary.indd 1

7-10 July 2019 9th European Symposium on Plant Lipids World Trade Centre Marseille, France www.dgfett.de/meetings/ aktuell/marseille2019 17-19 July 2019 Oleochem Outlook Dalian, China https://ienmore.com/ webedit/?activityId=871 11-13 August 2019 Deep Vegetable Oil Frying Course Texas A&M University, USA https://perdc.tamu.edu/ event/vegetable-oil-frying/ 3 September 2019 Operational & Commercial Aspects of Palm Oil Trade Malaysia Email: poram@poram.org.my

8-9 October 2019

28 October-1 November 2019

9-10 November 2019

22-23 Novemeber 2019 PORAM Annual Events 2019 (Forum, Golf & Dinner) Malaysia http://poram.org.my/p/ 9-12 February 2020

The Annual Association of Bulk Terminal Operators (ABTO) Conference Amsterdam, Netherlands www.bulkterminals.org/ events.html

World Congress on Oils & Fats 2020/ISF Lectureship Series International Convention Centre, Sydney, Australia http://wcofsydney2020.com

20-23 October 2019

8-10 March 2020

17th Euro Fed Lipid Congress Barceló Sevilla Renacimiento Hotel, Seville, Spain http://www.eurofedlipid.org/ pages/sevilla.html

10th International Symposium on Deep-Frying Hagen, Germany www.dgfett.de/index.php

27-31 October 2019

2020 AOCS Annual Meeting Montreal, Canada www.annualmeeting.aocs.org

Vegetable Oil Processing (Refining) and Products of Vegetable Oil/Biodiesel Texas A&M University, USA www. https://perdc.tamu. edu/event/vegtetable-oilprocessing-and-products-ofvegetable-oil-biodiesel/

26-29 April 2020

20-23 September 2020 18th Euro Fed Lipid Congress and Expo Leipzig, Germany www.eurofedlipid.org

For a full events list, visit: www.ofimagazine.com OFI – MAY 2019

25/04/2019 10:52:21

STATISTICS STATISTICAL NEWS FROM MINTEC Sunﬂowerseed and rapeseed

Sunflowerseed prices from Russia and Ukraine have fallen year-on-year (y-o-y), 13% and 1% respectively, following high production expectations for the 2018/19 season. Russia and Ukraine have been increasing their harvested area over the last few years, up 23% and 17% respectively when compared to the 10-year average. Weather conditions for sowings have been ideal, adding to an expected increase in sunflowerseed production for the 2019/20 season. Both Russia and Ukraine have seen an early start to warm spring weather, resulting in sowing commencing several weeks ahead of the usual mid-April start. The EU oilseed market is relatively stable with production forecast to rise 2% y-o-y for 2018/19, along with consumption, and EU supply into the market is expected to be adequate. However, rapeseed prices are currently at a premium to sunflowerseed prices in Europe following the damage to rapeseed production from 2018 heatwaves. Sunflowerseed production was not as affected, keeping prices competitive. Consequently, there could be a shift in demand. Overall, global sunflowerseed production is expected 9% up y-o-y, with global ending stocks forecast up 27% y-o-y for 2018/19.

Rapeseed and sunﬂower oil prices (€/tonne)

Butter

Global sunﬂower oil production (M tonnes)

EU March butter prices are down 6% month-on-month (m-o-m) and are 17% below price levels in March 2018. The main reasons behind falling prices are lacklustre demand and seasonally increasing butter production. Buyers tend to wait for the spring flush to resume buying activity while, at the same time, current stock levels are filled for the short-term. EU prices are trending below Oceania and US levels, but this has still not triggered an increase in demand, frustrating manufacturers. The seasonal uplift in demand begins in the spring and production is seasonally increasing as milk flows coming off farms improve. Export interest is also currently low, but this should increase in coming weeks as EU prices are at a discount on the global market.

Butter 82% fat exp fob W Eur

Butter prices (€/tonne)

Prices of selected oils (US$/tonne) 2017

Nov 18

Dec 18

Jan 19

Feb 19

Mar 19

Soyabean

829.0

719.5

711.7

718.3

737.9

715.7

Crude palm

690.0

522.8

526.6

585.5

588.4

557.9

Palm olein Coconut

661.0

555.5

533.5

576.4

581.5

549.3

1,537.0

780.6

824.1

814.5

747.8

721.7

855.0

827.2

815.4

826.0

811.7

789.9

Rapeseed Sunﬂower

800.0

670.8

679.5

694.2

707.6

699.5

1,250.0

718.2

752.9

799.6

740.8

685.6

Average

946.0

685.0

692.0

716.0

702.0

674.0

Index

224.0

162.0

164.0

170.0

166.0

160.0

Palm kernel

32 OFI – MAY 2019

stats may.indd 1

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world's most prestigious brands to make informed commercial decisions. Tel: +44 (0)1628 851313 Email: sales@mintecglobal.com Web: www.mintecglobal.com

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25/04/2019 09:51:47

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