OFI May 2020

OILS & FATS INTERNATIONAL MAY 2020 ▪ VOL 36 NO 4

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BUTTER

Spread the word

RUSSIA

Focus on exports

MARGARINE Butter’s rival

Cover May.indd 1

29/04/2020 09:25:58

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Science behind Technolog y

CONTENTS

OILS & FATS INTERNATIONAL

IN THIS ISSUE – MAY 2020

FEATURES

NEWS & EVENTS

Butter

Russia

24 18

After a period of dramatic price swings, the international butter market is now facing the impact of COVID-19 pushing prices to challenging lows

Focus on exports Russia is aiming to be a leading oils and fats exporter by increasing domestic output and providing additional support for exporters

Spread the word

Plant & Technology

26

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

Margarine & Spreads

Ukraine

Comment

2

Global effect

News

4

Some food export bans imposed

Biofuel News

10

COVID-19 hits fuel ethanol demand

Transport News

12 20

Renewable News

Butter’s rival The global margarine/spreads market has developed to include omega-3 fatty acids, plant stanols and sterols and certified oils, with a growing appeal to vegans looking for a butter alternative

Shipping and logistics disrupted by COVID-19

14 29

Retail and catering oils The increasing popularity of eating out and the growth of the fast food sector means demand for fat products, including deep frying fats, will grow

European glycerine prices triple as biodiesel use falls

Biotech News

16

Bayer settles Roundup labelling case

Diary of Events

17

International events listing

Statistics

32

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Contents May.indd 1

World statistical data

OFI – MAY 2020 1

04/05/2020 09:22:45

EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 36 NO 4 MAY 2020

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com CORPORATE: Managing Director: Tony Crinion tonycrinion@quartzltd.com +44 (0)1737 855164 SUBSCRIPTIONS: Elizabeth Barford subscriptions@quartzltd.com +44 (0)1737 855028 Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK © 2020, Quartz Business Media ISSN 0267-8853 WWW.OFIMAGAZINE.COM

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

Global effect As we went to press in mid-May, with global COVID-19 cases hitting more than 3M and deaths over 200,000, it is clear that the ongoing pandemic has touched every aspect of the oils and fats market, with no sign of a quick recovery.

Having enough healthy employees to keep facilities operational and products moving has been one key concern.

However, logistics are also expected to be impacted, with safety and quarantine procedures likely to affect the global shipping of oilseeds, oils and food commodities (see page 12).

As drivers stay off the roads due to lockdowns and movement restrictions, petrol and diesel demand and prices have crashed, with blended ethanol and biodiesel following suit. Roughly half the US ethanol industry, for example, is now shut (see page 10). While some production has shifted to meet the alcohol demand for disinfectants and hand sanitisers, the shift does not compensate for the drop in fuel ethanol demand.

Meanwhile, restaurants and hotels remain closed, impacting demand for vegetable oils.

The market has seen palm oil demand from the hotel, restaurant and catering sector in India – the world’s largest edible oil consumer – falling by as much as 40% (see p6), while seasonal Ramadan demand for the world’s top traded vegetable oil has also slumped.

International cooperation is needed to ensure that COVID-19 is contained and the supply and trade of food commodities continues to flow. However, the danger is that protectionism will kick in instead. Some countries have already banned exports of food commodities, including edible oils and oilseeds, to protect domestic supplies (see p4).

At a 21 April virtual meeting, G20 agriculture and food ministers said worldwide food supplies were adequate and vowed not to allow current emergency measures wreak havoc on the global supply chain.

Any emergency measures should be “targeted, proportionate, transparent and temporary,” the G20 said, adding that any actions should not create unnecessary trade barriers or disrupt global food supply chains. The emergency measures also should be consistent with World Trade Organization (WTO) rules, the G20 said.

While the reported number of COVID-19 cases and deaths have been highest so far in the world’s most developed countries, a bigger threat looms in developing nations with weaker health systems which are highly dependent on imports, notably Africa, where the worst locust outbreak in decades has already ravaged food crops.

“We must ensure that our response to COVID-19 does not unintentionally create unwarranted shortages of essential items and exacerbate hunger and malnutrition,” the United Nations, World Health Organization and WTO said in a joint statement on 1 April.

COVID-19 has shown us how interconnected our world is today. Economists are predicting that the impact of the measures taken to contain the virus will lead to the worst global downturn since at least the Great Depression of the 1930s. Millions may end up in economic hardship or poverty.

“It is at times like these that more, not less, international cooperation is essential,” the three global organisations said.

@oilsandfatsint

Oils & Fats International

2 OFI – MAY 2020

Comment.indd 1

Serena Lim serenalim@quartzltd.com www.ofimagazine.com

04/05/2020 09:26:50

NEWS

Some food export bans imposed Various countries around the world have banned exports of certain food commodities, including edible oils and oilseeds, to protect domestic supplies in the wake of the COVID-19 pandemic.

The customs union of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia announced on 2 April that it would restrict exports of sunflowerseeds, soyabeans and rye until 30 June, effectively from 12 April, according to Reuters.

Romania suspended most exports of grains, oilseeds and related products to markets outside of the EU, effective 10 April, World Grain said on 16 April. The measure included exports of barley, corn,

IN BRIEF AUSTRALIA: Canola production is expected to rebound in 2020-21 after several years of below average output due to drought, according to a US Department of Agriculture (USDA) report on 6 April.

The Global Agricultural Information Network report said higher prices and improved soil moisture at planting were expected to result in an expansion of canola planted area.

Canola output was forecast to rise by 800,000 tonnes from the previous year to reach 3.1M tonnes in 2020/21, significantly more than in the past two years.

Exports were expected to reach 2.2M tonnes in 2020/ 21, up 600,000 tonnes from the previous year.

oats, rice, wheat, wheat flour, soyabeans and meal, sunflowerseeds and oil, sugar, bakery products and oil cakes.

Serbia also banned exports of unprocessed sunflowerseed, sunflower oil and semi-processed oil, N1info.com reported on 17 March.

Top wheat exporter Russia approved a 7M tonne quota for grain exports from April to June. The move, announced on 2 April, was unlikely to have a strong market impact as this was the volume the country had been expected to export for the period, Reuters said.

World number three rice exporter Vietnam temporarily suspended rice export

contracts until 28 March, while Ukraine’s economy ministry said it was monitoring wheat exports and would take necessary measures if required, Reuters said.

Industry experts stressed that staple crops such as soyabeans, corn, rice and wheat were available in abundance and nations had no reason to stockpile, urging nations to cooperate.

“Given the problem that we are facing now, it’s not the moment to put these types of policies into place,” said Maximo Torero, chief economist at the UN’s Food and Agriculture Organization. “On the contrary, it’s the moment to cooperate and coordinate.”

China to allow some Canadian imports China will allow some canola seed imports to continue from top world supplier Canada despite its year-long trade dispute with the country, Reuters reported on 31 March.

Last March, China stopped buying canola from Canada’s two top exporters, Richardson International and Viterra Inc, citing insect and weed contamination in shipments, although it was suspected that the move was linked to Canada’s arrest of Meng Wanzhou, vice president of Chinese technology firm Huawei.

Shipments from other Canadian firms were still allowed but an agreed standard between the two countries on the amount of foreign material allowed per shipment was due to expire on 31 March, Reuters said.

Canadian agriculture minister Marie-Claude Bibeau said on 31 March that Beijing would allow imports to continue provided shipments contained less than 1% foreign material such as straw or chaff. However, no agreement had been reached regarding exports from Richardson and Viterra.

China is Canada's biggest canola market.

Palm oil futures plunge as crude oil prices go below zero Malaysian palm oil futures plunged 7.5% on 21 April to their lowest level since last August in reaction to US crude oil trading negatively, AgriCensus reported on 21 April.

With global demand for both vegetable and mineral oils dropping, this was the first time in history that US crude oil had fallen below zero. Benchmark West Texas Intermediate (WTI) futures for May delivery settled 4 OFI – MAY 2020

General News p4.indd 2

at minus US$37.63/barrel on 20 April, as traders struggled to store a glut of oil caused by COVID-19 lockdown measures hitting fuel use and demand.

Meanwhile, the benchmark July crude palm oil futures contract (FCPO) on Bursa Malaysia fell to MYR2,604/tonne (US$469.84/tonne) by close on 21 April – its biggest daily loss since mid-January and down 34% since the start of 2020.

“Palm oil was relying on palm-based biodiesel blends to absorb the increasing production in Indonesia and Malaysia but ... extremely low gas oil prices – together with curbed transport – has put biodiesel use in question,” Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group, told AgriCensus.

Vegetable oil futures in China also fell, with soyabean and

palm oil futures on the Dalian Commodity Exchange shedding 1-5% across the board and rapeseed oil futures on the Zhengzhou Commodity Exchange slumping 1-3%.

In the USA, soyabean oil futures on the Chicago Board of Trade for July delivery had been trading 2.9% lower at US$564.61/tonne, its lowest level since 23 March, AgriCensus aded. www.ofimagazine.com

04/05/2020 10:36:02

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NEWS IN BRIEF WORLD: Global soyabean output as forecast by the International Grain Council (IGC) is expected to reach a record high in 2020/21 due to a bumper crop in Brazil, a standard USA crop and production increases in smaller producing states, the Union for the Promotion of Oil and Protein Plants (UFOP) reported on 14 April.

The world soya harvest area would see a growth of 4% in 2020/21 compared to the previous year. In combination with slight yield gains, this would lead to a 7% production rise to hit a new peak of 366M tonnes.

The IGC estimated that 2020/21 global soyabean consumption would surge to a new peak – 365M tonnes – for the ninth year running.

Palm oil market loses out on lost Ramadan exports

demand to pick up,” said Sathia Varqa, owner of Singapore-based Palm Oil Analytics.

March palm oil exports from Malaysia, the world’s second largest producer, had fallen 27% from a year earlier to 1.2M tonnes, the lowest volume for March since at least 2016, according to Malaysian Palm Oil Board data. Top producer Indonesia’s March exports had fallen 3% from a year earlier to 1.9M tonnes, Refinitiv data shows.

In India – the world’s biggest edible oil consumer – the hotel, restaurant and catering industry was a major user of palm oil but demand from this sector had fallen as much as 40% due to a nationwide lockdown, according to analysis by the Malaysian Palm Oil Council (MPOC).

The country’s palm oil imports in March had fallen 58% from a year earlier to 335,308 tonnes according to the Solvent Extractors’ Association.

“Purchasing power is falling. People are losing jobs or witnessing pay cuts. This will have an impact on palm consumption,” a Mumbai-based dealer with a global trading firm told Reuters.

The palm oil sector is missing out on a traditional period of high demand as COVID-19 lockdowns during the Muslim holy month of Ramadan affect imports from countries such as Bangladesh, India and Pakistan, Reuters reported on 21 April.

Palm oil demand typically increased in the two months before Ramadan, which began on 23 April this year and ends with Eid al-Fitr on 23 May. Importers usually stocked up on the edible oil in anticipation of increased food consumption as families and friends met in communal feasts to break their daily fasts, Reuters said.

With people under lockdown unable to gather as normal this year – and with many restaurants, canteens and hotels shut – iftar, or break-fast meals, were expected to be on a smaller scale.

Traders and analysts told Reuters that purchases from major Ramadan buyers in Bangladesh, India, Iran, Pakistan and Saudi Arabia had picked up in early March, but had slumped since governments enacted lockdown measures.

“We have lost that window for Ramadan

Bunge Loders Croklaan lowers 3-MCPDE levels in oils Target group Product

Maximum level (µg/kg) GE (2021) 3MCPDE (2021)

6

15

50

125

500

750

Refined named vegetables oils/fats: coconut, maize, rapeseed, sunflower, soyabean, palm kernel, olive (and mixtures of these)

1,000

1,250

All other refined vegetable oils/fats: palm, shea, fish & oils from marine organisms (and mixtures of these)

1,000

2,500

Liquid formula Powder formula Infants, young Vegetable oils & fats, fish oils & children oils from marine organisms, as an ingredient

General population

SIMPLIFIED VERSION OF EXPECTED GE AND 3-MCPDE LEGISLATION

stuffs for infants and young children would be introduced (see above). Even stricter limits would be set for liquid and powder formula, while products intended for general consumers

would have limits of 1,250µg/ kg for coconut, maize, rapeseed, sunflower, soyabean, palm kernel and olive oils; and 2,500µg/kg for palm, shea, fish and other marine oils.

Figure: Bunge Loders Croklaan

Global speciality oils and fats supplier Bunge Loders Croklaan (BLC) announced on 21 April that it had lowered 3-MCPDE levels in its oils portfolio ahead of expected EU legislation.

The European Commission (EC) was expected to set new, stricter maximum levels on 3-MCPDEs (3-monochloropropanediol esters) levels, effective in January 2021, BLC said. The potentially harmful process contaminants occurred when vegetable oils were exposed to high temperatures in the refining process.

A new legal limit of 750µg/ kg in all vegetable and fish oils incorporated into food-

The new 3-MCPDE limits would be complementary to existing glycidyl ester (GE) levels that had been in place in the EU since 2018.

“We are positioned to ensure food companies can transition smoothly into conformity with the regulations by January 2021," BLC vice president David Vandermeersch said.

The tighter regulations would largely impact food companies operating in the bakery, confectionery and infant food and formula sectors.

Manufacturers would need to realign the fat formulation of their products to meet the new standards.

Sinograin releases 500,000 tonnes of reserve soyabeans China’s state-owned grain stockpiler Sinograin has released 500,000 tonnes of national soyabean reserves to COFCO amid low stock levels and weak imports in March, trade sources told AgriCensus on 7 April.

This was the second half of the 1M tonne volume that Sinograin had previously assigned this year to COFCO, the country’s largest food processor, AgriCensus quoted 6 OFI – MAY 2020

General News p6.indd 1

three China-based soya traders as saying.

The move was made at a time when commercial soyabean stocks had reached a near record low of 2M tonnes at the end of March, with imports during the month expected to fall about 15% year-on-year.

“It is probable that [Sinograin] is worried about shipment delays in Brazil so it wants to use reserves,” one soyabean trading

manager at an international trading house was reported by AgriCensus as saying.

A number of small-to-medium oilseed crushers in China had faced supply shortages since mid-March due to logistics disruptions caused by the ongoing coronavirus pandemic.

Many had been forced to shut facilities to avoid overhead costs. www.ofimagazine.com

04/05/2020 10:37:59

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NEWS IN BRIEF CHINA/USA: China imported more than 1.71M tonnes of soyabeans from the USA in March this year, up more than 13% from the same month in 2019, AgriCensus reported on 27 April.

This followed the two countries signing a 'Phase One' trade deal in January, in which China pledged to buy US$40bn of US agricultural goods this year, the majority expected to come from the soyabean sector. Before the deal, China and the USA had been locked in a trade battle which had seen the two countries imposing billions of dollars worth of tariffs on each other’s goods.

The March soyabean import volumes from the USA were still lower than those from Brazil, where a record harvest was underway, AgriCensus wrote.

China’s soyabean imports from Brazil totalled nearly 2.1M tonnes, down nearly 25% year-on-year as crushers slowed buying due to the COVID-19 pandemic.

However, Brazil was still the largest soyabean supplier to China during March, accounting for more than half of the total volume of 4.28M tonnes imported during the month.

China’s soyabean imports from Argentina during March had been slightly higher at 336,088 tonnes, up 4% from the same month last year.

Trump warns of new China tariffs due to COVID-19 US president Donald Trump says the country’s trade deal with China is now of secondary importance to the COVID-19 pandemic and has threatened new tariffs against Beijing in retaliation over the outbreak, Reuters reported on 30 April.

Trump signed the first phase of a trade deal with China in January that cut some US tariffs on Chinese goods in exchange for Chinese pledges to buy more US farm and energy goods, including soyabeans.

However, the US president made clear that his concerns

about China’s role in the origin and spread of COVID-19 had taken priority over his efforts to build on the initial trade deal.

“We signed a trade deal where they’re supposed to buy, and they’ve been buying a lot.

But that becomes secondary to what took place with the virus.”

Trump said on 3 May that he believed a “mistake” in China was the cause of COVID-19, hours after Secretary of State Mike Pompeo said there was “a significant amount of evidence” suggesting that the virus emerged from a Chinese labora-

tory in Wuhan, CNBC reported.

The president is eager to scapegoat China for a virus that has infected more than 1.1M Americans, killed more than 68,000 and left more than 30M jobless, ahead of presidential elections in November, according to the Washington Post.

Two US officials, speaking anonymously to Reuters, said a range of options against China were under discussion while the Washington Post said some officials had discussed the idea of cancelling some of the massive US debt held by China.

Global partnership makes blockchain deal A blockchain platform provided by Singapore-based dltledgers was used to complete a US$12M shipment agreement of wheat from North America to Southeast Asia, World Grain reported on 15 April.

The companies involved included global agribusiness Cargill, Rabobank North America and Singapore, ship owner Amarante, shipping agent Transmarine and agri-commodity trader Agrocorp International. They said the trade took a total of just five days to settle compared to traditional trading processes, which could take up to a month. The transaction – settled on 1 April – was a way of helping the global agricultural supply chain deliver food, particularly during the COVID-19 pandemic, the companies said.

Blockchain provides a repeatable framework for end-to-end digital trading, digitalising documents and trade execution processes.

FGV warns of significant shortfall in palm oil production Malaysian palm oil producer FGV Holdings is projecting "a significant shortall in production" this year due to the effect of the movement control order (MCO) put in place since 18 March to combat COVID-19, The Star reported on 28 April.

CEO Datuk Haris Fadzilah Hassan said in FGV’s latest annual report that the MCO had affected the group’s performance this year by limiting the strength of its workforce, shuttering businesses and limiting the movement of consumers.

“For our downstream business, we expect a reduction in processing volume especially 8 OFI – MAY 2020

General News p8.indd 2

for the export and bulk product segments.”

The shortfall is in contrast to 2019, when fresh fruit bunch (FFB) production rose 5.6% to 4.45M tonnes and crude palm oil output increased to 3.07M tonnes from 2.82M tonnes the year before.

FGV said it had a total plantation landbank of 439,230ha in Malaysia and Indonesia, including 351,000ha under a land lease agreement with Felda. The total palm oil hectarage in Malaysia was 338,437ha.

FGV expected CPO prices to trade at between RM2,400 (US$558.46) and RM2,200 (US$511.93)/tonne this year, with tight

supply and higher biodiesel mandates in Malaysia and Indonesia supporting prices.

In its outlook, FGV said China’s recovery from the pandemic provided relief as demand for CPO was expected to increase as the country replenished its stockpile.

However, competition from lower cost producer Indonesia, as well as COVID-19 challenges in other key importing countries, would cap further price increases.

“While CPO prices remain stable in first quarter 2020 in spite of COVID-19 challenges, the duration for recovery is crucial for the CPO outlook,” it said.

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OFI – MAY 2020

9

BIOFUEL NEWS

COVID-19 hits fuel ethanol demand

Ethanol sales in the USA could fall by more than US$10bn this year due to the effects of the COVID-19 pandemic, according to analysis by the Renewable Fuels Association (RFA) published on 20 April.

“Roughly half of the ethanol industry is shut down today as fuel demand has collapsed in response to COVID-19 movement restrictions,” said RFA president Geoff Cooper.

“Corn demand and prices have plummeted as plants have idled and jobs are being lost.”

The Financial Times said US petrol consumption had fallen by almost two-thirds or 6M barrels/day, hitting ethanol, which comprised about 10% of most petrol sold in the country.

The RFA estimated that ethanol production could fall by approximately 3bn gallons in 2020, a nearly 20% cut from levels normally expected.

Ethanol prices could be

IN BRIEF MALAYSIA/INDONESIA: Malaysia is delaying plans to step up its 20% biodiesel blending programme (B20) due to COVID-19 movement curbs, Today reported on 16 April.

The rollout would be paused for regions that had yet to implement it, the Malaysian Biodiesel Association told Reuters. B20 had been set to be fully implemented by mid-June 2021.

Malaysian Palm Oil Board director general Ahmad Parveez Ghulam Kadir said B20 would be restarted once the movement curb ended.

Meanwhile, Argus Media said on 3 April that Indonesia was delaying implementing its B40 programme. Trials had been due to begin in March with a 2021 roll-out but the Ministry of Energy and Mineral Resources said there were “still issues” with the current B30 programme that had to be resolved.

10 OFI – MAY 2020

Biofuel news.indd 2

US$.056 cents/gallon lower on average from March to December than usually expected, mainly due to lower usage and high inventories. As a result, ethanol sales would fall to US$12.5bn in 2020, a 46% drop from the US$23bn that would have been expected prior to the pandemic.

While some alcohol had been donated to make hand sanitisiers, most plants made foodgrade ethanol, one step below the highest pharmaceutical

grade, Time wrote on 27 March.

“The Food and Drug Administration (FDA) doesn’t want the alcohol used for a product to be applied to the skin. In addition, the alcohol is not denatured or mixed with a bitter additive to make it undrinkable.”

Denaturing was critical because of potential poisoning.

Companies which have cut or idled production include The Andersons, Pacific Ethanol, POET, Rex American Resources and Valero.

In the EU, refineries were shifting some production from biofuels to ethyl alcohol for use as disinfectants and hand sanitisers.

“In all countries, producers are appealing to officials to grant temporary derogations under the Biocidal Product Regulation to use undenatured alcohol as a disinfectant,” the European renewable ethanol association (ePURE) said.

“Authorities in Austria, France and Germany have approved technical alcohol for use in disinfection.”

However, ePure warned that the shift in demand to ethyl alcohol did not come close to compensating for the drop in fuel ethanol demand and some plants had had to reduce their production. ePURE said prices in the European fuel ethanol market had dropped from €600m³ to below €400m³ in March.

EU FAME biodiesel to suffer most in 2020

Biodiesel consumption in the EU could fall by 2M tonnes this year as drivers stay home due to COVID-19 travel restrictions, FO Licht said in a 3 April report.

The EU consumed around 16M tonnes of biodiesel last year, including 13.M tonnes of fatty acid methyl esters (FAME) and 2.5M tonnes of hydrotreated vegetable oils (HVO).

Disregarding COVID-19, demand had been set to rise by 12% to 17.8M tonnes this year, comprising 3.5M tonnes of HVO and 14.3M tonnes of FAME, mostly due to higher quotas.

Current projections taking into account COVID-19 would lead to a 2M tonne demand loss this year but it would be FAME that would suffer the most, FO Licht said. This was because refiners preferred to blend HVO over FAME due to technical reasons (energy content, physical and chemical characteristics) and a higher blending limit. EU HVO production capacity rose last year, meaning almost 3.5M tonnes could be available for the market in 2020.

There was also a strong preference for waste-based biodiesel (FAME and HVO), following double counting provisions (DC) in the EU’s Renewable Energy Directive; its advantageous greenhouse gas (GHG) emissions; and the fact that the market share of crop-based biodiesel was capped in the directive and in member state legislations.

“Last but not least, high quotas in some member states make the use of DC biofuel necessary.”

EU-wide DC biodiesel production in 2020 was earlier projected at almost 6M tonnes, more than 3M tonnes from used cooking oil (UCO), while several 100,000 tonnes of UCO methyl ester were set to be imported, FO Licht said. The waste segment would suffer from the COVID-19 lockdown due to UCO collection problems and falling supplies from shut restaurants. Imports - mainly from China – were also likely to decline.

The EU had also built up biodiesel stocks in recent years. “These stocks will weigh on the market and may cut output once more,” FO Licht said. “We therefore see an 8% reduction in EU biodiesel output to 13.7M tonnes in 2020, with FAME hitting a six-year low of less than 10M tonnes.”

▪ French vegetable oil and biodiesel leader Groupe Avril has temporarily closed three of its six production plants due to COVID-19 slashing biodiesel demand, biofuels-news.com reported on 22 April. A steep fall in biodiesel prices had not been matched by a corresponding fall in rapeseed oil prices, making production uneconomic, the report said.

“The prices are catastrophic,” said chief executive Jean-Philippe Puig.

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11

TRANSPORT NEWS IN BRIEF RUSSIA: Leading Ukrainian sunflower oil producer and exporter Kernel has sold its 50% stake in Taman Grain Terminal Holdings, a joint venture owning Taman Grain Terminal Complex (TGTC) in Russia, latifundist. com reported on 23 March.

Kernel’s 50% stake in the venture was purchased by Demetra Holding, a subsidiary of VTB Group. Glencore Agriculture retained its 50% share in Taman Grain Terminal Holdings.

TGTC is a deepwater grain export terminal in Taman port, Russia.

Kernel and Glencore had acquired 100% of the shares in TGTC in 2012 from specialised fats and vegetable oil/mayonnaise producer EFKO Group.

Shipping and logistics disrupted by COVID-19 Transport restrictions put in place to curb the spread of the COVID-19 virus have caused serious disruption to the flow of trade, according to a Malaysian Palm Oil Council (MPOC) report.

The vegetable oils and fats sector was one of the most affected industries as it was heavily reliant on shipping for flow of goods, the report said.

World Grain wrote on 1 April that the physical movement of grains and soyabeans between buyers and sellers had continued relatively smoothly in terms of logistics and shipping because their transport had, so far, been excluded from COVID-19 related restrictions.

Dry bulk shipping freight rates fell initially as China quarantined large parts of the country in February but rates for vessels used in grain transport (those below Capesize) recovered once China got back on its feet. Exports from the Black Sea and Brazil also helped prop up freight rates for smaller bulk carriers through the first three months of 2020.

“As we enter the Latin American grain export season, long-haul soyabean shipments from Brazil to China will drive an uptick in Panamax bulker demand,” World Grain quoted shipping analyst MSI as saying.

UkrAgroConsult freight market analyst Maksym Kharchenko said new layers of bureaucracy and additional safety and quarantine procedures would impede grain logistics in the coming months. “Delivery periods tend to be increasing due to quarantine measures at ports. Many countries have introduced additional screening and mandatory 14-day quarantine rules for vessels coming from certain countries. This may increase the cost of shipment in some cases because of more time charter-chargeable days.”

MSI said the cost of shipping over the next six months would be determined by whether commodity producers in key exporting countries such as Australia, Brazil and Indonesia continued to escape the worst ravages of COVID-19.

Paraguayan exporters are struggling to ship soyabeans due to low water levels in sections of the Paraná and Paraguay rivers, says Juan Carlos Munoz, head of Paraguay’s maritime and shipping chamber CAFyM. More than 120 barges loaded with soyabeans had been affected by extremely low water levels in a certain section of the Paraná River, Munoz said in a 17 April AgriCensus report.

The barges, which usually transported 1,600 tonnes of soyabeans, needed at least 1.1m for navigation but the water level in the affected area was about 30cm. Paraguayan

Photo: Aranha, Pixabay

Low river levels hit Paraguay’s soyabean exports

Paraguay’s soyabeans are shipped along the Paraná and Paraguay rivers

exporters usually shipped nearly 30% of their soya exports via this section of the Paraná River.

Munoz said the only solution would be if the Itaipu dam, which was controlled by

Brazil and Paraguay, could free up water volumes to increase water levels in this area.

Navigation also presented logistics hurdles at the Paraguay River, he added.

Some soyabean producers

from regions including Alto Paraná, Caazapá, Itapuã, and Misiones were transporting soyabeans via lorries to the Asuncion area, to reach other ports in the region, he said.

“This is increasing logistics costs for producers as they have to pay an additional $8/ tonne to reach the Asuncion region,” Munoz said.

Paraguay was set to produce more than 10M tonnes of soyabeans in the 2019/20 crop year, with exports representing nearly 75% of total production, AgriCensus said.

Barges are used in Paraguay to ship soyabean to ports in Argentina, Brazil and Uruguay.

Bunge truck app handling 45% of its grain freight in Brazil Global agribusiness Bunge has launched an app which allows truck drivers to schedule grain freight in Brazil via their mobiles.

Bunge said it handled more than 25M tonnes/year of commodities in Brazil, with 320,000 drivers involved in its logistics operations. The Vector app was now responsible for about 45% of the total cargo handled by the company by road. By the end of 2020, around 50,000 drivers were

12 OFI – MAY 2020

Transport news.indd 2

expected to use the app, which was introduced gradually since January 2020.

The tool gathers information about Bunge’s cargo available for handling: pick-up and drop-off locations, pick-up and delivery timelines, and the quantity per tonne.

Registered drivers can select a freight and schedule the load in a few seconds, without visiting one of the company’s branches to withdraw the load order.

Bunge logistics director Makoto Yokoo said the app was also a great ally to drivers in the current COVID-19 pandemic by reducing face-to-face exposure.

“We have already seen an increase in the number of active users since the last two weeks of March. Today, about 35% of the total drivers who downloaded the app are active users of the tool compared to 20% in early March.”

www.ofimagazine.com

29/04/2020 10:10:14

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17th Global Oleochem Summit 2020 July15-17,2020 Xiamen,China 17th

We are honored to inform you that the Oleochem Summit 2020 will be held on July 15-17 th in Xiamen,China.

The annual summit will gather 500+ elites and executives together, which will associate oleochemical industry closely with feedstock policy, import market ,downstream industry as to solve the obstacles and problems, discuss the future market trend as well as establish strategic plans to cope with changeable market ahead, the impact of the epidemic on the economy.

We Enmore sincerely invite you to join us together in Xiamen, China for July 15-17 th to build more haemonious industrial environment in the future.

Catch A Glimpse of Our Speakers

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www.ofimagazine.com

Yoong Jun Hao Technical Advisory

Jackie Wong Analyst

Zhao Guangyu Oils & Fats Researcher

Hu Jiehua GM

86-136 7195 4548;86-021-51550862

Wang Nengquan Chief Researcher

Bai Jie Senior Oils & Fats Researcher

Xu Hujun Director of Research Center for Daily Chemicals and Surfactants

Jiang Pingping Professor

monicayu@enmore.com OFI – MAY 2020

13

RENEWABLE NEWS GERMANY: Hamburg-based Hammonia OleoChemicals (HOC) and Spain’s Industrial Química Lasem (IQL) have expanded their partnership in Germany, HOC announced on 4 April.

As a result, HOC would be supplying IQL’s speciality esters, in addition to the existing products of IQL’s parent company Nisshin Oillio, for cosmetics applications in Germany.

The co-operation between the two partners began in 2018 for applications other than cosmetics.

IQL is a leading European oleochemicals manufacturer and supplies a portfolio of emollients, emulsifiers and thickeners for personal care applications. In addition to medium chain triglycerides (MCT) based on coconut, monohydricalcohol esters and polyhydricalcohol esters form its product base.

UK: Researchers at Aberystwyth University’s Institute of Biological, Environment & Rural Science have developed new miscanthus hybrids which can produce biomass for a range of products including bioplastic, Bio Market Insights reported on 1 April.

The hybrids were adapted to lower quality land less suitable for food production and were produced from seeds, instead of rhizomes, allowing for more rapid scale-up of the planted area.

Industry partner Terravesta was aiming for a commercial roll-out of the crop this year.

European glycerine prices triple as biodiesel use falls Photo: Adriano Gadini, Pixabay

IN BRIEF

European glycerine spot prices have tripled amid fears that upstream biodiesel production will fall further due to coronavirus movement restrictions, the Independent Commodity Intelligence Services (ICIS) reported on 3 April.

Glycerine is a by-product of biodiesel production and lack of demand for fuels in Europe due to COVID-19 restricting travel had led some biodiesel producers to cut or halt production.

ICIS said refined vegetable glycerine prices had shot up €130-230/tonne to €670-900/tonne FD (free delivered) NWE (northwest Europe) in the week ending 3 April. Refined tallow/technical vegetable glycerine values also jumped €100210/tonne to €500-670/tonne FD NWE. Crude glycerine prices rocketed by €150/tonne to €310-480/tonne FD NWE. ICIS said there was little to no material being

imported from southeast Asia due to logistical issues moving material into Europe, as well as a lockdown in Malaysia forcing some oleochemical plants in the country to shut.

“Any material that can leave southeast Asia bound for Europe will take at least 40 days to reach its destination.”

ICIS said it was likely that biodiesel production in the EU would remain reduced for most of the second quarter.

“Biodiesel producers don’t have any offtake for biodiesel right now,” ICIS quoted one glycerine seller as saying. “Demand has collapsed … there is no external storage space left in Europe.

“There are 30,000 tonne cargo vessels being re-routed into Europe from Asia because they can’t dock there and, when they dock here, they need to store it. So producers have to lower their utilisation rates in the plant because the customers have nowhere to put the product.”

ICIS said glycerine demand remained healthy, with a slight increase seen in interest for use in sanitiser applications, though glycerine was a small component of most sanitiser products.

Glycerine was mainly used in personal and oral care products such as skincare creams, toothpastes and mouthwashes, as well as food products either as glycerine directly or one of its derivatives such as glycerol mono-stearate.

There had been a drop in demand for industrial applications, with the rubber and antifreeze industries taking a knock from falling automotive demand.

Gevo suspends operations at Luverne plant US renewables firm Gevo Inc announced on 31 March that it was suspending operations at its Luverne facility in Minnesota for the foreseeable future due to the impact of the COVID-19 virus.

However, it will continue the production of renewable

isooctane and sustainable aviation fuel from its plant in Silsbee, Texas.

“Additionally, Gevo intends to continue developing its hydrocarbon business and will continue to move forward in securing the project funding needed to expand the Lu-

verne facility. The expansion is designed to allow Gevo to produce large quantities of low carbon isobutanol, sustainable aviation fuel and renewable isooctane.”

Gevo uses a variety of sugar and starch feedstocks, such as beets and sugarcane.

VTT develops thermoplastic cellulose with Arla, Paulig and Wipak Finland’s VTT Technical Research Centre has developed a bio-based plastic made from cellulose and fatty acids that can be used for food packaging, Bio Market Insights reported on 14 April.

VTT said it was working in cooperation with dairy company Arla Foods, food and drink firm Paulig and packaging company Wipak to develop its product.

14 OFI – MAY 2020

Renewable news.indd 2

Thermoplastic cellulose – a cellulose moulded using heat – could be processed like conventional plastic and refined into packaging films and bulk commodities, VTT said, adding that the final application of its Thermocell product would depend on how companies wanted to use it.

“The next step in the development process is to produce hundreds of kilos of the

material and process it into various packaging prototypes with companies to verify its functionality in industrial processes and real application conditions.”

VTT said it hoped that cooperating with Arla, Paulig and Wipak would help boost the launch of its material on to the market and expected the project to be completed by May 2021. www.ofimagazine.com

04/05/2020 10:28:34

HEXANE FREE OIL & FEED PROCESSING TECHNOLOGIES

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www.farmet.eu www.ofimagazine.com

OFI – MAY 2020

15

BIOTECH NEWS

Bayer settles Roundup labelling case German chemical giant Bayer AG has agreed to pay US$39.6M to settle a class action in the USA over the labelling of its controversial Roundup weedkiller, which contains glyphosate, the active ingredient in the herbicide which has been linked to cancer, Deutsche Welle (DW) reports.

According to documents revealed to a court in Kansas city, Bayer reached an agreement with several plaintiffs but the court must still approve the settlement, DW said on 31 March.

The lawsuit centred on how Monsanto, which Bayer acquired for US$60bn in 2018, failed to list glyphosate’s health risks in Roundup labelling.

The settlement requires an improvement

IN BRIEF USA: Plant-based technology company Calyxt has licensed a new method from the University of Minnesota to help increase efficiency in gene edited plants.

The method had the potential to reduce the time needed to edit plants from one year to several months and could help bring consumer-desired products, such as better tasting plant proteins, to the market faster, Calyxt said.

The company expected to launch at least six product candidates before 2024, including a hemp product in 2020; an alfalfa product in 2021 through its collaboration with S&W Seed Company; a high fibre wheat product candidate as early as 2022; and four additional product candidates either via its integrated business model or in collaboration with third parties.

to Roundup labelling, with Bloomberg reporting that language saying that glyphosate only affected an enzyme found in plants had to be removed.

Bayer still faces 48,600 lawsuits in the USA over the alleged cancer risks associated with Roundup.

“This agreement is not related to the Roundup product liability litigation, for which the parties continue to mediate in good faith,” Bayer said.

Meanwhile, the Environmental Protection Agency (EPA) has been sued by multiple groups over its January decision to re-approve glyphosate, thehill.com reported.

One lawsuit against the EPA was filed on

behalf of the Center for Food Safety (CFS), Beyond Pesticides, the Rural Coalition, Organización en California de Lideres Campesinas, and the Farmworker Association of Florida.

“EPA’s half-completed, biased, and unlawful approval sacrifices the health of farmworkers and endangered species at the altar of Monsanto profits,” CFS legal director George Kimbrell was quoted by thehill.com as saying in a statement.

In re-approving the chemical earlier this year, the EPA said “there was insufficient evidence to conclude that glyphosate plays a role in any human diseases”.

Glyphosate is the most commonly used herbicide among farmers.

Amyris tech to give boost to CBD skin care US biotech ingredients firm Amyris hopes to be the first company to produce highly pure and efficacious cannabidiol (CBD) from fermentation technology at commercial scale, CosmeticsDesign.com reported on 17 March.

The company supplied biotech ingredients to the Biossance skin care and Pipette baby care brands and teamed up with a cellular agriculture company called LAVVAN in 2019 to accelerate progress toward this goal, with Amyris contributing the R&D and LAVVAN handling the manufacturing and commercialisation, the report said.

CBD is a compound found in the cannabis plant with growing medical, food and skin care applications.

Amyris specialises in modifying the DNA of yeast to produce cosmetic and health ingredients such as its Neossance Squalane emollient, us-

ing sugarcane as a feedstock.

It posted new research data recently highlighting the advantages of CBD skin care with Neossance Squalane, CosmeticsDesign.com said.

Studies conducted by Cosmo Technical Center and the R&D Division of NIKKOL Group looked at how various oils and fats carried and delivered CBD to the epidermis, comparing medium-chain triglycerides, jojoba oil, sun-

flower oil, hemp seed oil and Neossance Squalane.

According to data posted on the Amyris site, the company’s squalane was a more effective carrier by 10-40 times than the other oils.

CosmeticsDesign.com said cannabinoids were expected to be a big opportunity in the cosmetics market and CBD was just one of several cannabinoids being used in skin care and wellness products.

CGB acquires QTI’s non-GM food grade soyabean business Grain and transportation business Consolidated Grain and Barge Co (CGB) has acquired the food-grade soyabean division of Quality Technology International (QTI).

“This new business fits perfectly into our market development group as we work to expand in the food and consumer areas for non-GMO, speciality and organic areas,” said CGB’s general manager of market 16 OFI – MAY 2020

Biotech news.indd 2

development on 2 April.

The new business would trade, ship and sell speciality food soyabeans via container to Japan, and domestically for processing and resale to Japanese food manufacturers. Common food uses for these soyabeans would be Japanese staples including tofu, miso and natto.

Health product provider QTI said the sale

would allow the company to focus on its growing animal health and nutrition division.

CGB is a wholly-owned subsidiary of CGB Enterprises. The company operates 95 grain facilities across the US Midwest and also has operations in logistics and transportation, crop insurance, agri-finance, soyabean processing, producer risk management and other related businesses. www.ofimagazine.com

29/04/2020 10:24:08

DIARY OF EVENTS 10 June 2020

24-26 August 2020

22-23 September 2020

29-30 October 2020

International Grains Virtual Conference www.igc.int/en/conference/ confhome.aspx

Ethanol 101 Minneapolis Convention Center, USA http://fuelethanolworkshop. com/ema/DisplayPage. aspx?pageId=Ethanol_101_ Pre_Conference

Future of Biofuels Copenhagen, Denmark https://fortesmedia. com/future-of-biofuels2020,4,en,2,1,5.html

4th ICIS Pan American Oleochemicals Conference Miami, USA www.icisevents.com/ehome/ panamoleochemicals/home

24-25 June 2020 Oleofuels 2020 Marseille France www.wplgroup.com/aci/ event/oleofuels/ 30 June-1 July 2020 8th International Symposium on Surfactants in Tribology Lublin Poland https://sis2020.umcs.eu/ symposium/accompanyingevents/surfactants-intribology 15-17 July 2020 17th Global Oleochem Summit 2020 Xiamen, China https://globaloleochem2020. ienmore.com 14-15 August 2020 Palmex Thailand 2020 ICC Hat Yai Songkhla Thailand http://thaipalmoil.com 24 August 2020 Biofuels Environmental, Health & Safety Forum Minneapolis Convention Center USA www.fuelethanolworkshop. com/ema/DisplayPage. aspx?pageId=Biofuels_ Enivornmental__Health___ Safety_Forum_Precon 24-26 August 2020 Biodiesel Production Technology Summit Minneapolis Convention Center, USA www.biodieseltechnology summit.com/ema/ DisplayPage. aspx?pageId=About_Us www.ofimagazine.com

Diary May 2020.indd 1

24-26 August 2020 International Fuel Ethanol Workshop & Expo Minneapolis Convention Center, USA http://fuelethanolworkshop. com/ 6-11 September 2020 FOSFA Basic Introductory Trade Education Course Royal Holloway University of London UK www.fosfa.org/events/ basic-introductory-tradeeducation-course/

22-24 September 2020

2-4 November 2020

Oils and Fats Industry Exhibition Kiev, Ukraine https://oil.agroinkom.com.ua/

World Bio Markets Amsterdam, the Netherlands www.worldbiomarkets.com

23-24 September 2020

10th ICIS Asian Surfactants Conference Singapore www.icisevents.com/ehome/ asiansurfactants/contact_us/

Future of Surfactants Summit Boston, USA www.wplgroup.com/aci/ event/surfactants-summitamerica/ 23-25 September 2020 Globoil India 2020 Renaissance Mumbai Convention Centre Hotel India www.globoilindia.com

12-13 November 2020

7-9 December 2020 10th International Conference on Algal Biomass, Biofuels and Bioproducts (AlgaBBB 2020) Pittsburgh, PA, USA www.elsevier.com/events/ conferences/internationalconference-on-algal-biomassbiofuels-and-bioproducts

16-18 September 2020

6-7 October 2020

10th ICIS World Surfactants Conference Hyatt Regency Jersey City New Jersey USA www.icisevents.com/ worldsurfactants

Biofuels International Conference & Expo Brussels, Belgium www.biofuels-news.com/ conference/biofuels/biofuels_ index_2020.php

AOCS Annual Meeting & Expo Portland, Oregon, USA www.aocs.org/attendmeetings/industry-events

6-8 October

14-16 September 2021

17 September 2020

Bulk Terminals 2020 Riga, Latvia www.bulkterminals.org/ events.html

oils+fats Munich 2021 Messe Munich, Germany www.oils-and-fats.com/index. html

6-8 October 2020

17-20 October 2021

Plant Protein Science and Technology Forum Chicago, USA https://plantprotein.aocs.org/

EuroFed Lipid Congress/Expo Leipzig, Germany www.eurofedlipid.org

22-23 October 2020

AOCS Australasian Section Meeting Newcastle, Australia www.aocs.org/attendmeetings/industry-events

Black Sea Oil Trade Fairmont Grand Hotel Kiev Ukraine www.ukragroconsult.com/en/ conference/bso2020 22-23 September 2020 Future of Biofuels Copenhagen Denmark https://fortesmedia. com/future-of-biofuels2020,4,en,2,1,5.html 21-24 September 2020 Bio Impact Ag & Environment Raleigh Convention Center North Carolina USA www.bio.org/events/ bio-impact

7th High Oleic Oils Congress Toulouse, France http://higholeicmarket.com/ hoc-2019/

2-5 May 2021

8-10 November 2021

For a full events list, visit: www.ofimagazine.com OFI – MAY 2020 17

04/05/2020 14:50:08

RUSSIA

Focus on exports Russia is aiming to become one of the world’s largest exporters of oils and fats in the next few years by significantly increasing domestic output and by providing additional support for exporters, according to some Russian senior officials and local analysts in the agriculture sector.

In recent years, Russia has strengthened its position in the global oils and fats market primarily by increasing exports.

According to data from the Russian Ministry of Agriculture, Russian exports of oils and fats grew by about 20% in 2019 compared with the previous year and were worth around US$3.9bn. In terms of volume, exports increased to 3M tonnes, which was a record in the history of modern Russia.

Commenting on these figures, Russia’s Deputy Minister of Agriculture Oksana Lut said the 20% growth had been the highest for the Russian oils and fats industry since 2014-2015 and the highest among the non-energy sectors of the Russian economy.

As a result, Russia’s share of the global vegetable oils market reached about 14% in the case of soyabean and rapeseed oils, and around 26% for sunflower oil.

However, despite these increases, the government still plans further increases in the domestic production and exports of both oils and fats. As part of these plans, by 2024, total exports of domestic vegetable oils are expected to reach US$8.6bn, which would be almost 2.7 times higher than in 2017.

According to an official spokesperson from the Russian Ministry of Agriculture, in contrast to previous years, the export 18 OFI – MAY 2020

Russia.indd 2

Russia is aiming to become a leading oils and fats exporter by increasing domestic output and providing additional support for exporters Eugene Gerden of finished products would be given a specific focus. At the same time, exports of some major oil-bearing crops would decrease to meet the needs of domestic processors.

In fact, there has already been a recent decline in exports of oilseeds from Russia.

Last year, these exports totalled 726,000 tonnes, compared with 1.2M tonnes in 2018. By 2024, it is forecast not to exceed 447,000 tonnes.

Lack of raw materials

The implementation of these plans, however, could be hampered by serious problems within the industry, notably the shortage of raw materials, according to local analysts. This shortage persists despite the fact that the harvest of oil-bearing crops in Russia this year is expected to exceed a record 17M tonnes.

Even such record harvests would be insufficient to meet the demands of domestic oil processors, who currently require a total of around 23-25M tonnes/ year, local analysts say. This figure is expected to increase to 33M tonnes/year by 2024.

The lack of raw materials limits the margins of the industry and reduces its export potential. Processors have spoken about the need to expand the planted area of major oil-bearing crops in Russia.

Commenting on the situation, Daria Snitko, head of Gazprombank’s Center for Economic Forecasting and one of Russia’s leading analysts in the field of agriculture, said in an interview with the Russian Rossyiskaya Gazeta business newspaper that there was also a need for Russia and its farmers to make better use of its global experience in the use of arable land.

According to Snitko, only 69% of the existing arable land area in Russia is currently used by local farmers, significantly lower than in the majority of developed nations, where the figure is in the range of 75-80%.

In the meantime, aware of the problem, the Russian Ministry of Agriculture is planning to introduce up to 10M ha of arable land into the domestic farming business over the next five years.

According to state plans, this would fulfil the demands of domestic oilseed processors and also stimulate the production of vegetable oils and fats.

The only problem, however, could be related to existing duties on the export of oilseeds from Russia, which are currently set at a rate of 6.5%, a figure the industry considers as extremely low.

According to analysts, such a low rate forces farmers to export their crops rather than supply domestic processors.

Sunflowerseeds are the exception, with exports growing five-fold for the last three www.ofimagazine.com

01/05/2020 17:39:25

RUSSIA years up to a total of 300,000 tonnes.

This growth continues despite numerous calls from domestic sunflower oil and meal producers on the national government to introduce tariff and nontariff measures to prevent such high sales of these crops overseas.

Finally, the government is also planning to further tighten sanitary regulations for vegetable oils and fats in the domestic market. In 2018, Russia reduced the maximum content of trans fatty acids in oils and fats products from 20% to 2% and a further reduction is planned this year.

Processors expand overseas

Patrushev, an official spokesman of the Russian Ministry of Agriculture, in addition to the territory’s traditional production of sunflower oil, the state is planning to create conditions to increase production of soyabean and other oils.

With regards to soyabean oil, these plans will primarily be implemented in the far eastern area of Russia, where the majority of soyabean is sown.

In the long-term, the Russian government has plans to stimulate the production of olive oil in the domestic market. Olive oil is not currently produced in Russia and must be imported.

The 2014-2015 Russian financial crisis,

the result of a sharp devaluation in the ruble, led to a serious decline in olive oil sales in the country. However, in recent years, the situation has started to improve, while local demand for the product among customers is growing steadily.

According to state plans, the total investment necessary to implement these plans is estimated at RUB365bn (US$5.67bn) until 2024. The majority of these funds will be provided directly from farmers’ and processors’ own sources, with the remainder provided by the state and some state-owned banks in the form of loans.

 Eugene Gerden is a freelance journalist

Many processors have recently announced plans to enter new markets and significantly expand the geographic spread of their supplies.

For example EFKO, one of Russia’s largest oils and fats producers, has almost tripled exports of its vegetable oils to foreign markets since 2016. The company is planning a further increase in exports and, with this in mind, has recently completed the expansion of trans-shipment capacities at its Taman terminal in the Black Sea, where most of its exported oil has traditionally been handled.

The current main overseas markets for Russian vegetable oils processors include Egypt, Iran and Turkey. In the last two years, supplies to these countries have increased by an average of 25% and it is possible the same growth rates will continue in the next few years.

This increase in exports was also due to the expansion of the trans-shipment capacities at some major Russian sea ports in the Azov and Black Seas, primarily those which specialise in the handling of domestic agricultural products and commodities.

In addition to this increase in exports to the Middle East, processors also plan to expand into the Asia Pacific region, where the demand for Russian vegetable oils has recently increased significantly.

Domestic production

Meanwhile, domestic production of oils totalled approximately 5.8M tonnes in 2019, according to preliminary estimates by analysts of the Russian Ministry of Agriculture.

At the same time, the volume of production in other countries in the Eurasian Economic Space, including some former Soviet states such as Belarus, Kazakhstan and Armenia, reached 750,000-800,000 tonnes.

According to statements by Dmitry www.ofimagazine.com

Russia.indd 3

OFI – MAY 2020 19

01/05/2020 17:39:27

MARGARINE & SPREADS The global margarine market has developed to include lowfat and low-salt spreads and products with added omega-3 fatty acids, plant sterols and certified oils, with a growing appeal to vegans searching for an alternative to butter OFI The global margarine/spread market is expected to grow with a single digit increase in CAGR between 2018 and 2028, according to a recent report by Persistence Market Research (PMR).

Growth will be driven by consumer demand for food products high in nutritional value and low in fat and calorie content, and higher consumption in under-developed countries where margarine offers greater value for money and multiple usages.

“The global market for margarine/spread is dominated by North America, which holds a significant market share, followed

by Europe and Asia-Pacific,” PMR says.

“North America is the largest consumer, especially due to the high consumption in food processing. Europe is the second largest consumer. Developing regions, such as Asia-Pacific and South America, are constantly growing at a high consumption rate. China and India are the largest producers and consumers of margarine/ spreads in the Asia-Pacific region.”

PMR says a growing number of vegan customers are also looking for butter alternatives, with margarine and spreads offering a plant-based alternative which has less saturated fats and cholesterol.

“Immense competition exists in the global margarine/spread market due to high market concentration. Only 18 major companies hold most of the market share.”

Some of the prominent players in the global margarine/spread market are Boulder Brands, Bunge, ConAgra Foods, Dairy Crest, Land O’Lakes, NMGK Group, Smart Balance, Unilever and Upfield Foods, PMR says.

Development of margarine

Margarine has a history dating back some 150 years and is a non-dairy product used as a flavouring, for cooking and in baking to produce products such as pastries, doughnuts, cakes and cookies.

It comes as a soft and spreadable spread in tubs, as a liquid cooking blend in bottles and in hard blocks used in baking.

The first margarine was created by 20 OFI – MAY 2020

Margarine.spreads.indd 2

Butter’s rival Hippolyte Mège-Mouriès in 1869, who responded to a challenge by Emperor Napoleon III to create a butter substitute for the armed forces and lower classes.

The recipe was a mix of skimmed milk, water and animal fat.

In 1871, Mège-Mouriès sold his patent to Dutch firm Jurgens. Jurgens realised that for the naturally white margarine to become a butter substitute, it needed to look like butter and began dyeing margarine yellow. Jurgens eventually became a world-renowned maker of margarines and soaps, becoming part of consumer goods giant Unilever.

Between 1900 and 1920, commercial oleomargarine was produced from a combination of animal fats and hardened and unhardened vegetable oils, according to Wikipedia. The depression of the 1930s and WWII led to a scarcity of butter and animal fats, leading to an almost complete switch to vegetable oils and fats.

Voluntary fortification of margarine with vitamins had been carried out by manufacturers since 1925 but in 1940, with the advent of WWII, certain governments made the addition of vitamins A and D compulsory to safeguard nutritional health.

During the 1950s and 1960s, competing producers vied to produce margarine that tasted more like butter.

In the mid-1960s, the introduction of two lower-fat blends of butter oil and vegetable oils in Scandinavia, called Lätt &

Lagom and Bregott, began the debate on what should be called ‘margarine’ leading to the introduction of the term ‘spread’, Wikipedia says. In 1978, an 80% fat product called krona, made by churning a blend of dairy cream and vegetable oils, was introduced in Europe and, in 1982, a blend of cream and vegetable oils called Clover was introduced in the UK by the Milk Marketing Board. The vegetable oil and cream spread ‘I Can’t Believe It’s Not Butter!’ was introduced into the USA in 1981 and in Canada and the UK in 1991.

Today, margarine and spreads are typically made from cottonseed, olive, palm, rapeseed, soyabean and sunflower oils. The product has gone through many developments to improve its health profile. Most brands have phased out the use of partially hydrogenated oils and are now also trans fat free. Many brands have launched refrigerator margarine spreads that contain only a third of the fat and calorie content of traditional spreads.

Other varieties include those with added omega-3 fatty acids, those with low or no salt, those with added plant sterols and stanols (claimed to reduce blood cholesterol) and some made from certified sustainable oils.

Definitions

To be classified as margarine, the product must have a vegetable fat content of 80% or more, similar to butter, Wikipedia says.

Over the years, producers have reduced

u

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The GERSTENBERG Polaron pilot plant sets new standards in the crystallisation of margarine · · · · · ·

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MARGARINE & SPREADS u the fat and calorie content of margarines.

These lower fat options are officially called ‘spreads’. The EU limits the terms ‘butter’ and ‘margarine’ to products with a fat content of not less than 80%.

It defines spreadable fats as “a waterin-oil emulsion derived from vegetable/ animal fats, with a fat content of at least 10% but less than 90%, that remains solid at a temperature of 20°C and is suitable as spread”.

Margarines may not have a milk fat content of more than 3%. For blends and blended spreads, the milk fat may be between 10% and 80%.

Spreads that contain 60-62% of fat may be called ‘three-quarter-fat margarine’ or ‘reduced-fat margarine’. Spreads that contain 39-41% of fat may be called ‘half-fat margarine’, ‘low-fat margarine’, or ‘light margarine’. Spreads with any other percentage of fat are called ‘fat spread’ or ‘light spread’.

Butter vs margarine

In the past, the popularity of margarine was of great concern to dairy farmers, who lobbied legislators to ban the yellow dyeing of margarine. Bans on adding colour became commonplace in Canada, Denmark and the USA. By 1900, artificially coloured butter was contraband in 30 US states, Mental Floss writes. Some states even required margarine to be dyed pink. The Canadians banned all margarine from 1886 to 1948, except between 1917 and 1923 when WWI left butter in short supply. Even after the ban was relaxed, Quebec ensured that the ban on dyeing margarine remained in place in the province until 2008.

In Australia, it did not become legal to sell coloured margarine until the 1960s.

The harder spreadability of butter has also helped the growth of the margarine industry.

Many popular table spreads sold today

Gerstenberg introduces new pilot plant Denmark’s Gerstenberg Services AS has recently introduced a fully automated pilot plant for the crystallisation of all types of fats, margarine and butter products.

The firm is a leading equipment supplier for the production of margarine, puff pastry, shortening, ghee and related products within the yellow fat and edible oil industry.

“The new POLARON plant allows producers of yellow fat products to make test runs in order to determine the optimum processing conditions for their products, either on site or in-house at their production sites,” Gerstenberg says.

The pilot plant comprises a preparation/remelt line and a crystallisation section – a complete industrial production plant in small scale.

Preparation/remelt: A fully automatic emulsion preparation section houses a melting tank and oil storage tank, with fully automatic water phase, emulsifier and emulsion preparation. Gerstenberg says this offers the possibility to run continuous crystallisation, an advantage in the manufacture of products for market tests of a limited volume, which is costly to carry out at a full-scale plant.

The plant also has an automatic remelt function, allowing remelted product to be returned to the emulsion buffer tank while waiting to reach the different product setpoints, minimising product loss.

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Crystallisation: The pilot plant’s scraped surface heat exchanger (SSHE) is designed for crystallisation with CO2 as a refrigerant. However, it can also accommodate customers and markets where ammonia is still used.

“The CO2 boosts cooling capacity as the volumetric efficiency is up to seven times higher than that of other refrigerants and gives low energy consumption during production and a low carbon footprint,” Gerstenberg says.

The design of the SSHE makes it possible to run with exactly the same tip speed on the rotors as that on an industrial SSHE, allowing an exact upscaling to an industrial plant, the company says.

The rotor is equipped with an advanced scraper system (open hinge) in either plastic with two scraping edges, or steel with four scraping edges, allowing several scraper configurations to be used (staggered etc), which ensures highly efficient scraping of crystallised product from the interior tube surface.

“The pin rotor machine is a stand-alone unit, reflecting a pin rotor machine in an industrial plant,” Gerstenberg says. In addition, the machine has a modular design, allowing the pin rotor cylinder to be mounted in three different places in the process. At the same time, each cylinder can be changed to have three different volumes.

Gerstenberg says the pilot plant is for a working pressure of 120 bar, enabling all product types to be made, and has a semi-automatic clean-in-place (CIP) function.

22 OFI – MAY 2020

Margarine.spreads.indd 3

are blends of margarine and butter or other milk products, Wikipedia writes. In some European countries butter-based table spreads and margarine products are marketed as ‘butter mixtures’.

Butter mixtures now make up a significant portion of the table spread market. The brand ‘I Can’t Believe It’s Not Butter!’ spawned a variety of similarly named spreads including ‘Beautifully Butterfully’, ‘Butterlicious’, and ‘Utterly Butterly’. These butter mixtures imply a strong similarity to real butter and their names present the product to consumers differently from the required product labels that call margarine “partially hydrogenated vegetable oil”.

During the 1980s, butter consumption fell as fats of animal origin became a great health concern. However, butter has made a comeback due to its image as being a more natural and less processed product.

Nowadays, margarine, particularly polyunsaturated margarine, has become a major part of the Western diet, overtaking butter in popularity in the mid-20th century, according to Wikipedia.

In the USA in 1930, for example, the average person ate over 8.2 kg/year of butter and just over 0.91 kg of margarine.

By the end of the 20th century, an average American ate around 2.3 kg/year of butter and 3.6kg/year of margarine.

Trans fatty acids

Trans fatty acids (TFAs) occur naturally in small amounts in meat and milk fat but also as a result of the partial hydrogenation of fats and oils to improve their texture and shelf-life for use in spreads, fast food, snack food and baked goods. Trans fats are used in shortenings for deep-frying in restaurants, as they can be used for longer than most conventional oils before becoming rancid. Partially hydrogenated oils (PHOs) have the right consistency to replace animal fats such as butter and lard at a lower cost. Many baked foods also require semi-solid fats to suspend solids at room temperature.

In the early 1990s, concerns over the negative health impact of TFAs grew, with industrial trans fat linked to an increased risk of heart disease.

In 2003, the World Health Organisation recommended that trans fats make up no more than 0.9% of a person’s diet and, in 2018, it introduced a six-step guide to eliminate industrially-produced TFAs from the global food supply.

Many countries have introduced TFA limits. In 2015, for example, the US Food and Drug Administration determined that PHOs are not ‘generally recognized as safe’ (GRAS), setting a deadline of www.ofimagazine.com

04/05/2020 11:43:57

MARGARINE & SPREADS 18 June 2018 as the date from which manufacturers could not add PHOs to foods. The compliance date for products produced before 18 June 2018 was extended to 1 January 2020.

A great deal of work has gone into developing suitable alternatives to PHOs including blends of liquid oils and hard stocks and interesterified oils with fully hydrogenated hard stocks.

Palm oil controversy

Many food manufacturers turned to palm oil to replace PHOs because, unlike most vegetable oils, it is solid at room temperature.

However, oil palm cultivation has been criticised for its impact on the environment, including deforestation and the loss of natural habitats which has threatened critically endangered species, such as the orangutan and Sumatran tiger.

While some food manufacturers have decided to go palm oil free, many are choosing to use sustainable palm oil.

“Over the years, margarine manufacturers have improved the sustainable production of their products considerably by increasing the sustainable sourcing of oils, reducing the emissions from transport and production, and limiting

waste and water usage in their factories,” the International Margarine Association of the Countries of Europe (IMACE) says.

“Today, margarines are a smart environmental choice compared to animalbased spreads like butter. They use about half the land required for producing butter products, and the carbon footprint is less than one-third the size of butter’s.”

IMACE says its members also prioritise the sustainable sourcing of palm, coconut, soyabean, rapeseed and sunflower oils used in margarines and spreads.

Going vegan

According to Global Market Insights, world plant-based product demand should register over 3.5% gains by 2025 owing to the growing adoption of vegetarianism and veganism.

“Switching to a plant-based diet is one of the most important moves to help the environment.” IMACE says. “By sustainably sourcing the oils used in margarines, we can protect the planet’s natural resources and, at the same time, ensure security of supply for the long term.”

Vegan butter is steadily carving a niche in the plant-based world.

Colorado-based Earth Balance started out in 1998 as a small company

specialising in its non-genetically modified ‘Original Butter Spread’ made with a blend of vegetable oils. It now produces a range of plant-based spreads including Pressed Sunflower Oil, Pressed Extra Virgin Olive Oil and Pressed Avocado Oil spreads, as well as Soy Free, Organic Whipped Buttery, Olive Oil Buttery, Omega-3 Buttery and Organic Coconut spreads.

In 2017, ‘I Can’t Believe It’s Not Butter’ launched a new ‘It’s Vegan’ product, made with a blend of soya and canola oils.

“This expansion into organic and vegan alternatives emphasises the brand’s commitment to innovation and inclusiveness for any diet or lifestyle,” Unilever said at the time. Since then, the brand, along with Unilever’s spreads business, was sold at the end of 2017 to private equity firm KKR. Margarine and spreads have developed from being based on animal fats to vegetable oils. Their popularity has risen and fallen due to the scarcity of butter, competitive pricing, health concerns over animal and trans fats, and consumer focus on palm oil and veganism.

Throughout their history, margarine and spreads have been in competition with butter and this rivalry is likely to continue into the future. 

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BUTTER After a turbulent period of dramatic price swings alongside increased demand, the international butter market is now facing the impact of the COVID-19 pandemic, which is pushing prices to challenging lows Gill Langham Following several years of fluctuating prices, the butter trade is now facing the effects of the COVID-19 pandemic and global butter prices are currently sitting below the average for the last five years.

The upward trajectory in global dairy product prices, visible in the final quarter of 2019, stalled in the first quarter of 2020, according to a March 2020 RaboResearch Dairy Quarterly report, titled ‘The Corona Hangover’.

The onset of the coronavirus in China and the permeation across the globe had buyers and sellers scrambling to assess the market impact, the report says. As markets became more restricted, due to both difficulties in shipping and isolation restrictions put in place in the larger European countries, prices started to fall.

This impacted most key dairy products, according to the UK’s Agriculture & Horticulture Development Board (AHDB).

EU wholesale markets also saw quite marked price reductions in March as the impact of coronavirus coincided with the seasonal increase in milk production, the AHBD says.

Reports also suggested that there was a significant rise in demand for packaged butter as shoppers stocked up, while there was a drop in demand for bulk butter.

Consequently, there was a shortlived rise in butter prices in early March.

However, since the beginning of the year, butter prices have dropped 5% to their lowest level since August 2016, according to the AHDB. The first notable impact from coronavirus on UK dairy markets was the effect it had on shipping. With many freight ships held up in China either quarantined or unable to load, a shortage of refrigerated containers to transport butter arose.

“As the virus spread across the world and multiple countries have imposed lockdowns, the impact on markets is becoming more severe. Companies which supply the food service industry are 24 OFI – MAY 2020

Butter feature.indd 2

Spread the w particularly hard hit,” explains Katherine Jack, dairy analyst at the AHDB. And speaking about the impact of COVID-19 on the sector, Tom Bailey, senior analyst at Rabobank, says: “The butter price has collapsed – along with other dairy commodities - due to the coronavirus. Butter prices globally have fallen around 40% through April versus last year’s levels.

“A big part of the issue is due to weakened food service demand. Around a third of US butter produced is sold or used in the foodservice industry and this is likely in other key markets like the EU. Stocks are rising and prices are falling as a result.”

Key markets

The prices of the five key dairy exporting countries/regions – Australia, the EU, New Zealand, the USA and, to a lesser extent, Argentina – have the largest influence on the sector. However, they are also affected by their internal markets, so prices can still vary from country to country.

While the EU and USA consume a lot of their dairy production as well as

exporting it, New Zealand has grown its dairy industry with a focus on exports.

China is also a major purchaser of dairy products while India is a large consumer but generally supplies itself.

Speaking about the growth in demand in China for dairy products, Jack says: “China, in particular, imports a lot of milk powder but exporting countries are working to develop increased interest in other dairy products like cheese and butter.

“With a growing middle class and a growing interest in western food, China and other Asian markets are seen as opportunities for dairy exports. It’s particularly a target for Oceania and New Zealand has a strong dairy trade relationship with China.”

Turbulent years

To understand why the international butter market has seen such dramatic price swings over the last few years, Jack says it is necessary to look back at the period leading up to 2015, mainly in Europe but also globally.

Prior to 2015, the EU had quotas capping milk production, which it www.ofimagazine. com

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BUTTER Consumer sentiment has changed from seeing butter as a high-fat food to be avoided, to viewing fat as not bad, with a preference towards natural products shifting demand away from margarine to butter

global demand for butter, according to Rabobank.

“McDonalds took a proactive step early on, reformulating to use butter instead of margarine. This change required the US dairy industry to produce more butter.

This shift helped to support butter prices,” adds Bailey.

Price swings

e word removed in 2015. This was done with plenty of warning and many producers (especially in Ireland) were well prepared and ramped up production. This then led to an oversupplied market and dairy product prices and farmgate milk prices plummeted.

During this time, a lot of dairy product, particularly skimmed milk powder (SMP), was put into EU intervention stores with Private Storage Aid. Production then dropped back, restoring a degree of balance.

Meanwhile, a shift was taking place on the demand side of butter.

“Consumer sentiment shifted from seeing butter as a high-fat food to be avoided, to viewing fat as not bad, with a preference towards natural products shifting demand from margarine back to butter. Demand for butter increased and more manufacturers wanted to use it in their products – likely helped by a more competitive price at the time.

“So there was an increased demand for butter, but there was also a problem in meeting it,” explains Jack.

Since 2014 this shift in consumer sentiment led to a 7% increase in www.ofimagazine.com

Butter feature.indd 3

As making butter uses the fat from milk, there is skim milk left over – most commonly turned into SMP. In the period before 2015, there was around 400,000 tonnes of SMP sitting in EU public intervention, weighing on the market and keeping prices low, explains Jack.

As a consequence, the return for turning milk into butter (and SMP) stayed uncompetitive, and processors were not incentivised to make butter unless the price of it could make up for the shortfall on the SMP side. So, prices rose and rose.

There was a lot of price swing in 2017 and 2018 but, overall, butter prices were unusually high – particularly in Europe.

EU intervention stocks gradually started emptying, with the bulk being sold in 2018 and early 2019. By mid-2019 it had all been sold.

“With this weight off the SMP market, things gradually got back in balance.

Now butter prices have dropped off considerably compared to 2017 and 2018, but it was those years that were exceptional, while 2019 is more normal.

“There were also some longer-term consequences to the price spikes. Many manufacturers struggled to cope with the high, volatile butter prices and reformulated products so that they would be less reliant on butter. Reformulation takes some time but means that there is now likely to be reduced demand for butter from this sector going forward,” adds Jack.

Bumper EU butter exports

Meanwhile, 2019 was a bumper year for EU butter exports, according to a report by the AHDB. The report says that EU28 exports of butter products increased by 35% or 214,000 tonnes year-on-year in 2019.

The majority of that rise took place in the latter half of the year.

In value terms, EU butter exports were worth just under £1bn in 2019, up 21% on 2018. With wholesale prices for butter

falling through the year, value growth was restricted compared to volume growth.

The key growth destinations for EU butter products include Egypt, Turkey, the United Arab Emirates and the USA. Turkey imported 11,000 tonnes, more than five times the amount the EU sent the previous year. The UAE imported 12,000 tonnes, up 140% on 2018. A little under 8,000 tonnes was exported to Egypt, more than four times the amount sent in 2018. These three countries, together with the USA, accounted for half of the additional EU butter exported in 2019 compared with 2018.

The USA accounted for 17% of the EU’s butter exports in 2019, up by 7,000 tonnes on the previous year. The majority of this rise took place between April-July, following the announcement of potential US tariffs of 25% in relation to a dispute over the EU’s subsidies for European aerospace corporation Airbus. These tariffs were then made official in late October 2019, after which exports fell.

The top three EU exporters are France, Ireland and the Netherlands, which make up around 60% of the EU’s butter exports.

Ireland saw particularly strong growth in 2019; exporting 63% (20,000 tonnes) more butter products than in 2019.

UK butter exports up 11%

UK butter exports to all countries (including other EU countries) totalled 693,000 tonnes in 2019, up 11% on 2018. Exports to non-EU countries were up 83% but, at 7,600 tonnes, this is a small proportion of total exports.

The UK also benefitted from increased exports to the USA, with 1,400 tonnes exported in 2019, up 1,000 tonnes on 2018.

Exports to EU countries were up 6% (3,500 tonnes). The EU remains the UK’s main butter export destination, with 89% of 2019 exports going there.

Future outlook

Even without taking into account the long-term effects of COVID-19, the dairy industry will face many challenges in the years ahead, according to the AHDB. Extreme weather events are likely to become more frequent and continue to impact production, while environmental concerns will increasingly drive consumer decisions around food choices.  Gill Langham is the assistant editor of OFI OFI – MAY 2020 25

29/04/2020 10:31:56

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 IN BRIEF SWEDEN: International technology group ANDRITZ announced on 23 March that it had started up a biomethanol plant in southeastern Sweden.

The Södra Cell Mönsterås pulp mill uses ANDRITZ’s A-Recovery+ concept and has an annual production capacity of 6.3M litres of biomethanol from forest biomass. The fossil-free biomethanol can be used for applications in the pulp mill itself, or as a substitute for fossil-based methanol in the transport sector and as a chemical base substance.

Preem selects HydroFlex for renewable fuels plant Swedish petroleum company Preem has selected Haldor Topsoe’s HydroFlex renewable fuel technology to produce clean renewable diesel and jet fuel at its Gothenburg refinery in Sweden.

The 16,000 barrels/day unit will have a yearly production capacity of approximately 1M m³ of fuels, which is about 25% of Sweden’s estimated consumption of renewable fuels in 2030.

Preem’s new plant is scheduled to come on-stream in 2024 and will be dedicated to producing renewable fuels from tall oil, tallow and other renewable feedstocks.

Speaking about the plans, Preem CEO Petter Holland said on 12 March: “Preem’s goal is to become the world’s first climate-neutral petroleum and biofuels company with net zero emissions in its entire

Swedish petroleum firm Preem will be producing renewable jet fuel and diesel

value chain before 2045, and production of renewable fuels is an essential part of that ambition.”

Denmark’s Haldor Topsoe said its Hydroflex technology produced fuels from renewable feedstocks

and could be deployed in grassroots units and revamps for co-processing or standalone applications.

It would license and supply basic engineering, proprietary equipment, catalysts and technical services to Preem.

Austrian chemical company Borealis AG has started to produce renewable polypropylene (PP) at its facilities in Kallo and Beringen, Belgium (pictured right).

“This marks the first time that Borealis has replaced fossil fuel-based feedstock in its large-scale commercial production of PP,” the company said on 10 March.

PP is a thermoplastic ‘addition polymer’ used in a variety of applications including packaging for consumer products, plastic parts for the automotive and other industries, and special devices like living hinges and textiles.

Borealis said its renewable 2 OFI 2018 26 OFI––MONTH MAY 2020

P&E.indd 2

Photo: Borealis

Borealis producing renewable polypropylene in Belgium

Borealis PP pellets produced at its Belgian plants have been certified as renewable

PP was made from propane supplied by Finnish renewable diesel and chemical firm Neste,

which uses vegetable oils and waste animal fats and oils as feedstocks.

“After producing renewable propane using its NEXBTL technology, Neste sells it to the Borealis propane dehydrogenation plant in Kallo. Here, it is converted to renewable propylene, then to renewable PP at the Kallo and Beringen plants,” Borealis said.

The Belgian plants were recently awarded ISCC Plus certification for their renewable PP by the International Sustainability and Carbon Certification initiative.

Borealis said it was aiming to ensure that 100% of its consumer products were recyclable, reusable or produced from renewable u sources by 2025. www.ofimagazine.com www.ofimagazine.com

06/05/2020 13:00:29

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27

INA to build bioethanol plant in Croatia Global technology firm Axens announced on 9 March that it had been awarded a licence to supply Croatian oil and gas company INA with cellulosic ethanol technology for an advanced bioethanol plant in Sisak, Croatia.

“Supplying INA with our Futurol technology marks a major step for us as a key player in biofuels and biobased chemicals production processes,” Axens said.

The technology would enable INA to produce 55,000 tonnes/ year, equivalent to 70M litres, of advanced ethanol based on lignocellulosic feedstock such

Photo: Pixabay

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as agricultural residues and miscanthus (pictured).

The agreement would also cover the basic engineering design of the plant.

“This project is in line with INA’s development guidelines

and our downstream 2023 programme,” said Stjepan Nikolić, INA operating director of refining and marketing.

“Moreover, it fits into the EU Green Deal guidelines and empowers the transformation

Photo: Pixabay

FPT testing macaúba biodiesel

Italy’s FPT Industrial is investing in a production plan and tests to explore macaúba biodiesel, with a view to developing a potential new source of sustainable fuel, CNH Industrial reported on 4 March.

FPT is a brand of the Dutch multinational corporation CHN. Macaúba, a palm tree native to Brazil,

the Caribbean and South Florida, could be used to produce ingredients and materials for construction, medical and the cosmetic industries, CHN said. More recently, its use in the production of biodiesel had been investigated.

The research was conducted at the Technical Center in Betim, southeast Brazil, with the main focus on its application as a fuel for agricultural tractors. Tests for trucks and buses, as well as power generators, were planned for the future.

The macaúba oil used in the tests was extracted by Cooper Riachāo, a rural producers cooperative in the region of Montes Claros, in Minas Gerais state. Prior to that, biodiesel was produced in an experimental plant via transesterification.

of the industry in a sustainable direction by having advanced biofuel with a negative CO2 footprint as a final project target.

“Choosing the technology and signing the contract for basic engineering design for the advanced bioethanol plant is an important step towards our final investment decision,” he said.

Axens Futurol technology converts biomass from agricultural and forest residues into cellulosic, second generation bioethanol through enzymatic conversion and fermentation.

Alfa Laval wins renewable energy order in Sweden Swedish fluid handling supplier Alfa Laval has won a SEK60M (US$59.6M) order from Finnish energy company St1 for a process line to be installed in a new biorefinery in Gothenburg, Sweden.

The order includes equipment to remove impurities from waste fats and oils, which would then be converted into renewable fuels, Alfa Laval said on 23 March.

Due to open in 2022, the new St1 biorefinery would have an annual production of 200,000 tonnes.

Alfa Laval is active in the energy, marine and food and water sectors, supplying heat transfer, centrifugal separation and fluid handling equipment.

Safran Helicopter to study biofuels production in southwest France Safran Helicopter Engines is joining a consortium to study the feasibility of producing aviation biofuels in southwest France, the firm announced on 10 March.

The consortium also comprises Aquitaine Chimie Durable, the Aerospace Valley consortium, Agri Sud Ouest Innovation, CCI Pau Béarn, Chemparc, Euralis, Pau and Pays de l’Adour University, Teréga and Xylofutur.

“To complete the necessary transition to carbon neutrality by 2020, the aerospace industry has to act in many areas,” said Alain Rousset, president of the Regional Council of Nouvelle-Aquitaine. “In the 28 OFI – MAY 2020

P&E.indd 3

short and medium term, introducing biofuels is one of these.

“The Nouvelle-Aquitaine region possesses excellent resources in agriculture, chemicals and energy, which can be used to develop this production.”

The consortium would evaluate local capabilities and skills in the fields of agriculture, chemicals and energy to produce and distribute ‘drop-in’ sustainable aviation biofuels.

International group Safran operates in aircraft propulsion and equipment, space and defence. Safran Helicopters is a leading producer of helicopter engines.

Photo: Pixabay

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PLANT & TECHNOLOGY

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04/05/2020 10:49:26

UKRAINE

Retail and catering oils Sunflower oil is the main oil used in homes and within the hotel, retail and catering sector in Ukraine. The increasing popularity of eating out and the growth of the fast food sector means demand for fat products, including deep frying fats, will grow Olga Mozgova There are more than 20 types of vegetable oils present in the Ukrainian oils and fats market with a per capita consumption of about 15kg/year (see Table 1, below).

To a significant extent, the vegetable oil needs of the Ukrainian market are met by domestic production. Sunflower oil was the main oil produced in 2019, totalling 6,704,000 tonnes, followed by soyabean oil at 255,000 tonnes, and corn oil at Sunflower oil

9.8kg/person

Palm oil

4.4kg/person

Corn oil

0.3kg/person

Soyabean oil

0.3kg/person

Olive oil

0.1kg/person

Other

0.1kg/person

Table 1: Ukraine – per capita consumption of different oils www.ofimagazine.com

Ukraine.indd 2

11,000 tonnes, according to the State Statistics Service of Ukraine (see Table 2, following page).

Ukraine also imports vegetable oils, mainly comprising palm oil at 212,200 tonnes in 2019, followed by olive oil at 2,700 tonnes (see Table 2, following page).

Sunflower, corn, soyabean and olive oils are consumed directly, while sunflower and palm oils are processed into margarine and spreads, and cooking and deep frying fats.

Use of vegetable oils

Sunflower is a traditional oil, used in homes and in almost all hotel, retail and catering (HoReCa) businesses, both in its refined and non-refined form.

Corn is also a traditional oil, used in households and some HoReCa businesses in refined form.

Soyabean oil is mostly used in Asian food restaurants as well as in fast food as u a component of deep frying fats.

OFI – MAY 2020

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04/05/2020 10:05:08

2017

2018

2019

Sunflower oil

4,913

6,410

5,628

6,503

6,704

Soyabean oil

181

165

201

340

255

8

9

10

8

11

Palm oil

1,30.8

194.5

238.8

219.0

212.2

Olive oil

1.2

1.2

1.2

1.5

2.7

Imports

Table 2: Ukraine – Vegetable oil production and imports (‘000 tonnes) Production

2015

2016

2017

2018

2019

Vegetable oils

130.3

121.7

112.4

12.3

124.4

13.8

12.8

10.3

10.2

10.1

9.5

9.1

10.8

9.6

9.3

Spreads and fat mixture

Table 3: Ukraine – Vegetable oil consumption by households (‘000 tonnes) Production

2015

2016

2017

2018

2019

Vegetable oils

78.8

78.1

77.9

81.8

83.1

Margarine

20.0

19.8

19.6

22.6

23.2

Speciality fats

20.6

30.4

30.0

32.9

34.9

4.7

4.6

4.4

5.0

5.1

Spreads and fat mixture

Table 4: Ukraine – Vegetable oil uage in HoReCa sector (‘000 tonnes) 60,000 50,000

50,400

50,200

50,000

10% 8%

5.6

30,000

4% 2%

1.9

10,000 0

53.200

6%

40,000

20,000

52,700

–0.4 2015

2016 Number

0.9

–0.5 2017

2018 Growth rates

2019

0% –2%

Figure 1: Ukraine – Number of eating out businesses Spreads 3% Confectionery fat 8% Margarine 16% Deep frying 16%

Vegetable oil 57%

Figure 2: Ukraine – Vegetable oil usage in HoReCa sector 30 OFI – MAY 2020

Ukraine.indd 3

Source: State Statistics Service of UkraineUkraine

Margarine

Hotels 4% Fuel stations 20% Catering 24%

Restaurants, cafes, pubs etc 52%

Figure 3: Ukraine – Structure of eating out market

Source: UkrAgroConsult estimatene

Corn oil

State Statistics Service of Ukraine

2016

UkrAgroConsult estimate

2015

UkrAgroConsult estimate

Production

Source: UkrAgroConsult estimatene

u

UKRAINE Olive oil is used primarily in up-market restaurants and as a premium product in households.

Palm oil is used in HoReCa businesses, especially in fast foods as a component of professional deep frying fats and other cooking fats. It is also used in households as a component of margarines and spreads.

Consumption patterns

There are some 14.9M households in Ukraine, with 67% of them concentrated in urban communities.

The size of households differs from region to region, the largest to be found in western Ukraine (2.91-3.49 people). The average number of people in a household is 2.58.

Sunflower oil is still the main vegetable oil used in household cooking due to national cuisine traditions. (See Table 2, left). It is also the dominant oil within the HoReCA sector, where vegetable oil usage comprises 57% of this sector (see Figure 2, below left). This is followed by deep frying use (16%), margarine (16%), confectionery fat (8%) and spreads (3%).

The eating out market in Ukraine is demonstrating stable growth (see Figure 1, left) with restaurants, cafes, bars and pubs accounting for the majority of this sector (see Figure 3, below).

A considerable part of this market is taken up by the catering segment which is dominated by companies delivering catering services to state and private enterprises (such as educational establishments, hospitals and military bases) as well as culinary departments of supermarkets.

Catering in fuel stations is actively developing while catering in hotels comprises the smallest part of the eating out market.

In terms of price and service levels, HoReCa businesses in Ukraine are broken down into elite (premium-class) restaurants; mid-price restaurants; and inexpensive (economy-class) cafes, bars and restaurants.

Trade sources estimate that some 30,000 HoReCa businesses now operate in Ukraine, including over 2,000 in Kiev.

International fast-food chains (particularly McDonald’s and KFC) as well as national brands are quite widely represented in Ukraine.

The McDonald’s company has been operating in Ukraine since the late 1990s.

Back then, supported by the US Embassy, the network purchased and rented the best premises. It only runs its own outlets in Ukraine and no franchises are sold.

As of 2017, McDonald’s had invested www.ofimagazine.com

04/05/2020 10:05:12

UKRAINE US$1M in a food court, US$1.2-2.5M in a restaurant in a separate building and spent US$700,000-US$2.5M in reconstruction. The company was operating 90 restaurants in 20 cities and one village in Ukraine as of the end of 2019 and plans to continue reinforcing its position in the Ukrainian market.

KFC opened its first restaurant in Ukraine in late 2012 and now operates 30 restaurants including 18 in Kiev and nearby suburbs; six in Dnipro, four in Kharkiv and one each in Sumy and Zaporizhia. The company’s near-term development plans include opening franchise restaurants in all major cities.

KFC is less dominant than McDonald’s because of its later entry into the market and keen competition for attractive locations. There is also low demand for KFC franchises because of their high costs. According to open sources, the franchisee must pay US$48,400 plus 6% of turnover per month as a royalty fee, 4% to a marketing fund and 1% for local marketing costs. In addition, another US$700,000 on average will have to be spent on opening a restaurant.

Kiev also has 20 fast food brands operating today, while each major region has at least two to three of their own

McDonald’s, including this outlet in Kiev (pictured above), has been operating in Ukraine since the late 1990s. The increasing popularity of the fast food sector is expected to fuel demand for specialised and deep frying fats in the country

outlets (see Figure 4 below).

Fast-food outlets are the key consumers of specialised oils and deep frying fats.

Currently, almost every catering establishment in Ukraine is equipped with deep-fat fryers. The list of ready-to-eat

products made in fryers is quite long: pies, doughnuts, meat pastries, potatoes and other vegetables, poultry meat and various national dishes, including confectionery items.

Future trends

250 200 National

International

100 50 0 McDonald’s

KFC

Fast Food Systems

Kryla

Puzata Hata

Fresh Line

FM Group Mafia Kartofan Pechena Belgian Kartoplya Potatoes

Figure 4: Ukraine – Biggest fast food networks (number of outlets) 100% 80%

46%

60%

60% 40%

54%

40%

20% 0%

18-30 years old

77%

33%

30-39 years old

Regularly visited

49-50 years old

Not regularly visited

Figure 5: Ukraine – Age groups visiting public catering establishments www.ofimagazine.com

Ukraine.indd 4

Source: Kyiv International Institute of SociologyUkraine Source: UkrAgro Consult estimatekraine

150

Ukrainian eating habits remain mainly conservative and most of the population still prefers eating at home.

The number of restaurants per resident in Kiev is eight to nine times smaller than in other European capitals.

However, the number of people who are eating out frequently is slowly rising.

According to poll results from the Kyiv International Institute of Sociology, about 30% of the population are now eating out at least once a month, with the highest proportion aged from 18-30 years of age. (see Figure 5, below left).

The increasing popularity of fast-food outlets is fuelled by demand (especially among young and middle-aged people) for fast service, payment convenience and the possibility to buy and consume food on the go.

This suggests that the sector will continue developing and demand for fat products, including those based on palm oil, will be high.

New companies, both national and international, will enter the market and will develop rapidly, use franchises and create consolidated companies, thereby increasing the number of catering outlets and generating strong demand for fat  products.

Olga Mozgova is a project manager at UkrAgroConsult, Ukraine OFI – MAY 2020 31

04/05/2020 10:05:16

STATISTICS STATISTICAL NEWS Global vegetable oil prices

Wholesale prices of vegetable oils (€/tonne)

UFOP/AMI

The spread of COVID-19 has sent global vegetable oil prices on a downward spiral, says the German Union for the Promotion of Oil and Protein Plants (UFOP).

Rapeseed oil was €690/tonne in March, a decline of more than 18% within one month. Soyabean oil stood at €605/tonne, down about 15%. Sunflower oil and palm oil recorded a decline of 11.5% and 16% respectively compared to the previous month. Palm oil prices were negatively impacted by an estimated 20% slump in Malaysian palm oil exports in March 2020.

Palm vs crude oil (POGO) spread

CPO vs WTI crude oil price (US$/tonne)

MPOC/investing.com

Crude oil prices have fallen more than 60% since the beginning of 2020 amid the coronavirus crisis and a price war between OPEC and Russia, despite a 12 April agreement between the two to cut production by 10%, says the Malaysian Palm Oil Council (MPOC). The price of WTI Crude fell below US$15/barrel on 20 April and crashed on 21 April to touch an all-time low of minus US$40.32/barrel.

Vegetable oil prices track crude oil prices, particularly palm oil as the most commonly used vegetable oil for biodiesel blending. Based on the current palm oil-gas oil (POGO) spread, biodiesel blending has become uneconomic and the market is unlikely to see discretionary blending as the POGO spread has risen from US$102/tonne on 2 March to US$264/tonne on 22 April, says the MPOC.

Rapeseed and soyabean futures prices

Oilseed futures closing prices (€/tonne)

UFOP, CME, NYSE Liffe, AMI

Prices of selected oils (US$/tonne) Nov 19

Dec 19

Jan 20

Feb 20

Mar 20

Apr 20

Soyabean

748.5

826.1

857.3

772.8

695.3

661.8

Crude palm

692.2

772.5

801.6

718.7

625.6

569.2

Palm olein

648.8

720.0

728.3

656.7

583.9

531.6

Coconut

838.4

1,038.4

1,015.1

884.0

863.5

852.2

Rapeseed

872.4

918.8

935.3

870.3

783.0

769.0

Sunflower

758.9

803.9

841.4

762.7

701.0

740.5

Palm kernel

775.6

977.1

991.7

830.0

734.5

715.6

Average

762.0

865.0

882.0

785.0

712.0

691.0

Index

181.0

205.0

209.0

186.0

169.0

164.0

32 OFI – MAY 2020

Stats.indd 1

Mintec

Rapeseed futures prices in Paris have firmed – increasing 8% since their two-year low of €335.50/tonne in mid-March – uncoupling from recently weaker soyabean prices, says UFOP. According to Agrarmarkt Informations-Gesellschaft (AMI), concerns over falling biodiesel demand had put downward pressure on prices but support came from firm soyabean prices in Chicago and a weaker Euro making rapeseed oil more attractive for foreign purchasers. While rapeseed prices continued to rise beyond the end of March, soyabean prices dipped 3% due to anticipated large harvests in Latin America. Brazil expects a bumper crop of 126M tonnes and Argentina also anticipates a large harvest.

Mintec provides independent insight and data to help companies make informed commercial decisions.

Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com Web: www.mintecglobal.com The Union for the Promotion of Oil and Protein Plants represents the interests of companies and associations involved in the production, processing and marketing of oil and protein plants in Germany

www.ofimagazine.com

04/05/2020 14:51:24

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