OFI January 2017 by Quartz

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January 2017 Vol 33 No 1 www.oďŹ magazine.com

LAURIC OILS Splitting the kernel

PALM OIL

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Leading edge technologies for the oils & fats industry

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Desmet Ballestra delivers tailor-made engineering and procurement services covering each step of the Industry, from oilseed preparation, prepressing and extraction to oil processing plants including refining and fat modification processes, as well as oleochemicals and biodiesel technologies. Desmet Ballestra masters the processing of 40 raw materials, including soyabean, sunflower seed, rapeseed/canola, palm oil, groundnut, cottonseed oil etc. Desmet Ballestra has supplied small, medium and very large plants to more than 1,700 processors in 150 countries, covering over 9,000 process sections. Desmet Ballestra is highly regarded worldwide for its experience, innovation, outstanding project management, dedicated customer service and environmentally friendly processes.

Science behind Technology

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

CONTENTS

PROCESSING & TECHNOLOGY

SHOW PREVIEW

FEATURES

CHINA VOL. 33 NO. 1 JANUARY 2017

EDITORIAL:

Editorial Assistant: Rose Hales Tel: +44 (0)1737 855157 E-mail: rosehales@quartzltd.com

COFCO’s global expansion

PALM OIL

Sales Manager: Mark Winthrop-Wallace Tel: +44 (0)1737 855 114 E-mail: markww@quartzltd.com Sales Consultant: Anita Revis Tel: +44 (0)1737 855068 E-mail: anitarevis@quartzltd.com

Splitting the kernel

Processing coconut oil

CORPORATE: Managing Director: Steve Diprose Tel: +44 (0)1737 855164 E-mail: stevediprose@quartzltd.com SUBSCRIPTIONS: Elizabeth Barford Tel: +44 (0)1737 855028 E-mail: subscriptions@quartzltd.com Address: Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey, RH1 1QX, UK Annual Subscription: UK £149, Overseas £173. Two years: UK £268, Overseas £311. Single copy £37

Transport & Logistics News

Bunge-AGD terminal investment

SHIPPING & STORAGE

Biotech News

Cargill certifies three products to meet more non-GM demand

LAURIC OILS

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

Biofuels News

EPA finalises 2017 renewable fuel blending volumes for USA

Chinese Sales Executive: Erik Heath Tel: +44 (0)1737 855108 E-mail: erikheath@quartzltd.com PRODUCTION:

News

Palm giants agree one rule to measure ‘no deforestation’

Game of drones

SALES:

New date for OFI India in May 2017

NEWS & EVENTS

IMAGE: PRECISIONHAWK

Editor: Serena Lim Tel: +44 (0)1737 855066 E-mail: serenalim@quartzltd.com

Plant and technology round-up

Stolt-Nielsen: bucking the trend

Renewable Materials News

Cargill buys Brazilian oleochemicals producer

OLEOCHEMICALS

Extending oleochemistry 14

Diary of Events

Website: www.ofimagazine.com

TRADING & PRICE FORECASTING

International Market Review

Statistics

2017 price outlook

A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road Redhill, Surrey RH1 1QX, UK Tel: +44 (0)1737 855000 Fax: +44 (0)1737 855034 E-mail: oilsandfats@quartzltd.com Printed by Pensord Press, Gwent, Wales

@oilsandfatsint

Oils & Fats International

Koole Terminals is a leading independent storage company in North-West Europe headquartered in the Netherlands. The company operates eight tank storage terminals and an own fleet of twelve barges and three coasters. Koole Terminal has a total storage capacity of over 2.0 million cubic meters handling a wide range of liquid bulk products including edible oils and fats, mineral oil products, waxes, (oleo-) chemicals, biodiesel and other liquid products which are being stored and handled in Rotterdam, Zaandam, Amsterdam, Nijmegen, United Kingdom and Poland. Koole Tankstorage Pernis (Rotterdam, NL). Capacity: 675,000 m3 of which 210,000 m3 is made out of stainless steel. Main products: vegetable oils & fats, oleo-chemicals, waxes, base oils, easy chemicals and biodiesel. Koole Tankstorage Minerals (Rotterdam, NL). Capacity: 1,100,000 m3 . Main products: mineral oils like, gas oil, fuel oil, gasoline, methanol, MTBE and ethanol.

Koole Tankstorage Amsterdam (NL). Capacity: 118,731 m3. Main products: molasses, vegetable oils & fats and oleochemicals. Koole Tankstorage Zaandam (NL). Capacity: 43,000 m3. Main products: vegetable oils & oleo-chemicals. Koole Tankstorage Nijmegen (NL). Capacity: 79,000 m3. Main products: vegetable oils & fats, oleo-chemicals, lecithin and castor oil. Koole Tankstorage Liverpool (UK). Capacity: 22,004 m3. Main products: phosphoric acid, vegetable oils & fats and molasses. Koole Tankstorage Avonmouth (UK). Capacity: 24,553 m3. Main products: phosphoric acid, vegetable oils & fats and molasses. Koole Tankstorage Gdynia (PL). Capacity: 29,900 m3. Main products: vegetable oils & fats and mineral oil products. If you need any further information please contact our Sales department: Mr. Robert Guijs: Phone. 31 (0) 75 6812 812, E-mail. r.guijs@koole.com. Mr. Rob Valkenburg: Phone. 31 (0) 10 472 45 49, E-mail. rvalkenburg@koole.com or visit www.koole.com

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NEWS

COMMENT

Trump’s victory I

t’s been two months since Donald Trump swept to victory in the US presidential elections on 8 November. Much has been written about the domestic and international impact of the only person elected to America’s top job without political, diplomatic or military experience. But it is the area of agriculture and trade that have direct implications for the oils and fats industry. Trump’s message has been of “putting America first” and developing trade agreements that benefit American workers, including farmers. Farmers in the mid-Western states where Trump won will be pleased that the Environmental Protection Agency has announced higher renewable fuel blending volumes for 2017 that will benefit corn and soyabean production (see Biofuel News, p6). Trump may even change the US$1/gallon biodiesel blenders’ tax credit to a producers’ credit, as this is in line with supporting domestic, rather than foreign producers. On the other hand, Trump’s pledge to quit the Trans-Pacific Partnership (TPP) and a suggested withdrawal from the North American Free Trade Agreement with Canada and Mexico is not what either the American Soybean Association (ASA) or the National Corn Growers Association wanted. The TPP promised reduced tariffs for its members, which include Australia, Canada, Japan, Malaysia, Mexico, New Zealand and Vietnam. “TPP is vital to farmers across the country, as well as the processors and exporters that take US soyabeans to markets around the world,” ASA president Richard Wilkins had said. ASA vice president Ron Moore had also said “it is impossible to overstate the importance of trade, and specifically the Chinese market, to American soyabean farmers. Similarly, our export markets in North America and Southeast Asia are extraordinarily important. We export half of all soya grown in the USA.”

Threats of tariffs and to climate?

China is the top buyer of US agricultural goods, forecast to be worth US$21.5bn in the year to September 2017, and Mexico is the third largest buyer, at US$18bn, according to agrimoney.com. One final issue too important to ignore is Trump’s threat to withdraw from the Paris Agreement on climate change, which requires 195 nations, including the USA, to take collective action to reduce greenhouse gas (GHG) emissions. The USA is the second largest contributor of GHG emissions after China. Trump has called the Paris agreement “bad for US business”. But more than 365 businesses have written a letter urging him to implement the agreement, including industry leaders such Coca Cola, Dupont, NIKE, Mars, Microsoft, Monsanto, Nestlé, Shell and Unilever. Trump has backed the coal, gas and shale industries but if the rest of the world continues inevitably towards clean energy, can the USA afford to fall behind rivals such as China and Germany in this area? We are likely to see a more protectionist USA but we can also be fairly certain that Trump cannot carry out all the promises he made during his campaign, particularly those which are bad for business. Only time will tell exactly how much rhetoric will translate into action once he takes office on 20 January.

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Palm giants agree one rule to measure ‘no deforestation’

ajor palm oil companies have reached agreement to use a single set of principles to implement their “no deforestation” policies. The companies and NGOs include Asian Agri, Cargill, Forest Peoples Programme, Golden Agri-Resources, Greenpeace, IOI Corporation Berhad, KLK, Musim Mas, Rainforest Action Network, Sime Darby, TFT, Unilever, Union of Concerned Scientists, Wilmar International and WWF. According to mongabay.com, there have been essentially two competing methodologies to determine what constitutes a “High Carbon Stock” landscape, with rules for sustainable conversion of land to oil palm plantations. One, the High Carbon Stock Approach (HCSA), was first developed in 2010 by a coalition of businesses and civil society groups. The other, HCS+, was advanced last year by a group called the Sustainable Palm Oil Manifesto, which included many of the same companies that had developed the HCSA. However, on 8 November, the HCS Convergence Working Group announced that it would be

releasing a revised HCSA toolkit in early 2017 that represents convergence between the HCSA and HCS+ approaches. The toolkit would be implemented by all the companies signing up to the new agreement. “Agreeing a single approach to put ‘no deforestation’ into practice is a huge step forward for the palm oil sector and the environment,” said Kiki Taufik, global head of Indonesian forests, Greenpeace. “HCS convergence has not been an easy road but we got there in the end – this is a game changer for the forests and communities where oil palm is expanding in Asia and Africa.” The agreement included the fundamental elements of a methodology to protect high carbon stock (HCS) forests and other high conservation value (HCV) areas such as peatlands, said the HCS Convergence Working Group. Forest stratification, below-ground carbon, and decision-making in “young regenerating forests” – a class of forest that was at the heart of the disagreement between the HCSA and HCS+ approaches – had all been dealt with in the new methodology.

Mondelez sets new palm oil rules

S food and beverage multinational Mondelez International set out new requirements on 10 November in its updated Palm Oil Action Plan, requiring palm oil suppliers to: Map and assess the risk for all supplying mills on Global Forest Watch (an interactive on-line forest monitoring and alert system). Give assurance that no deforestation occurs on their concessions and exclude third-party suppliers who do not cease deforestation. Work with recognised third-party experts to protect labour rights.

“We’re asking our suppliers to improve practices across their operations and engage their third-party suppliers to implement the same practices,” said Walter Nobles, Mondelez vice president of global raw materials. Mondelez said that at the end of 2015, 90% of the palm oil it sourced was traceable to the mill and 91% was purchased from suppliers with policies that are aligned with its principles. The company manufactures chocolate, biscuits, confectionery and coffee including brands such as Oreo cookies, and Milka and Cadbury chocolate.

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NEWS

Amnesty International accuses Wilmar of labour abuses H uman rights NGO Amnesty International has accused Indonesian palm oil giant Wilmar International of contributing to child labour, forced labour and dangerous working practices at its own or third party plantations. In a report released on 30 November, Amnesty has also accused nine consumer goods companies of sourcing palm oil from refineries where the oil had been directly supplied or been mixed with palm oil produced on plantations where there were severe labour rights abuses. The companies it names are: ADM, Agrupación de Fabricantes de Aceites Marinos (AFAMSA), Colgate-Palmolive, Elevance Renewable Sciences, The Kellogg Company, Nestlé, Procter & Gamble, Reckitt Benckiser and Unilever. Amnesty interviewed 120 plantation workers on plantations directly owned by two Wilmar subsidiaries (PT Perkebunan Milano and PT

A day before the report’s publication, Wilmar said it acknowledged there were ongoing labour issues in the palm oil industry which could affect any palm oil firm in Indonesia. “We have outlined internal investigations that have been taking place since August 2016, which relate to the allegations that Amnesty raised. For Wilmar’s refinery suppliers, these are assessed within the Aggregator Refinery Transformation approach in partnership with The Forest Trust.” Perpetua George, assistant general manager for Wilmar Group, sustainability, said: “Many of these highlighted issues need a bigger platform than sustainable certification to resolve; they require collaborations between governments, companies, and civil society organisations like Amnesty. We have reached out to Amnesty to work more collaboratively with the industry and we hope that this can be a reality.”

Daya Labuhan) and on plantations owned by three companies that supply oil to Wilmar’s Indonesian refineries (PT Sarana Prima Multi Niaga, PT Abdi Budi Mulia and PT Hamparan Masawit Bangun Persada). The NGO said that abuses on the plantations of Wilmar and its suppliers included forced labour and child labour, gender discrimination, exploitative and dangerous working practices, and the use of the herbicide paraquat, which is banned in the EU and by Wilmar itself. “The abuses were due to systemic business practices, in particular the low level of wages, the use of targets and ‘piece rates’ (where workers are paid based on tasks completed rather than hours worked), and the use of a complex system of financial and other penalties. Workers, especially women, are employed under casual work arrangements, which make them vulnerable to abuses.”

EFSA publishes guide for novel food applications n 10 November, the European Food Safety Authority (EFSA) published final guidelines on novel food applications to ensure these products are safe before they are marketed in Europe. Its guidance follows the adoption of a new EU regulation on novel food in November 2015, which will see a centralised approval procedure come into force in January 2018. A novel food refers to food that European citizens have not consumed to a significant degree before May 1997. It includes food from new sources (such as oil rich in omega-3 fatty acids from krill), or food

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NOVEL FOODS INCLUDE FOODS FROM NEW SOURCES SUCH AS KRILL OIL

obtained through the application of new technologies (such as nanotechnology) or by using

new substances (such as phytosterols or plant sterols). Under the new regulatory procedure, responsibility for novel food applications would largely shift from member states to the EFSA, according to foodnavigator.com. The EFSA said EU risk managers would decide on the market authorisation of novel foods. Novel food applicants needed to present data such as compositional, nutritional, toxicological and allergenic properties of the novel food; proposed uses and use levels; and the production process.

ADM sells 19.9% stake in Australia’s GrainCorp

S agribusiness commodities trader Archer Daniels Midland (ADM) has sold its 19.9% stake in GrainCorp Ltd for about A$387M (US$286M) three years after a failed bid to buy the Australian grain handler outright, Reuters reported on 1 December. The deal had been carried out via an underwritten sale to Swiss bank UBS, the Reuters report said. ADM chairman and CEO Juan Luciano said: “This transaction will allow us to further reduce our invested capital and it will provide cash that we can redeploy to higher-return investments.” In November 2013, the Australian government rejected ADM’s proposed acquisition of GrainCorp for A$3.4bn (US$3.1bn), saying that the deal would go against national interests.

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The Sydney-based firm receives, handles and exports grain and other bulk commodities, including wheat, barley and oilseeds. At the time of the proposed deal, GrainCorp operated a network of 280 storage facilities, Food Business Review said. Its seven storage and loading facilities controlled more than 90% of eastern Australia’s bulk grain exports. In December last year, GrainCorp expanded its grain origination footprint in Canada, through the establishment of a joint venture with Japanese ZenNoh Grain, Food Business Review said. GrainCorp said it would invest CAD$30M (US$22.5M) over the next three years to support the start-up phase of the joint venture.

IN BRIEF EUROPE: On 10 October, Europe Snacks, UK and France’s Kolak Food Snacks Ltd announced a US$276M merger to create one of Europe’s largest private label savoury snack companies. “The newly formed group generates revenues of some €250M and produces over 1.4bn packs annually across 750 product types,” said Kolak, which specialises in own label manufacturing, with a range of potato crisps; extruded, fried and popped snacks, and stacked chips. Europe Snacks is a key player in the French own-brand savoury snacks market and the leading own-label stacked chips manufacturer. Global AgInvesting said the global savoury snack market was valued at US$94.5bn in 2015. SAUDI ARABIA: The country’s largest food products company, the Savola Group, reported a 53.3% drop in third-quarter net profits ending 30 September 2016, which totalled 173.4M riyals (US$46.3M) compared with 371.6M riyals in the same period a year earlier, Reuters reported. Savola supplies Saudi Arabia, the Middle East and North Africa with edible oils, sugar and other food products.

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NEWS

EC looks to strengthen acrylamide regulations T

he European Commission (EC) has moved to strengthen regulations on acrylamide, the chemical compound found in certain foods such as potato chips and French fries which has links to cancer. Foodnavigator.com said on 10 November that a revision to legislation included two articles, one requiring member states to monitor progress on an annual basis to ensure acrylamide levels were below indicative values. A second article threatened “maximum levels for acrylamide” if food manufacturers did not apply Codes of Practice relating to the compound. Food campaigners, meanwhile, have called for a legally-binding level for different food

IN BRIEF INDONESIA: The Roundtable on Sustainable Palm Oil has certified Cargill’s new palm kernel (PK) crushing plant at its PT Hindoli oil palm plantation in South Sumatra, Indonesia, the company said on 3 November. “The plant will cater to growing local demand for certified-sustainable crude palm kernel oil (PKO) from speciality fats and oleochemicals manufacturers, while the palm kernel expeller by-product will serve as a quality feedstock for the local animal husbandry sector,” Cargill said. Drawing its PK supplies from Cargill’s other RSPO-certified mills in South Sumatra – Sungai Lilin, Tanjung Dalam and Mukut – the PT Hindoli kernel crushing plant can produce up to 98 tonnes/day of sustainable PKO and 124 tonnes/day of palm kernel expeller. PT Hindoli would begin selling both products in January 2017, Cargill said. EUROPE: Archer Daniels Midland (ADM) and Wilmar International announced on 14 November that they had completed the transition of Olenex from a marketing and sales partnership formed in 2012, to a full-function joint venture with its own assets (see ‘In brief’, OFI November/ December 2016).

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high temperatures in the presence of certain sugars, asparagine can form acrylamide. Hightemperature cooking methods above 1200C – such as frying, baking or roasting – have been found to produce acrylamide The World Health Organization and the UN’s Food and Agriculture Organization have stated that the levels of acrylamide in foods pose a “major concern”. The EFSA noted in June 2015 that acrylamide “potentially increases the risk of developing cancer for consumers in all age groups”. A vote on the EC’s draft regulation will take place this year, an EU spokesperson has told EurActiv.com.

Perdue opens office in Brazil

erdue AgriBusiness, USA announced on 20 October that it is opening an office in São Paulo to enhance its direct sourcing of corn, soyabeans and other commodities from Brazilian farmers. “Establishing a presence in Brazil enables us to engage in bi-hemispheric trading and merchandising,” Perdue AgriBusiness president Dick Willey. “Brazil has become the world’s number-two soyabean producer and number-three corn producer. We’ll have access to South American soyabeans and grain when our ability to purchase domestic grain is

limited and we’ll now be able to export to our international customers year-round.” Perdue AgriBusiness – part of Perdue Farms – sources, merchandises and processes agricultural commodities including grains, oilseeds, soyabean meal, blended feed ingredients and oils for food and other uses. It said it was among the top US grain companies and a leading exporter through its deepwater port in Chesapeake, Virginia and other US ports. “Approximately one-third of our sales are to export customers,” the company said.

World olive oil production to fall

orld production of olive oil in 2016/17 is expected to fall around 7% to total 2.92M tonnes compared with 2015/16, according to International Olive Council (IOC) figures released in its September newsletter. Consumption for 2016/17 is forecast at 2.95M tonnes, 0.5% lower than the previous year, with imports and exports projected at 792,000 tonnes and 788,000 tonnes respectively. Production of IOC member countries – which account for 93% of global production – was expected to fall 8% to 2.72M tonnes. Production of EU member countries was estimated at 2.1M tonnes, with Spain in the lead with 1.38M tonnes, which is slightly down on 2015/16 (–1%); followed by Italy with 330,000 tonnes (–30%); Greece with 260,000 tonnes (–19%); and Portugal with 110,000 tonnes (+1%). “The estimated production in the rest of IOC member countries stands at a total of 625,000 tonnes, which is 17,500 tonnes less (–3%) than the previous crop year,” the IOC said. “Within this group, Turkey’s production is set to increase with an estimated 177,000 tonnes (+24%) but production will be lower in Tunisia, with a predicted harvest of 100,000 tonnes (–29%).”

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categories with independent enforcement. They have also said that the EC’s indicative values were higher than those put forward by Denmark and Germany and published by the European Food Safety Authority (EFSA) in 2012. “The regulation’s existence will prevent member states from deciding on stricter measures,” said Corporate Europe Observatory CEO Martin Pigeon, in a letter to the European Commissioner for Health and Food Safety Vytenis Andriukaitis Acrylamide is formed from the amino acid – asparagine – which is found in many vegetables, with higher concentrations in some varieties of potatoes. When heated to

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Vote for EU limit on trans fats

he European Parliament (EP) voted overwhelmingly on 25 October for a EU limit on industrially-produced trans fat. For more than a year, major food producers such as Mars, Kellogg’s, Nestlé and Mondelez, have urged industrial trans fatty acids (TFAs) to be limited to 2g per 100g and the EP’s Environment, Public Health and Food Safety Committee (ENVI) backed the limit on 29 September (see News, OFI November/ December 2016). According to foodnavigator. com, EP members had become increasingly frustrated by a lack of progress from the European Commission (EC) on the issue. Industrial or artificial TFAs can be found in baked, fried and snack foods and are formed when fats and oils are partially hydrogenated to improve their taste, texture and shelf-life. Commissioner for health and food safety Vyetnis Andruikaitis said the EC had looked at policy options including a limit on industrial trans fats, mandatory labelling on partially hydrogenated oils – the main source of industrial trans fats in processed foods – and self-regulatory measures. But the ENVI had said that lack of awareness among consumers made mandatory TFA labelling an ineffective tool to reduce intake among European citizens.

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BIOFUELS NEWS

IN BRIEF WORLD: British oil and gas major BP announced a partnership on 7 November with Fulcrum BioEnergy, a US company which utilises municipal solid waste to produce transportation fuels. The partnership includes a US$30M investment in Fulcrum and an offtake agreement that will provide Air BP – the aviation division of BP – with 50M gallons/year of drop-in jet fuel. Fulcrum’s first plant is under construction and it said the BP deal was its fourth major corporate partnership after similar ones with United Airlines, Waste Management and Cathay Pacific. The BP investment would allow faster development of Fulcrum’s second and third plants, Fulcrum said. Air BP is one of the world’s largest suppliers of aviation fuel products and currently supplies over 7bn gallons/year of jet fuel. USA: The US Energy Information Administration’s November Short-Term Energy Outlook said that fuel ethanol production would average around 990,000 barrels/day for 2016 and 2017, up from 970,000 barrels/day in 2015. Ethanol production was expected to average 1M barrels/ day in the first and second quarters of 2017, falling to 990,000 barrels/day in the third quarter and 980,000 barrels/ day in the fourth quarter. INDIA: The Cabinet Committee on Economic Affairs passed a proposal on 13 November to revise ethanol prices to help public sector oil marketing companies (OMCs) blend ethanol with petrol, reports Business Standard. Ethanol prices for blending were to be cut to Rs39/litre from Rs48.50-49.50/litre effective 1 December”. A Webindia123 report said OMCs should be able to blend 1.1bn litres of domestic ethanol to comply with the country’s E5 blending mandate in the 201617 supply year.

EPA finalises 2017 renewable fuel blending volumes for USA

n 23 November, the US Environmental Protection Agency (EPA) published mandatory renewable fuel volumes for 2017 and blend requirements for biomass-based diesel for 2018. The total renewable fuel volume (RVO) for 2017 is 19.28bn gallons, of which 4.28bn gallons is advanced biofuel and 311M gallons is cellulosic biofuel, leaving 15bn gallons of renewable or conventional biofuels such as corn ethanol. The 15bn gallons is higher than the 14.8bn gallons proposed by the EPA in May 2016 (see Biofuel News, OFI June 2016). The EPA said total RVO would grow by 1.2bn gallons or 6% from 2016 to 2017. “Advanced renewable fuel – which requires 50% lifecycle carbon emissions reductions – would grow by roughly 700M gallons between 2016 and 2017. Non-advanced or ‘conventional’ renewable fuel

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2014

2015

2016

2017

2018

123

230

311

n/a

Biomass-based diesel (bn gal)

1.63

1.73

1.90

2.00

2.1

Advanced biofuel (bn gal)

2.67

2.88

3.61

4.28

n/a

16.28

16.93

18.11

19.28

n/a

Cellulosic biofuel (M gal)

Renewable fuel (bn gal)

increases in 2017 meet the 15bn gallon congressional target for conventional fuels. “The standard for biomassbased biodiesel – which must achieve at least 50% lifecycle greenhouse gas (GHG) emission reductions against petroleumbased diesel – grows by 100M gallons, twice as high as the minimum congressional target. “Cellulosic biofuel – which must achieve at least 60% lifecycle GHG emissions reductions – grows by 35% over the 2016 standard. The advanced biofuel

standard – comprised of biomassbased diesel, cellulosic biofuel, and other biofuel that achieves at least 50% lifecycle GHG emissions reductions – increases by 19% over the 2016 standard.” The EPA is the body which sets the volumes of renewable fuels blended under the Renewable Fuel Standard (RFS) programme, which was created under the 2005 Energy Policy Act and requires a certain volume of renewable fuel to replace or reduce petroleumbased transport fuel, heating oil or jet fuel.

Shell and Cosan strengthen Raízen joint venture

etroleum giant Shell and Brazilian sugar conglomerate Cosan announced on 23 November that they had agreed to transform their Raízen joint venture in Brazil from a temporary to a permanent one. “The partners have agreed to remove the mutual time-bound buyout options included in the original joint venture agreement, signed in June 2011,” Shell said. Raízen was the world’s largest individual producer of sugarcane, producing more than 4M tonnes of sugar, more than 2bn litres of ethanol

and 2.2 gigawatt hours of cogenerated energy in 2015, Shell said. “It also operates a network of more than 5,800 Shell-branded service stations in the country. The combination of Shell and Cosan’s retail experience and technical expertise have contributed to Raízen’s strong performance since the venture was established.” John Abbott, Shell’s downstream director, said: “Low-carbon, sustainable biofuels play an important role today and will be required long term for heavy duty and long distance transport.”

Peru imposes tariffs on Argentine biodiesel imports

eru will impose anti-dumping tariffs on biodiesel imports from Argentina for a period of five years following complaints of unfair competition, Reuters reported on 26 October. The country’s competition regulator Indecopi said the move was taken “to prevent the imports of biofuel to continue harming national production.” Under the measure, different companies would be charged different rates, with the Argentine subsidiaries of Cargill, Bunge and Noble being charged US$134.70/tonne, US$141.40/tonne, and US$152.70/tonne respectively, Reuters said. Louis

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RENEWABLE FUEL VOLUME REQUIREMENTS, 2014-2018

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Dreyfus and other companies would be charged the highest rate of US$191.60/tonne. The report said Peru was the second-largest export market for Argentine biodiesel. The Argentine Biofuels Chamber has said it would take legal action against the Peruvian government over the matter. “We are the main supplier of biodiesel for Peruvian transport and this unjustified decision will have consequences for their economy since domestic prices for fuel will rise,” said Luis Zubizarreta, the group’s president, in the Reuters report.

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BIOFUELS NEWS

Biofuel groups criticise EC’s renewable energy proposal E

Malaysia delays B10 for third time in year

alaysia has delayed implementing a B10 biodiesel blending mandate for the third time this year, the Minister of Plantation Industries and Commodities (MPIC), Mah Siew Keong, confirmed on 15 November. The decision was taken “after a thorough study, taking into consideration the difference between crude palm oil and diesel prices in the current volatile market,” Mah said in a statement on the MPIC website. The B10 mandate was due to take effect on 1 December, following delays in June and July. No new date has been given for its introduction. A B7 blend was also due to be introduced for the industrial sector on 1 December. Mah said the government was committed to ensuring there was no burden of extra cost to consumers. The retail price of B10 diesel would be higher than the current B7 blend as the price of palm oil was higher than diesel. According to Platts, palm oil prices have risen sharply, with the crude palm oil (CPO) front-month contract hitting MR3,000/tonne (US$681.12/tonne) on 11 November, widening the palm oil-gas oil spread to US$262.17/ tonne.

promote other ‘low emissions fuels’ such as renewable electricity and advanced biofuels used in transport. “A reduction of the limit on conventional biofuels use to 3.8% undermines the existing €16bn in European biofuel production facilities since 2003,” European renewable ethanol association ePure said. The proposed phase-out of conventional biofuels meant the EC had now proposed four different changes to renewable energy use in EU transport since the adoption of its first biofuels policy in 2003. “This permanent policy flux has created an impossible policy environment that

significantly jeopardises further investments in both conventional and advanced biofuels in Europe.” Danish biotech firm Novozymes also said the proposal would increase the share of fossil fuels in transport. “By 2020, the aim was to have 10% renewables in transport by 2030. The ambition is lowered to 6.8%,” Thomas Schrøder, Novozymes’ vice president for biorefining, said in Biofuels International. The association of the German biofuels industry (VDB) also said if the proposal was implemented, consumption of fossil fuel would rise significantly by 2030, while the use of biofuels in transport would break down.

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uropean biofuel groups have reacted with dismay to the European Commission (EC)’s revised Renewable Energy Directive (RED), which proposes to cap food-based biofuels’ contribution to renewable energy targets at 7% in 2021, going down to 3.8% in 2030. The proposed RED was published on 30 November as part of the EC’s Clean Energy Package. The EC has proposed reducing the maximum contribution of conventional biofuels, such as ethanol made from corn, wheat and sugar beet, from a maximum of 7% of transport fuels in 2021 to 3.8% in 2030. It has also proposed a mandatory blending obligation of 6.8% to

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Indonesian measure for 20% biodiesel blending

ndonesia’s Energy and Mineral Resources Ministry has made it mandatory for nonsubsidised diesel fuel to contain a 20% mix of biofuel, with a US$0.46/litre penalty for those violating the regulation, the Jakarta Post reported on 22 October. The Biofuels Producers Association (Aprobi) said the new regulation would boost the consumption of B20 fuel to almost 6M kilolitres by the end of 2017. The country’s biodiesel mandate increased from 10% in 2013, to 15% in 2015 and to 20% last year. However, Aprobi chairman Paulus Tjakrawan said 2016’s blending target of 3M kilolitres was unlikely to be met as national production was forecast to reach only 2.6M kilolitres by year-end.

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BIOTECH NEWS

IN BRIEF USA: DuPont Pioneer and Perdue AgriBusiness announced plans on 19 October to more than double contracted acreage of Pioneer’s Plenish high oleic soyabeans in Maryland, Delaware, southeast Pennsylvania and southern New Jersey for this year to meet increasing demand from food companies. DuPont Pioneer said Plenish had 0g trans fat per serving and 20% less saturated fat than commodity soyabean oil, with increased oxidative stability leading to a long shelf and fry life. Its traits had been approved in nearly all key US soyabean export markets including Canada, China, Japan and Mexico and approvals were pending in remaining markets. BRAZIL On 6 October, the country’s biosafety commission, CTNBio, approved imports of three GM corn varieties from the USA for animal feed production, Reuters reports. Two of the varieties are produced by Monsanto and one by Syngenta. Poultry and port industry group ABPA said the move would help mitigate tight corn supplies after a harsh drought severely cut production in 2016 and forced animal growers to import corn from Argentina. CHINA: US seed breeder NexSteppe announced on 10 November that it had entered an agreement with Longping Hi-Tech to distribute and sell its Palo Alto biomass sorghum hybrids in China. Longping is a Chinese seed leader. NextSteppe’s agreement is with the subsidiary, Longping Hi-Tech Arable Land Remediation Technology Company, which is focused on developing solutions for land remediation. NexSteppe CEO Anna Rath said: “We believe that NexSteppe sorghums will have a vital role as a sustainable technique for remediation of heavy metal contaminated soils and production of clean biopower energy in China.”

Cargill certifies three products to meet more non-GM demand G

lobal agribusiness giant Cargill has for the first time gained non-GM certification for three of its food ingredients to meet rising demand. The company announced on 6 October that it had gained Non-GMO Project verification for its high oleic sunflower oil, cane sugar and sugar substitute erythritol, which are now commercially available. “Consumer demand for non-GMO food and beverages is growing and Cargill is responding,” said Mike Wagner, managing director for Cargill Starches and Sweeteners, North America. “We’re delighted to work with the Non-GMO Project, the leading verifier of non-GMO products in the United States.” Cargill said annual sales of Non-GMO Project Verified products had increased from US$348.8M in 2010 to more than US$19bn as of March 2016. “According to Packaged Facts, demand for nonGMO products is expected to grow 12% annually

Greentech acquires Brazilian ingredients supplier

rench biotechnology firm Greentech announced on 4 November that it is acquiring Brazil’s Mapric, a supplier of ingredients to the cosmetic, pharmaceutical and nutraceutical industries. “Mapric’s activity complements that of Greentech, which produces high-tech ingredients from the plant, marine and microbial worlds for these same industries,” Greentech said. “Through the acquisition, Mapric gains an international

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dimension to continue its growth, while Greentech – already present in Brazil through a subsidiary – gains a local site in a country with rich biodiversity.” The firm operates through three companies: Greentech produces extracts from plants and biotechnology; Greensea from micro- and macro-algae and coastal marine plants; and Biovitis uses microbial biotechnology to produce ingredients. Its cosmetics portfolio spans

skin care, anti-aging, body care and hair care including Lipactive Inca Inchi to ‘repair’ hair, derived from a Peruvian plant with 94% polyunsaturated fatty acid content including Omega-3. Mapric also produces bioactives for the cosmetic industry including vegetable extracts; butters and vegetable oils; silicones; vitamins and minerals. Specific Brazilian origin products include pataua, pracaxi and bacaba oils; and bacuri, murumuru and ucuuba butters.

New deadline for decision on Dow-DuPont merger

he new deadline for the European Commission (EC) to take a decision on US$130bn merger of Dow Chemical and DuPont is 28 February, a spokesperson said on 9 November. The EC had halted its probe into whether the merger would reduce competition in crop protection, seeds and some chemicals for a second time on 13 October after the companies failed to provide crucial data. “We have received the missing information and the clock has been re-started,” an EC spokesperson said in an e-mail to Reuters. The EU’s probe was announced on 11 August (see Biotech News, OFI September/October 2016) but was halted in September due to missing information. The merger to create DowDuPont Inc was first announced on 11 December and would eventually see the new entity split into three by the end of 2018,

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through 2018.” Megan Westgate, executive director of the NonGMO Project, said working with a supply chain leader such as Cargill could lead to large-scale availability of non-GMO food ingredients. “Scaling production and transitioning entire supply chains are some of the most complex issues facing the food industry. Cargill’s commitment to verification of these ingredients, and others expected in the future, should have significant impact on the available non-GMO verified ingredient supply for consumer packaged goods, and increase the acreage dedicated to non-GMO agriculture in North America,” she said. Cargill’s high oleic sunflower oils which have been verified as non-GMO include Clear Valley high oleic sunflower oil, Clear Valley expeller pressed high oleic sunflower oil and IngreVita high oleic sunflower oil.

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creating separate companies focused on agriculture, specialty products and materials science. Both companies supply GM seeds and crop protection products to the oils and fats industry. Dow Chemical spokeswoman Rachelle Schikorra said she still expected to close the deal in the first quarter of 2017. Monsanto reiterated that its US$66bn acquisition by Bayer would close by the end of 2017, with CEO Hugh Grant saying on 5 October that combining with the German chemicals giant “represents the most compelling value for our shareowners.” Grant was reporting on the company’s fiscal 2016 results, which saw a fall in net sales to US$13.5bn from US$15bn in 2015, due mainly to currency headwinds and price declines in agricultural productivity.

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TRANSPORT & LOGISTICS NEWS

IN BRIEF CANADA: Viterra Inc – part of the agricultural business segment of Anglo-Swiss commodity trading giant Glencore – officially re-opened its Pacific Terminal at the Port of Vancouver on 27 October. The event marked the completion of Viterra’s $100M investment at the terminal, including a new ship loader, new bulk weighers, upgrades to shipping conveyors and rotary cleaners, and improved electrical and dust control systems. “Our goal was to create a highly efficient port terminal with unprecedented capability to process a diverse range of commodities,” said Viterra president Kyle Jeworski. The improvements have tripled the handling capacity of the terminal to more than 6M tonnes/year. It also allows for the loading of ‘post-Panamax’ vessels, the largest ships able to navigate through the recently expanded Panama Canal. “This added capacity is basically equivalent to adding two additional port facilities in Vancouver,” Jeworski said. Viterra said its main focus at Pacific would be on pulse crops. The company is Canada’s grain industry leader, handling, processing, distributing and transporting grains and oilseeds. Within oilseeds, Viterra operates a canola and soyabean processing and refining plant in Bécancour, Québec with a crushing capacity of 1.05M tonnes/year; and a canola processing plant in Ste Agathe, Manitoba.

Bunge-AGD terminal investment G

lobal agribusiness giant Bunge and Aceitera General Deheza SA (AGD) are jointly investing US$100M in the Puerto General San Martin T6 industrial complex and port terminal, located on Argentina’s Paraná River, World-Grain.com reported on 26 October. The investment includes a three-year plan to increase the complex’s operational capacity. The terminal is jointly operated and managed by both companies and is used to load ships with dry bulk and vegetable oils, handling 13M tonnes of exports last year, according to AGD. The privately-owned crushing company is responsible for more than 14% of Argentina’s edible oil exports with a turnover of some US$2.4M in 2015/16. It has an oilseed crushing capacity of 20,000 tonnes/day; total storage

capacity of 3.3M tonnes; and a grain and oilseed planted area of 200,000ha. Its main industrial complex is in Córdoba province, with a refinery that can crush up to 8,000 tonnes/day of oilseeds and refine 700,000 litres/day vegetable oil, with a storage capacity of 60,000 tonnes of oils and 1M tonnes of oilseeds. It also has a crushing plant in Dalmacio Vélez Sarsfield, Córdoba which can process 500 tonnes/ day of oilseeds. AGD’s Aceitera Chabás facility in Santa Fe province can process 4,000 tonnes/day of soyabeans to produce oil, lecithin and protein meals and has a storage capacity of 420,000 tonnes of seeds, pellets and oils. Its T6 Industrial facility on the Paraná River can process 20,000 tonnes/day of oilseed

with 450,000 tonnes of storage capacity. As well as operating the T6 port complex, AGD also runs Guide SA at the port of Rosario on the Paraná River, which has two independent lines for loading refined and crude oils on its two piers, with a storage capacity of over 72,000 tonnes. Bunge has been growing its company around the world, entering a distribution agreement with Oleo-Fats Inc in the Philippines in September; buying two oilseed processing plants and businesses from Cargill in August; forming a joint venture with Wilmar International in Vietnam in July; and expanding a joint venture partnership in July with Brazil’s Amaggi Group to operate on the ‘Northern Corridor’ via the Tapajós-Amazon waterway in Brazil.

First tank cleaning station opens in West Africa

lobal logistic provider Van den Bosch and MultiPurpose Terminals Ghana (MTG) have opened a tank cleaning station in the Port of Tema, the companies announced on 3 November. “A growing number of companies choose to ship their liquids to Africa as bulk freight instead of small packaging”, says Paul van de Vorle, member of the team of directors at Van den Bosch. “The tank cleaning station will support companies in making the switch to bulk transport. This will provide many advantages in terms of handling, heating and packaging costs.” Van de Vorle said the cleaning station was the first of its kind in West Africa. “Now, it is possible to have tank containers cleaned in Ghana, which leads to new possibilities for shipping and transport companies. The station will create a better balance between inbound and outbound cargo flows and reduces the number of empty transport

movements.” The cleaning station is operated by MTG, a subsidiary of logistic services provider Portside, which acts as Van den Bosch’s agent in the Ghanaian market. MTG provides services from the Port of Tema including bulk handling and storage, reefer container storage and logistics advice. Last year, Van den Bosch announced it was expanding its activities in Africa and the Middle East (see Transport News, OFI November/December 2015), saying the African continent offered many opportunities in loading edible oils and fats including cocoa or shea butter in bulk from origin. The Dutch group specialises in the transport of liquid and dry bulk for the food and chemical industries and acts as a bulk supply chain partner for major edible oil refiners such as IOI, Cargill, Olenex and Sime Darby in delivering vegetable fats, Van de Vorle had told OFI.

Brenntag acquires EPChem’s distribution business in Asia Pacific

lobal chemical distributor Brenntag announced on 27 October that it is acquiring the distribution business of Singapore’s EPChem Group, a company which supplies special performance chemicals in the Asia Pacific region dedicated to wax and its related products. EPChem distributes a range of synthetic and vegetable waxes, including palm and soya waxes.

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“Waxes have a broad range of applications in several industries such as personal care, coatings and adhesives,” said Anthony Gerace, managing director of mergers & acquisitions at Brenntag Group. “These are attractive industries with high growth potential, especially for innovative products.” The acquisition – which includes EPChem’s distribution businesses in Indonesia and China – would expand Brenntag’s speciality chemicals

footprint in the Asia Pacific region, one of its strategic growth objectives, said Henri Nejade, CEO of Brenntag Asia Pacific. “In addition, the company has an outstanding track record and long-standing partnership with major global wax producers.” EPChem generated total sales of about US$54.6M in the 12 months to May 2016. Brenntag generated sales of US$11.5bn in 2015.

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

Cargill buys Brazilian oleochemicals producer

lobal agribusiness giant Cargill announced on 11 November that it has bought Brazilian oleochemicals producer SGS Microingredients (SGS Agricultura e Industria Ltda) for an undisclosed sum. Based in Ponta Grossna, Paraná state, SGS Microingredients operates in four business segments: oleochemicals; pet/ feed ingredients; food ingredients; and polymers. Paul Hoffman, general manager of Cargill Industrial Specialities in Brazil, said the company’s focus was to increase current capacity

IN BRIEF SOUTH AFRICA: Indian consumer goods manufacturer Dabur International is acquiring the personal care, hair care and creams businesses of South African-based CTL group of companies for ZAR18.8M (US$1.5M). “This acquisition represents a significant step in our strategy to accelerate growth in the international market, particularly Africa. We have identified expansion of our hair care business in Africa as a strategic priority,” Dabur India CEO Sunil Duggal said on 1 November. ASIA: British speciality chemicals company Croda plans to open three new formulation laboratories in China, Indonesia and South Korea, signifying its commitment to continued investment in Asia, the company said on 24 October. The laboratories would enable collaboration between Croda and local formulators to develop new products, and allow customers to learn about its new products and gain insight into market trends in personal and health care. Croda produces highperformance ingredients for a range of sectors including personal care, oleochemicals, cleaning, pharmaceuticals, adhesives and coatings.

utilisation from 35% to a target of 80-90%, according to Valor International. Annual revenue in Ponta Grossa stood at between BRL$80-90M (US$23-26M) but the plant had the potential to expand its sales in the industrials segment to around BRL$500M/ (US$144M) year in Brazil, the report said. “SGS Microingredients brings capabilities and complementary processes that add value to our existing industrial specialities chain,” Hoffman said in a press release. “Cargill’s results in this sector

Waste-to-chemicals site planned

waste-to-chemicals consortium plans to build a plant in the Port of Rotterdam that will produce methanol from residual waste. The partnership consisting of AkzoNobel, Van Gansewinkel, Air Liquide, AVR, Enerkem and the Port of Rotterdam announced its plans on 9 October. The plant would use technology developed by Canada’s Enerkem that converts residual waste into methanol, which can then be processed into substances such as acetic acid (for fibres and adhesives) and thickening agents and dimethyl ether (for clean propellant gases). “These chemicals are currently generated almost entirely from fossil fuels to which the planned facility will provide a sustainable alternative,” the consortium said. The partners would complete a feasibility study into the plant, including plans for its exact location within the port and the start of the application process for the necessary permits. “This phase is expected to result in a conclusive decision on the construction of the plant in the first half of 2017.” Enerkem produces biofuels and renewable chemicals from waste by converting non-recyclable municipal solid waste into methanol, ethanol and other widely used chemical intermediates. It is beginning operations at Enerkem Alberta Biofuels, its first fullscale commercial facility, and owns a demonstration plant and pilot facility in Québec. The consortium said that next to source separation and conventional recycling, chemical recycling would become increasingly important in the coming years, given increasing end-product complexity and the ever higher demands on secondary resources.

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canola and sunflower oils. It launched a hydrogenation plant in 2002, and an emulsifier production plant in 2006 that resulted in the creation of its food ingredients division, specialising in ingredients for bakery, dough, dairy, chocolate, margarine and ice cream products. In 2008, it started operating a molecular distillation plant to obtain monoglycerides and launched a new fatty acid distillation plant in 2013, increasing the production capacity of distilled fatty acids to 30,000 tonnes/year.

Verdezyne signs distribution pact

S renewable chemical producer Verdezyne Inc has signed an agreement with Aceto Corporation to distribute its bio-based dodecanedioic acid in the USA. Verdezyne’s BIOLON DDDA can be used in a variety of end-user products including automotive parts, coatings, cosmetics and fragrances. “The market is interested in high-quality renewable chemicals which can be used in the production of high-performance nylon 6,12, moulding resins, lubricants, adhesives and powder coatings,” said William Radany, president and CEO of Verdezyne, whose investors include BP Ventures, DSM Venturing, OVP Venture Parters, Monitor Ventures and Malaysia’s Sime Darby. Aceto develops, markets, sells and distributes health products, pharmaceutical ingredients and performance chemicals.

Musim Mas acquires Dutch Glycerin Refinery BV

usim Mas Europe Ptd Ltd, a wholly-owned subsidiary of the Indonesian vegetable oil giant Musim Mas Group, announced earlier in 2016 that it had agreed to buy Dutch Glycerin Refinery BV (DGR) based at the Delfzijl Chemical Park in the Netherlands. Singapore-headquartered Musim Mas said DGR had more than 200,000 tonnes/year of refining capacity, making it the largest crude glycerine refining

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in recent years have been above the market average. We have an important position within the industrial oil market and our goal is to be a leader in providing bio-solutions and bio-products to replace petroleum oil.” Cargill’s industrial oils business operated in Marinque in neighbouring São Paulo state, where its plant was at the limit of production, the press release said. SGS Micronutrients began operating a fatty acid distillation plant in 1999 utilising feedstocks such as soyabean, corn, palm,

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unit on a single location in the world. “Europe accounts for some 41% of the world’s crude glycerine supply and also consumes 28 % of the world’s refined glycerine,” Musim Mas said. “As such, DGR is well positioned at the centre of the global glycerine trade route.” Applications for refined and high quality glycerine included cosmetics, pharmaceuticals, industrials, paint and home and personal care products, Musim Mas said.

12 OFI – JANUARY 2017 www.ofimagazine.com

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D IARY OF EVEN TS

11-12 JANUARY 2017

27-30 MARCH 2017

5th ICIS Asian Oleochemicals Conference VENUE: Kuala Lumpur, Malaysia CONTACT: Merinda Bradshaw, Registration Team, ICIS, UK. Tel: +44 20 8652 3887 E-mail: events.registration@icis.com Website: www.icisconference.com/ asianoleo17

12th Annual World Bio Markets VENUE: The NH Hotel Krasnapolsky, Amsterdam, the Netherlands CONTACT: Green Power Conferences, UK Tel: +44 20 7099 0600 Website: www.worldbiomarkets.com

26-27 APRIL 2017

23-24 JANUARY 2017

7th European Algae Industry Summit VENUE: Nice, France CONTACT: Jasmine Okure, ACI, UK Tel: +44 203 141 0647 E-mail: jokure@acieu.net Website: www.wplgroup.com/aci/event/ european-algae-industry-summit/

Fuels of the Future 2017 VENUE: CityCube, Berlin, Germany CONTACT: Markus Hartmann, German Bioenergy Association (BBE) Tel: +49 228/81002-22 E-mail: info@bioenergie.de Website: www.fuels-of-the-future.com

30 APRIL - 3 MAY 2017

1-2 FEBRUARY 2017

108th AOCS Annual Meeting VENUE: Rosen Shingle Creek, Orlando Florida, USA CONTACT: AOCS Meetings Department, USA Tel: +1 217 6934821 Fax: +1 217 6934865 E-mail: meetings@aocs.org Website: www.annualmeeting.aocs.org

Lignofuels 2017 VENUE: Helsinki, Finland CONTACT: Dimitri Pavlyk, ACI (Europe), UK Tel: + 44 20 7981 2503 E-mail: dpavlyk@acieu.net Website: www.wplgroup.com/aci/event/ lignocellulosic-fuel-conference-europe

8-9 FEBRUARY 2017

11-12 MAY 2017

2nd Future of Surfactants Summit Europe VENUE: Antwerp, Belgium CONTACT: Solvent Jasmine Okure, ACI, UK Tel: +44 203 141 0647 E-mail: jokure@acieu.net Website: www.wplgroup.com/aci/event/ surfactants-summit

OTAI-FSSAI Conference: 1st Summit on Compliance Across Food Value Chain VENUE: Taj Palace, New Delhi, India CONTACT: Ajay Singh, Coordinator Tel: +91 9811 1133 85 E-mail: ajay@otaiconference.com Website: www.otaiconference.com

12-13 FEBRUARY 2017

17-19 MAY 2017

Global Castor Conference 2017 VENUE: Hotel Courtyard by Marriott Ahmedabad, Gujarat, India CONTACT: Solvent Extractors Association of India (SEA); Tel: +91 22 22021475/22822979; E-mail: solvent@mtnl. net.in or seaofindia1963@gmail.com Website: www.seaofindia.com

7th ICIS World Surfactants Conference VENUE: Hyatt Regency, Jersey City, USA CONTACT: Georgina Shillito, Conference Producer, ICIS, UK Tel: +44 (0) 20 8652 3641 E-mail: georgina.shillito@rbi.co.uk Website: www.icisconference.com/ worldsurfactants

6-8 MARCH 2017

19-20 MAY 2017

28th Annual Palm and Lauric Oils Conference & Exhibition: Price Outlook Conference 2017/2018 (POC 2017) VENUE: Shangri-La Hotel, Kuala Lumpur, Malaysia CONTACT: POC2017 Secretariat, Malaysia Email: poc@bursamalaysia.com Website: www.pocmalaysia.com

OFI India 2017 VENUE: Bombay Convention and Exhibition Centre (BCEC), Mumbai, India. CONTACT: Mark Winthrop-Wallace, Sales Manager, OFI, UK. Tel: +44 1737 855 114 E-mail: markww@quartzltd.com Website: www.ofievents.com/india

19-20 MAY 2017 OILS & FATS INTERNATIONAL INDIA 2017

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31 MAY - 3 JUNE 2017

Bombay Convention & Exhibition Centre (BCEC) Mumbai

17th EFPRA Congress 2017 VENUE: Empire Riverside Hotel Hamburg, Germany CONTACT: INTERPLAN Congress, Meeting & Event Management AG Tel: +49 40 32 50 92 57 Fax: +49 40 32 50 92 44 E-mail: efpra2017@interplan.de Website: www.efprahamburg2017.com

18-21 JUNE 2017 7th International Conference on Algal Biomas, Biofuels and Bioproducts VENUE: Hyatt Regency Hotel, Miami Florida, USA CONTACT: Janet Seabrook, Elsevier Conferences, UK Tel: +44 1865 843691 E-mail: JM.Seabrook@elsevier.com Website: www.algalbbb.com

2-5 JULY 2017 8th European Symposium on Plant Lipids VENUE: Scandic Hotel Triangeln Malmö, Sweden CONTACT: Eurofedlipid, Germany Tel: +49 69 7917 345 Fax +49 69 7917 564 E-mail: amoneit@eurofedlipid.org Website: www.eurofedlipid.org/meetings/ malmoe2017/index.php

27-30 AUGUST 2017 15th Eurofedlipid Congress VENUE: Uppsala Konsert & Kongress Uppsala, Sweden CONTACT: Eurofedlipid, Germany Tel: +49 69/79 17 533 Fax: +49 69/79 17 564 E-mail: info@eurofedlipid.org Website: www.eurofedlipid.org/meetings/ malmoe2017/index.php

14-16 NOVEMBER 2017 PIPOC 2017 VENUE: KLCC, Kuala Lumpur, Malaysia CONTACT: Malaysian Palm Oil Board E-mail: pipoc2017@mpob.gov.my Website: http://pipoc.mpob.gov.my

For a full listing of oils and fats industry events, go to: www.ofimagazine.com

14 OFI – JANUARY 2017 www.ofimagazine.com

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I NTE RN ATION AL M ARKET REVIEW

Soya fills the gap FIGURE 1: CBOT SOYABEAN FUTURES - FIRST MONTH (US CENTS/LB)

CHARTS: JOHN BUCKLEY

Amid disappointing palm oil output and tighter rapeseed stocks, rising supplies of s e il h e s tisfied the growth in demand and stabilised prices. That will probably continue in 2017 as soya crops continue to climb and palm oil recovers. John Buckley writes

he slowdown in palm oil production resulting from El Niño effectively began in late 2015. Its legacy was still influencing the oilseed complex as OFI went to press in the late stages of 2016, keeping most items – with the recent exception of sunflower oil – at higher prices than the same time last year. Over the two full seasons 2014 to 2016, palm – normally the market leader in supply expansion – has contributed less than 20% of the growth in world total vegetable oil consumption. That role has been taken over by soyabean oil, unusually accounting for two-thirds of the extra 10M tonnes of vegetable oil consumed globally over that period. This is no small achievement for an oilseed with oil extraction rates of under 20%. Soyabeans have not been spared crop weather problems entirely though. Latin American producers lost several million tonnes of potential from their last crop after drought in Brazil and flooding in Argentina earlier in the year. The effect continues to linger in the form of diverted demand from these regions to US suppliers. Fortunately for consumers, the US new crop has excelled, delivering another year of record production – far above earlier market expectations. In May when the USDA released its first crop forecasts for the new season, output was expected to dip after two record years from almost 109M tonnes to about 103.5M tonnes. After a series of upward appraisals for yields and harvest area, November’s forecast was over 15M tonnes higher than that – a windfall equal to about 2.85M tonnes of extra soyabean oil. It was also fortuitous for end-users that the soya market had been carrying larger than usual stocks through the 2014-2016 period, especially in Latin America. That enabled crushing to stay relatively high through the crop squeeze. Soya crush has continued to grow fastest within top consumer China, boosted by imports that are growing at over 5M tonnes annually. Over the past three years of this strengthening demand, China has accounted for about 38% of the total global growth in soya crush. The US export sales windfall has meanwhile provided main support to the bellwether Chicago soyabean futures market. In other sectors, the global sunflower crop also turned out better than expected, thanks to the CIS and EU countries. Their gains are expected to enable world sunflowerseed oil production to expand to a new record 16.7M tonnes from the 15.2M tonnes of the past season and under 15M tonnes in 2014/15. The increase has had a significant effect in keeping sunflower oil prices under control. Over the three

months since the last review in OFI, the average price in Rotterdam has risen by less than 2% whereas rapeseed oil has been up as much as 14%. Rapeseed production, while down, does at least seem to be turning out a bit better than expected earlier in the year, thanks largely to a big jump in Canadian output. But just how big is a matter of some debate. At the end of 2016, almost a fifth of the crop was still in the field as wet weather and early snowfall started to interrupt harvests. Some of these crops may be abandoned, but hopes remain that output will still be bigger than last year’s.

Palm oil demand declines Palm oil has been an erratic, if overall firming, influence on oil sector pricing over the last few months as the conflict continues to play out between lagging Asian production versus a disappointing export trade. Contrary to market expectations, Malaysian production in October did not manage a belated seasonal rise as the El Niño-linked drought continued to crimp yields. It dipped 2% on the month and 17.6% on the year – its worst performance for that month for several years. That also left Malaysian year-to-date output about 15.6% lower than the same period in 2015. However, the impact was muted by another month of flat export trade, hovering around the 1.43M tonnes level compared with the year’s high of 1.82M tonnes in August. Particularly steep declines in demand were seen from the two top buyers, India and China. For the year to date, their demand for Malaysian oil has dropped by 15% and 29% respectively, as both countries have taken advantage of more abundant soya oil offered at a far lower than

usual premium to palm. Europe, at least, did take more Malaysian palm oil in October (+31%), probably at least partly replacing tighter supplies of domestically produced rapeseed oil in the industrial/biodiesel sector. However, for the year to date, it too has taken about 12% less. While there have been some gains in demand – from Bangladesh and Turkey especially (the latter partly due to feeding its huge refugee influx from Syria) – world demand for Malaysian palm has dropped 12%. That did not match the fall in production – so stocks have been drawn down to unusually low levels – but the market did not get as tight, or prices as high as many analysts expected earlier in 2016. Nonetheless the bellwether Kuala Lumpur market saw enough bullishness in this backdrop to reach a four-year-plus high in the November/ December period at MR3,089 (US$720). The weak ringgit helped the rally, building hopes of an export revival. However, recent data from shipping sources shows no proof of that happening yet, with November demand reportedly down again on the month. As we go to press, prices have backtracked somewhat on that news and on reports of improving production from global supply leader, Indonesia, where crude palm output was unofficially estimated to have risen for a sixth successive month in October to over 3M tonnes.

Further factors affecting palm oil Bullish sentiment was also weakened by news that Malaysia was yet again delaying its higher biodiesel mandate for the industrial/transport sector. Palm blends of 7% and 10% were originally due to start in June, then July, then 1 December. No new date had yet been fixed for the expansion, while its economic case was challenged by 2016’s weak energy markets

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I NT E RN ATION AL M ARKET REVIEW

FIGURE 2: VEGETABLE OIL PRICES, MONTHLY AVERAGES (US$/TONNE)

and the higher cost of the feedstock. In early November, for example, palm was reportedly priced as much as 50% over conventional diesel. The additional palm oil off-take that Malaysia’s B10 requires would not have been game changing in terms of global demand. However, Indonesia’s ambitious biofuel targets could have a major impact if they transpire in 2017 (especially if now rallying crude oil continues to believe in OPEC’s plan to curb output). Overall, though, these events have been another warning to palm not to overreact price-wise to the El Niño legacy. That was underlined by further factors in the news at the end of 2016. One factor was the expected steep slowdown in demand from India, the top palm oil importer. India is harvesting a much larger domestic oilseed crop, including rapeseed. The country’s decision to ban the use of large rupee currency notes to tackle domestic corruption also seems to have backfired. Instead, it has caused a huge slowdown in consumer spending that will probably curb its imports of palm oil and other commodities into 2017. Even more important is the widespread view that as the El Niño effect continues to fade, palm production in Indonesia and Malaysia is in for seismic rebound from around the middle of 2017 (if not before). This could result in an additional 4M to 6M tonnes that would more than make up for the past year’s shortfalls. Many analysts have already issued warnings that this will result in lower palm oil prices for the second half of 2017, even if consumption rebounds by 2M to 3M tonnes on higher Indonesian biofuel use and a comeback in food oil demand in importing countries.

maize, prices of which rocketed when that crop underperformed and got oversold earlier in 2016. Argentina might also curb sowings in response to its government postponing a full liberalisation of soya exports for a couple of years, while freeing up grains. It is thought the USA, on the other hand, is sure to increase soya plantings, perhaps by 3M acres or more. This is in preference to maize, prices of which have under-performed in relation to the oilseed (and corn costs more to grow). That could feasibly lead to the USA’s first 120M tonnes soyabean crop, assuming normal weather patterns. China’s soya crop may also rise in response to its government cutting back support for maize, although we are only talking about another 1.0/1.5M tonnes or so – not enough to seriously dent its demand for US and Latin American soyabeans. China’s imports are supported by a still expanding feed industry – growing pig and poultry numbers and a cutback in imports of competing feeds (especially US dried distillers’ grains) boosting demand for oilseed meal. China usually prefers to expand soyabean rather than product imports. This means more soya crush and more oil product, so greater use of soya to meet expanding consumption of edible oil (although a bigger Chinese groundnut crop will make a contribution as well). A big boost to US soya oil demand was signalled by a higher renewable fuel mandate for 2017. One analyst said this could use an extra 1.3M tonnes of soyabean oil, equal to a quarter of current US domestic and export demand (the USA already uses 2.7M tonnes for biodiesel).

Oil markets in 2017

RAPESEED In the first half of 2017, the outcome of Canada’s late harvest will have a big impact on overall supply. Recent estimates had pointed to a crop of 18.5M tonnes, similar to 2015’s and much better than 2014’s 16.4M tonnes. Some estimates had run well over 19M tonnes but with rain and snow delaying its collection far beyond normal, something closer to 18M tonnes now seems more likely.

SOYA The year ahead is likely to see further growth in supply of soyabeans and their products as the Latin Americans recover from this year’s weather challenges and the USA goes on to sow an even larger area than the 2016 record one. There are some caveats. Brazil might trim the soyabean area somewhat to plant more

Europe is unlikely to produce much more rapeseed next year, possibly even less, as farmers in some member states get fed up with the weather spoiling crops and/or the banning of the widely used neonicotinoid pesticides, contributing to greater than usual harvest losses. That suggests another crop in the 20M tonnes area – not enough to feed domestic demand at past levels without higher imports. Major supplier Ukraine on the other hand, seems to have planted more winter rapeseed for harvest in 2017, when it should be able to resume better export flows to west Europe. The largest rapeseed importer, China, still has very large stocks of the oil (recently seen over 4M tonnes), which it has been selling off in the past year. This is another factor holding down its imports of palm oil. It could continue to use these to control imports or at least to time its purchases of items like palm oil when the price is more favourable. Or it could decide to import less rapeseed from Canada, which would be bearish for a market that relies on China as a top customer. SUNFLOWERSEED The area sown to sunflowers has grown only modestly over the past decade or so but yields have shown a far more significant improvement – up 50% to 60% since the early 2000s. In the past year, mostly favourable weather saw these jump again, pushing the world crop up 8% to a new record 43.7M tonnes. Most major producers achieved more – Europe, Russia, Ukraine and Argentina. The larger crush should add about 1.2M tonnes to world sunflower oil supplies for 2016/17. These should be eagerly snapped up again – not only be the growing markets for this perceived quality oil in countries like China, India and the Near East. European and other consumers will also be using more to replace tighter more expensive rapeseed oil, recently priced at unusual premiums over normally more expensive sunflower. It’s too early to make reliable predictions about next spring’s sunflower sowings in the main northern hemisphere producing regions but at this stage, the factors above – generating strong global demand – suggest producers’ interest in the crop should be rewarded again. One source already cashing in on better returns is Argentina, where higher local prices (due to the weak peso) and the ending of export taxes on this item have encouraged farmers to increase plantings by a hefty 34% to a new peak 1.675M ha. A recent US attaché report sees that adding about 600,000 tonnes to the next crop, most of which will be crushed internally and exported as oil. Overall, world supplies of oilseeds should be adequate into first half 2017, especially soyabeans and sunflowerseed, pointing to some further accumulation of soyabean stocks (forecast at a new record 93M tonnes or about two-and-a-half months’ supply). Later in the first half and accelerating into second-half 2017, resulting higher oil output should be supplemented by a recovery in palm oil output. This points to price restraint that should help foster ongoing consumption growth for oils and fats in total (currently seen running at about 3.3%, near last year’s levels). John Buckley is OFI’s market corrrespondent

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COFCO e

only non-grain fuel ethanol production plant, using tapioca as a raw material.

State owned food-giant COFCO has snapped up new assets and announced plans to list certain assets on the stock exchange, which many interpret as a desire by China to compete with US agribusinesses and feed the country’s growing population. Rose Hales writes

Foreign asset acquisition Between 2005 and 2016, COFCO increased its acquisition of foreign assets exponentially, with commentators saying global expansion would propel COFCO to begin dominating the export grains market.

ast year was busy for Chinese state-owned food giant COFCO, including foreign acquisitions, leadership changes and the closing of a syndicated credit facility. Most commentators agree that these changes are fuelled by a desire to acquire assets that will feed China’s booming population, and they have turned COFCO into a global superpower that can or will soon compete with Western grain trading giants. China’s urban middle-class population is growing rapidly and thus it relies heavily on foreign imports. COFCO is China’s largest edible oil producer and processor in the country’s edible oil refining industry. It has 13 oilseed processing plants across China with a crush capacity of more than 2M tonnes.

Background China National Cereals, Oils and Foodstuffs Corporation (COFCO) was founded in 1952, in the early years of the communist revolution in China. According to a historical overview on Encyclopedia.com, the new government took control of the agricultural sector and organised specialised state-owned agencies, including China Cereals and Oils Export Corporation. This merged with another company in 1961 to become the China Cereals, Oil and Foodstuffs Import & Export Corporation (or COFCO) – the change reflected the country’s increasing dependence on foreign imports, the overview said. At the end of the 1980s, COFCO began the transformation from state-owned trade agency to a corporate structure, although still government-owned. Zhou Mingseng was appointed as COFCO’s managing director in 1992, and he began implementing a diversification strategy, acquiring new assets for the business. By 1998, a COFCO company, China Foods, changed its name to COFCO International and business interests in edible oils were transferred over. It subsequently went public in 1999 and listed on the Hong Kong stock exchange. COFCO International announced that it would be the company’s channel for foreign investment capital into China’s foods industries. China Agri-Industries Holdings split from COFCO International on 21 March 2007 and listed on the Hong Kong stock exchange. China Agri has divisions including oilseed processing, biofuels and biochemical, rice trading and processing, wheat processing and brewing materials. It is also China’s leading ethanol producer. It says corn is instrumental to its production of ethanol, and it has 11 corn processing bases across China, with an annual corn ethanol production capacity of 8.74M tonnes. It also owns the country’s first and

NOBLE: In April 2014 COFCO purchased a 51% majority stake in Noble Group Ltd’s agribusiness for US$1.5bn, with the intention of forming a joint venture. The Noble Group, a physical commodities trader with grains and oilseed operations in South America, Europe and Asia, will bring its grain sourcing and trading operations, which COFCO would link with its grain processing and distribution business, the companies said in a press release. Cheng Guoqiang, a researcher with the State Council Development and Research Center in China, told Reuters that by participating in the global grain trade, COFCO and China could better the world grain market. In addition, the acquisition would allow China to bring food into the country without going through the world’s top ABCD traders – Archer Daniels Midland (ADM), Bunge Ltd, Cargill and Louis Dreyfus. In a statement, chairman of COFCO at the time Frank Ning (also known as Ning Gaoning) said: “By pushing the international strategy, COFCO will set up a stable grain corridor between the largest global grain-growing origins and the biggest global emerging market, in terms of grain consumption growth in Asia.” In December 2015, it was announced that Noble would sell its remaining 49% stake to COFCO for a sum of US$750M; the deal was successfully closed in March last year. Following the 100% acquisition of Noble, COFCO announced it would take the name COFCO Agri Ltd. According to a press release from the company, COFCO Agri has 45 asset locations and 10,000 employees in 29 countries, generated sales of nearly US$17bn in 2015 and delivers 47M tonnes of products globally. NIDERA: In February 2014, COFCO bought a 51% stake in Netherlands-based grain trader Nidera NV. Nidera was founded in Rotterdam in 1920 and was a major agribusiness and trading company with an annual turnover of US$18.5bn in 2015. In August 2016, COFCO announced it would be buying the remaining 49% stake in Nidera and, at the same time, said it planned to fully integrate the newly created COFCO Agri, COFCO International and Nidera. The prices for both the 51% stake bought in 2014 and the remaining 49% stake in 2016 were not disclosed, although The Wall Street Journal reported that the 51% was purchased at an equity valuation of US$2.4bn. Chief executive of COFCO International and COFCO Agri Matt Jensen, told The Wall Street Journal that: “our combination enlarges the playing field and opens up new opportunities that were previously closed to us as separate companies, but that we can now pursue together”.

T :S

FIN

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The Financial Times commented on the acquisition, saying that the deal would “expand COFCO’s reach further into Europe and Latin America, as China attempts to build an agricultural trader that can fully compete with western rivals led by Cargill”. In an interview with Sputnik International last August, Yakov Berger, a leading expert at the Institute of the Far East in Moscow agreed, saying “COFCO will now be able to buy more grain and oilseeds in Latin America, thus bolstering its status as one of the world’s leading grain traders”. COFCO and Nidera are two of the world’s major importers and exporters of grain and oilseeds. In addition, the Financial Times reported that with the acquisition, COFCO wanted to merge its units into a structure that resembled western agricultural traders, while still focusing on food supply to China’s population. The acquisition was anticipated to take place in the fourth quarter of 2016, Nidera said. On 7 November 2016, Reuters reported that COFCO has plans to expand into Brazil’s sugarcane industry, according to the company’s global head for sugar, Marcelo de Andrade. Andrade said plainly that “COFCO is a company that wants to expand,” and that it was talking to mills and looking at opportunities. Currently high sugar prices made the price of assets “absurd”, he said. The company already has four mills in Brazil’s São Paulo cane belt, acquired when it purchased the agricultural assets of Noble Group Ltd.

Effect on global grain traders Acquisitions of assets such as Noble and Nidera

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OFCO’s global expansion

place COFCO into a strong position in terms of food supply, in particular oilseed and grain, and reflect China’s goals of becoming a major oilseed and edible oil trader. In October 2014, COFCO unveiled plans to move some international assets to stock market listing, including those acquired from Nidera and Noble Group. The Financial Times said it hoped the move would put it on a par with dominating US companies. In March last year, Reuters reported that data had shown that the ABCD top grain houses had lost their dominance of Brazil’s grains export market, with Asian rivals, including COFCO, muscling in. Reuters analysed shipping data and found that Asian traders including COFCO bought 45% of Brazil’s soyabean, corn and soyabean meal exports in 2015. The ABCD traders purchased only 37%. Reuters said this was “an abrupt turnaround” from 2014, when ABCD companies accounted for 46% and Asian firms 36%. The data showed a tightening grip on Brazilian food supplies, challenging the traditional trading giants and securing food supplies for themselves. ABCD had little volume growth, especially in comparison to fast-expanding Asian companies, including COFCO.

Leadership changes COFCO is a state-owned group, controlled by the Chinese government. Ning Gaoning (Frank Ning) was appointed chairman of COFCO in January 2005 and led the company to acquire over 50 foreign assets, with foreign holdings accounting for half of the company’s profits, Caixin Online reported last January. Under his management, the company

became the third largest agribusiness in the world in terms of assets, growing from US$43bn at the end of 2013 to US$71.9bn at the end of 2014. For COFCO, the last 10 years have been defined by Ning’s aggressive overseas expansion plans, but this is set to change. Last January a leadership reshuffle took place, in which State-owned Assets Supervision and Administration Commission (SASAC), the agency responsible for overseeing public assets, appointed Ning chairman of oil company Sinochem Corp. Zhao Shuanglian was then appointed chairman of COFCO. According to a report in Caixin Online, investors are concerned about the future course of the company without Ning. Although major acquisitions had gone through, much is still needed to be done to manage the overseas acquisitions and ensure the smooth running of its consolidation plans for its assets. Caixin Online continued by saying that COFCO still needed to gain a foothold in North America, as well as increase its access to the Black Sea region and Pacific Rim. COFCO Agri got its first foothold in North America last May, when it hired an ethanol trader to set up a US trading desk, Reuters reported. The trader was apparently hired from rival Louis Dreyfus, and was named as Aaron Parrish; he joined the company’s Stamford, Connecticut office. The report said that by opening the trading desk, COFCO is trying to gain entry to trade between the top two ethanol producers in the world – the USA and Brazil – and meet growing demand in China. Following this news in the US, in June Reuters reported COFCO would be opening a trade office in Canada, its first in the country. The office will be located in the centre of Canada’s grain region, in Winnipeg, alongside the offices of other major grain traders Cargill, Richardson International, Paterson Grain, and Parrish and Heimbecker. The report said COFCO Agri was hiring three traders and an operation manager to oversee the trading activities. Following the announcement of the integration of COFCO International, COFCO Agri and Nidera, the company also said in July 2016 that it had appointed Matt Jansen as CEO of COFCO International, in addition to his role as CEO of COFCO Agri, which he had held since May 2015. According to a press release distributed by COFCO International, Jansen is a 25-year veteran in the agriculture industry, having previously held positions with ADM. Since his appointment at COFCO Agri in 2015, Jansen commenced on a full restructuring of the business, which included changing 70% of the management team, the Financial Times reported. In addition, he changed the company’s focus from trading more towards processing, especially in grains and oilseeds. In the same report, it was stated that Jansen had said COFCO Agri was looking to list on the stock market by 2020, “[an initial public offering] should happen before the end of the decade,” he said.

Brands and assets COFCO’s edible oil brands include Fortune, Four Lakes, Vitoil, Sihai, Fuweilai, Fuzhanggui. It processes oilseeds such as soyabean, rapeseed and peanut, and refines and produced special small-

packaged edible oil. It has an annual processing capacity of 21M tonnes. OILSEED PROCESSING COMPLEXES IN CHINA (EXAMPLES) Fuling: A soyabean crushing and refining plant occupying an area of 13ha. The facility has ready access to the Yangtze River, main road and rail transport networks. Its central location in China is ideal both for the intake of raw materials and ready distribution of finished products to customers in neighbouring provinces. Longkou: The complex is located in the north of the country, with useful links to Qingdao, Tianjin, Dalian and Beidahe provinces, as well as to the Korean Peninsula. Its proximity to Longkou Port, which has an annual handling capacity of 25M tonnes, ensures efficient loading and unloading. Qinzhou, Guangxi: A plant that is ideally situated to supply the expanding markets of south and central China, via barges to Hainan province, rail to Yunan province as well as the Vietnamese Peninsula. A direct unloading facility from the discharging port pier to the plant makes bean intake very efficient. Nantong: A facility that COFCO says has contributed to its ability to capture approximately 10% of China’s active output in the oilseed processing sector.s PALM OIL PROCESSING COMPLEX Mingfa: Located close to the Yangtze River in Taixing, the facility has an oil storage capacity of 100,000 tonnes. It has palm oil refining, fractionation and processing capabilities. In addition, it benefits from direct piping to the port for vessel discharge and loading. GRAIN STORAGE TERMINAL Nanjing: Wholly owned and operated by COFCO, the terminal is a storage silo complex with a capacity to store oilseeds and vegetable oil. The storage terminal plays a key role in supplying the company’s Fuling plant.

Next steps In September 2016, COFCO Agri announced the closure of a US$2.6bn syndicated credit facility. The deal was oversubscribed, representing strong support from the banks. According to COFCO Corporation president Patrick Yu, the transaction constitutes a vote of confidence, which “is critical to our ability to realise our vision of a global and integrated business”, Yu said. The deal means the company’s debt can be refinanced, Yahoo Finance reported, and it can also be used for general corporate purposes. COFCO is expected to continue making foreign acquisitions. In particular, it is anticipated there will be further investment in North American assets as currently the company does not have a significant presence in the continent. However, CEO Matt Jansen made it clear last year to the Financial Times that COFCO was not simply focused on buying agricultural commodities for China and would not ignore profitability in order to solely build the business. “We’re a company focused on returns and results,” he said. Rose Hales is OFI’s editorial assistant

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PALM OIL

Game of D drones

Rose Hales looks at the role of drones in oil palm plantation management and crop cultivation rones, also called unmanned aerial vehicles (UAVs) or remotely piloted aerial systems (RPAS), are remotely controlled flying machines that since their earliest use in the 1930s, have become popular and are used extensively for various applications including news gathering, data collection and by the military. Using a drone is usually quicker, cheaper or safer than a piloted vehicle. The machines vary in size, from large plane shaped drones, to small flying objects weighing less than 20kg.

Drones and agriculture The use of drones in agriculture is a market that has been increasing rapidly in recent years and looks set to continue. In June 2016, Research and Markets estimated the agricultural drone market to be worth US$864.4M and growing fast. Agricultural drones are used across all farming sectors including vineyards and oil plantations, in particular soya and oil palm. According to an article in Technology Review in April 2014, drones are cheaper, offer higher resolution images that are unobstructed by clouds and are available anytime, compared to satellite imagery. In addition, the article highlights the three types of detailed view that drones provide: From the air, farmers can better observe patterns that expose many different issues, including irrigation problems, soil variation and pest and fungal infestations; Drone cameras can take multispectral images, meaning they can capture data within spectrums such as infrared, as well as the visual spectrum. A combined view of multiple spectrums can give landowners a complex view of their plantings, specifically highlighting the difference between healthy and unhealthy crops; Low-cost drones can survey an area of land as often as it is required, hourly, daily or monthly. Such data creates a “time-series animation” that clearly provides a farmer with information on trouble spots, or where crops can be managed better. In the edible oil industry, drones have two main uses: policing of land use and controlling illegal deforestation; and increasing the efficiency and productivity of plantations. This feature will focus on how drones can be used to improve productivity and increase plantation knowledge for oil palm and soya plantations. In his presentation ‘From precision plantation preparation to management via drone-enabled GIS mapping and remote sensing’ at PIPOC 2015, Mustaqiim Modh Abidin of Braintree Technologies outlined the various uses and advantages of using drones to help manage oilseed plantations. The advantages of using drones over any other form of monitoring such as manned vehicles like light aircraft or simple human monitoring from ground level are many, Abidin says. Drones: Have speed on their side and are able to perform monitoring or photography much quicker than any other method; Can be deployed any time when needed; Are not affected by cloud as they fly underneath them; Reduce surveyors’ exposure to risk; Can remotely survey areas that are inaccessible or hazardous; Can capture high resolution images; Are a cost effective solution. According to Abidin, drones for these uses come in two types, quadcopter and octopter (used for filming). The drones used for oil palm plantations cover 200-500ha/day; reach speeds of 47km/hour; fly at an altitude of 100-300m (without an additional license needed); have endurance of 30 minutes to three hours (depending on battery packs); have a wingspan of 2.12m; and take images with a resolution of 32 pixels/cm. Technology is developing fast, and more powerful and higher quality drones have already been developed. 20 OFI – www.ofimagazine.com

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The drone’s journey is in three phases, phase A: data acquisition, phase B: data process analogy, and phase C: on-site implementation. Data is retrieved in order to make tangible changes on site in the plantation. For phase A, the drone is launched, flying over the selected area performing aerial photo capture. Once the area has been covered, the machine lands or is recovered. In phase B, the images taken by the drone are stitched together to make a complete photo of the area. The complete photo is imported into a geographic information system (GIS software) for further analysis.

Analysis The GIS software can use the aerial photo for various purposes including tree counting, plantation preparation, irrigation or disease detection. Tree counting analysis (shown in Figure 1, below) uses the high-resolution images taken by a drone to semi-automatically count the number of trees in each block. Such technology allows growers to budget better and calculate the amount of fertiliser and pesticide needed. Plantation preparation analysis involves ensuring only healthy trees grow in a plantation by identifying the terrain before planting and establishing a budget for costs. Preparation prior to planting should also help to avoid disputes later on by estimating the number of trees expected for each land owner. Aerial images obtained by drones can help agricultural cultivators to better irrigate their crops, which helps to avoid crop loss due to a shortage of water, and saves farmers money by reducing water waste. By mapping the terrain, farmers can identify peaks to install water reservoirs and distribute the water through primary and secondary pipes using gravity. With a detailed image of the area, the lengths and quantity of pipes can be easily calculated, allowing landowners to better estimate costs and minimise waste. Finally, disease detection is an important use for drone technology. Information on the health of a plantation can be collected regularly, allowing managers to quickly detect and identify the location of an unhealthy palm for diagnosis and treatment, as well as track the spread and severity of disease. This also provides a cost saving for farmers who can better manage their use of pesticides and react quickly to changing situations with the most up-todate information.

prevent large-scale crop losses. In April 2015, Cargill announced in its palm oil sustainability report that it planned to begin using drones in Malaysia, which was then moving into the operational phase. Cargill planned to use drones to “help us map and monitor valuable pieces of forest land that need to be protected, and improve land and water use, so that we can grow more on the same amount of land and manage our environmental footprint better.” Cargill also said in September 2015 that it plans to use the drones to “respond to land use issues, promote conservation, increase plantation management transparency and aid in the identification of High Carbon Stock (HCS) and High Conservation Value (HCV) forest areas”. The Guardian called the move “an interesting example of a company employing the methods used by conservation charities campaigning against it as a tool for its own sustainability strategy”. In May 2015, Cargill began training a group of prospective pilots in Sandakan, Malaysia. The students were taught how to plan missions, use autopilot, gather and extract vision data and create photo mosaics. According to Cargill, the first drone in its fleet was the Skywalker UAV – six-foot long, battery powered, fixed-wing, can take 2kg in weigh and can produce images with 10cm/pixel resolution. It says it hoped the drones “will aid our progress towards fulfilling the promises outlined in our July 2014 palm oil policy”.

Drawbacks Like any emerging technology, using drones in agriculture is not without its challenges. An article in The Wire in October lists a number of the challenges that the technology is facing: Outdoor use is weather dependent; Sunlight and cloud cover can make images vary; Limited internet access and cellular infrastructure in many oil palm regions make it harder to rely on cloud-based computer services; Small landowners in emerging economies will experience higher costs; Flight time/battery is limited; Maintenance costs and resources; Operators need to be skilled and trained; Government regulation is still uncertain on

many aspects of drone use and will need to be overcome before drones can be widely used.

Key players Some key players in drone production worldwide include DJI Technology, China’s largest marker of commercial drones; Trimble Ltd located in California USA, which was founded in 1978; PrecisionHawk headquartered in North Carolina, USA, which was founded in 2010; Parrot Group headquartered in France is a leader in consumer drones and owns a commercial drone subsidiary called senseFly which was founded in 2009 and develops “situationally aware systems”; Kespry, located in California, USA and founded in 2013; and 3D Robotics also located in California, USA and founded in 2009. Most drone producers are new companies responding to technological advances and demand for this technology for commercial use. As well as the drones themselves, companies are investing heavily in writing advanced software and computer programs to analyse the information obtained by UAVs. In March 2016, DJI Technology announced it was expanding its network of drones in order to increase their use in agricultural functions. It planned to train 10,000 people across China to operate the drones and, in addition, will set up around 100 after-sales service centres. The company launched its first farm drone in November 2015, the MG-1. Public relations officer of the company, Wang Fen, said specialised sales and after-sales service was required for this specific market. In particular, the company notes the use of farm drones for spraying pesticides. It says an agricultural drone can load 10kg of pesticides and spray an area of up to 4ha/hour, making it around 40 times more efficient than a human. According to DJI, there is huge potential for growth in China for agricultural drones. It reports that the penetration rate is only 3% in China, compared to 50% in the USA and Japan. PrecisionHawk launched a data analysis software platform called DataMapper in 2012, originally under the name PrecisionMapper. The software “automatically converts aerial data into georeferenced orthomosaics, features a library of on-demand analysis tools, and makes aerial data PHOTO: PRECISIONHAWK

What is the process?

FIGURE 1: TREE COUNTING ANALYSIS SOFTWARE

Drone use in practice The International Water Management Institute (IWMI) carried out trials in September 2015 in Sri Lanka using an eBee drone equipped with a nearinfrared sensor to detect plant stress, the Guardian reported. Head of IWMI’s GIS remote sensing and data unit, Salman Siddiqui, said near-infrared technology could detect plant stress 10 days before it was visible to the human eye. Stress, caused by water or fertiliser shortage or pest attack, caused a decrease in photosynthetic activity, the report said, which affects chlorophyll. Chlorophyll levels can be detected by near-infrared technology and utilising this on drones could

PLANT COUNTING ALLOWS FARMERS TO AUTOMATICALLY QUANTIFY THE SUCCESS OF A PLANTING ACCURATELY, REACT QUICKLY AND REPLANT IF NECESSARY

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PALM OIL

easy to share”, DataMapper says. The website also includes an AlgoMarket page, which was launched in June 2015, and displays available, compatible algorithms that are useful for various industries, including agriculture. These algorithms include a field uniformity tool, apps to measure plant height, canopy cover and green leaf index, and row based plant counting all built by PrecisionHawk. In 2015 the name was changed to DataMapper and the platform was opened to all drones (making it platform agnostic). In November 2016, PrecisionHawk announced the launch of its Plant Counting algorithm, which allows farmers to automatically quantify the success of a planting accurately, react quickly and replant if necessary. The company announced a partnership with DJI in May 2016 to launch what it calls the ‘Smarter Farming Package’. The package offers customers DJI’s hardware platform (as well as sensors and additional batteries), PrecisionHawk’s in-flight and infield analysis software, and access to its online DataMapper platform. OFI spoke to PrecisionHawk about the work the company does specifically in oil palm plantations. It says it is using its drone collection and accompanying analytics platform “for inventory management… as well as utilising its automated algorithms to count plants, assess overall health and measure individual tree crowns”. PrecisionHawk mentions the “unique mapping perspectives” that can be obtained by drones. Traditional methods of mapping plantations from an aerial view include satellites and helicopters, but

satellite imagery is often out-dated and obtaining aerial photography via helicopter is expensive. Drones offer an answer to both of these problems, being inexpensive and providing real-time data. In addition to plantation management for tree health and productivity, the company says drones “add a new layer of security for large plantations by providing a perspective that may otherwise be inaccessible”. In August 2016, it became the first US company to be given permission to fly its unmanned aerial vehicles beyond the visual line of sight in US airspace, TechCrunch reports.

Future of the technology In a report published in July 2015 on phys.org, Dr Juan Enciso, a research engineer at AgriLife reiterated that drones would soon play a major role in the challenges faced by the need to improve food crop productivity. He said drones could help an agricultural producer to “effectively manage his crops, improve yields and optimise resources, especially water”. Through the data collected by a drone, a grower could “make decisions about when and where to perform farming practices, like irrigating, fertilising or using insecticides”, he continued. Drone-collected data is an efficient form of detecting stresses in plants. In addition to the current technology, phys.org reported that additional sensors were being evaluated for use on drones including ultrasound sensors to measure plant height, infrared thermometers to measure

The Industry’s Number 1 Choice

plant and soil temperatures, hyper-spectral sensors to measure relative leaf water content and normalised difference vegetation index (NDVI) which can establish how well a plant canopy is performing photosynthesis. Although at the time of writing, Enciso said work still needed to be done to identify which sensors would be the most useful, and if any could be combined to make them light enough to be carried on a drone. Finally, economic assessments would take place to determine “exactly how much cheaper it is to fly over a crop than to do it on a tractor”. The agricultural drone market is estimated to be worth between US$3,770M and US$4,209.2M by 2024. Research and Markets reported last June, that the market would be worth US$4,209.2M by 2022, and a report published by Grand View Research on 25 October 2016 said the market was expected to reach US$3,770M by 2024. Grand View Research said increasing technological enhancements in equipment and for enhancing the quality of farming techniques have led to a sharp rise in drone use in agriculture. In addition, market growth will be positively impacted by an increase in automating the agricultural process due to a labour crisis caused by a decline in skilled labour and an aging population of farmers. Although at the moment the major application for agricultural drones is field mapping, Research and Markets said that the market for drones for crop spraying is expected to grow at the highest rate between now and 2022. Rose Hales is OFI’s editorial assistant

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of the two. First the kernels are crushed into small pieces (grinding) in order to increase the surface area, which facilitates flaking. The next process is determined by whether the mechanical or the solvent method is being used. For mechanical processing, the small pieces are two-stage screw-pressed to release the crude oil. The pressed oil is then filtered, removing any solid impurities. This process yields 45-47% oil. Figure 1 (below) shows the process of mechanical extraction of palm kernel oil. For the solvent process, the small ground pieces are saturated with a solvent called hexane, which draws out the oil. The oil then has to be filtered, distilled and stripped to remove any traces of the hexane. The process yields 47-49% oil.

History of palm kernel oil production

Two oils can be extracted from the oil palm – palm oil and palm kernel oil (PKO). Rose Hales looks at the composition of PKO, extraction methods, production and sustainability

he fruit of the oil palm produces two oils, palm oil – extracted from the mesocarp or fruit flesh, and palm kernel oil (PKO) – which is the white fat found in the seed of the oil palm. Oil World estimated annual production of palm oil to be 60.7M tonnes in the 2014/15 season, whereas the production of PKO in the same period was estimated to be 6.7M tonnes. Oil palms grow primarily in west Africa and south-east Asia in countries including Malaysia, Indonesia, Thailand, Nigeria and Cameroon. The most commonly grown variety is the tenera hybrid, which yields around four tonnes/ha of palm oil, 0.5 tonnes/ha of palm kernel oil and 0.6 tonnes/ha of palm kernel cake, figures in Palm Oil World say. According to the World Bank, the price per tonne of PKO from Malaysia in October 2016 averaged US$1,300. This compares to US$712/tonne for Malaysian palm oil in the same month.

Processing Unlike palm fruit oil, palm kernels do not need to be processed immediately as the oil does not deteriorate in quality quickly. As the kernels themselves are very hard, they can be moved and stored without risk to the quality. According to FEDIOL, palm kernel oil is still usually extracted in the country of origin. Initially, fresh fruits are steam sterilised and then run through machines that separate the fruit from the nuts. These nuts or kernels can then be further processed.

According to the Malaysian Oil Scientists’ and Technologists’ Association (MOSTA)’s Palm Fruit Oil handbook, prior to the 1960s, palm kernels were most often exported for oil extraction – mostly to Europe. When oil palm planting began to increase rapidly in the 1970s, palm kernels naturally became far more abundant and subsequently local palm kernel crushing capacity was expanded. In some cases, coconut oil extraction plants switched to process palm kernels instead. MOSTA reports that, at its peak, there were over 100 palm kernel crushing plants in operation, each able to crush between 30 and 500 tonnes/day of palm kernels. More recently, the industry has consolidated and there are around 45 plants crushing about 7M tonnes/year of palm kernels. Crushing plants themselves have evolved since the 1970s. Traditionally, most employed all the kernel pre-treatment steps (grinding, flaking, rolling, cooking) using imported extraction equipment and screw-press worms of up to three metres in length. However, since the 1980s, the crushing process is more often a two-stage direct extraction after grinding, and screw-presses are mostly locally made with short worms of around one metre. PKO extraction can be carried out using either a mechanical or a solvent process, or a mixture TABLE 1: FATTY ACID CONTENT IN PKO Type of fatty acid

FIGURE 1: MECHANICAL EXTRACTION OF PKO

48.2

Myristic C14

16.2

Palmitic C16

8.4

Capric C10

3.4

Caprylic C8

3.3 15.3

Linoleic C18 (polyunsaturated fatty acid)

2.3

Others

0.4

SIZE REDUCTION

FLAKING

STEAM CONDITIONING SCREW-PRESSING COARSE SCREEN FILTER FILTER PRESS

2.5

Oleic C18 (monounsaturated fatty acid)

C CLEANING

Lauric C12

Stearic C18 (saturated fatty acid)

The oil content of the palm kernel is around 50%. Palm kernel oil is a lauric oil, more comparable to coconut oil than palm oil. It solidifies between 20OC and 24OC and contains 80% saturated fats. It also contains a high amount of Vitamin K. Table 1 (below, left) shows the chemical composition of palm kernel fat, which is markedly different from palm oil. According to FEDIOL, PKO’s main uses are in oleochemicals (soaps, cosmetics, plastics) and for human consumption. It is commonly used as a component fat in the production of margarine and, because it has a sharp melting point, it can be used as a cocoa butter substitute in confectionery products. In addition, it is used in coffee whitener, filled milk, biscuit cream and coating fats. Its use is also growing in the production on non-hydrogenated trans fat free margarine, Oil Palm India says. PKO can be fractionated for additional uses, a process that heats and then cools the fat to split it into a liquid and a solid called palm kernel olein and palm kernel stearin (or fractionated palm kernel SOURCE: FOOD AND AGRICULTURE ORGANIZATION

Splitting the kernel

Make-up of PKO

EXPELLER

PALM KERNEL OIL

STORAGE

LINE A IS FOR DIRECT SCREW-PRESSING WITHOUT KERNEL PRE-TREATMENT. LINE B IS FOR PARTIAL KERNEL PRE-TREATMENT FOLLOWED BY SCREW-PRESSING. LINE C IS FOR COMPLETE PRE-TREATMENT FOLLOWED BY SCREW PRESSING

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TABLE 2: TOP PALM KERNEL PRODUCERS JAN-DEC 2015 Country Mature area 1,000ha Yields tonnes/ha Crop*

Imports*

Exports*

TABLE 3: PKO 14/15 (1,000 TONNES) Country Production Imports Exports

Crushings*

Indonesia

8,550

0.94

8,000

7,940

Indonesia

3,484.4

0.6

1,830.0

Malaysia

4,755

1.05

5,000

Malaysia

2,276

310.0

1,140.0

Thailand

750

0.59

443

11.5

395.0

Thailand

167.9

88.0

75.0

Nigeria

450

0.53

240

244.3

Nigeria

112.4

0.3

4.0

Cameroon

138

N/A

0.7

56.3

25.3

2.7

Cameroon

SOURCE: OIL WORLD

LAU RIC OILS

TABLE 4: WORLD PKO SUPPLY AND DISTRIBUTION (M TONNES) 2011/12 2012/13 2013/14 6.16

6.63

7.03

7.26

7.28

2.54

2.78

2.42

2.63

2.56

Exports

2.84

3.26

2.88

3.24

3.08

Consumption

5.73

6.22

6.56

6.77

6.87

0.92

0.85

0.86

0.74

0.63

Ending stocks

recertification. Consultancy firm Aidenvironment, called the decision “premature”. Following IOI’s suspension, consumer good giants including Unilever, Kellogg, Cargill, Mars and Nestle cut supplies from IOI, and it was unclear if any would return.

2015/16**

Imports

* PRELIMINARY

2014/15*

Production

The future of sustainable PKO

**PREDICTED

oil). Modern processes use semi-continuous chilling and automatic high-pressure membrane filtration to separate the fractions. Stearin is used mostly in energy bars and sweets, or chocolate to prevent a coating from melting.

Production and trading

FIGURE 2: GREENPALM PALM KERNEL OIL MARKET TRADES, VOLUME AND PRICES

Sustainability

40K

30K

20K

10K

JAN

FEB

MAR

2011 VOLUMES 2011 VOLUMES

APR

MAY

2012 VOLUMES 2012 VOLUMES

JUN

JUL

AUG

SEP

OCT

NOV

MONTHS 2013 VOLUMES 2014 VOLUMES 2013 VOLUMES 2014 VOLUMES

DEC

JAN

2015 VOLUMES 2015 VOLUMES

FEB

MAR

2016 VOLUMES 2016 VOLUMES

FIGURE 3: GREENPALM PALM OIL/PALM KERNEL OIL ANNUAL CERTIFICATE SALES 3,824,943

ANNUAL CERTIFICATE SALES

Like palm oil, palm kernel oil is subject to sustainability challenges and demands, especially from western consumers. Certification trader GreenPalm provides a sustainability verification solution for PKO. Product manufacturers and retailers purchase GreenPalm certificates from Roundtable on Sustainable Palm Oil (RSPO) certified oil palm growers for each tonne of palm kernel oil they use – one tonne is equal to one GreenPalm certificate (in the Book and Claim system). Figure 2 (right) shows the number of GreenPalm certificates for PKO sold each month as well as the average price for each certificate. Although prices and certificate volumes have fluctuated in the last five years, 2015 was a record year for sustainable palm kernel oil. However, 2016 saw the PKO market in crisis, with two large producers of palm oil and PKO losing their RSPO certification earlier in the year. GreenPalm showed 2016 sales significantly down from previous years, see Figure 3 (right). Malaysia’s IOI Group’s certification was suspended by the RSPO last April due to alleged

In July 2016, the RSPO announced that it would not be endorsing GreenPalm’s certificate/credit trading supply chain from 1 January 2017. On 30 August it announced that instead, the Book and Claim supply chain model would be supported by the trade of RSPO credits (see News, OFI September/October 2016 for further information on the announcement and change). With a continued focus and demand for companies to supply sustainable products to the marketplace, it looks like the future of sustainable PKO is assured. The RSPO’s new credit scheme began on 1 January, so it remains to be seen how it will cope with any sustainability challenges or suspensions, which limit available volumes of sustainable PKO. Rose Hales is OFI’s editorial assistant

CERTIFICATE PRICES, US$

Indonesia and Malaysia are the top producers of palm kernel oil. Table 2 (above) shows the palm kernel yield for the top five producing countries, and Table 3 (above) shows the palm kernel oil production for the same five countries. Malaysian palm kernel oil production has risen sharply in recent years, climbing from 1.3M tonnes in 1999 to 4.7M tonnes in 2011, Palm Oil World figures say. Exports from Malaysia reached 1.17M tonnes in 2011. Table 4 (above) shows the world supply and distribution of PKO. Both production and consumption have increased by more than 1M tonnes between the 2011/12 season and the 2015/16 season.

deforestation, misconduct and non-compliance with RSPO principles. In addition, another palm oil giant Felda Group requested the withdrawal of its RSPO certification in the 58 mills in Malaysia due to supply chain issues. According to GreenPalm, the two producers were responsible for producing around 21% (639,000 tonnes) of the total available volume (3.07M tonnes) of RSPO-certified sustainable palm kernels. In August last year, IOI regained the right to sell certified sustainable palm and palm kernel oil, under the RSPO brand. RSPO cited IOI’s “good progress” towards resolving the issues and an action plan submitted by IOI as the reason for its quick

CERTIFICATE VOLUMES

SOURCE: USDA

* 1,000 TONNES

3,481,309 2,873,968

1,929,181

1,894,840

925,088

3,416,287

7,972 2008

252,449 2009

2010

2011

2012

2013

2014

2015

2016

YEARS PALM OIL

PALM KERNEL OIL

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LAU RIC OILS

Processing coconut oil The high content of mediumchain fatty acids in coconut oil makes it a unique ‘fat-burning’ functional oil, according to S. P. Kochhar, who looks at how processing can give coconut oil a longer shelf-life and better health aspects

oconut oil is derived from copra, which is the dried kernel or ‘meat’ of coconut. Coconuts are fruit of the coconut palm (Cocos nucifera L), which is cultivated in tropical coastal areas. The usual tall variety of coconut tree reaches a height of over 30m. Typically, fresh coconut kernel contains (by % of weight), moisture (50%), oil (34%), carbohydrate (7.3%), protein (3.5%), fibre (3.0%) and ash (2.2%) (Canapi et al 2005). World production of coconut oil (CNO) or copra oil is about 3.4M tonnes, about half

of which is traded internationally. The main producing countries are India, Indonesia, Papua New Guinea, the Philippines, Solomon Islands, Sri Lanka, Thailand and West Malaysia. The Philippines and Indonesia are major exporters, while the EU countries and USA are major importers. CNO is a lauric oil (about 50% lauric acid) similar in composition to palm kernel and babassu oils. In addition to triacylglycerols and free fatty acids, crude CNO also contains 0.51.5% unsaponifiable matter (Codex, 2009). This material consists mainly of sterols, tocopherols, squalene, pigments and odour compounds (such as lactones). The pleasant odour and taste of CNO when extracted from fresh material is mainly due to ϒ- and δ-lactones, present in trace amounts. ϒ-Valerolactone is considered to be responsible for the characteristic taste of coconut oil.

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LAU RIC OILS

TABLE 1: QUALITY CRITERIA LIMITS FOR REFINED COCONUT OIL (CNO) AND VIRGIN COCONUT OIL (VCNO) Parameter CNO VCNO Moisture (% weight) Refractive index (40 C) O

Insoluble material (% weight) Unsaponifiable matter (% weight)

0.1 max

0.2 max

1.448-1.450

1.448-1.449

0.05

≤ 0.15

0.2-0.5

Acid value (% lauric acid)

0.1 max

0.2 max

Peroxide value (meq O2 /kg)

1.0 max

1.5 max

Induction period (hrs) at 100OC

123-132

200-232

Trans fatty acids (% weight)

0.5 max

0-0.1 max

Copper (Cu)

0.1 max

0.4 max

Iron (Fe)

1.5 max

5.0 max

Trace metals (mg/kg)

Note: Induction period indicates oxidative stability of the oil, which provides the likely oil shelf life SOURCE: IBRAHIM (2011); KOCHHAR (2016); APCC (ASIAN AND PACIFIC COCONUT COMMUNITY STANDARDS FOR VCNO)

Production and processing Coconut oil is generally classified into two categories: virgin coconut oil and refined, bleached and deodorised (RBD) coconut oil. Both types are referred to as pure coconut oil, and the main difference is in the production and refining process. REFINED COCONUT OIL The first step in CNO production is dehulling, which involves cracking the shell to take out the meat or kernel. The kernel contains about 50% moisture, and it is dried to a moisture content of 6-8% before oil extraction. This can be achieved by drying the kernel under the sun, with direct heat or through the use of hot air. The dried kernel, known as copra, has an oil content of about 64%. Usually, the oil is extracted from the copra by pressing in screw presses (expellers), followed by solvent extraction to recover the residual oil from the cake. The crude CNO is then refined by traditional chemical or physical refining steps to remove impurities. making it suitable for human consumption and better prolonged shelf life. In traditional physical refining, the crude oil is first treated with 0.05-0.1% aqueous phosphoric acid or a mixture of citric and phosphoric acid (plus a small amount of natural antioxidant, namely ϒ-tocopherol 50mg/kg, as a processing aid to enhance shelf life) to remove phospholipids and heated to 80-90OC for 20-30 minutes. The pre-treated oil is then bleached with a mixture of bleaching earth and activated carbon (10:1 ratio) at 90-95OC for 20-30 minutes and finally de-acidified/steam deodorised at 220240OC under vacuum for about one hour. Due to the removal of desirable odour components in the last stage of refining, the RBD coconut oil possess little or no ‘typical’ pleasant coconut odour and taste. VIRGIN COCONUT OIL Virgin coconut oil (VCNO) is extracted from fresh coconut milk obtained from the mature kernel of a coconut by mechanical means with or without heat application. Generally, the following steps are used to produce quality grade VCNO:

De-husking of coconuts; de-shelling; removal of brown testa; blanching; draining; grinding; grinded ‘meat’; press; coconut milk; centrifugation; separators (2 or 3); oil (28-30OC); heat exchanger; vacuum drying; and filter. Coconut milk is a natural oil-in-water emulsion. The oil separated by centrifugation is filtered to remove any solids present. The residue, flake/ defatted desiccated coconut is dried and is often used as flour. Virgin coconut oil processed without any refining or deodorisation is colourless and has natural fresh coconut aroma and taste. VCNO is gaining popularity worldwide; the oxidative stability (shelf life) as well as health benefits of virgin coconut oil is better than that of RBD coconut oil – mainly due to its comparatively higher contents of tocopherols, polyphenols and other bio-active compounds. Since VCNO and CNO come from the same source (coconut kernel or ‘meat’), differing only in the way they are processed, the major characteristics of the two oils are very similar. Quality criteria limits for RBD coconut oil and virgin coconut oil are presented in Table 1 (above). Some physical characteristics, typical fatty acid composition and Codex ranges of coconut oil are shown in Table 2 (right). It can be seen that CNO contains about 92% saturated fatty acids; this makes the crude oil very stable against oxidation. However, RBD oil has less oxidative stability compared to the crude oil due to some losses in natural antioxidants (tocopherols) during the refining process. The crude oil also contains, apart from unsaponifiable components, small amounts of protein, crude fibre and trace metals such as iron, lead and copper. Most of these undesirable materials are removed during the refining, bleaching and deodorisation process. By applying modern technologies and refining under optimal conditions, the losses in contents of desirable minor components such sterols and tocopherols are minimised to 10 to 15% of their respective original amounts present in crude oil. The shelf life (oxidative stability) of the refined oil can be improved considerably by dosing with citric

acid solution (as a chelating agent of any residual pro-oxidant trace metals) during the cooling stage of deodorisation. Sterols composition (% of total) and Codex ranges of coconut oil are presented in Table 3 (right). It can be seen that total sterols amount to about 800 mg/ kg of oil and the major ones present are β-sitosterol (about 47%) and ∆5-avenasterol (about 27%). On comparison with palm kernel oil, coconut oil contains less β-sitosterol and more ∆5-avenasterol. The ratio of β-sitosterol to ∆5-avenasterol is about 1.8 in coconut oil and about 11.6 in palm kernel oil. The determination of this ratio will add extra support to assess any adulteration of palm kernel oil into pure refined coconut oil or virgin coconut oil, which is analysed by fatty acid composition data alone. The total tocopherols content of coconut oil vary from trace to 50 mg/kg, and Codex ranges of individual tocopherols content (mg/kg) are reported: α-tocopherol (nd-17), β-tocopherol (nd11 ), ϒ-tocopherol (nd-14 ), α-tocotrienol (nd-44) and ϒ-tocotrienol (nd-1; nd = not detected). Fatty acids with 8 to 12 carbon atoms are classified as medium-chain fatty acids (MCFAs). The sum of MCFAs in coconut oil is about 62%, which makes the oil the richest source of MCFAs among vegetable oils. In spite of being highly saturated, the oil has a relatively low melting point since it contains mainly short- and medium-chain fatty acids. Therefore, coconut oil can be used without any modification in a vast variety of food products.

Uses in food and oleochemicals Coconut oil, which has a high quality image, is used for a vast variety of food products but its nonfood, oleochemical use is also very large. Coconut oil is commonly used as a frying medium (mainly shallow frying for domestic purpose, but also on small scale deep-frying e.g. frying banana chips in South India) in tropical countries, especially in the Philippines and India. However, it is not suitable for industrial frying due to the liberation of quite volatile medium-chain fatty acids, which causes excessive smoke development. Coconut oil is very popular for use in personal care products. It is interesting to note that the products (medium-chain triglycerides [MCTs]) made from glycerol and coconut fatty acids (caprylic C8:0 and capric C10:0) are easily absorbed in the digestive tract (List, 2016). Therefore, MCTs are used as an immediate energy source in the body, avoiding being stored in adipose tissue and are thus useful ingredients in sports foods, infant foods and in clinical nutrition applications. There are also many commercial products that use lauric acid and monolaurin as antimicrobial agents.

Health aspects Coconut oil is high in lauric acid (45-50%) and a rich source of MCTs. Many of the health claims of CN0 correspond to these unique property contents. Studies conducted on people living on Pacific Islands, where coconut oil constituted 30-60% of calories, have shown nearly non-existent rates of cardiovascular disease, and the inhabitants are healthy and trim. Several positive health benefits of coconut oil are reported to include heart health, promotion of weight loss, better immune system health, healthy

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L AUR I C OI L S

TABLE 2: SOME CHARACTERISTICS, FATTY ACID COMPOSITION AND CODEX RANGES OF CNO Parameter

Mean

Iodine value

Range

Codex 2009

8.5

6.3-10.8

6.3-10.6

24.1

23.0-25.0

C6:0

0.4

0-0.6

nd-0.7

C8:0

7.3

4.6-9.4

4.6-10.0

C10:0

6.6

5.5-7.8

5.0-8.0

C12:0

47.8

45.1-50.3

45.1-53.2

C14:0

18.1

16.8-20.6

16.8-21.0

C16:0

8.9

7.7-10.6

7.5-10.2

C18:0

2.7

2.5-3.5

2.0-4.0

C18:1

6.4

5.4-8.1

5.0-10.0

C18:2

1.6

1.0-2.1

1.0-2.5

C18:3

nd-0.2

C20:0

0.1

0-0.2

nd-0.2

Slip melting point ( C) O

Fatty acid (% weight)

TABLE 3: STEROLS COMPOSITION (% OF TOTAL) AND CODEX RANGES OF CNO Mean

Range

Codex

Cholesterol

1.7

0.6-3.0

nd-3.0

Brassicasterol

0.5

nd-0.09

nd-0.3

Campesterol

8.7

7.5-10.2

6.0-11.2

Stigmasterol

12.5

11.4-13.7

11.4-15.6

β-Sitosterol

46.7

42.0-52.7

32.6-50.7

∆ -Avenasterol

26.6

20.4-35.7

20.0-40.7

∆ -Stigmastenol

2.4

nd-3.0

∆ -Avenasterol

1.1

0.6-3.0

nd-3.0

Others

1.1

nd-3.6

Total (mg/kg)

807

470-1,110

400-1,200

5 7 7

SOURCE: IBRAHIM (2011); CODEX ALIMENTARIUS (2009). KEY: ND = NOT DETECTED

skin and thyroid function. Recently, Dayrit (2015) has reviewed in depth the mechanistic support for various beneficial effects of coconut oil. The positive supplementation effects of consuming VCNO on quality of life among breast cancer patients have been reported (Law et al, 2014). From animal studies, it has been reported that CNO supplementation reduces the blood pressure and oxidative stress in spontaneously hypertensive rats (Bendeira-Alves et al, 2014). In the body, the lauric acid containing MCTs are converted into monolaurin, which reportedly has antiviral, antibacterial, and antiprotoza properties. It is claimed this monoglyceride is capable of destroying lipid-coated viruses such as HIV, herpes, measles, pathogenic bacteria, and giardia lamblila protozoa (List, 2016). Moreover, lauric acid has also been reported to have a more favourable effect on lowering HDL cholesterol ratio than other higher chain saturated fatty acids (Mensink et al, 2003). Coconut oil containing about two-thirds mediumchain fatty acids can permeate cell membranes easily. In other words, they are easily digested and sent directly to the liver where they are converted to energy rather than stored as fat. This is why CNO is sometimes reported as being a ‘fat-burning’ health beneficial oil, which should be taken as a part of balanced diet and active lifestyle. This feature was written by S P Kochhar, Speciality Oils, Antioxidants and Functional Lipids Consultant, Reading, UK. For references, please go to www.ofimagazine.com/processingcoconutoil

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S H IPPIN G & STORAGE

PHOTO: STOLT-NIELSEN

profitability. The company has adopted various strategies to ensure its continuing success, including acquisitions, unique selling points and a drive towards information technology.

Stolt-Nielsen Limited (SNL)

THE STOLT GROENLAND, WHICH IS AN OIL/CHEMICAL TANKER

Stolt-Nielsen: bucking the trend Stolt-Nielsen Limited is an international transportation, distribution and storage provider for speciality liquid chemicals and bulk liquids including vegetable oil. Rose Hales looks at what the company is doing to continue its fi i l s ess i the e di fi lt r et diti s

All analyses are performed using state-of-the-art instruments and technology to ensure the lowest detection limits.

he global economy and world trade is still facing volatility and an uncertain future. Companies need to adapt and reassess in order to succeed and remain profitable. A company within the transportation sector that is doing just that is Stolt-Nielsen, an international transportation, distribution and storage provider for speciality liquid chemicals and other bulk liquid products including vegetable oil. Its three largest operating units are Stolt Tankers, Stolthaven Terminals and Stolt Tank Containers. Regardless of difficult circumstances, Stolt Tankers reported its best year since the financial crisis in 2015, bucking the trend for bankruptcy and low

SNL was founded in 1959 by Jacob Stolt-Nielsen and was originally called Parcel Tankers Inc, with a single chartered ship – the Stolt Avance. By 1963 it had opened offices in New York, Japan and Oslo and had 18 ships. The company opened its first storage terminal in 1971. Since this point, it has grown to a global distribution and shipping giant and reported a net profit of US$133.1M in 2015, up from US$78.1M in 2014. For its three main operating units – Stolt Tankers, Stolthaven Terminals and Stolt Tank Containers – SNL reported operating profit of US$122.2M for Stolt Tankers in 2015, US$38.9M for Stolthaven Terminals, and US$63.3M for Stolt Tank Containers. Stolt Tankers was responsible for most of the company’s increase in net profit, as operating profit in this unit increased by US$86.9M between 2014 and 2015. SNL attributed this performance mainly to lower bunker fuel costs.

Stolt Tankers Stolt Tankers has a fleet of deep sea, regional, coastal and inland parcel tankers specialising in the transportation of chemicals and bulk liquids. The company said it can safely handle virtually any liquid cargo, including speciality chemicals, petrochemicals, commodity chemicals, oleochemicals, vegetable oil, biofuels, clean petroleum products and lubricating oils and acids. In its end of year business review for 2015, Stolt Tankers reported that 2015 was its best year since the financial crisis in 2008. On average, the company transports 20M tonnes of cargo/year. Around 30% of seaborne chemical tanker trade is comprised of vegetable oil, meaning that an estimate of up to 6M tonnes of Stolt Tankers’ cargo would be vegetable oil. In 2015, Stolt Tankers transported its cargo using 60 deep sea parcel tankers, 84 coastal and inland tankers. It also reported that it had 10 newbuildings under construction due for delivery in 2016 and 2017. Six were 38,000dwt parcel tankers from China, and the other four were 12,500dwt

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OLEOTRADING SA ESTABLISHED SINCE 1959

SUPPLIERS OF Oilseeds, Oils and Fats, Lecithins, Margarines, Dairy Products, Confectioneries Worldwide activity 16, Chemin de la Fraidieu 1223 Cologny, Geneva, Switzerland Tel : +41 22 786 44 22 Fax : +41 22 786 58 20 Email : oleotrading@oleotrading.com 29 OFI â&#x20AC;&#x201C; JANUARY 2017 www.ofimagazine.com

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S H IPPIN G & STORAGE

chemical tankers from Japan. In 2015, Stolt Tankers implemented a reorganisation process which aims to address “the changing dynamics of the bulk liquid transportation market it serves”, the company says. It recognised the negative and difficult outlook for world trade, characterised by its volatility and uncertainty. Stolt Tankers president, Mark Martecchini says that “managing smarter” is “more important than ever”. “When the global economy is strong, when the world’s factories are humming, that’s when the demand for chemicals is strongest, and that’s when demand for our tankers is greatest”, Martecchini says. Since the financial crisis in 2008, the world economy is not strong and demand is weak. However, the company reports that since 2008, when other competitors in the shipping

and transportation industry have struggled, Stolt Tankers acquired 39 new ships – made up of 14 newbuildings, 10 previously chartered ships acquired through purchase options, and 15 highquality second-hand ships. Unfortunately, those that hoped that the downturn would quickly bounce back and business would resume as before were disappointed and the current market became the new reality – requiring a completely different recalibration and strategy. Stolt Tankers announced a reorganisation in late 2014 that reflected this new reality. It employed four key strategies: optimising fleet deployment and development; reducing costs and increasing efficiency and improving service to customers; delivering top performance; and finally a focus on safety. It cites its tank cleaning expertise as a USP that

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sets it apart from its competition. Efficient and excellent cleaning “means we can go from any cargo to any cargo”, Martecchini says. The company says it benefits from an unrivalled product-information and cleaning database. Through accumulated operational experience, it says it can handle and clean even difficult cargoes quickly.

Stolt Tank Containers (STC) As of 2014, Stolt Tankers transported around 20M tonnes of cargo per year. This was using 58 deep sea tankers, 93 coaster and inland tankers, with six newbuildings expected to be delivered by 2017. The operating unit also deals with transportation services for bulk liquid chemicals and food grade products. In 2015, it had a fleet of more than 35,000 tank containers and 19 owned and jointventure maintenance and repair depots. In 2015, it made 116,720 shipments. Stolthaven Terminals provides storage services, including storage of edible oils and biofuels. In 2014, the unit had 4.1M m2 storage capacity with an additional 648,000m2 under construction. Stolt said that its terminals are located in strategic chemical tanker hub locations and, in 2014, included six wholly-owned terminals, 10 consolidated majorityowned terminals and four joint ventures. In 2015, according to Stolt-Nielsen’s 2015 Business Review, the chemical fleet of STC increased by 500 tanks, and the food-grade fleet added 525 tanks with an additional 500 in the pipeline. The company reported that food-grade shipments outperformed in 2015, growing by 8%.

Stolthaven Terminals Stolthaven Terminals had an overall storage capacity of 4.5M m2 at the end of 2015, rising from 4.4M m2 in 2014, across 20 terminals. Stolthaven’s most frequented port is Houston, averaging 150 calls/year. The main products that move through the port are chemicals, vegetable oils and petroleum products. The port is located in the Houston ship channel with direct access to major roads. Customers include Cargill, Dow, SK chemicals and BASF. The terminal has 162 tanks with a capacity of more than 502,000m2, as well as 94 dock lines, five truck loading racks, 12 bays, four rail loading racks with 68 spots, and one jetty, two ship berths and one barge berth. In recent years, Stolthaven added 103,300m2 of new storage to the terminal, and at the end of 2015 it completed an expansion of the barge dock so that it could accommodate two barges simultaneously. In its financial review at the end of 2015, SN said it was finalising plans for a new ship dock, which would enable the terminal to handle three ships at once.

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Stolt Tankers says it “was an early adopter of IT across multiple business function, from operations to HR”. It acknowledges that “information technology is increasingly critical to our business – and our ability to compete successfully and more efficiently”. Stolt Tank Containers launched the online tool mySTCtanks.com in 2014; it allows customers to manage their tanks, reduce costs and drive

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S H IPPIN G & STORAGE

supply-chain improvements, STC says. The system’s analytics give customers insights that will allow them to manage their shipments better, STC says. The focus on this online system “translates to both customer retention and competitive advantage” STC says. In 2015, STC gained more users to its online tool and the company introduced further enhancements and more communication devices to the social media platform. In 2015, Stolt’s depot network launched CONTERM, which gives the company visibility on the tanks and enhanced communication capabilities on the status of the tanks.

Jo Tankers acquisition In July 2016, Stolt-Nielsen announced that it had agreed to acquire the chemical tanker operations of Jo Tankers, a leading provider of deep-sea transport for the chemicals and edible oils industry. The acquisition was dependent on competition authority approval, which Stolt initially said was expected by September 2016. However, in October, it said the decision had been delayed until the end of 2016 as permits from Germany, Holland and South Africa needed to be received. Global Newswire reported on 16 November 2016 that competition authorities had given the acquisition unconditional approval, and on 23 November 2016, Stolt-Nielsen announced the acquisition of Jo Tankers had been completed. The transaction comprises 13 chemical tankers and a 50% share in a joint venture with eight chemical tanker newbuildings. The total purchase price was approximately US$575M, including the proportional share of the newbuildings joint venture. The 13 chemical tankers consist of eight all stainless steel ships, ranging from 19,000-38,000 deadweight tonnage (dwt), and five ships with a combination of stainless steel coated tanks all approximately 37,000dwt. Six of the 13 ships have been on a time charter to Stolt Tankers for the last five years. The newbuildings consist of eight stainless steel eco-friendly ships of 33,000dwt, which are currently on order from New Times Shipbuilding in China. Bunker Ports News Worldwide said in July that it anticipated Stolt-Nielsen’s revenues to increase by around 10% in the longer term. It highlighted the reasons that the acquisition will be a strengthening move for SNL. Firstly it saw the market conditions as being favourable with an increase in chemicals demand in particular in China, the world’s largest chemicals importer. The company is a market leader in chemical transportation and following the acquisition of Jo Tankers, it would hold around 13% of the total market share. It was also reported by Global Newswire in November 2016 that: “the acquired ships would satisfy the tonnage-replacement needs of the Stolt Tankers’ fleet for the next several years and add new trade routes that enhance the company’s global service capabilities”.

Chemical tanker shipping market

that RadiantInsights estimates will be worth US$2.23tr by 2020, it said in February 2016. Global chemical tanker shipments were also estimated to reach 268.42M tonnes by 2020, an increase from 200.10M tonnes in 2013. In addition, the report found that growing vegetable and animal oil and fat production, particularly in Asia Pacific is expected to remain a key driving factor in IMO II being the largest type of cargo used for chemical shipments, which accounted for 50.4% of market share in 2013. Global shipping consultancy Drewry’s November Chemical Forecaster had less positive predictions for the chemical shipping market. A report in Hellenic Shipping News covering the forecast says softening seaborne trade and rising fleet growth are expected to depress chemical shipping freight rates over the next few year. The forecast references a fall

in demand from China due to a surge in domestic production. In addition, plant shutdowns in the Middle East and intense competition between operators is putting pressure on freight rates, the forecast says. In October last year, SNL announced a drop in net profits during Q3, with net profit down to US$22.2M compared to US$37.8M in Q2. Chief executive officer, Niels G Stolt-Nielsen said results were held down due to weak summer demand, cutbacks in Chinese production and a reduction in transportation volumes. He also said that forecasting for the remainder of 2016 and 2017 would be difficult, “weak return volumes from China and the Far East are likely to continue” he said, although the decline in rates and the margin squeeze “will soon bottom out”. Rose Hales is OFI’s editorial assistant

Your storage partner

Vopak Vlaardingen is a subsidiary of Royal Vopak, the world’s leading independent liquid bulk tank storage provider. Offering a total storage capacity of around 600,000 cbm, Vopak Vlaardingen operates the largest terminal dedicated to vegetable oils and fats, biodiesel, oleochemicals and base oils in the Port of Rotterdam. Our customers expect the highest level of service and look at us as their partner in new requirements of product handling. We can offer dedicated infrastructure for loading and discharging vessels, barges, rail and road tank cars. Discover more at www.vopak.com or contact us by sales.vlaardingen@vopak.com

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OLEOC H EM IC ALS

Extending oleochemistry Bio propylene glycol is a highquality and versatile product that provides a new outlet for glycerine and offers cost and environmental advantages to oleochemical producers. Its production is commercially proven, safe and highly reliable, with a ‘green bonus’ over traditional propylene glycol, Air Liquide explains

ver-supply of glycerine, a byproduct of biodiesel and fatty acid processes, has resulted in a glut in the market and limited outlets for its use, with falling prices rendering it a low-priced commodity product. Conventional propylene glycol (PG – or 1,2-Propanediol) provides a high value-added downstream product for abundant low-cost glycerine. In the course of last year, the average price for one tonne of glycerine was US$200-250/ tonne while the price of PG was US$1,100-1,500 per tonne. Now, Air Liquide has combined its expertise with commercially-proven licensed BASF technology to develop and bring to market an alternative to conventional PG. Air Liquide’s Bio PG is a new outlet for glycerine. It is a bulk chemical in a fast growing market and offers multiple benefits to producers. Market sources indicate demand of 2.2M tonnes per annum in 2014 and a growth rate of 4.5% until 2020.

FIGURE 1: APPLICATIONS OF PG

Why bio propylene glycol? Bio PG, like petroleum-based PG, has applications in many different industries (see Figure 1, below). FIGURE 2: CONVENTIONAL VERSUS BIO PROCESS

FIGURE 3: BIO PROPYLENE GLYCOL PROCESS FLOW DIAGRAM

It is a feedstock for polyester resins and urethanes, is used in functional fluids such as aircraft deicing and in automotive anti-freeze, and acts as a preservative in food and beverage processing, and a solvent and active ingredient in pharmaceutical and cosmetics applications. A COMPETITIVE DROP-IN FOR THE CONVENTIONAL PG MARKET Bio PG retains the product characteristics and qualities of petroleum-based PG, as an odourless, tasteless, clear liquid that is typically produced to a technical grade of more than 99.5% purity. Pharma grade PG is possible to produce depending on feedstock quality. Users making the transition to Bio PG therefore need have no concerns about its impact on their existing customers or applications. It can simply replace existing uses, providing better product quality and characteristics but at a much more attractive price. SAFE AND FLEXIBLE PRODUCTION PROCESS Bio PG production involves less risk than traditional PG processes. There is no handling of hazardous chemicals, and none of the explosion risk inherent in the use of propylene oxide. The avoidance of propylene oxide, which is also costly and requires operations of sufficient scale, opens up potential Bio PG production to smaller, more remote biodiesel producers. Existing biodiesel producers can install a Bio PG plant near their existing plant (where they may need to import quantities of glycerine) and the lower average capacity enables smaller operators to participate in the market. The green chemistry of Bio PG production, involving the catalytic hydrogenolysis of glycerine, uses hydrogen as a feedstock. In the Bio PG process, refined glycerine and hydrogen are converted to crude PG in the liquid phase using a BASF catalyst. The reaction takes place under optimum operating conditions of 75 bar and 200°C, with a very high yield to PG. In the subsequent distillation unit some lighter byproducts are removed, together with water, formed in the hydrogenolysis reaction. The PG is obtained as distillate, while some heavy ends are withdrawn from the bottom. A SMALLER ENVIRONMENTAL FOOTPRINT Bio PG production has a smaller environmental footprint than the manufacture of conventional propylene glycol, generating around 60% lower emissions of CO2 and other greenhouse gas emissions per unit of production, and lower amounts of effluent. Traditional PG manufacturing processes, by contrast, require the use of more hazardous chemicals with harmful environmental impacts. COMMERCIALLY PROVEN The technology for Bio PG production is commercially proven. It has been operating at scale successfully in Europe since 2012. The product offers a valuable solution to the oleochemical market, Air Liquide says. This article has been written by Air Liquide Global E&C Solutions, the engineering and construction business of the Air Liquide Group

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T R ADIN G & PRIC E FOREC ASTIN G

2017 price outlook

TABLE 1: INDIAN OIL IMPORTS (1,000 TONNES) 2015-16 2015-16 (expected) (actual) 4,200

4,235

Palm oil

9,750

8,510

Sunflowerseed oil

1,200

1,516

Laurics

200

100

Rapeseed oil

250

377

15,600

14,738

Total

estimated at 29M tonnes against 32M tonnes in 2015. Overall in 2016, palm oil production will decline by over 6M tonnes – a decline which has never before been seen in history.

Stocks

Dorab Mistry examines the effects of Indonesia’s biodiesel mandate, Indian and Chinese demand and La Niña on the edible oils market and their impact on prices

Soyabean oil

n 2015, Malaysia and Indonesia suffered the effects of a very severe El Niño, keeping palm oil production down. The Indonesian palm oil industry also successfully implemented the Palm Biodiesel Mandatory Programme in 2015 and despite the wide discount on gas oil, the fund has been able to keep the country’s biodiesel programme at a steady pace. Because of the renumerative prices for palm oil resulting from lower production, the beneficial effect of the biodiesel programme was not felt much. However, in the next 12 months are production recovers and prices come under pressure, the biodiesel programme will become ever more crucial to prices. In Malaysia, palm oil production performed poorly in the first half of 2016, which was expected. Production in the first half of 2016 was almost 1.5M tonnes lower than in the first half of 2015. The biggest divergence was in the month of May when Malaysia produced only 1.364M tonnes against 1.810M tonnes in May 2015. The lack of a meaningful recovery in the second half of 2016 was a surprise to many in the market. One reason for the lack of recovery in Malaysian production was the dry weather that the country experienced in the first quarter of 2016. This dry patch also affected a few pockets in Indonesia but the country recovered better due to the much younger profile of its plantations. Young palms have recovered faster than older tall palms. It is now clear that between October 2015 to September 2016 in Malaysia, palm oil production dropped from 19.872M to 17.687M tonnes. The estimated production for the 2016 calendar year is between 17.3-17.4M tonnes. That is a shortfall of 2.5M tonnes compared to 2015. Indonesian production also declined in the 2015/16 season by about 4M tonnes. For the 2016 calendar year, Indonesian palm oil production is

Between November 2015 and August 2016, stocks in Malaysia halved from 2.9M tonnes to 1.464M tonnes. Similarly in Indonesia, stocks are estimated to have declined from 5M tonnes in November 2015 to just 1.6M tonnes in August 2016 – a decline of 3.4M tonnes. Overall, in the nine months from November 2015 to August 2016, palm oil stocks in these two key producing nations fell by a considerable 5M tonnes. Despite all these declines in production, recovery has commenced in Indonesia already. Malaysian production was expected to recover from December and it is likely that palm oil production in Malaysia in December 2016 will be higher than it was in December 2015. This will break the run of 11 consecutive months when production in each month was lower than the subsequent month in 2015. For the 2016/17 season and for calendar year 2017, a strong recovery should be expected in world palm oil production of almost 6.5M tonnes. Malaysia is expected to produce 19.5M tonnes of palm oil in calendar year 2017 while Indonesia will produce 33-33.5M tonnes.

Production increase for other oils The most pleasant surprise has been the increase in sunflowerseed production in Ukraine and Russia. In the 2016/17 season, there will be at least an additional 1M tonnes of sunflower oil. The production boost will come from the Black Sea region and the quality of that sunflowerseed oil is also vastly superior to the sunflowerseed oil coming from Argentina. The world has seen a bumper crop of soyabeans in the USA for three consecutive years. Including South American production, this is the sixth bumper soyabean crop in a row. Worldwide crush is expanding, mainly on account of China. So world production of soya oil is again expanding strongly. In the 2016/17 season, soyabean oil production is expected to increase by another 2.5M tonnes. The industry must look out for any weather related disturbance in growing conditions in South America during the first quarter of 2017. A revival of La Niña will be bullish and an absence of La Niña will result in a record crop in Brazil once again. The only oilseed that is facing lower production this year is rapeseed. EU production of rapeseed is significantly lower and canola production in Canada is also believed to be down. However, the biggest

2016-17 (projected) 3,700

2014-15

2012-13

2,986

1,090

9,250

9,478

8,240

1,700

1,542

980

100

250

340

200

356

14,950

14,612

10,670

drop is said to be in China’s production of rapeseed in the 2016/17 oil year. Production appears to be growing only in India and Australia. At this stage, the Indian rape mustard crop is doing well and expectations are for a bumper crop in line with bigger oilseed crops harvested in the earlier Kharif (monsoon) season.

Release of old rapeseed oil The release of old rapeseed oil from the state’s long-term reserve has been a game changer in the vegetable oil market in 2016. The El Niño drought led to massive production losses in palm oil but prices did not rise as much as expected. One major reason was the continuous release of rapeseed oil by the State Reserve Bureau in the later part of the 2015/16 season, totalling almost 2.8M tonnes. The current round of releases which started from the second week of October will eventually have an effect on prices as well.

Indian imports Soyabean oil imports into India in the last four years have quadrupled (see Table 1, above) but palm oil imports have stagnated due to the inverted export tax structure in Indonesia and Malaysia. Exports of refined palm oil are taxed lightly whilst exports of crude palm oil (CPO) are taxed heavily. The result is that the Indian refiner does not want to import palm oil, but prefers to import soyabean or sunflowerseed oil, which do not face competition from refined alternatives. Refiners are the gatekeepers to the Indian market. It is not yet clear whether vegetable oil consumption in India will return to the strong growth rates of earlier years. Currently, Indian per capita consumption of vegetable oil is approaching 16kg, this rises to 18kg/capita when dairy fat consumption is included. On 8 November last year, the Indian government demonetised Indian currency notes of 500 and 1000 rupee denominations. This is the first time since 1978 that such an exercise has been undertaken. Roughly 86% of currency in circulation by value was of 500 and 1000 rupee denominations, therefore most cash transactions came to a halt in a country. This disrupted normal business transactions and is leading to much lower levels of buying and selling as well as transportation of goods within the country. It is estimated that edible oil imports will shrink and India will rely on its internal pipeline and stocks for current consumption. Overall, in the 2016/17 season, availability of locally-produced vegetable oils in India is expected to rise about 1M tonnes. Therefore imports are only expected to increase 200,000 tonnes.

33 OFI – JANUARY 2017 www.ofimagazine.com

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T R ADIN G & PRIC E FOREC ASTIN G

TABLE 2: INCREMENTAL SUPPLY AND DEMAND (1,000 TONNES) Oct 15-Sep 16 (old) Oct 15-Sep 16 (revised)

Oct 16-Sep 17

Soyabean oil

+ 3,800

+ 3,000

Rapeseed oil

-------*

– 1,000

– 1,500

-------

+ 500

+ 1,000

– 300

– 500

+ 300

– 3,000

– 6,000

+ 6,500

-------

– 1,400

+ 700

+ 500

– 5,400

+ 9,500

+ 4,500

+ 4,000

+ 4,500

Sunflowerseed oil Groundnut & cottonseed oil Palm oil Lauric oils Supply increase Demand increase

+ 2,500

*World supply of rapeseed oil in 15-16 fell by almost 1M tonnes, but China released 2.5M tonnes from its State Reserve. The figures for rapeseed oil for 2016-17 do not include this reserve release

Energy demand Malaysia is doing well on its B7 mandate but it recently announced the postponement of the B10 mandate (see Biofuel News, p7). For Malaysian biodiesel producers, this is a huge disappointment. For Indonesia’s mandatory palm biodiesel programme, the distribution of subsidies from the Indonesian Oil Palm Estate Fund (BPDP) began in November 2015, while the fund started collecting export levies from July 2015. This gave the fund a cushion. However, palm oil’s discount to gas oil narrowed considerably in the later part of 2016 and is still continuing around that same level. As the discount narrows, the cost of producing biodiesel from palm oil becomes closer to, or even exceeds, the price of gas oil, meaning that discretionary blending – which relies on biodiesel being cheaper than gas oil – becomes less viable for new biodiesel production. It is going to be a challenge to finance the entire biodiesel subsidy from the collection of export levies each month. At the present level of support, it is not possible for the BPDP to finance more than 200,000 tonnes of palm biodiesel each month. There have been optimistic projections for palm biodiesel to be used to generate electricity, with forecasts for combined palm biodiesel consumption of almost 6-7M tonnes. However, these volumes are only possible when palm biodiesel is cheaper than gas oil. In other words, these projections are a safety net in the very unlikely event that CPO prices were to fall to very low levels. Other than that, or unless electricity generation is subsidised by the government, it is very unlikely that palm biodiesel will be consumed at the level of 6-7M tonnes/year within Indonesia. In 2017, world production of palm oil will rise each month. The Indonesian Biodiesel Mandatory Programme will perform its natural role as a safety net and will prevent prices from falling dramatically. To that extent, the programme will serve a very useful purpose and will ensure that palm oil producers will get remunerative prices even in times of over-supply.

The rest of the world On 23 November, the US Environmental Protection Agency (EPA) announced mandates for biodiesel and biofuels for calendar year 2017. The mandate for biodiesel is higher than expected and the additional vegetable oil usage could be higher by 350,000 tonnes in 2017. This must have a bullish

impact on Chicago soyabean oil futures. World energy demand is expected to expand in 2015/16 by 1.5M tonnes, mainly due to Indonesia’s biodiesel mandate. In 2016/17, there will be further expansion by about 1.5M tonnes, mainly due to higher mandates in soya oil producing countries. World food demand expanded in 2015/16 by only 2.5M tonnes and may expand by 3M tonnes in 2016/17. In the 2015/16 season, the gap between incremental supply and incremental demand was a record 9.4M tonnes. World stocks have been drawn down dramatically. Stocks in Malaysia and Indonesia are down almost 5M tonnes and stocks in China are down at least 3M tonnes. However, in the 2016/17 season, it is expected that stocks will be rebuilt as palm oil production recovers (see Table 2, above).

Price outlook My price outlook for 2017 is based on the following assumptions: Brent crude oil will trade in a range between US$45-55/barrel; The Federal Reserve System (FED) will increase interest rates periodically from December 2016; There will be no major re-alignment of currencies such the Malaysian ringgit, the Indonesian rupiah, the Brazilian real and the Argentinian peso versus the US dollar; No major trade war or disruption is expected to be initiated by the new Trump Administration in the USA. Since October, world commodity markets have experienced an unusual bout of activity from investment funds. The sheer weight of money, originating from Chinese and other investors has made a big bullish impact. Agri products have not experienced the kind of bullish moves seen in metals or energy, but that may still happen if the funds have their way. The funds have been helped in the case of vegetable oils by the lack of a meaningful recovery in palm oil production in the third and fourth quarters of 2016 in Malaysia. Malaysia is likely to have an election in 2017 and governments often try to make farmers and smallholders happy in an election year by introducing price support measures, which the Malaysian government may do for palm oil growers. My price forecast is therefore vulnerable to concerted government action. On top of these factors comes the higher mandate for biodiesel in USA.

PALM OIL After weighing all these factors, I have changed my stance from being bearish to being short-term bullish on palm oil prices. In ringgit terms, from late 2016 until 31 March 2017, BMD CPO prices should trade in a range from MR3,000-3,300 (US$677-744). The weakness of the ringgit makes it probable that it shall exceed MR3,300 at some stage. RBD palm olein can trade up to US$750 FOB. Going forward, and looking forward into the third and fourth quarter of 2017, a recovery in stocks in Malaysia and Indonesia is expected. Therefore, by June 2017, palm oil prices will come under sustained pressure and may eventually decline to MR2,400 (US$541) or US$650 FOB for RBD palm olein. SOYABEAN OIL At present, soyabean oil is expensive and uncompetitive against all oils. In particular, it will have to fight for demand against sunflowerseed oil. Soyabean oil prices are not expected to decline from current levels of US$830 FOB until the new crop oil is available from Argentina. If there is no La Niña, new crop soyabean oil for May/June/July 2017 should trade lower at around US$700 FOB Argentina. However, if a La Niña develops, soyabean oil prices will rise and they will pull up palm oil prices as well. OTHER OILS Sunflowerseed oil will continue to take market share from soyabean oil and will remain at a discount for the next six to nine months. On the other hand, rapeseed oil will command a premium over soyabean oil. Lauric oils have defied gravity and surprised many by their ability to sustain high price levels. The explanation for this lies in the inelastic nature of demand for lauric oils. Manufacturers of detergents and personal products that have committed to using natural oils as opposed to petrochemicals, cannot switch away from lauric oils even if they are forced to pay higher prices. As palm oil production dipped in 2016, the supply of crude palm kernel oil (CPKO) also dipped while its demand remained steady. Lauric oil prices will decline from second quarter 2017 as supply of CPKO rises again. The full recovery in palm oil production in Malaysia should erode the premium commanded by CPKO over CPO.

Conclusion 2017 will be the year of Asia. Growth and prosperity will flow in this direction and China, India, Indonesia and Malaysia are all well placed to forge ahead. It must also be hoped that Indian business conditions will soon return to normal. Speculating on the policies of the new Trump Administration in the USA, candidate Trump was vociferous but president-elect Trump has so far been reasonable and the world must hope that President Trump will be different from Candidate Trump and that there will be minimum disruption in terms of trade policies and tariffs. Dorab Mistry is the director of Godrej International Limited. This feature is based on a presentation he gave at the 12th Indonesian Palm Oil Conference and 2017 Price Outlook on 25 November 2016

34 OFI – JANUARY 2017 www.ofimagazine.com

Dorab Mistry 2.indd 2

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OFI January 2017 p35_air liquide.indd 35

04/01/2017 21:22

PR OC ESSIN G & TEC H N OLOGY

Plant and technology round-up Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world IN BRIEF USA: Express Grain Terminals has invested US$2M to expand its agricultural product processing operations in Greenwood, Mississippi on top of a US$13M investment earlier in 2016. “We are excited to expand our operations in the Greenwood area to include soya processing,” said Express Grain Terminals president John Coleman. The new plant will process local soyabeans into meal and hulls for the state’s animal feed market. Soyabean oil will be sold to edible oil and biodiesel refineries. USA: Six POET biorefineries in the US states of Ohio and Indiana are installing a new energy generation system using combined heat and power. “The system will use steam in a turbine to generate electricity to run the plant and recover waste energy from the turbine to meet additional energy demands,” POET said in October. The plants installing the new systems are Fostoria, Marion and Leipsic in Ohio; and Alexandria, North Manchester and Portland in Indiana. All of the upgrades are scheduled for completion this year. GERMANY: BASF has introduced a new version of its Lutropur brand of methanesulfonic acid (MSA), with a higher active concentration of 94%, for multiple applications in biodiesel and ethanol processing, Biodiesel Magazine reported on 29 November. The new MSA-XP is used to esterify free fatty acids, neutralise crude biodiesel and glycerine, and in soap splitting to separate fatty acids. It is a chemical replacement for harsher acids such as sulphuric acid, Biodiesel Magazine said. FRANCE: Belgium-based De Smet Engineers & Contractors has announced the creation of a new office based in France, it said on 28 November. The new entity would focus on the company’s core markets including sugar and ethanol, biochemistry, vegetable oils and fertiliser chemistry.

ADM reopens oilseed facility A

rcher Daniels Midland Company (ADM) announced on 28 November that it had reopened its oilseed processing facility in Chornomorsk (formerly Illichivsk), Ukraine, after completing a major expansion and improvement project that almost doubles the plant’s sunflowerseed processing capacity and adds switch capacity that allows the plant to crush rapeseed. “We are excited to reopen our improved and enhanced oilseed processing plant at Chornomorsk,” said Anton Povkhan, ADM general manager of EU softseed crush. “This expansion enables us to continue to efficiently grow our operations in Eastern Europe and meet the

ADM has a nationwide network in the Ukraine that includes seven regional offices, six inland grain elevators, and a grain terminal at the port of Odessa, as well as the crush facility in Chornomorsk.

NEB planning new bioethanol plant in Pietarsaari

he joint venture between St1 and SOK – Northern European Bio Tech Oy (NEB) – is planning a 50M litre/ year Cellunolix bioethanol plant in Pietarsaari, Finland, the companies announced on 15 November. The Cellunolix plant, which would utilise sawdust and recycled wood, was planned for UPM’s Alholma industrial area. Alholmens Kraft and UPM would provide services and commodities and, where possible, would utilise the by-products of the ethanol production in their own processes. An environmental impact assessment procedure and approved environmental permit was required before the project could proceed. It was estimated to be in the investment decision stage by 2018 with potential start-up to be in 2020. Investment decisions would also depend on the profitability and operational experience of NEB’s soon-to-start Cellunolix plant in Kajaani, St1 said. According to preliminary plans, NEB would invest in the plant, utilising sawdust as a feedstock. St1 would plan and deliver the plant, and coordinate and carry out production. An associated company of SOK and St1, North European Oil Trade Oy, would lease the production capacity of the plant. The 10M litres/year Cellunolix plant delivered by St1 to NEB in Kajaani, which also manufactures ethanol from sawdust, would reach full production speed during 2017, St1 said. NEB was also looking to expand the plant, or construct a new Cellunolix plant with capacity of 50M litres/ year in Kajaani.

REG completes upgrades and capacity increase

enewable Energy Group (REG) announced the completion of US$34.5M worth of upgrades and enhancements to its 45 MMgy Danville, Illinois, biorefinery on 4 October. Biodiesel distillation capabilities and other manufacturing upgrades were made, which REG said would allow a wider array of lower carbon intensity feedstocks to be used. In addition, logistical improvements were made including an additional truck loadout, new warehouse and office space, and the acquisition and integration of approximately 13M gallons of biofuel and feedstock storage from the neighbouring Bunge facility. REG said this would significantly improve year-round production and storage capabilities at Danville and within its logistics system. Daniel Oh, REG president and CEO said, “We now have a stronger REG Danville that can produce high-quality, lower carbon intensity biofuel from a wider variety of crude raw materials in a part of the country where they are abundant.” REG acquired the Danville biorefinery in 2010 from Blackhawk Biofuels LLC. It is one of the

36 OFI – JANUARY 2017

P&E round-up.indd 1

needs of our food and feed customers in the region. In addition, by adding switch capacity to the facility, we now have more flexibility to quickly and effectively respond to shifts in the marketplace.” The expansions and enhancements include: Doubling the existing production lines in seed preparation; Replacing the extraction plant; and Installing an additional biomass boiler.

company’s 11 biomass-based diesel refineries in the USA, which have a total production capacity of 452 MMgy. On 8 November, REG began a project to increase the annual capacity of its Ralston, Iowa biodiesel plant from 12M gallons/year to 30M gallons/year, Biodiesel Magazine reported. The Ralston plant was REG’s largest facility when it was built in 2001, but was now the smallest, REG said. Landus Cooperative’s soya crush operation, located adjacent to the Ralston plant, was also being expanded. John Scott, president of the Landus Cooperative board of directors said: “We look forward to finalising plans with REG for their expansion as another way to add value to our soyabeans via oil utilisation at the Ralston biorefinery”. Brad Albin, REG vice president, manufacturing, added, “With a greater, adjacent feedstock supply and continuous improvements at REG Ralston, this capacity expansion is a logical investment.” Once completed, the expansion would raise REG’s production capacity to 470M gallons/year, Biodiesel Magazine said.

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05/01/2017 15:36

P RO C E SSI NG & TE CHNOLOGY

www.dsengineers.com

CGB invests $31M in plant

onsolidated Grain and Barge Co (CGB) is investing US$31M to increase its soyabean processing facilities at the Port of Indiana-Mount Vernon, USA. “The processing plant was constructed in 1997, processing 65,000 bushels/day of soyabeans at that time into soyabean meal, soyabean oil and soya hull pellets for both food and industrial uses,” CGB said on 4 October. “Since its initial construction, the plant has continued to grow its capacity. With this expansion, the plant will more than double its original size.” CGB said the expansion would increase product supply for its agribusiness customers and servicing opportunities for soyabean farmers

in Indiana state, ranked third in the country for soya production. CGB is jointly owned by Japan’s Itochu Corporation and ZEN-NOH, a federation of agricultural cooperatives. The Mount Vernon plant is the company’s only processing facility, its location allowing for different logistics options including inbound and outbound barge, rail and truck transportation as well as outbound container shipping options. “Roughly 60% of the facility’s volume is shipped via barge, utilising the Port of Indiana-Mount Vernon,” CGB said. “No other company has harnessed the logistics benefits of the Ohio River to serve the Indiana agriculture community better than CGB,” said Phil Wilzbacher, port director at the Port of Indiana-Mount Vernon. CGB provides a range of services to crop producers including buying, storing, selling, shipping, financing and risk management. It has nearly 100 grain elevators and terminals and serves food and feed customers in the USA and globally.

LintraMax launches cloud-based plantation management system

lantation management software solutions provider LintraMax announced the launch of a new cloudbased system on 22 November called Quarto. The system targets palm oil plantation businesses in Malaysia. LintraMax said Quarto was an all-in-one solution, which allowed companies to manage their plantations on a single system that supports various key operational functions. Business owners could also access data on their plantations any time and anywhere via a web browser or mobile.

Funding of MR700,000 (US$157,890) came from Malaysian government agency Malaysia Digital Economy Corporation Sdn. Bhd. (MDEC), which was secured by LintraMax earlier in 2016. Khor Kheng Khoon, founder and managing director of LintraMax said: “Currently, our focus is to market Quarto to plantations in Malaysia where there is a vast market opportunity. The funding from MDEC also enables us to start exploring and researching markets outside of Malaysia”.

Serving the Vegetable Oil Industry From Basic Engineering to Full Turnkey Project Single Point Responsibility through EPC or EPCM+® with guaranteed: � Process Performances � Time Schedule � Budget

WR Grace to supply silica to Bunge

eading catalyst supplier WR Grace & Co announced on 27 October that it had signed a global license agreement to supply its Trisyl 150IE silica to global agribusiness and food company Bunge Limited. The silica will be used in Bunge’s enzymatic interesterification technology to process edible oils. “The new technology is a healthier and more efficient alternative to partial hydrogenation, a process that is being phased out by the US Food and Drug Administration by 2018,” WR Grace said. “Based on immobilising enzymes, Bunge’s new process produces no trans fats, requires fewer processing steps, occurs naturally at a lower, energy-saving temperature and improves the stability of vegetable oil.” “We are pleased to partner with Grace to develop Trisyl 150IE silica, which materially extends the life of the enzymes, making our process even more efficient,” said Chris Dayton, Bunge’s director of fats and oils processing. 37 OFI – www.ofimagazine.com

P&E round-up.indd 2

Engineers & Contractors Brussels • Belgium Tel.: +32 (0)2 634 25 00 Fax: +32 (0)2 634 25 25 info@dsengineers.com

Reliability through Experience

05/01/2017 15:36

SH OW PREVIEW

New date for OFI India in May 2017 IMAGE: ADOBE STOCK

OFI India returns to the world’s largest edible oil market for the second time on 19-20 May 2017 in Mumbai, with an international exhibition of suppliers to the industry, and business and technical conferences featuring global and regional experts in their fields

Book a stand! Exhibition & sponsorship Mark Winthrop-Wallace, Sales Manager E-mail: markww@quartzltd.com Tel: +44 (0) 1737 855 114 Anita Revis, Sales Consultant E-mail: anitarevis@quartzltd.com Tel: +44 (0) 1737 855 068 Nikunj Vishwakarma, India Sales Executive E-mail: nikunj@quartzltd.com Tel: +91 67351022; +93 73517070

www.ofievents.com/india

Register now! Three registration options 1. Register free of charge for the exhibition online at www.ofievents.com/india 2. Register for the exhibition and the OFI Business Congress & SOPA Soya Conference for 5,000 rupees (including lunch and refreshment package) at www.ofievents.com/india. 25% discount for SEA, SOPA, OTAI, CSIR-IICT and FOSFA members 3. Register for the Smart Short Course and receive free entrance into the exhibition. Go to: www.smartshortcourses.com/ ofi-india17/program.html

Supporters:

MUMBAI IS INDIA’S COMMERCIAL AND FINANCIAL CAPITAL AND THE HOST CITY OF OFI INDIA 2017

ith just four months to go, the second OFI India exhibition and conference in Mumbai promises to be bigger and better than the launch event which attracted over 600 attendees in 2016. OFI India 2017 is being held on 19-20 May 2017 at the Bombay Convention and Exhibition Centre (BCEC) in Mumbai, India’s commercial and financial headquarters. It will feature: An international exhibition of suppliers, producers and processors The OFI India 2017 Business Congress & SOPA Soya Conference: ‘New Strategies, New Approaches’ (see programme, opposite). A Smart Short Course technical programme: ‘Oilseed and Oil Processing Technology – Focus on Mustard Seed, Sunflower Seed and Rice Bran Oil’ (see programme, opposite).

The world’s key edible oil market India is a US$2tr economy, with GDP growing at more than 7% and a population of over 1.2bn people. It is the world’s largest edible oil importer, with an oil and oilseed turnover of US$25bn and import-export turnover of some US$13bn. India’s demand for edible oils is some 21M tonnes/year. It meets this with domestic production of some 7-8M tonnes and imports of 14-15M tonnes – some 70% of the country’s requirements – valued at over US$12bn. The country’s edible oil imports have soared by almost 50% in the last five years, with imports of palm oil growing by 25% and soya oil jumping by 300%. India’s consumption growth is pegged at 5%/

year and the country is expected to be consuming around 34M tonnes of edible oil by 2025, with a projected vegetable oil imports bill of US$25bn. Increases in the population and lifestyle changes are driving a rise in edible oil consumption, meaning interest is strong in this growing market.

Learn from the experts The two-day OFI India 2017 Business Congress & SOPA Soya Conference will offer delegates the chance to learn from leaders in their fields about the Indian and global marketplace for oils and fats. Four modules will cover ‘World Supply and Demand – 2017/18 Price Forecast and Outlook’; ‘The Indian Market – Challenges and Opportunities’; ‘SOPA Soya Conference’; and ‘Feedstocks and Applications’ (see programme, opposite page). A parallel two-day Smart Short Course technical programme will be held for marketing, technical and plant personnel entitled, ‘Oilseed and Oil Processing Technology – Focus on Mustard Seed, Sunflower Seed and Rice Bran Oil’ (see programme, opposite page).

Industry support OFI India 2017 is also supported by the main edible oils and fats associations in India including the Solvent Extractors’ Association of India (SEA); Soybean Processors Association of India (SOPA); Oil Technologists’ Association of India (OTAI); CSIRIndian Institute of Chemical Technology (IICT) and also the Federation of Oils, Seeds and Fats Associations Ltd (FOSFA). Major suppliers to the edible oils and fats industry have already booked exhibition space at the OFI India 2017 exhibition including Andreotti Impianti, Buhler Group, CM Bernardini, Crown Iron Works/Kumar Metal Industry, Desmet Ballestra, Fenix, GEA Westfalia, HF Press+LipidTech, Muyang, SAP and Sharplex Filters.

38 OFI – JANUARY 2017 www.ofimagazine.com

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06/01/2017 10:53

SH OW PREVIEW

OFI India 2017 Business Congress & SOPA Soya Conference: ‘New Strategies – New Approaches’ DAY ONE: FRIDAY 19 MAY 2017

Module 2: The Indian Market – Challenges and Opportunities Keynote address: India’s edible oil demand and supply picture Solvent Extractors’ Association (SEA), India India’s biofuels policies Speaker to be confirmed

Welcome and opening remarks Oils & Fats International/Quartz Business Media, UK

Rice bran oil ... growth story Dr B V Mehta, Executive Director, Solvent Extractors’ Association of India (SEA)

Module 1: World Supply and Demand – 2017/18 Price Forecast and Outlook

DAY TWO: SATURDAY 20 MAY 2017

James Fry, Chairman, LMC International, UK

Module 3: Soybean Processors Association of India (SOPA) Soya Conference

G Chandrashekhar, Economic Advisor, Indian Merchants’ Chamber

Dr Davish Jain, Chairman, Soybean Processors Association of India (SOPA); President and Managing Director, Prestige

Sumit Gupta, Business Manager, McDonald & Pelz Global Commodities

Smart Short Course: ‘Oilseed and Oil Processing Technology – Focus on Mustard Seed, Sunflower Seed and Rice Bran Oil’ DAY ONE: FRIDAY 19 MAY 2017 8.50: Opening remarks 9.00: Chemistry and Fundamentals of Oils and Fats. Dr. Roland Verhé, Ghent University - Bio Base Europe Pilot Plant, Belgium Session 1: Oilseed Processing

Bleaching Optimisation. Clariant Chemicals, India 15.00: Break – Visit OFI India Exhibition 15.30: Comparison With Cold Refining Winterising Using Centrifuges and Classical Filtration System in Sunflower Oil. Dr Mario Bernardini, Technoilogy, Italy Session 3: Fundamentals of Edible Oil Refining 16.00: Review of Degumming and Refining Technologies. Alfa Laval, Malaysia

9.30: Optimal Oil Seed Dehulling. Buhler Group, Switzerland (TBC)

16.30: Advanced Technologies for Edible Oil Refineries – Case Studies. MecTech Process Engineers, India

10.00: Energy Recovery Optimisation in Preparation Plants. Solex Thermal Science Inc, Canada

DAY TWO: SATURDAY 20 MAY 2017

10.30: Break – Visit OFI India Exhibition

9.00: Optimising Deodorisation for Quality and Energy. Desmet Ballestra Group, India

11.00: Extraction Fundamentals: Optimising Oil Removal in Extractors. CPM Crown Iron Works, USA (TBN)

9.30: Enzyme Solutions Improve Process Yield and Final Product Qualities. Novozymes, Denmark

11.30: Latest Innovations in Pressing Technology. Harald Boeck, HF Press+LipidTech, HF Group, Germany

10.00: Fundamentals of Oils and Fats Processing – Deodoriser Design and Optimisation. Kumar Metal Industry/CPM Crown Iron Works, SKET, India (TBN)

12.00: Desolventising: Balancing Meal Quality with Solvent Recovery. CPM Crown Iron Works, USA (TBN)

Group of Industries, India D N Pathak, Executive Director, Soybean Processors Association of India (SOPA) Module 4: Feedstocks and Applications Global sunflowerseed and oil production, trade & prices and India’s role in world imports Sergey Feofilov, General Director, UkrAgroConsult, Ukraine World palm oil supply and India’s demand and future outlook Bhavna Shah, Country Representative – India/ Sri Lanka, Malaysian Palm Oil Council Sustainability and ingredient applications in line with new Indian food regulations Kaustuv Bhattacharya, Principal Application Scientist, Oils & Fats, DuPont Nutrition Biosciene, Denmark

13.30: Fat Modification Processes – Dry Fractionation, Chemical and Enzymatic Interesterification and Hydrogenation. Desmet Ballestra Group, Belgium 14.00: Mechanism of Oxidation and Oil Quality Management in Frying and Cooking Oils. Dr Ignace Debruyne, ID&A, Belgium 14.30: Modification of Castor Oil for Making Feed Stock for the Oleochemical Industries. BASF, Germany 15.00: Break – Visit OFI India Exhibition 15.30: Protein Concentrate Plant Design for Food and Aquafeed Applications. CPM Crown Iron Works, USA (TBN) 16.00: Sustainability and Ingredient Applications in Line with New Indian Food Regulations. DuPont Nutrition & Health, Denmark

10.30: Break – Visit OFI India Exhibition 11.00: Latest Developments in Filtration of Edible Oils and Fats and Biodiesel During Oil Processing. Sharplex Filters, India

12.30: Lunch – Visit OFI India Exhibition Session 2: Mustard Seed and Sunflower Seed

11.30: Methods to Reduce 3MCPD and GE Content. Marco Muraca, CM Bernardini International, Italy

13.30: Full-Pressing of Canola and Sunflower Seed with the Two-step Pressing Process. Harald Boeck, HF Press+LipidTech, HF Group, Germany

12.00: Critical Issues in Rice Bran Oil Processing: Deodorization Process (TBC)

14.00: Chemical Refining of Oils in Solvent Phase. GEA Mechanical Equipment, Germany

12.30: Lunch – Visit OFI India Exhibition

14.30: How to Deal with Colour Fixation During Rapeseed and Mustard Seed Refining Using

Session 4: Speciality Processing

Smart Short Course Registration www.smartshortcourses.com/ ofi-india17/program.html Full registration includes access to all presentations, short course manuals, lunch and coffee breaks and free access to the OFI India Exhibition. Early Bird Registration (On or before 17 April 2017) US$445 (India Subcontinent) US$695 (Other) Regular Registration (After 17 April 2017) US$545 (India Subcontinent) US$795 (Other) Group Registration Rate: 10% off for three or more; 20% off for five or more US$50 discount for members of supporting organisations (OTAI; CSIR-IICT; SEA; SOPA; FOSFA International)

39 OFI – JANUARY 2017 www.ofimagazine.com

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06/01/2017 10:53

STATISTIC S

CRUDE PALM OIL PRICES, ROTTERDAM (US$/TONNE)

STATISTICAL NEWS FROM MINTEC Palm oil

CRUDE COCONUT VS PKO PRICES, ROTTERDAM (US$/TONNE)

Palm oil prices have increased overall in 2016 reaching two-year highs. Price increases in the first quarter of the year were driven by lower production in 2015/16 which was due to crop damage caused by El Niño-related droughts in Southeast Asia. By mid-2016, this increase was almost undone by expectations of recovering production in the coming season. However, the gradual realisation of the delay in this recovery has caused prices to go up again. This has only been subdued by slight month-on-month improvements in Malaysian production and weaker demand from China and India following a build-up of stocks before their festive celebrations. Global production is expected to recover in the current 2016/17 season, forecast up 10% year-onyear at 64.5M tonnes. However, stocks are not expected to start increasing before Q2 2017, halfway through this season.

Palm kernel oil and coconut oil (lauric oils) Due to the stagnant production of coconut oil in recent years, price movements of the lauric oils were predominantly influenced by palm kernel oil-related factors. Prices of both lauric oils rose significantly from the beginning of the year reaching over five-year highs. The price premium of coconut oil has dropped significantly due to the supply tightness of palm kernel oil. Palm kernel oil production had a major setback in 2015/16 due to El Niño, which impacted the availability of the oil throughout the season. Exports from major producers remained low as the increased production forecast would not be realised until 2017. Total exports from the two main exporters, Indonesia and Malaysia, during the first nine months of 2016 were down 10% year-on-year at 1.9M tonnes. Combined global production in 2016/17 is forecast to recover to 11.0M tonnes, up 6% year-on-year, mainly led by palm kernel oil. However the increase in demand is expected to lower combined ending stocks further down to 0.8M tonnes, down 9% year-on-year.

GLOBAL PRODUCTION INDICES (US$/TONNE)

Sept 16

Oct 16

Nov 16

Dec 16

809 688 660 1,500 811 811 1,329

827 712 678 1,514 840 818 1,375

849 706 671 1,443 893 821 1,290

858 739 698 1,523 866 823 1,426

889 779 738 1,633 908 846 1,590

Mintec works in partnership with sales, purchasing and supply chain professionals to deliver valuable insight into worldwide commodity and raw materials markets using innovative technology and a knowledgeable team of specialists. We provide independent insight and trusted data to help the world’s most prestigious brands to make informed commercial decisions.

944 224

966 229

953 226

990 235

1,055 250

Tel: +44 (0) 1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com

PRICES OF SELECTED OILS (US$/TONNE)

Soyabean Crude Palm Palm Olein Coconut Rapeseed Sunflower Palm Kernel Average price INDEX

2015

Aug 16

747 637 602 1,099 773 846 901 801 190

40 OFI – JANUARY 2017 www.ofimagazine.com

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