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The price of beauty

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NEWS

COMMENT

The price of beauty C

onsumer demand for sustainable and environmentally-friendly products is not a new trend in the food industry – the campaign against palm oil in Kit-Kat bars dates back seven years and the Roundtable on Sustainable Palm Oil itself was officially formed in 2004. More recently, the focus on what goes into our products has widened to cosmetics, with a ‘natural’ or ‘green’ ingredient lending an advantage to

cosmetic producers. French firm L’Oréal, for example, unveiled its first Palm Oil Progress report last June. While L’Oréal uses less than 700 tonnes/year of palm oil, it buys some 60,000 tonnes of palm oil or palm kernel derivatives such as glycerol, fatty acids or fatty alcohols. In fact, 70% of the world’s cosmetics contain palm derivatives and 1,000 ingredients are palm-derived, according to Chris Sayner, vice president of global accounts at chemicals company Croda. “Responding to demand for sustainable palm oil is far more complex for the beauty and personal care industry than for many others,” he says. “Not only are palm oil, palm kernel oil (PKO), palm fractions and their derivatives almost ubiquitous in finished products, but often even the formulator cannot be sure whether it is present in a specific ingredient.” Common ingredients such as sodium laureth sulfate also highlight an extra layer of complexity, as this is a lauric ingredient derived from either PKO or coconut oil. Another area where oils and fats play a role in the cosmetics is squalene, which is conventionally obtained from shark liver oil (see story, p3). According to a 2013 Daily Telegraph article, six million deep sea sharks are killed every year as a result of squalene harvesting. Over-exploitation of sharks has prompted some regulatory agencies to limit shark fishing and several cosmetic firms are turning to plantderived squalene from sources such as olive oil. Consumer demand for ‘green’ cosmetics extends not only to the source of ingredients, but also to a product’s environmental impact. Some sunscreen chemicals have been found to have a toxic effect on young coral and to exacerbate coral bleaching. Another issue is the release of plastics into our seas and waterways. At least 8M tonnes of plastics leak into our oceans each year, disrupting marine eco-systems, according to the World Economic Forum. A contributor from the cosmetics industry are microbeads – the tiny bits of plastic found in exfoliating body and face scrubs, and also used as thickeners. These microbeads – which can absorb pollutants – are too small to be filtered by sewage and water filtration systems and end up in the food chain when eaten by fish and aquatic creatures. An analysis of waters around the USA has found that the country is dumping eight trillion microbeads into oceans and lakes every day. As a result, the USA is banning microbeads with effect from July, and other countries and cosmetic firms are also looking at bans. Meanwhile, Italy’s Bio-on Spa has developed biodegradable microbeads and is planning a facility to manufacture them in Bologna (see p12). Other companies are also developing products such as biobased glitter and cellulose-based green exfoliants. On the face of it, polluting the environment and depleting natural resources for the sake of beauty seems a crime. But the beauty industry is big business and worth billions of dollars each year. As with the food industry, it is the push from consumers and the desire of manufacturers to stay ahead of the game that will drive development of greener and more sustainable products. w

MEPs vote in favour of European palm oil sustainability scheme

embers of the European Parliament (MEP) voted on 4 April in favour of a report calling for a single certification scheme for palm oil entering the EU and the phase-out of unsustainable vegetable oils in biofuel production. With the move, the Parliament aims to counter the impact of unsustainable palm oil production, such as deforestation and habitat loss. “We want an open debate with all players so we can make palm oil production sustainable without cutting down forests and in compliance with dignified human rights conditions,” said Parliament rapporteur Katerina Konecná, who drafted the resolution. “This is the Parliament’s first resolution on this issue and it is up to the European Commission (EC) how it acts upon it. But we cannot ignore the problem of deforestation, which threatens the Global Agreement on Climate Change and UN Sustainable Development Goals,” she added. During the voting, the MEPs noted that various voluntary certification schemes, such as the Roundtable on Sustainable Palm Oil (RSPO), promote sustainable cultivation of palm oil, but claimed that their standards were open to criticism and confusing for consumers. The original report by the Committee on the Environment, Public Health and Food Safety expressed disappointment with the voluntary schemes’ failure in prohibiting their members from

converting rainforest or peat lands into palm plantations. Additionally, the report found that the voluntary schemes failed to limit greenhouse gas emissions and prevented forest and peat fires, which had turned Indonesia into “one of the greatest contributors” to global warming. To combat this, the MEPs called for the EC to install a single certification scheme that would guarantee that only sustainably produced palm oil entered the European marketplace, along with introducing sustainability criteria for palm oil and products containing palm oil. MEPs noted that 46% of the palm oil imported by the EU was used to produce biofuels, and therefore called for a phase-out of deforestation-contributing vegetable oils in biofuels by 2020. The decision drew criticism from Malaysia’s Minister of Plantation Industries and Commodities Datuk Mah Siew Keong who, according to the Malaysian Reserve, called it “discriminatory and biased”. “It is not fair that the EU wants the certification before the palm oil can enter the EU market. Malaysia, as a palm oil producer, is entitled to issue the certificate and it is not for Europe to determine,” Keong said. He added that Malaysia would be against the resolution as it would have a negative impact on palm oil exports, the economy and palm oil producers, who exported 3.63M tonnes of palm oil to the EU in 2016.

Unilever to sell spreads business

nglo-Dutch food giant Unilever announced on 6 April that it would sell its margarine division, known for such brands as Flora, only two months after it rejected Kraft Heinz’ US$143bn takeover offer. Unilever was also planning to boost dividends by 12% in 2017 and would launch a US$5.3bn shares buyback scheme by the end of the year, according to a statement from Unilever CEO Paul Polman. “After a long history in Unilever, we have decided that the future of the spreads business now lies outside the group,” he said. Unilever set up a separate baking, cooking and spreads unit, which had “responded well” by reducing costs, increasing cash generation and holding market share, but the underlying category remained challenged. “We have now taken the decision to launch a process to either sell or demerge spreads,” Polman said.

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NEWS

South Africa blocks bid to stop oil cartel investigation W illowton and Wilmar, two of the five edible oil companies currently under cartel allegations in South Africa, have had heir attempts to block the investigation turned down. The Kwazulu-Natal and Gauteng Divisions of the High Court of South Africa rejected Willowton Oil and Cake Mills’ application to stop the Competition Commission from reviewing documents that were seized from the company’s offices in 2016, the just-food news site reported on 21 March. Wilmar Continental Edible Oils and Fats submitted a similar request earlier in March, but this application was turned down as well.

The commission said that should the rulings have been found in the companies’ favour, it would have “effectively stopped” the investigation, just-food wrote. The news site quoted competition commissioner Tembinkosi Bonakele as saying: “The search and seizure operation was conducted with due regard to the rights of all the affected persons. We will therefore not be swayed in our efforts to clamp down on the exploitation of consumers by cartels, particularly in the food and agro-processing sector.” A spokesman for Willowton told just-food the company was “consulting with its legal team”.

Five companies – including Willowton, Wilmar, FR Waring, Africa Sun Oil Refineries and Epic Foods – have been accused by the Competition Commission of engaging in “cartel conduct which includes price fixing” that is claimed to have started as far back as 2007. The commission raided the offices of all five companies last year after securing search and seizure warrants, just-food wrote. Each, with the exception of Epic Foods, had filed applications to stop the commission from reviewing the seized documents. The commission had filed another bid to oppose Africa Sun Oil’s request on 20 March and FR Waring’s on 22 March.

Global squalene market to reach US$24M by 2022

he global squalene market is poised to grow through increasing consumption of cosmetics and personal care products, with the European market expected to surpass US$110M by 2022, according to a new Global Market Insights report. Squalene – conventionally obtained from shark liver oil – is widely used in emollients, lipsticks, lotions, and antiageing creams as it is said to possess antioxidant and antiinflammatory characteristics. However, the report said that over-exploitation of sharks had prompted many regulatory agencies to limit shark fishing, with companies such as Unilever and L’Oréal introducing initiatives to use plant-derived squalene instead. Olive oil was the richest vegetable source, containing around 400mg of squalene per 100g, the report said. Vegetable squalene sources were expected

SQUALENE IS TRADITIONALLY OBTAINED FROM SHARK LIVER OIL

to generate US$130M by 2022. The shark squalene market was forecast to experience moderate gains over the coming years, and the synthetic squalene industry was projected to generate demand of over 850 tonnes by 2022. The global squalene market size was projected to see a CAGR of 9% over the 2015-2022 period, the report said. “Global industry revenue is anticipated to

exceed US$24M by 2022.” Cosmetics applications dominated the industry, accounting for a 66% share in 2014. “Squalene is a key ingredient in products such as eye makeup, bath oils, body powders, skin care and moisturising, nail products, suntan and hair preparations, with content ranging from 0.1% to 50%.” Pharmaceutical applications were expected to grow at a rate of 9% CAGR over the 2015-2022 period, the report said. Europe was the main regional market for squalene, with Asia Pacific also witnessing substantial growth. North America was projected to register a CAGR of 8.5% over the 20152022 period. The report said the squalene market was consolidated, with major players including Arbee Fish Oil, Amyris, Kishimoto Special Liver Oil, SeaDragron Ltd and Sophim.

Indian government approves bulk edible oil exports

ndia has opened up the exports of edible oils in bulk quantity in what the Hindu Business Line has described as a “major policy shift” by the government of Prime Minister Narendra Modi. Until now, the export of edible oils – such as groundnut, soyabean, sesame and maize oil – had been allowed only in branded consumer packages up to 5kg in weight. The new ruling was given in the aftermath of a projected record-breaking oilseed output of 33.6M tonnes in 2016/17, up 32.8% from 25.3M tonnes in the previous year, Hindu Business Line wrote. Additionally, Indian exporters were reported to be expecting China to emerge as a major importer of Indian groundnut oil due to rising demand from a more wealthy population. “The decision … will boost overall edible oil

exports and improve the utilisation of domestic oil millers,” Atul Chaturvedi, president of the Solvent Extractors’ Association of India (SEA), told the newspaper, adding that the edible oil industry welcomed the move. According to Chaturvedi, the ruling would encourage bulk exports of groundnut oil to China and Europe, among others, and would give an advantage to India’s non-GMO soyabean in the international market. SEA believed that India’s edible oil shipments had previously peaked at 40,000-50,000 tonnes “a few years ago”. Projections from the US Department of Agriculture expected Indian peanut production to reach 6.3M tonnes and soyabean production to rise to 11.5M tonnes by the end of March 2017.

IN BRIEF ARGENTINA: To cope with the volatile grain market, global food and grains company Archer Daniels Midland Co (ADM) is restructuring its operations in Argentina and preparing to close its South African office, Reuters reported on 6 April. In late March, the company turned off the lights at its Toepfer grains trading unit in Buenos Aires, Reuters said, quoting three anonymous “industry sources familiar with the situation”. ADM reported in February a 41% fall in its fourth quarter net revenues at US$424M as gains in agricultural services were offset by losses in global trading. ADM’s new company in Argentina would keep the ADM name and three grain elevators along the Paraná River and in Bahia Blanca on the coast of the Atlantic would retain the name of Toepfer, Reuters said. BRAZIL: The Brazilian Ministry of Agriculture, Livestock and Farming (MAP) has revealed a widespread mislabelling scheme of olive oil products, the Olive Oil Times wrote on 20 April. A MAP report stated that out of 140 olive oil brands analysed over the last two years, 45 did not meet the requirements of their labelling. The highest incidences of mislabelling were encountered in the states of São Paulo, Paraná, Santa Catarina and the Federal District. In Paraná, the investigation revealed a mix of 85% soyabean oil and 15% lampante oil not fit for human consumption being sold as “olive oil”.

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NEWS

Health Canada submits bid to ban trans fats H

ealth Canada, Canada’s governmental health department, has introduced a regulatory proposal to prohibit the use of partially hydrogenated oils (PHOs), the main source of industrially produced trans fats in food. According to a department statement released on 7 April, prohibiting PHOs in all foods sold in Canada represented a “significant and final step” in Health Canada’s efforts to reduce trans fats in the Canadian food supply to the lowest possible level to promote greater national health. The move follows the October 2016 launch of the Healthy Eating Strategy by Canada’s Minister of Health Jane Philpott, itself based on a mandate letter sent to Philpott in 2015.

Cargill launches oilseed process plant in China

argill and Chinese New Hope Group and Hebei Bohai Investment Group have brought online a US$100M oilseeds processing plant in China, Cargill announced on 24 April. The Hebei Jiahao Grain & Oil Co Ltd plant, located in the Bohai New Development Area in Huanghua, Cangzhou in Hebei province, had the capacity to process 1.32M tonnes/year of oilseed. The finished products from the plant would include high quality oil products and animal feed, which would help meet the growing demand for food products from the population of 300M in northern China, Cargill said. “With consumption upgrading in China, we hope to meet the market demand for quality and nutritious food by leveraging our integrated supply chain that comprises both agriculture and animal husbandry,” said Angelu Liu, board member of New Hope Group and chair of New Hope Liuhe Co Ltd. In addition to the oilseed processing facility, the three companies have also opened the Hebei Jihai Port Co Ltd, which will manage a bulk and general cargo berth with a capacity of 100,000 tonnes. The Jihai Port would serve the transportation and storage needs of the new plant for both domestic and international markets. Total investments in the Jihai Port had exceeded US$100M, Cargill said.

“Through the Healthy Eating Strategy, our government is working to make the healthier choice the easier choice. By prohibiting PHOs, we are removing the largest source of industrial trans fats from Canada’s food supply and helping reduce the risk of heart disease,” she said in a statement. Under the strategy, trans fats must already be reported in the nutritional facts table on product labels, making claims of being ‘trans fat free’ is regulated and voluntary programmes to reduce the use of trans fats have been set up. While Health Canada said this approach had proven successful, some foods still contained industrially produced trans fats and it now intended to add them to the Canadian

List of Contaminants and Other Adulterating Substances in Foods. If the regulation is introduced, Canadian producers would have a 12-month transitory period to switch their production away from using trans fats, re-label products and sell existing stock. A notice of proposal detailing the legislation has been posted to seek comments from Canadians and will remain open until 21 June 2017. Trans fats are a type of unsaturated fatty acid found naturally in food from ruminant animals, such as milk and beef, and which can also be industrially produced. Their consumption has been linked to an increase in the risk of coronary heart disease.

Global castor seed production falls DSM, Evonik to

produce omega 3 oils from algae

ndia – the world’s largest producer of castor seed – is expected see a 25% fall in its production of the oilseed to 1.07M tonnes for the 2016/17 season, against 1.42M tonnes the previous year, according to a crop survey released by Nielsen India, reports Hindu Business Line. The fall was due to farmers turning to alternative crops such as groundnut, cotton, pulses and spices because of low castor seed prices. This resulted in a 26% decline in the castor area to 845,000ha, against 1.14M ha in 2015/16. Gujarat, the largest castor seed producing state, saw the biggest shift from the oilseed to other crop. Its castor area fell 28%. Atul Chaturvedi, president of the Solvent Extractors’ Association (SEA) of India, told the Global Castor Conference in India on 18 February that India was the world’s largest

D producer of castor seed, meeting nearly 90% of global demand. It currently exported castor oil and derivatives worth over US$850M/year. Meanwhile world castor seed production is expected to plummet to around 1.24M tonnes in 2016/17, down from 1.61M tonne last season and down the most recent fiveyear average of 1.65M tonnes, according to a report in the February 2017 SEA newsletter. “The major decline is occurring in India,” the report said. China is the second largest producing of castor seed, followed by Brazil and Thailand.

utch health company Royal DSM and German chemicals producer Evonik are planning to set up a joint venture in the Netherlands to produce omega 3 fatty acid products from marine algae for animal nutrition. For the first time in the world, the companies’ technology would enable the production of omega 3 acids without using wild caught fish, they said in a statement on 8 March. Evonik and DSM’s alternative omega 3 source, aimed initially at salmon fisheries and the pet food industry, would be the first to offer both eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA), important fatty acids that are not naturally produced by the body. By replacing fish-based oils in salmon feed, the companies said the fish-in-fish-out ratio of salmon fisheries could be “reduced significantly”.

Malaysia sets MSPO scheme compliance deadline

il palm plantation companies already certified by the Roundtable on Sustainable Palm Oil (RSPO) will have to comply with Malaysia’s own Malaysian Sustainable Palm Oil (MSPO) scheme by 31 December 2018. Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong set out the deadline on 22 February, saying compliance with the scheme would be implemented in stages. Along with the 31 December 2018 deadline for plantation players that were already RSPO-certified, those without RSPO certification would need to comply by 30 June 2019 and all smallholders by 31 December 2019. “We will be getting the financial incentives ready by

June to help the industry for certification,” Bernama news agency reported him saying. The MSPO scheme was launched at the PIPOC International Palm Oil 2013 Conference with an original implementation date of January 2015. It was developed as an alternative to certification schemes at the time and sets out auditable standards on sustainability principles and criteria for independent smallholders, plantations and organised smallholders, and palm oil mills. The MSPO scheme contains principles covering management responsibility; transparency; compliance with legal requirements; environment, natural resources, biodiversity and ecosystem; best practices; and development of new plantings.

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NEWS

Bunge acquires bakery oils firm Lindemann

lobal agribusiness and food company Bunge has entered into a definitive agreement to acquire Westfälische Lebensmittelwerke Lindemann GmbH & Co. KG, a German supplier of oils and fats. Established in 1902 in Bünde, East Westphalia, the family-owned business has grown to become one of the leading suppliers of oils and fats to both the industrial and artisan channels of the German bakery market. In a statement released on 13 March, Bunge said the Lindemann portfolio was an “excellent fit” for it and would allow the company to offer a broader range of products in response to consumer trends and requirements. “This acquisition will allow us to build a more robust and balanced B2B oil and fat

IN BRIEF PALESTINE: Palestine was added as a member of the International Olive Council (IOC) on 9 April, the agency said in a statement. The promotion to a member state came in the aftermath of Palestine ratifying the 2015 International Agreement on Olive Oil and Table Olives. IOC figures show that in the 2014/15 season, Palestine produced 24,500 tonnes of olive oil. IOC is an intergovernmental United Nations advocacy organisation for the olive oil and table olive industries. WORLD: The European Bank for Reconstruction and Development (EBRD) has agreed to provide a US$100M loan facility for the regional expansion of global agri commodity trader Louis Dreyfus Company. The loan was set to finance the working capital needs of Louis Dreyfus in Bulgaria, Egypt, Kazakhstan, Poland, Romania, Tajikistan, Turkey and Ukraine, EBRD said in a statement on 16 March. EBRD and Louis Dreyfus have worked together in Ukraine since 2000, but they were now expanding to areas such as Egypt, as making export-import operations more efficient would help the sector in both countries, Louis Dreyfus said. The EBRD loan would also help Louis Dreyfus to enter Tajikistan for the first time, focusing on the cotton industry.

business by expanding our portfolio and capabilities to the bakery segment,” said Tommy Jensen, CEO of Bunge EMEA. “It will enable us to strengthen our presence in northwestern Europe that we have established with our existing assets and our recent acquisition of Walter Rau Neusser,” Jensen added. Bunge’s subsidiary, Bunge Deutschland GmbH, acquired the majority stake in German edible oils and fats producer Walter Rau Nesser Öl und Fett AG from holding company Cremer Group in April 2016. Bunge has completed a slew of other acquisitions within the past year as well, including the takeover of Turkish olive and seed oil producer Ana Gida in December 2016

and two oilseed crushing plants from Cargill in February 2017. The Cargill deal included a soyabean and rapeseed crush and soyabean refining facility, along with a part of a bulk port terminal, in the Port of Amsterdam, the Netherlands, and a soyabean and rapeseed crush plant in the Port of Brest, France. Additionally, Bunge formed in February 2017 a join venture with Saudi shipping firm Bahri Dry Bulk Company to establish an ocean freight supplier for dry bulk import and export flows in and out of the Middle East. The Dubai-based Bunge Bahri Dry Bulk Ltd is planning to ship more than 5M tonnes of freight in one year and is aiming to increase this number to double digits over time.

Algae butter receives GRAS letter China urges farms to plant soyabean

he US plant-based food, nutrition and specialty ingredients company TerraVia Holdings’ algae butter has received a Generally Recognised as Safe (GRAS) No Questions letter from the US Food and Drug Administration (FDA). The GRAS notice, announced by TerraVia on 13 April, confirms that the scientific data and information of the algae butter are known and that it is safe for human consumption. The new butter, free of palm and hydrogenated oils, featured a low melting point and could reduce saturated fat content in most applications by up to 50% while still providing a “clean taste”, TerraVia said. “The food industry has been searching for a replacement for palm and hydrogenated vegetable oils that maintains quality, taste and functionality and also meets their rigorous criteria for sustainable sourcing,” said Mark Brooks, TerraVia

T senior vice president. The FDA response, according to the company, paved the way for the commercialisation of the butter, which is an exclusive product to TerraVia and its joint venture partner Bunge North America. It would be produced through the joint venture company SB Oils and marketed in the USA by Bunge. “The potential of the product to meet so many on trend demands has been met with strong levels of interest from a number of our food customers,” said Mark Stavro, senior director of marketing at Bunge North America.

he Chinese government is encouraging farmers to switch from planting corn to soyabeans to reduce the country’s massive corn stockpile, Reuters reported on 19 April. Beijing had 250M tonnes of corn – more than a year’s consumption – due to a decadelong stockpiling programme that ended in 2016 and processors were ramping up capacities to get rid of it, the report said. COFCO Biochemical, a subsidiary of the state-owned grain trader COFCO, was increasing its annual capacity to more than 10M tonnes by 2020, Reuters quoted the company’s general manager Tong Yi as saying. Tong said China’s total corn processing capacity was projected to reach 70M tonnes by the end of 2018, up from the current 50M tonnes, which would use up the old corn stock in three to five years.

Fish oil draft standard sent for Codex Alimentarius

he Codex Committee on Fats and Oils (CCFO) has finalised a fish oil draft standard to be included in the Codex Alimentarius, an international collection of food standards and safety rules. The CCFO agreed to send the draft standard to the Codex Alimentarius Commission for adoption during its next meeting in July. The suggested draft – including several named fish oils, such as anchovy, salmon and tuna oil, and unnamed oils as either mixes or concentrates – is the first ever standard for fish oil in the Codex. While generally welcomed by the fish oil industry, there were concerns about certain parts of the new standard, Nutritional Outlook reported. Harry Rice, vice president of regulatory and

scientific affairs at the Global Organization for EPA and DHA Omega-3s (GOED), told the news site that his primary concern was the identification of named oils based on matching a fatty acid profile. “The fatty acids are given in ranges, but it’s likely that the ranges will shift over time and then what’s in the standard won’t correspond to what’s being sold. While Codex can adjust the fatty acid ranges, this is a process that takes many years,” he said. According to Rice, should the CCFO amend the standard in 2019, for example, the amendment proposal would not be submitted until 2021, with the final change approved only in 2023. The Codex Alimentarius is an international voluntary reference standard for food.

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BIOFUELS NEWS

IN BRIEF BRAZIL: Dutch tank storage company Royal Vopak is expanding its wholly-owned Alemoa Terminal at the Port of Santos, Brazil, primarily for ethanol exports. The expansion was to add 16 new tanks with a capacity of 61,000m3, bringing the terminal’s total capacity to 235,000m3, the company said in a statement of 19 April. Additionally, five truck loading bays would be constructed to handle an additional 130 trucks per day. Commissioning is projected for first quarter 2019. INDIA: The Indian government has approved the closure of two joint ventures growing the jatropha energy crop for biofuels production. The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved the closures of CREDA HPCL Biofuel Ltd (CHBL) and IndianOil – Chhattisgarh Renewable Energy Development Agency (CREDA) Biofuels Limited (ICBL) on 22 March. According to a committee statement, the companies had ceased all activities, there was no financial outgo from the government and all lands had been returned to CREDA. The committee said the closure of CHBL and ICBL would result in saving “unfruitful” expenditure on statutory compliance. CHINA: Zhenhai Refining and Chemical, a subsidiary of China’s state-owned oil and gas company Sinopec, is planning to construct a 100,000-tonnes/year used cooking oil (UCO)-to-biofuel plant in eastern China. To be located in Ningbo, Zhejiang Province, the plant would produce 30,000 tonnes of aviation-grade biofuel for long-haul international flights, the CNBC news channel reported. The facility’s design was near completion and proceeding on schedule. “We have confidence about breaking ground in 2018,” Huang Zhongwen, spokesman for Zhenhai Refining, told South China Morning Post. Output would be sufficient for certain long-distance flights, he added.

USA launches an anti-dumping probe against biodiesel imports

he USA has launched an anti-dumping investigation into Indonesian and Argentinian biodiesel imports after the National Biodiesel Board (NBB) filed a complaint with the US Department of Commerce in March. The International Trade Commission (ITC), part of the commerce department, was expected to make a preliminary decision on 5 May on whether or not the biodiesel imports hurt domestic producers, the NBB said on 13 April. In testimony to the ITC given on the same day, the NBB said biodiesel imports from Argentina and Indonesia had surged by 464% from 2014 to 2016, taking 18.3% of market share from US manufacturers. “2016 should have been a banner year for US biodiesel producers with demand growth, stable feedstock prices, and regulatory certainty that should have led to profitability and reinvestment in their businesses, but unfortunately that didn’t happen,” said NBB vice president of federal affairs Anne Steckel. Submitted on behalf of the National Biodiesel Board Fair Trade Coalition, comprising NBB and US biodiesel producers, the complaint claimed that companies from Argentina and Indonesia were violating trade laws by flooding the US market with “dumped and subsidised” biodiesel in record volumes. Oke Nurwan, director general for foreign trade

in Indonesia, told Reuters that the Indonesian government would be cooperative in the investigation by providing arguments and supporting data showing there had been no dumping or subsidies. Argentinian biodiesel producers were claiming that the USA would now have to prove that dumping and illegal subsidies were taking place. “[It] is a sham. It’s a protectionist measure. We hope that the US offers a fair process, which will show that there is no dumping or subsidies of Argentine biodiesel,” said Argentina’s Biofuels Association head Claudio Molina. “If a sanction is applied against Argentina in the US, our exports will no longer be viable. At this point, there is no alternative market,” Molina told Reuters. According to Reuters, there was not enough demand to absorb excess production should US exports become blocked, as Argentina exported 90% of the 1.6M tonnes of biodiesel it produced in 2016. Argentina represented two-thirds of the total US biodiesel imports of 916M gallons in 2016, followed by Indonesia and Canada, according to US government data. The EU has previously placed anti-dumping duties on Argentinian and Indonesian biodiesel, and both have filed complaints against the measure with the World Trade Organization (WTO). The WTO ruled in favour of Argentina’s complaint against the duties in 2016, but a counterclaim by the EU has kept them in effect for the time being.

Abengoa sells EU bioethanol plants EC ends ethanol

rivate equity firm Trilantic Europe has agreed to purchase struggling Spanish renewable energy company Abengoa’s four bioethanol plants in Spain and France. Included in the sale are the Cartagena, La Coruña and Salamanca locations in Spain and the Lacq plant in France. The €140M (US$150.6M) deal, including the debt assumed by the buyer and the minority interests, was expected to close once “a number of conditions precedent” had been met, Abengoa said in a statement on 16 March. The Trilantic agreement, alongside others that the company said were in advanced stages of negotiations, culminates Abengoa’s viability plan to sell all of its European biofuel assets. Over the past months, Abengoa has announced its agreement with Ericsson for the sale of its subsidiary Abentel, its participation in the solar thermal

plant Shams-1 in the United Arab Emirates, as well as the Campo Palomas wind farm in Uruguay.   In early March, Spanish energy company Cepsa purchased Abengoa’s San Roque plan in Spain for €8M (US$8.6M) The renewables ex-giant also sold off its US assets in 2016 after declaring bankruptcy, the latest among them the Hugoton, Kansas, ethanol plant sold to Synata Bio for US$48M, which beat oil firm Royal Dutch Shell’s US$26M offer (see Biofuels News, OFI November/December 2016). Green Plain Inc bought Abengoa’s Madison, Illinois; Mount Vernon, Indiana; and York, Nebraska, plants for US$237M, while its Ravenna, Nebraska, plant was sold to KAAPA Ethanol LLC for US$115M and the Colwich, Nebraska, facility to ICM Inc for US$3.15M (see Biofuels News, OFI September/October 2016). In August 2016, Abengoa presented its updated restructuring plan.

antitrust probe

he European Commission has closed an antitrust investigation on ethanol producers and traders launched in 2015, consisting of unannounced inspections of the operators’ premises. According to Argus Media on 18 April, the closure of the investigation did not prevent the Commission from re-opening it at a later date if it saw fit to reassess its position. Explaining why the investigation came to an end, Commission spokeswoman Lucia Caudet said the Commission wanted to “focus its limited resources on the cases that promise the greatest merit from a public enforcement perspective”. There was no legal deadline for the completion of the inquiries and the commission in April 2015 said their duration depended on a number of factors, including the complexity of each case, the readiness of concerned companies’ to cooperate with the investigation and their exercise of their right of defence.

8 OFI – MAY 2017 www.oilsandfatsinternational.com

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9 OFI – MAY 2017 www.ofimagazine.com

BIOTECH NEWS

EC approves ChemChina-Syngenta merger T

he planned merger of China’s state-owned chemical company ChemChina and the Swiss pesticide producer Syngenta can go ahead as it does not violate competition rules, the European Commission (EC) has decreed. The Commission was satisfied that both Syngenta and ChemChina’s subsidiary Adama had successfully and sufficiently divested their operation so as to not create an unfair competitive situation in Europe, the EC said in a statement on 5 April. Having analysed the effects of the merger, the EC originally raised concerns that the move would negatively impact competition in the areas of herbicides, insecticides, fungicides and seed treatment products, where the two companies are close competitors.

IN BRIEF USA: A team of researchers at the University of Illinois has proven sugarcane can be genetically modified to produce oil for biodiesel production. The modification also had the unintended side effect of increasing sugar yields, which could be used for ethanol production, the university said in a 7 April statement. The scientists recovered 0.5% and 0.8% oil from two modified strains, which marked a 67% and 167% increase to unmodified sugarcane. The team has since engineered sugarcane strains with 13% oil, of which 8% was suitable for conversion to biodiesel. The researchers are now seeking commercial investors to achieve 20% oil production, sugarcane’s calculated theoretical limit. USA: Global agribusiness corporation Cargill has initiated an identity preservation process to address growing consumer demand for non-GMO food. The company’s KnownOrigins process delivered transparency so food and beverage manufacturers can source the ingredients they need to deliver non-GMO products, Cargill said in a statement on 15 March. The process features testing, approval and evaluation protocols that Cargill said would allow food and beverage manufactures trust that nonGMO ingredients provided by the company meet all relevant standards.

Together, they would have held a large share of the market with few competitors remaining, which the EC thought would raise prices for European farmers and ultimately consumers. However, the EC said the parties had been prepared to address the raised concerns. “They offered to sell off a major share of their overlapping business. This includes a significant part of Adama’s business for pesticides and plant growth regulators, as well as some pesticides owned by Syngenta,” the EC statement read. Additionally, Adama also agreed to sell off 29 products that it had under development. The EC confirmed that the divestments would work through a market test and, on this basis, approved the merger transaction.

The Commission cooperated with competition authorities from several countries and the USA, Mexico and China have all also approved the merger. Chemical equity analyst Bernstein Research said the divestures were likely to be bought by companies such as FMC, Nufarm or Sumitomo, reported petrochemical market news channel ICIS. The EC drew a parallel between the ChemChina/Syngenta merger and the Dow/ DuPont merger, which it approved at the end of March 2017. However, it noted that Adama was not active in the R&D of new pesticides which gave rise to a different set of concerns between the two transactions.

FMC to buy parts of DuPont crop protection business

peciality chemicals firm FMC Corporation will be buying parts of US chemical company DuPont’s crop protection business, which the European Commission has ruled must be divested for DuPont’s US$130bn merger with Dow Chemical Company to take place, both companies said on 31 March. FMC would acquire DuPont’s cereal broadleaf herbicide and chewing pest insecticide portfolios, its crop protection R&D pipeline and organisation, excluding seed treatment, nematicides and late-stage R&D programmes. In addition, DuPont would

purchase FMC’s health and nutrition business for US$1.2bn. FMC said once the deal was completed, its agricultural solutions business would become the world’s fifth largest crop protection chemical company by revenue, with an estimated annual revenue of US$3.8bn. FMC was expecting its acquisition to generate US$1.5bn in revenue and US$475M in EBITDA in 2017. “This agreement with FMC is a win-win. It’s pro-competitive, it advances the regulatory approval process, and it maintains the strategic logic and value creation potential of our merger,” said

DuPont chairman and CEO Edward Breen. The FMC nutrition and health business to be acquired by DuPont generated more than US$700M in revenues in 2016. The transaction between DuPont and FMC was expected to close in fourth quarter 2017, subject to the closing of the DuPont and Dow merger. t The proposed merger between DuPont and Dow was likely to hurt competition, Indian competition regulators have said. According to Reuters on 22 March, the regulator had sought public opinion on the deal and directed the companies to publish details of the merger.

Nuseed submits omega 3 producing China approves GMO canola for regulatory approval fewer GM crops

lobal seed company Nuseed, a wholly-owned subsidiary of Australia’s Nufarm Ltd, has submitted a genetically modified strain of canola producing omega 3 for regulatory approval in Australia. Further submissions for the canola strain, which would provide long-chain omega 3 oils using a sustainable land-based source, would be sent to US and Canadian authorities by the end of March, Nuseed said in a statement on 21 March. The proprietary canola was developed in collaboration with Australia’s national science agency Commonwealth Scientific and Industrial Research Organisation (CSIRO), and the investment firm Grains Research and Development Corp (GRDC), with an aim to help

relieve pressure on global wild fish stocks, currently the major source of omega 3s. Nuseed said providing a landbased source for omega 3s would help maintain adequate supply in the face of increasing global demand. The company anticipates that one hectare of its canola strain could provide omega 3 yields as high as 10,000kg of fish. It planned to grow up to 1,600ha of the crop this year in the USA under a closed-loop grain handling and oil processing system, with commercialisation expected to commence in 2018-2019. Nuseed also announced two end-use market specific brands for aquaculture feed and human nutrition applications.

hina has approved the import of fewer GMO crops than before, which could prove an obstacle for new product launches and global trade, a US industry group said. The country’s agriculture ministry approved only one new GM crop in 2016, opposed to three in 2015, according to a Reuters report on 21 March. “The trend is moving in the wrong direction in terms of the product being approved in the past few years,” Gao Yong, co-chairman of the agriculture group at the American Chamber of Commerce in China told the news agency. The Chinese government supported biotechnology, but the public remained suspicious of GMO foods.

10 OFI – MAY 2017 www.oilsandfatsinternational.com

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TRANSPORT & LOGISTICS NEWS

MOU to develop Indonesian maritime logistics

ouis Dreyfus Armateurs Group (LDA), a French maritime transportation group, has signed a memorandum of understanding (MOU) with Indonesian palm oil plantation company Golden Agri-Resources (GAR) to develop business opportunities in maritime logistics in Indonesia. The MOU, signed between GAR and LDA on 29 March, focused on developing logistics in Indonesia for the next five years with planned acquisitions and investments amounting to around US$100M, LDA said in a statement. In 2014, LDA and GAR established a joint venture company dedicated to transporting LDA and GAR cargoes within Indonesian

waters, which in 2016 transported 4.5M tonnes of various cargoes. Jesslyne Widjaja, executive director of GAR, said: “The maritime sector plays a pivotal role in the Indonesian economy and our goal is to contribute actively to the development of the sector as a whole.” “This new step in our partnership with GAR confirms LDA’s strategy to keep strong links with Indonesia, where our group has been active for more than 25 years in the coal export market, onshore and offshore port logistics as well as marine industrial services,” said Philippe Louis-Dreyfus, president of the supervisory board of LDA.

According to the firms, Indonesia was a key commercial partner for French companies, especially for marine services. In 2014, Indonesian President Joko Widodo announced plans to turn Indonesia into a global maritime axis and had often reaffirmed this strategy since then, the statement read. LDA saw French President François Hollande’s historic visit to Indonesia at the end of March 2017, the first of a French President in 30 years, as signalling stronger bilateral ties between the two countries as well as France’s support of the certified, sustainable development of plantation industries in the region through supportive measures.

Colombia storage deal

iquid and bulk terminal company Zenith Energy LP announced on 22 March that it had entered into an agreement with food and agri firm Cargill to store and handle palm oil in Colombia. Construction at Zenith’s Palermo Tanks Terminal, located at the port of Barranquilla, began on 1 February 2017, with the aim to build 19,000m3 of storage capacity in four dedicated tanks for Cargill’s palm oil operation. The long-term contract includes the construction of a new dyke, tanks with a heating system, a dedicated dock line and truck loading and unloading positions with capabilities to import and export products. Palermo Tanks is a joint venture between Coremar Group and Zenith and became operational in 2016. The public access liquids terminal – with an initial liquids storage capacity of 58,000m3 – imports and exports petroleum, chemicals and vegetable oils. Zenith planned to eventually increase storage capacity at Palermo Tanks to exceed 400,000m3.

Your storage partner

Kernel sells 50% stake in Taman terminal

krainian agribusiness firm Kernel plans to sell its 50% stake – valued between US$70-150M – in the Taman grain terminal, its last remaining asset in Russia, the Interfax news agency reported on 31 March. The most likely buyer was reported to be Swiss commodity trader Glencore, which bought the other half of the terminal with Kernel in 2012 for US$262M from Efko Group. Taman seaport is Russia’s largest terminal for liquid food cargo handling, with its throughput dominated by vegetable oil, beet molasses, sunflower meal and beet pulp. Kernel handles about 7M tonnes/year of agricultural commodities including grain and sunflower oil produced in Ukraine and Russia. The Vedomosti newspaper reported in March 2016 that Kernel was its selling oil extraction plants in Florentina and Maslo Stavropolya, Russia, and it had sold another facility in Nevinnomysk to the Swedish retail finance company Resurs Group in 2014.

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

11 OFI – MAY 2017 www.ofimagazine.com

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

Kao-Apical venture to produce fatty acids

roduction at a new 100,000 tonnes/year fatty acid plant in Indonesia being built by a joint venture between Japan’s Kao Corporation and Indonesia’s Apical Group Ltd is scheduled to begin in 2019. The PT Apical Kao Chemicals joint venture was announced late last year, with an initial capital investment of US$25M. Apical will own 65% of the venture and Kao 35%. The companies said the plant would be located at Dumai, a city in Riau province on the island of Sumatra, at a site of approximately 44,000m2. “Kao will establish a production base for fat and oil products in Indonesia, a country with abundant raw materials for the production of such products,” the Japanese consumer products group said. “This is in addition to the production

IN BRIEF USA: Butamax Advanced Biofuels LLC, a 50/50 joint venture between BP and DuPont, is adding bio-isobutanol capacity to the Nesika Energy ethanol facility which it acquired on 3 April. The Scandia, Kansas-based plant would continue to produce ethanol before and after the retrofit, Butamax said. Butamax plans to use the plant as a demonstration facility before licencing its bioisobutanol technology abroad. It said bio-isobutanol did not suffer from the water solubility issues associated with blending ethanol in petrol. WORLD: Specialty chemicals company Johnson Matthey and catalysts firm Rennovia Inc signed a licence agreement earlier this year to supply Archer Daniels Midland Company (ADM) with catalyst and process technology to produce bio-based glucaric acid. “The licensed process, jointly developed by Johnson Matthey and Rennovia, combines the efficiency and selectivity of heterogeneous catalytic process technology with the use of renewable feedstocks to produce bio-based glucaric acid,” Johnson Matthey said in February. Glucaric acid was an emerging platform chemical with a wide range of applications in detergents and cleaners, concrete formulations, de-icing and anti-corrosion markets, it added.

bases Kao already has in the Philippines and Malaysia. “By cooperating with Apical Group – which has its own plantations and also manufactures fats and oils – Kao will be able to secure an even more stable supply of fat and oil materials than ever before. “Through the optimisation of production bases within the Kao Group to manufacture and supply competitive fat and oil products, Kao plans to build the foundation for the expansion and greater profitability of its chemical business unit.” Kao’s main business field is in consumer products, particularly in beauty care, human health care and fabric and home care. In its chemical business, Kao manufactures industrial products including oleochemicals (fatty alcohols, fatty amines, fatty acids,

glycerine), commercial-use edible fats and oils, and performance and speciality chemicals. It generates about 1,500bn yen (US$13.53bn) in annual sales. Apical is one of the largest exporters of crude palm oil (CPO) in Indonesia and refines, processes and trades palm oil. It crushes palm kernels; refines and fractionates CPO, crude palm kernel oil and soyabean oil; and produces shortenings, margarine, powder fat, biodiesel, glycerine, fatty acids and glycerol. It also merchandises and distributes CPO and processed palm oil. Apical operates four refineries with a total capacity of 3.7M tonnes/year, a biodiesel plant, a fat splitting plant and a crushing plant. Its facilities in Indonesia are located at Tanjung Balai, Dumai and Marunda. It also operates in China’s Nanjing industrial zone.

Bio-on and Greenergy may build PHA plant in UK

taly’s Bio-on Spa and UK biodiesel manufacturer Greenergy International Limited have signed an agreement to investigate the possibility of building a 5,000 tonnes year plant – expandable to 10,000 tonnes/year – to produce bioplastic from glycerol, the companies announced on 16 March. “This would be northern Europe’s most advanced plant producing

(polyhydroxyalkanoates) PHA biopolymers from glycerol,” said Bio-on CEO Marco Astorri. Greenergy has two production plants in the north east of England producing biofuel from food industry waste streams, such as used cooking oil. Its technical collaboration with Bio-on will investigate the potential to manufacture PHAs biopolymers from glycerol, a byproduct of biodiesel production, on an industrial scale in the UK.

“We are looking at the potential to integrate the Bio-on technology into our existing biodiesel processes, thereby adding value to our existing activities,” said Greenergy CEO Paul Bateson. Bio-On conducts R&D on bio-fermentation technologies in the bioplastic sector. It has developed a process to produce PHAs polymers from agricultural waste including sugarcane molasses and sugar beet syrups.

Green Biologics to supply Bio-on to make n-butanol to Jungbunzlauer Ibio-microbeads G reen Biologics Inc, USA announced on 14 February that it would exclusively supply Germany’s Jungbunzlauer Ladenburg GmbH with renewable n-butanol. Jungbunzlauer received its first shipment of n-butanol from Green Biologics’ production facility in Little Falls, Minnesota in February to produce bio-based tributyl citrate and acetyl tributyl citrate, Green Biologics said. The US subsidiary of UK industrial biotechnology and renewable chemicals company Green Biologics Ltd announced the start-up of its first commercial production facility for renewable n-butanol and acetone in December 2016. “Our focus is to selectively move our renewable n-butanol and acetone into high value markets, and Jungbunzlauer is an outstanding partner for Green Biologics, particularly in citric-based plasticisers, and other bio-based esters as well,” said Timothy Staub, global vice president of business development for Green Biologics. Jungbunzlauer Ladenburg GmbH is the German operating unit of Jungbunzlauer Suisse AG in Basel, Switzerland, a leading producer of biodegradable ingredients of natural origin. Green Biologics’s platform combines fermentation with proprietary clostridium microbial biocatalysts and synthetic chemistry to convert a range of sustainable feedstocks into green chemicals such as n-butanol, acetone and their derivatives. Its n-butanol and acetone have received 100% USDA BioPreferred status.

talian intellectual property company Bio-on Spa has begun the construction of a new facility in Bologna to manufacture microbeads out of bioplastics. In a statement on 21 March, the company said the €15M (US$16.1M) plant would begin production in 2018, with a capacity of 1,000 tonnes/year. Plastic microbeads are widely used as thickeners and stabilisers in cosmetic products such as lipstick, mascara, creams, shampoo and toothpaste. When rinsed off, they enter the food chain, posing a danger to fish and aquatic creatures. The 2015 US MicrobeadFree Waters Act will phase out microbeads in cosmetics by July and other countries are implementing or considering bans. Bio-on said the micro particles of its bioplastic was biodegradable in water.

12 OFI – MAY 2017 www.ofimagazine.com

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DIARY OF EVEN TS

11-12 MAY 2017 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

17-19 MAY 2017 7th ICIS World Surfactants Conference VENUE: Hyatt Regency, Jersey City, USA CONTACT: Georgina Shillito, conference producer, ICIS, UK Tel: +44 20 8652 3641 E-mail: georgina.shillito@rbi.co.uk Website: www.icisconference.com/ worldsurfactants

19-20 MAY 2017 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

31 MAY - 1 JUNE 2017 12th Annual Conference of the Roundtable on Responsible Soy Association (RTRS) VENUE: Empire Riverside Hotel, Hamburg, Germany CONTACT: INTERPLAN Congress, Meeting & Event Management AG Tel: +49 40 32 50 92 57 E-mail: efpra2017@interplan.de Website: www.responsiblesoy.org/ annual-conference

31 MAY - 3 JUNE 2017 17th EFPRA Congress 2017 VENUE: Empire Riverside Hotel Hamburg, Germany CONTACT: INTERPLAN Congress, Meeting & Event Management AG, Germany 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 Biomass, 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

18-23 JUNE 2017

31 JULY - 1 AUGUST 2017

FOSFA Middle Managers Course VENUE: Royal Holloway, University of London, UK CONTACT: FOSFA International, UK. Tel: +44 207 374 2346; E-mail: amy.morrell@fosfa.org Website: www.fosfa.org/events/ middle-managers-course/

Palm International Nutra-Cosmeceutical Conference (PINC) 2017 VENUE: Le Méridien Putrajaya, Putrajaya Malaysia CONTACT: Malaysian Palm Oil Council (MPOC) Email: pinc2017@mpoc.org.my Website: www.mpoc.org.my/Palm_ International_Nutra-Cosmeceutical_ Conference_(PINC)_2017.aspx

28-29 JUNE 2017 Oleofuels 2017 VENUE: Kraków, Poland CONTACT: Marta Kielerska, ACI, Poland Tel: +48 61 6467058 E-mail: mkielerska@acieu.net Website: www.wplgroup.com/aci/event/ oleofuels/

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

11 JULY 2017 23rd MPOB Transfer of Technology Seminar and Exhibition 2017 VENUE: Malaysian Palm Oil Board (MPOB) Head Office, Bangi, Selangor, Malaysia CONTACT: HRD & Conference Management Unit, MPOB, Malaysia. Rubaah Masri, Tel: +60 3 87694567 E-mail: rubaah@mpob.gov.my or Salmah Hussin, Tel: +60 3 87694873 E-mail: salma@mpob.gov.my Website: www.mpob.gov.my/en/events/ conferences-seminars/28233-23rd-mpobtransfer-of-technology-seminar-2017-11july-2017

12-13 JULY 2017 14th Oleochem Outlook 2017 LOCATION: Nanjing, China CONTACT: Amy Shen, Enmore, China Tel: +86 21 5155 1208 E-mail: shenchuan@enmore.com Website: http://en.enmorebiz.com/ Chemical/101412.html

For a full listing of oils and fats industry events, visit our website at: www.ofimagazine.com

2 AUGUST 2017 Malaysia-Ghana Palm Oil Trade Fair & Seminar (POTS) 2017 VENUE: Accra, Ghana CONTACT: Kamal Azmi or Nor Iskahar, Malaysian Palm Oil Council (MPOC) E-mail: kazmi@mpoc.org.za iskahar@mpoc.org.my Website: www.mpoc.org.my/Palm_Oil_Trade_ Fair_and_Seminar_(POTS)_2017.aspx

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/ uppsala2017/index.php

3-8 SEPTEMBER 2017 FOSFA Basic Introductory Course VENUE: Royal Holloway, University of London, UK CONTACT: FOSFA International, UK Tel: +44 207 374 2346 E-mail: amy.morrell@fosfa.org Website: http://www.fosfa.org/events/ basic-introductory-course/

5-6 SEPTEMBER 2017 4th High Oleic Oils International Congress VENUE: Bucharest, Romania CONTACT: FAT & Associés, France Tel: +33 567 339 206 Fax: +33 567 339 203 Website: http://higholeicmarket.com/ hoc-2017/

11-14 SEPTEMBER 2017 17th AOCS Latin American Congress and Exhibition on Fats and Oils VENUE: Grand Fiesta Americana Coral Beach Hotel, Cancun, Mexico CONTACT: AOCS Meetings Department, USA Tel: +1 2176934821; Fax: +1 2176934865 E-mail: meetings@aocs.org Website: http://annualmeeting.aocs.org

14 OFI – MAY 2017 www.ofimagazine.com

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DI ARY O F E V E NT S

www.dsengineers.com

12-14 SEPTEMBER 2017 oils+fats International Trade Fair for Technology and Innovations VENUE: Messe München, Munich, Germany CONTACT: Messe München, Germany Tel: +49 89 94911328 E-mail: info@oils-and-fats.com Website: www.oils-and-fats.com/index-2.html

13-15 SEPTEMBER 2017 Globoil India 2017 VENUE: Renaissance Mumbai Convention Centre Hotel, India CONTACT: Tefla’s, India Tel: +91 9820990012 /+91-7506502201 /+91-7045363088 /+91 22 62231245; E-mail: teflas@gmail.com; events@teflas.com Website: www.globoilindia.com/

22-23 SEPTEMBER 2017 1st Indian Surfactants Conference VENUE: Mumbai, India CONTACT: ICIS, UK. Inara Mironova, senior conference producer, ICIS, UK Tel: +44 20 7911 3134; E-mail: inara.mironova@icis.com Website: www.icisconference.com/indiansurfactants2017

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1-3 NOVEMBER 2017 12th Indonesian Palm Oil Conference (IPOC) and 2017 Price Outlook VENUE: The Westin Resort Nusa Dua, Bali, Indonesia CONTACT: IPOC Secretatiat, Indonesia Tel: +62 21 57943852; E-mail: info@gapkiconference.org Website: www.gapkiconference.org/

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

17-18 NOVEMBER 2017 PORAM Annual Forum, Dinner, Golf Challenge VENUE: One World Hotel, Kuala Lumpur, Malaysia CONTACT: The Palm Oil Refiners Association of Malaysia (PORAM) Tel: +603 7492 0006; E-mail: info@poram.org.my Website: www.poram.org.my/p/ 15 OFI – www.ofimagazine.com

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Activated carbon is used in edible oil bleaching to remove contaminants prior to consumption. Rose Hales looks at how the product is made and activated, who is producing it, and how it works

ctivated carbon or activated charcoal is used during the deodorising and bleaching process of edible oil preparation. It employs physical adsorption as a method to purify vegetable oils and make them suitable for consumption. Edible oils can be contaminated with natural and anthropogenic compounds, some of which are carcinogenic, including polycyclic aromatic hydrocarbons (PAH), dioxins and polychlorinated biphenyls (PCB), heavy poly neleic aromatics (HPNA), pesticides and herbicides. Oils can become contaminated through environmental pollution, drying with combustion gases, associated smoke drying or contamination of transport containers. Activated carbon is employed alongside bleaching earths (see ‘Salt of the earth’, OFI June 2016) for refining and decolourisation of oil. According to activated carbon producer Cabot Norit Activated Carbon, although activated bleaching earths have improved in quality and are now capable of most of the bleaching, activated carbon is useful for high concentrations of pigments – such as chlorophylls, xanthophylls and carotene – to improve the bleaching effect or support the thermal decomposition of pigments during deodorisation. Activated carbon is produced from carbonaceous sources, which can include coal, coconuts, nutshells, peat, wood and lignite. The source can be any organic material with a high carbon content. The organic raw material is physically modified and thermally decomposed in a furnace to produce the activated carbon. The final product is highly porous. One gramme of activated carbon has a surface area of at least 500-1,500m2, according to activated carbon solutions provider Haycarb. The company says that a single spoon of activated carbon could easily equate to the surface area of a football field. Contaminants adhere to the carbon’s large surface area, removing them from the end product.

Properties Activated carbon products are characterised by their activity and physical properties. Pore size distribution is an important activity property that indicates the carbon’s performance for removing contaminants from a liquid. According to TIGG – a supplier of activated carbon adsorption systems, equipment and media – there are three pore size regions: t Micropore region – less than 100 angstroms (a unit of length equal to one ten-billionth of a metre) t Mesopore region – between 100 and 1,000 angstroms t Macropore region – more than 1,000 angstroms

Activated carbon In addition to this, activated carbons produced from different raw materials have distinctive properties and characteristics that make each suitable for specific types of purification. These characteristics include pore diameter, hardness, density, iodine content and ash content. Table 1 (following page) provides examples of the varying properties achieved through using different raw materials. Pore diameter determines whether a certain kind of activated carbon can be used for general dechlorination and a wide variety of organic contaminants. Such variants include bituminous coal activated carbon. If the carbon has greater microporosity, such as that made from coconut, it may be better suited for removing low concentrations of contaminants. Pore diameter is deduced from the iodine number, ,with a higher number correlating with a larger surface area. A large surface area is more suitable for weakly absorbed organic contaminants. This is the most fundamental consideration when choosing an activated carbon for any application. Hard carbon may be necessary if the purification process is more vigorous, such as backwashing. Density affects how much carbon can fit into a container or processor, and incorrect use will affect performance. Ash content is mainly important for

water treatment, as a high ash content may not be suitable for certain water purification processes where liberated ash will cloud the water. Finally, the molasses efficiency rate measures an activated carbon’s aptitude to absorb large molecules. According to activated carbon producer Haycarb, activated carbon with optimum iodine, methylene blue and molasses figures – with demonstrated colour and smell removal capabilities and consistency – should be used for edible oil applications. The company recommends these properties for oils including coconut, olive, fish, sunflower, rapeseed, palm/palm kernel and soyabean.

How is it activated? When something has been ‘activated’, this means it has been processed to increase the internal microporosity of the original material. This is done by removing individual carbon atoms and creating tiny holes in the material, which adsorb unwanted molecules. According to Hugh McLauglin in Biofuels Digest, “the key to activated carbon is that it is optimised for a specific adsorption application and the adsorption capacity is packed into as dense a material as possible to minimise the

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PHOTO: SHOWCAKE/ADOBE STOCK

volume of adsorbent necessary.” Carbonaceous raw materials are activated either using chemical activation or high temperature steam activated (HTSA)/physical mechanisms. CHEMICAL According to B. Viswanathan, P. Indra Neel and T. K. Varadarajan in their book ‘Methods of Activation and Specific Applications of Carbon Materials’, chemical activation is a single step process where chemical agents are used to activate organic carbon. The method utilises a solid activating agent (such as an alkali), substances that contain alkaline earth metals, or some acids. The agents used dehydrate the carbon and cause pyrolytic decomposition, which inhibits the formation of tar and enhances the carbon yield. Chemical activation takes place at a lower temperature than physical activation, which results in a better developed porous structure. However, drawbacks of the method include the need to wash the final product of residual inorganic materials, which can cause pollution problems.

PHYSICAL In the same book, ‘Methods of Activation and Specific Applications of Carbon Materials’, the authors describe how physical activation is a twostep process. This involves carbonising the raw material in an inert atmosphere and then activating the resulting char with a carbon gasification reactant, such as CO2, steam or air. The physical activation reaction happens between the carbon atom and the oxidising gas, which causes the creation of pores as different parts of the char structure react faster than others. The process uses gaseous activation agents and therefore does not produce wastewater. For this reason, it is considered to be environmentally friendly. However, due to the length of time and energy needed, the method is not ideal. In addition, a large quantity of the internal carbon mass is destroyed to obtain the pore structure, so the yields are limited, especially in comparison to chemical activation. Physically and chemically activated carbons are available in three forms: granular (GAC), powdered (PAC) and extruded carbon. t GAC: irregularly shaped, formed through milling and sieving. Sizes range in diameter between 0.2mm to 5mm. They are hard and longlasting, clean to handle and purify large quantities of oil or gas to a consistent quality. GAC can be reactivated and reused. t PAC: have a particle size distribution between 5-150 angstroms. PAC have relatively low processing costs and can be used flexibly as the dosage can easily be increased or decreased. Edible oils are mainly purified using PAC and always alongside bleaching earths (apart from fish oils). PAC cannot be reactivated. t Extruded: cylindrical pellets used in heavy-duty applications.

How does it work? Activated carbon removes contaminants from liquid oil through the process of physical adsorption. According to John Sherbondy and John Mickler at TIGG, activated carbon’s large surface area works through several forces to attract other molecules inside it. Sherbondy and Mickler compare this to the gravitational force: “Contaminants … are adsorbed to the surface of the carbon from a solution as a result of differences in adsorbate concentration in the solution and in the carbon pores”. All molecules apply attraction forces, and these forces are even greater on the surface of a solid – which the internal porousness of activated carbon utilises to its advantage. Contaminants in the solution being purified adhere to the carbon because the attraction forces on the surface of the carbon are stronger than those that keep them suspended within the solution.

TABLE 1: TYPICAL ACTIVATED CARBON PROPERTIES FROM DIFFERENT RAW MATERIALS Coconut

Lignite

1,100

950

600

Abrasion number

Bulk density as packed in column ibs/ft3

Ash %

3.0

6.7

20.1

Iodine number SOURCE: TRIGG

Bituminous

Companies Cabot Norit Activated Carbon says it is the world’s largest and most experienced producer of activated carbon. It purchased Norit NV (previously the largest producer) in July 2012 and formed Cabot Norit Activated Carbon, based in Amersfoort in the Netherlands (although Carb Corp is headquartered in the USA). An article in Chemie Magazine in February 2016 quoted Cabot Norit Activated Carbon’s director of global technology and marketing, Jim Makuc, as saying: “On the one hand we are conducting research into new resources, to convert them into activated carbon. On the other hand we are developing products for customers with exactly the right pore structure and we supply the usage data.” The future is looking bright for the company as it extends its range of activated carbon products. Jacobi Carbons says it is one of the world’s three largest activated carbon companies and ships over 100,000 tonnes of activated carbon per year. It is also the largest manufacturer of coconut shell-based activated carbon. It has 20 carbon manufacturing facilities and five carbon reactivation plants worldwide. Haycarb PLC is a leading player in coconut-shell activated carbon and global industry. It has six manufacturing plants acorss three countries, and an annul production capacity of 40,000 tonnes. It had an annual turnover of US$80M in 2015/16. Haycarb markets activated carbon directly to European consumers through its subsidiary Eurocarb. The Activated Carbon Producers Association (ACPA) represents the European activated carbon industry and in June 2016 it was composed of 10 members. These are CarboTech AC, CECA, Chemviron Carbon, Desotect, Donau Carbon, Eurocarb, Cabot Norit Activated Carbon, Jacobi, SICAV and Silcarbon. Chemviron Carbon purchased CECA at the end of 2016, bringing the member companies down to nine.

Overview of the market The activated carbon market is mature and around 1M tonnes is produced annually, according to Hugh McLaughlin, writing for Biofuels Digest in October last year. It has been growing steadily for the past 50 years, as specific purification processes have been developed in some industries. Most production of the material takes place in tropical and Asian countries. The majority of the product is then exported to Europe and North America. According to McLaughlin, the market is dominated by a relatively small number of international companies with both production and marketing capabilities. A report published by Ceskaa, titled ‘Global Activated Carbon Market: 2016-2021’, projects that the global value market will grow from US$2.7bn in 2015 to US$2.9bn in 2016. The market’s growth is expected to continue, and in 2021 it will be worth approximately US$5.1bn. This estimate covers the whole activated carbon market, of which activated carbon for the removal of impurities from edible  oil is one part. Rose Hales is OFI’s former editorial assistant

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he commodity markets are an essential part of not only the oils and fats industry, but also of most other processing and production industries. In fact, they are essential for the functioning of global trade as we understand it. Without commodity trading, the systems currently in place for controlling the values of currencies, supplying energy to the grid and ensuring that biofuel producers get the palm oil they need would simply not function. Commodity trading is not a modern invention, either. There is some evidence, according to financial editor and writer Marvin Dumon on Investopedia, that rice futures could have been traded in China as long as 6,000 years ago. Many lucrative trade agreements have been signed around commodities, building international cooperation and benefiting people around the world. At other times, commodity shortages have dragged nations into strife and warfare, such as when Japan invaded its neighbours before and during the Second World War to ensure a steady supply of rubber and iron, while commodity surpluses can devastate the economy of producing regions. But what exactly are commodities if they are so important? CME Group, the operator of one of the world’s largest options and futures exchanges, defines a commodity as “any product approved and designated for trading or clearing in accordance with the rules of an exchange”, including physical commodities. In slightly simpler terms, a commodity is a trade good that is interchangeable with other goods of the same type. This means that there is a

Trading, futures and exchanges explained Commodity trading by buying and selling futures and options contracts at futures exchanges forms the lifeline of the oils and fats industry. But how exactly does it all work? Ile Kauppila explores the basics of commodity trading uniform quality standard in place across a certain commodity type, such as soyabean, and product from two producers will be similar. While no two batches of soyabeans are exactly identical, their quality will still be within agreedupon limits. Thus, predetermined standards are essential for commodity trading. Without them, buyers could not be assured that they will receive a quality product with each purchase. Commodities are generally traded in four categories, namely energy, metals, livestock and meat and – most importantly from the perspective of the oils and fats industry – agricultural products. Agri products, including oilseeds and grains, are the oldest form of commodity upon which the very first futures exchanges were established.

The primary purpose of commodity trading in the oilseed and grains markets, as with all commodities, is to provide certainty to both buyers and sellers and to reduce the risk their businesses face. These markets are much more volatile than, for example, stocks and bonds, as there are more variables affecting them (see Figure 1, following page). Profits from an oilseed harvest, for instance, could be ruined by the weather (too much or too little rain), global economic development (dropping demand for sunflower oil can drag down seed prices) or technological advances (a new harvesting method could make oil produced in a certain manner less competitive).To protect their businesses from such volatility, farmers, processers v

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FIGURE 1: VOLATILITY IN COMMODITY MARKETS (1980–2012)

SOURCE: CHATHAM HOUSE CALCULATIONS BASED ON IMF COMMODITY PRICE DATA

FIGURE 2: MALAYSIAN CRUDE PALM OIL FUTURES PRICES, APRIL 2016–MARCH 2017

generally poor harvests. Should our farmer, however, also want to cover the possibility of rising prices, he could sign an options contract. Then, if the soyabean price indeed ends up rising, he can simply not exercise his right to sell at the predetermined price and thus increase his profits. To trade these contracts, buyers and sellers again have a number of options. The oldest and most traditional way to trade futures and options is for them to agree on an over-the-counter (OTC) deal. OTC trade takes place between a buyer and a seller outside of a formal, regulated setting. To make an OTC deal, our soyabean farmer could call the manager of a nearby processing plant over to his house for a cup of coffee, while they negotiate a deal right there in the farmer’s living room. However, usually traders work through a network of traders who negotiate the deals on a one-to-one basis. OTC derivatives allow traders to go beyond standardised futures products and customise the terms of the contracts freely. However, while OTC deals can offer greater freedom and lower trading costs, they cannot protect either party in the case of counterparty default. In short, both the possible profits and risks are higher with OTC deals. The popularity of OTC deals seems to be on the decline, according to March 2017 data from the Bank of International Settlements, which noted that the gross global market value of commodities other than precious metals had decreased from US$277bn in the second half of 2014 to US$157bn in the first half of 2016. In general, the total values of all commodity contracts in the same period fell from US$318bn to US$202bn.

Futures exchanges

SOURCE: OIL WORLD

v and traders often rely on futures and options on futures contracts to sell and buy commodities.

Contracts and OTC trading Futures and options contracts are a form of derivative, a financial instrument whose value is based on a physical commodity or other financial instruments. They are among, if not the, most common ways to engage in commodity trading. In essence, a futures contract is a contractual agreement that obligates a party to buy or sell a determined amount of the described product at a fixed price at a certain future date. Futures contracts detail the quality and quantity of the underlying asset in a standardised manner to ensure that the contractual obligation is fulfilled. “The futures contract has to be relevant to the underlying, real cash market,” Fleur Binyon, manager of corporate communications at the CME Group, tells Oils & Fats International. “In order for that to happen, you need to know the delivery details and the contract specifications making the sold product the right grade, and so forth.” Options on futures, or simply options contracts, are in many senses similar to futures. However, the

primary difference between options and futures is that options give the holder the right to buy or sell the underlying asset at the time of the contract’s expiration, while the holder of a futures contract is obligated to fulfil the terms of the contract. Should the option be exercised, the initial holder of the option then enters into a ‘long option’ of the contract and buys the product at the specified price. A ‘short option’ on a futures contract lets an investor enter into a futures contract as the ‘short’, who would be required to sell the underlying asset on the future date at the specified price. In a nutshell, the holder of an options contract has the option to buy or sell the product, but they do not have to, unlike with a futures contract. This way, futures and options protect both the seller and the buyer. For example, let us think of a soyabean farmer who wants to sell his crop, but has heard that prices might fall before harvest time. By engaging in a futures contract with a buyer, he can lock onto a certain price for his beans and thus protect himself from the possible future profit loss. Similarly, a soyabean producer can enter into a futures contract with a farmer to ensure steady supply of raw material at an affordable price, even when faced with rising costs due to, for instance,

Should oilseed farmers and sellers want a more secure and controlled trading environment than what OTC deals can provide, they can list their contracts at a futures exchange. Futures exchanges are, as defined by the CME Group, central marketplaces where buyers and sellers of commodities come together to trade their futures and options contracts. Futures exchanges make it easier for both buyers and sellers to manage risk by providing a regulated, stable and transparent marketplace with high liquidity. They are self-regulating organisations, meaning they have stringent internal safety standards. Additionally, they are closely monitored by both third party regulatory group functions and government agencies. “It’s risk management, first and foremost,” says Binyon. “Exchanges are, by their very nature, standardised. This often makes them cheaper to trade on and more transparent than OTC trades.” According to CME, a modern, trustworthy futures exchange is built on four key elements. These elements are: t The futures traders – These include both hedgers, who are trying to decrease the risk they are assuming in trading, and speculators, who are willing to take on higher risks in hopes of potentially greater profits. These two types of traders go hand in hand, ensuring the flow of trades back and forth and thus contributing to a balanced marketplace. t Trading technology – Most modern futures

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COM M OD ITY TRADIN G

exchanges use electronic trading platforms to enable them to operate on a truly global scale. Electronic trading provides 24/7 access to the market at a steady speed with increased transparency. They also decrease the possibility of human error, which could potentially cause buyers or sellers significant losses. t Clearing – Nearly every futures exchange operates its own internal clearing house. They operate as neutral parties, providing a seller for every buyer and vice versa. Clearing houses validate the credibility of the parties involved in each trade and ensure that both can make good on the terms of the trade. They assume responsibility for the buyers’ and sellers’ performance, thereby protecting the integrity of the marketplace. t Liquidity – Liquidity translates the ability of each buyer to find a seller and vice versa to keep trading activity consistent and reliable. Being able to find a counterparty quickly and efficiently prevents substantial waiting times from impacting market prices. The more liquid the futures exchange, the better.

CME Group in 2007. The group acquired the New York Mercantile Exchange parent company NYMEX Holdings in 2008 and 90% of the Dow Jones Indexes in 2009. In 2012, finally, CME Group became what it is today with the acquisition of the Kansas City Board of Trade. Through each of its exchanges, the CME Group covers a massive number of commodities and securities. Most of its agricultural contracts, including soyabean and soyabean oil, are listed on the CBOT, while its palm oil futures and options – in cooperation with Bursa Malaysia – are processed through the CME.

Contracts provided by Euronext: t Rapeseed futures/options t Rapeseed oil futures/options t Rapeseed meal futures/options

Bursa Malaysia

Contracts provided by CME Group: t Soyabean futures/options t Soyabean oil futures/options t Soyabean meal futures/options t Mini soyabean futures t USD Malaysian crude palm oil calendar futures t Malaysian palm oil calendar swaps

Euronext

There are dozens of futures exchanges around the world, each providing a variety of services and commodities for trading. Not every exchange will list every available commodity and some may be specialised in a very limited range of contracts. The most important futures exchanges around the world for operators in the oils and fats industry are:

CME Group

CME Group operates the world’s largest futures and options exchange, handling three billion contracts worth approximately US$1 quadrillion annually. Made up of several subsidiaries, it operates major exchanges in Chicago and New York City and exchange facilities in London. It offers a wide variety of contracts based on agricultural commodities, rare and precious metals, interest rates, foreign exchange and energy, among others. CME Group was founded as the Chicago Board of Trade (CBOT) in 1848 to provide a centralised location for US merchants concerned about ensuring that there were buyers and sellers for their commodities. The Chicago Mercantile Exchange (CME) was founded 50 years later in 1898 as a nonprofit spin-off of CBOT and was at the time called Chicago Butter and Egg Board. CME went public in 2002, followed by CBOT in 2005, and the two companies merged into the

to hedge their entire purchase and output chain as well as its crushing margin.

Operating from exchanges in Amsterdam, the Netherlands; Paris, France; Brussels, Belgium; and Lisbon, Portugal, Euronext describes itself as the “first Pan-European marketplace”. In addition to its four main exchanges, Euronext also operates a regulated securities market in London, UK. It is the primary rapeseed futures exchange in the world. Euronext traces its roots more than 400 years back to the first European stock exchanges. In 1607, traders in Amsterdam began trading the first corporate shares to fund the Dutch East India Company’s travels to the Far East. In Belgium, the birthplace of the ‘bourse’, 13th century merchants gathered in the house of the van der Bürse family to do business, while the first purpose-built stock exchange was built in Antwerp in the 1500s. France and Portugal also have stock exchange traditions stretching back to the 16th and 18th centuries. Based on these century-old practices, Euronext launched its rapeseed grain futures contract in 1994 in response to the 1992 European Common Agricultural Policy (CAP). Developed in close cooperation with the oilseeds industry and trade organisations, Euronext’s contract volumes increased by 67% around the turn of the last decade to reach 93M tonnes in 2013. In 2014, the group further expanded its portfolio with the launch of two separate contracts for rapeseed meal and oil. The new contracts, Euronext says, provide a clear response to the high volatility in the oilseeds sector and offer the industry a way

Formerly known as Kuala Lumpur Stock Exchange (KLSE), Bursa Malaysia is one of the largest bourses in the Association of South East Asian Nations (ASEAN) region. It hosts more than 900 companies across 60 economic activities. Bursa Malaysia‘s comprehensive product range includes derivatives, futures and options, offshore and Islamic assets, as well as exchange-related services, such as listing, trading, clearing, settlement and depository. Malaysia’s first formal securities business organisation, the Singapore Stockbrokers’ Association, was founded in 1930 and during the same year it set up the KLSE. In 1960, the Malayan Stock Exchange was established and the public trading of shares commenced. The Stock Exchange of Malaysia was founded in 1964, but nine years later this entity split into the Stock Exchange of Singapore and the KLSE Berhad with the cessation of currency interchangeability between Malaysia and Singapore. In 1976, the KLSE was incorporated, and it is this event that Bursa Malaysia dates back to, gaining its current name in 2004. In May 2015, the company started promoting sustainable strategies amongst its issuers and the marketplace by joining the United Nations Sustainable Stock Exchanges (SSE) initiative Within the oils and fats industry, Bursa Malaysia is particularly recognised for one of the world’s most liquid and successful crude palm oil (CPO) contracts, the FCPO. The contract, available since 1980, is used as the global price benchmark in the edible oils and fats industry (see Figure 2). On 17 September 2009, Bursa Malaysia entered into a strategic partnership with the CME Group to improve accessibility to its derivatives offerings globally. Together, the companies made the contract available on the CME Globex platform to bring it to a wider global marketplace. Contracts provided by Bursa Malaysia: t Crude palm oil futures/options t USD RBD palm olein futures t CPO kernel oil futures t USD crude palm oil futures

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EASTERN EUROPE

Ukraine:

The sunflower state

PHOTO: ADOBE STOCK

Ukraine is a world leader in sunﬂower seed production, but its rapeseed and soyabean output is growing. Charlotte Niemiec writes

kraine is the world leader in the processing and production of sunflower oil. According to a report by the National University of Life and Environmental Sciences of Ukraine, titled ‘Market trends of oilseeds production in Ukraine’, the domestic oils and fats industry is one of the most advanced and promising segments of the food sector for its economy. In recent years, in line with growing global demand, there has been a corresponding and steady increase in the production of major oils and fats products. The main growing regions for oilseeds are Dnipropetrovsk, Donetsk, Zaporizhia, Luhansk, Mykolaiv, Odesa and Kharkiv, where major production facilities are also located. A report by the Ministry of Economic Development and Trade of Ukraine (MEDTU) notes that the country’s vegetable oil market comprises, in total, 1.7M tonnes/year. The biggest crop is sunflower oil, which makes up more than 90% of the total volume of oil-related products in Ukraine and represents at least 10% of total crop area. A large proportion of this is exported. MEDTU says Ukraine is the only state in the world where the population prefers unrefined sunflower oil, and not just because it is cheaper. There is also an increasing tendency towards bottled and refined sunflower oil production. However, a recent – and important – trend is the industry building and operating universal processing plants, which can process not just sunflower, but also soyabeans and rapeseed. As a whole, the Ukrainian oil and fat industry is represented by companies of the Ukrainian Oil Industry Association (Ukroliyaprom) and large companies, including CJSC Cargill LLC,

Holding Grain trading company and Bunge. Small manufacturers produce up to 30% of the total sunflower oil volume. All companies operate with large Ukrainian plants and there are around 17 large enterprises on the market at present. Operating facilities are able to process up to 4.5M tonnes of oilseeds (mostly sunflower seed and rapeseed) and to produce 1.5M tonnes of sunflower oil, 380,000 tonnes of margarine and 105,000 tonnes of mayonnaise. Domestic consumption of sunflower oil grew from 7.5kg per capita in 1998 to 12kg per capita in 2007. Domestic output of margarine and mayonnaise has also increased due to rising consumer demand and the growth of production volume in the confectionery and baking industries. Almost 20% of total sunflower oil production is used for this purpose. The main products using oils and fats in Ukraine include mayonnaise, margarine, soap, confectionery fats and frying oil.

The passing of palm oil Historically, Ukrainian producers have struggled with high rates for the financing of crops. Obtaining loans is difficult for farmers because of a lack of mortgage loans and lending. Now, new legislation is geared towards creating a mortgage lending system to attract necessary financial resources to agriculture. Furthermore, prior to 1999, a lack of duty for the export of sunflower seeds negatively affected the local industry. That year, however, the government introduced a 23% export tax to protect the industry and tolling schemes made it possible to export seeds further on. The oils and fats sector started to recover its position only after the banning of tolling operations. A new law, adopted in July 2001, reduced the export tax down to 17% of customs duties and abolished duty-free exemptions, which had been previously granted to give and take contracts. After the cancellation of duty-free status, the new 17% export duty significantly curtailed the export of Ukrainian sunflower seeds.

Consumption of various vegetable oils in Ukraine has been constant over the years, although from 2010 the overall trend has slipped slightly downward. Two possible reasons for this are a slowly declining population and producers’ inability to supply the Crimean Peninsula and the conflict zone in the Donetsk and Lugansk regions. The downward trend is seen most particularly with palm oil, which is used in the production of vegetable oils and fats, and indirectly in the confectionery and food processing industries. Decreased consumption of these products by the domestic market, as well as a slash in exports to traditional markets in ex-USSR counties (especially the Russian Federation), resulted in a major fall in domestic consumption of palm oil and triggered a subsequent cut of its imports to Ukraine. In 2014/15, Ukraine imported 136,000 tonnes of palm oil, 22% lower than the previous year. This drop was caused by a smaller market of processed products using palm oil, as well as decreased export volumes for products containing palm oil to other countries such as Moldova, Kazakhstan and Armenia. Imports of palm oil for 2015/16 were expected to remain on the same level and with a slight increase to 140,000 for 2016/17 due to expected gradual economic recovery pushing up demand for processed products. However, a draft law intends to introduce a complete ban on the use of palm oil in food production. If passed, it could change the distribution of vegetable oil consumption on the domestic market and result in a complete shutdown of palm oil imports for food purposes to the Ukraine, the GAIN report says. Under this scenario, the industry could expect a slight decrease of total vegetable oil exports of 140,000 tonnes to compensate for the palm oil imports. Soyabean and rapeseed oils have never been popular food products with Ukrainians, although sunflower oil is traditionally a staple food used in salads, as well as in baking and frying. Ukrainians are not used to consuming soyabean or rapeseed oils for household food preparation. Thus, these

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oils are mostly destined for exports as value-added products, while soyabean and rapeseed meal is fed to animals. However, there is an observed increase in the consumption of soyabean and rapeseed in the last few years in the country, mainly coming from food processing and other industrial uses. This trend can be explained by the fact that these oils are now produced in Ukraine in larger quantities and have become available for domestic consumption at competitive prices.

FIGURE 1: PROFITABILITY AND AREA PLANTED UNDER MAIN AGRICULTURAL CROPS IN UKRAINE

Oilseed planted area increasing According to a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report, the oilseed planted area in the Ukraine in 2016-17 is forecast to increase overall, due to the expansion of soyabean plantings (up 8%, reaching 2.3M ha) compared to 2.1M ha in 2015-16. The report says soyabeans and sunflower seed are the two major oilseed crops in Ukraine in 2014 that maintained relatively strong profitability (see Figure 1, above). This trend is expected to continue into 2015. It should be noted that the increased profitability for all major crops in 2014 is largely attributed to significant devaluation of the national currency. Agricultural crop production is expected to be impacted by the following factors: The national economy is still experiencing aftershocks of economic instability stemming back to the end of 2014 The local currency (hryvna) continues its devaluation – almost 70% value has been lost since the beginning of 2015 and over 300% since the beginning of 2013 Continued political instability in the country Further increase of hryvna-denominated costs of agricultural inputs, including fuel, seed, fertiliser and pesticide chemicals – a significant share of which are traditionally imported Intermediary financing for agricultural production is only available for the short-term (one to three months, at exorbitantly high interest rates) and long-term credit resources are prohibitive in terms of costs to producers These factors influence Ukraine’s farmers, who must reduce production costs for the 2016 harvest. Producers are trying to adapt to this new business environment. As seed costs constitute over 30% of the input expenses for some crops, agricultural producers will be using lower cost seeds and give preference to domestically-produced seeds over imported ones. Under these conditions, average crop yields are not expected to reach record high levels and are expected to demonstrate significantly lower performance under stressful weather conditions. However, the export-orientated nature of agricultural commodity production in Ukraine, especially in the oilseeds and grains sector, will allow local producers to benefit from the inflow of foreign currency as a result of sales to world markets. According to industry insiders, total oilseed crush capacity in Ukraine at the beginning of 2016 reached 16.5M tonnes. That could be expanded up to 17M tonnes by the end of 2016 due to construction of new facilities, as well as the modernisation of existing ones, which could allow a larger threshold and variety of oilseeds to be crushed at higher speeds and improve output quality.

SOURCE: STATE STATISTICS SERVICE OF UKRAINE, 2015 (ECONOMIC RESULTS DATA WAS NOT AVAILABLE AT THIS DATE)

In addition, a few new transshipment facilities are planned to enter into operation in Ukraine in the near term, which would create even stronger stimulus for farmers to opt for the production of oilseeds as competition between importers and/ or crushers would translate into more competitive domestic prices. In terms of exports, rapeseed and soyabean oil exports from Ukraine are split between the EU and East and Southeast Asian countries, while sunflower seed oil exports are distributed evenly between Asian, European and Middle Eastern markets.

Optimum sunflower seed production The GAIN report notes that the production of sunflower seed in Ukraine in 2016/17 is forecast to reach 11M tonnes – just 1.5% lower than the 11.2M tonnes produced in the previous years. Sunflower areas in Ukraine have remained relatively stable over the last five years, varying between slightly below 5M ha in 2013 to almost 5.3M ha in 2014. The report says it could be argued that the production area for this crop has reached its optimum level and is likely to remain stable, barring drastic changes in global demand for this crop from domestic processors. Ukraine’s Foreign Agricultural Service (FASKyiv) forecasts sunflower seed yields in 2016/17 will remain above the five-year average, but slightly below last year’s official country yield of 2.17 tonnes/ha, as producers are not increasing their costs for imported agricultural inputs and would rely on low-cost imported sunflower seeds, as they did last year. The forecasted yield is subject to further revisions depending on actual weather conditions during the growth period. According to industry representatives, sunflower seed production volumes could be increased only through the use of more advanced hybrids and improved farming technologies, which might not be an option for farmers in times of economic instability, and subsequent cost-saving mechanisms in place for their businesses. At the same time, given the unstable economic situation, some producers will likely make decisions to expand production areas at the expense of grains, in addition to replacing expected winter-kill areas for other winter crops.

Almost all sunflower seed produced in Ukraine is crushed domestically, which has been the case over the last decade since the export duties for sunflower seed were introduced in 1999. A small share of sunflower seed is consumed raw as food and by the confectionery industry. Crush and consumption statistics for the last few seasons were revised by FAS-Kyiv to correspond with officially reported sunflower oil production and exports and to better reflect industry trends. The sunflower seed crush for 2016/17 is forecast to reach 10.8M tonnes, comparable to the 11M tonnes estimated for 2015/16. The only factor that might significant lower the crush numbers for Ukraine is a significant decrease and/or total abolishment of the 10% export duty for sunflower seeds through suggested changes in legislation. For 2016/17, local consumption of sunflower is expected to follow the usual trend, unless Ukraine changes its sunflower seed export tariffs. In terms of trade, the combination of export tariffs and excess domestic crushing capacity makes Ukraine a marginal sunflower seed exporter. This is confirmed by decreased exports from 280,000 tonnes of sunflower seed in 2011/12 down to 45,000 tonnes in 2014-15. Based on this trend, sunflower seed exports are forecast to remain around 50,000 tonnes, both for 2016/17 and 2015/16. The dynamics could be reversed only in the case of significant lowering and/or abolishment of existing export duties. Exports were slightly above 45,000 tonnes in 2014/15, which is approximately 35% less compared to exports in the previous year. The EU remained the largest export destination for sunflower seed, buying over 31,000 tonnes, or around 70% of total exports from Ukraine in 2014/15. Export volumes for September-December 2015 indicate that the EU bought 142,000 tonnes, retaining its status as the most popular destination for Ukrainian oilseeds.

Rapeseed crush growing A report by the State Statistic Service of Ukraine (SSSU) states that in 2016 farmers had planted around 655,000ha of winter rapeseed. Traditionally, over 90% of all rapeseed sown in Ukraine is the winter variety and these areas will form the foundation of future harvest.

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Given that autumn weather conditions featured low levels of soil moisture while winter conditions failed to produce sufficient levels of snow cover in some regions, expected winterkill could reach 2030%, depending on spring weather conditions. FASKyiv forecasts 2016/17 production area to shrink to 640,000ha – over 6.5% below the area planted the previous year. However, it is possible that affected areas under this crop could be replaced with crops such as sunflower and soyabeans, which offer better profit margins for farmers. The production of rapeseed, based on the expected production area and average yields, is forecast to reach slightly below 1.5M tonnes for 2016/17, which is around 15% lower compared to production volume the year before. Domestic rapeseed crush, while still insignificant – but growing – is the only force competing with exports. Growth of the overall oilseed crush capacity in Ukraine drives production and subsequent exports of rapeseed oil and meal. The rapeseed crush in 2016/17 is forecast to reach 390,000 tonnes, up by almost 11% compared to the estimated 350,000 tonnes the previous year. The domestic rapeseed price stabilised in 2014/15, after a major drop in the second half of 2013 and early 2014 induced by collapsing world oil prices. This crop is extensively used for biofuel production, especially on the EU market. In July-December 2015, Ukraine exported almost 1.3M tonnes of rapeseed, 28% below the same period in 2014. This corresponds to the usual pattern when around 80% of sales occur in the first four to five months of the season, the GAIN report says. The EU remains the largest customer for Ukraine’s rapeseed, buying almost 1.3M tonnes in 2014/15. It is expected to remain the top buyer in the new season as in July-December 2015 exports to this designation exceeded 1M tonnes. In July-December 2015, rapeseed exports were also shipped to other traditional buyers: Pakistan (almost 136,000 tonnes), UAE (more than 58,000 tonnes) and Bangladesh (almost 30,000 tonnes). For 2016/17, rapeseed exports are forecast to reach only 1M tonnes – around 25% below the

estimate for 2015/16 – based on a combination of an expected decrease in production volume, together with a gradual increase of domestic crush.

Soyabean production hits record The soyabean planted area in Ukraine in 2016/17 is forecast to increase to 2.3M ha, about 7% higher compared to the 2.1M ha planted in 2015/16. Production is projected to reach roughly 4.6M tonnes in 2016/17 under the assumption of expected yields at the average level for five previous years. This would result in a 17% increase compared to the 3.9M tonnes produced in 2015/16, when yields were lower than average due to unfavourable weather conditions. A number of factors explain the favourable expansion. Farmers have seen good returns on soyabean production compared to sunflower seed. There is a strong demand from exporters, as well as excess domestic crushing capacity that ensures sustainable farm-gate prices. Exports from Ukraine are generally low cost due to its geographic proximity to its major consumers – the EU, Egypt and Turkey. Favourable soil moisture and other climatic conditions, mainly in the north-central regions, have also helped production. Soyabean profit margins for agricultural producers in Ukraine over the last six years have remained positive and, for the last three years, they have significantly surpassed that of rapeseed and grains. Soyabeans have become the second most profitable crop after sunflower and the same level of profitability might be expected for 2015. This makes the crop more attractive to local farmers, since production costs and technology are not the most expensive compared to other crops (for example, sunflower). Domestic consumption in 2016/17 is forecast to reach 1.7M tonnes, a 6.7% increase compared to 2015/16 estimates. A significant share of the soyabeans produced in Ukraine – over 20% – will likely be used by the domestic crushing industry. Part of this quantity ends up as soyabean oil and meal for exports and the rest is consumed

domestically as full-fat or regular soyabean meal. Soyabean consumption for feed and waste for 2015/16 is expected to increase up to 730,000 tonnes, and to another 740,000 tonnes for 2016/17, under the assumption that the increased production areas under this crop will require more seeds that are produced domestically. Over half of all soyabeans produced in Ukraine are traditionally exported. In 2016/17, exports are forecast to reach 2.9M tonnes, a 26% increase compared to the 2.3M tonnes estimated for 2015/16. Over 2014/15, as well as the first half of 2015/16, domestic farmers enjoyed relatively stable prices for soyabeans, with a few hikes associated solely with volatility of the national currency. Also, local prices were sometimes higher than export prices. For 2014/15, total soyabean exports reached a new record of 2.4M tonnes, 92% higher compared to the previous year. Among the largest importers were Turkey, which purchased 920,000 tonnes, and the EU, which imported 527,000 tonnes. For September-December 2015, soyabean exports were mainly designated both to the EU (170,000 tonnes) and Middle East (over 645,000 tonnes), where the major buyer was Turkey, which imported over 460,000 tonnes. These dynamics suggest that for 2015/16, the major markets for Ukrainian soyabeans will likely remain unchanged compared to the previous year. Export volumes for 2015/16 are estimated to reach lower levels – 2.3M tonnes, which is a result of expected stable demand from crush while lower than expected yields kept volumes of production comparable to the previous year, despite the expanded production areas under this crop. For 2016/17, exports are forecast to reach 2.9M tonnes based on an assumption of expanded areas of production and average growth of demand from crush. Soyabean imports were minimal and constituted mostly of planting seeds. Charlotte Niemiec is a freelance journalist. Parts of this feature have been extracted from a United States Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report published 22 March 2016

SOURCE: INFORMATION AGENCY APK-INFORM

FIGURE 2: SUNFLOWER SEED AND OIL PRICES, UKRAINE, SEPTEMBER 2014 - FEBRUARY 2016

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N OR TH AFRIC A

Desert gold MOROCCAN ARGAN TREES PROVIDE A BARRIER AGAINST THE ENCROACHING DESERT, THANKS TO THEIR DEEP ROOT STRUCTURE

Moroccan argan oil is a highly valuable oil often referred to as ‘liquid gold’. It is used in food preparation for its nutty taste, and prized in the cosmetic industry due to its apparent antiaging effects. Rose Hales writes

rgan oil is produced from the nut or seed of the argan tree (Argania spinosa), which is found primarily in Morocco. The tree is a member of the Sapotaceae family, which also includes the shea tree (see ‘Shea potential’ OFI September 2015). Although the oil has been used throughout North Africa for many years, it only burst onto western markets in the early 2000s as a specialist food ingredient and a cosmetic oil. It is currently the world’s second most expensive oil after cactus oil. According to Eat Globe, the wholesale price of one kilogram of argan oil in February 2016 was US$90, compared to US$4-6 for olive oil. The argan tree is endemic in Morocco and currently grows over an area of around 800,000ha, which is referred to as the ‘argan forest’. This argan forest contains approximately 21M trees that have been under UNESCO protection since 1998 as a ‘biosphere reserve’. The UNESCO protection was put in place for the argan forest as the unique deep root structures of the trees makes them resistant to wind and provides a barrier against the encroaching

desert, which – without the trees – turns the land into arid and infertile sand. Morocco is already 78% desert and dry land. The argan trees reach a height of between eight and 10 metres, begin bearing fruit after five years and are at maximum production capacity after 20 years. According to producer OLVEA, the trees can live as long as 200 years, with some specimens recorded as reaching 250 years old. According to Zoubida Charrouf and Dominique Guillaume in their 2014 paper, ‘Argan oil, the 35-years-of-research product’, credit for argan oil’s reputation and success must be given to the government of Morocco. In the early 1980s, it initiated a multi-disciplinary programme to establish an official and internationally recognised quality norm for the oil, as well as guidelines for good preparation. The process from collection to extraction was fully standardised. This ensured that the oil could be identified by its high quality, certified and trusted. It is estimated that between two and three million people rely on the argan tree for a source of income. These are mainly women and some of Morocco’s poorest Berber people.

Production, extraction and volumes Argan nuts are traditionally cold-pressed without chemicals, solvents, alcohols or preservatives to produce the oil, although mechanical and industrial press extraction methods can also be utilised. Food Navigator reported in 2005 – when argan oil was ‘fresh to western markets’ – that researchers in Morocco and France tested 21 samples of argan

oil from Morocco and found that the chemical composition of the oil was preserved regardless of which extraction process was used. According to argan oil producer OLVEA, 35kg of ripe fruit yields 25kg of dried fruit, of which 20kg is nuts. Of this, 3kg of kernels can be extracted from the nuts, which when pressed, produces 1kg of argan oil. A single tree can produce an average of 10kg of fruit a year, less than half a kilogramme of argan oil. The oil-rich argan kernels yield between 30 and 50% oil, depending on the extraction method. Morocco produced about 4,000 tonnes of argan oil in 2015, the Guardian reported, of which about a third was exported. In Morocco, argan oil is produced mainly in the region of Arganeraie. Regeneration of the area is currently taking place, as authorities began an operation in 2009 to plant 4,300 argan plants in Essaouira province.

COLD PRESSING PROCESS:

t Collecting the argan fruit: the fruit falls to the ground between June and August t Drying the fruit: it is traditionally left to dry in the sun for several weeks t Extracting the nuts from the fruit t Cracking the nuts to reveal the kernels: this is traditionally done using two rocks t Pressing the kernels to release the oil: the seeds are ground into a paste using a rotary stone tool. Water is added to the paste and the mixture is stirred and squeezed by hand to extract the oil (see image, following page). If the oil being extracted is for culinary use, the v

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N OR TH AFRIC A

v kernels are gently roasted before they are ground and pressed. Argan kernels for cosmetic oil are not roasted to avoid the nutty scent this step produces. There are issues that can arise in the extraction and production process, which reduce the quality of the final product oil. Dana Elemara, owner of argan oil business Arganic, told the Financial Times that poor hygiene and incorrect storage causes the oil to spoil. In addition, if the kernels are burnt rather than toasted, the argan oil will taste bitter.

Increasing popularity drives production Argan oil’s increasing popularity has driven the Moroccan government to introduce measures to increase production in the country. In 2012, the Observer reported that the government wanted to increase production from the current 2,500 tonnes/ year to 4,000 tonnes/year with a goal of achieving this increase by 2020. It said this would involve planting an additional 100,000ha of trees. However, Reuters reported in July 2014 that Morocco had hit its production target of 4,000 tonnes with new plans to increase production to 10,000 tonnes in the future. Around 200,000ha of argan forest would be regenerated to reach this target. Morocco is also facing the threat of competition from other countries, which have begun to produce the oil, including Niger – which is already exporting argan oil – and Algeria and Tunisia, which have planted trees but are yet to produce oil. The Financial Times reported that Israel and the UAE have plantations of hybrid trees. In order to produce a consistently high quality oil and to speed up production – and therefore keep up with global competition – Zoubida Charrouf

said a change in the traditional extraction methods might be necessary. This could mean mechanising some of the processes, for example cracking the shells. Using current methods, it takes approximately 16 hours and 30-40kg of kernels to produce a litre of oil. Charrouf found that mechanising the pressing of the oil helped to speed up operations, improved the quality of the oil, reduced waste and prolonged the oil’s shelf-life.

TABLE 1: FATTY ACIDS IN ARGAN OIL Fatty acid Percentage

Properties and uses

In order to make the tree and oil attractive and sustainable, locals need to be encouraged to see opportunity and profitability in the oil. Where the argan trees naturally grow, in southwestern Morocco, their complex root system acts as a natural barrier against the desert. Without the trees, the land faces erosion and the advance of dry, infertile desert plains. Dana Elemara, founder of Aganic, told the Guardian that “one key thing to sustainability is getting local people involved and paying them fairly. That stops them from cutting down the UNESCOprotected trees.” Similar to shea butter, argan oil is collected and extracted primarily by women in Morocco, and much of the work to increase quality and profitability for argan oil focuses on these women and creating co-operatives that empower them.

Argan oil is rich in vitamin E and unsaturated fatty acids, including oleic acid (43%) and linoleic acid (36%), which are believed to lower the levels of bad cholesterol in the blood. Its high unsaturated fatty acid content means it cannot take heat well, so is not useful for cooking. It has a smoke point of 215oC. The oil is rich and nutty in taste, popular as part of the ethnic food trend, and gives new products an edge. Food Navigator reported that argan oil could be used to improve the flavour profile of North African ready meals in the western market and will compete with speciality oils such as avocado, pumpkin seed and macadamia nut oil. It has been claimed that consuming the oil has chemopreventive (reduces the risk of, or delays the development or recurrence of cancer) and antiinflammatory properties. Its other main use is in the cosmetics industry, which in the western world accounts for approximately 40% of demand. Argan oil is touted to have anti-aging properties, which is what makes it popular as a cosmetic ingredient. According to the paper ‘Argania spinosa – How Ecological Farming, Fair Trade and Sustainability Can Drive the Research for New Cosmetic Active Ingredients’ in SÖFW-Journal, argan oil is able to work against the damaging effect of MMP (matric metallo-proteinases) to preserve the quality of the tissues supporting the skin. MMP are enzymes that cause the slow degradation of collagen fibres so that they can be renewed. This results in a loss of skin elasticity and firmness. Argan oil is also reported to have anti-free radical properties – free radicals play a role in skin aging as well.

Sustainability The extraction and production process of argan oil is both strenuous and time-consuming. For this reason, locals have cleared some trees to make way for more profitable and less labour-intensive crops.

Oleic

42.8%

Linoleic

36.8%

Palmitic

12.0%

Stearic

6.0%

Linolenic

<0.5%

The future is bright According to a Grand View Research study, published in January, the global argan oil market will reach US$1.79bn by 2022, with North American and European health and cosmetics markets driving the growth. Top consumers include China, Germany, Japan and Morocco. The report says that health and medical innovations in the Middle East, Africa, Asia Pacific and Southeast Asia will also drive fast growth for argan oil. This equates to an increase to 19,622.5 tonnes of the oil by 2022, from 4,835.5 tonnes in 2014. The report says that cosmetics, food and medical applications lead the way, accounting for 40% of market demand in 2014. According to the report, some key manufactures of argan oil include OLVEA, Zineglob, Biopur and Nadifi Argan. In April 2009, argan oil become the first African product to be certified internationally as a Protected Geographical Indication product by the w European Union. Rose Hales is OFI’s former editorial assistant

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ants

TEC H N OLOGY FOC U S

Plant and equipment round-up

North Dakota to get its first soya processing unit

innesota Soybean Processors (MnSP) and its subsidiary North Dakota Soybean processors (NDSP) are planning to construct North Dakota’s first soyabean processing plant in the village of Spiritwood, USA. The planned US$240M facility would be an integrated soyabean crush facility and refinery with a capacity to process 125,000 bushels/ day, according to a 8 February statement from the North Dakota Governor’s office. The plant would produce 816,500 tonnes/ year of soyabean meal for use as livestock feed and approximately 222,300 tonnes/year of refined, bleached and deodorised soyabean oil, half intended for biodiesel production with the other half for food-grade oil.

MnSP is currently working with the North Dakota Agricultural Products Utilization Commission to complete a preliminary frontend engineering and design study. The plan has the support of North Dakota governor Doug Burgum, who said the project was great news for the state’s farmers. “The NDSP plant will create value in the local community and beyond by creating 55 to 60 full-time jobs, supporting local service companies, vendors and suppliers and supporting the soyabean price paid to local farmers,” Burgum said. MnSP, already owns and operates a soyabean crush facility and biodiesel operation V in Brewster, Minnesota.

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

IncBio wins contract for Colombia palm oil plant

ncBio, a Portuguese engineering company specialising in fully automated industrial plants, has been awarded a contract to build a 60,000 tonne palm oil refining facility in Colombia, the company said on 7 March. The project, commissioned by Colombian plantation and palm oil extraction firm Abagó SAS, would mark the construction of world’s first palm oil refinery using IncBio’s ultrasonic reactor technology, which the company said improves operational costs by reducing chemical consumption and process time. Comprising degumming, bleaching, deodorisation and fractionation of crude palm oil (CPO), the new plant would be located at the Abagó’s palm oil extraction mill in Puerto Gaitán, where the company already uses IncBio’s dynamic sterilisation technology. IncBio said the sterilisation technology allowed Abagó to reach the highest CPO extraction rate in Colombia, regularly exceeding an oil extraction rate (OER) of 25%. The plant, which would produce CPO for food and biodiesel applications, was expected to come online in the first quarter of 2018. IncBio launched in February a new CPO extraction technology that it said had been “proven to achieve an OER above 25%”. “Considering that the OER for the Malaysian palm oil industry was 20.1% in 2016 (based on Malaysian Palm Oil Board data), this represents a potential gain of 25%,” IncBio said in a statement dated 6 February. The technology aims to solve water-related problems with traditional CPO mills through a 60% reduction in water usage and a 50% reduction in effluent discharge. The process could lower methane emissions by 50% and could be installed in new mills or be retrofitted to existing facilities, IncBio said. 27 OFI – MAY 2017

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TEC H N OLOGY FOC US

BDI biodiesel plant to handle used cooking oil

Chemical free water treatment

ustrian biodiesel plant designer and builder BDI – Bioenergy International AG has been awarded a contract to retrofit its technology to a biodiesel plant in Connecticut, USA, the company said on 1 February. American GreenFuels LLC, a wholly-owned subsidiary of Kolmar Americans Inc, hired BDI to modernise its biodiesel facility in New Haven. BDI would supply engineering plant components for the project with the aim to increase production capacity and to enable the utilisation of used cooking oil (UCO). According to Hermann Stockinger, vice president of global sales at BDI, the modernisation of the plant required the “highest technical expertise and know-how”. “BDI has successfully completed more than 40 biodiesel projects in the past 20 years. With this strong focus on biodiesel, our experts have come up with an optimised retrofit after successfully concluding a preengineering project,” Stockinger added. The project follows BDI’s October 2016 completion of another retrofit project for Crimson Renewable Energy in California, which was carried out in cooperation with BDI.

Bunge to build first new US facility in 15 years

unge North America announced on 9 January that it was planning to build its first new processing plant in the USA in 15 years to improve the productivity of its soyabean processing footprint in eastern United States. Locations in Ohio and Indiana were under final consideration for the new facility. “A state-of-the-art facility in the Eastern Corn Belt combined with an increase in overall efficiency of our existing footprint will ensure Bunge can serve growing demand in the southeastern US feed and export markets,” said Tim Gallagher, executive vice president, oilseed value chain, Bunge North America. Once site selection was complete, Bunge would have to obtain necessary approvals for the project, which was expected to go on line by the end of 2019.

omputer-generated frequencies are being charged through wastewater to help sugarcane processing plants in Thailand meet environmental standards, reported the Lead on 19 January. The Hydrosmart system, designed by a South Australian company, improves water quality without the addition of chemicals by placing microprocessors on the outside of pipes which emit frequency shots to disrupt the bonds of minerals in the water, dissolving calcium, iron and gypsum scale off pipes. It was now being used to reduce algae and improve the chemical oxygen demand (COD) of sugarcane wastewater in the eastern Thai province of Sakeo, the Lead said. Hydrosmart managing director Paul Pearce said the onflow from sugarcane wastewater was a serious environmental threat where large amounts of harmful materials were carried into waterways. “Our unit allows for beneficial microbes and bacteria to thrive and balances the water

Agreement to design 2G biodiesel plants

Ethanol from cassava

hai petroleum retailer PTG Energy Plc (PTG) and tapioca products producer Eiamburapa Co (EBP) have formed a partnership to develop what they say will be the world’s first facility that makes ethanol from cassava pulp, the Bangkok Post reported on 10 January. The facility in Sa Kaeo’s Wattana Nakhon district would have an investment budget of 1.5bn baht (US$42.5M), and construction on the 200,000 litres/day plant was due to start next year, with commercial operations expected to begin by 2020, the report said. 28 OFI – MAY 2017

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to a healthier state by reducing particle size, without the addition of chemicals.” The sugarcane project was initially run as a trial using a smaller waste pond to test the effectiveness of Hydrosmart’s U-bend technology. The D60EO model used in the trial consisted of a 60mm PVC pipe that connected to the pipes which pumped water out of the wastewater pond. Using two sets of frequencies, the economy unit was able to successfully treat the water within four weeks of being installed, the Lead said. The plant now planed to install a full-sized model at its primary waste pond in Thailand. Pearce said the microprocessor unit would only use about AU$10/year worth of electricity and required little maintenance. The Hydrosmart technology was also being applied to textile wastewater in Bangladesh and was improving water quality in the Polynesian state of Tonga.

taly’s Processi Innovativi, a subsidiary of KT-Kinetics Technology, and DP Lubrificanti announced at the start of the year that they had signed an agreement to design second generation biodiesel plants. The designs will be based on DPLubrificanti’s technology to utilise used cooking oil, animal fats and by-products of vegetable oil processing to produce biodiesel. The agreement follows on from a previous partnership for the installation of a pilot plant to convert glycerol into ethanol based on a process developed by Processi Innovativi, ENEA, SINTEF and the University of Copenhagen under the European research project GRAIL. DP-Lubrificanti is a biodiesel and glycerol producer based in Aprilia, south of Rome. Processi Innovativi is part of process engineering contractor KT-Kinetics Technology, and is dedicated to technology development and industrial applications in green chemistry. KT is part of Maire Tecnimont, an international group which operates in Engineering & Construction, Technology & Licensing, and Energy & Ventures.

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Extract more fat

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POC 2017 SH OW REVIEW

Palm oil output to climb

World palm oil production is forecast to rise by around 6M tonnes this year as palm trees recover from the drought effects of El Niño last year. The big question is whether another El Niño will develop from June and what effects it will have on the global oils and fats market, delegates at the recent Palm & Lauric Oils Price Outlook Conference (POC 2017) heard

lobal palm oil production is expected to climb by around 6M tonnes this year as oil palm trees recover from the adverse drought effects of the El Niño weather pattern, according to several experts speaking at the Palm & Lauric Oils Price Outlook Conference & Exhibition (POC 2017) in Malaysia on 6-8 March 2017. Good weather was also aiding output in Indonesia and Malaysia – the world’s top two palm oil producers, said Thomas Mielke, executive director at Oil World. Indonesia’s production was expected to reach 35M tonnes in 2017 from 32.1M tonnes recorded in 2016, while Malaysia’s output would increase to 19.85M tonnes from 17.32M tonnes a year ago. “However, replenishment of vegetable oil stocks will take time and will not be possible in 2016/2017 as we need a better year of good weather and high production,” he said. On prices, Mielke said palm oil prices had peaked at RM3,300 (US$747)/tonne in the first quarter of this year but would stay below soyabean oil prices for the rest of 2017. He also forecast the crude palm oil (CPO) prices falling to RM2,400 (US$543)/tonne by 2018. M R Chandran, senior independent dirrector of IJM Plantations, forecast an 11% rise in global palm oil production to 65M tonnes this year against

JAMES FRY OF LMC INTERNATIONAL SAYS PALM OIL PRODUCTION HAS SEEN A SURGE FOLLOWING EL NIÑO LAST YEAR

58.3M tonnes a year ago. “Normally February and March are dry months but there have been very good rains,” he said. Rising production and slowing demand from top importers was expected to keep a lid on prices. While top importer India was expected to produce a near record domestic oilseed crop, which would keep its edible oil imports flat in the year to October.

Identical El Niño weather pattern LMC International chairman James Fry noted that Malaysian palm oil production was following an almost identical pattern to the last big El Niño in 1997/98, where output saw huge growth a year following the phenomenon. He said the pattern of seeing a surge in production post-El Niño was also present in other countries including Thailand and Indonesia. “Looking at the year-on-year changes in Malaysian production for the El Niño in 2015 and 2016, the recovery pattern that we are seeing has also been very similar to what we had way back 20 years ago. If we follow the same growth rate and if history repeats itself exactly, Malaysia’s monthly production will be more than 2M tonnes for six months this year,” he said. If this happened, Malaysia would end up with 22.26M tonnes of production this year, nearly 5M tonnes above the 2016 figure of 17.32M tonnes. “I don’t believe this will happen, but I also did not expect that the pattern that we are seeing would be so similar.” He forecast Malaysian palm oil production at 19.9M tonnes, with global production growth of over 6M tonnes. Fry concluded that CPO prices at the end of this year would be similar to the level traded for most of 2014 and 2015, with FOB CPO in the third quarter averaging US$605/tonne and Bursa Malaysia Derivatives (BMD) at RM2,500 (US$566).

Palm oil production recovery Godrej International director Dorab Mistry pegged

palm oil production this year at 19.5M tonnes for Malaysia and 33.5-34M tonnes in Indonesia against 17.32M tonnes and 30M tonnes respectively in 2016. “Production recovery in Malaysia has started already. We turned the corner in December 2016 when that month’s production exceeded December 2015’s production. Year-on-year, December 2016 was up 5%, January 2017 was up 12% and February 2017 up 15%.” Malaysian stocks would remain tight until July 2017 with Ramadan shipments going out in the first half of May. “Palm stocks will begin to recover from July 2017 and palm will face strong competition in India from South American soyabean oil.” The big question was whether a new El Niño would develop from June. Mistry also drew attention to oil palm cultivation in Central and South America as areas to be watched, with production up from 2.2M tonnes in 2011 to 3.2M tonnes in 2016 and exports doubling to 1.8M tonnes in five years. Covering other vegetable oils, Mistry said there had been a big rise in sunflower oil production, with three record sunflower seed harvests in the CIS and Black Sea sunflower oil becoming very competitive and taking market share. More sunflower oil had helped to keep prices in check in 2016, especially in India. On rapeseed, he said EU production could improve by 2M tonnes but it was too early to forecast.

Soyabean oil In 2015 and 2016, soyabean oil picked up a huge market share in edible oil markets such as India “The main reason was that soya oil is usually exported as a crude unrefined oil whereas palm is usually exported as a refined oil,” Mistry said. “Local refiners prefer to import a crude unrefined oil so they can run their refineries and also add value.” Mistry said the market has had six back-to-back bumper harvests in soyabeans.

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POC 2017 SH OW REVIEW

“Will the seventh harvest in USA also be as lucky?” US farmers were expected to increase soya acreage this year and expansion in Brazil and Argentina would continue. Export taxes in Argentina would decline from January 2018. The world outlook for soyabean oil would depend on the US biodiesel regime for 2017. “A producer credit instead of a blender credit is a game changer for soya oil futures.We need to know the exact fine print of thehave new US policy.” Mistry said world demand for edible oils was expected to grow 3M tonnes in 2016/17 against 2.5M tonnes in 2015/16 (see Table 1, right). World energy demand for vegetable oils could also rise by 3M tonnes in 2016/17, depending on the US biodiesel regime and Indonesian policies. This would be slightly up on the 2.5M tonnes increase in 2015/16.

Price outlook Mistry outlined three possible scenarios for crude palm oil (CPO) prices this year, favouring a scenario of around RM3,000 (US$680)/tonne until fourth quarter 2017. This, he said, was based on his “bullish scenario” due to the impact of weather conditions and the possibility of another El Niño developing in Southeast Asia by June. Mistry’s first “normal scenario” was based on supply and demand “Stocks are still very tight, the inverse has been eroded and palm has once again become

TABLE 1: INCREMENTAL EDIBLE OIL SUPPLY (‘000 TONNES) 2015/16

2016/17

Soyabean oil

+3,000

+2,500

Rapeseed oil

–1,000

–1,500

Palm oil

–6,000

+6,000

Others

–1,400

+2,000

Total supply

–5,400

+9,000

Total demand

+5,000

+6,000

Source: Dorab Mistry, POC 2017

competitive,” he said. “In fact I am optimistic that prices will again go up to RM3,000 (US$680) and after June, possibly July, it may go all the way down to RM2,500 (US$566).” The assumptions were made with the expectation that Brent crude oil would be between US$45 and US$65 a barrel, there would be three rate hikes by the US Federal Reserve, and that currencies of the developing countries would stabilise. On his alternative preferred “bullish scenario”, he noted that climate was becoming increasingly uncertain. “What if the recovery in palm oil production gets postponed? What if Malaysia produces only 18.7M tonnes and Indonesia only 33M tonnes? “In this case, CPO will hold at RM3,000 (US$680) until September, dip for a few months and then take off again,” Mistry said. His third scenario related to the US government

encouraging repatriation of profits held overseas by its companies. “The Donald Trump administration is toying with the idea of giving an advantageous 10% tax incentive to repatriate and bring this money back to the US. “There is about US$2tr of untapped US company profits lying outside the country. “If this policy is announced, it is almost certain that US corporations will take advantage of it and bring their money back,” he said. Such a tremendous drain of liquidity from emerging countries, he said, could push some countries into recession apart from being extremely bearish for all commodity prices. “At this stage my feeling is to go with the bullish scenario. I feel that the impact of weather is so important, and I expect palm oil prices to remain in the region of RM3,000 (US$680) for the next six to eight months,” he said. w

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STATISTIC S

SUNFLOWER SEED AND OIL PRICE, 2015-17 (US$/MT)

STATISTICAL NEWS FROM MINTEC Sunflower seeds and oil

GLOBAL SUNFLOWER OIL PRODUCTION/EXPORTS, 2014-17

Sunflower seed prices remained stable for the second half of 2016 and into 2017, due to an increase in global production and steady demand from crushers. Global production climbed 11% y-o-y to 45M tonnes in 2016/17 as a result of large harvests in the major producing regions of Ukraine, Russia and the EU. Sunflower seed crushing also rose 10% y-o-y as a result to 40.7M tonnes. Commonwealth of Independent States (CIS) countries are responsible for most of this growth, with Russia and Ukraine contributing 11M tonnes of crushing y-o-y from September 2016 to January 2017. Sunflower seed prices fell in March due to the downward trend of soyabeans, with which they compete. Sunflower seed stocks in CIS countries were also expected to be at record high levels in the beginning of April 2017 despite the high level of crushing. The increase in seed production and crushing has resulted in large stocks of sunflower oil being held, further driving prices down.

Butter EU butter prices rose 80% throughout 2016, reaching record highs due to declining production coupled with stronger demand. Prices fell slightly through December and January as buyers built sufficient inventory levels for immediate needs, alongside slow contracting for second and third quarters 2017 as a result of uncertainty over milk fat availability. The prices rose again in March, consistent with rising global demand for milk fats. Butter production fell in September and October 2016, down 7% and 14% y-o-y as a result of dairy cow slaughtering resulting in lower milk fat availability. The low availability of milk fat continued into 2017, with production down 1% y-o-y in January. Domestic demand for butter is forecast to rise 1% y-o-y to 2.4M tonnes in 2017. Butter stocks available in EU private storage aid fell 36% m-o-m to 15,900 tonnes in January. Butter exports fell a further 16% y-o-y in January with reduced trade to Saudi Arabia. However the US butter market continues to grow for the EU.

EU BUTTER PRICES, 2015-17 (€/MT)

879 853 808 794 778 760 733 690 738 716 694 671 1,649 1,756 1,645 1,505 901 911 862 836 837 822 810 786 1,590 1,696 1,520 1,193

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PRICES OF SELECTED OILS (US$/TONNE) 2015 Soyabean Crude Palm Palm Olein Coconut Rapeseed Sunflower Palm Kernel Average price INDEX

Nov 16

747 858 637 739 602 698 1,099 1,523 773 866 846 823 901 1,426 801 190

990 235

Dec 16

Jan 17

1,073 254

Feb 17 Mar 17

1,010 239

925 219

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