KUALA LUMPUR, Sept 9 — With sentiment turning increasingly positive, crude palm oil (CPO) is on its way to reaching the initial price target of RM3,000 per tonne before the end of 2020, as forecast last year, says the Malaysian Palm Oil Board (MPOB).
Director-general Ahmad Parveez Ghulam Kadir said that the demand for the commodity is slowly recovering although it has not reached pre-Covid-19 levels.
Factors that contribute to the positive sentiment, he noted, include the implementation of the B20 programme, encouraging export figures, lower production and inventory, and new potential markets.
“Last year we set a target that CPO could reach RM3,000 per tonne in 2020, with an average price of RM2,750 for 2020, but then we were hit by the Covid-19 outbreak that disrupted the whole supply chain, and it forced us to revise our average price to RM2,500 per tonne.
“The average price revision was due to many other reasons but mainly because of the pandemic. However at the current level of RM2,950 per tonne as at yesterday’s closing (physical price), we are catching up even faster than we thought, so it’s just a matter of time,” he told Bernama.
Data on exports of palm oil by destination shared on the MPOB website shows that for the period from January to July 2020, Malaysia’s CPO exports worldwide stood at 9.57 million tonnes versus 10.88 million tonnes recorded in the same period in 2019.
Exports to India declined to 852,450 tonnes for that period from 3.04 million tonnes last year due to, among others, the temporary shutdown of the hotel, restaurant and café industry.
Exports to the EU slipped to 1.18 million tonnes versus 1.27 million tonnes, but exports to China, on the other hand, increased to 1.54 million tonnes from 1.09 million tonnes as demand continued for the production of processed food including instant noodles.
While some countries reduced their purchases of palm oil during the first few months of the pandemic lockdown, others maintained and even increased their purchases.
Bangladesh imported 215,930 tonnes of palm oil, up from 29,052 tonnes, while Saudi Arabia imported 218,076 tonnes versus 74,236 tonnes previously.
“Although so far we have only managed to export CPO, I think as long as we secure their market and help stabilise our stocks level, it will still be okay and the prices will be supported.
“There might be some people saying Malaysia is going backwards by exporting CPO when we are supposed to produce more downstream products.
“But at times like this, we need to have some level of compromise…once the situation stabilises, we can again push all our initiatives forward especially to go for more downstream as well as more value-added products,” he explained.
Meanwhile, asked to comment on the recent criticism by a Europe-based academic of Malaysia’s sustainable palm oil certification, he said that the EU would never accept any sustainability efforts made by Malaysia.
“We will never satisfy them and they just want to protect their own crop, which is more expensive and less sustainable.
“Malaysia is actually a latecomer in the edible oil business. We are only a 100-year-old industry whereas the other vegetable oils have a much longer history, some around 300-400 years, and we are competing with the other 17 edible oils worldwide.
“But palm oil is contributing more than the others. For every hectare that we explore, we are producing up to 10 times more yields, and we are still keeping our pledge of maintaining 50 per cent forest cover nationwide,” he stressed.
He said that palm oil commands almost 60 per cent of the global oils and fats market while taking up less than 10 per cent of the land used to cultivate all oil crops globally, and it is the cheapest oil.
In addition, he said, the oil palm cultivation period is usually around 25 years, during which time the trees can continuously absorb carbon dioxide and other emissions.
The other edible oils, he stressed, may take just a few months to plant and smallholders need to harvest and clear the land for the next cycle.
“They need to repeat the cycle on a short-term basis, putting pesticides et cetera. Their carbon and water footprints are always very high. So which one is more sustainable?”
To recap, the Europe-based academic, Roberto Cazzolla Gatti, described the certification by the Roundtable on Sustainable Palm Oil (RSPO) as “greenwashing”, saying it is a meaningless attempt to pass off palm oil as sustainable without basis.
He claimed that 99 per cent of the palm oil supply bases in Borneo certified by RSPO was on land that was forested as recently as 30 years ago. — Bernama
