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Datuk Dr. Kalyana Sundram
Chief Executive Officer
Malaysian Palm Oil Council (MPOC)
Malaysian Palm Oil: An Overview of its Role and Necessity in Global Food Supply and Security
Datuk Dr. Kalyana SundramChief Executive Officer
Malaysian Palm Oil Council
YourText
The Oil Palm
Palm Oil (% Share) Contributed Among Global Edible Oil Consumption Patterns
Source : Oil World
PO31%
SBO24%
RSO11%
SFO9%
Animal Fats12% Others
13%
Major Palm Oil Uses
1. Source of food (global food security): 80%
2. Oleochemicals: 15%
3. Biofuel : 2%
4. Renewable energy source: Potential Remains Largely Untapped through Palm Biomass
Source: Oil World
Palm Oil Fractions With Different Iodine Value Ranges For Foods
Palm OilIV 51 - 53
OleinIV 57 - 59
Super OleinIV 64 - 66
Top OleinIV 70 - 72
Soft PMFIV 42 - 48
Hard PMFIV 32 - 36
Hard StearinIV 32 - 36
Soft StearinIV 40 - 42
Super StearinIV 17 - 21
Palm Oil Uses
• Palm oil & SBO are now the two most used oils & fats for various applications
• Palm oil has established itself as excellent medium for frying of staple and snack foods.
• Increasing use of palm oil is in restaurants, bakeries, sweet shops and by food industries particularly biscuits and noodles.
• Palm based speciality and coatings fats in confectionery and snacks are increasing
Fried Fats, Fatty Acid Profile & Oxidative Stability
7
8
16
7
7
13
14
15
27
43
51
72
87
26
62
62
15
28
23
18
47
38
18
4
55
26
21
71
57
54
54
9
10
2
3
3.5
10
1
1
8
1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Natreon Canola AOM 42
Natreon Sun AOM 53
Low lin Soy AOM 20
Low Lin canolca (C5) AOM 30
Canola AOM 18
Sunflower AOM 14
Com AOM 25
Soybean AOM 15
Cotton AOM 25
Lard AOM 25
Palm AOM 50
Sats Oleic 18:1 Linoleic 18:2 Linolenic 18:3
The practice of frying foods to increase
palatability and increase consumer
appreciation is rated among the top 20
innovations in the food industry
National Academy of Science, Royal
Society, United Kingdom, Sept. 2012
June 2015: US FDA Rules
towards ABSOLUTE
ZERO TRANSin US Food
Supplies
Results of Randomized Studies of the Effects of a Diet High in Trans Fatty Acids (Circles) or Saturated Fatty Acids (Squares) on the Ratio
of LDL Cholesterol to HDL Cholesterol
Ascherio A et al. N Engl J Med 1999;340:1994-1998
Worstoutcomeswith TFA even at intakes 2.5-fold belowother fattyacids
95% CI for TC Mean Diffrerence
-1
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0
Mean Difference
Overall
Study Palm Oil Favourable Palm Oil UnFavourable
Data from a meta-analysis of 36 human dietary trials in which palm oil was evaluated against other common dietary oils and fats
Sundram et al. & Fattore et al, AJCN 2014.
Palm Oil in Pakistan
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Pakistan Consumption of Oils & Fats
Crop2015 (MT)
2016 (MT)
2017 (MT)
2018(MT)
2019(MT)
Locally Produced Oils(Cotton/Sunflower)
556,000 462,000 450,000 503,000 500,000
Imported Oils & Fats(Palm /Soybean)
2,773,703 2,651,443 3,161,863 3,139,132 3,221,959
Oil from imported oilseeds crushed locally
450,846 712,790 802,553 699,781 546,037
Total 3,780,548 3,826,233 4,414,416 4,341,913 4,267,997
10 Year Consumption Pattern
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2,058,252 2,125,427 2,073,212 2,373,866 2,512,336
2,773,703 2,651,443
3,161,863 3,139,132 3,221,959
662,000 696,000 636,000
567,000573,000
556,000462,000
450,000 503,000 500,000
453,301 369,099 289,760
291,748261,598
450,846 712,790
802,553 699,781 546,037
Imported Oils & Fats Oil from local oilseed crops Oil from Locally Crushed Oilseeds
Source: MPOC Market Intelligence, Pakistan Economic Survey
MT
Oils & Fats Imports in Pakistan
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2,327,938 2,396,615 2,586,231
2,327,938 2,396,615 2,586,231 2,499,345
2,928,208 3,034,995 3,075,460
30,664 98,249
164,759
30,664 98,249
164,759 152,098
221,150 104,137 146,499
15,264 17,472
22,713
15,26417,472
22,713 -
12,505 - -
Palm Oil Soybean Oil Tallow
Source: MPOC Market Intelligence, Pakistan Economic Survey
MT
Malaysia vs Indonesia Market Share Analysis (%)
0
10
20
30
40
50
60
70
80
90
100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
97
88
72
57
27
17 18 19 24
20
3
12
28
43
73
83 82 81 76
80
Malaysia Indonesia
Source: MPOC Market Intelligence, Shipping Agents Data
%
Palm Products Imported from Malaysia
Commodity 2015 2016 2017 2018 Jan-Nov 2019
Palm Kernel Cake 171,855 211,764 299,449 214,387 296,151
Cooking Oil 155,588 156,690 148,774 192,171 198,320
Oleochemical 32,692 34,411 30,676 28,245 26,299
Finished Products 15,297 16,353 13,241 16,501 17,578
Others 40,948 35,729 29,110 44,583 48,459
Total (MT) 416,379 454,946 521,250 495,887 586,807
Source: MPOB Data
Cooking Oil Imports – Potential Growth Segment
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2015 2016 2017 2018 Jan-Nov 2019
155,588 156,690 148,774
192,171 198,320
Packed Cooking Oil
Source: MPOB Data
MT
Price Outlook 2020
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Current Global Oils and Fats Scenario
Source : Oil World MPOC Estimates
('000 T) 2015 2016 2017 2018 2019E 2020F
Opening Stock 31,138 33,474 28,305 31,226 33,623 34,723
Production 208,192 206,771 222,538 231,427 236,000 239,500
Import (of all oils) 82,946 80,584 87,024 87,709 92,000 96,500
Export (of all oils) 84,223 80,438 87,287 88,258 93,000 95,450
Consumption 204,579 212,086 219,354 228,481 233,900 240,300
Ending Stock 33,474 28,305 31,226 33,623 34,723 34,973
Stock Usage Ratio 16.36% 13.35% 14.24% 14.72% 14.85% 14.55%
Source: Oil World & MPOC Estimates
Global Palm Oil Scenario Update
Source : Oil World MPOC Estimates
('000 T) 2015 2016 2017 2018 2019E 2020F
Opening Stock 11,838 13,486 10,354 13,222 15,285 14,729
Production 63,037 59,522 68,677 72,992 77,126 78,100
Import 47,684 44,133 49,193 50,029 53,362 54,220
Export 48,270 43,928 49,557 50,209 53,331 53,960
Consumption 60,803 62,852 65,444 70,749 77,714 79,200
Ending Stock 13,486 10,354 13,222 15,285 14,729 13,889
Stock Usage Ratio 22.18% 16.47% 20.20% 21.60% 18.95% 17.54%
Source: Oil World, USDA & MPOC Estimates
Price Forecast Given at POSDOC (Oct 22, 2019)
Original price estimate given by the MPOC team:
➢ Based on our model of linking global SUR to palm oil prices, we forecast that palm oilprice in the Q4 of 2019 could reach RM2,566/MT and in Q1 of 2020 could reach aminimum high of RM2,900/MT.
➢ However, we opted not to even believe our own analysis and presented a lowerrevised price forecast as below:
➢ Based on our model of linking global SUR to palm oil prices, and assimilating otherexpert forecast and their trend models, we forecast that palm oil price in the Q4 of2019 and Q1 of 2020 could reach a high of RM2,430/MT.
➢ And the Gurus were too far off the reality curve!!!
Price Forecast – Scenario 1
➢ The Stock Usage Ratio (SUR) in 2020 for global oils and fats is at 14.85%
➢ Based on our model of linking global SUR to palm oil prices, we forecast that the lowfor palm oil in Q1 & Q2 of 2020 could hit RM2,947/MT matched by an average ofRM3,210.
➢ Among the factors putting downward pressure on price are:
➢ Anti-palm oil sentiments in emerging markets
➢ Substitution of palm oil with other oils especially in Europe
➢ Financial constraints in certain importing countries due to sanctions
➢ Legislations against palm oil use (Europe)
➢ Oversupply of other competing oils – Eg. USA is forecast to have record soybeanharvest while Europe will also see likelihood of higher sunflower seed production;both due to better average yields
➢ Price undercutting by other producing countries
Tracking CPO Price Against Stock Usage Ratio
3,210
3,475
2,947
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020F
SUR
, %
CP
O P
rice
, RM
/MT
SUR vs CPO Price
SUR CPO Price Forecasted CPO Average Forecasted CPO Higher Forecasted CPO Lower
Price Forecast – Scenario 2➢ Price volatility is an inherent feature of commodity production due partly to inelastic supply and demand.
Slight changes in the fundamental factors reflect a large impact on prices.
➢ Based on our model of linking global SUR to palm oil prices, we forecast that “the high” for palm oil price inQ1 & Q2 2020, could touch RM3,475/MT.
➢ Among the factors pushing the price upward are:
➢ Overall oils and fats, including palm oil consumption in 2020 will likely exceed production
➢ Implementation of the B20 blending in Malaysia which is expected to consume an additional 500,000MT domestically will force Malaysian stocks lower
➢ Implementation of B30 blends in Indonesia which will see and additional 2.5 to 3 million MT consumeddomestically. The B50 gearing has not even been factored here
➢ Higher demand for oils and fats from higher populated regions (Africa, ASEAN) and also countries likeChina and India
➢ Expected improvement in trade relations between two largest economies (US-China Trade Dispute)
➢ With low stock levels and firmer soybean oil and crude oil prices (geopolitical issues), CPO prices areforecasted to be higher in 2020 than in 2019
Our Take Home Messages
• Palm oil continues to be an attractive long term commodity for producers & consumers
• Malaysian Palm Oil (MPO) is a solution provider
• Unlike other exporters, MPO provides its importers and consumers strategic & technical solutions. These are often free services to you.
• Palm oil, without doubt is the ultimate oil when it comes to affordability, sustainability and economic development
• Through MPOC we are prepared to provide support and assistance to our customers through consultation and collaboration with industry, growers, government and the wider end use community
• So what is stopping you from trading with us!
