POINTERS: Global Oils & Fats Outlook 2015

By: Tan Sri Datuk Dr. Yusof Basiron

TAN SRI DATUK DR. YUSOF BIN BASIRON aged 66, a Malaysian. He is presently holding several important positions which include: i. Chief Executive Officer of Malaysian Palm Oil Council (MPOC) ii. Director of Sime Darby Berhad iii. Chairman and Director of CBIP Berhad Apart from holding distinguished corporate positions, he is also involved in other organizations which are: (i) Senior Fellow and Past President of Academy Sciences Malaysia (ASM) (ii) Fellow member of Malaysia Scientific Association (MSA) (iii) Fellow member of Malaysian Oil Scientists' and Technologists' Association (MOSTA) (iv) Fellow member of the Incorporated Society of Planters His notable academic achievements are as follows: i. In 1972, he obtained his Bachelor in Chemical Engineering Degree from the University of Canterbury, New Zealand; ii. In 1974, he obtained his Post-Graduate Degree in Rubber Technology (ANCRT) in the United Kingdom; and iii. In 1976, he obtained his Masters Degree in Engineering specializing in Industrial Management (M.E.) and also in Business Administration (MBA) from the Catholic University of Leuven in Belgium. Before he joined Palm Oil Research Institute of Malaysia (PORIM) in 1979, he held the position of Rubber Technologist/Techno-Economist with the Rubber Research Institute (RRI)/Malaysian Rubber Research Development Board (MRRDB). In 1986, he completed his doctorate with a PhD in Applied Economics and Management Science from the University of Stirling, Scotland. He was later appointed as the Director-General of PORIM in 1992. He held the position for 8 years until April 2000 before assuming the role of the Director-General of Malaysia Palm Oil Board (MPOB), an organization which existed as a result of a PORIM and Palm Oil Registration and Licensing Authority (PORLA) merger, from 1 May 2000 until 18 January 2006.

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As we had earlier predicted, the global oils and fats production in 2014 exceeded 200 million MT and for the year 2015, we forecast that the global oils & fats production will likely surpass 205 million MT. Driven by favourable weather the oils and fats production globally will again be led by palm oil which is poised to exceed 61 million MT and will play a crucial role in the global supply of oils and fats.

As the two top palm oil producing countries contributing to 85% of the global palm oil production, Malaysia and Indonesia will be the focus of the international oils and fats trade. With 30% of the global oils and fats production coming from Malaysia and Indonesia, the role played by both countries is vital in forecasting palm oil price.

For the first six months of this year, palm oil prices have fluctuated between RM2,150 and RM2,350/MT. The fall in crude mineral oil price during this period impacted the price of not only palm oil but also other edible oils such as soybean and sunflower oils. These are among some of the issues that will be highlighted in this paper.

This paper will analyse issues that will affect palm oil price in 2015 such as demand and supply analysis and we will also take into account the influence of the current drop in crude oil price on palm oil price especially in the first half of this year. Demand for palm oil from major consuming countries such as India, China, EU and USA is nevertheless, expected to remain upbeat and we will take these factors into account. The regional analysis on the demand and supply scenarios will be aggregated at the global level to forecast the price, demand and supply balance in 2015.

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Questions & Answers (5) :

Mohamad Raid Majzoub

9 years ago

Dear Tan Sri Datuk Dr. Yusof Basiron As usual very informative and useful presentation, it give us a good guidance however do you think the Palm Tree production cycle will be lower end of this year due to the Elnino affection and the flood happened on 2014.

Yusof Basiron:
Effect of floods at the end of 2014 has already been included in the production forecast (not significant) and the effect of El Nino if it occurs in 2015, on the production cycle of the oil palm will be felt only late this year or mostly next year.
9 years ago

Ertan

9 years ago

Dear Tan Sri Datuk Dr.Yusof Basiron Thank you very much for your informative presentation

K H LEE

9 years ago

very informative..WellDone Tan Sri !

Dr. Ahmad Mustafa

9 years ago

Dear Tan Sri Datuk Dr.Yusof Basiron Thank you very much for your informative presentation, is their any news regarding the possibility of palm olein to enter the Egyptian market in the ration card as a blend with soybean or sunflower?. I believe that this would be more economic than soy and sunflower blend which the current used blend in Egypt. Ahmad Mustafa Oleo Misr for Oil and Soap Plant, Egypt

Yusof Basiron:
The Egyptian ration scheme no longer restricts the use of palm olein in the subsidized scheme. Eligible recipients of the food subsidy system can use their 'smart cart' to buy cooking oil which may contain palm olein blended with other oils. Such blends are already popular in the Egyptian market.
9 years ago

Dr. Ahmad Mustafa:
Thank you for your reply Tan Sri.
9 years ago

Ng Yong Ming

9 years ago

Is it possible for palm oil to enter New Zealand as a new market?

Yusof Basiron:
New Zealand has been importing about 20,000 tonnes of palm oil per year in the past. Obviously palm oil can be used in the New Zealand market which is rather small. Palm oil can be used in solid fat products such as margarine and shotenings as this will eliminate the use of undesirable trans fats
9 years ago

Ng Yong Ming:
Thank you for your information Tan Sri. As what I know about New Zealand, the public is strongly against deforestation and palm oil had taken into the account. Is this the major resistance that stop palm oil from widely used in New Zealand?
9 years ago

Yusof Basiron:
Palm oil is used widely in the EU, USA and Australia even though there are those opposed to its use because of allegations on deforestation. The deforestation allegation is not backed by facts if relative areas occupied by other oil crops are compared. Usually, palm oil is not used as a liquid cooking oil in cold climates, and that could be its limitation in penetrating the small NZ market (also costly shipment cost).
9 years ago

Ng Yong Ming:
Thank you for your infos Tan Sri.
9 years ago