POINTERS 2014 MPOC
Palm Oil Internet Seminar
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POINTERS ON THE PRICE TRENDS:
Malaysian Palm Oil Industry Outlook and Biodiesel Mandates
By: Dr. Ahmad Parveez Bin Ghulam Kadir

Dr. Ahmad Parveez is currently the Director General of Malaysian Palm Oil Board (MPOB), effective 10th August 2019. He was appointed as Fellow of Academy Science Malaysia in 2016 and Member of National Biosafety Board (2018 – 2021). He sits on various other Boards; Board of Trustee of Malaysian Palm Oil Council (MPOC, 2019 -2020), Board of Trustee of Malaysian Palm Oil Certification Council (MPOCC, 2019 - 2021) and Board of Trustee of Institute of Malaysian Plantation and Commodities (IMPAC). Dr. Ahmad Parveez was previously the Chairman of Genetic Modification Advisory Committee under the National Biosafety Board (GMAC, 2010 – 2018). He is also very active in various professional societies including as the President of International Society for Oil Palm Breeders (ISOPB) and Chairman of American Oil Chemists’ Society (AOCS) Asian Section.

Dr. Ahmad Parveez was born in Taiping, Perak and obtained his secondary education at Sekolah Menengah King Edward VII, Taiping. He graduated with Bachelor of Science (UKM) in Genetics, Master of Science (UKM) in Molecular Genetics and a PhD (UPM) in Plant Genetic Engineering. He has 31 years of experience in Plant Molecular Biology, Genetic Engineering and Biosafety. He developed world first transgenic oil palm in 1997. His interest is in genetic modification of oil palm and biosafety of living modified organisms.

He has obtained a number of prestigious awards both locally and internationally. He has 15 patents filed and six of them have been granted. He has authored and co-authored more than 80 papers in refereed journals and more than 250 conference papers.


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The year 2019 had indeed been a good year for the Malaysian oil palm industry with improvements have been recorded in many key performance indicators such as crude palm oil (CPO) production, exports and palm oil stocks. The beginning of 2020 witnessed the CPO production in January significantly lower than that of January 2019. However, the production was catching up hence narrowing the production gap year on year. The year 2020 also witness the spread of the COVID-19 pandemic which has changed the landscape of the global economy. COVID-19 pandemic is disrupting some activities within the supply chain in the palm oil industry, of which exports were among the most affected segments due to changes in consumer spending behaviour resulted from the pandemic. For the first four (4) months of 2020, Malaysian palm oil industry recorded lower exports. The average CPO price during that period was higher than that of last year. However, the prices were on the downward trend due to unexciting demand and this had caused piling up in stocks. The pandemic not only disrupt the external demand for palm oil, but also affect demand for biodiesel. Lacklustre in Brent crude oil prices which worsened by the pandemic has widened the price gap between palm biodiesel and petroleum diesel. Consequently, this creates an unfavourable situation for discretionary biodiesel usage. This paper will further provide the details of the performance of the Malaysian oil palm industry for the first five months of 2020, covering all the above-mentioned issues as well as the expected development for the remaining 2020.


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Questions & Answers (3) :
Mohd Feroize
8 months ago
There is much talk about biodiesel mandates in Malaysia. But we at the market place do not know how the mechanism work. Can you enlighten us? How does the subsidy scheme work? How much subsidy does petroleum companies get from producing a MT of biodiesel. Where does the money use to subsidise this scheme comes from?
Dr. Ahmad Parveez:
1. There is much talk about biodiesel mandates in Malaysia. But we at the market place do not know how the mechanism work. Can you enlighten us? How does the subsidy scheme work? In Malaysia, the retail price of petroleum products, including diesel is calculated based on Automatic Pricing Mechanism (APM). Under this mechanism, relevant cost for product components are taken into account, such as diesel Mean of Platts Singapore (MOPs) price, biodiesel price, operation costs, margin and etc. The Managed Float Mechanism is currently being implemented to allow consumers to enjoy a more stable retail fuel price. In this regard, the Government monitors the movement of fuel prices and exchange rate on weekly basis. A new petroleum products prices at retail station, including diesel prices will be announced on every Friday, with the new pricing takes effect every Saturday at 12.01 am. Like any other subsidised products, the subsidy and source of funding for biodiesel programme shall be refer to Ministry of Finance. 2. How much subsidy does petroleum companies get from producing a MT of biodiesel. Where does the money use to subsidise this scheme comes from? Petroleum companies buy biodiesel based on price formula set by the government. Biodiesel is already factored in as component price in APM calculation. Just like diesel subsidy.
8 months ago
HCLeow
8 months ago
1) I notice that MPOB has revised down the palm oil production for Malaysia in 2020. May I know which state show the biggest downward revision and what are the factors lead to this revision? 2) Do you foresee large group of foreign workers to leave Malaysia with the relaxing of travel restrictions? What would be MPOB estimation in term of the number of labour shortage in Malaysia palm oil industry? 3) Any update from government to speed up the approval to bring in more labour within the next 1 to 2 months? 4) Possible to share with us the monthly biodiesel blending volume for 2018, 2019 and Jan to May 2020? and also the annual blending volume per regions.
Dr. Ahmad Parveez:
1. I notice that MPOB has revised down the palm oil production for Malaysia in 2020. May I know which state show the biggest downward revision and what are the factors lead to this revision? MPOBs forecast on production are only on the overall national CPO production. 2. Do you foresee large group of foreign workers to leave Malaysia with the relaxing of travel restrictions? What would be MPOB estimation in term of the number of labour shortage in Malaysia palm oil industry? MPOB does not foresee such situation happening as the relaxation on travel restriction is only applicable within the country. Thus, we are expecting that the labour shortage would not differ significantly from the April figure of 37,424. 3. Any update from government to speed up the approval to bring in more labour within the next 1 to 2 months? This is under the purview of the Ministry of Home Affairs and Ministry of Human Resources. However, we understand that the Government are currently not allowing new recruitment of foreign workers until the end of this year. 4. Possible to share with us the monthly biodiesel blending volume for 2018, 2019 and Jan to May 2020? and also the annual blending volume per regions. The actual monthly biodiesel blending volume is available at the Ministry of Finance. However, based on the data collected by MPOB, Malaysia will utilise 534,000 tonnnes of palm oil per year for B10 programme and more than 1 million tonnes of palm oil per year for B20 programme. In addition to that, Malaysia has also implemented B7 for industrial sector which would require about 227,000 tonnes of palm oil per year to be utilised as biodiesel.
8 months ago
Yazid Mustafa
8 months ago
1. Thank you sharing MPOB’s statistics of and information. Questions on your slide 4. Q1) What causes the drop in planting hectarage? 2) You claim that FFB yield drop because lower FFB processed. Are you saying that many FFB fruitlets are not processed? Is it because the fruitlets are not collected or there is other reasons? 3) Referring to your slide 9, FFB yield is really low in Jan. and Feb 2020. Why? 4) The issue looks severe as the figure on your slide indicated that unprocessed fruitlets contribute towards a 1.11 million drop in CPO production during the Jan.- May period. Any comments from your side. 2) On oil extraction, why is Sabah oil extraction rate higher than Peninsula Malaysia and Sarawak? (Slide 10).Slide 14 shows that Major Malaysia importers volume of imports do not fall much. But other importers registered substantial drop in volume. What is actually happening to all other importers position? And what is the government doing about it.
Dr. Ahmad Parveez:
1. What causes the drop in planting hectarage? Some owners have converted their plantation area to other than oil palm cultivation such as property development, resulting in the slight reduction of oil palm planted areas. In addition, higher replanting activities also contributed to the drop in oil palm planted area as oil palm trees that had been cut are not counted. 2. You claim that FFB yield drop because lower FFB processed. Are you saying that many FFB fruitlets are not processed? Is it because the fruitlets are not collected or there is other reasons? The reason for the lower FFB processed was because of low FFB production. 3. Referring to your slide 9, FFB yield is really low in Jan. and Feb 2020. Why? The decrease of FFB yield was due to low crop season (run off) in the beginning of the year. 4. The issue looks severe as the figure on your slide indicated that unprocessed fruitlets contribute towards a 1.11 million drop in CPO production during the Jan - May period. Any comments from your side. The drop in CPO production during Jan-May 2020 was due to the decline in FFB production which consequently resulting in low FFB processed by the palm oil mills. 5. On oil extraction, why is Sabah oil extraction rate higher than Peninsula Malaysia and Sarawak? (Slide 10) Sabah oil extraction rate is higher than that of the Peninsular Malaysia and Sarawak partly due to the fact that Sabah has bigger proportion of estates and organised smallholders in relation to independent smallholders (86.4%:13.6%) as compared to Peninsular Malaysia (81.1%:18.9%) and Sarawak (85.7%:14.3%). In addition, Sabah has an advantage in terms of soil quality as compared to Peninsular Malaysia and Sarawak. The expansion of oil palm cultivation in Sabah was later as compared to the Peninsular Malaysia, thus providing Sabah planters with better quality of soil. The land-clearing for the replanting purposes in the Peninsular Malaysia has eroded the soil nutrients supplies. Meanwhile, higher proportion of marginal soils in Sarawak caused its OER to be relatively lower than that of Sabah. Oil-to-bunch analysis conducted by MPOB has found that oil-to-bunch ratio for samples of FFB from Sabah contains higher oil content than samples from Peninsular Malaysia and Sarawak. 6. Slide 14 shows that Major Malaysia importers volume of imports do not fall much. But other importers registered substantial drop in volume. What is actually happening to all other importers position? And what is the government doing about it. Exports of palm oil by the Others importers category declined by 38.3% to 4.6 million tonnes during Jan-May 2020 mainly contributed by India, which recorded a significant decline of 93.0% (or 2.01 million tonnes) in export of palm oil during the said period. Export of palm oil to India decreased drastically during Jan-May 2020 as the Indian buyers reduced imports in response to the restriction on imports of refined palm oil. Refined palm oil is imported via import license issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce. Import of palm oil by India has shifted to Indonesias origin as import licenses were issued for palm oil originating from Indonesia. As a result, the intake of palm oil from Indonesia increased by 12.2% to 1.59 million tonnes (Jan-April 2020) from 1.41 million tonnes (Jan-April 2019). The Government has given 100% exemption of export duty on CPO, crude palm kernel oil and RBD palm kernel oil for the period of 6 months, effective on 1st July to 31st Dec 2020 provided under the National Economic Recovery Plan (PENJANA). This was aimed at managing the countrys stocks level, stabilising the crude palm oil price and enhancing exports.
8 months ago
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