OVERVIEW OF THE MALAYSIAN OIL PALM INDUSTRY 2008
The
Malaysian palm oil industry recorded a satisfactory performance in 2008. Crude
palm oil (CPO) production recovered sharply by 12.1%, while palm oil stocks
remained high close to 2.0 million tonnes at the end of the year. Export
earnings of oil palm products rose to record RM 65.2 billion. The local daily
average traded CPO price declined by
66% within a span of eight months from a high of RM 4,179.00 in early March
2008 to a low of RM 1,403.00 in late
November 2008.
The total oil palm planted area in the
country increased by 4.3% to 4.48 million hectares in 2008. The expansion in planted area occurred mainly in
Sabah and Sarawak with a combined growth of 7% compared to 2% in Peninsular
Malaysia. Sabah remained the largest oil palm planted state, accounting
for 1.33 million hectares or 30% of the
total planted area in the country.
The production of CPO reached a record 17.73 million tonnes in 2008, an increase of 1.91 million tonnes or 12.1% from
last year attributed mainly by the
recovery in fresh fruit bunches (FFB) yields from the biological stress
last year. The national average FFB
yield increased by 6% to 20.18 tonnes/hectare as against 19.03 tonnes/hectare
achieved in 2007, which is a record high since 1994. In addition, the expansion in
matured areas by 151,534 hectares coupled with the improvement in the national
average oil extraction rate (OER) to 20.21% also contributed to the higher CPO
production. The average oil yield per hectare also posted a 6.5%
year-on-year increase to 4.08
tonnes/hectare, the highest yield since 1987. The production of
crude palm kernel oil (CPKO) also rose by 11.7% to 2.13 million tonnes.
Biodiesel is a new emerging sector in the
industry. By end December 2008, 14 plants have been established with total
annual biodiesel installed capacity of 1.7 million tonnes. An additional four
biodiesel plants with a combined annual capacity of 190,000 tonnes have completed construction but yet to
commence production. The production of biodiesel rose by 32% to 171,700 tonnes
in 2008, compared to 129,715 tonnes the
previous year because of favourable market conditions.
The total exports of oil palm
products, constituting palm oil, palm
kernel oil, palm kernel cake, oleochemicals, biodiesel and finished products
increased by 11.1% or 2.18 million
tonnes to 21.75 million tonnes in 2008 from 19.57 million tonnes recorded in
2007. The total export earnings
also increased by
44.3% or RM20.02 billion to RM65.19 billion compared to RM45.17
billion in 2007. Exports of most of
the oil palm products registered
increases in 2008 compared to
the previous year with the exception of
oleochemicals and palm kernel oil.
Exports of palm oil increased by 1.66
million tonnes or 12.1 % to 15.41
million tonnes in 2008. China, P.R maintained its position as the largest
export market for Malaysian palm oil
for the seventh consecutive year,
with off-take totalling 3.79 million tonnes
or 24.6% of total
palm oil exports, followed
by the European Union 2.05 million tonnes (13.3%) , Pakistan 1.26 million
tonnes (8.2%), USA 1.05 million tonnes (6.8%), India 0.97 million tonnes (6.3%), Japan 0.55 million tonnes
(3.5%) and Ukraine 0.48 million tonnes (3.1%).
Together, these seven (7) markets accounted for 10.15
million tonnes or 65.9% of
total Malaysian palm oil exports in 2008.
The higher export demand from
India, Jordan, Ukraine, USA, Pakistan and Egypt contributed to the favourable
palm oil export performance this year. Exports to India increased by
0.46 million tonnes or 89.9% due to reduced import duties and increased intake
of processed palm oil arising from the Government’s efforts to distribute
vegetable oils to low-income households. Exports to Jordan witnessed a
significant increase of nearly 63 folds to 0.38 million tonnes in 2008 from a mere 6,014 tonnes the
previous year attributed by the re-exports to neighbouring countries such as
Iraq and Syria. Palm oil off-takes to
Ukraine rose nearly 3 folds to 0.48
million tonnes in 2008 because of
the re-exports to the Central Asian
Republic countries. The trans-fatty acid labelling
in the USA which was enforced since 2006 has continued to spur a significant
increase in palm oil usage in the food sector with exports up by 31.8% to 1.04 million tonnes. Meanwhile,
exports of palm oil to Pakistan rose by
17.5% to 1.26 million tonnes due to
the import duty reduction on
Malaysian palm oil by a 10% “Margin of
Preference” under the Malaysia-
Pakistan FTA Agreement.
Exports of palm oil to China, P.R
declined slightly by 1.2% to 3.79 million tonnes in 2008 as against 3.84 million tonnes the previous year due to a 22.2% increase in imports of soyabean for local crushing
and 11.7% increase in Indonesian palm oil imports. Exports to the
EU fell marginally by 0.5% to 2.05 million tonnes, attributed by the
increase in domestic vegetable oils production, namely rapeseed oil which rose 15.0% to 8.0 million
tonnes in 2008.
Palm
kernel oil exports declined by 1.3% from
1.06 million tonnes in 2007
to 1.05 million
tonnes in 2008.
USA was the
major export market for palm
kernel oil with 0.26 million tonnes (or 24.5% of total palm kernel oil exports), followed
by China P.R 0.13 million tonnes (12.2%), EU 0.12 million
tonnes (11.9%) and Japan 0.08 million tonnes (7.2%).
Exports of palm kernel
cake increased by 7.7% to 2.26 million tonnes from 2.09 million tonnes
in 2007. The major palm kernel
cake export markets were the
European Union (1.25
million tonnes or
55.3% of total
palm kernel cake exports), New Zealand 0.55 million
tonnes (24.6%) and South Korea 0.23 million tonnes (10.0%).
Exports of oleochemical products
declined by 3.2% to 2.07 million tonnes in 2008. The major markets for oleochemicals were the European Union (0.61
million tonnes or 29.4% of total oleochemical exports), China, P.R 0.26 million
tonnes (12.4%), USA 0.20 million tonnes
(10.0%) and Japan 0.18 million tonnes (8.5%). The major oleochemical products
exported were fatty acids (0.84 million tonnes
or 40.7% of
total oleochemical exports),
followed by fatty alcohol 0.43 million tonnes (20.5%),
methyl ester 0.22 million tonnes (10.4%) and glycerine 0.22 tonnes (10.4%).
Exports of finished products
increased by 90.9%
to 0.67 million tonnes from
0.35 million tonnes in
2007. The major markets
for finished products in
2008 were Iraq with 131,552 tonnes (or 19.6% of total
exports of finished
products), followed by Kuwait 93,131 tonnes (13.9%), Russia 52,679
tonnes (7.9%), UAE 44,272 tonnes (6.6%), the EU 37,557 (5.6%), Pakistan 27,338
tonnes (4.1%) and Saudi Arabia 25,329 (3.8%). The major products exported
under this group
were vegetable ghee/vanaspati
and shortening with 305,207 tonnes and 220,530 tonnes respectively.
Exports of biodiesel increased by
91.7% to 0.18 million tonnes in 2008 against 0.09 million tonnes recorded in
2007. USA was the largest biodiesel export
market accounting for 71,324 tonnes or 39.2% of total biodiesel exports,
followed by the EU with 70,273 tonnes or 38.6%.
The palm oil
closing stocks declined 12% to 1.99
million tonnes as at end December 2008 as against the peak of 2.27 million
tonnes attained in November 2008. However, the year end closing stocks is still
higher by 18.5% as against 1.68 million tonnes last year because of the higher supply growth. The stocks of palm
kernel oil also closed higher by 29.7%
to 0.35 million tonnes.
The
average CPO price increased by 9.8% or
RM247.00 to RM2,777.50 in 2008 against RM2,530.50 the previous year. However, the palm oil industry experienced
extreme price fluctuations during the year with the highest monthly average CPO price recorded in March 2008 at RM3,695.00
and the lowest attained in November at RM1,520.50. CPO prices firmed during the
first half of the year trading above RM3,500/tonne level supported by higher crude oil prices, demand for biodiesel,
tight global vegetable oils situation and higher vegetable oils prices.
However, during the second-half of the
year bearish sentiments prevailed in the market influenced by the sharp decline in crude oil prices as
well as other vegetable oils, high palm oil stocks, global financial crisis and fears of global recession. This
resulted in the monthly average CPO price falling below the RM 2,000/tonne
level since October 2008. In line with the overall gains in
local CPO prices, the average export price for processed palm oil products also
increased, namely, RBD palm oil by RM59.00 or 2.2% to RM2,699.00; RBD palm
olein by RM467.00 or 18% to RM3,055.00; and RBD palm stearin by
RM40.00 or 1.6% to RM2,551.00.
The average price
of palm kernel(PK) in 2008 increased by
12.7% or RM185.50 to RM1,647.00 from RM1,461.50 the previous year because of
the higher CPKO prices in the domestic market.
The average price of CPKO rose by 22.4% or RM629.50 to RM3,437.00 from
RM2,807.50 the previous year as a result of firmer lauric oil prices in the
world market. In the case of FFB,
its average price at 1% OER rose by 15.7% to RM30.16 from RM26.07 the
previous year in tandem with the higher CPO and PK prices . Based on the
national OER, the average price of FFB in 2008
is equivalent to RM595/tonne as
against RM505/tonne the previous year.
The year 2009 is expected to be a challenging one for the
industry in view of the high prevailing palm oil stocks, set-back in
prices and concerns of a global
recession. The Malaysian Government has taken various measures to stabilize palm oil
prices at remunerative levels. Among the measures are the Oil Palm Replanting
Incentive Scheme to accelerate replanting and reduce CPO production in the near term, the
implementation of the 5% biodiesel mandate
in the transport and industrial sector starting with government vehicles
in February 2009 and increasing exports
under the CPO export duty free scheme. In view of the prevailing CPO
prices , the average price in 2009
is expected to soften compared to last year.
Dato’ Dr. Mohd.
Basri Wahid
Director-General
MPOB
January,
2009