Statistics
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FOREWORD
The year has been an eventful one for the Malaysian palm oil industry as the National Biofuel Policy was announced by the Government in August 2005 to spur the development of the biofuel industry in Malaysia. The policy entails a four-prong strategy which encompasses the production of a biofuel blend of 5% processed palm oil and 95% diesel (or B5), encouraging the use of B5 among the public, establishing an industry standard for palm biodiesel quality and the setting up of biodiesel plants in Malaysia for exports. Three companies have established joint-ventures with MPOB to set up palm biodiesel plants in the country using MPOB patented technology, each with an annual production capacity of 60,000 tonnes. During the year, several other companies have also disclosed their intentions to build biodiesel plants. In addition, the introduction of the B5 in the domestic market is also being planned for under a voluntarily programme which will involve a selected fleet of Government vehicles.
The Malaysian oil palm industry recorded a mixed performance in 2005 due to the continued strong growth in production. The prices and export earnings dipped, despite an increase in exports of all oil palm products during the year. This also resulted in higher closing stocks for the year.
The total oil palm planted area increased by 4.5% or 174,000 hectares to 4.0 million hectares in 2005. Sabah remained the largest oil palm planted State with 1.2 million hectares or 30% of the total planted area.
The production of crude palm oil continued to increase for seven consecutive years reaching 15.0 million tonnes in 2005 from 14.0 million tonnes the previous year. The impressive production growth of 7.1% was mainly attributed to the increase in matured areas, enhanced plantation and mill management, recovery in fresh fruit bunches yield per hectare to 18.88 tonnes and continued improvement in the oil extraction rate (OER) to 20.15%. The increase in OER during the past two years can be partly attributed to the Productivity Campaigns carried out by MPOB. In the case of crude palm kernel oil, production also rose by 12.1% to 1.8 million tonnes in tandem with the increase in palm kernel production and crushings by 8.3% and 11.3% respectively.
The total export volume of oil palm products, constituting palm oil, palm kernel oil, palm kernel cake, oleochemicals and finished products increased by 7.3% or 1.26 million tonnes to 18.62 million tonnes in 2005 from 17.36 million tonnes in 2004. The export volume of all the oil palm products was higher compared to the previous year, notably palm kernel cake, palm kernel oil and palm oil registering increases of 13.1%, 9.0% and 6.9% respectively.
However, the total export revenue of oil palm products declined by 6.1% or RM 1.84 billion to RM 28.60 billion compared to RM 30.44 billion in 2004. This was mainly due to the decline in export earnings of palm oil by 9.7% owing to its lower export prices during the year. On the other hand, the export earnings of palm kernel oil, oleochemical products and palm kernel cake was up 10.6%, 1.9% and 0.7% respectively, while that of finished products saw a marginal decline.
Palm oil exports increased by 6.9 % to 13.45 million tonnes from 12.58 million tonnes in 2004. China, P.R maintained its position as the largest export market for Malaysia with offtakes totaling 2.96 million tonnes ( + 5.5% compared to 2004), followed by the EU at 2.27 million tonnes (+15.6%) and Pakistan 0.96 million tonnes (+0.3%). However, exports to India declined by 32.6% to 0.64 million tonnes due to the high discriminatory import duty on processed palm oil products compared to crude palm oil and soyabean oil.
The lower exports to India was offset by the increased export demand by other major markets. Palm oil exports to the US rose 62.8% to 0.56 million tonnes as food manufactures switched to palm oil in anticipation of trans-fat labeling which comes into effect on January 1, 2006. The expansion of the oils and fats manufacturing sector in Egypt saw palm oil exports to the country increasing by 81.6% to 0.61 million tonnes. Exports of palm oil to Bangladesh also rose sharply by 40.0% to 0.51 million tonnes.
Palm kernel oil exports rose by 9.0% to 0.85 million tonnes from 0.78 million tonnes in 2004. Exports to the US increased 11.4% to 0.20 million tonnes, while offtakes by the EU saw a remarkable increase of 72.1% to 0.17 million tonnes. Exports of palm kernel cake increased by 13.1% to 2.03 million tonnes from 1.80 million tonnes the previous year. The EU continued to remain as the largest palm kernel cake market with exports up 4.7% to 1.56 million tonnes or 76.8% of total palm kernel cake exports.
Oleochemical exports continued to show good momentum, increasing by 3.6% to 1.83 million tonnes. The major oleochemical products exported were fatty acids ( 42.5% of total oleochemical exports), followed by soap noodles (17.2%) and fatty alcohol (16.8%). The major markets were the EU ( 28.5% of total oleochemical exports), China, P.R (14.6%), USA (12.3%) and Japan (10.4%).
The slow pace of palm oil exports vis-a vis production during the second-half of the year saw palm oil stocks gradually building up and closing at 1.6 million tonnes in 2005, an increase of 0.11 million tonnes or 7.6% against the previous year’s closing level of 1.49 million tonnes. Palm kernel oil closing stocks also rose by 20.2% to 0.23 million tonnes.
The average prices of oil palm products retracted in 2005, after sustaining an upward trend during the past three years. The price decline was attributed by the high stocks at the beginning of the year, renewed concerns over the build-up in domestic stocks owing to the slow pace of exports during the second-half of the year and lower soyabean oil prices in the world market. In addition, the de-pegging of the RM in July 2005 and market expectations that the RM will strengthen also dampened market sentiments. The average crude palm oil (CPO) price fell 13.4% or RM 216 to RM1,394 as against RM1,610 the previous year. CPO prices traded in a narrow range throughout the year with the highest and lowest CPO monthly average prices recorded in October and February at RM 1,455 and RM 1,305 respectively. Subsequently, the average export price for processed palm oil products also declined, namely, RBD palm oil by RM222 or 13.2% to RM 1,454; RBD palm olein by RM 255 or 14.6% to RM1,497; and RBD palm stearin by RM 243 or 15.8% to RM1,298.
The average price of palm kernel and crude palm kernel oil also declined by 4.3% and 5.3% to RM 1,017 and RM 2,183 respectively. The average price of FFB at 1% OER also fell in tandem with the lower CPO price by 15.7% to RM 14.55 from RM17.26 the previous year.
The forecast smaller growth in CPO production to 15.1 million tonnes in 2006 after seven years of uninterrupted uptrend in production growth is expected to mitigate the pressure of the higher palm oil carry-over stocks. Demand for palm oil also looks promising with the abolishment of palm oil import quota by China, trans-fat labeling in the US and increasing worldwide demand for biodiesel. Coupled with this and the projected higher growth in world oils and fats demand against production, the outlook for palm oil prices in 2006 is likely to be positive.
Dr. Mohd. Basri Wahid
Director General
MPOB
19 January 2006
Revised 14 February 2006
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