Virus outbreak impact on palm oil prices temporary, says minister

CORONAVIRUS | The novel coronavirus outbreak in China is expected to have a temporary impact on commodities prices, especially crude palm oil (CPO).

“Prices will come down and this (will) only (be) a temporary phenomenon, not only on commodities prices but share prices are also going down,” Primary Industries Minister Teresa Kok Suh Sim told reporters after the Reach and Remind Friends of the Industry Seminar 2020 and Dialogue in Putrajaya today.

The seminar was organised by the Malaysian Palm Oil Council (MPOC).

Commenting on the falling CPO demand from India, she said it was a temporary glitch and would be well resolved by both countries.

“Having long-standing bilateral ties, I believe our two nations will overcome this and prevail towards a mutually beneficial outcome,” she said, adding that her ministry together with the MPOC and agencies would continue to tackle this challenge, including the anti-palm oil campaign in Europe.

The Malaysian palm oil industry continues to contribute robustly to the nation’s economic development, and according to Kok, the industry is now the fourth-largest component in the national economy.

“From January to November last year, Malaysia’s total exports of palm oil and its downstream derivatives stood at 25.7 million tonnes, an increase of 10.9 percent from 23.2 million tonnes recorded in the same period in 2018.

“Although this generated an income of more than RM59 billion to the country, it is a decline of 5.9 percent compared to 2018’s revenue of RM62.7 billion for the same time frame,” she said.

Palm oil has become a leading vegetable oil globally and Malaysia is now the second-largest exporter accounting for 20.1 percent of global oils and fats export.

“China, India, the EU, the US and Japan are among the major palm oil export destinations for Malaysia,” she added.

Meanwhile, the MPOC has forecast the CPO price to average at around RM2,600 to RM2,700 per tonne this year.

“The high CPO price is expected to continue with the implementation of B20 biodiesel mandate which is taking place this month, as well as other factors including lower CPO stocks and decrease in production,” said MPOC.

B20 refers to a fuel mixture consisting of 20 percent vegetable oil and 80 percent petroleum.

On Monday, about 3.87 million hectares or 66.22 percent of the total plantation areas of 5.85 million hectares have obtained the Malaysian Sustainable Palm Oil (MSPO) certification.

Some 88.76 percent out of 0.68 million hectares of the total area for organised smallholders have been MSPO-certified, while about 10.17 percent out of 0.97 million hectares have been certified for independent smallholders. — Bernama