KUALA LUMPUR: Malaysia’s palm oil exports hit a record high of RM80.4 billion last year, thanks to higher average palm oil prices and sustained demand for the edible oil from Asia and Africa.
“Last year, we achieved an all-time high of more than RM80 billion. That was about RM20 billion more than 2010’s RM59.8 billion,” said Deputy Plantation Industries and Commodities Minister Datuk Hamzah Zainudin.
“We were able to do well because our planters reaped bumper harvest and our millers squeezed 18.9 million tonnes of palm oil. This lead to our refiners selling the oil at an average price of about RM3,100 per tonne. So, high palm oil prices have contributed to this record achievement,” he told reporters at the Reach & Remind Friends of the Industry Seminar organised by the Malaysian Palm Oil Council here yesterday.
Four months ago, the Indonesian government raised export taxes drastically to boost refining capacity and downstream activities. As a result, crude palm oil and crude palm kernel oil are cheaper for downstream producers there and refined products shipped out from Indonesian shores are tax-free. This lead to palm olein prices falling by US$55 (RM173) per tonne while crude palm oil price settled by US$20 (RM63) per tonne.
Malaysian refiners are losing out on this unfair level playing field.
In response, Hamzah acknowledged that refiners and downstream players in Malaysia, which include foreign investors, are fighting for their survival. He assured that the government is still fine-tuning an amicable solution that will be palatable to both upstream and downstream players in the industry. “Bear with us for a couple of more months. We’ll make the announcement after the Cabinet approves of it,” he said.
Asked if the amicable solution could involve more tax on oil palm planters' harvest, he shook his head and replied, "not likely. The government is mindful that oil palm planters are the most heavily-taxed in this country."
Also present at the dialogue were Nextview Sdn Bhd chartist Benny Lee and Malaysian Palm Oil Board chairman Datuk Seri Utama Shahrir Abdul Samad.
Yesterday, the third-month benchmark for crude palm oil contract on the Bursa Malaysia Derivatives Exchange slid RM16 to close at RM3,136 per tonne.
Lee, in his palm oil price forecast presentation before 270 participants from the oil palm industry, said that palm oil prices is likely to trade as high as RM3,450 per tonne in the next 10 weeks. "The US dollar has started to weaken again and this will provide support to palm oil prices," Lee said.
Shahrir concurred with Lee that global demand for palm oil is still strong. India and China will continue to buy large quantities of palm oil to feed its burgeoning population. "Emerging economies in Eastern Europe and North Africa will also continue to place more orders for palm cooking oil," he said. "Also, since palm oil is trading at a discount to soya oil, demand for palm oil should accelerate in the months to come," he added.
When asked about this year's forecast of palm oil output, Shahrir expressed optimism that it is likely to hold up again this year, surpassing last year's 18.9 million tonnes. "More trees will mature and bear more fruits. This is especially so from Sarawak's oil palm estates," he said.
This is good news for palm oil consuming countries around the world as Malaysia supplies half of the world's need for this cooking ingredient that is packed with vitamins.
Shahrir explained that the developing world is heavily reliant on palm as a source of nutrition because the oil crop thrives in tropical climates and yields more fats and calories than other options. It gives the developing world - where hundreds of millions of people still live on a few dollars a day - the most caloric bang for the buck.