As part of the MPOC Webinar series, 2nd webinar was held on Thursday, June 11. The theme of the webinar was to decode ‘Palm Oil in the Post-Pandemic Market’ The panellists were Sudhakar Desai, IVPA; Ooi Liang Hin, KLK Berhad and Jose Angel Olivero Garcia, Lipidos Santiga SA (LIPSA). The show was moderated by Dr.Kalyana Sundram, MPOC.
Dr Kalyana Sundram welcomed everyone on the call and set the ball rolling with his short presentation which covered the Impact of the Pandemic. He observed COVID-19 had disrupted global economic, social and financial structure.
All major commodities and exchanges have registered steep declines. Prices of all major edible oil have been hammered. The dramatic downward spiral in Brent crude oil has also been a factor. Demand for oil and fats in HORECA and Bio-diesel has plummeted. He also did price comparison of edible oil between January 2020 and May 2020. Export summary of regions across the world between January and May 2020 was displayed.
The Indian sub-continent showed the steepest decline due to a sharp decline in exports to India. The presentation also included top Malaysian Palm Oil export destinations. With the setting of the stage, it was time for the panellists to propound their views.
Sudhakar Desai, IVPA was invited to share his thoughts. He presented a host of India specific data points. HORECA demand constitutes 30-35% of the total consumption of edible oil of 23 million tonnes. India Palm demand was affected by 40% during the lockdown. Around 65% of total palm oil is consumed by HORECA and food services. Household consumption has jumped by 20%.
India’s total oil import to reduce by 2 million tonnes for 2020-21 in comparison to 19-20. The pipeline was dry due to the lockdown with the lowest ever stock levels. The stimulus package announced by the government for the country was for 260 billion dollars. He also touched upon market developments in India and on the global stage.
Farmers are now allowed to sell products outside the market yard was a huge step. The removal of oil seeds from controls on the amendment of the Essential Commodities Act was also a big change. He also touched on import projections for the sector.
The Oil Sheet Balance sheet for India, Malaysia and Indonesia made for interesting reading. Some of the factors to look out for in the future according to him were:
- Government of India priority is the need to reduce import dependency in Vegetable oil
- Possible Review of ASEAN, SAFTA treaties and WTO duties
- The potential implementation of the ban on the sale of loose oil. Especially post COVID-consumer priority will on health & hygiene d) The balancing of the ‘Local vs Global’ concept. How can Malaysia help in Oil Palm in India? Joint ventures were a possibility.
This was followed by Ooi Liang Hin, KLK Berhad who gave us a perspective from the Chinese point of view. He shared interesting statistics. China relied on imports and was interested only in importing refined oil. He made a pertinent observation saying after the SARS virus had afflicted China, recovery was swift and sharp. He feared the recovery this time may not be so fast and sharp. Sobering thought. He wound up with what he felt would be the way ahead with regard to edible oil.
The last panellist to speak was Jose Angel Olivero Garcia, Lipidos Santiga SA (LIPSA). Before asking him to share his thoughts, Dr. Kalyana Sundaram expressed his sympathies for the loss of lives in Italy and Spain due to the pandemic. Jose Angel Olivero Gracia gave us a picture of how the pandemic has affected the European Union with special emphasis on Spain and Italy.
He revealed all celebrations have been cancelled. No weddings, birthday parties, Holy communion, baptism are happening with feasts. Tourism has also been badly hit, A combination of all this has seen the curtailment of the consumption of cakes and pastries severely denting the local HORECA industry.
Once the panellists were through, questions posed on the ‘Chat’ bar was collated and fielded by Dr. Sundram to the respective panellists.
The session ended with the fervent hope wishing the corona crisis would end soon and there would be an uptick in the business outlook.
Key points highlighted in the webinar are:
- Malaysia total palm oil production in 2020 forecasted at 19.5-19.6 mln tonnes
- Malaysian palm oil exports in Q3 are projected to be 4.56 million MT, a 2.5% increase compared to Q2, due to a gradual increase in demand from traditional markets.
- Malaysia will export more palm oil to India, China and the European Union, the biggest buyers, in the third quarter, after an export duty exemption
- Palm oil exports to India in the third quarter is projected to reach about 2.15 mln tonnes
- Palm oil exports to China in the third quarter is projected at 1.8 mln tonnes
- EU demand for palm oil in third-quarter anticipated improving due to decline in rapeseed production