Malaysia's CPO stock level declines on biodiesel plan

Banks and plantations were among the top losers.

KUALA LUMPUR: The Ministry of Plantation Industries and Commodities (MPIC) is optimistic over the outlook for the Malaysian palm oil industry, saying measures to reduce the crude palm oil (CPO) stockpile has started to show success.

Datuk Amar Douglas Uggah Embas, the minister, said Malaysia's CPO stock level showed a reduction from 2.9 million tonnes to 2.6 million tonnes last month.

"This is a good indication that the country has been able to reduce the stockpile following the two programmes implemented by the MPIC.

"The measures involve an increase in the use of B7 biodiesel and towards the higher blend B10 programme, as well as replanting scheme incentive. Both have shown results.

"With the projection of an El Nino phenomenon on the way and reduction in the stockpile, there is a lot of optimism over the local palm oil industry," he added.

Uggah told reporters this after officiating the Palm Oil Economic Review and Outlook Seminar organised by the Malaysian Palm Oil Board and themed, "Palm Oil: Maximising Opportunities During Challenging Times", here today.

As the Malaysian CPO stockpile is a good indicator of global stocks, Uggah said Malaysia must continue to have an effective mechanism to reduce the stockpile domestically and within its own control.

"The best mechanism for this is through the biodiesel programme implementation and replanting. 

"Aside from helping reduce the CPO stockpile, the biodiesel programme is also contributing towards the reduction of carbon dioxide emission which Malaysia has committed to in supporting the Paris Agreement on Climate Change," he added.

Malaysia's latest biodiesel programme involves the blending of 10 per cent palm-based biodiesel (palm methyl ester) with 90 per cent fossil fuel petroleum diesel, that is set to replace the B7. 

"When we implement the B10, 1.0 million tonnes will be domestically utilised. To shift our CPO stockpile to produce biodiesel involves a very simple time lag as players have all the facilities. 

"In the meantime, we are not overstocking on biodiesel," said Uggah.

On the oil palm replanting scheme, he said the allocation of RM100 million as an incentive, was aimed at replanting 83,000 hectares of unproductive oil palm plantations nationwide.

The El Nino experience has shown that there could be reduction of 10 per cent in Malaysia's CPO production.

Uggah also urged plantation companies experiencing a labour shortage to submit their requirement by month-end.

"The government is very supportive in solving whatever problems faced by the industry, including the labour shortage," he added. - Bernama