Growing global demand


According to IOI Corp Bhd group managing director and CEO Datuk Lee Yeow Chor, there will be a challenge to meet global demand due to risks including the shortage of workers and the La Nina weather pattern.

KUALA LUMPUR: Despite the rosy outlook for crude palm oil (CPO) prices in the first half of this year, plantation companies see supply shortage as one of the major challenges amid the rising global demand.

According to IOI Corp Bhd group managing director and CEO Datuk Lee Yeow Chor, there will be a challenge to meet global demand due to risks including the shortage of workers and the La Nina weather pattern.

“Despite the noises such as the anti-palm oil campaigns, I am very optimistic on the outlook of the palm oil industry given the steady growing demand this year.”

Furthermore, the attacks on sustainability and deforestation by developed countries have an unintended consequences which resulted in the supply being constrained, Lee said during a panel discussion at the ongoing palm oil trade fair and seminar 2021 organised by the Malaysian Palm Oil Council.

LMC International chairman Dr James Fry pointed out that: “One needs to keep an eye on Malaysia’s B20 biodiesel mandate this year as it could influence the direction of CPO prices this year.”LMC International chairman Dr James Fry pointed out that: “One needs to keep an eye on Malaysia’s B20 biodiesel mandate this year as it could influence the direction of CPO prices this year.”

Looking beyond the Covid-19 pandemic, Lee suggested that palm oil producers collaborate with other oilseeds producers to offer a multi-oil solutions for various applications, instead of competing heads on.

“Collaborating with other seed oil producers would offer multi-oils solution, which will give flexibility to new innovative uses, ” he added.

In addition, the palm oil industry should also regionalise commodity-based palm oil trade as the spread of Covid-19 pandemic will posed risks to the supply chain and implications on the food security.

“We also could develop special applications using palm oil for high-value products in the hygiene, pharmaceutical and renewable fuel sectors.

“This will give palm oil a competitive position which is more secure and sustainable in the long run, ” explained Lee.

PBB Oil Palms Bhd executive director Jeremy Goon concurred that sustainable palm oil would provide easier access to lucrative global markets, multi-national customers and brands with bigger investors.

“We need to figure out a proper sustainable business plan, especially in terms of transparency and meeting the standards set by the International Organisation for Standardisation (ISO) and the Roundtable on Sustainable Palm Oil (RSPO).

“Otherwise, local palm oil could only end up in the local market, ” he added.

LMC International chairman Dr James Fry pointed out that: “One needs to keep an eye on Malaysia’s B20 biodiesel mandate this year as it could influence the direction of CPO prices this year.”

Malaysia delayed the nationwide roll-out of B20 biodiesel last year following the movement control order imposed due to the Covid-19 pandemic.

The third month benchmark CPO futures on Bursa Derivatives Exchange rallied to close RM122 higher at RM3,877 per tonne on continued bullish fundamentals yesterday.

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