PETALING JAYA: Local integrated planters and palm oil refiners with an early head-start at producing red palm oil stand to become major beneficiaries to China’s latest decision to allow the importation of such commodity into the country.
According to industry observers, the potential beneficiaries include Sime Darby Plantation Bhd, Sarawak Oil Palms Bhd, United Plantations Bhd, Carotino Sdn Bhd, a subsidiary of Johor-based JC Chang Group and Harvist by Profes Lipid Sdn Bhd.
Red palm oil is the product from minimally processed oil palm fruits using a different technology that maintains the abundance of carotene and Vitamin E in comparison to the regular golden palm oil.
It has similar versatile usage particularly in consumer goods, food services and other-related industrial products. In a statement yesterday, Malaysian Palm Oil Board (MPOB) director-general Dr Ahmad Parveez Ghulam Kadir (pic below) said China has announced the implementation of the Chinese Group Standard for red palm oil effective early this month.
This will enable Chinese importers to import red palm oil from Malaysia by quoting specifications in the standard, he noted.
Previously, the import of red palm oil was not allowed to enter China due to the colour specification in the existing Chinese Standard for Palm Oil, which was set at a maximum 3.0 red.
Most of the red palm oil produced in Malaysia is detected at 7.0 red and above, he added.
Ahmad Parveez pointed out that the latest Chinese Group Standard was the result from multiple stakeholder engagements and extensive bilateral cooperation between MPOB and the respective Chinese authorities, which enabled the entry of Malaysian red palm oil into China.
According to Malaysia Palm Oil Association CEO Datuk Nageeb Wahab, the latest development on red palm oil export access to China is definitely a boon for integrated planters with refineries and also, palm oil refiners.
“They must seize this opportunity to export more red palm oil into China’s strong growth edible oils market, ” he said adding that red palm oil can be produced by most integrated plantation players in Malaysia.
China is the second largest market for Malaysian palm oil with an uptake of 2.73 million tonnes in 2020, which is an increase of 9.6% from 2.49 million tonnes in 2019. Sime Darby Oils managing director Mohd Haris Mohd Arshad told StarBiz that plans are afoot to export its red palm oil products to China in the near future. Sime Darby Oils is the downstream business arm of Sime Darby Plantation.
“We truly welcome the latest decision by China and also, glad that the efforts undertaken by MPOB have come to fruition.”
To date, Sime Darby Oils’ red palm oil has been exported to Japan and Europe for use as natural colourant in food based products.
Asked to comment on the latest development, United Plantations Bhd (UP) chief executive director Datuk Carl Bek-Nielsen pointed out that “we will sell to Chinese interested parties if they are interested in exploring commercial deals on red palm oil that also value the highest standards of sustainability.”
As of now, UP is already selling high quality fractions of palm oil to China which “we find to be a very enterprising market, ” he added.
Cargill Investments (China) Ltd expects that China will likely import between 6.7 million tonnes and 7.1 million tonnes of palm oil
This is about 400,000-800,000 tonnes higher than 2019, said its China CNF business director (oils & softseeds) Ryan Chen.
“Many Chinese investors were trading the inflation story on commodities.
“Fundamentally, they watch the nearby soybean oil tightness and palm producing recovering pace very closely, ” he said at Bursa Malaysia Derivatives’ second virtual Palm and Lauric Oils Price Outlook Conference 2021 last week.
Meanwhile, Ahmad Parveez said MPOB, through its regional office in Shanghai, China also known as the Palm Oil Research and Technical Service Institute of MPOB (PORTSIM China) together with local industry players and research institutes, has jointly developed food and animal feed formulated with red palm oil.
“We hope Malaysian exporters can grasp this golden opportunity to sell the premium and nutritious red palm oil to China, a multi-segment market with the most diversified consumers in the world, ” he added.
Apart from red palm oil, China has also announced the official implementation of the Chinese Group Standard for palm kernel cake.