Archived News

Oleh Datuk Dr Yusof Basiron12 November 2001 (Berita Harian)

15 November 2001 (Business Times) - Universiti Malaysia Sabah (UMS) andIJM Plantations Sdn Bhd (IJMP) today signed a Memorandum of Understandingto explore prospects for joint research and development in the oil palmindustry.

12 November 2001 (Berita Harian)

KUALA LUMPUR, Nov 12 (Bernama) -- Crude Palm Oil (CPO) production inMalaysia increased 40,337 tonnes or 3.7 percent to 1,141,072 tonnes inOctober 2001 compared with 1,100,735 tonnes in September, Malaysian PalmOil Board (MPOB) said.

12 November 2001 (Berita Harian)

LONDON, 11/13/2001 (BUSINESS WIRE) The imminent announcement by theEuropean Commission of its proposals for two new directives to ensure thatbiofuels make an important contribution to the total automotive fuelconsumption in the EU will give a huge boost to the European Biodieselindustry.The directives will make changes to tax laws to enable EU member states tointroduce tax breaks for biofuels, and will stipulate that biofuels mustmake up a fixed percentage of all automotive fuel sales across Europe.A new study of the European Biodiesel market by Frost & Sullivan forecaststhat this firm backing by the Commission will help increase the biodieselmarket from todays $504million to $2.4billion by 2007, a compound annualgrowth rate of 25% over the forecast period.Gordon McManus, research analyst with Frost & Sullivan explains,"Biodiesel can cost over twice as much to produce as conventional diesel,without some form of tax exemption it cannot compete at the pumps. Untilnow these exemptions have only been available in some countries, leadingto huge geographical variations in the biodiesel market and uncertaintyfor producers. The politicians are laying the challenge firmly at the feetof the producers to meet the volumes of biodiesel needed, meaning a lot ofhard work in terms of raw material procurement, capacity expansion andmarket development."As part of the Kyoto Agreement, the EU committed to reducing emissions ofCO2 by 8% by 2012. The life cycle analysis (LCA) approach to the overallatmospheric CO2 contribution of a fuel suggests that biodiesel uses about50% less CO2 than mineral diesel. This is one of the main incentives forindividual governments, and the European Commission, to support thedevelopment of the biodiesel market.However, limits on the production of non-food oilseeds, and a decrease insupport payments for oilseed producers means there is less incentive forfarmers to grow rapeseed -- the main source of oil for the biodieselindustry. But, whether the price of rapeseed rises high enough tosignificantly affect the biodiesel market, or whether demand for rapeseedfrom the biodiesel industry outstrips the possible supply, restraints onthe availability of raw materials is likely to be a major restrainingforce as the biodiesel market grows.

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15 November 2001 (Business Times) - FOR Malaysia, money literally grows ontrees. The country has bought everything from battle tanks to supersonicfighters, and signed contracts for major infrastructure projects, all tobe paid for with palm oil.The commodity, versatile as it already is, being able to be used forcooking, lubrication, fuel and soap-making, has of late acquired addedsignificant “currency”.Malaysia has entered into barter trade deals with various countries, andsome quarters are now proposing that this be expanded to cover moreactivities.Malaysian Palm Oil Association chief executive M.R. Chandran, for one,feels that the same approach can be adopted to develop ports and roads inSabah, as well as for the purchase of food items from abroad.“The use of palm oil as a currency is also an effective way to gain accessto both traditional and non-traditional markets,” he told Business Times.Trade and investment links with China, for example, will benefit under thestrategy, he said.Beijing imposes an import quota on palm oil and is reportedly willing tobuy more from Malaysia — and at a fixed price — if Chinese companies aregiven an active role in the construction of the RM9 billion BakunHydroelectric project. In fact, Beijing officials have been lobbying theMinistry of International Trade and Industry for a share of the Sarawakdam’s main civil works.And considering Malaysia’s high food import bill of about RM13 billion ayear, the country should consider exchanging palm oil for food instead ofpaying in cash, Chandran said .Analysts agreed, saying that by offering palm oil in exchange for goodsand services from abroad will also allow Malaysia to secure long-termdemand for the commodity. Barter trade deals executed through bilateraltrade arrangements can help keep the level of palm oil stocks manageableand the commodity’s price reasonable, they said.“Malaysia can lock up future demand for palm oil,” said a plantationanalyst with a foreign research house.Another analyst said given the intense competition in the global edibleoils market, barter trade agreements would certainly give the commodity anedge over its rivals.Malaysia has entered into several billion ringgit worth of sucharrangements with, notably, India, China and the US. They include payingfor contracts to double-track the peninsula’s railway network and and thepurchase of new locomotives.Malaysia had also bought 18 MiG-29 Fulcrum fighter jets from Russia for atotal of US$600 million under an offset programme, a deal signed in 1994.Palm oil and palm oil products worth US$95 million were shipped aspart-payment.And the Primary Industries Ministry is now trying to get the Russians toaccept 20 per cent of the payment for a proposed purchase of 10-16 SukhoiSu-30MK fighter jets in palm oil. “I hope to see part of the totalcontract estimated at between US$350 million and US$560 million to be paidin palm oil,” its minister Datuk Seri Dr Lim Keng Yaik said early lastmonth.In September last year, US firm General Electric International agreed tosell KTM Bhd 20 “Blue Tiger” high-power locomotives worth US$60 millionunder a similar arrangement. The locomotives are to be delivered beginningApril 2003 in exchange for 200,000 tonnes of palm oil and palm oilproducts.

Monday, November 12, 2001(The Star) - Farming, forestry and fishing -usually seen as supporting acts to their more famous cousin themanufacturing sector – appear to be sharply incongruent with the image ofa country aspiring towards developed nation status.The oft-touted tagline has it that knowledge, and not physical toil, willpropel the economy to greater heights.But, the manufacturing sector, long the mainstay of the Malaysian economy,has been looking somewhat less than slick these days.Its fortunes have been affected especially after its biggest market, theUS, was sent reeling following the Sept 11 attacks. And now, thepossibility of an ongoing conflict with Afghanistan does not bode well forthe American economy.Manufacturing activity in Malaysia is clearly down. In September, themanufacturing sector index shrank 12.8% year-on-year to 195. About 75.6%of the 29,837 jobs shed from January to September this year were from themanufacturing sector.According to think-tank Malaysian Institute of Economic Research, themanufacturing sector is expected to contract 5.5% this year. Theagriculture sector, on the other hand, is likely to register a 3.5%growth.The agriculture sector, which has been receiving insufficient focus fromthe government, could provide a measure of support to the domestic economynow, said PPB Oil Palms Bhd executive director Khoo Khee Ming.“The country’s strength now lies in commodities,” Khoo said in aninterview in Kuala Lumpur.He stressed that agriculture, although not the main pillar of theMalaysian economy is an important sector.The palm oil industry, in particular, could be a catalyst for growth. Likeall other plantation players, palm oil producers have to contend with thevagaries of nature. However, their fortunes are largely dictated by theprice of crude palm oil (CPO) that, in turn, is subject to cyclicalswings.Hopes now abound that a possible upswing of CPO price is in store. Theprice of CPO seems to have found its way to firmer ground recently, afterhaving been mired in painfully low levels earlier this year.For the most part, this has been a year that palm oil producers wouldprobably rather forget. The price of CPO plummeted to a low of RM695 pertonne in February this year due to a glut in the oils and fats market. Itthen strengthened to RM1,215 per tonne in August before slipping to RM998a month later.It did not help that the level of palm oil production was up this year.According to the government, production this year is expected to increaseby about one million tonnes or 8.9% to hit 11.8 million tonnes. This isattributed to a 6.4% increase in yield to 19.5 tonnes per ha compared with18.3 tonnes per ha last year.Another 158,200 hectares of planted area, mainly from east Malaysia, willalso come into maturity. This will bring the total mature hectarage to 3.1million hectares.Khoo however is looking forward to rosier prospects next year, largelybecause of an expectation of a lower production level leading to betterprices.He projected that CPO production would be flat or register a 1% to 2%growth next year.“There won’t be a very big surge in production due to natural trends andthe fact that a big area had been felled for replanting. The effects ofthis will be seen next year,” said Khoo.He said the natural trends could be explained by the reduction in input bysome producers who cut fertiliser application and upkeep during the lasttwo years.To encourage replanting, the government is undertaking a replantingprogramme of 200,000 ha of oil palm by year’s end. It has also allocatedRM300mil in grants to spur more producers to replant.Palm oil producers received a much-needed spot of good news late lastmonth. News that India, the world's biggest consumer of palm oil, hadreduced customs duty on CPO to 65% from 75%, cheered producersconsiderably as it sparked hopes of an increase in demand.Producers are also tapping other markets to cushion themselves. Inaddition to the traditional core markets of India, Pakistan and China,there is a concerted effort to explore the African, Middle Eastern andEuropean Union markets, Khoo said.He added that demand from Pakistan, which is now in a very volatile regiongiven the US strikes on Afghanistan, had not dropped significantly.In recognition of their susceptibility to CPO price swings, producers likePPB Oil Palms are run in a “very lean” fashion, with low production costsand small management teams.“We take a longer view of things as we’re here for the long-term. We feelthat there are opportunities for prices to improve,” Khoo said.Supply and price aside, he believes that the relatively low price of CPOwould continue to stimulate demand.PPB has the advantage of a relatively young estate. According to Khoo,close to 40% of PPB’s oil palms are between five to 10 years old. As theaverage fruit-bearing life of oil palms is 25 years, this indicates thestrong potential for future production growth.

12 November 2001 (Business Times) - MALAYSIA’S palm oil sector is set forbetter days ahead, at least until the year-end as growing demand boostsexports and strengthens prices. Most industry observers are in consensusand optimistic that crude palm oil (CPO) prices will remain strong,averaging at RM1,200 a tonne for the whole of 2002 or remain rangeboundbetween RM1,000 and RM1,200 a tonne until January. The commodity wastrading in February at RM693.32 a tonne on the spot market, its lowestlevel in more than a decade and a sharp reversal of fortune from the peakof RM2,505.71 in May 1998. CPO prices hovered between RM700 and RM800 atonne, averaging at RM743 in May, RM795.50 in June and RM893 in Julybefore it shot limit-up across the board and breached the RM1,000-a-tonnemark at the Malaysia Derivatives Exchange on July 12, a level not seen in13 months. Since then, prices have climbed steadily and increased 150 percent from RM693.32 a tonne in February to RM1,085 a tonne for the physicalDecember South last Friday. A few weeks after the September 11 attacks onthe US, prices of the commodity plunged to RM850 a tonne; it has sinceclimbed to the RM1,000-a-tonne level.

Monday, November 12, 2001 (The Star) - CRUDE palm oil futures prices atthe Malaysia Derivatives Exchange (MDEX) surged on aggressive speculativebuying and short covering prompted by news that the Malaysian governmentintended to extend zero export duty on 1.3 million tonnes of crude palmoil in 2002. The most active January contract pushed above its immediateresistance at the RM1,050 level and closed the week with huge gains.The January futures trended from a weekly low of RM1,038 to RM1,120 andfinished Friday with strong gains at RM1,120, up RM90 per tonne from aweek ago.

13 November 2001 (Business Times) - IMPROVING exports and declining outputare expected to continue to bolster palm oil prices, with traders sayingthe RM1,200 a tonne resistance level, a three-month high, will likely bebreached within the next two weeks.