Crucial 2024 likely for palm oil industry
13/12/2023 (The Star Online), Kuala Lumpur - The Council of Palm Oil Producing Countries (CPOPC) views 2024 to be a critical year for the palm oil industry, underpinned by the upcoming enforcement of the new European Union Deforestation-Free Regulation (EUDR) as well as other new legislations.
CPOPC deputy secretary general Datuk Nageeb Wahab said the main challenge confronting the palm oil industry remains to be on addressing the negative perceptions towards the commodity and the imminent implementation of a new legislation, namely the forced labour legislation, as an upcoming regulatory concern.
“The forced labour legislation is even more impactful to us because we have foreign workers in Malaysia. It also affects Indonesia which has workers who are migrating from one region to another,” he said during a media briefing on the challenges and opportunities of the palm oil industry in 2024.
Nageeb said the main challenge is on addressing the negative perceptions surrounding palm oil.
“We remain deeply concerned, particularly as the EUDR has not yet been fully addressed and is still under the implementation procedure. For the European countries, it is not about palm oil being a bad commodity, but it is a matter of protecting their own oils.
“In Europe, rapeseed, canola and soybean is heavily subsidised and cannot compete with palm oil. As such, the only way is for them to create entry barriers for palm oil.”
CPOPC secretary general Dr Rizal Affandi Lukman said the organisation continues to be bullish on crude palm oil prices, which is expected to be supported by declining production, ageing palm profile, uncertainties in weather conditions, and biofuel mandates. He projects prices will hover between US$800 to US$1000 per tonne.
“Previously, in the past five years, Indonesia’s exports to the European market stood at about 15.7%, but presently it is around 10% to 11% of our total exports. Several factors have contributed to this decline, notably the increased domestic consumption in Indonesia.”
Rizal said this year, the Indonesian government initiated the B35 biodiesel programme, consuming about 43% of the national palm oil production for biodiesel purposes, significantly impacting the volume of exports.“Furthermore, the government plans to progress to the B40 programme next year, indicating sustained domestic demand for palm oil. While European demand may be declining, the overall demand for palm oil remains robust, especially in key markets like India, China, and Pakistan, which will continue to be robust,” he said.