CPTPP expected to boost palm oil exports, says MPOB
30/12/2022 (Free Malaysia Today), Petaling Jaya - The Malaysian Palm Oil Board (MPOB) said the country’s ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) last September will boost demand for palm oil products and broaden access to new markets.
“Upon ratification and implementation of the CPTPP, tariffs for palm oil products gets reduced from a minimum of 6% for Canada, 5% for Mexico, and 9% for Peru based on the tariff elimination schedule,” said MPOB director-general Ahmad Parveez Ghulam Kadir.
The elimination of tariffs will improve Malaysia’s palm oil competitiveness in the CPTPP member countries, he added.
Ahmad also said the country’s palm oil industry experienced a better performance this year and the momentum may continue into 2023.
“Due to the ongoing Russia-Ukraine conflict disrupting (the) sunflower oil supply chain globally, it has caused a surge in the demand for palm oil as a replacement,” he said.
Other factors that may have attributed to the better performance were the rising prices of soybean oil and Brent crude oil in the world market.
Exports for palm oil and other palm-based products from January through November had increased 1.3% to RM22.43 million tonnes compared to 22.14 million tonnes in the same period in 2021.
Increasing exports and revenue
The higher prices of palm oil had boosted total export revenue by 31.8% to RM120.43 billion from RM91.38 billion from January to November.
Palm oil exports rose by 0.8% to 14.25 million tonnes in January-November 2022 compared to 14.14 million tonnes in the previous corresponding period.
Due to this, palm oil export revenues spiked 31% to RM80.22 billion from RM 61.26 billion in the same period of 2021.
He said crude palm oil (CPO) production is expected to increase slightly by 2.1% to 18.5 million tonnes for 2022 as compared to 18.12 million tonnes last year.
This is forecasted to increase to 19 million tonnes in 2023 due to the expected increase in productive areas, in the peninsular and Sarawak.
In addition, the workforce situation should stabilise next year as foreign worker applications are being approved in stages.
From January to November, CPO production stood at 16.83 million tonnes. This is an increase of 1% compared to 16.67 million tonnes achieved in the same period last year.
“In anticipation of higher production, we project the closing stocks of palm oil for this year at 1.85 million tonnes. This is a 14.9% increase compared to 1.61 million tonnes in December 2021,” Ahmad said.
For 2023, he expects closing stocks of palm oil to be at two million tonnes due to expected higher supplies of other major vegetable oils including palm oil.
CPO prices likely to fall in 2023
MPOB expects CPO prices to average at RM5,100 a tonne for this year, 15.7% higher compared to RM4,407 a tonne in 2021.
In Q3 2021, CPO prices experienced a dip due to high CPO production season, rising palm oil stocks and declining soybean oil prices.
“This year, from January through November 2022, the average CPO price was RM5,167 a tonne, an increase of 18.4% compared to RM4,363 a tonne for the same period in 2021,” he said.
Whilst exports are projected to grow, there appears to be a downside. Ahmad said CPO prices in 2023 are expected to dip to RM3,800 a tonne on average.
This is in anticipation of higher palm oil production, weather conditions which are expected to improve especially in the second half of 2023, and expected higher availability of supply of other major vegetable oils.
Nevertheless, he said the Malaysian palm oil industry is anticipated to be better next year than in 2022.