Palm | Kelapa Sawit

CRUDE palm oil (CPO) prices could fall temporarily on news that the commodity's stock hit a 13-month high before rising again as demand from China kicks in, traders said.

The Malaysian Palm Oil Board reported yesterday that December palm oil stocks surged 15.7 per cent to a 13-month high of 2.24 million tonnes as demand fell faster than production.

"The latest set of numbers was quite scary. Exports were lower and stock levels were higher than our estimates. There is an immediate bearish reaction and prices slid. We think, at most, prices could fall to RM2,550 per tonne," brokerage Oriental Pacific Futures Sdn Bhd's executive director Ricky Chin said.

In a separate telephone interview from Singapore, a senior trader remarked that the December stock of 2.2 million tonnes was surprisingly high and he was seeing more commodity funds back in the market.

The funds were said to be instrumental for palm oil prices reaching a record of more than RM4,000 a tonne in 2008 as these big investors rushed to find secure investments. "We're starting to see more speculative play than physical demand. The funds are back in the markets. They'll push prices up and down with more volatility," he said.

Yesterday, third month benchmark palm oil futures traded on the Bursa Malaysia Derivatives market fell RM41 to close at RM2,585 per tonne.

Still, palm oil traders and futures brokers think prices could rise as high as RM2,900 per tonne by March.

In the next few weeks, however, we anticipate more buying from China as the demand for cooking oil heightens in preparation for the Lunar New Year," Chin told Business Times. He thinks palm oil is likely to trade at a higher band of between RM2,800 and RM2,900 per tonne in the longer term.

A trader with a multinational oil palm plantation company in Kuala Lumpur, however, had a lukewarm outlook. "At present, the futures market is rather quiet. There's not much movement. Maybe it is because it is still early in the year," he said.

"But as we enter into low crop months, we may see lower stock levels in January and February. In the short term, we can expect palm oil to trade sideways at between RM2,500 and RM2,700 per tonne."

KUALA LUMPUR: Greenpeace, Friends of the Earth (FOE), Wetlands International and World Wide Fund For Nature (WWF) could play invaluable roles in highlighting environmental problems and promote public and corporate oversight.

But when these non-governmental organisations become biased and apply double standards in their whistleblowing, many begin to doubt their credibility.

"Public trust and integrity are the essence of any NGO should we want to stay true to our purpose and remain relevant in today's context," said Malaysian Nature Society president Tan Sri Dr Salleh Mohd Nor.

"In the last decade, we've seen an increasing presence of foreign green NGOs in Southeast Asia. The objective of these foreign green and animal rights NGOs in setting up affiliates here is questionable," he told the New Straits Times in an interview here.

Examples include Amsterdam-based Friends of the Earth (FOE) giving financial support to Sahabat Alam Malaysia, Swiss-headquartered WWF funding anti-palm oil lobbyist Wetlands, which in turn contributes to Global Environment Centre, a non-profit organisation set up in Malaysia to support the protection of the environment and the sustainable use of natural resources.

There is also the UK-based Oxfam International giving money to Indonesian NGO Sawit Watch that purports to "highlight the negative social and environmental impacts of oil palm".

Earlier this week, Malaysia's Registrar of Societies Datuk Mohd Alias Kalil warned that Sahabat Alam Malaysia would be deregistered if in the fight for its cause, it is proven to indulge in extremist acts that threatens the country's interests.

When asked to comment, Salleh said: "At Malaysian Nature Society, we cherish the right to speak up for the conservation of nature but we're certainly not an extremist group. In fact, we don't agree with Greenpeace, FOE, Wetlands, Sawit Watch and WWF's biased approach, specifically their anti-palm oil lobby."

"We're a green NGO but we do not lobby against select industries or seek representation at negotiating tables to set up trade barriers disguised as environmentally-friendly measures."

Salleh said the Malaysian Nature Society had, throughout its 70 years of existence, stuck to its core activities of expeditions and explorations into the deep jungles and caves to inculcate love for nature among its members. "As the oldest green NGO in Malaysia, we take pride in being transparent. We have never haboured any hidden agenda or ulterior motives. We publish all contributions and expenses in our annual reports. I can assure you every sen is accounted for," he said.

Today, it is an undisputable fact that financially strong NGOs like Rainforest Action Network (RAN), Greenpeace, FOE, Wetlands, Oxfam International and WWF wield great clout at international decision-making forums on global warming. One would expect that with great power, comes great responsibility.

But to date, it is unclear whether these NGOs have institutionalised external oversight of their decision-makings.

Are there independent audits to determine the effects of their policies and practices on the orang-utans and indigenous people they claim to be helping? These NGOs are whistleblowers, judge and jury, all roled into one -- a stark contrast to independent boards in corporations.

On the other hand, oil palm plantation companies, whether listed on the stock exchange or privately held are a responsible lot by virtue of the industry being tightly regulated. About 50 corporates involved in palm oil-related businesses are listed on Bursa Malaysia.

Related party transactions and profit/loss accounts are open to public and regulatory scrutiny. Every oil palm planter, miller, refiner, trader and cargo forwarder is subjected to the Malaysian Palm Oil Board's (MPOB) stringent regulation.

This means the government keeps tab of agricultural land planted with oil palm trees, quality of seedlings that are planted in the estates, how much palm oil is produced and how soon and the quality of oil shipped out. Every shipment is reported to MPOB within 24 hours. Those in the industry who do not comply face heavy penalties.
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Sahabat Alam at a loss over Registrar's warning
KUALA LUMPUR: Sahabat Alam Malaysia, an affiliate of Amsterdam-based Friends of the Earth, does not want to speculate on the motive behind the Registrar of Societies' warning about its possible deregistration.

Earlier this week, the Registrar of Societies (ROS), Datuk Mohd Alias Kalil warned that SAM can be deregistered as a non-governmental organisation if there is proof that it is involved in activities which threaten the nation's interests. Speaking from Miri, Alias said ROS is monitoring SAM closely and any other NGOs which acted extremely in their cause.

In a telephone interview from Penang yesterday, SAM secretary Meenakshi Raman said: "We don't know what motivated the ROS to give such warning. "We were caught by surprise when we saw it in the news. There was no official letter from ROS, so we shall wait and see."

Friends of the Earth and affiliates have in the last five years blamed the oil palm industry's rapid growth to deforestation and peatland degradation, which in turn is blamed for species extinction, worsening climate change and the displacement of indigenous people.

It lobbies for a moratorium on the conversion of forests and peat land into plantations be it oil palm, rubber or timber species.

Biodiesel and biogas plant contractors, oil palm millers installing greenhouse gas capture tanks and biodiesel plant owners are eligible to apply for cheaper loans under a new government scheme.

Energy, Green Technology and Water Minister Datuk Seri Peter Chin said that under the 2010 Budget, the government, through commercial banks, will offer RM1.5 billion worth of loans to companies that supply and use environmentally friendly technologies.

"I urge process engineers and plant owners using green technologies to put in their applications to my ministry. Once approved, they can get the soft loans from the banks," Chin told Business Times in an interview in Kuala Lumpur.

"The government is promoting green technology across all sectors," he added.

Suppliers of green technology can borrow up to RM50 million, while their clients are eligible to take a maximum loan of RM10 million. The loans, of which the government will bear 2 per cent of the total interest rate, will be offered at all commercial banks from January 1 next year. The government will also guarantee 60 per cent of the loan.

When contacted, Lipochem Sdn Bhd managing director Koh Pak Meng said, "This is good news. It will speed up the implementation of home-grown technologies to produce biodiesel and biogas." Since 2005, it has been leveraging on Malaysian Palm Oil Board (MPOB)'s technology to build biodiesel plants in Malaysia, South Korea and Indonesia. It is now working with scientists in Japan to further develop efficient ways to capture harmful greenhouse gas from palm oil mill effluent and process it into biogas for power generation.

Oil palm millers, timber processors and rubber glove makers using biomass to fuel their boilers are also eligible to apply for pioneer status and investment tax allowance.

Three weeks ago, Chin launched the handbook on Incentives for Renewable Energy and Energy Efficiency In Malaysia. "The government will only receive applications for these fiscal incentives until the end of 2010," he said.

The pioneer status, granted under the Promotion of Investments Act 1986, provides a 10-year income tax break for renewable energy businesses. There is also a full tax allowance on qualifying five-year capital expenditure. Unused allowances can be carried forward until fully absorbed.

Chin added that all applications for pioneer status, investment tax allowance and exemptions from import duty and sales tax must be submitted to the Malaysian Industrial Development Authority (MIDA).

THE Malaysian Palm Oil Board (MPOB) is proposing a heavier fine of RM2 million for criminals who deceive planters into buying and planting low yielding oil palm seedlings.

Currently, those found guilty are only fined up to RM250,000 or jailed up to three years, or both. "There is a need for heavier sentencing as the current penalty does not reflect the severity of the crime," said MPOB deputy director general Dr Salmiah Ahmad.

MPOB is now taking a more serious stance on oil palm seed scams as it is found to be one of the main causes for the country's average yield stagnating at four tonnes per hectare a year for the last 20 years.

Many smallholders have been duped but they cannot be blamed because it is difficult to differentiate a genuine crossbred seedling of dura and psifera (DXP) strains from fake ones.

These fake seeds will only yield five to 10 tonnes of fresh fruit bun-ches a year compared with DXP seeds, which will yield 25 tonnes.

Cross breeding DXP seeds takes time and they are sold for RM2 per seed. Malaysia's strategy to remain the most productive oil palm producer in the world is mainly buoyed by the government policy of using DXP seeds, tissue cultured and clonal palms.

Yesterday, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok launched the Malaysian Oil Palm Nurseries Association (Mopna) in Bangi, Selangor. He advised smallholders to be more discerning. "We must remember that whatever we plant will remain in the ground for the next 20 to 25 years. It is therefore absolutely essential that we get it right the first time, ensuring that only superior planting materials reach the fields," he said.

Under the national replanting strategy to reduce palm oil supply in the immediate months and boost supply in the longer term, RM200 million has been allocated to encourage the replanting of 200,000ha. MPOB has, so far, approved of 160,000ha for replanting this year.

Earlier this year, the Finance Ministry allocated RM50 million more to MPOB to supply seedlings and fertilisers to independent smallholders who do not get support from other government agencies like Felda, Felcra or Risda. It works out to be RM6,000 per hectare spread over three years.

Mopna president Azhari Wasi Mohd Jamli said half of its 60 members already received MPOB's oil palm nursery certificate of competency.

Malaysia's palm oil output, down 4 per cent in the first half from a year ago, is likely to fall further as the government continues to chop down unproductive oil palm trees.

"Replanting is a two-pronged strategy. It will immediately cut off some oil supply into the market, but, in the mid-term, oil yield will improve," Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said.

The minister is optimistic of buoyant palm oil prices in the months ahead.

In an interview in Putrajaya yesterday, Dompok said he had told the Malaysian Palm Oil Board (MPOB) to speed up replanting efforts. "The RM200 million budget has been allocated, MPOB must speed up the implementation," he said.

Asked to comment on conflicting price forecasts by several plantation analysts, Dompok said: "Analysts and traders like Dorab Mistry can forecast from time to time. But you have also seen their predictions were not accurate.

"Palm oil prices are essentially subjected to market forces. You also have to consider the strength of the US dollar against ringgit and the amount of rainfall in oil palm plantations.

"If you ask me, I would not be able to give a specific forecast to palm oil prices. But I can assure you the government is committed to tightening palm oil supply in the immediate term."

Last year, Malaysia produced 17.7 million tonnes of crude palm oil. In the first six months of this year, the output was only 7.92 million tonnes, about 4 per cent less than a year ago.

Dompok estimates this year's palm oil output at 17 million tonnes, 700,000 tonnes less than last year's all-time high. "There is already a supply shortage, compared to last year, because of replanting. Also, since many smallholders cut back on fertiliser usage a year ago, we're seeing smaller and fewer fruit bunches," he said.

Yesterday, the third-month benchmark September contract on Bursa Malaysia’s Derivatives Exchange fell RM20 or 1 per cent to RM1,990 per tonne, the weakest level since March 30.

Here are reviews of premium-priced cooking oil NoveLin by my colleagues at New Sunday Times.

A brand new palm cooking oil variant that looks and feels like olive oil but it’s not. THERESA MANAVALAN is thrilled to discover that it has absolutely no smell or taste.

Let's begin with a confession of my fondness for complications. Ismail, the friendly fishmonger at Petaling Jaya’s Old Town Market, tells me I’m only the only customer who has ever asked him to butterfly fresh sardines. He starts with an “Oh Kak...” kind of whine but does a great job of it anyway. His bright eyes are darting about the busy market but he’s heard every word about my plan to serve Bay of Bengal sardines. I know he’ll ask me about it too, next time I’m there.

On the phone, my Aunty Rita warns me that they might not be sardines, rather they may be scad, a similar-looking small fish with an entirely different flavour scope. Use a fleshier fish, she advises, if you’re going to grill it.I’ve chosen sardines simply because they’ve got a distinct flavour and an unmistakable aroma that charges the nose the moment they’re cooked.

You must, at this point, understand that sardines in tins bear absolutely no resemblance to fresh ones. I need an individualistic fish because I’m grilling them with NoveLin, a brand new palm oil variant that I’m testing.

It looks like olive oil, it feels like olive oil, but it’s not olive oil. It does everything that olive oil does except deliver that particular flavour of the Mediterranean. NoveLin is literally flavourless and odourless — qualities that would eventually send me to sardine heaven.

It greases the hotplate gracefully, with absolutely no aroma of its own to steal the thunder from the fish rubbed with chili and turmeric in its searing ikan bakar moment. The sardines, grilled crisp with no sign of oil, go out with cherry tomatoes and mesclun lightly dressed in old-fashioned balsamic vinegar, NoveLin and wave of sea salt. Oh, I like this — it’s as if there’s only the vinegar and salt. The oil hovers in the distant background of taste – and the shredded ginger flower sprinkled into this salad zooms straight to the foreground. This is interesting.

In search of drama, I boil potatoes, you know, those non-descript ones found in every Malaysian grocery that are born for chicken curry.

Cut into wedges and brushed in NoveLin, I stick them in the oven with roasting chicken pieces. They crisp efficiently in 200ºC, the edges browned and inviting. And that, it turns out, is the hottest item in the line-up at dinner. The potato, says the spouse, tastes like real potato. Oh.

So, NoveLin knows it’s the hired help? That its job is to provide cooking fat, not seize the entire taste spectrum. This makes it a great cooking oil because it will always allow the natural perfumes of herbs and spices dance through the true taste of food.

NoveLin, a blend of palm oil and other vegetable oils, is Malaysia’s newest oil, launched last Thursday. Developed by the Malaysian Palm Oil Board and now manufactured by Ace Edible Oils, NoveLin was designed specifically for export to cold countries.

Beating the cold weather has always been a challenge for the palm oil industry because classic palm oil congeals in the cold. We’ve all seen it happen in our fridges. NoveLin goes to Japan and Korea by Christmas, and next year, it will go to Europe, the US and possibly, be sold here too.
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I LIKE olive oil but it isn’t any good for deepfrying.

With its smoke point hovering around 200ºC, all I get is a misty vision and a really oily residue I have to scrape off the walls. Because of this, I seldom ever deepfry food.

So I want to know if NoveLin can beat that. I marinate chicken wings in Worcestershire sauce with salt and pepper. An hour later, I’m ready to fry. The wok heated, I pour in NoveLin. Hey, no smoke. That’s wonderful. But I’m also missing the aroma of the usual brand of blended cooking oil I use for deepfrying.

I put the chicken in and about two minutes later, an appetising smell fills the kitchen. Littlest Princess runs in, distracted from her homework by the smell, and impatiently demands to know if dinner would be ready soon.

The chicken wings brown beautifully and I remove them onto a plate.

The odourless oil doesn’t seem to make the chicken any less tasty. In fact, it seems to allow the taste and flavour of Worcestershire sauce to shine through more acutely. Having wolfed down dinner, Littlest Princess licks her fingers clean and says, “Ma, can we have this again tomorrow?” — By TAN BEE HONG