While the unemployed people with plenty of time to waste are causing havoc and being a general nuisance, here is some bread and butter information. China is now our largest importer of palm oil. China imports something like 300,000 tonnes of palm oil a month. At today's prices that is about RM600 million a month or RM7.2 Billion a year.
Due to global factors beyond our control, palm oil prices have declined by about 33% from July last year. It was RM3043 per tonne in July, down to RM2922 per tonne in September and reached RM 2017 per tonne on December 13, 2012.
There is a pick up now to about RM2200 per tonne. Prices are expected to move up to around RM2300 by March 2013. The long term view is bullish with prices hopefully breaching RM3000 again by 2014. Good times are always there for this most golden crop that is such a reliable anchor of our economy.
If future historians try to figure out which economic factors contributed so much stability and wealth to this country called Malaysia from the 1980s onward - the answer is palm oil.
It is not just the price per tonne of palm oil that is relevant but how this industry is so tightly woven into the lives of our people, especially the rural folks. The palm oil industry provides a livelihood for millions of people in the country. If you have 10 acres of oil palms to your name, you can live a comfortable life (provided you take care of the oil palms). If you have 60 acres of oil palm to your name in some small town, you sudah kaya.
There are some clouds on the horizon though. The Chinese, our biggest export market, have slammed the barkes on imported palm oil with some new regulations. They want the palm oil to be of higher quality. Here be the news:
- China's tighter rules may hurt M'sian palm oil industry
- China's tighter requirements on refined palm oil, to be of "landed quality" rather than the preceding "shipped quality at origin"
- 300,000 tonnes of palm oil imported into China monthly
- not meet specifications would be turned away.. The CIQ regulation also holds the refiners and exporters responsible for the deterioration of the edible oils without additional charges.
- PORAM most concerned that its members may face big losses if their cargos are rejected.
- only about 5% of local palm oil shipments to China did not meet the new CIQ specifications
- could impact as much as 175,000 tonnes of palm oil exported from Malaysia.
- domestic palm oil stocks of 2.56 million tonnes last November.
- every 5 per cent reduction in annual exports to China, palm oil stocks elevated by 175,000 tonnes.
- trigger weaker crude palm oil (CPO) prices
- local CPO exports that were not affected by the new ruling would stbeteart to increase.
- current record high palm oil stock to a more stable position of below two million tonnes by March this year
I think much credit id due to the MPOB (palm oil Board) and PORAM (refiners association) for keeping the industry up to date. However it is safer to set our own standards ahead of the world markets.
Whenever in doubt about the future, just focus on higher quality product. It may cost a bit more but the payoff will be better market share.
Whenever in doubt about the future, just focus on higher quality product. It may cost a bit more but the payoff will be better market share.
Just something about palm oil. In the midst of all the useless talk and time wasting crap that is clogging up our time and draining our energy I thought this news would be a small reminder of the real bread and butter issues that affect us all.
10 comments:
Bread n butter news yes very correct. will pas understand anything about this palm oil? will ketua umum worry about how important is palm oil to malaysian people? he just want to have girls and boys to play. they dont understand anything - you are correct. the indon, bangla worker, felda, chinese and bumi plantation company work hard to produce the palm oil to make the country rich. many people in kampong and plantation sector depend on palm oil only. we have the best plantation in the world. malaysia is world no. 1 palm oil producer. the people in the city and working for kerajaan dont understand also. they just makan gaji every month. where does the gaji come from? from palm oil, factories, oil, economy. must remind these people where their gaji coming from every month.
ANON 2:31:00
Haparkan Pagar ,Pagar makan Padi. FELDA has been found liable for cheating settlers by paying them less for high quality FFB. Why worry about what others will do when the very agency that is supposed to look after their interest cheats them day in day out.Now at the helm is a man whose own party says he was corrupt.
God help the defenseless settlers.
paksyed,
this is a good article to write amidst all the negative-vibe articles you had written recently. yes i agree with anon 12:31 that we need this kind of article to remind malaysian of the importance of continuous trade and prosperity.
i'm getting sick of those PAS boys who daily talked about haram this, haram that, tudung, women, dosa, nampak boobs bulat, syariah, hudud and so much more craps. I always wonder, can Hadi besi or Mat Sabu or Nik Aziz go to international trade forums and attract investors to come here? Are their brains able to think about economy, trades and businesses?
Jangan jadi macam kedah. Sumber ekonomi- potong balak. Kelantan- potong balak dan mintak royalti. They only know to perabis apa yang ada atas bumi ni. Genius.
Part1
The following is a translation on how Najib stole Robert Kuok's sugar business so that greedy UMNO cronies could enjoy the profits, and how Malaysia's economy suffered as a result.
Recently, the govt offended Robert Kuok. As a result, the Malaysian economy suffered a great blow. And now, after Chinese Premier Wen Jiabao's visit to Malaysia, Najib's administration truly understands Robert Kuok's influence in China.
Crony got richer, Malaysia got poorer
UMNO cronies are loyal when there's easy money for the taking. To keep them happy, Najib twisted Robert Kuok's arm to get the profits from his sugar empire. As a result, UMNO cronies got richer by tens of billions of ringgit. But it caused a national loss of more than 200 billion for Malaysia as a whole!
(Those who have insider knowledge on this are still cursing until God knows when.)
So, the Malaysian sugar king was forced to leave his own country, but ironically, he has now become the world's sugar emperor. How? He bought the world's largest sugar mills in Australia, investing a cool 10 billion US dollars.
So, Najib's government benefited a few UMNO families at the expense of national interests. Very ungrateful, when it is a known fact that Robert Kuok had given a lot of help to the Malaysian Govt for several decades. A Chinese idiomatic expression calls this 'turning a pig's intestine inside out' because on the other side is a lot of shit.
Palm oil slap in the face
In the global political gossip columns, insiders are smiling because Chinese Premier Wen Jiabao's visit to Malaysia hit a snag with Najib. How? You see, before this visit, Najib and his cabinet had hinted several times that they hoped China would double the amount of palm oil imports from Malaysia.
China is the largest buyer of Malaysian palm oil. But there is strong competition with Indonesia, which is trying to sell palm oil at lower prices to China and India. Najib is very worried about this. So during the official visit, he hoped to seal a new palm oil trading contract with China to double the average of 10 million tonnes sold by Malaysia every month.
But Wen Jiabao said that this was impossible. Najib was very disappointed. He knew the Chinese market demand; even for China to import 1,000,000 tonnes per day is not a problem. So where was the problem?
The problem was that Robert Kuok did not agree!
How was Robert Kuok able to influence China's decision? Who owns the monopoly of China's national vegetable oil market? The market leader is Arowana brand cooking oil, accounting for nearly 40% of the market. And the Arowana cooking oil boss is, Robert Kuok!
Part 2
Think about it. If Premier Wen Jiabao had agreed to buy more Malaysian palm oil, who is going to refine it into cooking oil? Privatised enterprises, of course! With 40% market share, if the Arowana cooking oil company refuses the additional supply, how is the Chinese government going to utilise the extra crude palm oil?
Najib, insensible from the start, did not know that Kuok was so influential in China. By helping UMNO cronies get rich, he jeopardized the prosperity of Malaysia and its ordinary people.
Ask what Kuok has done for his country
After losing his throne, the Sugar King left Malaysia, understandably disappointed and unhappy. Many people still remember that, in the early days of Malaysia, we did not have aviation professionals, and the BN govt asked Kuok's father to help set up Malayan Airways.
In the 1970s, our maritime industry was also a vacuum, and Malaysian govt sent representatives to Hong Kong to request Kuok's help. For the sake of national development, Kuok put aside the Group's business and returned to Malaysia to help establish a national shipping industry. This later became MISC, the Malaysia International Shipping Corp.
When Malaysia repeatedly faced economy difficulties, Robert Kuok was a big help. He even posted bail for MCA's Tan Koon Swan's CBT case. The govt owes Robert Kuok a great deal, but it used strong-arm tactics to forcefully take over Kuok's sugar empire in Malaysia. Truly ungrateful.
Dear Syed,
1. No amount of resources will be enough if the resources are not used wisely. It's always a bread and butter issue.
2. The question is who's eating all the bread and using up all the butter?
3. I think you've made a great point. Malaysia's prosperity is it's natural resources, not any economic planner's masterplan. Unsurprisingly, the "planners" of this country up till now, have most likely done more socio-economic harm than good if you look at the evidence, as is always the case with charlatans.
Syed you should do some research on who is the biggest user of the Chinese palm oil imports and why the new regulations on Chinese imports of palm oil which was supposed to come into effect a few years ago was delayed until Jan 2013. Let me give you a hint. UMNO shafted the wrong Chinaman in their greed to monopolize the sugar and palm oil trade in Malaysia. Tony Pua once asked why the FGV clowns are buying sugar at higher than international prices. The answer lies in the same hint. Pretty soon all the holders of the palm oil export AP will find that for some strange reason rejections of their palm oil shipments drops to insignificant levels the moment they get the 'right' agent in China. Now it is that Chinaman's turn to tell UMNO Kangkang Adik Kangkang Abang Masuk Luba===.
good observation tn syed. palm oil certainly has served us well (and not just as part of the roti canai).
however, have a look at the electrical & electronics exports too. it is maybe 3 times larger than palm oil; but when corrected for imports, the value creation is of the same scale as palm oil too.
the point is, we have not put the necessary efforts to enhance/intensify the local value-adding for all these economic activities. tambah nilai. this is the real part of the economy; something that is inherent to malaysia and define our global competitiveness.
yang lain tu atas angin aja...stock market, real estate, banking...benda mudah belaka.
keep up these sort of observations...differentiate what is real, what is superficial...
nanti jadi greece pulak.
wslm
6995 says,
Good piece of info SAA, Thanks. A most welcome break from the usual highly charge political bantering. I just wonder what happen when the MPOB and PORIM were merged a few years back, did the formula work well for creating a higher productivity on innovating palm oil resources or were it just an administrative make over?
simple, u want good price, u deliver good quality, fair demand. Indon oil palm industry giving us a run for money, more competition
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