KUALA LUMPUR: Top palm oil producers Indonesia and Malaysia today criticised the European Union (EU) for backing a ban on the use of palm oil in biofuels, with a Malaysian minister calling the move a protectionist trade barrier and a form of “crop apartheid”.
European lawmakers approved draft measures on Wednesday to reform the power market there and reduce energy consumption to meet more ambitious climate goals. The plan includes a ban on the use of palm oil in motor fuels from 2021.
Indonesia and Malaysia are the world’s top two palm oil producing countries, accounting for nearly 90% of global supply.
A large portion of European palm oil imports are used to make biofuels, giving the industry’s top two producers cause for concern as they fear overall demand will fall.
“This vote is very disappointing. It’s a black day for free trade. You are discriminating against palm oil,” Malaysia’s Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong told reporters at an industry conference here.
By allowing other vegetable oils to be used in biofuels, the EU was discriminating against palm oil, he said.
“The EU is practising a form of crop apartheid,” Mah said separately in a statement.
Palm oil exports are a key source of revenue for Malaysia. The EU is its second-biggest market after India.
Indonesian Trade Minister Enggartiasto Lukita told reporters in Jakarta there should be fair treatment for all vegetable oils, and that Indonesia had protested the EU’s “negative campaign” on palm oil on several occasions.
The palm oil industry has come under fire in Europe over its impact on forest destruction and Southeast Asian producers have faced calls to meet higher sustainability standards.
Mah said Malaysia’s ambassadors in the 28 EU member countries will raise objections and that he will work closely with Indonesia to protect the interests of smallholders.
“The government will not tolerate the denigration of the palm oil industry and will ensure Malaysia gives a fitting response to those who harm the palm oil industry,” Mah said. – Reuters
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KUALA LUMPUR: Malaysian palm oil futures tumbled in early trade today, as worries over soft demand leading to high stockpiles in December lingered while weakness in rival oils compounded the bleak picture.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange dropped 1.32% to RM2,466 a tonne at the midday break, and looked set for a third straight session of falls.
Trading volumes stood at 16,130 lots of 25 tonnes each.
“Demand has not been promising. The market is closely watching how exports will turn out (this month),” a Kuala Lumpur-based trader said, noting that stocks could rise for another month.
Malaysian palm oil shipments fell 2% on Dec 1-20 compared with the same period last month, data from cargo surveyor Intertek Testing Services showed.
Inventory levels in Malaysia rose to their highest in nearly two years, by 16% to 2.56 million tonnes, while exports for November fell 11.9% on-month, data from the Malaysian Palm Oil Board last week showed.
Demand from Europe and China, key regions for palm oil exports, typically dwindles at the end of the year, as colder weather in the northern hemisphere solidifies the tropical oil.
Another trader said weakness in rival vegetable oils has exerted further pressure on palm, but the market could be slightly relieved by bargain hunters.
“Overall the market lacked positive news. Bargain buyers could come in and there could be buying for a year-end rally,” the trader said.
In other related edible oils, the January soybean oil contract on the Chicago Board of Trade slid 0.4%, while the May soybean oil contract on the Dalian Commodity Exchange was down 1.3%.
The Dalian January palm olein contract fell 1.6%.
Palm oil prices are impacted by movements in other edible oils, as they compete for a share of the global vegetable oils market. – Reuters
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