Iran has replaced the UAE as the largest direct importer of edible Malaysian palm oil in the Middle East after many Iranian traders stopped sourcing the product from UAE.
A senior Malaysian Government official, however, maintained that Malaysia – the second largest producer and exporter of palm oil in the world after neighbour Indonesia – continues to consider the UAE as a matured market, with many industrial users here buying the edible oil in bulk.
Speaking to Emirates Business, Haznita Husin, Regional Director (Middle East), Malaysian Palm Oil Council (MPOC), a Malaysian Government body to promote palm oil export, also said the council has relocated its Middle East regional office from the UAE to Istanbul in Turkey. The UAE Office of MPOC was opened around four years ago to promote awareness about palm oil in the region.
“The UAE was number one importer of Malaysian palm oil in the Middle East for the past four years. Palm oil traders used to bring Malaysian palm oil to UAE and park here for two weeks. Now many of them have started shipping directly from Malaysia to Iran, avoiding the high freight rates and leakage of oil during transshipment in the UAE.”
She said a major reason that prompted Iranian traders to change shipping pattern was to “control palm oil quality” and avoid adulteration and quality problems. “During the two-week period when palm oil used to be parked here after shipment from Malaysia, certain quantity of the oil was lost due to spillage during re-shipment. The storage also affected its quality.”
Palm oil price came down by almost 50 per cent after the global recession started, as demand plummeted in major markets while total production and stock remained high. “Palm oil prices have been coming down and it is the cheapest edible oil. The economic downturn has affected demand but the market has started picking up in the past six months. Firms could not buy palm oil due to liquidity problems,” said Husin during the third Halal Export 2009 exhibition at the Madinat Jumeirah organised by Orange Fairs and Events.
She said palm oil prices have been under pressure because production exceeded demand. Due to the economic crisis, industrial users reduced imports. “The council has inaugurated our new office in Istanbul, Turkey, in August for the East of Suez market after closing the UAE office a few months ago. We have an office in Egypt, which is a big market and moved the UAE office to Istanbul, because Turkey is a big market,” said Husin.
She said the closing of the UAE office has nothing to do with the “decline in the volume of imports”. The UAE remains a matured market for palm oil and many major food industrial units like the Abu Dhabi Vegetable Oil Company, United Foods, and Iffco, continue to buy huge quantities of Malaysian palm oil. Iffco even has a joint venture in Malaysia to produce palm oil.
Currently, the council’s two offices in the Middle East take its global total to nine. Turkey is the third-largest producer, importer and exporter of oils and fats in the Middle East after the UAE and Iran and has huge potential for re-exporting solid fats like margarine. It is also a gateway to the EU market.
Crude palm oil prices plunged towards the end of last year by almost half when many traders were keeping huge stocks after the commodity’s price reached record highs. As the market was bearish about large palm oil stocks, there was a decline in exports resulting in apprehensions over potential default and difficulty in obtaining credit due to global financial crisis, said Husin.
“Iran is a good market and depending on the season, the monthly demand goes up to 40,000 tonnes. Last year, the Middle East imported 1.9 million tonnes of Malaysian palm oil, out of a total import of 4.89 million tonnes of edible oils – a 31.76 per cent growth over 2007,” she said. “Exports to the East of Suez sub-region rose by 312,527 tonnes to 1.06 million tonnes in 2007. While imports to Iran increased by 12.3 per cent to 259,511 tonnes, the imports to the UAE came down by 4,114 tonnes – from 360,509 tonnes to 356,395 tonnes.”
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