Report Highlights:

Palm oil production is forecast to drop from 19.8 million tons in 2014/15 to a low of 19.5 million tons in 2015/16 as there were long periods of dry weather which affected the major palm producing states of Sabah and Johore in mid-2015 and expectation that it would last till mid-2016. In addition, replanting incentives for plantation companies, tree stress, disease problems and varying agronomic practices hindered production growth in 2015/16 and beyond. Exports of U.S. soybeans are forecast to drop slightly from 294,000 tons in 2014/15 to 290,000 tons in 2015/16 and remain stagnant in 2016/17.

Executive Summary:

U.S exports of soybeans to Malaysia are forecast to drop slightly to 290,000 tons in 2015/16 and remain stagnant in 2016/17. Total imports, however, increased slightly from 643,000 tons in 2014/15 to 650,000 tons in 2015/16 and to 653,000 tons in 2016/17. This in line with projected population growth of 1.3 percent annually from year 2010 to 2016 and thereafter projected at 1.2 percent till 2020. The U.S. remains the largest supplier of soybeans to Malaysia; whereas, for soybean meal, Argentina has over 95 percent market share.

Long dry weather affecting the states of Sabah and Johore throughout 2015 expected to last till mid-2016, caused production for 2015/16 to be low and forecasted at 19.5 million tons. This is consistent during the event of El-Nino, whereby in 1997/98, production dropped as low as 5.5 %. In addition, the introduction of a replanting program for plantation companies in October 2015, tree stress, disease problem and varying agronomics practices especially in pesticide usage and fertilizer contributed to low production for year 2015/16. Steep depreciation of Malaysian currency saw drastic increase in imported fertilizer prices, leading most smallholders to reduce use. As a result, lower yields are expected to mean lower production of 19.5 million tons, a drop of 3% from year 2014/15 production of 19.8 million tons. Palm oil output, however, is forecast to rebound to 21.0 million tons in 2016/17 due to favorable weather patterns for the year.

Palm oil exports are expected to stagnate and forecasted at 17.4 million tons, in 2015/16, due to stiff competition from Indonesia and other edible oils. China, India and Pakistan remain major export markets for Malaysia's palm oil. Exports to the United States run1.0 million tons valued at US$250 million annually.

OILSEEDS

Soybean

There is no commercial cultivation of soybeans in Malaysia.

Imports

Imports of soybean are projected to increase slightly to 650,000 tons in 2015/16 from 643,000 tons, valued at US$307 million in 2014/15, in line with the projected slight increase in demand for swine and poultry feed, and also a slight increase in soy for direct human consumption. The U.S remains the top supplier of soybean commanding 44 percent of market share. Paraguay, Canada and Brazil are the other major suppliers to Malaysia. Depreciation of Malaysia currency increased the price of imported soybean and squeezed small margins of swine and poultry farmers, thus limiting the growth of the industry.

Consumption

Soybean crushing activity is growing in line with slow growth in the poultry industry. In 2015/16, crushing activity was at 450,000 tons and forecast to slightly increase to 455,000 tons in 2016/17. Most of soybeans imported are for crushing to produce oil and meal for local consumption in poultry industry. Human consumption only accounts for 25 percent and imported from Canada for the production of soy drinks and a local delicacy called “tempe" (a fermented soybean cake).

Trade Policy & Market Access

A labeling requirement for GE content went into effect in July 2014, but it has not been enforced yet. Under the GE labeling requirement, products that contain less than 3 percent GE content, and highly refined processed foods and meat from animals fed with GE grains are exempt from the GE labeling requirement.

Beginning in 2015, the Malaysian Department of Agriculture and the Agriculture and Quarantine Inspection Service began to require that soybean importers obtain an import permit and that a phytosanitary certificate accompany all consignments. These new requirements did not cause any disruptions in U.S. soybean imports.

Soybean imports

Import Trade Matrix

Country

Malaysia

Commodity

Soybean

Time Period

Market Begin Oct

Units:

1000MT

Imports for:

2013/14

2014/15

U.S.

188

U.S.

294

Others

Others

Canada

85

116

Brazil

65

69

Paraguay

115

61

Argentina

42

51

Uruguay

8

24

Ukraine

6

13

Total for Others

321

334

Others not Listed

45

15

Grand Total

554

643

Oilseed, Soybean

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

Oct 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Beginning Stocks

35

35

50

52

0

48

Production

0

0

0

0

0

0

MY Imports

643

643

650

650

0

653

MY Imp. from U.S.

200

294

210

290

0

290

MY Imp. from EU

0

0

0

0

0

0

Total Supply

678

678

700

702

0

701

MY Exports

16

16

15

21

0

20

MY Exp. to EU

0

0

0

0

0

0

Crush

430

430

460

450

0

455

Food Use Dom. Cons.

155

152

160

155

0

160

Feed Waste Dom. Cons.

27

28

30

28

0

30

Total Dom. Cons.

612

610

650

633

0

645

Ending Stocks

50

52

35

48

0

36

Total Distribution

678

678

700

702

0

701

(1000 HA) ,(1000 MT)

Copra

Copra production in Malaysia continues to decline as it isn't profitable vis-à-vis alternative uses for land. Although there is some coconut plantation replanting, the new trees are for production of coconut juice rather than for desiccated coconut or coconut cream.

Oilseed, Copra

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2015

Jan 2016

Jan 2017

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

0

0

0

0

0

0

Area Harvested

114

114

114

114

0

114

Trees

0

0

0

0

0

0

Beginning Stocks

0

0

0

0

0

0

Production

28

28

29

29

0

29

MY Imports

20

15

15

15

0

15

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

48

43

44

44

0

44

MY Exports

1

1

1

1

0

1

MY Exp. to EU

0

0

0

0

0

0

Crush

47

42

43

43

0

43

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

47

42

43

43

0

43

Ending Stocks

0

0

0

0

0

0

Total Distribution

48

43

44

44

0

44

(1000 HA) ,(1000 TREES) ,(1000 MT)

Oilseed, Palm Kernel

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

May 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

0

0

0

0

0

0

Area Harvested

4689

4689

4800

4800

0

4900

Trees

0

0

0

0

0

0

Beginning Stocks

198

198

199

199

0

189

Production

5050

5050

5050

4950

0

5300

MY Imports

14

14

20

5

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

5262

5262

5269

5154

0

5489

MY Exports

5

5

5

5

0

7

MY Exp. to EU

0

0

0

0

0

0

Crush

5058

5058

5090

4960

0

5285

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

5058

5058

5090

4960

0

5285

Ending Stocks

199

199

174

189

0

197

Total Distribution

5262

5262

5269

5154

0

5489

(1000 HA) ,(1000 TREES) ,(1000 MT)

OILMEALS

Soybean Meal

Production and Imports

In tandem with steady growth in population, meal imports are expected to moderately increase. Imports forecast at 1.5 million tons in 2015/16 and will slightly increase to 1.51 million tons in 2016/17. In 2014/15, soybean meal imports were 1.45 million tons valued at US$684 million. Argentina remains the dominant supplier of soybean meal controlling 95% of total Malaysia's import.

Consumption

As demand for poultry and swine products remains firm and as a function of population growth, soybean meal consumption is forecast to increase marginally at 3 percent in 2015/16 and at 0.6 percent in 2016/17.

Soybean meal imports

Import Trade Matrix

Country

Malaysia

Commodity

Soybean meal

Time Period

Market Begin Oct

Units:

1000MT

Imports for:

2013/14

2014/15

U.S.

15

11

Others

Others

Argentina

1,293

1,414

Brazil

1

14

Total for Others

1,294

1,428

Others not Listed

55

12

Grand Total

1,364

1,451

Meal, Soybean

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

Oct 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

430

430

460

450

0

455

Extr. Rate, 999.9999

0.7884

0.7442

0.787

0.7333

0

0.7473

Beginning Stocks

130

130

144

141

0

141

Production

339

320

362

330

0

340

MY Imports

1465

1451

1500

1500

0

1510

MY Imp. from U.S.

0

11

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1934

1901

2006

1971

0

1991

MY Exports

45

45

42

40

0

40

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

1745

1715

1830

1790

0

1820

Total Dom. Cons.

1745

1715

1830

1790

0

1820

Ending Stocks

144

141

134

141

0

131

Total Distribution

1934

1901

2006

1971

0

1991

(1000 MT) ,(PERCENT)

Palm Kernel Meal

Palm kernel meal production is expected to increase in 2016/17, from 2.67 million tons in 2015/16 to 2.88 million tons in 2016/17. As palm kernel meal commands a higher price in overseas markets, most of the production goes to New Zealand and the EU. Around 10 percent is consumed domestically.

Meal, Palm Kernel

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

Oct 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

5058

5058

5090

4960

0

5285

Extr. Rate, 999.9999

0.5399

0.5338

0.5399

0.5397

0

0.5455

Beginning Stocks

363

363

350

343

0

340

Production

2731

2700

2748

2677

0

2883

MY Imports

2

10

0

5

0

5

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

3096

3073

3098

3025

0

3228

MY Exports

2344

2500

2450

2400

0

2500

MY Exp. to EU

524

600

525

550

0

600

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

402

230

338

285

0

370

Total Dom. Cons.

402

230

338

285

0

370

Ending Stocks

350

343

310

340

0

358

Total Distribution

3096

3073

3098

3025

0

3228

(1000 MT) ,(PERCENT)

Meal, Copra

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2014

May 2015

Jan 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

47

42

43

43

0

43

Extr. Rate, 999.9999

0.3404

0.3333

0.3488

0.3721

0

0.3488

Beginning Stocks

0

0

0

0

0

0

Production

16

14

15

16

0

15

MY Imports

0

1

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

16

15

15

16

0

15

MY Exports

2

3

2

2

0

2

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

5

6

5

6

0

5

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

9

6

8

8

0

8

Total Dom. Cons.

14

12

13

14

0

13

Ending Stocks

0

0

0

0

0

0

Total Distribution

16

15

15

16

0

15

(1000 MT) ,(PERCENT)

Meal, Fish

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Catch For Reduction

240

240

240

240

0

0

Extr. Rate, 999.9999

0.2708

0.275

0.2708

0.275

0

0

Beginning Stocks

3

3

3

3

0

3

Production

65

66

65

66

0

66

MY Imports

15

20

15

20

0

20

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

83

89

83

89

0

89

MY Exports

30

28

30

28

0

30

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom. Cons.

50

58

50

58

0

56

Total Dom. Cons.

50

58

50

58

0

56

Ending Stocks

3

3

3

3

0

3

Total Distribution

83

89

83

89

0

89

(1000 MT) ,(PERCENT)

OILS

Palm Oil

Palm oil production for the period of October to December 2015 and January 2016 show a huge drop of 14.5% from 7.27 million tons recorded from October to December 2014 and January 2015 to 6.21 million tons from October to December 2015 and January 2016. This huge drop is consistent with El Nino weather conditions recorded in mid-2015 and expected to last till mid-2016. Tree stress, replanting program for plantation companies, disease problems and varying agronomic practices were other factors that hindered production growth in 2015/16. Production is expected to recover to 21.0 million tons in 2016/17. Depreciation of Malaysian currency makes imported fertilizer cost more and forces plantation companies and small holders to reduce usage, thus reducing yield and production of palm oil.

Palm planted area is expected to expand to 6.0 million hectares in 2016/17 (which include replanted plantation and new plantation areas with 0 - 3 year old palm trees that are yet to produce any fruits ) with expansion mainly in East Malaysia, area harvested increased to 4.9 million hectares (area with palm trees that producing fruit at least once or twice a year) while fully matured hectare equivalent (MHE) area, plantation with palm trees that producing fruits at least 4 times a year, is estimated at 2.75 million hectares. Yields are expected to drop in 2015/16 due to adverse weather condition and will rebound in 2016/17 as the weather improves in line with increases in mature hectare equivalent (MHE). Consequently, output is forecast to grow to 21.0 million tons.

The following MHE/yield table is based on the October/September marketing year:

2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

Area-MHE (1,000 ha)

2,409

2,547

2,608

2,652

2,698

2,755

Production (TMT)

18,202

19,300

20,161

20,000

19,500

21,000

Yield-MHE (Ton/ha)

7.55

7.74

7.73

7.54

7.22

7.62

Trade

For the year 2015/16, Malaysia's palm oil exports are forecasted to stagnate at 17.4 million tons and to increase to 18 million tons in 2016/17. The drop in 2015/16 exports are attributed to stiff competition from Indonesia and other competing vegetable oils. In addition low production forecasted in 2015/16, are expected to increase the price of Crude Palm Oil (CPO) and reduce the margin factor between the price of CPO and Soy Oil, thus making the price of Soy Oil competitive compared to Palm Oil.

Trade Policy

No export tax has been imposed since May 2015 to March 2016. Malaysia has raised its crude palm oil export duty to 5% for April and May.

CPO price (per ton in USD)*CIF Rotterdam

Export Tax

750 – 800

4.5%

800 – 850

5.0%

850 – 900

5.5%

900 – 950

6.0%

950 - 1,000

6.5%

1,000 - 1,050

7.0%

1,050 - 1,100

7.5%

1,100 - 1,150

8.0%

1,150 - 1,200

8.5%


Oil, Palm

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

Oct 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Planted

0

0

0

0

0

0

Area Harvested

4689

4689

4800

4800

0

4900

Trees

0

0

0

0

0

0

Beginning Stocks

2091

2091

2642

2642

0

1552

Production

19879

19879

20000

19500

0

21000

MY Imports

1000

1000

400

200

0

400

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

22970

22970

23042

22342

0

22952

MY Exports

17378

17378

18050

17400

0

18000

MY Exp. to EU

2000

2000

2000

2000

0

2000

Industrial Dom. Cons.

2240

2240

2550

2700

0

2750

Food Use Dom. Cons.

660

660

680

650

0

660

Feed Waste Dom. Cons.

50

50

50

40

0

40

Total Dom. Cons.

2950

2950

3280

3390

0

3450

Ending Stocks

2642

2642

1712

1552

0

1502

Total Distribution

22970

22970

23042

22342

0

22952

(1000 HA) ,(1000 TREES) ,(1000 MT)

Palm Kernel Oil

Production of Palm Kernel Oil (PKO) is expected to stagnate at 2.3 million tons in 2015/16 and forecasted to increase to 2.5 million tons or 8.4% in 2016/17. PKO exports are expected to remain at 1.05 million tons in 2015/16 and forecast to rebound to 1.1 million tons or 4.7% in 2016/17. The main destinations are the United States, Singapore, Egypt, Australia, Russia and China.

Oil, Palm Kernel

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

May 2015

May 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

5058

5120

5090

5150

0

0

Extr. Rate, 999.9999

0.465

0.4492

0.465

0.4478

0

0

Beginning Stocks

282

282

315

252

0

188

Production

2352

2300

2367

2306

0

2500

MY Imports

356

200

210

180

0

200

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

2990

2782

2892

2738

0

2888

MY Exports

1138

1030

1100

1050

0

1100

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

1412

1400

1400

1400

0

1500

Food Use Dom. Cons.

125

100

125

100

0

0

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

1537

1500

1525

1500

0

1500

Ending Stocks

315

252

267

188

0

288

Total Distribution

2990

2782

2892

2738

0

2888

(1000 MT) ,(PERCENT)

Coconut Oil

Total coconut oil imports for 2015/16, is projected at 150,000 tons. Most of the imports are further refined and re-export to third countries, namely Singapore, Ukraine and Australia with exports forecast at 128,000 tons in 2015/16. Coconut oil accounts for less than 1 percent of local consumption.

Oil, Coconut

2014/2015

2015/2016

2016/2017

Market Begin Year

Jan 2014

May 2015

Jan 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

47

42

43

43

0

43

Extr. Rate, 999.9999

0.617

0.5238

0.6279

0.5116

0

0.5349

Beginning Stocks

16

16

50

13

0

12

Production

29

22

27

22

0

23

MY Imports

210

147

165

150

0

155

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

255

185

242

185

0

190

MY Exports

145

127

150

128

0

130

MY Exp. to EU

10

10

10

10

0

10

Industrial Dom. Cons.

25

30

25

30

0

35

Food Use Dom. Cons.

35

15

35

15

0

17

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

60

45

60

45

0

52

Ending Stocks

50

13

32

12

0

8

Total Distribution

255

185

242

185

0

190

(1000 MT) ,(PERCENT)

Oil, Soybean

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

Malaysia

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Crush

430

430

460

450

0

455

Extr. Rate, 999.9999

0.1791

0.1791

0.1783

0.1778

0

0.1824

Beginning Stocks

9

9

10

10

0

6

Production

77

77

82

80

0

83

MY Imports

126

126

125

120

0

125

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

212

212

217

210

0

214

MY Exports

170

170

176

172

0

176

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

0

0

0

0

0

0

Food Use Dom. Cons.

32

32

32

32

0

32

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

32

32

32

32

0

32

Ending Stocks

10

10

9

6

0

6

Total Distribution

212

212

217

210

0

214

(1000 MT) ,(PERCENT)