Newsbrief 11

For week ending Mar. 16, 2006

MINOLA EXPANDS REFINERY CAPACITY

Minola Refining Corp. (MRC), a 60-40 joint venture of the Coconut Industry Investment Fund Group of Companies (CIIF) and Mitsubishi Corp., will expand capacity by 150 MT to 450 MT per day when its second P180 million refinery come on stream next month. The plant is located at the Cocochem Agro-Industrial Park where its first refinery which started operation in 2000 is also located. It is a multi-seed physical refining plant, fully automated with sixteen 30-ton stainless steel tanks and two 500-ton multi-seed steel tanks.

MRC Chairman Danilo M. Coronacion said the expansion will address expected rise in demand in Asia for edible and specialty fats. MRC General Manager Antonio Eleazar said the new plant will also go into blended oil and specialty oil which will be a major contribution to the food market. About 70% of the plant’s production will be exported, the balance retained for the local market.

To ensure stable supply of raw materials, MRC is advocating several strategies like planting, replanting and fertilization of existing nutrient-deficient coconut land areas in the country. “Declining output is one of the major concerns that we are facing. And to address this problem, we will carry out these measures aside from encouraging farmers to participate in intercropping”, Coronacion said.

PHILIPPINE IMPORT OF VEGEOILS UP SHARPLY IN 2005

Figures from the National Statistics Office show Philippine import of vegetable oils in January-November 2005 totaled 222,766 MT. This is a whopping 80.7% higher than the annual total in 2004 at 123,283 MT. The increase was mainly driven by palm oil import which nearly doubled last year annual uptake of 98,026 MT to 195,768 MT. The oil accounted for 87.9% of aggregate during the 11-month period. Second largest oil import was soybean oil with total at 10,904 MT, recording a 24.7% shortfall from year-ago at 14,482 MT. This amounted to a 4.9% market share.

Of note, however, is the exponential growth in palm kernel oil as well as linseed oil imports during the period: palm kernel oil skyrocketed 296% from 703 MT to 2,784 MT; linseed oil shot up by 186.2% from 1,846 MT to 5,289 MT. Other oils imported in significant quantities include rapeseed oil at 2,797 MT (-17.2% from last year at 3,378 MT), corn oil at 2,260 MT (-11.5% from 2,553 MT) and sunflower oil at 1,371 MT (+31.7% from 1,041 MT.

... MALAYSIA REMAINS A PRIMARY SUPPLIER

Malaysia continues the leading origin of vegetable oil imports of the Philippines. The 11-month total to November show uptake at 172,843 MT which comprised a huge 77.6% of aggregate Philippine import. Expectedly, palm oil constituted the bulk of trade at 160,706 MT or 93% of total imported from the country. Apart from being top palm oil supplier, it also led in soybean oil (7,630 MT), linseed oil (1,335 MT), palm kernel oil (2,687 MT). Other oil imports were rapeseed oil (232 MT) and corn oil (253 MT).

Far second was Indonesia with 31,880 MT which accounted for 14.3% of gross import. The product mix was led by palm oil at 31,642 MT and included linseed oil (103 MT), corn oil (38 MT) and palm kernel oil (97 MT). Import from Singapore at 5,975 MT was made up of palm oil (3,322 MT), soybean oil (1,184 MT), corn oil (790 MT), rapeseed oil (563 MT), and linseed oil (116 MT). Supply from Thailand at 2,318 MT comprised of soybean oil (1,240 MT) and linseed oil (1,078 MT). Other significant sources were Belgium and Denmark. Shipment from Belgium included linseed oil (866 MT), rapeseed oil (630 MT), and corn oil (331 MT) and from Denmark rapeseed oil (837 MT) and corn oil (668 MT).

CAR MAKERS OKAY USE OF COCO-BIODIESEL BLEND

The Chamber of Automotive Manufacturers of the Philippines (CAMPI) expressed its support on the use of 1% coco-biodiesel (coco methyl ester - CME) blend with regular diesel in the transport sector. At a recent Bio-fuels Conference, Jeff Matsuo, CAMPI Fuels and Emission Sub-Committee chairman and Toyota Motors Corp. head of Government and Regulations and Technical Section said the group has signified its support to the proposed 1% coco-biodiesel blend or B1.

Matsuo, however, pointed out that CAMPI only supports B1, adding that they need to have separate discussions if the blending ratio will be higher. Also, the group would need a two-year time from passage of the bill on biofuels for the use of alternative fuels on new car models to do some retrofitting to ensure compliance with the law. It was also pointed out that the group only endorses the use of coco-biodiesel and not yet for ethanol.

MAJOR OIL PLAYERS WANT MORE TESTS ON COCO-BIODIESEL

Chevron Philippines (previously Caltex Philippines) recently joined Petron Corp. and Pilipinas Shell in insisting that more tests be conducted before selling pre-blended coco-biodiesel products following concerns that no engine tests has been conducted. The company said prior tests made were only property tests. Despite its position, Chevron pointed out it would continue to support government efforts to promote the use of alternative fuels.

The oil firm explained that the long-term effects of coco methyl ester (CME) blended diesel on vehicle’s fuel injectors have yet to be determined. Additionally, it had not been determined who would take the blame - the government, the oil company or the retailer - should there be any malfunction. Earlier, Petron Corp. had asked for similar request before it agrees to dispense pre-blended CME biodiesel in their pumps but agreed to sell the blend in bottles at their stations.

... BUT COCO-BIODIESEL GROUP REFUTES CLAIM ON PRODUCT TESTING

The Philippine Biodiesel Association (TPBA), however, disputes the claim of Chevron Philippines that coco-biodiesel has not been properly tested. TPBA said, “Biodiesels, which have been tested and accepted in many countries in Europe and in North America, were sourced from vegetable oil of even lesser stability than coconut oil”, adding that such have not caused widespread problems even with extensive use.

The group further explained that ester from coconut oil fraction are already in use and sold by oil companies worldwide in more sensitive engines like jet engines. For many decades, polyol/di ester of C8/C10 cut had been the main ingredient of aviation lubricants and this comes from coconut oil and some from palm kernel oil as no other plant oil contains such components. This in effect shows that the technical excellence of coconut ester had been tried, tested and used for the past many years.

INDIA CHANGES BASE IMPORT PRICES FOR VEGETABLE OILS

The Government of India amended early this week its import base prices in line with market movements. The base import price for palm oil was lowered to $434/MT from $437/MT while that for soybean oil was raised to $537/MT from $524/MT. Similarly, the rate for refined, bleached and deodorized (RBD) palm oil was reduced to $449/MT from $452/MT.

CHINA'S NEW TARIFF SYSTEM FAVORS PALM OIL OVER SOYA OIL

China’s abolition of import tariff rate quota on edible oils as part of a deal that was made in preparation for its membership in WTO has favored importation palm oil over other oils, the Public Ledger reports. Figures for January show Chinese import of palm oil rose 4% to 277,512 MT from 266,045 MT in the same month year-ago and by 15% from 241,350 MT two years ago. On the other hand, import of soybean oil in January totaled 156,435 MT, a cut by 22% from 201,289 MT a year ago and off 43% from 273,698 MT two years ago.

Weak soya oil prices due to large imports of soybeans and ample oil stocks also helped cut imports of soybean oil. Prices of domestic soya oil are currently lower than the cost of imported supply, the report said.

FDA URGED TO DEFINE "NATURAL" IN FOOD CLAIMS

The U.S. Sugar Association has asked the U.S. Food and Drug Administration (FDA) to set rules and regulations to define ‘natural’ before a ‘natural’ claim can be made on the labels of food and beverages regulated by the agency. Two criteria were presented for consideration in making a “natural” claim: (1) a food that does not contain anything artificial or synthetic, and (2) a food or food ingredient is not more than minimally processed.

The Association also requested that FDA support consistency among Federal agencies like the U.S. Department of Agriculture. For instance, USDA definition of “natural” for meat and poultry should be adopted as the general definition for all “natural” claims. A national survey made for the Sugar Association show 76% of respondents agreed the USDA standard should apply to all foods.