OILS & FATS INTERNATIONAL

FEBRUARY 2019 ▪ VOL 35 NO 2

WWW.OFIMAGAZINE.COM

HEALTH
Tackling
acrylamide
EUROPE
Rapeseed:
king of the crop
Cover feb19.indd 1 06/02/2019 12:20:44
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 CONTENTS

OILS & FATS INTERNATIONAL IN THIS ISSUE – FEBRUARY 2019

 FEATURES Plant & Technology

23 Global round-up of projects

NEWS & EVENTS
The latest projects, technology and
China processing news around the world

Health & Nutrition

25 Tackling acrylamide

18 Spurning US soyabeans Comment

China and the USA have agreed a 90-
day in their trade war but how likely is
Beijing to resume soyabean imports?
Germany
Biofuels
3 Preparing for new low-sulphur
With new EU legislation setting
rules
benchmark levels for acrylamide in food, News
how can businesses reduce levels of this
chemical and what is the role of frying in 4 Indofood withdraws from
its formation? RSPO
Biofuels News

27 Path to a sustainable future 10 EU settles Argentine biodiesel

The biodiesel industry has evolved from
trade dispute
using food crops as feedstocks to waste
Biotech News
streams from vegetable oils and fats

Transport & Logistics

12 China approves five new GM
crops for importing
30 Structural change ahead
20 Rapeseed: king of the crop Brazil’s grain traders must adapt to
Renewable News
Germany is one of Europe’s top oilseed logistics and storage challenges or face
producers and rapeseed is among the top
14 BASF pulls out of FDCA joint
exiting the market
five products in the country’s agricultural venture deal with Synvina
sector Transport News

16 Panama Canal in deal with

Itaqui port
Diary of Events

16 International events listing

Statistics

32 Statistical data from Mintec

www.ofimagazine.com OFI – FEBRUARY 2019 1

Contents feb19.indd 1 06/02/2019 15:11:03

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 EDITOR'S COMMENT

VOL 35 NO 2
Preparing for new
OILS & FATS INTERNATIONAL

EDITORIAL:
FEBRUARY 2019
low-sulphur rules
Editor: Serena Lim
serenalim@quartzltd.com As our industry looks ahead to what 2019 will bring, an
+44 (0)1737 855066 important global regulation that may be under the radar for
some of us is set to have a major impact on our market.
Assistant Editor: Gabriel Day
gabrielday@quartzltd.com
+44 (0)1737 855157
On 1 January 2020, the sulphur cap for marine fuels will drop
from 3.5% to 0.5% in areas outside current emission control
SALES: areas (ECAs) – essentially affecting everywhere around the world
Sales Manager: Mark Winthrop-Wallace apart from the existing Baltic Sea, North Sea, North American
markww@quartzltd.com and US Caribbean ECAs, where the sulphur limit is 0.1%.
+44 (0)1737 855114
Because the shipping sector is the highest emitter of toxic sulphur oxide in the
Sales Consultant: Anita Revis
transportation industry, these limits have been set by the UN’s International Maritime
anitarevis@quartzltd.com
+44 (0)1737 855068 Organization. In order to comply, ship owners must either use low-sulphur fuel, install
scrubbers on their ships to clean up emissions, or switch to alternative fuels such as
PRODUCTION: liquefied natural gas (LNG).
Production Editor: Carol Baird
carolbaird@quartzltd.com “This is going to be a major change for our industry,” says Jonathan Daw, a director at EA
Gibson Shipbrokers.
CORPORATE:
Managing Director: Steve Diprose The regulation will affect the world’s entire shipping fleet of some 60,000 vessels,
stevediprose@quartzltd.com including those carrying oilseeds or vegetable oils – from the Handysize to Panamax
+44 (0)1737 855164 ships which transport the 90M tonnes of oilseeds traded annually, to the medium range
chemical tankers moving the some 50M tonnes/year of vegetable oils traded globally.
SUBSCRIPTIONS: Elizabeth Barford
subscriptions@quartzltd.com
+44 (0)1737 855028 A very small percentage of ship owners are installing scrubbers, but at around US$2-4M
Subscriptions, Quartz House, 20 Clarendon Road, a piece and a month of down time to install them, it is a prohibitive cost for the majority
Redhill, Surrey RH1 1QX, UK of owners. Most will turn to using low-sulphur fuel (gas oil or middle distillates), and
although previous concerns about fuel shortages are unlikely to come to pass, pricing
© 2019, Quartz Business Media
will be a big issue, says Richard Matthews at EA Gibson.
ISSN 0267-8853

“Global demand for bunker fuel in 2020 will be around 4M barrels/day and 3–3.5M
WWW.OFIMAGAZINE.COM
barrels of this will need to be replaced with gas oil or 0.5% compliant fuel.”

A member of FOSFA This surge in demand will push up fuel prices which, in turn, will hit freight rates.

Oils & Fats International (USPS No: 020-747) is
published eight times/year by Quartz Business
Media Ltd and distributed in the USA by DSW,
75 Aberdeen Road, Emigsville PA 17318-0437.
Periodicals postage paid at Emigsville, PA.
POSTMASTER: Send address changes to Oils &
Fats c/o PO Box 437, Emigsville, PA 17318-0437
Published by Quartz Business Media Ltd
Quartz House, 20 Clarendon Road,
Redhill, Surrey RH1 1QX, UK
oilsandfats@quartzltd.com
+44 (0)1737 855000
Printed by Pensord Press, Gwent, Wales
Matthews says that high sulphur fuel prices – currently around US$350/tonne – are
projected to fall to US$280/tonne in January, while gas oil prices are set to hit around
US$580/tonne. If fuel costs rise by US$200-300/tonne, ship owners cannot absorb this.
“The shipping market is already quite depressed, with the trade war between China
and the USA affecting volumes,” says Daw. “Ship owners are not doing well and the
new regulation will increase their running costs. They will try and pass on these costs
to charterers, and charterers will try and pass it on to their customers in the food and
biodiesel market.”
How these costs are spread out between the different operators involved, the price of
low-sulphur fuel itself (also dependent on petroleum prices and competing demand from
other industries such as those for jet fuel) cannot be predicted precisely.
But Daw believes that freight rates will go up in the last quarter of this year and moving
into 2020, with a period of instability for 6-12 months. The market will then settle, but
with higher freight rates.

@oilsandfatsint Oils & Fats International It is a scenario that many of us in the trade need to prepare for.

Serena Lim – serenalim@quartzltd.com

www.ofimagazine.com OFI – FEBRUARY 2019 3

Feb comment.indd 1 05/02/2019 09:33:45

 NEWS
IN BRIEF
ARGENTINA: Chinese
agribusiness giant COFCO
International has closed its
Argentine edible oil process-
ing plant as it struggles with
the effects of the country’s
recession and the US-Chi-
na trade war, Bloomberg
reports.
“A significant reduction in
local demand, unfavourable
market conditions and rising
idle capacity” had led to
the closure of the Legitimo
plant, in Lanus, Buenos
Aires, COFCO said in a
statement on 4 January. The
plant refined soyabean and
sunflower oil.
CANADA: Agribusiness firm
Richardson International
announced on 18 Decem-
ber that it had agreed to
buy Wesson, Conagra’s US
retail brand of canola and
Indofood withdraws from RSPO
following audits on plantations
Indonesian food firm Indofood has withdrawn
from the Rountable of Sustainable Palm Oil
(RSPO) certification scheme after allegations of
labour violations and an audit of its oil palm plan-
tations, just-food reported on 30 January.
The decision was made following RSPO audit-
ing of two of Indofood’s Indonesian plantations,
after allegations made by the Rainforest Action
Network (RAN), International Labor Rights
Forum and the Indonesian labour rights body
OPPUK in November last year, just-food wrote.
Indofood operates its oil palm plantations
through its subsidiary, IndoAgri Resources.
US food and drink giant PepsiCo, which is
partnered with Indofood, said that it held consul-
tations with the company over the accusations.
"PepsiCo and our Indonesian joint venture de-
cided some time ago to no longer receive palm
oil from IndoAgri, owner of PT Lonsum," PepsiCo
told just-food.
The RSPO sanctioned Indofood in November
for 20 violations of its principles and criteria, as
well as 10 violations of local labour laws related
to its palm oil facilities.
A 17 January letter from Muhammed Waras,
head of sustainability at Lonsum, to RSPO chief
executive Datuk Darrel Webber, read: “We are
not in agreement with some of the [RSPO] find-
ings from the audit carried out from 4-7 June.
"We have therefore decided to concentrate
our sustainability journey and practices through
implementation of the mandatory Indonesian
Sustainable Palm Oil standards."
PepsiCo said in its statement to just-food:
“We are very disappointed to learn of IndoAgri's
attempt to withdraw PT Lonsum from the RSPO.
This is unacceptable and inconsistent with our
policy and commitments on sustainable palm
oil. We support the RSPO's Complaints Panel
process and continue to urge IndoAgri to act
immediately to resolve the identified issues and
strengthen their palm oil policy.”

ADM to acquire Gleadell

vegetable cooking oils. The
Wesson facility is located in
Memphis, Tennessee.
Financial terms of the
acquisition were not dis-
closed and the agreement is
expected to close in the first
quarter of this year.
Richardson is Canada’s
largest agribusiness and is a
worldwide handler of grains
and oilseeds, as well as a
vertically integrated pro-
cessor and manufacturer of
oats and canola-based prod-
ucts. Conagra Brands is one
of North America’s leading
branded food companies.
US agribusiness giant Archer
Daniels Midland (ADM)
signed a deal on 17 January
to acquire the remaining 50%
stake of Gleadell Agriculture
Ltd UK, which it currently
owns with French agricultural
cooperative group InVivo.
Gleadell is a UK trader and
exporter of oilseeds, grain
and pulses and the agreement
includes its wholly-owned
subsidiary, Dunns (Long
Sutton) Ltd, one of the UK's
largest pulse and agricultural
seed processors.
“ADM will merge Gleadell
and Dunns with ADM Arkady
– ADM’s UK destination mar-
keting business– and ADM
Direct UK – ADM’s specialist
combinable crop origination
business – to create ADM
Agriculture Ltd.
“The transaction will in-
crease the origination, storage
and destination marketing
capabilities of ADM, allow-
ing it to serve as the trader
partner of choice for even
more farmers and customers,”
ADM said.
Gleadell Agriculture is a
leading supplier of com-
binable crops and exporter of
grains, oilseeds and pulses.
The deal was subject to
regulatory review and was set
to close at the end of the first
quarter of 2019, ADM said.

IBM and Galpagro to use blockchain technology in olive oil production

IBM Spain and Galpagro, a company
focused on high yield olive groves, are
introducing blockchain technology to trace
all stages of extra virgin olive oil production
and distribution, reported Olive Oil Times on
21 January.
Blockchain technology is a high security
sophisticated data holding platform which
can be accessed by anyone to view. Digital
data is separated into blocks, connected
by a digital chain, which shows transaction
information from owner to owner. The
transaction information is very difficult to
tamper with, providing more transparency
in the value and legitimacy of a product.
4 OFI – FEBRUARY 2019
Olive Oil Times said the first extra virgin
olive oil with full blockchain tracing would
be available this year, originating from
some of the plots of Finca El Valenciano in
Seville, Spain.
The Olive Trace initiative would provide
detailed information on every transaction
and company involved in the production
process of the oil. After scanning a QR
code, anyone with access to the blockchain
could view all the transactions through
an app, such as the location of the olive
trees, the olive variety, pressing in the
mill, production, packing, distribution and
placement on supermarket shelves.
“The system is therefore interesting not
only to consumers, but also to olive growers,
producers and packers,” the report said.
IBM had been focusing on the
food sector to incorporate blockchain
technology to help assure quality and to
avoid olive oil fraud, Olive Oil Times said.
Last May, Spain also saw the launch
of Olivacoin, a company that created
hardware to provide a payment platform
for buyers and sellers of olive oil, using
cryptocurrency. Blockchain technology
was originally developed as a core
component of the cryptocurrency, Bitcoin,
serving as the digital public ledger for it.
www.ofimagazine.com

General News NEW.indd 2 07/02/2019 09:23:08

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 NEWS

Huawei arrest hitting Canadian canola

The arrest of a top Huawei executive is
slowing canola shipments through Chinese
ports, the South China Morning Post (SCMP)
reported on 6 February.
Meng Wanzhou, Huawei chief financial
officer, was arrested on fraud charges on
1 December after a US extradition request.
Since then, Beijing has detained two
Canadian diplomats and the drug sentence
for a Canadian national has been changed
to the death penalty.
A senior Canadian grain company official
told Commodity News Service Canada: “If
the conflict isn’t resolved, (canola) will be
the obvious target, and that’s a deep con-
cern to everybody.”
The SCMP reported a dozen traders with
direct knowledge of sales in Canada and
China saying the shipping pace of canola
had slowed noticeably since Meng’s arrest.
Canadian canola had taken longer to
clear Chinese customs and permits needed
to import GM crops, including canola, had
become more difficult to obtain, traders
said.
"One Chinese canola crusher who had
cargo arrive at the end of December said it
took more than 20 days to clear customs,
about twice the usual time, as authorities
carried out more thorough inspections
related to GMOs," the SCMP wrote.
"Another Canadian trader said he was
not aware of any Canadian export com-
pany booking a new canola shipment to
China since Meng’s arrest."
China bought around US$1.9bn worth of
Canadian canola every year, which repre-
sented 90% of China's total canola imports,
the newspaper said.

IN BRIEF Volatile 2019 for Chinese food and agribusiness

EU/USA: EU imports of US
soyabeans have doubled
in the first half of 2018/19
compared to the previous
marketing year, according to
a recent report by Germa-
ny’s Union for the Pro-
motion of Oil and Protein
Plants (UFOP).
In the first half of the
2018/19 marketing year,
the EU imported 6.95M
tonnes of soyabeans, an
increase of 12% from the
previous year. The USA
remained the EU’s main
supplier with volumes of
US imports increasing to
5.2M tonnes this season
from only 2.3M tonnes in
the previous year, German
market researcher, Agrar-
markt Informations-Ge-
sellschaft mbH (AMI) said in
the UFOP report.
According to UFOP, US
soyabean imports have in-
creased so rapidly because
of the ongoing USA-China
trade war, which led to
China imposing 25% tariffs
on several US imports,
including soyabeans.
Additionally, the
statistics showed that
the EU’s second largest
soyabean source, Brazil,
has had rapidly decreasing
exports over time. The EU
imported 1.9M tonnes of
soyabeans from Brazil in
2016/17, 1.8M tonnes in
2017/18 and 1.3M tonnes
from July to December
2018/19, UFOP said.
The food and agribusiness
sector in China will continue
to be volatile in 2019 as it fac-
es a slowing economy beset
with uncertainties, including
US-China trade negotiations,
tightening consumer wallets
and a manufacturing slow-
down, according to a new
RaboResearch report.
“China’s food and agribusi-
ness sector is also confronted
with potential disruptions soyabeans again after the two (US$103)/tonne.
from diseases and ongoing countries declared a 90-day "Chinese crushers will not
structural changes as a result ceasefire in their trade war, have the incentive to buy US
of industry consolidation, the report said. soyabeans until the punitive
environmental policies and “State-owned firms are tariff is abolished.”
rapidly changing consumer reporting purchases of around The Rabobank report said
trends,” said Ping Chew, head 5M tonnes of US soyabeans. effective 1 January, the Chi-
of RaboResearch Food & Agri- It is expected that the beans nese government removed the
business – Asia. were purchased to replenish import tariffs on alternatives
In the soyabean market, Ra- state reserves on behalf of the to soya meal for animal feed
bobank said factors to watch Chinese government." including rapeseed, sunflower
were the progress of trade The 25% tariff China had meal and palm meal.
talks between the USA and imposed on US soyabeans If China and the USA did not
China and weather conditions meant the gross margin to reach agreement after their
in South America. import US beans for crush- 90-day truce, a full-blown
China had started to buy US ing were negative CNY700 trade war could develop.
Cargill to invest US$200M for expansion in Pakistan
Global agricultural commodity company Cargill A rising demand for edible oils, backed by
announced on 17 January that it would be in- evolving consumption patterns and a growing
vesting more than US$200M over the next three market for animal feed driven by sustained
to five years in Pakistan. progress in the poultry industry, was also being
“Our strategy includes expansion across our seen in the country.
agricultural trading and supply chain, edible "Finalising one of our first investments in the
oils, animal feed, meat and dairy businesses, agricultural supply chain in Pakistan is our top
while ensuring safety and food traceability,” the priority,” said Imran Nasrullah, country head,
company said. Cargill Pakistan.
Cargill said it would bring “world class” The announcement comes after the Pakistan
innovations to the growing dairy industry Nation Shipping Corporation laid out plans in
in Pakistan while also supporting Pakistan’s November to build a new terminal in Karachi to
economic development and contributing to local ease pressure on the country’s only dedicated
employment. grain and oilseed facility at Port Qasim.

6 OFI – FEBRUARY 2019 www.ofimagazine.com

General News NEW.indd 3 07/02/2019 09:23:10

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 NEWS
IN BRIEF
WORLD: Vegetable oil
prices, including those for
palm oil, are set to rise by
US$50-100/tonne by June,
according to LMC Interna-
tional chairman James Fry.
"Prices of crude palm oil
(CPO) and other oils depend
on the outlook for palm oil
stocks. Stocks will fall until
mid-year, which will lift the
CPO premium over Brent
[crude oil price], especial-
ly if Indonesia maintains
its heightened pace of
biodiesel use," Fry told the
Pakistan Edible Oil Confer-
ence (PEOC) in Karachi on
19 January.
“If this occurs, there is an
upside of US$50-100 for
oils by June,” Reuters report-
ed Fry as saying. Crude oil
benchmarks set the floor
price for vegetable oils, he
explained.
Benchmark palm oil prices
had dropped to three-year
lows thanks to high inven-
tories and low demand.
Palm oil was last up 1.1% at
2,223 ringgit (US$540.88)/
tonne on 19 January.
Southeast Asian palm oil
stocks reached highs last
year but were expected to
come down in the next few
months in line with seasonal
production trends.
UK: The Department of
Health and Social Care
(DHSC) has launched a pub-
lic consultation on govern-
ment plans to restrict price
promotions for food and
drink products that are high
in fat, sugar and salt (HFSS),
FoodNavigator reports.
The consultation was
announced on 12 January
as part of the government’s
childhood obesity plan,
published in June 2018.
The DHSC’s plan includes
proposals to reduce
children’s exposure to the
marketing of unhealthy
food in stores, television
and online; restrict the sale
of energy drinks; introduce
calorie labelling; and
encourage physical activity.
8 OFI – FEBRUARY 2019
General News NEW.indd 4
Norway's stand on palm biodiesel
could affect EU-Malaysia trade
Norway's stand against palm biodiesel would something we will take lightly,” said Kok in a
adversely affect bilateral trade relations between statement on 28 December.
Malaysia and the European Free Trade Associa- Malaysia’s last round of trade negotiations
tion, says Malaysia’s Primary Industries Minister with the EFTA was in May 2017, Reuters said.
Teresa Kok. Earlier in December, Kok had spoken out
A Norwegian parliamentary decision made against the French Parliament for excluding palm
on 3 December and set to come into effect in oil as an approved biodiesel feedstock,
2020 called for the government “to formulate a suggesting the move went against free trade.
comprehensive proposal for policies and taxes in Malaysia and Indonesia exported around
the biofuels policy in order to exclude biofuels 90% of the world’s palm oil and had criticised
with high deforestation risk”. the EU in early 2018 for backing a decision
“We view this as unfair and unjust, going to ban palm oil in biofuels from 2021, Reuters
against free and fair trade, and is certainly not wrote.
EU plans to develop plant proteins to support demand
A European Commission (EC) report on plant 22 November – presented policies and new pro-
proteins has proposed several strategies to posals that could help support the development
develop production in an economically and of protein plants in the EU, including:
environmentally sound way, World Grain reports. • Supporting farmers grow plant proteins with
Commissioner of agriculture and rural devel- the proposed Common Agricultural Policy
opment Phil Hogan said: "Due to a variety of (CAP) by including them in national CAP
market and climatic factors, European protein strategic plans.
crop production is not sufficient to cover grow- • Nurturing competitiveness through research
ing demand." and innovation from research programmes,
According to the EC, demand for plant pro- and doubling the budget of the Horizon
teins in Europe amounts to about 27M tonnes Europe programme for 2021-27.
of crude protein in 2016/17, and the EU imports • The EC paying €200M in 2019 to fund the
around 17M tonnes/year of crude protein, 13M promotion of the benefits of plant protein.
tonnes of which is soya-based. • Increasing the sharing of knowledge/best
The report – adopted by the EC on practice in supply chain management.
Call made for EU to regulate junk food adverts
The World Obesity only half have taken any
Foundation (WOF) is calling steps to limit marketing of
for the EU to regulate adverts foods high in fat, sugar and
that target children on online salt (HFSS) to children, eight
video games, social media and years after World Health Or-
other digital platforms, reports ganization recommendations
just-food. were published.
The London-based or- “Of these, few countries
ganisation of more than 50 have regulated and even
regional and national obesity fewer have addressed digital
bodies compiled a dossier of marketing. Meanwhile, evi-
“powerful targeting tech- dence shows that introducing
niques that track children's restrictions would reduce
online behaviour – including purchase and intake of
their browsing history, loca- these HFSS foods, and thus
tion, preferences and 'likes' contribute to reducing body
– being used by advertisers mass index (BMI) and millions
to persuade children to pur- tion across national boundar- in cost savings.
chase foods and drinks high ies to minimise cross-border "It's time for governments
in fat, sugar and salt". marketing techniques, just- to seize the moment and de-
WOF was now proposing food wrote on 17 December. velop statutory regulations to
regulations for EU policy Hannah Brinsden, head of safeguard children from the
makers to adopt while also policy at the WOF, said: "Of unrestricted power of junk
calling for greater coopera- the 53 countries in Europe, food advertising."
www.ofimagazine.com
07/02/2019 09:23:13
 BIOFUEL NEWS
EU settles Argentine biodiesel trade dispute
Argentina and the EU have reached an
agreement to end their long-running trade
dispute over exports of biodiesel from the
South American country to the bloc, the
Argentine Ministry of Foreign Affairs said
on 30 January.
The deal established price and volume
limits to be announced next month, the
ministry said.
Two weeks earlier on 14 January, the
European Commission (EC) had announced
that it was willing to accept a deal with
Argentine biodiesel producers, allowing
them to avoid proposed anti-subsidy duties
of 25-33.4% that were due to come into
force on 28 February, Euractiv said.
“To find a solution to the commercial
dispute, the Argentine Chamber of Biofuels
(CARBIO), with the support of the national
government, offered a price and volume
commitment to allow the restart of ex-
ports,” CARBIO said.
The foreign ministry said it expected
Europe to ratify and settle on the details of
the agreement in the days ahead.
Euractiv said that the deal could help
bolster Argentina’s soyabean and biodiesel
sector.
The European Biodiesel Board (EBB) wel-
comed the deal, saying it showed the EU
recognised that Argentine export taxes had
unfairly distorted the international market.
Under the agreement, Argentine export-
ers would be allowed to export up to about
1.2M tonnes/year of biodiesel without
paying duties, the EBB said.
The EC began investigating Argentine
and Indonesian biodiesel imports in 2012
and imposed anti-dumping duties in 2013,
but then had to remove most of them in
September 2017 after losing challeng-
es at the World Trade Organization and
the European Court of Justice. The EBB
then requested further investigation into
the countries’ alleged subsidies of their
biodiesel industries, with the EC announc-
ing on 6 December that it had begun an
anti-subsidy process against Indonesia.

IN BRIEF EPA to finalise higher E15 rule before summer

FRANCE: French energy
group Total says the
French National Assembly’s
decision to exclude palm oil
as a biofuel feedstock could
put its La Mède biodiesel
refinery at risk.
On 19 December, the
assembly voted to end tax
incentives for adding palm
oil to diesel fuel as of 2020,
and agreed to treat palm
biodiesel as a regular fuel so
it cannot count towards EU
renewable energy targets.
Total chief executive
Patrick Pouyanne told Le
Figaro newspaper that the
decision cast doubt on the
viability of the 500,000
tonnes/year plant and its
overall profitability.
SINGAPORE: Finnish
renewable fuels producer
Neste annnounced on
12 December that it would
extend its capacity in
Singapore by up to 1.3M
tonnes/year, bringing its
total capacity in 2022 close
to 4.5M tonnes/year from
its current 2.7M tonnes/
year.
Neste president and
CEO Peter Vanacker said
the expansion would give
Neste more production
options for its products
including renewable diesel,
renewable aviation fuel and
raw materials for polymers
and chemicals.
The US Environmental Protec- istration would lift a long-time workers were furloughed as a
tion Agency (EPA) said on ban on summertime E15 sales result of the US government
25 January that it would to help boost demand for the shutdown from 22 Decem-
complete a proposal to expand corn-based fuel. The ban had ber-25 January.
sales of higher E15 ethanol been imposed over concerns The shutdown – the longest
blends in time for summer, that E15 contributed to smog in US history – stemmed
despite delays from the US in hot weather. from an impasse over Trump’s
federal government shutdown. Research had since shown demand for US$5.7bn in funds
“I still think we can get the that the 15% blend of ethanol for a US-Mexico border wall.
rule done in time,” Reuters into petrol may not increase Reuters said farmers and
reported Bill Wehrum, the smog relative to the E10 blend biofuel producers had been
agency’s assistant administrator sold all year round, Reuters said. lobbying to end the E15 ban to
for air and radiation, as saying. The EPA had been tasked bolster demand, but the petro-
US President Donald Trump with finalising the rule before leum industry was opposed to
had promised farmers and bio- June to have it in place for the a policy that would raise etha-
fuels producers that his admin- summer driving season but its nol’s share of the fuel market.
EU clears US soyabeans for use in biodiesel
from 2021 to 2030.
Currently, the USA exported soyabeans to
the EU for animal feed but the soyabean oil
was shipped back because the EU did not
allow it to be used for fuel, according to Reu-
ters. Should the EC decision proceed, this rule
would be changed.
According to Claus Keller of German
commodity analytical company FO Licht, EU
biofuel producers used an estimated 400,000
tonnes of soyabean oil for biofuel production
in 2018, compared with 5.9M tonnes of rape-
seed oil, the EU’s main feedstock.
“I think the EU move will be positive for US
The European Commission (EC) has decided soyabean sales prospects to the EU but it will
that US soyabeans can be used in EU biofuels not open a floodgate,” Keller said, adding that
as part of its push to strengthen trade relations other factors would also influence the sale of
with the USA. US soyabeans, such as US-China trade talks
In a statement on 29 January, the EC said and possible duties on Argentine biodiesel.
the recognition of US soyabeans for use in bio- The EU imported about 14M tonnes/year of
fuels was valid until 1 July 2021, but it could soyabeans for animal feed, and the USA was
extend the date provided the USA met the the EU’s main supplier, accounting for a 75%
sustainability criteria to be set in new EU rules share of the EU’s soya imports, Reuters said.

10 OFI – FEBRUARY 2019 www.ofimagazine.com

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www.ofimagazine.com OFI – FEBRUARY 2019 11

 BIOTECH NEWS
IN BRIEF
CANADA: The planted area
for genetically engineered
(GE) crops in Canada fell
by 2% in 2018 from the
previous year because
of a decreased soyabean
area, according to a US
Department of Agriculture
report on 12 Decemeber.
In the marketing year
2018/19, the overall
decrease of 13% was the
result of the soyabean
planted area growing 9% in
Ontario, but decreasing by
6% in Manitoba and 52% in
Saskatchewan.
The report said that in
2018, Canada planted
about 12.2M ha of GE
crops, mostly soyabeans,
corn, canola, sugar beets
and alfalfa.
USA: On 11 December,
a US district court judge
approved the US$1.51bn
settlement that Syngenta
reached earlier this year
over the sale of its Agrisure
Viptera and Duracade corn
seeds, concluding years of
lawsuits.
Syngenta introduced the
two GM corn strains for the
2011 US growing season
before China approved
them. China then stopped
importing US corn in No-
vember 2013.
Plaintiffs said the rejected
imports lowered commodity
prices and cost farmers as
much as US$3bn.
Syngenta had asserted it
did not need approval from
China for the corn since it
already had US approval.
China approves five new
GM crops for importing
China has approved five genet- Inc’s DP4114 Qrome corn; application process to make it
ically modified (GM) crops for DAS-44406-6 soyabean, more transparent, timely and
import after its first face-to- known as Enlist E3; the SY- based on scientific methods, as
face talks with the USA on 7 HT0H2 soyabean developed many products had been stuck
January since the two coun- by Bayer CropScience and in the regulatory process for
tries agreed a 90-day truce in Syngenta; BASF’s RF3 canola; years.
their trade war, reports Reuters. and Bayer-owned Monstanto’s US farmers had been anx-
“It’s a goodwill gesture MON 88302 canola. iously waiting to decide which
toward the resolution of the China also extended import seeds to plant this spring as
trade issue,” said a Chinese approvals for 26 other GM they did not widely plant vari-
representative of a US agri- crops by three years. eties not approved by China.
cultural industry association. However, five other products China bought 60% of US
“It’s been in the system for a were not approved, including soyabeans before the trade
long time but they chose today GM alfalfa products developed war, when Beijing imposed a
to release this good news,” by Monsanto and two DowDu- 25% import duty on US soy-
he added, declining to be Pont soyabean traits. abeans on 6 July in response
identified. Reuters said the USA had to US tariffs. However, it had
The GM products that China been demanding that China so far only bought 5M tonnes
has approved are DowDuPont change its GM crop import of the 2018 US soya harvest.
USDA releases plan to label GM products
mandatory compliance date is 1 January 2022.
‘Bioengineered’ foods must be disclosed
using text, a symbol or an electronic or digital
link including QR codes, said just-food. Small
food manufacturers or small packages may also
use options such as a phone number or web
addresses.
Soyabean oil and other highly processed
ingredients were exempted from mandatory
labelling.
The US Department of Agriculture (USDA) is- Reuters said the details of the new standard
sued rules on 20 December for the labelling of were more than two years in the making, with
genetically engineered foods, Reuters reported. consumer groups pushing for more transpar-
“The National Bioengineered Food Disclo- ency and food companies claiming the labelling
sure Standard ensures clear information and system would be costly and confusing.
labelling consistency for consumers about the Some consumer groups criticised the USDA,
ingredients in their food,” Agriculture Secretary because the required term “bioengineered” was
Sonny Perdue said in a statement. not a common enough phrase to see on labels,
Labelling would come into force on 1 January preferring “GMO” or “genetically engineered”
2020 or a year later for small companies. The instead.

Monsanto’s patent battle in India referred to High Court

Monsanto’s ongoing legal battle in India to
uphold its patent on GM cottonseed has
been referred to the Single Judge Bench of
the High Court, who will rule on patent-
ability after hearing expert evidence.
Monsanto has been in a legal battle for
years with Indian seeds companies, led by
Nuziveedu Seeds Ltd.
In November 2016, a Single Judge
Bench of the High Court restrained
Nuziveedu from selling Bt cotton seeds
using the trademark of Monsanto or its
Indian partner Mahyco Monsanto,
according to GMWatch. However, a
Division Bench of the Delhi High Court
overturned the order in April 2018, ruling
that certain items such as seeds, animals
and plants cannot be patented under
Indian law. Monsanto appealed against this
ruling.
On 8 January, the Supreme Court ruled
that it was incorrect for the Division Bench
to rule on patentability without expert
evidence.
“The Supreme Court felt that the issue
of whether Monsanto’s patent is valid or
not under the Patents Act would need to
be determined by the Single Judge,”
Nuziveedu told Hindu Business Line.
“The court has held that the validity of
Monsanto’s patent can only be judged
after evidence is led by both parties and at
the final, and not the interim, stage.”

12 OFI – FEBRUARY 2019 www.ofimagazine.com

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 RENEWABLE NEWS
IN BRIEF
GERMANY: Chicago-head-
quartered Vantage Specialty
Chemicals Holdings an-
nounced late last year that it
had agreed to buy speciality
surfactants producer LEU-
NA-Tenside GmbH (LTG).
Located in Leuna, LTG is
focused on small volume,
niche products including
anionic and nonionic surfac-
tants and emulsifiers based
on naturally-derived ingre-
dients for use in personal
care, soap and detergent,
industrial cleaning, lubricant
and coating products.
“The acquisition of LTG
provides us with a strategic
manufacturing footprint
in Europe, with products
and chemistries that are
similar to ours,” said Tiffany
Kyllmann, chief strategy
officer of Vantage.
LTG is the third acquisi-
tion Vantage has completed
since global private equity
investment firm HIG Capital
acquired it in October 2017.
Vantage has six manu-
facturing facilities and 13
formulation laboratories
in 14 countries across the
USA, Latin America, South
Africa, Europe and Asia.
WORLD: The global market
for soya-based chemicals
and materials is projected to
grow at a CAGR of 7.03%
to reach US$29.896bn by
2023 from US$19.887bn in
2017, according US market
research firm Research and
Markets.
“Soya-based chemicals
and products are increas-
ingly being utilised in many
established commercial
products such as bioplastics,
biodiesel and cosmetics,”
the report said.
Geographically, North
America held a signifi-
cant market share due to
increasing consumption of
soya-based chemicals and
materials in the region.
“In the last decade, indus-
trial and non-diesel use of
soya oil in the USA rose by
more than 50%.”
14 OFI – FEBRUARY 2019

Renewables news.indd 1
BASF pulls out of FDCA joint
venture deal with Synvina
German chemical group BASF interest in Synvina and €3.7M and carpet and textile fibres.
has pulled out of its Synvina (US$4.2M) for the assets The two companies had
joint venture deal with Dutch acquired by the joint venture in disagreed with BASF’s inter-
biotech firm Avantium, which the last two years. pretation of their joint venture
was aiming to build the first Synvina was formed in 2016 agreement. In January 2018,
commercial-scale furan-2,5-di- to commercialise Avantium’s Avantium announced a two to
carboxylic acid (FDCA) plant in YXY technology, which catalyti- three-year extension of its pilot
Antwerp, Belgium. cally converts plant-based sug- phase, which it said should
On 27 January, Avantium ar into FDCA, the main building postpone BASF’s final assess-
said it had regained the block for plastics such as the ment of its investment. How-
intellectual property, people new polymer polyethylenefura- ever, BASF maintained the final
and assets for its YXY tech- noate (PEF), which can be used assessment should be made in
nology, paying BASF €13.7M in food and beverage packag- the fourth quarter of 2018 as
(US$15.7M) for its equity ing, automotive applications originally envisaged.
Project offers ‘one-stop shop’ to produce PLA
Three process technology
and equipment specialists
have formed a partnership
to promote the production
of sustainable plastics made
from polylactic acid (PLA).
“PLA is a bio-based and
biodegradable polymer that
can replace petroleum-based
plastics in a wide range of
applications,” said Sulzer
Chemtech, on 6 December
“Different stages are required
to convert sugars from crops
into lactic acid, lactide and PLA is a bio-based polymer that can replace petroleum-based plastics
subsequently PLA.”
The Swiss separation and were offering a fully integrat- Futerro’s technology focuses
mixing technology firm is ed package to the agricul- on the production of lactic
working with Belgium’s Futer- tural, chemical and fibre acid and raw lactide from
ro – a technology provider for industries. “PLAnet offers a sugar or biomass; Sulzer
lactic acid and lactide produc- ‘one-stop shop’ for customers contributes the process for
tion – and TechnipFMC, a interested in PLA production. the purification of lactide and
leader in subsea, onshore/ It supports the construction its polymerisation to obtain
offshore, and surface projects of plants of any size, including PLA; while TechnipFMC acts
with growing activities in bio- facilities with a throughput of as technology integrator to
plastics and green chemicals. up to 100,000 tonnes/year.” deliver front-end engineering
Sulzer said the three firms In the PLAnet partnership, design packages.
Oxiteno expects more US demand with new plant opening
Latin American surfactants manufacturer Oxite- dustrial and institutional cleaning, personal care,
no is banking on growing US demand for its line- oilfield chemicals, paints and coatings.
up of surfactants and speciality chemicals, with Oxiteno said it had invested around US$200M
the official opening of its new alkoxylation plant over six years in the plant including site acquisi-
in Pasadena, Texas last year, says happi magazine. tion, plant construction and R&D facilities.
The 170,000 tonnes/year unit plant adds “The strategic US Gulf location allows easy
to Oxiteno’s existing footprint in surfactants, access to key raw materials, logistics, and a spe-
ethylene oxide and derivatives in Latin America cialised workforce.”
and would produce a wide range of non-ionic Oxiteno is one of the world’s largest ethoxyl-
surfactants and specialty alkoxylates serving key ates producers, with production units in Brazil,
markets such as agrochemicals, home care, in- Mexico, Uruguay and Venezuela.
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www.ofimagazine.com OFI – FEBRUARY 2019 15

 TRANSPORT NEWS
Panama Canal in deal with Itaqui port
The Panama Canal Authority (PCA) signed
an agreement late last year with Brazil’s
Port of Itaqui to promote the shipment of
grains and other cargo through the canal,
World Grain reports.
The port, located in São Luis in the
northeastern state of Maranhão, is Brazil’s
closest port to the Panama Canal.
“This agreement is very important to en-
able the handling of grains to Asia through
the canal, providing even more competi-
tiveness to Itaqui,” said Ted Lago, president
of the Maranhão Port Administration Co.
According to the PCA, the agreement
would promote the use of Panamax locks
for grain transit from northern Brazil to
markets in Asia. It would allow joint market-
ing activities and the sharing of informa-
tion on trade flows between the canal and
Itaqui port to maximise future improve-
ments and possible modernisation.
The PCA said Brazilian grain export-
ers were enjoying a substantial rise in
shipment volumes. Vessels transporting
grains, oilseeds and other dry commodities
accounted for about 22.2% of the Panama
Canal’s total ocean-going commercial tran-
sits from 1 October 2017 to 30 September
2018.
The agreement comes after the PCA
reached an agreement with the Brazilian
Association of Soybean and Corn Produc-
ers of Mato Grosso (Aprosoja) in March
2018 to conduct joint marketing activities
and exchange information that would ben-
efit trade flow and future improvements.

IN BRIEF Brazil railway projects ready for bidding soon

CHINA: China’s COFCO
International announced on
20 December that it is part-
nering with Archer Daniels
Midland Company (ADM),
Bunge, Cargill and Louis
Dreyfus Company (LDC) to
standardise data and digitise
global agricultural shipping
transactions.
The project, first an-
nounced in October, is
focused on the develop-
ment of automated grain
and oilseed post-trade
execution processes, which
would significantly reduce
costs and resources usually
needed to move documents
around the globe.
COFCO sources, handles,
processes, trades and trans-
ports grains, oilseeds and
sugar around the world, and
is the overseas agriculture
platform of COFCO Corpo-
ration, China’s largest food
and agriculture company.
Brazil’s Ferrogrão and FIOL railway projects,
which will serve the country’s central grain
belt, will be ready for bidding this year or early
2020, reported Reuters on 21 January.
The Ferrogrão grain railway will take about
10 years to build and run from Sinop in the
southern state of Mato Grosso, to Mirititu-
ba Port on the Tapajos river, according to
the head of Brazil’s Investment Partnerships
Programme (IPP) Adalberto Vasconcelos. From
Miritituba, barges would transport cargo along
the Amazon river to world markets.
The FICO and FIOL railways would connect
Brazil’s farm belt to the North-South railway
line and Atlantic ports, with capacity to trans-
port 8M tonnes/year of grain.
Vasconcelos told Reuters that the govern-
ment was aiming to reduce reliance on roads
to transport grain by building more railway
lines and getting current operators to invest in
expansions.
By 2025, Brazil hoped to increase the
amount of cargo moved by rail to 31% from
15%.
Brazil’s recently elected President Jair
Bolsonaro, who took office on 1 January, was
boosting the IPP programme to speed up
improvements to the country’s deficient infra-
structure, which added to the cost of exporting
Brazilian soya, Reuters said. The IPP programme
is tasked with attracting private investment
into Brazil’s infrastructure.
Vasconcelos said that the mining company
Vale SA and logistics firm Rumo SA were also
expected to sign early renewal of rail conces-
sions this year.
To improve air travel for tourism, farming
and the oil industry, 20 airports would also be
auctioned on 15 March.

USA: Oil and gas giant Shell

and sustainable aviation
fuel supplier SkyNRG have
begun the supply of aviation
biofuel to KLM, SAS and
Finnair at San Francisco Air-
port (SFO), the companies
announced on 6 December.
The fuel – made from
used cooking oil – is pro-
duced by US renewable fuel
supplier World Energy at its
Paramount refinery in Los
Angeles. It will be supplied
through SFO’s current re-
fueling facilities and can be
used by the airlines without
modification to their fleets.
US soya can benefit from containerised shipping
Containerised shipping of
soyabeans will open the door
for US farmers to access new
Asia-Pacific and European mar-
kets, according to the Illinois
Soybean Association (ISA).
Farmers had sown more soy-
abeans than corn for the first
time in 35 years last spring,
the ISA said late last year.
And with the two countries’
ongoing trade war leading to
China spurning US soyabeans,
American farmers were storing
more of their harvest.
ISA trade analyst Eric Wood-
ie said the association saw a
major opportunity in this trade
shift.
“Containerised shipping
offers several benefits for the
US soyabean industry. It better
meets the needs of customers
who want to purchase small-
er quantities, minimise their
inventory investment, pur-
chase soyabeans with precise
product attributes or seek fast
turnaround of their orders to
increase time-to-market and/or
maintain quality.
“Containerised shipping can
also benefit producers, cooper-
atives and small suppliers who
cannot fulfil demand for large
shipments via bulk vessels.
In fact, by 2019, the global
container market demand is
projected to increase nearly 5%
over just three years.”
The ISA said Illinois was the
top soyabean producing state
in the USA and was well-posi-
tioned to capitalise on contain-
erised shipping for international
soyabean export because of
its access to ocean containers
returning empty to the country.

16 OFI – FEBRUARY 2019 www.ofimagazine.com

Transport news.indd 2 05/02/2019 09:45:32


20-22 February 2019
Fats & Oils International
Conference - Exhibition
Lalit Hotel, Mumbai, India
www.otaiwz-foic2019.org/
index
28 February-1 March 2019
Fatty Acid & Lipid Analysis
Course
Dundee, UK
https://www.huttonltd.com/
events/falac
4-6 March 2019
Palm & Lauric Oils Conference
& Exhibition (POC) 2019
Kuala Lumpur, Malaysia
www.pocmalaysia.com
11-12 March 2019
20th Practical Short Course
Advanced Oilseed and Oil
Processing - Palm & Seed Oil
Quality Management
Guadalajara, Mexico
www.smartshortcourses.com/
oilprocess20/program
18-20 March 2019
2019 International Biomass
Conference & Expo
Savannah, USA
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com/ema/DisplayPage.
aspx?pageId=Home
1-3 April 2019
World Bio Markets 2019
Passenger Terminal
Amsterdam, the Netherlands
www.biobasedworldnews.
com/events/world-bio-markets
4-5 April 2019
3rd Sustainable Oils & Fats
International Congress
The National Horticulture
Society of France, Paris, France
www.fat-associes.com/en/
home
10-11 April 2019
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Kyiv, Ukraine
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bsg/2019/en/conference
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17-19 April 2019
21st Practical Short Course:
Advanced Technologies in
Oilseed Processing, Edible Oil
Refining and Oil Modification
Istanbul, Turkey
www.smartshortcourses.com/
oilprocess21/program.html
28-30 April 2019
Globoil International
JW Marriott Marquis
Dubai, UAE
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5-8 May 2019
110 AOCS Annual Meeting
th
& Expo
America’s Center Convention
Complex, St Louis, USA
www.annualmeeting.aocs.org
14-17 May 2019
The 9th ICIS World Surfactants
Conference
Jersey City, USA
www.icisevents.com/ehome/
index.php?eventid=200178918
21-22 May 2019
MCPD Esters and Glycidyl
Esters – Symposium 2019
Berlin, Germany
https://veranstaltungen.gdch.
de/tms/frontend/index.
cfm?l=8620&sp_id=2
3-5 June 2019
CESIO 11th World Surfactant
Congress
Infinity Hotel & Conference
Resort, Munich, Germany
www.cesio-congress.eu
5-6 June 2019
Oleofuels 2019
Venice, Italy
https://www.wplgroup.com/
aci/event/oleofuels
10-12 June 2019
2019 International Fuel
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Indianapolis, USA
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com/ema/DisplayPage.
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DIARY OF EVENTS
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London, England
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conference/registration/
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11 June - 13 June 2019
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12-15 June 2019
EFPRA Congress 2019
La Baule, France
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12-15 June 2019
30th Nordic Lipid Forum
Symposium
Horsens, Denmark
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16-19 June 2019
15th GCIRC International
Rapeseed Congress
Berlin Congress Center
Germany
www.irc2019-berlin.com
23-28 June 2019
FOSFA Advanced Course
Egham, Surrey, UK
www.fosfa.org
8-13 September 2019
FOSFA Basic Introductory
Course
Egham, Surrey, UK
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25-27 September 2019
Globoil India
Mumbai, India
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5-11 October 2019
18th AOCS Latin American
Congress and Exhibition on
Fats, Oils and Lipids
Foz do Iguacu, Brazil
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20-23 October 2019
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Seville, Spain
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de/tms/frontend/index.
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9-10 November 2019
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Conference: Health, Advanced
and Value-Added Utilization
Guangzhou, China
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19-21 November 2019
International Palm Oil
Congress & Exhibition
(PIPOC) 2019
Kuala Lumpur Convention
Centre, Malaysia
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9-12 February 2020
World Congress on Oils & Fats
2020
International Convention
Centre, Sydney, Australia
http://wcofsydney2020.com
8-10 March 2020
10th International Symposium
on Deep-Frying
Hagen, Germany
http://www.dgfett.de/index.
php
26-29 April 2020
2020 AOCS Annual Meeting
& Expo
Montreal, Canada
www.annualmeeting.aocs.org
20-23 September 2020
18th Euro Fed Lipid Congress
and Expo
Leipzig, Germany
www.eurofedlipid.org/
meetings/leipzig2020/index.
php
For a full events list,
visit our website
www.ofimagazine.com
17
06/02/2019 12:22:44
 CHINA
Despite the 90-day truce
agreed by China and the
USA in their ongoing trade
war, some analysts believe
Beijing is unlikely to resume
its reliance on US soyabeans
Jens Kastner and Ed Zwirn

The USA and China agreed a 90-day truce

in their bilateral trade war, including a
halt to any additional tariffs, at the G20
meeting in early December but sourcing
patterns are not going to become busi-
ness-as-usual any time soon for China’s
soyabean sector.

Chinese trade tariffs

China – the world’s largest soyabean
importer – slapped retaliatory tariffs
in July 2018 on a range of US goods,
including soyabeans, for which tariffs

were lifted from just 3% to 28%. This
was in response to tariffs imposed by the
Trump administration, which accused the
Chinese government of failing to prevent
intellectual property violations.
China traditionally relies on American
suppliers for around one-third of its soya,
and Chinese importers reacted to the new
tariffs by shifting mainly to Brazil, import-
ing a whopping 91% of China’s overall
soyabean imports of 50.48M tonnes in
May-October 2018 from that country.
This was in line with the two stages of
export policy set by the Chinese Ministry
of Commerce prior to the G20 meet-
ing. From October 2018 to February
2019, China would be mainly importing
soyabeans from Brazil, and only if Brazil
cannot supply all Chinese demand, would
a small volume be imported from the USA.
For the second stage, from March
2019 beyond, the Ministry of Commerce
expects supply to benefit from good har-
vests in Brazil and Argentina, while South
American countries and nations along the
‘One Belt One Road’ corridor will increase
soyabean planting – diminishing antici-
pated Chinese demand for US soya still
further.
Reliance on the USA
Regardless of whether the USA and China
resolve their trade differences in gen-
eral and over soya in particular, Kerstin
Brolsma, a business analyst with China
Market Research Group in Shanghai, is
doubtful whether China would want to
resume reliance on US soya supplies: “It
remains to be seen how extensively and
Spurning US soya
how quickly China will reduce its now
politically disadvantageous reliance on US
soyabeans, but early indicators show that
China is determined to quickly lessen re-
liance on US soyabeans for the soyabean
crusher and soya feed sectors by reducing
the percentage of soya found in hog feed,
using government reserve soyabean stock,
and switching to other oils like rapeseed
and cotton seed, among other things,” she
tells Oils & Fats International. Moreover,
“in the interim, the majority of Chinese
soyabean crushers show no signs of going
out of business, as they are currently
using beans from Argentina and Brazil as
well as beans from Chinese government
stockpiles,” she adds.
That said, domestic supplies may not
be that reliable, offering some short-term
hope to American exporters. In early Sep-
tember, severe frost occurred in China’s
northeast, causing significant adverse
impact on soyabean yields and soyabean
quality. The Hebei region in Heilongjiang
province, which accounts for 16.7% of the
country’s soyabean acreage, was the most
affected, recording a year-on-year drop in
production of 49%, in turn leading to an
8.2% reduction in national soyabean pro-
duction, according to Chinese-language
daily newspaper Qi Huo.
As many traders are unable to tap into
local bean sources, they have trans-
ferred to other producing areas to collect
beans, with logistic shifts translating into
increased costs. “Business profits are
declining compared with earlier this year,”
Brolsma says.
Nevertheless, China’s domestic soy-
abean oil stocks were still historically high
in the last week of November, at 1.78M
tonnes, attributable to the slower speed
of oil mills because of swelling soyabean
meal inventories under slow shipment as
well as stops for maintenance, according
to a Chinese-language post-G20 analysis
by Beijing-based agricultural information
provider Tianxia Liang Chang Technology.
But the analysis pointed out that de-
mand will increase gradually after mid-De-
cember with the start of the peak season
of small food gift bag production before
China’s Spring Festival (its New Year). In
addition, the volumes of soyabeans arriv-
ing in major ports, including Hong Kong,
are too small for the coming months.
The G20 summit and the future
Indeed, Tianxia Liang Chang Technology
estimates that the 21.22M tonnes of
imports scheduled to arrive in November-
February represents a steep drop of 34%
compared with the same period last year.
While this would drive up prices, it is
still unclear how the results of the G20
meeting will feed into the equation.

18 OFI – FEBRUARY 2019 www.ofimagazine.com

China trade war 2.indd 2 05/02/2019 09:28:28


oyabeans
“The White House stated that China
agreed to purchase US agricultural prod-
ucts immediately, but will the soyabean
import tariff immediately recover to 3%?”
the analysis asks. When and if this tariff
will fall is as yet unclear: “If it is deter-
mined that the soyabean import tariff
will return to 3%, then Chinese buyers
are likely to increase the purchase of
soyabeans from the US West, because
shipping from there only needs 20 days
to China,” predicts the analysis. However,
Chinese buyers will still tend to buy Brazil-
ian new season soyabeans for the longer
term, it suggests – that is, for deliveries
after March next year.
Similarly, Peter Peverelli, founder of
Netherlands-based Eurasia Consult, which
focuses on China’s food and beverage in-
dustries, notes that the public discussions
by Chinese agricultural experts and econ-
omists at Tongji University, in Shanghai,
and the Chinese Academy of Sciences, in
Beijing, convey the expectation that while
supplies might tighten in the short term,
because American soya exports are falling,
there always will be enough to crush.
“What is not stated, but can be read
between the lines, is that sources do not
foresee any increase in local production,”
Peverelli tells Oils & Fats International.
In the USA, producers and exporters of
soyabeans say they see a slim opportunity
www.ofimagazine.com OFI – FEBRUARY 2019

China trade war 2.indd 3
for renewed trade arising from the trade
thaw with China, although the 90-day
window leaves precious little time to
resolve the knotty issues at stake.
Beyond the relief from the temporary
avoidance of a tariff escalation was the
news which came out of the G20 meeting
that China will resume purchases of some
American agricultural exports, among
them soya, some 30M to 35M tonnes
of which gets sold to China in a ‘normal’
year, US Agriculture Department Deputy
Secretary Stephen Censky said at the Iowa
Soyabean Association on 13 December.
The announcement on that date by the
US Soyabean Export Council that China,
which had not bought any US beans so
far in 2018, had now bought 1.5M to 2M
tonnes of American-grown beans was en-
couraging to producers. Censky said it was
“just a start” towards the volumes needed
for this export market to recover. As it
stands, the United States Department of
Agriculture (USDA) November forecast
projects soyabean inventories to double,
to 25bn tonnes, by August 2019.
An American Soybean Association
(ASA) communiqué says the group was
“encouraged” by the news of the Chinese
purchases and is calling for a permanent
solution to the tariff disputes that have hit
the Sino-American soyabean trade.
Davie Stephens, ASA president and a
soya grower from Clinton, Kentucky, says:
“This is positive news for our growers and
for US-China trade relations. American
soyabean farmers prosper when they have
access to international markets, and our
trade relationship with China is critically
important to our industry.
“The news of resumed sales represents
a positive step under the current 90-day
agreement to suspend new tariffs and
negotiate on trade issues agreed to by
President Donald Trump and President Xi
Jingping. Beyond the sale announcement,
it is vital that this 90-day process results
in lifting the current 25% tariff that China
continues to impose on US soyabean
imports. Without removal of this tariff, it is
improbable that sales of US soyabeans to
China can be sustained.”
Problems for farmers
Even if the trade war is ended, American
soya growers will nonetheless face
some tough challenges, needing to see
the reopened markets reverse the price
falls that have occurred since the trade
war began. Stephens said the roughly
US$2/bushel drop in soyabean prices
experienced since last May continues to
harm soyabean farmers. Analysis from
the Commercial Agriculture Programme
of key soya production state Missouri,
CHINA
released in July, said that this 20% drop
in soyabean prices – if sustained – would
cost Missouri more than US$72.6M in
lost economic activity over a year, with
businesses and workers losing US$21.2M
in earnings.
As a result, Stephens says it is “critical”
for US agriculture secretary Sonny Perdue
to move forward with his commitment
to announce the second half of market
facilitation programme payments aiding
hard-pressed growers. When the USDA
initially calculated the harm incurred by
the tariffs on soyabean prices, it assumed
that China would still purchase at least
50% of the 32M tonnes of US soyabeans
it bought in 2017. With sales nowhere
near that amount, “it is critically important
that we see additional [government-fund-
ed] purchases and actual deliveries, and
for the USDA to make a payment on the
second half of 2018 soyabean produc-
tion,” Stephens says.
Conclusion
While US crushers have benefitted from
the trade war, both sides have suffered
billions of dollars in losses in the agriclture,
auto and technology sectors.
US crushers have enjoyed an increased
domestic supply of soyabeans, crushing
5.08M tonnes of soya for oil in September
2018, compared with 5.09M tonnes
in August 2018 and 4.36M tonnes in
September 2017, USDA data shows.
However, the US and Chinese
economies each lose about US$2.9bn
annually due to Beijing’s tariffs on
soyabeans, corn, wheat and sorghum
alone, says Purdue University agricultural
economist Wally Tyner.
“It’s something that’s crying for a
resolution. It’s a lose-lose for both the
United States and China.” ●
By Jens Kastner in Taipei and Ed Zwirn in
New York of International News Services
The 20% drop in soyabean prices since last
May will cost Missouri losses of US$72.6M in
economic activity.
19
05/02/2019 09:28:30
 GERMANY
Rapeseed is in the top five agricultural products of Germany, with a total planted area of around 1.225Mha for 2018/19
Rapeseed: king of the crop
Germany is one of Europe’s
largest producers of oilseeds
and rapeseed is among the
top five poducts in Germany
agriculture. However, the
country is set to see its
lowest rapeseed output in
15 years due to dry weather
Ile Kauppila
www.ofimagazine.com
20 OFI – FEBRUARY 2019

German Rapeseed 2.indd 1
B
eing the largest economy in Europe, it
comes as no surprise that Germany is
either the leader or among the top players
in many European industries. Oilseeds
are no different, and while Germany
faces stiff competition from countries
such as France, Poland and the UK, the
country is among the largest producers,
importers and processors of oilseeds on
the continent.
Germany’s need for oilseed
The undisputed top crop in the German
oilseeds complex is rapeseed. According
to data from the German federal statistics
office Destatis, rapeseed is among the
top five products in the entire German
agricultural sector. Only wheat, barley and
silage maize stand above it in acreage and
the same three, plus potatoes, overtake it
in production.
Winter rapeseed accounts for practically
the entire German rapeseed harvest.
Destatis says that in 2018/19, Germany’s
total rape planted area stood at 1.225M
ha, of which 1.223M ha consisted of
winter rapeseed. This planted area
produced a yield of 2.990 tonnes/ha for
the entire rapeseed total, while winter
rapeseed yields were negligibly higher at
three tonnes/ha. This yield translates into
a total production of 3.666M tonnes of
rapeseed, of which 3.659M tonnes was
winter rapeseed.
While such production numbers –
according to a September 2018 report
by French agro-economic research
and analysis bureau and consultancy
Stratégie Grains – rank Germany as the
second largest rapeseed producer after
France not only in the EU28 but also
in Europe, production and yields have
been decreasing for the past few years.
Germany’s total rapeseed production has
fallen by nearly 20% from the 4.579M
tonnes recorded in 2016, while yields are
decreasing by more than 13% from 3.45
tonnes/ha in the same year.
At the same time, the rapeseed planted
area has fallen by 7.5% from 1,325ha in
2016, which may in part explain the lower
production. In addition, Stratégie Grains
data shows rapeseed production falling in
all of EU28 during the same period – with
the sole exceptions of Belgium and Ireland
– which means Germany is following a
regional trend, brought on by the Europe-
wide heatwave in the summer of 2018.
Rapeseed market
Falling domestic rapeseed production in
Germany has not translated into increased
imports, says Stratégie Grains. According
to the agency, in 2017/18, Germany
imported 4.35M tonnes of rapeseed from
EU28 and 1.204M tonnes from outside
www.ofimagazine.com
OFI – MONTH 2018 1
06/02/2019 09:31:40
 GERMANY
the EU, totalling 5.554M tonnes, a record around sunflowerseed, albeit a minor since 2015, reaching a high of 43,000
high for Germany. In 2018/19, imports one that pales in comparison to the tonnes in 2018/19.
fell to 4.339M tonnes from EU28 and European sunflower powerhouses of This meager domestic sunflowerseed
1.032M tonnes from outside EU, totalling Bulgaria, Hungary, Romania and Ukraine. output does not, however, come
5.371M tonnes and marking a decrease of The sunflower planted area has stayed anywhere near to satisfying German
roughly 3.3%. The total German rapeseed roughly the same in Germany at 17,000- demand for the seed, which grew from
supply, therefore, also decreased from 18,000ha between 2015 and 2018, but 488,000 tonnes in 2017/18 to 505,000
10.195M tonnes in 2017/18 to 9.761M in 2018/19 the area increased to a full tonnes in 2018/19, says Stratégie Grains.
tonnes in 2018/19. 20,000ha, according to Stratégie Grains. As domestic sunflower production in
However, the lower supply did not Yields have also increased from 1.92 Germany cannot satisfy demand, the
prove an issue for the German oilseeds tonnes/ha in 2015/16 to 2.13 tonnes/ country imports most of its sunflower
processing industry. Stratégie Grains ha in 2018/19, although 2017/18 saw seed. Total imports grew from 433,000
data shows that demand also decreased still slightly higher yields of 2.2 tonnes/ha. tonnes in 2017/18 to 471,000 tonnes
slightly, from 9.461M tonnes in 2017/18 However, the higher yield in the year prior in 2018/19. Out of the total imports,
to 9.244M tonnes in 2018/19. In the was not reflected in final sunflower seed 450,000 tonnes are from within the
latter time period, German rapeseed production, which has grown each year EU, while 21,000 tonnes were sources u
crushers represented 8.96M tonnes –
nearly 97% - of the total demand, while
the remaining 171,000 tonnes went into
animal consumption where compound
feed consumed 50,000 tonnes and other
on-farm uses 122,000 tonnes.
Along with imports, German rapeseed
exports dropped as well between
2017/18 and 2018/19. In the year prior,
Germany exported 121,000 tonnes of
rapeseed to EU28 and 8,000 tonnes to
destinations outside the EU, bringing total
exports to 129,000 tonnes. In 2018/19,
total imports fell by 12% to 113,000
tonnes, of which EU28 destinations
accounted for 109,000 tonnes and extra-
EU destinations for 4,000 tonnes.
Within the EU28, the Netherlands is
the top destination for German rapeseed
with 34,000 tonnes (down from 54,000
tonnes in 2017/18). Poland is the second
largest EU importer, at 24,000 tonnes (up
from 18,000 tonnes in 2017/18). Imports
to other destinations are significantly
lower in quantity, with Denmark at 15,000
tonnes and France, at 10,000 tonnes.
According to Stratégie Grains in
September 2018, EU rapeseed prices
have been in decline for the past few
months. “Since 23 August, EU rapeseed
prices are in decline. Indeed, Ukrainian
ships are entering EU en masse, competing
aggressively with the local commodity.
“On the world market, prices barely
changed over a month, with the
worsening crop outlook in Australia offset
by an upward harvest forecast in Canada.
Hence, prices in Germany were down by
€7-12/tonne between 23 August and 20
September,”
However, the German oilseed and
protein plant association Union zur
Förderung von Oel- und Proteinpflanzen
(UFOP) noted in early November 2018
that rapeseed oil prices are again
increasing in Germany.

Sunflowerseed imports
Germany has also developed an industry

www.ofimagazine.com
2 OFI – MONTH 2018 OFI –www.ofimagazine.com
FEBRUARY 2019 21


German Rapeseed 2.indd 2 06/02/2019 09:31:40

 GERMANY
u from outside of the bloc. Within the EU,
Hungary is Germany’s main source for
foreign sunflowerseed, with imports of
112,000 tonnes in 2018/19. At second
place is Bulgaria with 96,000 tonnes,
followed by France (83,000 tonnes) and
Romania (57,000 tonnes).
With both the increased domestic
output and imports, total German
sunflowerseed supply grew from 515,000
tonnes the year prior to 541,000 tonnes
in 2018/19. The increase is significant
as in 2017/18, the final German
sunflowerseed stock ended the year with
a deficit of 8,000 tonnes. With more
u available seed in 2018/19, the country
had a surplus of 1,000 tonnes.
Biodiesel as consumption driver
According to a US Department of
Agriculture (USDA) GAIN report from
September 2018, rapeseed oil is one of
the key drivers in the European – and
German – rapeseed market, as it is
primarily used for biodiesel production.
According to UFOP, Germany is the
leading European biodiesel producer,
with 3.1M tonnes produced in 2016.
Statistics service Statista notes that by
2017, German biodiesel production had
increased to 3.293M tonnes, making it the
world’s third largest biodiesel producer in
the world, admittedly far behind the USA
and Brazil.
In the EU, says UFOP in its ‘Report on
Global Market Supply 2017/18’, rapeseed
oil is the number one biodiesel feedstock,
holding a 44% share of all feedstocks
in 2017. German rapeseed crushers
produced 4.1M tonnes of rapeseed oil in
2016. Of this, roughly 1.2M tonnes went
into food uses, while another 1.2M tonnes
went into the engineering sector. Roughly
930,000 tonnes were exported.
The increasing biodiesel production,
says Stratégie Grains, has translated into
higher crush margins, which average €39/
tonne on 2018/19 deliveries in Germany.
This level, however, is below soyabean
crush margins in northwestern EU coun-
tries, which the agency predicts is set to
penalise German rapeseed crushers.
Going forward, the USDA says EU
rapeseed crush is forecast to decrease
with reductions in Germany and the
Netherlands in particular. “A key driver of
the market is weak demand for rapeseed
oil as a feedstock for biodiesel production.
There is an oversupply of rapeseed oil in
the EU, particularly due to the increased
competition with cheap imported soy-
abean oil methyl ester and palm oil methyl
ester,” the agency points out.
“There is great uncertainty on the
rapeseed oil market and most of it comes
www.ofimagazine.com
22 OFI – FEBRUARY 2019

German Rapeseed 2.indd 3
‘According to UFOP,
Germany is the
leading European
biodiesel producer,
with 3.1M tonnes
produced in 2016’
from developments on the EU biodiesel
market. Changes in EU biofuels policy
through the Renewable Energy Directive
(RED) have already led to lower use of
rapeseed oil for biodiesel in recent years
and the outlook remains negative since
political support for rapeseed oil as a
primary biodiesel feedstock is declining.
There is strong competition with animal
fats and recycled oils as well as crude oil
prices affecting profitability of producing
rapeseed oil. The potential of rapeseed oil
is also limited through strong competition
from other vegetable oils as well as from
biodiesel imported from Argentina.”
Difficult weather ahead
Indeed, the USDA is not alone in
forecasting difficult times for the German
oilseeds sector going into 2019. A report
by Reuters in November 2018 notes that
dry autumn weather has led to decreased
rapeseed sowings not only in Germany,
but also in France and the UK, while
Poland’s planted area is projected to
remain unchanged if not shrink. UFOP
estimates that the German planted area
for winter rapeseed in 2018 will fall by as
much as 18.1% to only around 1M ha and
that an additional 100,000 ha may have
to be replanted. Such a prospect would
reduce the German rapeseed planted area
to only 900,000 tonnes.
While increased outputs elsewhere in
the world should keep world rapeseed
markets balanced, the EU could oil-
seeds-wise be facing a lean year. Reuters
quoted an unnamed German rapeseed
trader as saying: “Even at this early stage
of the season it looks like the EU could
face a reduced rapeseed crop in 2019. I
think the EU will need larger imports of
rapeseed and other oilseeds, such as soy-
abeans, to meet its needs in 2019.”
Agreeing with the German trader, the
USDA – as early as in September 2018
– forecast that Germany could become
a net importer of grains in 2019 due to
drought impacts. The German Ministry
for Food and Agriculture projects that the
country’s rapeseed output is set to fall to
its lowest in 15 years. To compensate for
the lack of rapeseed, the country is likely
to sharply increase imports of soyabeans
and soya meal, for which the USA would
be primary source, says the USDA.
“To alleviate the tight forage situation,
affected [German] federal states may
allow farmers to use areas registered as
Ecological Focus Areas under the EU’s
Common Agricultural Policy for forage
production after completing a minimum
non-use time of eight weeks,” the USDA
writes. Julia Kloeckner, Federal Minister of
Food and Agriculture, proposed in August
2018 a joint federal/state aid programme
worth around €340M for farmers whose
existence is threatened.
EU policies as obstacles
On the topic of the EU, the European
Parliament in November 2018 approved
new targets for renewables, energy
efficiency and second-generation biofuels
as it confirmed a provisional agreement
reached on its revised REDII. The plan will
require renewables to account for at least
32% of the EU’s final energy consumption
by 2030, mandates a 32.5% increase in
energy efficiency by 2030, and requires
each member state to present a 10-year
integrated national energy and climate
plan by the end of 2019 and every 10
years thereafter.
UFOP, however, is critical of REDII, say-
ing that climate protection in the transport
sector and European agriculture will be
the “ultimate losers”.
“For years, European agriculture has
been struggling with surpluses and price
pressure on international markets. This
pressure will increase in the face of this
resolution, because biofuels from cultivat-
ed biomass, such as rapeseed, grain and
others will be limited to the level of sales
in 2020,” says UFOP. The association also
argues that the EU’s decision to phase out
palm oil-based biofuels seems unlikely to
be implemented due to political and trade
pressure from Indonesia.
Predicting any possible changes to EU
policies is as hard as predicting if weather
patterns will develop in a more favorable
direction in the future. As the USDA
notes, much depends on the outcome of
the European Commission’s new trade
inquiry into Indonesian biodiesel, which
might result in the reintroduction of
anti-dumping taxes and generate more
demand for European rapeseed oil. As it
stands, the German rapeseed industry - if
not the entire oilseed complex – can only
try to prepare for stormy waters.  ●
Ile Kauppila is OFI’s former assistant editor
www.ofimagazine.com
OFI – MONTH 2018 3
06/02/2019 09:31:40
 www.dsengineers.com
PLANT & TECHNOLOGY

Global round-
up of projects
Oils & Fats International reports on some of
the latest projects, technology and process
news and developments around the world

Crown announces upgrade

for biodiesel manufacturers

Serving the
Vegetable Oil Industry
Photo: Crown Iron Works

From Basic Engineering

to
Full Turnkey Project
Minnesota-based oilseed processor Crown announced on
17 December a new process upgrade for biodiesel manu-
facturers called Advanced Catalyst Reduction and Econo- Single Point Responsibility through
misation (ACRE). EPC or EPCM+® with guaranteed:
ACRE allows biodiesel processing plants to run at a lower
operating cost with higher efficiency through adding a third
transesterification reaction step. ✔ Process Performances
The ACRE processing innovation currently running in
multiple plants was yielding good results, seeing yields of ✔ Time Schedule
over 40% and saving 3 cents/gallon, said Crown.
ACRE is also designed to reduce acid usage and increase
manufacturing uptime while also being able to be retrofit- ✔ Budget
ted into any unmodified Crown plant. The processor also
comes with less moving parts, making it easier to repair.
Crown is building a new innovation centre in Blaine,
Minnesota, which is expected to be up and running this
year. Customers will be able to simulate plant-processing
operations within a controlled environment to support
trials and customer trainings.

JAZADCO to build biodiesel plant Engineers & Contractors

Saudi Arabia’s Jazan Energy and
Development Company (JAZA-
DCO) announced on 17 De-
cember that it is forming a joint
venture with Delante Trading
Corp to build a US$50M
biodiesel plant in King Abdullah
www.ofimagazine.com
Economic City.
The plant will produce
45,000 tonnes of biodiesel
Belgium
from residues of edible oil and
Phone: +32 (0)10 43 43 00
other raw materials, with com-
mercial operations expected to info@dsengineers.com
start in 2020.
OFI – FEBRUARY 2019 23 Reliability through Experience

PE2 new.indd 1 06/02/2019 15:08:10

 NEWS
PLANT & TECHNOLOGY
IN BRIEF
CANADA: American
alternative energy company
Benefuel announced on
11 December that it would
be site searching and
holding talks with interested
parties for the company’s
next biodiesel facility, in re-
sponse to British Columbia
(BC)’s climate change plan.
“BC’s Low Carbon Fuel
Standard and climate
change strategy have made
the province a very attrac-
tive jurisdiction to locate a
biodiesel facility,” said Rob
Tripp, CEO of Benefuel.
“Our company and our
shareholders are committed
to building a world class
biodiesel facility in Canada.”
The new plant, capable of
producing 150M litres/year
of biodiesel, would produce
a fuel with a negative car-
bon intensity score and be
capital efficient.
The project would reduce
greenhouse gas emissions
by more than 550,000
tonnes/year, which was
equal to roughly 10% of
British Columbia’s 2030 tar-
get reduction for transpor-
tation, Benefuel said.
JAPAN: Biotech company
euglena plans to start mass
production of bio jet fuel
and biodiesel made from
waste oil and algae after
completion of its Yokohama
refinery plant, Nikkei report-
ed on 2 November.
The refinery will produce
125,000 litres/year of bio
jet fuel and biodiesel, rising
to 250,000 litres/year by
2025.
Partnering with aviation
group, ANA Holdings, eugle-
na plans to supply ANA’s
commercial international
flights departing from Japan
by 2020.
Mitsuru Izumo, euglena’s
chief executive, said that
by 2030, the plan was to
create three more new
refinery plants to produce
1M kilolitres of fuel, either
in Japan or abroad.
2 OFI
24 OFI––MONTH
FEBRUARY
2018
2019
PE2 new.indd 2
Gevo to use Shockwave process
for corn oil production at its facility
ty by lowering the cost of ethanol and isobutanol
production, increasing the number and value of
feed and protein products, producing corn oil for
food use and helping lower the plant’s carbon
footprint.
Gevo is also planning to debottleneck pro-
duction and optimise the facility’s energy and
equipment infrastructure to use less fossil fuels.
Gevo CEO Patrick Gruber said the firm
planned to use sustainable, low carbon intensity,
non-food corn as a raw material at the plant.
“We will process the corn, upgrade the protein
and make it suitable to go into higher-value
feeds and the food chain. The corn oil we plan
on producing with the Shockwave process is ex-
pected to be food-grade rather than fuel-grade.
“Once the protein and oil are sufficiently cap-
tured, we will process the residual carbohydrates,
Shockewaves’ LLC’s new thermodynamic corn fermenting them to low carbon intensity ethanol
fractionation process is expected to come online and ultimate isobutanol once we fully build out
early this year at American renewables firm Ge- our Luverne site,” said Gruber.
vo’s Luverne, Minnesota facility. The Shockwave process is a front-end corn
Gevo entered into two separate operating fractionation platform that uses high velocity air
leases and service agreements last year with Io- and pressure changes to fractionate solid materi-
wan Shockwave to install the corn fractionation als, providing a low-cost approach to separating
process technology at Lurverne. the corn kernel into its various fractions, said
The process is expected to improve profitabili- Gevo.
Cellana sells algae demonstration facility to Cyanotech
Hawaiian algae-based products tonnes of ReNew algae at KDF a letter of intent with POS
developer Cellana is selling its for processing and testing of Bio-Sciences to commercialise
Kona Demonstration Facility multiple high-value biomass high value EPA omega 3 oils
(KDF) to fellow algae firm Cya- components, including its com- produced from KA32 biomass.
notech as the former is moving mercial algae strain KA32. Due to the collaboration with
into larger scale production. “KDF was designed to allow POS Bio-Sciences, in addition
The US$30M KDF facility, Cellana to identify, develop and to Living Ink Technologies and
co-located with Cyanotech’s demonstrate commercially sig- Neste, Cellana in May 2018
site at the Natural Energy nificant yields of algae strains secured US$27M in funding to
Laboratory of Hawaii Au- for large-scale commerciali- construct a new, larger com-
thority (NELHA), was built to sation,” said Martin Sabarsky, mercial algae facility located
develop and validate Cellana’s Cellana CEO. adjacent to KDF.
ReNew Algae algae platform “This mission has been The proposed new facility
for non-GMO algae strains successfully accomplished was projected to produce 700-
rich in omega 3 oils, proteins, with Cellana’s leading strain of 800 tonnes of KA32 algae,
pigments, polysaccharides and algae, KA32, and so this is a and Cellana said it also had a
fuel-grade oils said Cellana on great opportunity to reduce our further US$100M earmarked
7 September. current operational expenses,” in possible loans for further ex-
Over seven years, Cellana he added. pansion if the new plant proved
had produced more than 10 In April 2018, Cellana signed successful.
New renewable diesel plant on US West Coast
Phillips 66 and Renewable Energy Group the facility in 2021, if the plans are approved.
announced plans on 1 November to construct “REG is excited to be working on a project
a large renewable diesel plant on the US West that has the potential to significantly expand
Coast to produce renewable diesel fuel using biofuel production in Washington State and pro-
REG’s BioSynfining technology. vide low carbon fuel markets with products that
The companies expect to make a final invest- are in significant demand on the West Coast,”
ment decision in 2019 and start production at said REG CEO Randy Howard.
www.ofimagazine.com
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06/02/2019 15:08:15
 HEALTH & NUTRITION

Tackling
acrylamide
New EU legislation that came
into force in April last year sets
benchmark levels of the carcinogen,
acrylamide, in various foods such
as chips and crisps. What can food
businesses do to lower acrylamide
levels and what is the role of frying in
its formation?  Serena Lim

N
ew European Union legislation that
came into force on 11 April 2018
has meant that all businesses that
manufacture food or prepare and serve
it to customers must understand the
potential risk of the carcinogen acrylamide
and take steps to reduce it.
Acrylamide is a chemical substance
formed when starchy foods with higher
levels of the amino acid, asparagine, are
cooked at high temperatures above 120°C
in processes such as frying, roasting,
baking, grilling and toasting.
The substance has the potential to
cause cancer and is found in a wide range
of foods including roasted potatoes and
root vegetables, chips, crisps, toast, cakes,
biscuits, cereals and instant coffee.
Acrylamide develops as a natural
by-product in food through the Maillard
reaction, a form of non-enzymatic
browning where a chemical reaction
occurs between reducing sugars (aldoses
such as glucose but not fructose/ketoses)
and amino acids to create a food’s
characteristic flavour, colour and smell.
Temperature is the most important
factor in acrylamide formation. Long
frying times but a low temperature cause
less acrylamide than a high temperature
and short frying time. It is not possible
to eliminate acrylamide from foods but
actions can be taken to reduce levels.
The new EU legislation passed in 2017
sets ‘benchmark’ levels for acrylamide in
various products and describes practical
measures to mitigate its formation.
Businesses that manufacture food or
prepare and serve it to customers in a
retail or food service setting must be
aware of the potential risk of acrylamide;
take steps to reduce its formation
and build these into their food safety
management procedures; take samples
to monitor levels where appropriate; and
keep records of mitigation measures, says
AAK Food Service.
The legislation sets out benchmark
levels for acrylamide in different products
such as 40 microgrammes(μg)/kg in baby
foods, 350μg/kg for biscuits and cookies,
750μg/kg for potato crisps, 850μg/kg
for instant soluble coffee and 300μg/
kg for most breakfast cereals, except for
maize, oat, spelt, barley and rice-based
products, for which the benchmark
level is 50% lower. The aim is for food
businesses to achieve acrylamide levels
as low as reasonably achievable below
these benchmark levels. The European
Commission (EC) will review the levels
every three years, with the aim to
gradually set lower levels.
Cancer risk
The first report of the presence of
elevated levels of acrylamide in food
came in April 2002, when the Swedish
National Food Administration announced
that acrylamide had been found at higher
levels in starch-containing foods cooked
at high temperatures, such as potato
products and bread.
Following the announcement, the World
Health Organization said it would organise
an expert consultation to determine the
full extent of the public health risk from
acrylamide in food.
The UK Committee on Mutagenicity
(COM) suggested in 2006 that acrylamide
could damage DNA, stating “there is
no level of exposure to this genotoxic
carcinogen that is without some risk”.
In 2013, the EC introduced ‘indicative
values’ for food groups most associated
with acrylamide. These were a guide
rather than regulatory limits.
In 2014, the European Food
Safety Authority (EFSA) supported
the CoM’s views and, in an opinion
adopted in 2015, the EFSA’s Scientific
Panel on Contaminants in the Food
Chain confirmed that acrylamide in
food potentially increased the risk of
developing cancer for people of all ages.
As it is not possible to establish a
safe level of exposure for acrylamide to
quantify the risk, the EFSA has used a
‘margin of exposure’ approach, which
provides an indication of the level of
health concern posed by a substance’s
presence in food.
Acrylamide has a margin of exposure of
100 compared with a value of 100,000 for
both aflatoxins and nitrosamines, which
are therefore 100 times less dangerous.
Acrylamide in oil
Acrylamide is not found in cooking oil but
if starchy food like potatoes are fried in
oil and that oil is reused, then acrylamide
levels can build up.
According to AAK Food Service, it is the
crumbs and fine particles of food that are u

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 HEALTH & NUTRITION
u left in the frying oil after cooking that may
contain and continue to create acrylamide
in the hot oil.
“If the frying oil is not skimmed or
filtered out, the crumbs and fine particles
of food may stick to the next batch of
food, raising acrylamide levels.”
According to food chemist Dr Christian
Gertz of Germany’s Maxfry GmbH,
acrylamide levels are not influenced by
the use life of frying oils.
“You can produce fried products in a
fresh oil with a high level of acrylamide
and vice versa. The main factor is the
applied temperature and frying time.”
UK food safety firm Klipspringer
recommends that cooking oil should be
replaced when it reaches a 25% total polar
compound (TPC) level.
“There isn’t a direct correlation between
acrylamide and TPC levels but it’s widely
acknowledged that oils with a high
TPC level also contain higher levels of
acrylamide,” it says.
The 25% TPC level is a rough guide
as the limits in Europe are different,
according to Gertz. In Switzerland, for
example, the level is 27%, while it is 24%
in Germany.
“In reality, the problem is much more
complex,” says Gertz. “TPCs give only
limited information on the real status of
an oil. In industrial practice, for example,
it can be found that production with oils
that have way less than 25% leads to
products of low quality and off-flavours.
Levels of 12-18% can already be a
problem depending on the application and
product, such as pastries, for example.”
Klipspringer outlines a few pieces
of advice for any business in the food
industry that cooks with oil, or cooks food
containing acrylamide:
• Abide by the new standards
• Cook food at lower temperatures
for less time and fry at a maximum
temperature of 175°C
• Cook food to a maximum light golden
brown colour
• Check the levels of TPC in oil and
discard at 25%.
Formation in frying
The most important condition affecting
acrylamide formation during frying is
temperature.
“In chemistry, a rough rule of thumb is
that the speed of a reaction doubles in
steps of 10°C. A critical temperature for
deep frying is 175°C. From that point on
and higher, the formation of acrylamide
increases exponentially,” says Gertz.
According to Gertz, S Klostermann
and Parkash Kochar in their study, ‘Deep
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Acrylamide.indd 2
frying – the role of water from food being
fried and acrylamide formation’, frying is
basically a dehydration process in which
oil acts as transfer medium for heat.
After food is immersed in oil, a sharp
superficial crust region is immediately
formed. The thickness of the crust
increases with the frying time to about
0.3mm-2mm.
Heat is transferred from the frying oil to
the core centre of the food via the crust
region. Water is evaporated at the moving
boundary.
After the boundary zone is dehydrated,
water migrates from the food outwards
to the walls to replace what is lost
during heating. Behind this front, the
temperature within the food is about
100-104°C, representing the temperature
change from water to steam. The
temperature in the crust remains at the
boiling point of water.
When frying potato crisps, the crust
region enlarges quickly and the core
zone disappears. The lack of water to be
evaporated makes the pressure drop, and
the heat transfer raises the temperature of
the material to above 100°C very quickly.
At the moment, when no more water
can escape through the crust, the
temperature increases and reaches a point
above 120°C, when acrylamide starts
to form. This reaction is at its optimum
between 170OC to 180OC.
Comparing different oils and fats
Different oils and fats have different
abilities to transfer heat to food as they
contain different quantities of substances
such as mono- and diglycerides, or short
or middle chain fatty acids.
In Gertz’s 2014 paper, ‘Fundamentals
of the frying process’, palm olein and
beef tallow were found to contain
more polar components – such as
mono‐ and di‐acylglycerols or medium
chain triacylglycerols – than oils such as
rapeseed oil, sunflower oil, or groundnut
oil. It is possible that more polar
compounds reduces the surface tension
between the oil and food surface.
The surfactant theory of frying suggests
that as oil degrades, more surfactant
materials are formed, causing increased
contact between oil and food. These
materials lead to better heat transfer at
the oil-food interface, meaning the water
in the food evaporates faster and the time
the temperature exceeds 100-104OC is
shorter.
This suggests that frying with palm
olein and tallow can give a higher level of
acrylamide in comparison to vegetable oils
like sunflower or rapeseed if no attention
is paid to the frying time.
Mechanism of formation
According to Gertz, a number of theories
have been proposed to account for the
mechanism by which acrylamide is formed
in fried food.
“In experiments with asparagine, it has
been confirmed that asparagine is the
nitrogen source for acrylamide,” he says.
Asparagine is found abundantly in
wheat, corn, potatoes, green beans and
peanuts. Heating of asparagine alone does
not efficiently produce acrylamide but,
combined with reducing sugars and some
fat degradation (oxididation) products, the
formation of acrylamide is accelerated.
Other factors which may influence the
reaction include the potato variety,
temperature, product moisture and acidity.
Gertz says that in discussions about
possible pathways to the formation of
acrylamide in deep-fried products, it has
been assumed that acrylamide is formed
via glycerol by oxidation of acrolein to
acrylic acid, which reacts with ammonium
coming from amino acids.
Another possible mechanism describes
acrylic acid arising directly from the
decomposition of two common amino
acids, alanin and aspartic acid.
Acrolein is also formed in various
concentrations in the oxidation of linolenic
acid (not via glycerol), depending on
the kind of cooking oil heated and the
temperature applied to the oil.
The role of silicone additives
Silicone is legally permitted in Europe as
additive E900 and is often used as an
anti-foaming agent in frying oils and fats.
According to Gertz, the role of silicone
in acrylamide formation is not clear.
“It is evident that heat stabilising
agents (not simple antioxidants) added to
vegetable oils rich in linolenic or linoleic
acid – such as rapeseed, sunflower and
soyabean – help to reduce the formation
of oxidised reaction products, which can
act as a partner in the Maillard reaction
“Unfortunately, the standard
antioxidants butylated hydroxyanisole
(BHA) and butylated hydroxytoluene
(BHT) do not have this effect.”
Conclusions
Acrylamide formation during frying
depends on many conditions, the most
important being temperature and frying
time. The formation of acrylamide in
fried food can be decreased by lowering
frying temperatures to below 175°C.
However, this does not necessarily reduce
acrylamide concentration in fried products
unless all process parameters are taken
into account. ●
Serena Lim is the editor of OFI
www.ofimagazine.com
06/02/2019 09:34:36
 BIOFUELS

Path to a Make the most

sustainable
future
The development of biodiesel has evolved
from first-generation technologies utilising
food oil as a feedstock, to second-generation
use of waste streams from vegetable oils and
fats to tackle sustainability issues
Marc Kellens
of your oil!
Acrylamide reduction with the help of Maxfry®
Reducing acrylamide means making deep-frying time shorter
and the temperature lower. The ingredients of Maxfry® turn
simple vegetable oils into powerful frying oils with superior
stability and much-improved heat transfer. This allows fried
products to be crisp and perfectly cooked despite the mild
temperature and short frying time. The vegetable ingredients
of Maxfry®: No allergens, genetically modified raw materials or
synthetic antioxidants.

A
s the world confronts the effects of global warming, various
solutions are being explored, developed, and some applied,
to control further escalation and possibly reverse the
negative effects.
We all know there is no “one fix all” solution to counterattack
the effects of our petroleum and coal-based energy economy on
the environment and our daily life.
Today, we increasingly produce more CO2-neutral energy from
various sources, such as solar, wind, thermal or hydropower. To
satisfy the energy needs of humanity, all that will not be enough
and some even believe a return to nuclear power is needed to
make a clear difference in the short term.
Biomass provides a good source for energy but that should not u
More information on
www.ofimagazine.com OFI – FEBRUARY 201927 www.maxfry.com


marc kellens 2.indd 1 06/02/2019 12:36:36

 BIOFUELS
FEATURE
Figure 1: World biodiesel market and trade, 2010-2027
u come at the expense of the environment
in general.
More promising is the utilisation of
various waste biostreams, especially from
agro industry, for energy.
Biofuels is one of the actual solutions
to reduce our petroleum dependency if
produced in a sustainable way. Today, the
most common biofuels are bioethanol,
mainly from cane sugar or corn (some
100M tonnes/year) and biodiesel from
vegetable oils and animal fats (some 40M
tonnes/year). The USA is the biggest
producer and consumer of bioethanol,
while the EU is more biodiesel-oriented.
Food for fuel
The food for fuel debate has forced the
biodiesel industry to look for alternative
biomass sources. Waste oil streams, like
used cooking oils, waste animal fats and
even algae and jatropha being typical
examples. The fact is that society today
cannot simply cut its energy demand, so
it needs to continue to use its current
energy sources more efficiently while at
the same time investing in renewable and
emission neutral sources to fulfil its future
needs.
The term “biodiesel” broadly refers to
biodiesel fatty acid methyl ester (FAME),
hydrotreated vegetable oil (HVO) and
biofuels made from vegetable oils in
petroleum refineries. In 2016/17, world
biodiesel production amounted to just
over 34M tonnes with Europe in a clear
leadership position. World biodiesel
production is expected to continue
to increase, despite the decision by
the EU to gradually phase out first-
generation biodiesel by 2030. This is
because Southeast Asian countries like
Indonesia and Malaysia are stimulating the
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marc kellens 2.indd 2
Source: OECD-FAO Agricultural Outlook 2018
production of first-generation biodiesel
from locally produced palm oil with
government mandates.
Origins of biodiesel
For decades, biodiesel was linked with
vegetable food oil being converted into
FAME, making it suitable for blending
with petroleum diesel. This biodiesel is
often called first-generation biodiesel. It
started in the 1990s in Europe to support
agro industry, where energy crops were
grown for non-food purposes. Several
first-generation biodiesel plants were
built, running mainly on rapeseed oil as a
feedstock. However, interest declined and
further expansion stopped in the mid-
1990s. Some biodiesel plants continued
to process rapeseed oil, especially in
Germany and France, mainly because of
continuing local political support.
The negative impact of uncontrolled
CO2 emissions prompted governments
to focus on renewable fuel, especially for
the transport sector, in a second biofuel
wave in the early 2000s, this time more
explosive and more worldwide. Hundreds
of biodiesel plants were built in a time
span of less than 10 years in all corners
of the world. The feedstock of choice
became palm oil and soyabean oil as they
were abundantly available and cheaper
than rapeseed oil. Over 40M tonnes/
year of additional capacity was erected
in a short time span but full production
was never reached because of ethical
concerns over using food oils for fuel and
the questions raised about long-term
sustainability.
Initial problems
By 2010, the second first-generation
biodiesel wave also faded as governments
– under pressure from social media
and consumer groups – felt they were
subsidising a biodiesel industry at the
expense of the food industry. Additionally,
insufficient control and the existence of
some loopholes in US subsidy policies
and EU laws to encourage the production
and use of biodiesel, resulted in the
infamous “splash and dash” controversy.
This brought a halt to the explosive first-
generation biodiesel demand and, hence,
growth.
From 2010 onwards, the food for fuel
debate triggered a change from the use
of food oils to waste oils for biodiesel,
particularly driven by extra incentives
(double counting), which led to another
smaller wave in the traditional biodiesel
industry. Used cooking oils, animal fats
and vegetable oil refinery byproducts
such as acid oils and fatty acid distillates,
are today in big demand. However, these
so-called second-generation biodiesels
still represent only a fraction of the
biodiesel currently produced. In Europe,
which produces and consumes close to
13M tonnes of biodiesel, about 20% of its
biodiesel originates from waste oils and
animal fats. But rapeseed oil still accounts
for the majority of EU biodiesel.
HVO demand
Whereas the growth in first- and second-
generation biodiesel production today is
rather low in Europe and the Americas,
the opposite is true for HVO biodiesel.
More hydrotreating plants are being built
to convert waste streams from vegetable
oils and animal fats into a high quality
renewable fuel, especially suitable for
aviation, which FAME biodiesel is not.
Apart from being used on its own
as drop-in or jet fuel, HVO can be also
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06/02/2019 12:36:37

blended with off-spec petroleum diesel to
improve its combustion parameters.
In the USA and Europe, a clear shift
towards HVO is observed, with the
installation of large oil pretreatment and
hydrotreating facilities. In contrast to first
generation biodiesel, where the main
players are active in the vegetable oil
processing industry, the HVO industry
is more controlled by the petrochemical
industry, with Neste, ENI and Total in
Europe, and Diamond Green Diesel and
Renewable Energy Group in the USA.
Today, about 15% of renewable
biodiesel produced is HVO (some 5M
tonnes in 2017), and there are clear
indications that by 2020/21 a 50%
increase is expected (up to 8M tonnes).
HVO currently has a 60% market share
in Europe, 25% in the USA and another
15% in Asia, but the USA is quickly
catching up. More HVO production is
expected in the Asian region in the near
future, especially as more waste oils
become available in the local markets
through better collection and selection.
Biodiesel critics
The anti-palm oil and soyabean campaigns
launched by various consumer and
environmentalist groups in recent years,
has had its impact on the biodiesel
industry, especially in Europe.
In Asia and Latin America however, new
large first-generation biodiesel plants of
up to 1,500 tonnes/day capacity are still
being built to provide biodiesel for the
local market.
Indonesia made the use of biodiesel
blended fuels compulsory for all vehicles
and heavy machinery from 1 September
2018 (now 20% and 30% from 2020
onwards), amid efforts to reduce the
current account deficit in its economy,
by saving billions of dollars in petroleum
diesel imports. At the same time, it is
supporting its palm oil industry, which
today is internationally criticised because
of concerns over deforestation and global
warming. With last year’s diesel use of
close to 40bn litres from which only some
7-8% is biodiesel today, and close to 60bn
litres by 2028, the local biodiesel industry,
currently producing some 3.5bn litres,
will have to radically increase its biodiesel
production if it wants to achieve the
mandatory government targets of 30%.
Similarly, in Malaysia, the government
decided last December to raise the
minimum biodiesel content in diesel from
7% to 10%. The B10 biodiesel programme
will be implemented in the transport
sector and other subsidised sectors
in stages and will be mandatory from
February 2019.
But in these regions, there is also a
clear shift to waste oils and fats. The palm
oil processing industry produces a lot of
side streams with no food value, which
are ideal feedstocks for biodiesel. Typical
examples are the palm fatty acid distillates
(PFAD) from palm oil refineries, high fatty
acids crude palm oil (HFCPO), and palm
sludge oil (PSO), by-products from palm
oil mills.
Improvements in palm oil
With the efforts of the palm oil industry to
increase the food quality and food safety
of palm oil (due to concerns over 3MCPDs
and GEs), new food quality standards are
to be expected in the near future, which
will result in more non-food palm oil
being segregated by palm oil mills. This
BIOFUELS
FEATURE
could result in up to 10-15% of all crude
palm oil becoming unsuitable for food
use. These low-grade palm oil feedstocks
are ideal for biodiesel and should be
promoted accordingly.
Biodiesel technologies are also evolving
as biodiesel standards are becoming more
stringent and feedstocks more difficult to
process. Various add-on technologies are
available today in the market to make the
biodiesel process more cost-efficient and
improve biodiesel quality.
Hydrodynamic cavitation is a typical
example, to lower catalyst consumption
and increase conversion efficiency at the
same time.
Apart from improving conventional
biodiesel technologies which make use of
various catalysts like sodium methylate
(the most common catalyst), new
processes are being tested, making use
of enzymes and in some case, no catalyst
at all.
A promising example is the mixed super
critical fluid reactor technology (MSCF)
from Inventure which allows conversion
of almost any waste oil feedstock into its
methyl ester form without the need of a
catalyst.
The future of biodiesel
Biodiesel, together with bio-ethanol, will
continue to dominate the biofuels market
for the next 10 years. Only time will
tell when second-and third-generation
renewable fuels will take the pole position
in the biofuels market. A lot will depend
on how the political world deals with
environmental challenges such as climate
change.  ●
Dr. Ir. Marc Kellens is the global technical
director of DeSmet Ballestra

Biodiesel source World % EU28 % USA % Bioethanol Million MT Biodiesel Million MT

Palm oil 31 27 – USA 46.19 EU28 12.61
Soyabean oil 27 5 46 Brazil 22.44 USA 6.21
Rapeseed oil 20 48 11 EU 4.08 Brazil 3.30
Used cooking oils 10 14 15 China 2.49 Indonesia 3.15
Animal fats 7 4 13 India 1.63 Argentina 2.66
Distillers corn oil – – 15 Canada 1.38 Thailand 1.16
Others 5 2 – Thailand 1.02 Singapore 0.99
Argentina 0.70 Malaysia 0.55
Colombia 0.34 Colombia 0.55
Source: Oil World
Source: Oil World

Australia 0.20 China 0.44

Paraguay 0.16 India 0.13
ROW 13.50 ROW 2.33
Total world 94.12 Total world 34.08
Figure 2: World biodiesel source, 2016 Figure 3: World bioethanol and biodiesel production, 2016

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 TRANSPORT & LOGISTICS
Header
T
ext - use the character style Feature Intro Byline
pallette for the drop cap
Structural change ahead
B
razil has been the largest soyabean
After some years of great exporter in the world since 2012,
soyabean and corn success, and the country has additionally
become the second-largest corn exporter.
Brazil’s grain traders are This relevance in the global oilseed and
facing challenges in logistics grain trade has led trading companies to
enter and/or to intensify their positioning
and storage that will force in the Brazilian market, including strategic
access to origination and investments
them to either adapt their in logistic facilities, says Rabobank in a
practices or exit the market recent report, ‘Migraines & Oilseeds – How
Structural Changes Are Required for Brazil’s
Victor Yoiti Ikeda G&O Traders’.
Nonetheless, after an initial ‘euphoric’
period, the industry has faced several
challenges, resulting in margins well
below the average 3% seen from 2010
to 2015. Despite some specific issues,
such as a 2016 crop shortfall, structural
changes have also been taking place –
and these are consequently pressuring
trading companies’ results. Companies
are therefore expected to review their
business models and some players will
leave the market, leading to consolidation
Source: Conab, Rabobank
in the Brazilian origination market.
Negative margins
Significant declines in soyabean and corn
yields in the 2015/16 season (October
2015-September 2016), a result of
Figure 1: Estimated on-farm storage in Brazil
weather problems, were one of the main
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30 OFI – FEBRUARY 2019

BrazilRabobank.indd 1
factors behind pressured margins for
trading companies in 2016. The lower-
than-expected availability of production
resulted in higher competition for grains,
and – in some periods of the year – some
companies paid penalties, given the
‘take-or-pay’ agreements with logistics
operators.
Despite larger record production and
exports in 2016/17, most trading firms
also faced difficulties in 2017. Once
soyabean and corn prices declined in
2017 (13% and 32% y-o-y, respectively,
in Brazilian real terms), farmers decided
to hold onto grains, rather than sell them
at low price levels. As a result, there was
a delay in the commercialisation of the
2016/17 season, and most trading firms
reduced their origination margins in order
to stimulate farmers’ sales.
Given all of these specific factors
during some periods in the past two
years, soyabean and corn prices in Brazil’s
inland were significantly above export
parity prices – clear evidence of negative
margins for trading companies, says
Rabobank.
Changing structure
In addition to these specific issues in
2016 and 2017, it is worth mentioning
that structural changes in the market have
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OFI – MONTH 2018 1
06/02/2019 09:38:52
 TRANSPORT & LOGISTICS
also been pressuring trading companies’
margins – and they will be the main
challenge the sector faces in the coming
years.
First, there was a wave of mergers and
acquisitions (M&A) activity over the past
decade, as international businesses (often
Asian) invested in Brazil in order to gain
more access to grain origination.
Second, some farm input distributors
also entered the Brazilian origination
sector as competitors/players, mainly
focusing on barter operations when
farmers pledge a volume of crop
production to a company in exchange for
fertilisers or agrochemicals. As a result,
stronger competition along the origination
sector has been pressuring companies’
margins.
Aside from these more competitive
market-pressuring margins, most
larger trading companies invested in
logistics facilities. After a period of
huge investments in port expansions,
overcapacity now exists, especially in the
so-called ‘Northern Arc’ ports. This has
resulted in an intense battle across trading

Source: SECEX/MDIC, Rabobank

companies when it comes to sourcing
ever increasing grain volumes – given their
high fixed costs in these new assets and
allowing capacity for third parties. This has
resulted in low utilisation rates, especially
in the Northern Arc.
In addition, internal logistics dynamics
have changed in order to improve the
efficiency of inland grain transport. Some
trading companies have faced significant
penalties in long-term agreements with
strict ‘take-or-pay’ transport clauses,
and they are now reassessing their
commitment to long-term volumes
with logistic providers (mainly railway
operators), after facing challenges to meet
the agreed volumes.
More on-farm storage
In the past, the lack of infrastructure (such
as on-farm storage capacity) and high
finance needs – mainly during the huge
expansion in the Central-West region
20-30 years ago – resulted in an attractive
business model for trading companies.
They offered financing to farmers, thereby
locking in farmers for long periods and
guaranteeing grain origination volumes.
However, the situation now sees yet
another structural change to the market,
as farmers’ dependency on trading
companies is far lower now than it was
before. As banks and equity increased
their shares in farmer financing, farmers’
dependency on traders’ finance decreased
considerably, compared to the 1990s and
2000s.
On-farm storage capacity has also
Figure 2: Grain and oilseed export capacity and utilisation in the Northern Arc, 2017
increased in the past few years, supported
by the Program for Construction and
Expansion Warehouse (PCA), launched
by the Brazilian government in 2013, in
which 12bn real (US$2.9bn) was released
at subsidised interest rates over the past
five seasons. According to Conab, Brazil’s
national supply company, on-farm storage
capacity increased from 15.6M tonnes
in 2010 to 24.3M tonnes in 2017, a
55% rise. Such a steep increase (mainly
on larger farms) since 2010 provides
farmers (especially in the Centre-West)
more flexibility when it comes to their
sales timing and volumes, reducing
predictability for trading companies in
terms of periods of origination.
Last but not least, the transparency
and speed of information has also
created a structural change in the market.
Nowadays, farmers benefit from having
access to CBOT prices in real time. They
have a better understanding of price
formation and concepts of basis, port
premiums, and US dollar future contracts.
Impacts
As a result of these changes, consolidation
will be inevitable, given the number of
registered trading companies (240) in the
Brazilian origination sector. In addition
to normal M&A transactions, some
companies will simply leave the market
and sell their assets (such as warehouses)
at market price.
The key success factors for trading
companies should include large scale,
access to competitive financing (tier
1 banks, external funding, and/or
intercompany loans), multi-export corridor
exposure, good understanding of local
agriculture, and sophisticated credit risk
and market controls (offtakers). Trading
companies might review their business
model in Brazil.
The traditional strategy of financing
farmers and offering storage capacity
to growers is losing pace. Alternatives
to increase the engagement/loyalty of
farmers will be essential to the business
going forward. ●
This article is based on the report ‘Migraines
& Oilseeds – How Structural Changes Are
Required for Brazil’s G&O Traders’, written by
Victor Yoiti Ikeda, grains & oilseeds analyst at
RaboResearch Food & Agribusiness

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2 OFI – MONTH 2018 OFI –www.ofimagazine.com
FEBRUARY 2019 31


BrazilRabobank.indd 2 06/02/2019 09:38:54

 STATISTICS

Biodiesel whs DE (L) STATISTICAL NEWS FROM MINTEC

Wholesale biodiesel prices, Germany (€/litre)
Rapeseed ‘00’ Euronext Paris (L) (DH-3)
Sunflower seed and sunflower oil
Sunflower oil prices have been rising since December
2018 as a result of strong global demand. Global
consumption is projected to rise 1% y-o-y in 2018/19.
Sunflower oil is expected to see high production levels,
mainly driven by record production from Russia and
the Ukraine where 2018/19 production is up 8% and
6% y-o-y respectively. Russia’s growth is the result of
a higher harvest area which was expanded in 2018,
combined with a higher expected yield. The EU also
saw high production levels, and 2018/19 is expected to
see a 2% y-o-y rise. Consequently, there is an increased
expectation of global ending stocks rising by 21%
compared to the previous season. This could see prices
starting to fall in Q1 2019.

Unleaded fuel and ethanol

Crude oil prices have been rising throughout January
due to supply disruption, resulting in a price increase of
10% m-o-m. In addition, OPEC-led cuts in production
have caused Saudi Arabian oil exports to fall, while US
sanctions on Venezuelan oil have also raised concerns
over supply. The rise in the crude oil price between
January-September 2018 drove Brazilian factories to
divert sugarcane towards ethanol prodution, with the
ethanol mix in Brazil’s Centro Sul region rising from
Rapeseed prices, Euronext Paris (€/tonne)
53% during the 2017/18 season to 64% for the current
season.
Sunflower oil fob NW Eur (L) (DH-3)
Rapeseed and rapeseed oil
Rapeseed oil prices have only risen slightly between
December and January amid tighter global supplies.
Although not a large rise, rapeseed oil continues to trade
at a premium compared to alternative oils. Rapeseed
oil production is the only one of the top four vegetable
oils seeing a fall in ending stocks for 2018/19, down 6%
y-o-y. This is supported by smaller production from some
of the main producers, with EU production forecast to fall
5% y-o-y this season, the lowest in the last five years.

Sunflower oil prices (US$/tonne)

Mintec works in partnership with sales, purchasing
Prices of selected oils (US$/tonne)
and supply chain professionals to deliver valuable insight
2017 Sept 18 Oct 18 Nov 18 Dec 18 Jan 19
into worldwide commodity and raw materials markets
Soyabean 829.0 744.4 746.7 722.1 707.7 718.8 using innovative technology and a knowledgeable team
Crude palm 690.0 570.3 582.2 522.8 526.5 585.5 of specialists. We provide
Palm olein 661.0 569.0 578.0 555.5 533.5 576.4 independent insight and trusted
data to help the world's most
Coconut 1,537.0 915.4 856.5 780.6 824.0 814.5
prestigious brands to make
Rapeseed 855.0 841.7 869.6 830.3 810.8 826.7
informed commercial decisions.
Sunflower 800.0 712.1 703.7 670.8 679.5 694.2
Palm kernel 1,250.0 874.5 805.7 718.2 752.9 799.6 Tel: +44 (0)1628 851313
Average 946.0 747.0 735.0 686.0 691.0 717.0 Email: sales@mintecglobal.com
Web: www.mintecglobal.com
Index 224.0 177.0 174.0 162.0 164.0 170.0

32 OFI – FEBRUARY 2019 www.ofimagazine.com

Stats feb 2019.indd 1 07/02/2019 09:00:51

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