- The Press quoted that Sarawak Oil Palm Plantation Owners Association as saying that it strongly rejects attempts by Wilmar International, Unilever PLC and World Wide Fund (WWF) to discriminate against the state’s palm oil supply.

- The association spokesman was quoted as saying that the association is very disappointed with Wilmar’s unilateral action to discriminate against palm oil harvested from trees grown on peat soil.

- According to the same article, WWF arranged for a signing ceremony for Wilmar and Unilever to undertake “no deforestation, no peat, no exploitation” in their palm oil trades last month.

- We view this development negatively although we believe that any ban on palm oil from oil palm trees grown on peatland will be difficult to impose.

- This is because Wilmar’s Bintulu Edible Oils Sdn Bhd still needs CPO from the millers in Sarawak to keep its refinery running. This is unless the refinery sources CPO from Sabah or Kalimantan.

- Bintulu Edible Oils is estimated to command a refining capacity of 1,800 tonnes/day or nearly 600,000 tonnes per year. This is about 19.4% of Sarawak’s CPO production of 3.1mil tonnes in 2013.

- If Bintulu Edible Oils does not accept CPO from peat soil, millers in Sarawak would have to sell to the other refiners in the state.

- Currently, Sarawak has five other palm oil refineries apart from Bintulu Edible Oils.

- In total, Sarawak’s palm refining capacity is about 2.9mil tonnes annually compared with the state’s 2013 CPO output of 3.1mil tonnes.

- A significant number of plantation companies in Sarawak have oil palm estates on peat soil. These include Sarawak Oil Palms, Tradewinds Plantation and Sarawak Plantation.

- It is estimated that about 400,000ha out of 1.2mil palm oil plantations in Sarawak are on peat soil.

Source: AmeSecurities