Nigeria: Palm Kernel Oil Is Fast Gaining Relevance
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Before the discovery of crude oil in commercial quantities in Nigeria, Palm Oil was a major agricultural export crop and a top foreign exchange earner for the country in the 1950s and 1960s. Nigeria was the world’s largest Palm Oil producer but has fallen to the fifth position with an average production of 1.4 million metric tons.
Climate change is affecting Nigerian Oil Palm production in two ways. Oil Palm needs a lot of water, and we are not getting enough of it. The rainfall pattern has changed. Okomu Oil plantation agriculture coordinator Billy Ghansah said: “We have fewer days of rainfall, and the bulk of it is very intense, but when it is intense, you don’t get what you need. You need more days of rainfall than fewer days of rainfall. Also, the long dry season; has an impact on our yields generally. Over the past three years, our yields have been dropping compared to the previous times. One will not be able to point his fingers at climate change per se, but then it is the real thing that is happening. Even our rainfall pattern is changing. In terms of total volume, it has not changed that much. But in terms of the pattern, it has changed.”
Also, Billy Ghansah explained: The Russia-Ukraine war initially impacted the prices of commodities. It’s for all commodities and not just Oil Palm. It had a “positive” impact in pushing the prices, but it was mostly speculation. People have now come to know the reality and accepted the condition as it is. Therefore, you will realize that prices are more stable than before when it was going up. We would have expected a higher price, but it is not like that. The price rose to $1,800 per ton, and it dropped to around $1,200 and below even. Besides that, the prices are more stable. That is where it has affected Nigerian Oil Palm prices.
FAS Lagos forecasts Nigeria’s Palm Kernel Oil production in MY 2023/24 at about 455,000 metric tons (MT), an increase of 16 percent above the USDA official MY 2022/23 estimate of 393,000 metric tons (MT). Post forecasts Nigeria’s Palm Kernel crush in MY 2023/24 at 1.1 MT, up 22 percent from the USDA official MY 202/23 estimate of 900,000 MT. The MY 2023/24 extraction rate will decrease by 5 percent to 0.4136 per MT. Despite increasing private sector investment, scarcity of foreign exchange and rising shipping freights threaten the importation of modern crushing equipment and parts.
Palm Kernel Oil Consumption in Nigeria
FAS Lagos forecasts Nigeria’s Palm Kernel Oil consumption in MY 2023/24 at 440,000 MT, up by 15 percent compared to the USDA official 2022/23 figure of 384,000 MT. Food use consumption is estimated at 320,000 MT, up 16 percent compared to the previous marketing year’s USDA’s official figure of 275,000 MT.Meanwhile, domestic industrial consumption is estimated at 120,000 MT, up 10 percent compared to the last year’s USDA’s official figure of 109,000 MT. Palm Kernel Oil is fast gaining relevance as a cheap source of Oil for food and non-food purposes. It also serves as biofuel and specialty fats. Post forecasts export of Palm Kernel Oil in MY 2023/24 to remain flat at 13,000 MT as the previous years. Exports to neighboring countries are generally due to high global commodity prices and increasing demand.
FAS Lagos forecasts Nigeria’s Palm Kernel Oil beginning and closing stocks in MY 2023/24 at 15,000 MT and 17,000 MT, respectively. Processors expect further increases in demand/price for Palm Kernel Oil, especially for industrial uses (including biofuel), in the upcoming marketing year. Global future demand for Palm Kernel Oil (for use in both food and non-food) will increase as more countries embrace renewable energy to fuel plants and automobiles.
Other sources: PREMIUM TIMES
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