Oils and Fats Market Overview
The growing demand for vegetable oils by the food manufacturing sector has been triggered by population growth caused mainly by refugees and foreign tourists arrivals prompting the oils & fats consumption to grow from 2.730 million tonnes in 2017 to 3.024 million tonnes in 2021. The gap between local production and demand is about 1 million tonnes and this shortfall was met mainly by imports of palm oil and sunflower oil which together with other oils made total imports of 1.934 million tonnes. Although Turkey is a country which is in a deficit in so far as oils and fats production, Turkey also re-export oils & fats products mainly to the İraq, Georgia and Azerbaijan reflected in export volumes of 947,000 tonnes for 2021. Most of the vegetable oils exported are also from imported vegetable oils as Turkey is also a hub for re-export to countries within this region.
Harvesting of sunflowerseeds is over and production of sunflowerseed is recorded 2.4 million tonnes in 2021 session, and this is an increase of 16% compared 2020 harvesting session. Another 1.1 million tonnes were imported from Romania, Russia, Moldova, Bulgaria and China for crushing to meet local demand and re-export markets of sunflower oil to İraq, Georgia, and Azerbaijan. Sunflower oil is also the second most imported oils & fats at 728.781 MT in Jan- Nov 2021 period.
| (,000 MT) | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Opening Stocks | 299 | 282 | 231 | 318 | 455 |
| Production | 1.885 | 2.034 | 2.233 | 2.170 | 1.982 |
| Imports | 1.498 | 1.329 | 1.260 | 1.678 | 1.934 |
| Exports | 667 | 651 | 636 | 937 | 947 |
| Consumption | 2.730 | 2.767 | 2.887 | 2.809 | 3.024 |
| Ending Stocks | 286 | 231 | 243 | 420 | 383 |
Source: Oil World, Sept 2021
MPOC Export 2021
Malaysian palm oil export to Turkey steadily rose since the implementation of the Malaysia-Turkey Free Trade agreement (MTFTA) in 2015. This is reflected in palm oil imports from Malaysia. From January to December 2021, Malaysian palm oil export to Turkey was recorded 827.535 MT. This was an increase of 70.912 MT or by 9 % compared to 757.343 MT recorded in the same period in 2020. RBD Palm oil is the most imported palm product reaching 703.588 tonnes in Jan- Dec 2021.
| (,000 MT) | MPO Export to Turkey Jan- Dec 2020 Vs Jan- Dec 2021 | |||
|---|---|---|---|---|
| Products | Jan- Dec 2020 | Jan- Dec 2021 | Change | Change % |
| Palm Oil | 615.872 | 703.588 | 87.716 | 19 |
| Palm Kernel Oil | 88.425 | 89.810 | 1.385 | 9 |
| Palm – Based Oleo | 104.426 | 85.769 | -18.657 | -21 |
| Finished Products | 48.104 | 31.647 | – 16.457 | -38 |
| Total | 757.343 | 827.535 | 70.192 | 9 |
Source : MPOB
Turkey lifted the movement restriction on 1 May 2021. The decision came following the declining pattern of new daily positive cases registered since 16 April 2021 that hovered just around 1,000 at the end of April. This is a significant progress as when Covid 19 infection was at its peak Turkey recorded around 4,000 daily cases. Since than no movement restriction has been imposed until today. Businesses and public areas are now allowed to open, and the public is allowed to move freely. There are 2 reasons behind the higher palm oil import by Turkey. Firstly, lifting movement restriction has led to rise in tourist arrivals to Turkey in 2021 with 21.5 million. However, 12 million tourists arrived in 2020. Full operation of Horeca sector has contributed to 19% increase in Malaysian palm oil export to Turkey. Secondly manufacturing activities in food industry which is now running at normal capacity in second half of the year of 2021 after the lifting the movement restriction.
Forecast for MPO export to Turkey in 2022
Turkey is the 6th largest importer MPO importer overall and also the biggest importer of MPO in the region. Malaysian palm export to Turkey will continue increase driven by the Horeca and food sectors which will see more palm oil to be imported by Turkey.
Due to the constant increase in cost in the hospitality sector, surge in energy, agriculture and food prices, as well as the rise in inflation and the rapid devaluation of the Turkish lira, Turkey will now focus on tourism to close the current account deficit. The tourism sector targets 40 million tourist arrivals to Turkey in 2022. Food manufacturing sector look set to continue its strong growth and demand for more palm oil for re-export is also expected to rise as Turkey is also the hub for Middle East, eastern European and African market for oils & fats products and confectioneries.
The current Malaysia-Turkey FTA gives another advantage to the export of Malaysian palm oil into the country by having a lower import tax compared to other palm oil-producing countries.
Finally Turkish government has adopted new economic policy which will focus on export, production and employment. These are all the factors that will contribute to increase the demand of palm oil for Turkey in 2022.
Prepared by: Hakan Alkan
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