New biodiesel plant in the integrated industrial complex in Serang, Indonesia.

This segment comprises the processing, merchandising and distribution of animal feeds, non-edible palm and lauric products, oleochemicals, gas oil and biodiesel.

We operate crushing plants in various countries such as China, India, Vietnam, Malaysia, Zimbabwe, Zambia, Tanzania and South Africa. We crush a wide range of oilseeds including soybean, rapeseed, groundnut, sunflower seed, sesame seed, cotton seed, copra and palm kernels.

Oilseeds & Grains - Crushing

In 2021, demand for soybean meal declined due to higher raw material prices and freight costs as well as weaker hog production margins in China.

Tropical Oils

Crude palm oil (CPO) prices were on an upward trend for most of 2021 due to tight supply for vegetable oils which pushed up prices for competing edible oils as well as higher crude oil prices. CPO prices started the year at RM3,130 and reached a record RM5,071 in October before closing the year at RM4,697, up 50% from the beginning of the year.

Indonesia remained committed to its B30 biodiesel programme with production increasing 2% to approximately 8.6 million kilolitres (kL) in 2021 from 8.5 million kL in 2020.

Our Performance

In 2021, the Feed and Industrial Products segment achieved a pre-tax profit of US$1.26 billion, a 58% increase from US$795.9 million in 2020. The growth was on the back of good refining margins and sustained demand for midstream tropical oils products, as well as steady contributions from sugar merchandising activities. Nevertheless, soybean crushing margins were thin during the year as hog farming margins continued to remain weak, resulting in lower demand for soybean meals. Overall volume for the segment decreased from 58.1 million MT in 2020 to 55.0 million MT in 2021 as a result of weaker demand for oilseeds and lower sugar merchandising activities.

Outlook & Strategy

Looking ahead to 2022, soybean crushing will be challenging with high soybean prices and poor hog farming margins in China. Nonetheless, in the longer term, meat consumption and hence demand for feed ingredients in China is projected to continue to trend upwards. Leveraging our wide distribution and sales network, and close relationships with large-scale feed manufacturers, we believe these advantages will be further reflected as the scale of China’s feed industry continues to expand.

On the supply side, dry weather conditions caused by La Nina during the start of the harvesting season in southern Brazil and Argentina have led to concerns over soybean production and crop yields. This is expected to keep prices firm in the near term.

For tropical oils, we expect continued support of the Indonesian biodiesel programme. The government increased its biodiesel allocation from 9.4 million kL in 2021 to 10.2 million kL for 2022, reaffirming its commitment to the biodiesel programme. The government also announced further export curbs, requiring 30% of palm oil exports to be sold domestically at a price cap of Rp9,300/kg for CPO. This is expected to result in a tighter global edible oil supply. Overall, we expect the palm processing business to perform well in 2022.