A worker collects palm oil fruit inside a palm oil factory in Sepang, outside Kuala Lumpur. (Reuters Photo/Samsul Said)

Malaysia Says Palm Kernel Cake Could Replace US Sorghum for China


APRIL 24, 2018

Kuala Lumpur. Beijing's antidumping move last week on US sorghum imports could open an opportunity for Malaysia to sell palm kernel cake to China as an alternative animal feed, Malaysia's Ministry of International Trade and Industry said.

Deputy secretary general of trade Isham Ishak said the palm kernel cake, a byproduct of the palm industry could replace sorghum, a niche animal feed grain.

Several ships carrying sorghum from the United States to China changed course after the world's second-largest economy slapped anti-dumping deposits on imports of the US grain, Reuters reported last Friday (20/04).

Sorghum arrivals in China fell 21 percent in March, while demand for barley rose, after China said in early February it would investigate alleged US dumping of sorghum.

"I'm sure palm kernel cake has the potential to be used as a replacement to make animal feed. Sorghum is not only used for human consumption but also animal consumption," Isham told Reuters in an interview on Monday.

"So there could be some opportunities for our products to fill in the gaps that have been created by this trade war."

Malaysia exported 2.2 million tons of palm kernel cake in 2017, according to data from industry regulator the Malaysian Palm Oil Board.

The Southeast Asian nation, second-largest palm oil producer globally, exported nearly 24 million tons of palm oil and palm related products in 2017.

MITI has set up a task force to monitor the fallout from the trade spat between the US and China, and will introduce its own anti-dumping rules if needed, Isham said.

"(We are monitoring from) the legal aspect, we look at trade data, and we are consulting the industries because we don't want China exporters who are affected by the imposition of the tariffs to circumvent and instead of exporting to the US, come and dump their products here," he said.

Malaysia is also seeking a dialogue with the United States Trade Representative to negotiate exemptions from the US tariffs on steel and aluminium, as well as on solar panel products.

"We are not direct competitors, we are not impacting their industries. We are not a threat to the US manufacturers," Isham said.

On the United States imposing tariffs on China products, he said Malaysia could benefit in the automotive parts sector, especially companies manufacturing rubber-based products, plastic molding, and electrical and electronic products.

"US importers may have a fear that whatever is from China is included in the list ... that's something we can take advantage of," he said.