'Palm oil shipments unaffected'


PETALING JAYA: PALM oil exporters from Lahad Datu, Sabah, did not experience any shipment cancellation despite the intrusion by Sulu terrorists.

Since the government launched Ops Daulat offensive on March 5 to counter the terrorist threat, 56 Sulu gunmen had been killed while 10 security forces personnel died in the line of duty.


"No, there had been no force majeure invoked with regards to palm oil shipment from Lahad Datu," said Palm Oil Refiners Association (Poram) chief executive officer Mohammad Jaaffar Ahmad. 

He was responding to rumours of palm oil shipment cancellation in the midst of unrest in Lahad Datu.

In the frenzy of the Ops Daulat offensive launched last week, a news report stated that the government had ordered Kuala Lumpur Kepong Bhd (KLK) and other palm oil refineries in Lahad Datu to halt operations for a few days. 

Soon after, another news report quoted a KLK official as stating the group's estates and refinery operations were running as normal.

"We are monitoring the situation and will act accordingly," the company official said.

Confusion arising from the first few days of fighting in Lahad Datu clouded price-sensitive information flow to many participants at the Palm and Lauric Oils Conference & Exhibition Price Outlook in Kuala Lumpur early last week.

When commenting on conflicting news reports concerning Poram members, Jaaffar noted that traders leveraged on volatile palm oil price swings in the futures market.

According to Malaysian Palm Oil Board, there are 13 refineries in Sabah with a total capacity of 7.73 million tonnes per year. 

In Lahad Datu, there are five refineries under Felda Group, Wilmar International Ltd, KLK and Kwantas Bhd. These refineries get their palm oil supply from surrounding mills under Felda, Hap Seng Plantations, KLK, Sime Darby Bhd, Wilmar and IOI Corp Bhd, including independent mills.

In an interview with Business Times here yesterday, Jaaffar confirmed that Lahad Datu port was never closed to traffic despite the ongoing Ops Daulat offensive. 

"Based on the feedback we received from our members, shipping activities in Lahad Datu are as per scheduled. 

"There is no threat of 'force majeure' clause being invoked arbitrarily. Refiners are transporting their refined palm oil products to the port for shipment without any disruption," he added.

Jaaffar explained that the force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. These include floods, earthquakes and other "acts of God" as well as terrorist attacks. 

When asked on exports outlook, Jaaffar expects Malaysia's palm oil stocks to continue its downtrend. 

"We are bullish on palm oil exports as they will pick up when the winter season is over in the Western hemisphere. In the mid term, we see consumers from China and India coming back into the market to replenish their stocks," he said.