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    Taiwan's Feng Chia University has succeeded in boosting the production of hydrogen from biomass to 15 liters per hour, one of the world's highest biohydrogen production rates, a researcher at the university said Friday. The research team managed to produce hydrogen and carbon dioxide (which can be captured and stored) from the fermentation of different strains of anaerobes in a sugar cane-based liquefied mixture. The highest yield was obtained by the Clostridium bacterium. Taiwan News - November 14, 2008.

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Thursday, July 26, 2007

Substitution logic: expensive corn creates market for oil palm protein as animal feed

Growing global demand for biofuels and the scarcity it has created in the supply of key a feed grain such as corn has been a blessing in disguise for some of the lesser-known palm oil byproducts such as palm kernel expeller (PKE), an animal feed ingredient (table shows properties, click to enlarge). PKE or palm kernel cake is obtained when palm kernel oil (PKO) is pressed out of palm nuts to yield a high quality oil that differs from crude palm oil (CPO), which comes from the palm fruit mesocarp.

PKE has also been used increasingly as a biomass feedstock as an alternative to coal (previous post). The fact that the byproduct now has two markets to play on, means that a kind of floor price has emerged, taking away the ever looming threat of collapsing prices, which have haunted oil palm producers in the past. This is only possible because PKE is the most competitive amongst the alternatives on both markets - largely the result of the mere fact that oil palm trees are naturally extremely efficient biomass producers.

According to Daniel Cheow, managing director of Malaysian PKE exporter Palmbase, the protein-rich PKE is now reaping the benefits of the global biofuels boom by substituting other animal feed sources such as corn gluten that are becoming far more expensive. He estimates that PKE, produced mainly in Malaysia and Indonesia, already contributes up to 30% to the compound animal feed blend in Europe compared to 10% to 20% in previous years.
Just like crude palm oil, PKE prices have shot up as demand is coming in much faster than expected, due indirectly to biofuels. The last time we saw these kind of prices was during the Gulf War and that was because of freight and shipping problems then. - Daniel Cheow, managing director of Palmbase
PKE is currently trading at around $120 a metric ton, free on board Malaysian ports, more than double the level a year ago. In the long run, prices are unlikely to keep rising as eventually, demand would slowdown and production of grains in general would increase, Cheow said.

For the short-term, however, PKE will continue to ride on the back of the expansion in the biofuels sector as buyers in major markets like Europe have little choice, not only because of a tight corn supply, but also because of concerns about genetically-modified corn.

The discovery of traces of unapproved genetically-modified varieties in shipments of regular corn have prompted some feed manufacturers in Europe to switch to substitutes:
:: :: :: :: :: :: :: :: :: :: ::

According to Cheow, in Europe, there is zero tolerance for GM products. So, instead of corn gluten, they are looking at the next substitute, PKE.

PKE, long dependent on European buyers, is also gaining ground in new markets such as Australia and New Zealand, another factor behind the rally in prices, Cheow said.

"World grain prices have gone up a lot and people are looking for alternatives. Although PKE prices have also gone up, it's still cheaper and viable for their (feed) formulas," Cheow added.

In the first half of 2007, Malaysia exported 985,151 tons of PKE, outstripping production of 961,742 tons. PKE's increasing share in the world's feed market is reflected in its price, relative to rival products.

Previously trading around $40 to $60/ton below corn gluten, PKE is now priced at a discount of only $13-$15/ton.

Impact on biomass segment
While PKE's feed market segment is growing, its biomass segment is slowing because of high prices. Over the last few years, PKE was gaining in popularity as an alternative to coal for burning in power plants for electricity generation.

However, its progress in the energy sector has all but come to a halt in recent month as it has become too expensive as a coal alternative, Cheow said.

Unless government subsidies are increased, PKE prices would need to fall back at least 20% before power producers can resume the use of PKE as biomass, he said.

Floor price
Still, the emergence of a biomass market for PKE, which until recently was almost exclusively used for feed, at least ensures that prices won't be in danger of a collapse.

"There's now a floor price for PKE, a level at which we know there will be demand coming in to support it," Cheow said. "This is good for the future of PKE."

For all the promise PKE holds for the future, the industry still has plenty of work to do to ensure PKE doesn't lose the advantage it's recently won over competing products, Cheow said.

The inconsistent quality of PKE available remains a concern because of poor handling of the product along the supply chain. PKE cargoes can sometimes include excessive levels of water and moisture, Cheow said.

Continued failure to tighten quality controls would hurt the industry in the long-run as shipments may be at risk of being rejected. "At this moment, this is not a major issue because buyers need the product," Cheow said.

"But when the (global feed ingredient) supply situation stabilizes and buyers have more choices, this may become a problem because buyers won't want to be paying so much money to buy water."

Image: properties of palm kernel cake compared to other oilmeals. Credit: Malaysian Palm Oil Council.

Cecu: DJ INTERVIEW:Biofuels Boom Extends To Minor Palm Oil Products - July 26, 2007.


Anonymous battery said...

The inconsistent quality of PKE available remains a concern because of poor handling of the product along the supply chain. PKE cargoes can sometimes include excessive levels of water and moisture, Cheow said.

6:05 AM  

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