AmInvest Research Reports

Author: AmInvest   |   Latest post: Fri, 27 Nov 2020, 10:59 AM


Plantation - News flow for week 13 – 17 Apr

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  • Bloomberg cited the China National Grain and Oils Information Center (CNGOIC) as saying that China’s consumption of edible oils may shrink for the first time in at least two decades mainly due to a drop in palm oil demand because of a slow recovery in the restaurant industry. CNGOIC said that edible oil consumption may be 34.9mil tonnes in 2019/2020F, weaker by 0.7% YoY. China’s palm oil demand is seen to be 6.3mil tonnes in 2019/2020F, lower by 7.5% YoY.
  • Bloomberg also reported that the Indonesia government is discussing options to provide additional funds for the B30 biodiesel blending programme. The country needs additional funds as the gap between gas oil and CPO has widened. The biodiesel blending programme is funded by the CPO export levies. We believe that there is risk that the CPO export levy may fall back to zero in May as currently, CPO price is below the threshold price for the export levy of US$730/tonne. For now, Indonesia is keeping its B30 programme and biodiesel target consumption of 9.6mil kiloliters (8.4mil tonnes) for 2020F
  • According to the USDA (US Department of Agriculture), as at 9 April 2020, India’s port in Mumbai continued to experience massive backlog due to the lack of administrative personnel, truck drivers and crane operators. As a result, the Jawaharlal Nehru Port Trust is offloading containers from its terminals to nearby container freight stations to reduce congestion.
  • In Mundra, congestion is rising as importers and house agents face difficulties clearing containers. The port’s parent company, Adani Ports has invoked force majeure at its Mundra and Dhamra ports. In Chennai, port operations are restricted due to limited personnel. According to local reports, the lack of truck drivers has resulted in 50,000 uncleared sea containers at the ports of Chennai, Kamajarar and Kattupalli.
  • In another development, Bloomberg reported that India would allow imports of refined palm oil but with stricter conditions. Validity period of the import licences for refined palm oil will only be for six months now instead of the usual 18 months. Refined palm oil importers will also have to provide pre-purchase agreements while applying for approval from the government agencies.
  • Meanwhile, Reuters reported that the US biofuel industry has asked the Trump administration for funds from the US Department of Agriculture’s Commodity Credit Corporation to help survive a demand slump triggered by the Covid-19 outbreak. The funds could be used to offset a portion of the biofuel industry’s corn and soybean purchases or as direct assistance to companies to help them retain staff. The biofuel players said that “collapsing demand” for biofuel during the outbreak had idled some 3.5 billion gallons of annualised ethanol output at a quarter of the country’s production facilities.
  • Bloomberg quoted China’s Agriculture Ministry as saying that the country is likely to import more corn this year following recent purchases from the USA as part of the phase one trade deal. Tariff waivers on US corn and sorghum have encouraged imports. China’s corn imports for the year ending 30 September 2020 are now estimated to be 4mil tonnes, one million tonnes higher than the original forecast of 3mil tonnes.

Source: AmInvest Research - 20 Apr 2020

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