AmInvest Research Reports

Author: AmInvest   |   Latest post: Wed, 21 Aug 2019, 9:35 AM


Plantation Sector - News Flow for Week 15 – 19 July

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  • Bloomberg reported that fertilizer prices may decline in the next few years. Producers are rushing to build new mines or expand capacity to tap a rebound in prices. An industry expert said that potash output may rise by more than 11mil tonnes by year 2023 and potentially push down prices by 23%. Potash prices in Brazil have jumped by 53% since mid-2016 as demand rose.
  • Bloomberg also said that Indonesia’s biodiesel consumption amounted to 2.9mil kiloliters (2.5mil tonnes) in 1H2019. This was 46.8% of the full year’s target of 6.2mil kiloliters (5.4mil tonnes). Previously, it was reported that Indonesia is in the process of carrying out vehicle tests for B30 biodiesel. If B30 is implemented in 2020F, Indonesia’s biodiesel consumption may reach 9mil kiloliters (7.8mil tonnes). This would be about 16.5% to 18.1% of Indonesia’s estimated CPO production of 43mil to 47.3mil tonnes for 2019E.
  • Bloomberg reported that China’s farmers are shifting to soybean from corn as the trade war with the USA and outbreak of African swine fever alter planting patterns. According to the China Agricultural Supply and Demand Estimates, farmers are expected to plant 41.5mil hectares of corn in 2019E/2020F compared with 42mil hectares in the previous year. Areas planted with soybeans are estimated to increase by 7.9% to 9.1mil hectares.
  • Reuters reported that severe US weather may dent earnings for large US grain companies such as Archer Daniels Midland (ADM) and Bunge Ltd for a second straight quarter, adding to headwinds from an unresolved US-China trade war. Companies such as ADM, Cargill and Bunge faced processing plant downtime, rail and barge shipping delays and other supply uncertainties as floods ravaged the US Midwest. Reduced US corn and soybean plantings may cut supplies in the US, driving up raw material costs and squeezing margins.
  • The Sun reported that so far this year, the Malaysian Palm Oil Board (MPOB) has received between RM5mil and RM6mil in royalties per annum for 651 transfer of technologies that are applicable for palm oil commercialisation. An official said that the transfer of technologies commercialisation rate of 30% this year was higher than the palm oil industry average rate of five to 10%. The board has patented 357 technologies and launched 174 services so far this year.
  • Star Tribune said that the uneven impact of climate change has helped corn and soybean farmers in the upper Midwest. According to a study conducted by the University of Minnesota, higher temperatures and heavier precipitation have increased yields for corn and soybeans in Minnesota, Iowa and the Dakotas. Corn yields are up 2.8% YoY in Minnesota while soybean yields are 8% higher based on the study’s models. Soybean yields have improved in the Western Hemisphere and North Africa thanks to the changing climate but have suffered in Eastern Europe. Even as corn harvests have benefited in Minnesota, they have suffered in Illinois, Indiana and Ohio.

Source: AmInvest Research - 22 Jul 2019

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