• The Wall Street Journal (WSJ) reported that American farmers hit by the trade war with China are planning to plant more corn next year instead of soybean on a land area equivalent to the size of Connecticut. Some industry experts said that farmers may convert as much as four million acres from soybean to corn next spring. According to the USDA (US Department of Agriculture), US farmers planted about 89.1mil acres of soybean in 2018E.

• According to WSJ, more plantings of corn in the USA would benefit seed sellers and fertiliser suppliers. Due to its longer growing season, corn is more susceptible to weeds and destructive bugs. Hence, US farmers often choose expensive seeds with genes inserted to repel pests. Also as corn produces more grains per acre, seed companies can charge more for a storage bag.

• Bloomberg cited an Indonesian government official as saying that the Industry Ministry has proposed a tax holiday for biodiesel producers. The government will continue to support the development of the biofuel industry. Recall that Indonesia has extended the B20 biodiesel mandate to power plants, mining and railway industries.

• Reuters reported that Indonesia’s anti-graft agency has arrested seven people including a senior executive of PT Sinar Mas Agro Resources and Technology in connection with a bribery case. Sinar Mas Agro is a subsidiary of Golden Agri Resources, which is listed in Singapore. The seven people were accused of bribing lawmakers to avoid an investigation on plantation permits and palm processing waste near Sembuluh Lake in Kalimantan. In the operation, the anti-graft agency collected 240mil rupiah (US$15,774), which was intended as bribery money.

• Reuters cited China’s government agency as saying that the new standards of protein content in animal feed will cut the country’s annual soymeal consumption by 11mil tonnes and soybean consumption by 14mil tonnes. China announced the new standards a few weeks ago. Bloomberg said that the new standards take effect 1 November 2018. China’s Feed Industry Association has already approved the new standards, which will reduce the protein levels in pig feedmeal by 1.5 percentage points and chicken’s feedmeal by one percentage point.

• Reuters cited industry players as saying that the standards are only guidelines. Also, most of the feedmeals in China are already less soymeal as prices of soymeal have gone up by almost 20%. The measures came after Beijing imposed a 25% import tariff on US soybeans on 6 July 2018.

• According to the Solvent Extractors Association of India, India’s groundnut production may fall by 29.2% YoY to 3.74mil tonnes this year due to a lack of rainfall in the top-producing state of Gujarat. The drop in groundnut production may result in India increasing its imports of edible oils in the 2018E/2019F marketing season, which begins in November 2018. Gujarat received 28% less rainfall than normal during the recent June to September monsoon season.

Source: AmInvest Research - 5 Nov 2018