• Reuters quoted industry sources as saying that palm oil suppliers across Southeast Asia are struggling to cope with record output while plantation estates are delaying harvest and palm oil mills stalling on deliveries as storage tanks overflow. Two Malaysia-based planters said that they have delayed harvesting in their Indonesian estates as the storage tanks were full. One of them was United Malacca. On a positive note, the supply glut is easing in Indonesia. Palm production is declining seasonally while shipments have picked up after the Indonesian government eased the export levy rules on palm products a few weeks ago.

• According to Reuters, Indonesia has signed an economic agreement with the European Free Trade Association aimed at increasing trade and investments. Under the deal, tariffs and nontariff barriers would be eliminated for thousands of products between Indonesia and EFTA countries — Switzerland, Liechtenstein, Norway and Iceland. Switzerland would grant easier access for Indonesia’s palm oil but under certain quota.

• Reuters also said that China has made its first major purchases of US soybeans, providing some relief to US farmers, who have been struggling to find buyers. Chinese state firms, Sinograin and COFCO, bought the soybeans from sellers such as Cargill Inc and Louis Dreyfuss. China was seeking to buy 2.5mil to 3.0mil tonnes of soybeans. A US trader said that Chinese firms bought at least 12 cargoes for shipment from January to March 2019. In spite of this, commodity traders said that soybean prices may struggle to increase its gains unless China buys more soybeans.

• Reuters cited a Brazilian minister as saying that Brazil is prepared if China removes the 25% import tariff on US soybeans. Outgoing Agriculture Minister Blairo Maggi said that removing the tariffs would lead prices in Chicago and Brazil to converge and bring greater predictability to the soybean market, which would benefit Brazil’s farmers.

• Bloomberg reported that Indonesia’s Agriculture Ministry has proposed to limit foreign ownership at plantation companies at 49% compared with 95% currently. There is a concern that foreigners would control the country’s plantation industry if the foreign ownership is too high. The ministry said that it is still holding discussions on the proposal.

• Bloomberg cited the USA’s Climate Prediction Center as saying that the odds of an El Nino have jumped. However, any El Nino is likely to be weak. There is a 91% chance of an El Nino by February 2019 compared with 80% previously.

Source: AmInvest Research - 24 Dec 2018