• Bloomberg reported that the Philippines is looking to limit the volume of palm imports from Malaysia and Indonesia after volumes surged by 900% in the past three years. The Agricultural Secretary said that the Department of Agriculture will submit its recommendations to the president to address the low prices of copra in the country.

• Apart from imposing a quantitative restriction on palm imports, the Philippine Agriculture Department is also recommending an increase in coconut oil in the biodiesel programme from B2 to B5. This would increase the usage of up to 200,000 tonnes of copra in the country. We believe that the limit on palm imports would hurt demand. The Philippines was the fifth largest buyer of Malaysia’s palm products in 2018, accounting for 4.2% of exports.

• Reuters reported that Indonesia has asked India to cut the import tariff on refined palm products from 50% to 45% to match the import duty enjoyed by Malaysia. In exchange, Indonesia will open up its raw sugar market to India. Indonesia currently imports raw sugar from Thailand and Australia. According to Reuters, India has responded positively. We believe that at the same rate of import tariff, Malaysia would be competing with Indonesia again for India’s market share. India was the largest buyer of Malaysia’s palm products in 2018, accounting for 15.2% of exports.

• In a related development, Bloomberg said that Indonesia may raise the import duty on India’s soybean imports if India rejects its request to reduce the import duty on Indonesia’s refined palm products.

• According to Reuters also, China has committed to buying an additional 10mil tonnes of US soybeans. Although China has resumed buying of US soybeans, sales are lagging. As of midFebruary 2019, China has bought 7.4mil tonnes of US soybeans compared with 26mil tonnes during the same period last year. The USDA has forecast inventory of US soybeans to climb from 438mil bushels in 2017/2018 to 910mil bushels in 2018/2019F.

• Euronews quoted French President Macron as saying that agriculture in the EU is being threatened by internal divisions and rival trading blocs. He called for a large budget to defend the EU’s goals on food quality and environmental protection. The French president cited the EU’s reliance on imported soybean for feedmeal and Russia’s rise as a cereal exporter. Macron also affirmed France’s position that farming products should be kept out of trade talks with the US. The European Commission has proposed leaving agriculture out of the USEU discussions, which is at odds with Washington. The US is proposing punitive tariffs on European cars.

Source: AmInvest Research - 4 Mar 2019