• Reuters cited a US broker as saying that China’s purchases of US soybeans beyond the 10mil tonnes, which have been committed, may be limited as the newly harvested Brazilian crop hits the market. The broker added that outbreak of the African swine disease in China could dampen the demand for soybeans. China has already reported more than 100 cases of the disease since it was detected in the country in August 2018. The disease has also emerged in Vietnam, which is one of the fastest consumers of feed grain in the world.

• According to Reuters also, Norway’s Government Pension Fund Global has sold stakes in more than 60 companies due to deforestation in the past seven years. These include investments in 33 palm oil companies. The names of the companies were not disclosed. Divestments in two palm oil companies happened as recently as last year. The fund said that it engages with companies it has stakes in, to cut their ties to deforestation. Also, the fund has been asking banks in Indonesia, Malaysia and Brazil to adopt a no-deforestation criteria for loans to the agricultural sector.

• The Star quoted traders as saying that world palm oil demand may suffer its first contraction in two decades during the 2019F/2020F crop year due to rising domestic supplies in India and slowing demand in Europe and China. Indian traders expect flat to slightly larger palm oil imports this year against a backdrop of record oilseed production that should boost domestic supplies. In Europe, buyers have cut back on large and long-term orders due to a high-profile pushback against palm oil, which is linked to deforestation. A trader said that European countries may impose more restrictions on palm oil and importers are not willing to take risks.

• The Star Tribune of Minneapolis said that US farmers are worried that China will not return to the US soybean market. American producers fear that China will be so satisfied with the alternatives that it will continue to use the substitutes even if the trade war with the US ends. American producers cite evidence of rising consumption of canola and sunflower meal in China. Another industry expert said that the US could permanently lose the soybean market to Brazil and other exporters.

• Jakarta Post reported that the Indonesian government plans to hire foreign law firms to negotiate with the EU on its restrictive policies on palm oil. A government official said that Indonesia has agreed with other palm oil stakeholders to hire European law firms as they will understand the “anatomy” better. He added that the government will determine the key performance indicators for the law firms, which will form a team, before 8 March 2019.

Source: AmInvest Research - 11 Mar 2019