• Bloomberg reported that Chinese soybean importers have requested US exporters to delay July shipments to August. Exporters have also been asked to postpone August shipments to September. In addition, Chinese buyers have requested to swap cargoes shipped in the US Gulf Coast to shipments from the Pacific Northwest. Bloomberg said that there is a lack of storage in China.

• In our view, we think that the delay in soybean shipments could be due to ample stockpiles in China. Also, China is auctioning soybeans from its state reserves. Drawdown or usage of soybeans in China could be weak as the African swine fever is still affecting the hog industry. According to Bloomberg, China will sell 300,000 tonnes of soybeans and 80,000 tonnes of rapeseed oil from its state reserves from 17 June onwards. The soybeans are from harvesting carried out in 2013. They are stored in warehouses in Heilongjiang and Inner Mongolia currently.

• Bloomberg also reported that Indonesia has launched vehicle road tests for the implementation of the B30 biodiesel policy. If successful, the government expects B30 to absorb about 7mil KL (6.1mil tonnes) of biodiesel in 2020F. The Indonesia Biofuels Producers Association forecasts a stronger biodiesel consumption of 9mil KL (7.8mil tonnes) from B30. In 5M2019, biodiesel consumption in Indonesia amounted to 2.46mil KL (2.1mil tonnes).

• Reuters cited a government official as saying that a pledge by Indonesia to hand back control of the customary forests to indigenous people is being hampered by overlapping land claims for mines, plantations, forests and public land. Rights to about 1.9mil hectares of forest land had been handed over by 2017 but land activists said that the process is still slow. This is partly because the government has refused to recognise a map of customary land prepared by an indigenous group called AMAN. In response, the government official said that the government needs to reconcile all of the maps before settling a claim. This is because currently, there are too many maps i.e. 85 maps for forestry, mining and plantations concessions.

• According to Reuters also, Cargill said that the food industry including itself will miss the goal of eliminating deforestation by 2020. In 2010, the world’s largest consumer brands pledged zero deforestation by 2020. In response to this, Cargill has pledged to start a comprehensive risk assessment of its soybean supply chain and commit US$30mil to find solutions to protect forests and vegetation in Brazil. Earlier last week, Greenpeace said that an area twice the size of the United Kingdom has been destroyed for the cultivation of oil palm and soybean in the past decade. Greenpeace estimates that by the start of 2020, about 50mil hectares of forests would be destroyed for the cultivation of agricultural products.

Source: AmInvest Research - 24 Jun 2019