• Bloomberg cited a weather expert in the US as saying that rains are expected to stop through 10 July across the southern and central Midwest and central and northern Great Plains. We believe that the warmer weather would provide a reprieve for crops such as soybean and wheat. US soybean price fell last week reflecting the prospects of improved weather conditions. Currently, the USDA is forecasting US soybean production to fall by 8.7% to 4,150mil bushels in 2019E/2020F from 4,544mil bushels in 2018/2019E.

• China is selling soybeans from its state reserves again. Bloomberg reported that the Chinese government has sold 65% or 183,229 tonnes out of 280,000 tonnes of soybeans offered in a state auction. Average price of soybeans sold was 2,999 yuan per tonne. Since 17 June 2019, China has sold 400,000 tonnes of soybeans from its reserves.

• In a related development, Bloomberg said that China’s imports of US soybeans fell MoM for the first time in six months. Soybean imports from the US plunged by 44% to 977,024 tonnes in May from 1.75mil tonnes in April. However on a YoY basis, soybean imports from the US surged by almost twofold in May 2019 due to the temporary impasse on the tariff.

• Reuters reported that a few weeks ago, thousands of young Indonesians spearheaded a three-day mass tree planting drive in the country to fight climate change and stop deforestation. About 1,200 young people and volunteers have planted more than 2,500 trees nationwide for Indonesia’s Heartland Project. A 16-year-old participant said that in Central Kalimantan, a lot of forests have disappeared because of deforestation and young people have a responsibility to restore the forests again.

• Food Navigator reported statements from the RSPO (Roundtable for Sustainable Palm Oil) defending palm oil and Greenpeace defending its actions. The RSPO said that palm oil boycotts would result in unsustainable alternatives. It said that “no palm oil” claims are rising in consumer goods. British retailers Iceland and Selfridges have imposed bans on palm oil for their in-house brands last year. In response, Greenpeace said that it is not calling for a boycott on palm oil. Instead, the group wants deforestation to stop.

• Jakarta Post reported that Sinar Mas bought around seven million tonnes or 60% of its palm oil requirements from external parties. Although some of the external suppliers are smallholders, their production process meets sustainable principles. Sinar Mas traces the source of its FFB or fresh fruit bunches. The tracing process is important to ensure that palm oil is produced in legal plantations and the production process did not violate any law.

Source: AmInvest Research - 8 Jul 2019