• Bloomberg reported that the Indonesia government is finalising a presidential regulation that will make the Indonesia Sustainable Palm Oil (ISPO) certification mandatory for smallholders. The government plans to start ISPO registration for smallholders next year. The government expects 60% of total palm oil plantations to be registered in year 2021F. ISPO requirements for smallholders will not be as strict as those for company-owned plantations.

• In a related development, Bloomberg said that Indonesia plans to replant about 200,000ha of ageing oil palm trees in 2019E and 500,000ha in 2020F. The Estate Crop Fund for Palm Oil will give smallholders Rph25mil per ha or about US$1,770 per ha for replanting. The smallholders planted about 20,000ha in 1H2019. Indonesia reckons that out of 5.6mil hectares of smallholders’ plantations, about 2.4mil hectares need to be replanted.

• Reuters cited trade officials as saying that Malaysia is set to replace Indonesia as the top supplier to India in 2019F due to lower import taxes on refined palm oil. An official with India’s Solvent Extractors Association of India said that Indian refiners are struggling to operate their plants due to rising imports of refined palm oil from Malaysia. He added that Indian refiners will not survive unless the government raises import duties on refined palm oil. India’s imports of refined palm oil surged by 50% YoY to 1.59mil tonnes in 1H2019.

• Reuters also reported that a Chinese delegation is set to visit Argentina in August to inspect soymeal crushing plants. Due to the China-USA trade war, China may consider importing soybean meal to meet its feed requirements. Argentina has tried for years to break into China’s market. However, China has been resisting for a long time to protect its own soybean crushing industry. An industry player said that it may take more than six months for Chinese inspectors to prepare a report from the trip in respect to approvals. He estimated that if any, the size of the first cargo of Argentine soymeal may be about 35,000 tonnes.

• The Parliament Magazine of the EU quoted the former chair of UK’s Sustainable Development Commission as saying that the EU’s palm oil boycott is a result of the influence of “two very powerful lobbies”. These are trade associations seeking to protect EU-based producers of rapeseed oil and sunflower oil and some environmental NGOs funded by the EU. Hence instead of supporting free trade, these lobbies are winning. This is in spite of the fact that oil palm uses less land to produce oil than other vegetable oils.

• Reuters quoted Nutrien Ltd, which is one of the largest fertiliser producers in the world, as saying that it expects US farmers to plant as many as 95mil acres of corn in 2020F, the highest in seven years after being affected by floods this year. Wet conditions left millions of acres unplanted across the US Farm Belt. Currently, the USDA is forecasting that US farmers will plant 91.7mil acres of corn and 80mil acres of soybean in 2019E.

Source: AmInvest Research - 13 Aug 2019