• Bloomberg cited a government official as saying that about 81% of oil palm estates in Indonesia broke various regulations including operating in conservation areas. Other violations include on-compliance with ISPO standards and operating on peatlands. The Indonesia government is considering legal action including penalties.

• Reuters reported that leading palm oil players in Indonesia see production growth being hit in the short to medium term as the country faces drought across its major planting regions. Four out of seven local planters said that third-quarter production is expected to be flat or lower compared with the previous quarter while the other three planters said that the effects of the drought would only be seen in 1H2020. A plantation manager at a company said that it has been so dry that there are unopened spears on the trees. Nevertheless, he added that it is not as bad as the El Nino in 2015.

• Bloomberg cited Argentina’s Agriculture Minister Luis Miguel Etchevehere as saying that the government will not include an export tax hike on crops as part of the economic measures that will be announced. There were concerns that there would be a hike in export tax for soybeans. Last year, President Macri imposed a tax on all exports. The taxes are 4 pesos per dollar of exports of primary products and 3 pesos per dollar for that of value-added products.

• Reuters cited Indonesia’s Energy and Mineral Resources Ministry as saying that biodiesel with a 30% palm oil blend has passed a series of cold temperature tests. The Energy Ministry said that a number of passenger cars were tested in Java’s highland region where the cars were left in cold temperatures for 21 days. A government official said that the start ability test results showed that the cars can start normally. Hence, B30 flows well in the engines even though they have been left in the cold for 21 days. Indonesia plans to implement B30 in 2020F if vehicle tests are successful.

• Singapore’s Business Times quoted Fitch Solutions as saying that meat could be the next target for taxes due to the industry’s role in climate change, deforestation and animal cruelty. The idea is still in its infancy and faces a lot of opposition from farmers, but it is emerging as a trend in Western Europe, according to Fitch. In Germany, some politicians have proposed raising the sales tax on meat products to fund better livestock living conditions.

• According to Reuters, Brazil is revisiting its soybean output estimates for the 2018 and 2019E crop seasons as discrepancies with private sector estimates raised doubts on the government’s demand and supply figures. For instance, Abiove, which represents trading firms like Cargill and Bunge, estimates domestic soybean production to be more than six million tonnes above the government’s forecast for the 2017/2018 and 2018/2019 seasons combined. For this year, the government agency sees Brazil’s soybean production at 115mil tonnes compared with Abiove’s 117.6mil tonnes.

• Malay Mail quoted the Primary Industries Minister Teresa Kok as saying that the government will not be extending the MSPO (Malaysian Sustainable Palm Oil) incentive, which ends on 31 December 2019. As such, smallholders who have failed to register and take advantage of the incentive would be at the losing end. The minister said that the government has disbursed more than RM100mil to pay for the certification cost. The government has allocated RM135/hectare as MSPO incentive for independent smallholders. As at end June, only 42% out of the 5.84mil hectares of smallholders’ oil palm plantations have been certified.

Source: AmInvest Research - 26 Aug 2019