• Bloomberg reported that Indonesia is looking to increase its palm oil consumption by 38% to 19.26mil tonnes by year 2030F. The Industry Ministry said that it has formulated a road map for the national development of palm oil. The ministry is looking to increase the number of palm oil products to 200 in year 2030F from 158 currently. Indonesia currently consumes 14mil tonnes of palm oil, including eight million tonnes for food.

• In a related development, Indonesia’s biodiesel exports fell to 500,000 kiloliters (435,540 tonnes) in 1H2019 from 800,000 kiloliters (696,864 tonnes) in 1H2018 due to weak demand from the EU and China. Bloomberg quoted the vice chairman of Indonesia Biofuel Producers Association as saying that the country’s biodiesel exports may be below two million kiloliters (1.7mil tonnes) in 2019E. He is also optimistic that Indonesia will receive positive results in an EU hearing in respect of the anti-subsidy duty on Indonesia’s biodiesel products, on 6 September 2019.

• Platts quoted sources as saying that even though the Argentine peso has fallen, Chinese buyers still prefer Brazilian beans due to the beans’ better quality. Average protein content in Argentine beans is 35% while the Brazilian soybean has a higher protein content of 37%. Sources added that Chinese crushers may start buying Argentine soybeans only if the price spread is at least 40 cents/bushel lower than Brazilian beans.

• Reuters reported that the US administration is scrambling to stem rising anger in the Farm Belt after its decision to allow various oil refiners to mix less ethanol in their gasoline products. President Trump held a meeting with members of his Cabinet after hearing blowback from farmers in respect of his decision to grant 31 refineries exemption from the biofuel law. It was unclear as to what actions would be taken to appease the farmers. Reversing the 2018 waivers was floated as an option but was quickly knocked down. The administration will find other ways to boost ethanol demand.

• Financial Times reported that India is facing a World Trade Organisation investigation on its sugar subsidy following complaints from Australia, Brazil and Guatemala. The three countries said that India’s sugar subsidies and domestic support are inconsistent with WTO obligations and have depressed global sugar prices, which are currently below the cost of production of 12 cents per pound. For example, India sets a minimum support price at which sugar mills must buy raw cane and then set the minimum price at which processors can sell the refined sugar to companies and consumers.

Source: AmInvest Research - 3 Sept 2019