• Bloomberg reported that Malaysia will seek to engage with India to resolve the trade spat on palm oil. International Trade and Industry Minister Darell Leiking will try to engage with the minister concerned and get more details on the issue including what the Indian government plans to do.

• According to Bloomberg also, Indonesia is seeking to lower the import tariff on India’s yarn products to zero from 5%. This is in response to India’s policy on palm imports from Indonesia. Recall that India has equalised the import tariff on refined palm products from Indonesia and Malaysia by raising the tariff on Malaysia’s refined products by 5 percentage points in September.

• In a related development, Indonesia has asked India to cut the import tariff on Indonesia’s palm products as part of the negotiations in the Regional Comprehensive Economic Partnership. Indonesia wants the same tariff rate as Malaysia, which is set to get a lower import tariff.

• Reuters quoted environmental organisations as saying that forest land that Indonesia plans to take back from plantation companies must not be handed to the mining, timber or infrastructure sectors. A few weeks ago, Indonesia said that it might take back 1.4mil hectares of forests under a ban on palm development. Also, an official from Greenpeace said that bureaucratic delays in taking back the land could lead to pre-emptive deforestation by developers or undermine efforts by some firms to protect forests in their concessions.

• Financial Times reported that a brief peace between the Trump administration and US grain farmers is at risk after the Environmental Protection Agency (EPA) published details of a biofuel policy, which was praised previously. The National Farmers Union said that the proposal would increase biofuel use by only 770mil gallons per year instead of the 1.35bil gallons estimated based on the initial announcement. About 40% of US corn are processed into ethanol, making the biofuel industry important to the Midwest states.

• According to the ICIS, a major shake-up in the global potash industry is on the horizon as Uralkali and Uralchem are set to become controlling shareholders in Brazil’s fertiliser firm, Fertilizantes Heringer SA. The latter is currently under bankruptcy protection. The acquisition will give Uralkali and Uralchem, which are major global potash and nitrogen fertiliser producers, a significant market share in Brazil.

• The news comes amid weak global demand for potash. In response to the soft global demand, major potash producers plan to slash their production in 4Q2019. The ICIS said that Nutrien, which is one of the largest potash producers in the world, has revealed plans for inventory shutdowns of up to two months in some of its mines in Saskatchewan in 4Q2019. In September, Uralkali said that it would reduce output by 350,000 to 500,000 tonnes.

Source: AmInvest Research - 29 Oct 2019