• Bloomberg cited an official with the Solvent Extractors Association of India as saying that local refiners will suffer as refined palm imports become more attractive than crude palm oil on 1 January 2020. Under the ASEAN Free Trade Agreement, India’s import duty on crude palm oil will fall to 37.5% from 40% while the import duty on refined palm oil will drop to 45% from 50%. The Indian vegetable oil processors group is seeking for a 15-percentage point difference between the import duties of crude and refined palm oil compared with the 10- percentage point difference currently.

• According to Bloomberg also, China will provide retaliatory tariff waivers to buyers of US farm products on a more regular basis after the countries have reached the phase one trade deal. Waivers were previously given in tranches but they will now be handed out more frequiently. US Trade Representative Robert Lighthizer said that Beijing has made detailed pledges that will see it purchase at least an additional US$16bil in commodities annually on top of the pre-trade war level of US$24bil. Detailed targets on each commodity will not be made publicly.

• Reuters reported environmentalists as saying that Indonesia should follow Malaysia’s example by allowing plantation and land maps to be made public to help fight deforestation and forest fires. RSPO published members’ land maps for Peninsular Malaysia and Sarawak a few weeks ago after being given the legal green light to do so by the Malaysian government. Greenpeace said that Indonesia’s Supreme Court has ruled that Jakarta must make its palm oil concessions public but the government has resisted the ruling.

• Financial Times reported that Brazil is overtaking the US as the world’s largest soybean producer as a trade war and extreme weather take a toll on American agriculture. Brazil’s agricultural agency, CONAB said that Brazil is estimated to produce 121.1mil tonnes of soybeans in 2020F, which is 25% more than the USA’s 96.6mil tonnes. This is the first time that soybean output in the USA is smaller than Brazil. CONAB said that Brazilian farmers have planted 36.8mil hectares with soybeans this year.

• USDA (US Department of Agriculture) has released its latest demand and supply projections for vegetable oils. There were no significant revisions. USDA has maintained its US soybean production forecast of 3,550mil for 2019E/2020F compared with 4,428mil bushels recorded in 2018/2019E. US soybean inventory is estimated to be 475mil bushels in 2019E/2020F vs. 913mil bushels in 2018/2019E.

• USDA forecasts world soybean inventory to be 96.4mil tonnes in 2019E/2020F vs. 95.42mil tonnes previously. USDA has raised its estimate of Brazil’s soybean stockpiles to 30.42mil tonnes from 30.04mil tonnes originally due to higher than expected carry over inventory. USDA has estimated world soybean production to fall to 337.48mil tonnes in 2019E/2020F from 358.21mil tonnes in 2018/2019E due to the fall in US soybean output. Brazil’s soybean production is expected to rise to 123mil tonnes in 2019E/2020F from 117mil tonnes in 2018/2019E. In contrast, CONAB has forecast the country’s soybean output to be 121.1mil tonnes in 2020F.

Source: AmInvest Research - 23 Dec 2019