• Bloomberg reported that Indonesia has confirmed it would impose the export levy of US$50/tonne on crude palm oil on 1 January 2020. However, the export tax on CPO remains unchanged at zero based on a reference price of US$729.72/tonne. The export levies will be used to subsidise the B30 biodiesel programme, which starts on 1 January 2020.
• The Economic Times of India quoted the Solvent Extractors Association (SEA) of India as saying that the reduction of import duties on crude palm oil pursuant to a free trade agreement with Asean on 1 January 2020 will hurt oil seed farmers in the country. SEA also said that India’s target of an oilseed production of 50mil tonnes in the next three to five years will be jeopardized. SEA has suggested that the duty differential between crude and refined palm oil be raised to 15 percentage points. SEA added that the palm refining industry in India will suffer if the duty differential is reduced to 7.5 percentage points from 10 percentage points currently.

• According to the Hellenic Shipping News, Brazil’s soybean exports in the first three weeks of December 2019 amounted to 2.5mil tonnes, up 23% MoM. Brazil exported 4mil tonnes of soybean in December 2018. The YoY fall in soybean exports in December 2019 could be due to China taking more US soybeans. A partial trade agreement between China and the US may not bode well for Brazil, which exports almost 75% of its soybeans to China.

• Euractive cited the EU’s agriculture commissioner as saying that the EU should gradually reduce soybean imports, not overnight by supporting the production of protein plants in the region. Embedded in the European Green Deal, the main principle of the Farm to Fork Strategy is to shorten as much as possible the entire agri-food chain. This includes supporting projects aimed at replacing long transport routes for feedstock and animals. However, curbing soybean imports clashes with the trade policy of the former president of the European Commission (EC). In July 2018, former President of the EC Jean-Claude Juncker agreed to import more soybeans from the US to calm a dispute with the US on steel and aluminium tariffs.

• Bloomberg reported that Thailand has ordered the Electricity Generating Authority of Thailand (EGAT) to hold off purchases of 38,000 tonnes of palm oil for power generation due to the rising price of the commodity. When the agreement to purchase palm oil, was signed, price of CPO was 17 baht/kg vs. the current price of 33 baht/kg. The government has also ordered a “slow down” on the drafting of another agreement to purchase 130,000 tonnes of palm oil in 2020F.

Source: AmInvest Research - 6 Jan 2020