Bloomberg reported that the EU expects stricter standards for food contaminants to be adopted in June 2020 in a regulation that would affect palm oil and other vegetable oil producers. The European Commission has notified the WTO on the proposal to set maximum levels for processing contaminants 3-MCPD and fatty acid esters in vegetable oils. The maximum level of 3-MCPD in oils and fats from palm kernel, coconut, corn, soybean, rapeseed and sunflower will be set at 1,250 micrograms per kg.
According to Bloomberg also, soybean crushers in China have restored their processing rates to normal levels after the government prioritised security of food supply amid the outbreak of Covid-19. According to the industry players in China, crushing volume was estimated to be 1.6mil to 1.8mil tonnes two weeks ago compared with the weekly level of 1.55mil tonnes in the same period last year and 1.6mil tonnes as at end-March 2019. The lack of truck drivers, who were previously quarantined, is expected to ease in the coming weeks.
Also, Indonesia’s palm biodiesel consumption amounted to 784,934 kiloliters (KL) (683,740 tonnes) between 1 January and 12 February 2020. Biodiesel usage was 706,000 KL (614,983 tonnes) in January 2020. Indonesia’s biodiesel allocation has been set at 9.6mil KL (8.4mil tonnes) for 2020F.
In a related development, Reuters said that PT Pertamina has asked the Indonesian Parliament to cap prices for some palm products as the group develops refineries to make fuel from palm oil. Pertamina CEO Nicke Widyawati said that Pertamina would like “domestic market obligation” rules to require a mandatory portion of industry CPO to be sold domestically at a capped price. Pertamina is converting some of its refineries so that they are able to process palm oil into fuel as well as adding a new plant. One of the facilities will cost US$600mil to develop.
Bloomberg reported that at least five ships scheduled to export crops from Argentina were held up at the ports last week as the government has not officially enforced the new tax rates. Argentina is planning to raise export taxes on soybean, soybean meal and soybean oil to 33% from 30%. On 26 February, the government shut down the country’s crop export register to stop the exporters from shipping ahead of the tax hike. Up to now, the register has not been opened.
Reuters quoted Indian traders as saying that political rhetoric alone will not restore palm oil flows from Malaysia to India any time soon. This is because palm prices in India are still too high relative to other vegetable oils. An official with the Solvent Extractors Association of India said that the narrow gap between softs oils and palm oil has been encouraging refiners to buy more soybean oil and sunflower oil. A spread of less than US$100/tonne between palm oil and soft oil makes imports of soft oils attractive for Indian importers.
This came after news reports cited Malaysian officials as saying that Malaysia and India will work on improving ties that soured under Malaysia’s former prime minister. An Indian official said that New Delhi is also keen to improve bilateral ties provided Malaysia keeps out of India’s domestic affairs. India could also invite Malaysia’s new Prime Minister Tan Sri Muhyiddin Yassin for a visit this year.
New IPO: Building management systems (BMS), solar thermal systems and energy-saving services provider, Solar District Cooling Bhd aims to list on the Ace Market!
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New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
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