Bloomberg reported that Malaysia's Prime Minister Tan Sri Muhyiddin Yassin is prepared to meet up with India’s Prime Minister Narendra Modi to strengthen ties and discuss issues related to the palm oil trade spat. Plantation Industries and Commodities Minister Datuk Dr Khairuddin Aman Razali will lead a delegation to India after the Covid-19 outbreak subsides.
Bloomberg reported that the soybean crushing industry in the US is benefiting from the closure of ethanol plants. As companies such as Valero Energy Corp and Andersons Inc take their biofuel plants offline, the market is being starved of dried distillers grains (DDG), which is a by-product of corn ethanol. The dearth of DDG is boosting the demand for soybean meal and soybean crushing margins.
According to Bloomberg also, while the coronavirus outbreak has yet to disrupt the operations of palm oil operations and factories in Indonesia, it has disrupted some trade activities. Sahat Sinaga, executive director of the Indonesian Vegetable Oil Association, said that the most crucial issue is that some buyers have delayed payments because they are too afraid to go to the bank. Exporters are also facing problems paying the export duty because of the movement limitation orders and reduced bank operations. Refineries could face cash flow difficulties if this issue persists.
Reuters reported that Indonesia exported 2.39mil tonnes of palm products in January. Shipments fell from 3.25mil tonnes in January 2019 and 3.72mil tonnes in December 2019. The drop in January’s exports was due to high stock levels in importing countries and demand uncertainties resulting from the coronavirus outbreak and lower global energy prices.
Reuters quoted the Malaysia Palm Oil Board as saying that the heavy slump in demand is expected to persist in 1H2020 as a growing number of countries impose lockdowns to contain the Covid-19 outbreak. The lockdowns have resulted in the closures of thousands of canteens and restaurants, choking edible oil demand in India, China and the EU. In addition, there is a challenge sustaining biodiesel demand due to the plunge in global fuel prices. The Malaysian Biodiesel Association expects exports of palm biodiesel to fall to 500,000 tonnes in 2020 from 609,777 tonnes in 2019.
Reuters also said that China’s soybean imports from the USA rose sixfold YoY in 2M2020 as cargoes booked during a trade truce arrived. China brought in 6.1mil tonnes of US soybeans in 2M2020 vs. 1.044mil tonnes in 2M2019. In contrast, soybean shipments from Brazil fell by 26% to 5.14mil tonnes in 2M2020 against 6.916mil tonnes in 2M2019. China’s soybean shipments jumped by 14.2% YoY to 13.51mil tonnes in 2M2020.
Bloomberg also reported that India has amended guidelines to exempt ports from the lockdown. India’s Ministry of Home Affairs issued additional guidelines to include ports, airports and railways among a list of industries that will be allowed to keep operating during the country’s three-week lockdown. Inter-state movements of goods for domestic use or exports have also been allowed.
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