• Bloomberg reported that Eni SpA, which is an Italian energy company, is reviewing its supply chain with the aim of eliminating the use of palm oil and its derivative PFAD (palm fatty acid distillate) by year 2023F. Eni said that the measure is part of the wider decarbonisation strategy in its 2020 to 2023 strategic plan. In 2019, Eni produced 242,000 tonnes of palm biodiesel and 23,000 tonnes of palm mill effluent-based biodiesel, amongst others. Recall that the EU is phasing out palm biodiesel to zero by year 2030F.
• Bloomberg also reported that Golden Veroleum Ltd, which is Liberia’s largest palm oil plantation, has cut 10% of its workforce. The layoffs were due to the global economic downturn resulting from Covid-19 and plummeting prices for palm oil. Golden Agri Resources is Golden Veroleum’s largest shareholder.

• In another development, Indonesia is mulling additional incentives to support its biodiesel programme. Options include changing the gasoil subsidy and raising the CPO export levy. The Indonesia government is in talks with biodiesel producers to ensure the continuance of B30 and the potential implementation of B40 in 2021F.

• Reuters reported that China has asked trading firms and food processors to boost inventories of grains and oilseeds as a possible second wave of coronavirus cases and worsening infection rates raise concerns over global supply chains. State-run and private grain traders were urged to procure higher volumes of soybeans, soybean oil and corn. COFCO and Sinograin have been stepping up purchases of US soybeans and corn in recent weeks. Chinese importers bought at least four cargoes or about 240,000 tonnes of US soybeans for shipments in July, recently.

• The Kathmandu Post reported that Nepal’s palm exports to India could get hit as India has suspended all import licences and imposed stringent trade measures to check cheap imports and protect the Indian processing industry. Although Nepali exports to India are eligible for tariff exemptions under the South Asian Free Trade Area Agreement, the imported goods must have at least 30% value addition. Trade experts said that Nepali traders do not meet the 30% value addition requirement. The firms in India, whose import licences have been suspended, were supposed to buy 455,301 tonnes of palm oil including 293,000 tonnes from Nepal.

• Reuters said that Argentine biodiesel exports have completely halted due to the coronavirus hammering demand in Europe. Last year, Argentina exported about one million tonnes of biodiesel, which went almost entirely to Europe. According to Luis Zubizarreta, head of the Argentine Biofuels Chamber, biodiesel plants in Argentina are currently inactive and as such, there will be a surplus of soybean oil in Argentina this year.

Source: AmInvest Research - 27 May 2020