• Reuters reported that PT Pertamina has produced its first successful batch of B100 in its Dumai refinery in Riau province. The group plans to produce 1,000 barrels per day of B100. Using CPO-based FAME (biodiesel) requires special handling and equipment as the fuel has a solvent effect that can corrode engine seals and solidify at low temperatures. Hence instead of using CPO, Pertamina processed refined palm oil in its refinery using catalytic cracking and hydrogen gas to produce the green biodiesel.

• The USDA has released its monthly forecast of global demand and supply for vegetable oils. The USDA raised its forecast of US soybean inventory for 2020E/2021F by 7.6% to 425mil from 395mil bushels. The revision was due to higher estimates of carry-over inventory from 2019/2020E and planted areas for 2020E/2021F. It revised carry-over inventory of US soybean to 620mil from 585mil bushels while planted areas for 2020E/2021F were raised to 83.8mil from 83.5mil acres.

• Comparing 2020E/2021F against 2019/2020E, US soybean inventory is forecast to decline by 31.5% to 425mil from 620mil bushels. This is mainly due to a 24.2% increase in exports. We attribute this to the resumption of China’s purchases of US soybeans.

• The USDA has forecast global soybean inventory for 2020E/2021F to fall by 4.6% to 95.08mil tonnes in 2020E/2021F from 99.67mil tonnes in 2019/2020E. This was due to a lower estimate of Brazil’s soybean stockpiles. Brazil’s soybean inventory is now expected to be 23.27mil tonnes in 2020E/2021F vs. 25.33mil tonnes previously.

• Bloomberg quoted a CASDE (China Agricultural Supply and Demand Estimates) report as saying that China’s soybean imports for the current marketing year may be 94mil tonnes vs. 91mil tonne previously. CASDE cited demand boosted by crushing profits and more purchases from the US pursuant to the implementation of the phase 1 trade deal. Estimates of China’s corn imports have also been raised to six million from four million tonnes for 2019/2020E.

• According to Bloomberg also, Indonesia’s biodiesel consumption was 4.2mil kiloliters (3.7mil tonnes) in 1H2020. In June 2020, it was reported that Indonesia had reduced its estimate of biodiesel consumption for 2020E to 8mil kiloliters (7.0mil tonnes) from the original target of 9.6mil kiloliters (8.4mil tonnes). The revision was due to a drop in demand for fuel during the country’s lockdown in 2Q2020.

Source: AmInvest Research - 20 Jul 2020