• Bloomberg reported that Mars, the confectionery maker, has trimmed the list of its palm oil suppliers. Mars said that it has eliminated suppliers that cannot commit to deforestation. Mars is using satellite mapping to monitor land use and third-party validation, and has asked all of its suppliers to apply the same rules to production. Mars has cut off two major suppliers and 21 second-tier suppliers for not following its protocols. Mars added that not only a tighter supply chain is easier to regulate, it also allows the group to shorten the pipeline from the plantation to the refinery, hence lowering costs.
• The USDA (US Department of Agriculture) has released its latest monthly demand and supply projections for vegetable oils. The USDA has reduced its estimate of US soybean inventory for 2020E/2021F by 37.0% to 290mil from 460mil bushels. This was due to an upward revision in soybean exports and a lower forecast of planted areas in the US.
• The USDA is now expecting soybean planted areas in the US in 2020E/2021F to be 83.1mil vs. 83.8mil acres previously. US soybean exports in 2020E/2021F are anticipated to be 2,200mil compared with 2,125mil bushels originally on the back of robust demand from China. Overall, US soybean stockpiles are envisaged to decline by 44.6% to 290mil bushels in 2020E/2021F from 523mil bushels in 2019/2020E underpinned by lower carry-over inventory from the previous season and higher exports.
• Due to a lower US soybean inventory, the USDA has reduced its forecast of world soybean stockpiles to 88.7mil tonnes for 2020E/2021F from 93.59mil tonnes. Comparing 2020E/2021F against 2019/2020E, world soybean inventory is expected to fall by 5.4% to 88.7mil tonnes from 93.75mil tonnes as US soybean stockpiles are envisaged to decline. Soybean inventory in Brazil is anticipated to inch up to 20.6mil tonnes in 2020E/2021F from 20.34mil tonnes in 2019/2020E driven by higher production. In Argentina, soybean stockpiles are estimated to be 27.7mil tonnes in 2020E/2021F vs. 26.4mil tonnes in 2019/2020E supported by an increase in output.
• Reuters reported that environmentalists in Indonesia are calling for the reversal of a controversial law aimed at job creation as it is seen favouring business interests at the expense of the environment and labour. The previous law required Indonesian islands to have a forest cover of at least 30%. The requirement has been removed, raising concerns that palm oil plantations and mining companies could sharply step up land clearance. In previous regulations, companies were responsible for environmental damage in their concessions, even if there was no proof that the company is at fault. Under the new law, environmentalists said that the wording is vague and proof of wrongdoing is now required to prosecute the company. The new law also removes criminal punishment for the illegal handling of toxic waste.

Source: AmInvest Research - 19 Oct 2020