• According to Bloomberg, Indonesia is likely to delay its B40 biodiesel blending mandate as the government has to provide a larger stimulus to the biodiesel programme due to rising palm oil prices. A government official said that the large price gap between gasoil and palm oil presents challenges for the government to finance incentives for the programme. Indonesia was planning to implement B40 next year.
• Bloomberg reported that Malaysia will collect an estimated RM348mil windfall tax revenue from the palm oil sector in 2020E compared with just RM256,000 in 2019. Minister of Plantation Industries and Commodities Mohd Khairuddin Aman Razali said that the estimate is based on forecasts of CPO prices and production from the oil palm estates this year. The ministry is also studying the overall tax structure and cess for the plantation sector as part of efforts to accelerate the development of the palm oil industry.
• Bloomberg cited the Sarawak Oil Palm Plantation Owners Association as saying that Sarawak’s palm oil industry is “in dire need of workers to survive” and is “near breaking point” as the state faces an acute shortage of harvesters and loaders.
• Group CEO Andrew Cheng said that Sarawak is the hardest hit in terms of shortage of workers in the industry and the problem is compounded by the current Covid pandemic situation of no entry for new foreign workers. Sarawak state authorities had only allowed hiring of Indonesian workers before the nationwide movement restrictions were implemented whereas workers of other nationalities were allowed to be hired in Sabah and Peninsular Malaysia.
• Reuters quoted industry officials as saying that Indian edible oil refiners are trimming imports of palm oil to make space for soybean oil as a rally in the price of palm oil has reduced the spread between the two commodities. An industry player said that Indian buyers are reducing purchases of palm oil for November and December shipments. Another player said that refiners are slashing palm imports for winter. In winter months, household palm oil consumption falls in India as the tropical oil solidifies at lower temperatures.
• Free Malaysia Today reported that the Malaysian Palm Oil Board (MPOB) has welcomed the move to regularise undocumented migrant workers, saying it will help solve the sector’s persistent labour shortage. MPOB director-general Ahmad Parveez Ghulam Kadir said that if the workers go through the proper channels and are legalised and utilised to work for the palm oil industry, it is a good move. Ahmad said that the palm industry is short of 40,000 workers.
• Biofuels International Magazine reported that a new independent study has found that demand for soybean diesel could quadruple in the EU because of the region’s biofuels policy. Transport and Environment (T&E), Europe’s leading clean transport campaign group, has raised concerns that soybean diesel would become a major source of biofuel replacing palm diesel in vehicles in the EU unless the EU declares it unsustainable like it did for palm oil. According to T&E, soybean cultivation was a major cause of deforestation in the Amazon and other ecosystems in Latin America, and biofuel made from soybean was twice as harmful to the climate as fossil fuel.

Source: AmInvest Research - 23 Nov 2020