• Bloomberg cited the Ministry of Plantation Industries and Commodities as saying that Malaysia has no current plans to extend a tax exemption on CPO exports that is set to end on 31 December 2020. A government official said that approval from the finance ministry must be sought for any extension. He added that speculation that CPO exports will continue to be exempted from duties next year is based on market rumours.
• Bloomberg also reported that China’s imports of US goods under Phase One of the trade deal slowed in October after hitting a high in September. Bloomberg estimates that China had purchased about US$75.5bil of targeted goods as at end-October 2020. This was 43.9% of the total 2020 target of US$172bil worth of goods. The slowdown was led by a nearly 60% drop in crude oil purchases in October from the previous month. Despite the reduced pace of overall purchases, shipments of soybeans were up more than 190% from September.
• Reuters quoted sources as saying that some Chinese soybean importers and processors are looking to cancel deals signed for US cargoes for deliveries in December 2020 and January 2021 after margins collapsed following a steep rally in prices. While US soybean export prices have matched the futures rally, the export basis or premium above the futures price that buyers must pay to secure supplies, have dropped by just 30%. This indicates reduced competition among buyers.
• According to Reuters also, forest-related risks could cost companies that trade in or use Indonesian palm oil as much as US$10bil this year based on a study of more than 100 firms published by a global environment group. CDP, which was formerly known as Carbon Disclosure Project, said that brand damage is the greatest financial risk, with a potential financial impact totalling US$4.2bil. Other risks include reduced demand, production capacity and disruption to sales. In response, Indonesia’s Palm Oil Association questioned CDP’s findings and said that plantation firms in the country adhered to domestic industry standards.
• S&P Global Platts cited US Grains Council as saying that the explosive growth seen in China’s grain demand this year has not been caused by just a temporary shortage but signals a structural change in domestic consumption levels. An official with the US Grains Council said that domestic corn demand and imports have been rising because production is relatively stable and temporary reserves from the price support programme earlier this decade have been more or less depleted. China’s corn imports hit 7.8mil tonnes between January and October 2020, a sharp 1,151% jump from last year. China’s import volumes have exceeded the annual tariff rate quota level of 7.2mil tonnes, which is a breach of the quota for the first time.

Source: AmInvest Research - 7 Dec 2020