• Bloomberg reported that the Indonesian government is in discussions to revise its palm oil export levy to boost export shipments. The current maximum CPO levy of US$255/tonne is seen as too high and may be cut to US$175, which will be imposed when the reference price exceeds US$1,000/tonne. A minimum levy of US$55/tonne for CPO will be imposed if the reference price is set at US$750/tonne or less. Revisions will be implemented after the finance minister signs the plan off.

• Bloomberg cited India’s Economic Times as saying that the illegal imports of palm and soybean oil from Nepal into India has threatened the survival of the industry and farmers. In a letter written to the central government, the Solvent Extractors Association of India (SEA) claimed that palm oil and soybean oil from other origins were being routed into India through Nepal to take advantage of zero import duties in Nepal. The SEA said that Nepal does not produce any palm oil. The palm olein imported from Nepal is from Indonesia and Malaysia origins and the soybean oil is from South America.

• In a related development, the Economic Times quoted the SEA as saying that with international prices of edible oils falling by 6% to 8% in the past weeks, any reduction in import duty should be done after the kharif oilseed planting is over so that there are no negative signals to the farmers. Currently, edible oils attract an import duty of 15%. An industry player said that the fall in the prices of edible oils in the international markets will have a downward impact on the landed price of imported edible oils in India. Last week, edible oil prices came down by Rs10 per litre.

• S&P Global Platts reported that India’s palm imports from Thailand in May have increased by almost 10 times from the month before as Thai-origin palm oil has become more competitive than Indonesia and Malaysia albeit by a slim margin. A market source said that more than 90,000 tonnes of Thai palm oil arrived in India on 21 May. An industry player said that Thai origin palm oil was cheaper by US$10/tonne compared to its larger rivals. For perspective, India’s imports of CPO from Thailand in April 2021 were recorded at 8,206 tonnes according to data from the SEA.

• Reuters reported that the World Trade Organization has agreed to a request from Malaysia to establish a panel examining an EU law that restricts the use of palm biofuels. Under the EU’s renewable energy directive, palm biofuels will be phased out by year 2030F. WTO panels typically deliberate for about six months before sending out their findings to the members. Any decision can be appealed.

• Reuters also reported that China has approved the trading of crude oil and palm oil options on the Shanghai International Energy Exchange and the Dalian Commodity Exchange respectively. Crude oil options will begin trading on 21 June and palm oil options on 18 June, the Securities Regulatory Commission said. Foreign companies and investors have limited access to China’s commodities market but recently, it has been opening up its futures contracts to foreign traders and adding options trading in efforts to become a global commodity pricing power.

Source: AmInvest Research - 8 Jun 2021