• Bloomberg reported that the Biden administration is developing targets for biofuel that are likely to be flat or even lower as it seeks to balance the interests of refining workers and advance a clean energy agenda. According to sources, the Environmental Protection Agency is set to propose renewable fuel requirements within weeks. The targets will dictate how much corn-based ethanol, biodiesel and other renewable fuels that oil refiners must blend into their products in 2021F and 2022F.

• Bloomberg cited PT Astra Agro Lestari as saying that Indonesia is set to churn out a record crop this year as favourable rains boost yields. Indonesia’s CPO production may climb by two million tonnes to reach 53.6mil tonnes in 2021F with the output of FFB gradually rising to a peak in the months of September through November. President director Santoso said that while the wet weather may have temporarily disrupted harvesting from September 2020 to March 2021, the rains will boost yields over the next nine to 12 months.

• According to Bloomberg also, Malaysia will roll out the full implementation of the B20 biodiesel programme by the end of year 2022F. Malaysia’s B20 programme in the transportation sector was initially scheduled to be completed by mid-2021F but is now delayed to 2022F as the country prioritizes economic recovery from the pandemic.

• S&P Global Platts reported that the FOB basis soybean oil in South America has plunged to record lows on surging CBOT futures and lacklustre export demand in Argentina and Brazil. Basis for July loading in the Argentinean Up River paper market was reported to be minus 1,500 points to the CBOT contract on 9 June vs. plus 150 points on the same date in 2020. The fall reflects a lack of fresh export demand, according to industry players. In early May 2021, purchases from Asian buyers, especially from China and India, helped lift the FOB basis of the South American soybean oil to as a high as minus 300 points to the CBOT but the appetite has decreased as international soybean oil prices rocketed to historical highs.

• The USDA released its monthly demand and supply estimates of vegetable oils recently. The USDA has raised its forecast of US soybean inventory for 2021E/2022F to 155.0mil from 140.0mil bushels on the back of higher beginning stocks carried over from the 2020/2021E season. Beginning stocks of US soybean are now estimated to be 135.0mil bushels instead of 120mil bushels previously. US soybean production is forecast to rise by 6.5% to 4,405.0mil bushels in 2021E/2022F from 4,135.0mil bushels in 2020/2021F while exports are expected to fall by 9.0% to 2,075.0mil bushels from 2,280.0mil bushels. US soybean inventory is envisaged to be 155.0mil bushels in 2021E/2022F vs. 135.0mil bushels in 2020/2021E.

• The USDA has also forecast world inventory of soybean to increase by 5.2% to 92.6mil tonnes in 2021E/2022F from 88.0mil tonnes in 2020/2021E. World soybean production is anticipated to be 385.5mil tonnes in 2021E/2022F, 5.9% higher than 364.1mil tonnes in 2020/2021E. Apart from higher output in the US, soybean production in Brazil is estimated to rise by 5.1% to 144.0mil tonnes in 2021E/2022F. In Argentina, soybean output is estimate to be 52.0mil tonnes in 2021E/2022F vs. 47.0mil tonnes in 2020/2021E.
   

Source: AmInvest Research - 21 Jun 2021