• According to a US Department Agriculture (USDA) report, China’s palm imports are forecast at 6.7mil tonnes in 2021E/2022F, unchanged from 2020/2021E. Palm demand for food processing, particularly instant noodle production, is expected to show growth but home and food service use will be constrained by greater demand and adequate supply of soybean and other vegetable oils. China’s vegetable oil imports are forecast at 11.6mil tonnes in 2021E/2022F, down from an estimated 11.9mil tonnes in 2020/2021E due to higher domestic production. Larger soybean imports in 2020/2021E and 2021E/2022F are projected to increase soybean crush volume and boost supply of domestically produced vegetable oils.

• Bloomberg cited Malaysia’s Plantation Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali as saying that the country will focus on developing machinery for harvesting and transport of palm fruit to boost productivity and reduce dependence on foreign labour. The resurgence of Covid cases and the lockdown have worsened a labour shortage. The current deficit is estimated to be 32,000 people. The labour shortage is estimated to result in a loss of about RM10bil a year as ripe palm fruits are not harvested.

• S&P Global Platts reported that CBOT (Chicago Board of Trade) soybean oil futures were more volatile in June than any month so far in 2021F, contributing to a sharp decline in trading activity in the South American FOB basis markets. The current front month CBOT contract posted a 15.5 US cents/pound range between its highest and lowest settlement in June, surpassing its previous high for the year of 12.81 US cents/pound in April. Forecasts of improving crude oil demand amid easing of restrictions related to the coronavirus pandemic contributed to the higher soybean oil futures in early June as soybean oil is the key raw material for biodiesel. In South America, the volatility has moved traders to cautionary positions, with scarce trades.

• Reuters reported that a bipartisan group of US Farm Belt will introduce a trio of bills aimed at boosting public investment in biofuel as the industry tries to combat a White House push for electric vehicles. The bills, which include billions of dollars in grants and tax credits, could be swept into broader infrastructure or spending bills through Congress. The biofuel industry is trying to position itself as a lower carbon bridge to an electric car future. One funding bill would provide US$1bil in grants to pay for pumps and storage tanks with higher gasoline blends of biofuels like corn ethanol. Another bill would provide a US$200 per car tax credit for automakers, who make “flex fuel” vehicles that can run on any blend of gasoline or ethanol.

• According to ICIS, the Belarus Potash Company (BPC) has warned that potential EU sanctions on potash exports could have a wide-ranging impact on global food security. BPC said that sanctions on potash exports could provoke a collapse in the fertiliser and agriculture markets. The EU is preparing to slap a fourth round of sanctions on Belarus and its President Alexander Lukashenko. BPC is one of the world’s largest potash producers, second only to Canada. BPC produces about 12mil tonnes of potash per year, accounting for 20% of global supply.

Source: AmInvest Research - 12 Jul 2021