• Bloomberg reported that traders are holding off on buying sugar as they are deterred by high freight costs and signs of abundant supplies from India, a key supplier. The hesitation to purchase the sweetener is best seen in the spreads between certain futures contracts. Sugar for delivery in October 2021 is at a discount to the delivery in March 2022 and the difference has become four times bigger since early July. Bigger supplies from India have partly offset some of the production woes in South America. Sugar cane crops in Center-South Brazil are still under stress from dryness following freezing blows in July.

• S&P Global Platts reported that Chinese buyers are looking to shift away from the US to meet their soybean needs following slow US export sales after Hurricane Ida hit New Orleans late last month. Hurricane Ida led to the suspension of operations and facility damages to major grain elevators in New Orleans. Multiple Chinese buyers said that there has been no availability of cargo offers for October shipments from the US Gulf for two weeks. However, China was still open for two to three million tonnes of uncovered soybean demand for October with crushers’ purchasing pace heavily falling behind due to negative crushing margins in the domestic market. Hence, Chinese buyers with urgent prompt needs have been struggling to source soybean cargoes from other origins such as Brazil and Argentina.

• According to Hydrocarbon Engineering, as at 1 January 2021, total US biofuels plant production capacity reached 21 billion gallons per year or 1.3 million barrels per day as reported by 278 facilities. Fuel ethanol producers accounted for 85% of US total biofuels production capacity, followed by biodiesel producers at 11% and the remaining 4% by other renewable fuel producers. Of the 13 states with the most fuel ethanol production, 12 are located in the Midwest. The three states with the most production – Iowa, Nebraska and Illinois – contain half of the country’s total ethanol production capacity.

• Jakarta Post reported that a consortium of Indonesian companies, regulators and one university have begun a series of tests on an aviation fuel containing a small share of biofuel derived from palm oil. The consortium carried out nine days of flight tests for an aviation turbine fuel dubbed Bioavtur J2.4, of which 2.4% was palm-based biofuel. The first test was conducted using a CN235-200 plane that flew 10,000 feet above West Java. Pertamina produced the fuel using a catalyst developed by the Bandung Institute of Technology while state-owned aircraft manufacturer, PT Dirgantara Indonesia provided the aircraft and test site.

• The Star reported that the Oil Palm Industry Mechanisation Scheme (Optimis), provided by the government though the MPOB, has encouraged the utilisation of mechanisation in the palm oil sector to address the ongoing labour shortage. MPOB director-general Dr Ahmad Parveez Ghulam Kadir said some Optimis scheme beneficiaries had recorded an increase in work productivity of up to 40%. The Optimis scheme was launched in 2016 with an allocation of RM4.5mil.

Source: AmInvest Research - 20 Sept 2021