• Bloomberg reported that India’s market regulator has suspended derivative contracts in seven commodities including wheat and crude palm oil. No new contract will be launched until further notice, according to the Securities and Exchange Board of India. Only squaring of positions will be allowed. Also, Russia is considering imposing a higher tax on wheat exports, based on a formula that links the tax rise to increases in the price of the commodity. Under the formula, the tax will rise if prices reach US$375/tonne and again if they hit US$400/tonne. Russia also plans to impose a wheat export quota of eight million tonnes from 15 February to 30 June 2022.

• According to Bloomberg also, Argentina is imposing a ceiling on exports of corn and wheat in a fresh bid by the government to quell food inflation. The government will first decide how much of the grains is needed in Argentina and then proceed to stop exporters from registering shipments that would jeopardise domestic supplies. In spite of the quota, Argentina will still be able to export 12.5mil tonnes of wheat and 41.6mil tonnes of corn, a government official said without specifying the crop season. Farmers have harvested two thirds of the 2021E/2022F wheat crop and are currently sowing the 2021E/2022F corn crops.

• Reuters cited the European Commission as saying that biofuel consumption in the European Union (EU) is expected to fall by year 2031F as road transport moves away from fossil fuel. Palm imports would also plummet due to stricter environment regulation. In its 2031–2031 Agricultural Outlook, the Commission projected that EU’s biodiesel use would fall by 24% to 14.3bil litres in 2031F after a peak of 18.9bil litres in 2023F. Palm imports in the EU are expected to decline to 4.0mil tonnes by 2031F from 6.5mil tonnes in 021F with most of the increase attributed to falling demand for biodiesel.

• Bloomberg reported that the Indonesian Palm Oil Association (GAPKI) has revised its 2021E estimate of the country’s CPO production to 46.7mil tonnes from 47.5mil tonnes due to bad weather. GAPKI’s new estimate of 46.7mil tonnes for 2022F is lower than the country’s CPO output of 47.0mil tonnes in 2020. For 2022F, GAPKI has kept its forecast of a CPO production of 48.0mil tonnes.

• Western Producer reported that Rabobank is forecasting a 4% reduction inthe EU’s biodiesel demand by 2025F. The EU’s biodiesel demand will shrink further by 2030F and beyond to a point where some production plants will be forced to shut down from 2040F to 2045F. Diesel demand is expected to fall in the EU with the increased adoption of electric and hydrogen vehicles. The electric share of new car registrations in the EU is expected to surge to 65% by 2030F up from 1.6% in 2019. Hydrogen vehicles are envisaged to account for another 13% of new car registrations.

Source: AmInvest Research - 27 Dec 2021