• Bloomberg quoted Astra Agro Lestari as saying that the group’s CPO production would increase by 5% to 6% in FY22F due to higher FFB supply from small plantation holders. Astra’s FFB production fell by 6.6% to 4.33mil tonnes in FY21. Also, fertiliser costs are estimated to jump by 75% in FY22F.

• According to Bloomberg also, Malaysia’s Human Resources Minister said that the country is ready to work with the US and UK to end forced labour conditions. The cooperation can be made through the National Action Plan on Forced Labour launched last year. The minister would be meeting with the US and UK diplomatic missions to discuss the issue further.

• Bloomberg cited Cargill Inc’s head of trading as saying that the rally in soybean prices could reach record highs this year if the dry weather does not improve in South America. Cargill estimates that between Brazil, Argentina and Paraguay, a total of 27mil to 28mil tonnes of soybeans have been lost to bad weather. Additional soybean exports from the US are likely this year. Cargill’s estimates for carry-out stocks from the US are “significantly lower” than the USDA’s numbers.

• S&P Global Platts quoted Bunge as saying that it expects an expansion in soybean-based renewable diesel capacity in the USA to support soybean oil demand. CEO Gregory Heckman said that the USA may be transformed from being an exporter to an importer of vegetable oils in the coming years. The USDA forecasts that out of the total US soybean oil production of 25.7bil pounds in 2021/2022F, the biodiesel sector is expected to consume 11.5bil pounds.

• theSun daily reported that Malaysia is pushing hard to achieve a high level of automation in labour intensive sectors such as plantation to reduce dependence on migrant labour. The Ministry of Plantation Industries and Commodities is conducting tests on various equipment designed for various processes in plantation. One of the equipment being tested is the “spider system”, which comprises a truck with five arms and a conveyor belt that can used to harvest FFB. With the spider system, the workforce can be reduced by 30% to 40%.

• Reuters quoted sources as saying that India plans to buy one million tonnes of potash from Belarus in the first bilateral deal between the two countries after sanctions crippled Minsk’s ability to sell. India has suggested that the state-run Belarus Potash Company could open a rupee account with a state-run Indian bank for potash sales as sanctions imposed by the US and EU cut off Minsk from the dollar and euro trade. Minsk could offer a discount over benchmark prices as India has offered to buy at least a million tonnes of potash.

• Biofuels International cited a European Biodiesel Board (EBB) paper as highlighting how Europe may fail to meet the transport industry’s rising demand for sustainable fuels. The EBB said that demand for green liquid fuels in Europe was set to double by 2030F as the EU goes on its decarbonising path in the maritime, aviation and heavy-duty road transport sectors. FuelEU Maritime and the ReFuelEU Aviation mandates will require around 42mil tonnes of oil equivalent to meet the targets set out in the revised renewable energy directive.

Source: AmInvest Research - 21 Feb 2022