• Bloomberg quoted the president director of the Indonesia Oil Palm Plantations Fund Management Agency as saying that the country will be allocating as much as 57.9tril rupiah (US$4.0bil) for biodiesel incentives this year. The funds will be used to cover the gap between diesel and palm biodiesel to support the B30 biodiesel blending mandate. The government is targeting 10.2mil kilolitres (8.9mil tonnes) of biodiesel consumption this year.

• Reuters reported that Indonesia and Malaysia remain committed to their mandatory biodiesel programmes despite higher prices of the feedstock. Coordinating Minister for Economic Affairs Airlangga Hartarto said that Indonesia will not stop at B30. The country is working to use palm oil in its diesel fuel, gasoline and jet fuel. Indonesia is currently running test flights using jet fuel mixed with palm oil, conducting various trials to use it to produce other fuels and planning road tests on B40. Malaysia plans to adopt B20 nationwide by the end of 2022F.

• Biofuels International reported that the US Energy Information Administration (EIA), in its Annual Energy Outlook 2022, projected that renewable diesel supply will exceed biodiesel supply in the short term. The EIA projected that renewable diesel supply will increase to 130,000 barrels per day in 2022F and 145,000 barrels per day in 2050F. Renewable diesel is chemically distinguishable from petroleum diesel as it meets specifications for use in existing infrastructure and is not subjected to blending limitations. Biodiesel on the other hand, is a mixture of chemical compounds called alkyl esters and is often combined with petroleum diesel in blends of 5% to 20%, known as B5 and B20 respectively.
• Reuters quoted industry experts as saying that Brazil’s tax cut for ethanol, sugar and soybean oil imports would have little impact on trade deals in the short term. The move came as the government tries to tame double-digit inflation with import tariffs for ethanol and six food products – ground coffee, margarine, cheese, pasta, sugar and soybean oil – being zeroed until the end of 2022F. Even with no taxes, imported ethanol would still enter Brazil at prices 8% to 10% higher than the local prices. Local prices are expected to decline beginning in April when the sugar cane crushing begins in Brazil. Taxes on sugar imports would also not have any effect as Brazil already has the lowest cost of sugar in the world.
• A Friends of the Earth US report found that one of Indonesia’s largest palm oil companies, Astra Agro Lestari, is responsible for longstanding land rights abuses and environmental destruction in operations undertaken without proper legal permits. The investigation affirmed the claims of local farmers, whose complaints traced back to 2005 that some 16,000 acres of their lands have been illegally occupied by three subsidiaries of Astra Agro. None of the three companies have received the Free, Prior and Informed Consent (FPIC) of local communities to operate. Friends of the Earth US has raised allegations on Astra Agro with the company’s customer, Procter & Gamble, repeatedly since 2020, but the company has yet to take clear steps to resolve the land conflict.

• Feed Navigator reported that UK feed industry representatives the Agricultural Industries Conference (AIC) have hailed the government’s announcement that from 1 June 2022 the 25% tariff on corn imports from the US will be removed. The decision to remove the ban will help mitigate limited corn imports from the Ukraine and Russia and will improve the ability of the agri-supply chain to maintain animal feed supply to UK farmers. The 25% import duty on US corn was part of a group of tariffs imposed on US goods in retaliation for the tariffs imposed by the US on UK exports of steel and aluminium in 2018 under former President Donald Trump.

Source: AmInvest Research - 4 Apr 2022