• Reuters quoted Indonesia’s finance minister as saying that Indonesia’s new palm oil export ban will hurt other countries but is necessary to bring down soaring domestic price of cooking oil. The finance minister said that previous measures requiring producers to reserve stocks for domestic use did not result in the level of prices that the government wanted. She added that the Indonesia government will analyse the impact of the measure on global and regional market dynamics.

• A S&P Global Platts survey of market participants indicated that China’s soybean demand will fall by 3.5% to 6.1% in 2022F due to lower demand from the downstream feed sector. China’s soybean imports are estimated to be 97.2mil tonnes in 2022F vs. 96.5mil tonnes in 2021. S&P Global Platts assessed the gross crushing margin to be minus US$23.06/tonne as of 20 April. According to market sources, the net crushing margin could be closer to minus US$63/tonne.

• Reuters cited industry players in Argentina as saying that the country is unlikely to take advantage of record soybean prices due to the drought, which has affected crops, a recent export tax hike and subsidies that are keeping domestic prices low. The government recently hiked the export tax rate on soybean oil and meal to 33% from 31% to bring down food inflation. Argentina’s 2021/2022F harvest is estimated to be between 41 and 42mil tonnes.

• Bloomberg reported that one of Brazil’s largest soybean farmers is planning to reduce fertiliser use by a quarter next season, relying on more precise applications and soil testing to maintain crop yields. SLC Agricola SA will probably use between 20% and 25% less fertiliser in 2022F to 2023F without compromising yields. SLC’s CEO said that it is possible to cut fertiliser in a year and have a null impact on production as fertiliser reserves in the soil from previous seasons will ease the effects of lower application.

• Bloomberg also quoted Unilever PLC as saying that it does not foresee immediate product shortages from Indonesia’s export ban on palm products. The group is well-placed to look for alternative materials. Unilver currently has sufficient supplies to cover its needs.

• The Malaysian Reserve reported that the Selangor state government will be starting its corn cultivation to produce chicken feed after Aidilfitri in May to help overcome the rising price of the commodity. The project under the Intervensi Ehsan Programme of the Selangor Agriculture Development Corporation (SADC) would be carried out on 121ha (300 acres) of land in Selangor and 162ha in Negeri Sembilan. SADC expects that over RM3mil would be spent on implementing the project as a long-term solution.

Source: AmInvest Research - 5 May 2022