• Bloomberg reported that Indonesia is setting a domestic palm oil sales quota of 300,000 tonnes for the month of June to ensure that the country has a sufficient supply of cooking oil at affordable prices. A government official said that producers will be allowed to export up to five times the volume of their domestic sales obligation. Another government official said that the government plans to revise the palm oil export levy soon. So far, 251 permits have been issued to 23 companies to ship 302,032 tonnes of palm oil.

• Bloomberg also reported that palm-based biodiesel consumption in Indonesia reached 3.8mil KL (3.3mil tonnes) this year through May 2022. A government official said that the B30 biodiesel mandate is running as expected, reaching 37% of the annual target of 10.1mil KL (8.8mil tonnes).

• Reuters reported that the US Environmental Protection Agency (EPA) has issued biofuel blending mandates for 2022F and the prior two years with this year’s amount below the one proposed in December. The mandates also deny oil refiners waiver to be exempted from the blending requirements. The EPA set biofuel blending mandates for 2022F at 20.6bil gallons and retroactive volume mandates for 2021 at 18.8bil gallons and 17.1bil gallons for 2020. The agency said that it would allow extra time for small refiners to meet their 2020 blending obligations.

• S&P Global Platts said that the EU’s purchases of rapeseed oil have risen sharply in the marketing year of 2021/2022F (July/June) from the previous season, a trend which is set to intensify in the near term. As of the week ending 30 May, the EU’s rapeseed oil imports soared 132% YoY to 553,207 tonnes in 2021/2022F. On a negative note, volatility is expected to continue on the supply front. An industry expert said that as of 25 May, there was a big price spread between old crops and new crops of rapeseed ranging from US$50/tonne to US$70/tonne. This makes production of rapeseed-based biodiesel unviable amidst an existing domestic food cooking oil demand.

• Financial Times reported that as sanctions throttle supplies of fertiliser from Russia and Belarus, buyers are scrambling for cargoes and warnings are growing of a global food crisis. In Brazil, potash prices have surged 185% over the past year, hitting records above US$1,100/tonne. In Europe, potash prices are up 240% to €875/tonne. Producers are now looking to capitalise on the surge in potash prices and geopolitical tensions that have upended traditional trade flows and highlighted the importance of the security of supply. BHP is weighing whether to bring forward production from Jansen, a US$5.7bil potash project in in Saskatchewan, Canada to 2026F from 2027F.

Source: AmInvest Research - 13 Jun 2022