• Bloomberg quoted the acting chairman of Indonesia’s palm oil board as saying that the country’s palm oil stockpiles may return to normal at the end of August if the government accelerates permit issuance, and exporters speed up shipments. The board has asked the government to cut export levy and tax by 25% to ease pressure on FFB prices. The government needs to hold 120,000 tonnes of bulk cooking oil reserves every month to control local prices.

• Also, Indonesia has raised its export quota to allow companies to ship more of their production abroad starting 1 July to cut inventories. A government official said that the move will prompt companies to buy more FFB from farmers and boost prices significantly. Under the new export quota, producers can export oil at a rate of 7x their domestic sales instead of 5x previously. As of end-June, the total volume of domestic sales obligations exceeded 270,000 tonnes. The volume can be converted into export quotas that are valid for six months.

• Free Malaysia Today quoted Plantation Industries and Commodities Minister Datuk Zuraida Kamaruddin as saying that CPO prices are not expected to fall below RM4,500/tonne. She said that the new norm would be between RM4,500/tonne and RM5,000/tonne. Zuraida added that the government will not hesitate to withdraw or suspend licences of cooking oil manufacturers if there was proof that they were selling the oil in 1kg polybags in the black market. Zuraida said that the government has allocated 60,000 tonnes of subsidised cooking oil to 32mil people in the country.

• DTN/Progressive Farmer reported that the majority of fertiliser products continued to be less expensive in the third week of June. The trend has been in place for a month now. Urea was 9% lower compared to last month. Nitrogen fertiliser had an average price of US$902/tonne, a decline of US$87/tonne. With lower fertiliser demand after the spring plantings, prices would normally drop in June/July and then firm up when retailers refill their inventories over the summer. Fertiliser prices would firm again in the fall as demand increases when application takes place.

• The Edge Markets cited international experts in the MPOC’s webinar series as saying that Malaysia must aggressively communicate its palm oil sustainability initiatives, particularly the MSPO (Malaysian Sustainability Palm Oil) certification scheme to remove the commodity’s high-risk status. A speaker said the MSPO certification scheme and other standards are “less known and understood” in Brussels and elsewhere. He also said that there is a discussion in the EU on banning forced labour product inputs that will be published this year. The speaker added that EU member states and EU stakeholders would like to see an explicit direct ban while the European Commission president has pledged to make imports of forced labour products illegal.

• The Express Tribune quoted Indonesia’s ambassador as saying that palm oil shipments from Indonesia to Pakistan will be completed by 10 July under the current phase. He said that so far, 5 ships have arrived in the port of Karachi and another 5 will arrive by 10 July. Indonesia is the largest supplier of palm oil to Pakistan. According to the Pakistan Bureau of Statistics, palm imports surged 46.7% YoY in the first three quarters of fiscal year 2021/2022E.

Source: AmInvest Research - 12 Jul 2022