• Bloomberg quoted Plantation Industries and Commodities Minister Zuraida Kamaruddin as saying that Malaysia plans to boost its market share in the EU by focusing on the countries that do not traditionally buy palm oil. Estonia, the Czech Republic and Hungary have started purchasing palm oil from Malaysia in recent months. Estonia bought Malaysian palm oil worth RM20.2mil between January and July while exports to Hungary and the Czech Republic were worth RM7.6mil in total. Malaysia’s ability to make inroads to these new markets were partly due to the war in Ukraine that has disrupted supplies of sunflower oil and rapeseed oil.

• Bloomberg cited a Buenos Aires Grain Exchange report as saying that Argentine farmers have traded 8.4mil tonnes of soybeans through 15 September after the government temporarily devalued the Peso on 5 September. Out of the 8.4mil tonnes, new sales were 5.8mil tonnes. Argentine farmers have completed transactions on delayed price contracts for another 2.6mil tonnes. The 8.4mil tonnes was about 19% of 2022E’s soybean harvest.

• Reuters cited industry officials as saying that Indonesian palm oil producers are reducing their hefty inventory overhang with discounts and aggressive sales to India. An industry player in India said that India has been aggressively buying from Indonesia as prices are attractive and the Deepavali festive period is approaching. He expects India’s palm imports from Indonesia to be 2mil tonnes between August and November. Another industry player in India said that Indonesian players are offering a discount of US$5/tonne to Malaysia prices. Indonesian producers offered discounts that were as high as US$15/tonne in July-August when the export levy was first removed.

• Reuters reported that farmers in Asia are busy planting palm oil but nurseries are struggling to keep up with demand for sprouts and seedlings. The demand surge comes as supply for germinated sprouts has fallen as oil palm nurseries scaled down production during the pandemic to adjust for weaker demand. Industry officials said that Indonesia and Malaysia are focusing on replanting while India and Thailand are trying to expand acreage. Industry officials estimate that Malaysia has the capacity to produce up to 80mil germinated sprouts a year and Indonesia, 200mil. However, Indonesia is only currently producing half of that amount or 110mil per year. An industry player in Malaysia said that demand for Malaysia’s germinated seeds is so high that some nurseries are rejecting orders. He added that his nursery has a waiting list of 6 months.

• According to Reuters also, Argentina’s main farming zones are facing the driest conditions in 50 years, raising fears about a new “great drought” and stalling planting of corn. The Pampas plains of Argentina are hitting the start of the corn planting season after almost no rainfall in 4 months. The Rosario Grains Exchange is likely to cut its planting estimate for 2022E/2023F corn. It is currently predicting a planting area of 8.2mil hectares. In Argentina, late September usually heralds the start of a wet spring season but a third straight La Nina is expected to limit the precipitation this year.

Source: AmInvest Research - 26 Sept 2022