• Bloomberg reported that Nestle SA has pledged to cut its ties with Astra Agro Lestari due to land rights abuses and environmental harm. Nestle SA instructed its direct vendors to ensure that palm oil from 3 entities linked to Astra Agro Lestari does not enter its supply chain in future. Nestle expects to complete the process by the end of the year.

• Bloomberg quoted Dorab Mistry as saying that CPO price may fall to RM2,500/tonne by yearend as production recovers strongly and demand languishes. Dorab Mistry also said that Malaysia will produce 18.5mil tonnes of palm oil in 2022E vs. 18mil tonnes in 2021 while Indonesia will produce an additional 3mil tonnes. Mistry reiterated a call for Indonesia to remove all export taxes and levies until year-end to accelerate shipments. He added that Indonesia should abolish the Domestic Market Obligation policy.

• In contrast to Dorab’s forecast, the Indonesian Palm Oil Association (GAPKI) said that CPO output in the country may fall to 45mil tonnes this year from 46.9mil tonnes last year due to lower productivity. Planted areas have not expanded over the past several years while new trees have not reached maturity yet. Stockpiles at the end of 2022F may be slightly lower than 5mil tonnes vs. 4.1mil tonnes a year earlier.

• Bloomberg cited the president of the India Vegetable Oil Producers Association as saying that the country’s palm purchases are expected to climb to 8mil tonnes in 2022E/2023F from 7.7mil tonnes a year earlier. In contrast, soybean oil imports are seen falling to 3.6mil tonnes in 2022E/2023F from 4.1mil tonnes in 2021/2022E. CPO prices on cost of freight basis in India are likely to be in the range of US$900-US$1,000/tonne in 4Q2022 and US$1,100- US$1,150/tonne in 1Q2023.

• The Financial Express reported that edible oil trade associations from India, Pakistan, Nepal, Sri Lanka and Bangladesh are setting up the Asian Palm Oil Alliance Association (APOA). The objective is to gain collective bargaining power and make imports sustainable. The first chairman of APOA, Atul Chaturvedi said that industry associations of Asian palm oil importing countries, unlike their counterparts in Europe, are not involved in shaping the global discourse on sustainable palm oil in a collective way. Instead, they are forced to follow sustainability standards that do not reflect market realities.

• S&P Global Platts cited market participants as saying that India’s soybean harvest in 2022E/2023F is expected to be higher than the government’s projection on the back of steady acreage and adequate rainfall. Soybean production is seen increasing by 3% to 13.1mil tonnes in 2022E/2023F from 12.8mil tonnes in 2021/2022E. In contrast, the government is pegging soybean output at 12.9mil tonnes in 2022E/2023F. An industry expert said that the government may have estimated a smaller output due to a decline in planted areas in Madhya Pradesh. However, adequate showers are seen to be boosting yield potential across the states. A large soybean harvest is expected to result in lower soybean oil imports going forward. Trade sources said that India’s soybean oil imports are projected to be 3.8mil-4mil tonnes in 2021/2022E vs. previous estimates of 4.2mil-4.5mil tonnes.

Source: AmInvest Research - 3 Oct 2022