• Bloomberg quoted Indonesia’s Energy and Mineral Resources Ministry as saying that Indonesia will use 13.2mil KL (11.5mil tonnes) of biodiesel in 2023F, a 19% increase from this year. Indonesia will be implementing B35 from 1 January 2023 onwards. As many as 21 biodiesel producers including Wilmar Nabati Indonesia, SMART, Permata Hijau Palm Oleo and Tunas Baru Lampung will supply the fuel to retailers.

• Bloomberg also cited Dorab Mistry as saying that Indonesia’s mandate to use more palm oil for biodiesel and lower reserves in Malaysia will continue to support CPO price in the coming months. CPO may trade between RM3,500/tonne and RM5,000/tonne between now and the end of May 2023 unless the war in Ukraine ends. Dorab added that Malaysia will produce close to 19mil tonnes in 2023F as labour shortage eases. Indonesia will produce only about 1.5mil tonnes more in 2023F. Malaysia’s palm inventory will continue to drop until May 2023 and may slip below 2mil tonnes.

• Reuters reported that Bunge Ltd will be investing about US$550mil to build a soy protein concentrate facility at Indiana to cater to a rising demand for food products and processed meats. The new facility, which is adjacent to the company’s soybean processing plant in Morristown, is expected to process an additional 4.5mil bushels of soybeans. Soy protein concentrate is used to make meat alternatives and help increase nutritional value in existing meat and poultry products. The size of global plant-based meat market is projected to reach US$24.8bil by 2030F.

• According to Jakarta Globe, the EU Ambassador to Indonesia has expressed confidence that most palm oil companies in the country can meet the bloc’s strict requirements against deforestation for commodities, including palm oil. The ambassador’s comments were in response to the EU’s recent legislation prohibiting companies from selling coffee, beef, soy, chocolate, rubber and some palm oil derivatives associated with deforestation in the EU. The law will require companies to provide a due diligence showing that their supply chain does not contribute to forest destruction before selling their goods to the EU or face significant fines. Many companies in Indonesia have expressed their concerns that the law would make it impossible for exporters to ship their commodities to the EU.

• Argus Media reported that the EU could lose its hegemony in biofuel feedstock in Asia Pacific soon due to increased competition. EU demand is being hit by recession fears, uncertain diesel demand and mandate changes. On the other hand, biodiesel production is rising in Asia. Finnish producer, Neste is expected to complete its 1.3mil tonnes/year hydro-treated vegetable oil (HVO) and sustainable aviation fuel (SAF) expansion in Singapore in March 2023. This will bring its total capacity to 2.6mil tonnes/year. In China, Oriental Energy’s 1mil tonnes/year SAF refinery and 300,000 tonnes/year of HVO capacity from Zhuoye and Shandong High Speed Renewable Energy will come online in 2023F.

Source: AmInvest Research - 27 Dec 2022