• Bloomberg quoted Indonesia’s weather agency as saying that there is a 50% chance of a weak El Nino in the latter half of the year. The 2023F dry season is seen to be drier than the last 3 years but not as much as 2015-2016. The dry season in parts of Riau, North Sumatra and Jambi starts in February.

• Bloomberg also reported that Indonesia is studying rules that would require exporters to trade at least some of their oils on the local exchange before shipping them overseas to improve control and data transparency. The goal is to have a reference price for a specific palm product from the exchanges, which can be used to calculate taxes and export levies.

• Also, Malaysia’s Plantations and Commodities Minister Fadillah Yusof said that Malaysia is still short of 63,000 foreign workers in the agri-commodities sector. Shortage of labour has hurt productivity and resulted in revenue losses of RM20bil in 2022. The government plans to simplify the process of hiring workers and will hold talks with source countries to hasten the labour intake.

• Reuters reported that the US Department of Energy (DOE) will allocate US$118mil to biofuel projects. The department plans to award US$118mil to 17 projects designed to accelerate the production of biofuels, which can be made from biomass including agricultural waste, soybean oil and animal fats. The funds add to the more than US$500mil that the DOE has invested in bio-energy/bio-refinery research and development over the past 2 years.

• According to Reuters, which quoted dealers, India’s palm oil imports could drop 29% in 1Q2023 from the previous quarter as record inventories and weak demand prompt refiners to curtail purchases and focus on liquidating stocks. Palm imports could fall to 2.2mil tonnes in 1Q2023 from 3.1mil tonnes in 4Q2022. According to the Solvent Extractors Association of India, vegetable oil stocks in India have jumped to a record 3.2mil tonnes at the start of January from 1.7mil tonnes a year ago.

• Jakarta Globe cited GAPKI (Indonesia Palm Oil Association) as saying that the country should not fear losing EU as Indonesia has many other markets to export to. GAPKI data showed that Indonesia exported 3.8mil tonnes of palm products to the EU in 11M2022. This was a 14% decline from the same period in 2021. In contrast to this, Indonesia’s exports to the US are rising. The US was the third largest importer of Indonesian palm oil last year. Indonesia shipped over 2mil tonnes of palm products to the US in 11M2022, up 15% YoY.

Source: AmInvest Research - 7 Feb 2023