• The USDA (US Department of Agriculture) has released the Prospective Planting Report for 2023F. The report was bullish for US soybeans and bearish for corn. In 2023F, American farmers are expected to plant corn on 92mil acres of land vs. consensus estimates of 90.9mil acres. On the other hand, soybean planted areas in the US are envisaged to be 87.5mil acres, marginally below consensus estimates of 88.3mil. Also, US corn inventory stood at 7.4bil bushels as at 1 March compared 7.8bil a year ago while US soybean stocks dropped to 1.7bil bushels from 1.9bil.

• According to Bloomberg, fertiliser has become cheaper as potash prices fall with a new India deal. Canpotex has agreed to a potash contract with Indian Potash at US$422/tonne (RM1,857/tonne) through September 2023. This was below the price of US$590/tonne (RM2,596/tonne) last year, which was the highest since 2013.

• Bloomberg also reported that Indonesia will maintain its biodiesel target of B35 this year even though the ramp-up has been slow. According to the Energy and Mineral Resources Ministry, Indonesia only consumed about 2.1mil kilolitres (1.8mil tonnes) of palm biodiesel between January and mid-March, down from 2.5mil kilolitres (2.2mil tonnes) in 1Q2022. Some industry players have said that producers need more time to meet the new target. A government official said that the government is giving fuel retailers flexibility until mid-year to make adjustments to their blending facility.

• The Telegraph of UK said that car manufacturers in the country will be forced to ration the number of petrol and diesel cars that they can sell from next year until 2030F when the sales will face an outright ban. The Government’s Zero Emissions Vehicle mandate (ZEV) will put yearly restrictions on car manufacturers on the proportion of petrol cars that they can sell, to drive up electric vehicle usage and hit net zero targets. The ZEV mandate will require manufacturers to ensure that 22% of all new cars sold are electric by the start of next year, rising to 80% in 2030F.

• Euractive.com reported that the amount of biofuels in Europe’s transport sector is expected to increase after the European Parliament and EU countries agreed on new rules to spur the use of renewable energy in the bloc. EU countries can either reduce greenhouse gas intensity in the transport sector by 14.5% in 2030F or opt for a binding target of at least a 29% share of renewables within the final consumption of energy in transport at the same date. The volume of second-generation biofuels made from used cooking oil and certain animal fats can also be ramped up with the introduction of “double flexibility” for the current 1.7% cap.

• Reuters reported that Shell has decided not to proceed with 2 projects to produce biofuels and base oils in Singapore. In late-2021, Shell announced that it was studying a 550,000 tonnes per year project at Bukom Island to produce sustainable aviation fuel (SAF) to major Asian hubs such as Singapore’s Changi Airport and the Hong Kong International Airport. However unlike Europe and the US, there is no mandate for airlines in Asia to use SAF. An industry source said that customers are not willing to accept higher costs for the fuel.

Source: AmInvest Research - 10 Apr 2023