• S&P Global Platts reported that soybean supply in China is expected to decline in the coming weeks as stricter customs inspections since April lead to longer-than-expected waiting times and demand disruption. Since the first week of April, the average time to inspect a vessel by China’s customs leapt to over 20 days compared to the standard 3 to 4 days, resulting in a decline in imports last month. Traders said that the introduction of stricter customs inspection norms was likely an attempt by the government to appease domestic soybean farmers. Chinese soybean farmers have been complaining about low demand for domestically grown beans by the crushing sector as crushers preferred better quality beans from Brazil or the US.

• Reuters reported that based on shipping data that it has seen, Brazil is exporting a combined 120,000 tonnes of soybeans to buyers in the US as the price of Brazil’s soybean is a bargain even for importers in the US. The 120,000 tonnes of imports to the US were the largest since 2021, when nearly 178,000 tonnes arrived in May and June, according to US Census Bureau trade data. The shipping data identifies the buyers as chicken producer Perdue Farms and global grains merchant, Archer Daniels Midland.

• Barron’s reported that the European Commission is investigating alleged fraudulent biofuel imports from China following a complaint from a member country. The commission is “looking into suspected cases” in cooperation with the complaining member state. A source said that the complaint was made by Germany. An industry group for biofuels, the European Waste-based and Advanced Biofuels Association said that “a recent enormous spike of Chinese exports of biodiesel with volumes deemed to be potentially fraudulent, has depressed biodiesel markets across the EU”.

• In a related development, Bloomberg reported that Chinese biodiesel producers has pledged to improve compliance and export standards, days after European rivals called for action to stem “potentially fraudulent” shipments. According to the Chinese group, China’s exports of methyl ester to the EU rose by almost 40% to 1.79mil tonnes in 2022. Production capacity is expected to increase to 3mil tonnes this year. The USDA said that nearly all of China’s capacity is export-oriented to take advantage of EU tax policies.

• Reuters reported that a group of US congressmen have formally complained about what they call unfair ethanol trade practices by Brazil that includes a blockade of US companies seeking to take part in the Brazilian low-carbon biofuel programme, RenovaBio. Under RenovaBio, companies such as ethanol makers generate carbon credits called CBios, from lower emissions of biofuels when compared to oil-derived fuels such as gasoline. Those carbon credits are sold to fuel distributors in Brazil who have targets to cut emissions or in a secondary market at Brazil’s B3 exchange. The lawmakers in a letter to the US Trade Representative also complained about the implementation of an import tariff of 16% on US ethanol. The import tax will increase to 18% in 2024F.

• The Star reported that policymakers in the UK have given their commitment to the recognition of the MSPO (Malaysian Sustainable Palm Oil) certification. Also, the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is expected to take place in a few months. Malaysia has negotiated with the UK to eliminate tariffs on Malaysian palm oil to zero from 12%. Malaysia will also be working with the UK to introduce a law to prevent negative labelling of products from Malaysia.

Source: AmInvest Research - 12 Jun 2023