• Bloomberg cited the Director General of MPOB as saying that CPO prices are expected to hover between RM3,800/tonne and RM4,000/tonne by the end of the year compared to an earlier forecast of RM4,200/tonne. Ahmad Parveez Ghulam Kadir said that the attractive prices of sunflower and soybean oil would have an impact on CPO. Also, CPO output in Malaysia is envisaged to rise to 19mil tonnes in 2023E from 18.5mil tonnes in 2022. Productivity is anticipated to increase in the next 2-3 months as workers are gradually coming back to the estates.

• Reuters reported that Nutrien, which is one of the world’s largest potash producers, has indefinitely paused ramp-up plans for potash production and halted work on its clean ammonia project at Geismar, Lousiana. Potash prices have eased after the resumption of shipments from major supplier, Belarus. Belarus’ exports were frozen last year due to sanctions after Russia’s invasion of Ukraine. The suspension of work at the 1.2mil-tonne clean ammonia plant was due to elevated costs and uncertainty on the timing of uses for clean ammonia.

• Singapore Straits Times reported that India could fall short of its biofuel production targets in 2023E because of a rice supply crunch, dealing a potential blow to ambitious plans to use ethanol to cut fossil fuel imports and reduce vehicular emissions. The government aims to blend petrol sold in the country with 12% ethanol, produced domestically from sugar cane and rice by the end of October 2023. However, the government-run Food Corporation of India stopped supplying surplus rice in early July to distilleries that produce the biofuel.

• According to the Star, the Plantation and Commodities Ministry will propose oil palm replanting grants for smallholders to the Ministry of Finance. Currently, the government is providing soft loans through Agrobank where the smallholders are only charged interest or a management fee of 2% and repayments only start in the 5th year. The soft loan is not only for replanting but also for purchases of fertiliser, pesticides, agricultural inputs and tools.

• Bloomberg reported that a US$210.5mil palm oil project in Uganda, which is backed by Wilmar Intenational, is expected to begin harvesting next year at its Buvuma hub. The NOPP is a 10-year public private partnership that seeks to boost rural income through palm oil production. Under the agreement with the government, 26,500ha will be established by Bidco, which is backed by Wilmar, while another 13,500ha are for smallholders.

• Bloomberg also reported that Argentine farmers are forecast to plant 17mil hectares of soybean next season, 1mil more than the previous year. It would be the first increase in nearly a decade. One of the reasons for the increase is the brutal drought last season, which hurt farmers’ finances. Soybeans are cheaper to grow than corn. With normal weather, soybean can produce 48mil tonnes vs. 20mil in 2022/2023E.

Source: AmInvest Research - 14 Aug 2023