• Bloomberg reported that Indonesia will maintain its policies on domestic market obligation (DMO) for cooking oil as well as the export ratio. A government official said that the basic ratio for regulating the volume of palm oil shipments will be maintained at 4x the amount that companies are required to sell in the domestic market. This is to prevent a sudden surge in export permits. Indonesian exporters had 6.7mil tonnes of export rights as of October excluding previously frozen quotas. The trade ministry wants to keep the export rights between 4mil tonnes and 10mil tonnes.

• Bloomberg also cited the Energy and Mineral Resources Ministry as saying that Indonesia’s biodiesel consumption was 8.9mil kilolitres (7.8mil tonnes) in 9M2023. The full year target is 13.15mil kilolitres (11.5mil tonnes). Indonesia has an annual capacity to produce 20mil kilolitres (17.4mil tonnes). Exports of biodiesel were 121,000 kilolitres (105,000 tonnes) in 9M2023.

• Reuters cited sources as saying that scarce rainfall due to El Nino has caused disparities in the speed of soybean planting in Brazil’s Mato Grosso state and this could impact sowing of second corn. Soybean farmers in Mato Grosso are worried that unusual heat and dryness will lead to replanting of some areas while lowering yields in others. Better rain conditions are expected in states such as Goias and Mato Grosso. However, soybean sowing could be 15 days late on average in relation to the previous cycle.

• According to Reuters also, US soybean exporters are seeing less action than usual from China although the 2 countries have signed a deal that could pave a path towards more Chinese purchases. The potential timing of the sales is uncertain as similar agreements in the past have sometimes led to immediate announcements of large US export sales while at other times, they have not. Also, the agreements are nonbinding letters of intent to buy at a later date, so the signing does not necessarily suggest that a sale has occurred. As of 12 October, China had purchased just under 10mil tonnes of US soybeans for delivery in 2023E/2024F. Out of the trade war years between 2018 and 2019, this was the lowest volume since 2008.

• Reuters reported that Indonesia has flown its first commercial flight using palm oil-blended jet fuel. Operated by Garuda, the Boeing 737-800NG aircraft carried more than 100 passengers from Jakarta to Surakarta city, which is about 550km away. The palm oil-blended jet fuel is produced by PT Pertamina at its Cilacap refinery, using hydro-processed esters and fatty acid technology and is made of RBD palm oil.

• New Straits Times reported that nearly 500,000 smallholders in Malaysia are expected to be connected to a RM10mil platform that will trace transactions, helping them to comply with criteria and traceability requirements for sustainability certification. This is thanks to a new traceability platform that will soon be launched by MPOB. The traceability platform is a data collection system that records and tracks transaction details of palm oil products as well as preparing for compliance with EU legislation. The system involves direct licences tailored for key players including mills and dealers, all mandated to furnish it with comprehensive reports.

Source: AmInvest Research - 6 Nov 2023