• Bloomberg quoted GAPKI (Indonesian Palm Oil Association) as saying Indonesia should limit palm oil mix in biofuels to 40%. The 40% limit is needed to ensure enough supplies for export and local markets. A cap is necessary for sufficient availability of palm oil when production stagnates or declines. Any move to boost palm oil mix to 50% or more will be a problem for Indonesian exports.

• Reuters reported that insufficient rainfall in Brazil’s top soybean and corn growing state of Mato Grosso has raised questions about the country’s soybean potential. Forecasts suggest that Mato Grosso will finish November with total rainfall around 45% below normal and that follows a 35% deficit in October. The impact on Brazil’s exports is significant if Mato Grosso is in trouble. In the past 3 years, Mato Grosso was responsible for 29% of Brazil’s soybean exports and nearly two-third of corn shipments.

• Reuters cited industry players as saying that Indian buyers have curtailed purchases of palm oil for December and January deliveries due to rising prices and as refiners face negative margins after heavy imports in the past few months. An industry player said that currently, there is no import parity. Older imported stocks are being offered at lower prices compared to the price of new shipments. The landed cost of CPO for December shipments on the west coast without import tax is 77,500 Rupees per tonne whereas older imported oil is being offered at 76,500 Rupees per tonne.

• Asia News Network quoted the Vietnam Sugarcane and Sugar Association as saying that sugar could become more expensive during the remaining months of 2023E. Industry experts said a decrease in supply as India and Thailand reduced their output, was the main factor behind the recent hike in prices. In Vietnam, inventory has been running low for some time. Industry experts advised sugar producers to capitalise on high prices to strengthen domestic sugar cane production and rely less on imports.

• Bloomberg reported that Brazil is eyeing a boom in cocoa as farmers respond to a surge in prices. There is fresh money flowing into the industry, producers are venturing into new areas and traditional growers are receiving aid. Brazil is looking to double cocoa production by 2030F. According to an industry player, Brazil would be producing enough to satisfy domestic demand by 2025F. This would help ease a severe global shortage of the chocolate ingredient. CocoaAction Brasil has mapped out at least 24 ongoing projects to aid local supply chain with a total investment of over 150mil Brazilian Reais (US$30.6mil).

Source: AmInvest Research - 4 Dec 2023