• Bloomberg quoted MDA Weather Services as saying that a weak El Nino is coming in the next few months. La Nina ended between late January and early February 2017. A weak El Nino is not expected to affect palm oil production significantly.

• It was also reported that China will be offering subsidies to soybean farmers in the northeast to boost soybean plantings and household income. The subsidies for soybean farmers will be higher than those for corn farmers. The amount of subsidies was not disclosed. Corn farmers in the northeast received subsidies of 150 yuan per 0.07 hectare in 2016.

• Financial Tribune said that Iran's palm oil market is expected to reach US$648.4mil by year 2025F (2015: US$232.3mil). According to a study by a US consultant, increased usage of palm oil in the cosmetics and biodiesel industries has contributed to the growth of palm oil imports in the country. Also, Malaysia is negotiating a reduction in tariffs under a free trade agreement, which is expected to boost palm oil imports further.

• According to Jakarta Post, Indonesia's vice president has called on the European Union (EU) to stop its negative campaigns against palm oil products. The vice president said that although it is a matter of trade competition, the EU has used environmental issues against palm oil. A government official added that Indonesia is concerned over the EU's resolution to only import sustainable palm oil after year 2020F, although the resolution is not binding for EU members.

• Reuters reported that Indonesia's Environment and Forestry Ministry wants to extend a moratorium on new licences for the development of palm oil on peatland and primary forests by another two years. The moratorium was established to reduce gas emissions linked to forest fires. The moratorium expired on 20 May 2017. If approved, this will be the third extension since 2011. As at November 2016, the forest moratorium covered more than 66mil hectares.

• Economic Times said that India's imports of vegetable oils jumped by 7% YoY to 1.3mil tonnes in April 2017. However, comparing the first six months of the November 2016 to April 2017 period against the corresponding period in the previous season, the country's vegetable oil imports declined by 6%. Inventory of edible oils at the ports and pipelines increased from 1.9mil tonnes as at 1 April to 2.1mil tonnes as at 1 May.

• According to Reuters, a Chinese consumer backlash against genetically modified (GMO) crops may affect the demand for soybean oil. This may in turn hit the soybean crushing industry, which depends on GMO soybeans from US and other countries. Soybean oil normally accounts for 36% of cooking oils used in Chinese kitchens. However, a Nielsen survey last year showed that 70% of Chinese consumers avoided or limited at least some GMO ingredients compared with the global average of 64%. Supermarket sales of soybean oil fell by 1% to 35bil yuan last year.

• SGS and Intertek reported that Malaysia's palm oil shipments rose by 7.1% and 8.9% respectively in the first 15 days of May compared with the same period in April. Iran's palm imports surged by 88.8% while India's demand improved by 35.8%. Malaysia's palm exports to the European Union (EU) fell by 13.4% while China's imports plunged by 58.6%. Intertek said that RBD palm olein accounted for 40.2% of Malaysia's palm shipments in the first 15 days of May while crude palm oil made up another 21.9%.

Source: AmInvest Research - 22 May 2017