• The European Union's (EU) sugar quota ended last weekend. Bloomberg reported that with the abolishment of the quota, sugar companies in the EU can produce and export as much as they want. The USDA forecasts that the EU's sugar exports will rise by almost 50% to 2.2mil tonnes this season. Another industry expert said that the EU's sugar production will surge by 23% in the season starting 1 October 2017. This development is positive for sugar refiners such as MSM Malaysia as the drop in the cost of raw sugar would improve operating profit margins. Raw sugar accounts for almost 90% of MSM's production cost.

• Bloomberg quoted Olam International as saying that grains and oilseeds prices will remain low in 2018F due to surging productivity in key export regions. A company official said that agricultural output per hectare has increased this year as farmers use better seeds, more fertiliser and new technologies. Almost perfect weather has also helped boost crop yields. He added that palm oil is very well-supplied with India and China well-stocked. Also, CPO prices are more likely to go down than stay around current levels.

• According to Bloomberg also, Indonesia palm inventory may have dropped in August due to lower production. A survey of planters indicated that palm stockpiles may have declined by 7.8% to 2.5mil tonnes from July to August. Palm oil production may have slid by 9.4% MoM to 3.4mil tonnes in August 2017. An industry player said that CPO production probably fell further in September before a recovery is expected to take place from October 2017 to January 2018.

• NST reported that the Malaysian Palm Oil Board (MPOB) will partly fund the audit fees for the MSPO certification for mid-sized oil palm estates. All oil palm estates must be MSPO-certified (Malaysia Sustainable Palm Oil) by 2019F. The MPOB will fund 70% of the MSPO audit cost for estates measuring 40.46ha to 1,000ha while for those larger than 1,000ha, the incentive will cover 30% of the audit cost. For downstream operations including palm oil mills, refineries and crushers, the MPOB will fund 30% of the MSPO audit cost. As at end-August 2017, about 245,381ha of oil palm estates and 22 palm oil mills are already MSPO-certified.

• Reuters said that European biodiesel producers are preparing to launch an anti-subsidy complaint against Argentine biodiesel imports, following a decision by the EU to significantly reduce the antidumping duties for Argentina. The group of producers called for a fast-track imposition of high-level EU countervailing duties to prevent an influx of products from Argentina.

• UKAgroConsult reported that Indonesia is fighting a negative campaign against the palm oil industry via a WTO (World Trade Organisation) forum. The Indonesia government organised the "Workshop on Sustainability and Non-Tariff Barriers to Trade: A Case Study of Palm Oil" end-September 2017 in Geneva, Switzerland. The workshop was supported by other palm producing countries such as Malaysia, Thailand and Colombia.

• SGS and Intertek said that Malaysia's palm oil shipments rose by 10.0% and 10.43% MoM respectively in September. According to SGS, Malaysia's palm exports to China climbed by 23.3%, which helped offset a 21.0% fall in shipments to the EU. Demand from Pakistan was 475.9% MoM higher in September while palm shipments to India declined by 13.4%. Intertek said that RBD palm olein accounted for 41.7% of the country's palm exports in September while crude palm oil made up another 20.5%.

Source: AmInvest Research - 9 Oct 2017