• According to Bloomberg, China's palm imports rose by 22.6% YoY in November 2017 vs. a 10.8% rise for soybean. In the first 11 months of the year, China's palm imports improved by 18.8% YoY. In contrast, the country's soybean imports expanded by only 14.8% YoY in 11M2017. We estimate Malaysia's share of China's palm imports at 37.2% in November 2017 and Indonesia's share at more than 50%.

• China imported soybean mainly from Brazil and the US in 11M2017.Brazil accounted for 57.0% of China's soybean imports in 11M2017 while the US made up another 31.0%. In terms of growth, Brazil was the winner. China's imports of Brazil's soybean grew by 29.3% YoY in 11M2017 while imports of the US' soybean only inched up by 2.3%. China's imports of Argentina's soybean fell by 25.9% YoY in 11M2017.

• Reuters reported that half of US soybeans exported to China this year would not meet Chinese rules for routine delivery in 2018. More stringent quality rules, which take effect on January 1, 2018 could require additional processing of the US oilseed at Chinese ports to remove impurities. This could raise costs and reduce sales to China. An industry expert said that reducing the impurities to 1% to less could increase US exporters' costs by 15 cents per bushel. The USDA plans to advise farmers on how to adjust production and harvesting techniques to reduce seed contamination.

• Jakarta Globe quoted a study from University of Indonesia as saying that Indonesia's tougher peatland protection regulation may cost billions of dollars and hurt a province's regional revenue. A researcher said that the government regulation on the protection and management of peatland ecosystem is estimated to result in a loss of Rp76 trillion (US$5.32bil) from a decline in the production of pulp and paper, palm oil, job loss and weaker economic activities in regions highly dependent on timber and palm oil. Riau may see its regional GDP decline by Rp16.15 trillion per year and a loss of income for the local community of Rp4.9 trillion per year from a fall in business activities from the pulp and paper industry.

• Reuters cited an EU executive as saying that rapeseed will lose ground as a crop in the EU in the next decade as biofuel demand wanes and other oilseeds capture more growth from edible oil and livestock feed markets. A sharp decline in the rapeseed area to around six million hectares by year 2030/31 vs. an average of 6.5mil hectares in the past five years would outweigh improving yields and push down production, the European Commission (EC) said. The EC added that the gradual demand shift from rapeseed to soybean is becoming more apparent. Rapeseed oil accounts for over 60% of vegetable oil use in biodiesel in the EU, leaving it more exposed to an expected decline in biofuel demand.

• SGS and Intertek said that Malaysia's palm shipments rose by 1.3% and 1.04% respectively in the first 25 days of December compared with the same period in November. SGS reported that Malaysia's palm exports to India declined by 22.8% while China's palm imports eased by 15.3%. On a positive note, exports to the EU increased by 32.0%. According to Intertek, RBD palm olein accounted for 35.1% of Malaysia's palm shipments while crude palm oil made up another 15.0%.

Source: AmInvest Research - 2 Jan 2018