• Reuters reported that Argentina has cut its soybean export tax from 30% to 29.5% in a plan to gradually reduce the tax to 18% over two years. The plan will see the tax being cut by 1.5 percentage points over 24 consecutive months. The government is also cutting the export tax on soybean oil and soybean meal from 27% to 26.5% each. The export tax on soy derivatives will fall to 15% by year 2020. In our view, the move will encourage Argentinean farmers to export more soybeans. This may increase soybean supply and exert pressure on soybean prices.

• In an another development, Bloomberg reported that soybean farmers in northern Argentina are in a race against time to get seeds in the ground before the planting window shuts in a little more than two weeks. Seedings have been delayed as farmers wait for rains to come. The northern provinces have until the third week of January to sow 2.14mil hectares of unplanted areas. These are 12% of total areas in Argentina.

• Associated Press said that Cargill has suspended business with a major Guatemalan palm oil supplier that has been accused of human rights violation and environmental degradation. In late November 2017, Cargill suspended business with REPSA. Cargill said it will reassess the relationship if REPSA shows a commitment to improvements.

• According to The Star, Liberian-President elect George Weah has set modest goals for his six-year term, calling for the country to start exporting crops and repairing decrepit infrastructure. More than 60% of Liberians depend on agriculture for their livelihood and multinationals like Sime Darby Plantation have invested heavily in palm oil plantations. But the sector has languished due to low productivity, forcing Liberia to import more than 80% of its staple foods. In FY17, Sime Darby Plantation recorded an impairment of RM202mil on its Liberia investment.

• According to www.cofeed.com, China's palm inventory at the major ports stood at 587,100 tonnes as at 29 December 2017. In comparison, palm inventory at the major ports in China were 309,000 tonnes as at 29 December 2016. Average palm inventory at the major ports in China were 482,456 tonnes in 2017 compared with 368,047 tonnes in 2016. The rise in China's palm inventory may result in slower demand from the country in 2018F. There is a possibility that China's palm imports may ease in 2018F after an 18.8% YoY increase in 11M2017.

• SGS and Intertek said that Malaysia's palm shipments improved by 9.8% and 6.7% respectively in December compared with November 2017. SGS reported that Malaysia's palm exports to India rose by 23.2% while the EU's palm imports climbed by 38.0%. On the other hand, Malaysia's palm exports to China slid by 16.0% MoM in December 2017. According to Intertek, RBD palm olein accounted for 31.7% of Malaysia's palm shipments while crude palm oil made up another 16.5%.

Source: AmInvest Research - 8 Jan 2018