• Bloomberg reported that Wilmar International has filed a pair of cases at the Court of International Trade in respect of the USA's anti-dumping duties on biodiesel products from Indonesia. Recall that the US Commerce Department has proposed anti-dumping duties of up to 72.28% on biodiesel products from Indonesia. A duty of 34.45% is imposed on Wilmar's biodiesel products. In one case, WIlmar is contesting on how the Commerce Department calculated the rates. In another case, Wilmar is contesting the International Trade Commission's determination that imports are taking a toll on the USA's biodiesel industry, a pre-requisite for the USA to impose anti-dumping duties.

• According to Bloomberg, Buenos Aires Grain Exchange has cut Argentina's 2018F soybean production from 54mil to 51mil tonnes due to the drought. In comparison, the USDA is forecasting Argentina's soybean production at 56mil tonnes for 2017E/2018F vs. 57.8mil tonnes in 2016/2017. If Argentina's soybean output turns out to be weaker than expected, this may support soybean and CPO prices.

• Bloomberg quoted the Indonesian Palm Oil Association as saying that CPO production in Indonesia will increase by 10% in 2018F. Palm oil output in Indonesia will climb to a record this year as wet weather boosts FFB yields. The official with the Indonesian Palm Oil Association added that the country's CPO production rose by 18% to 38.2mil tonnes in 2017. In contrast to the Indonesian Palm Oil Association's forecast, Oil World estimates that CPO production in Indonesia will rise by 4.9% from 36.5mil tonnes in 2017 to 38.3mil tonnes in 2018F. Indonesia does not have official statistics on the country's palm oil industry. Hence, there are instances when production figures from industry experts do not tie.

• China's soybean imports rose by 6.1% YoY in December 2017 while palm imports fell by 16.5%. In 2017, the country's soybean imports increased by 13.8% YoY while palm imports expanded by 13.4%. China's 13.4% growth in palm imports in 2017 came after a 24.2% decline in demand in 2016. We estimate Malaysia's market share of China's palm imports at 30% to 40% in 2017 while Indonesia is estimated to account for the balance 60% to 70%. We think that China's demand for palm oil would soften in the coming months as the country has ample inventories. Palm inventories at the major ports in China stood at 0.6mil tonnes as at 15 January 2018 vs. the average of 0.48mil tonnes in 2017.

• China imported its soybeans mainly from Brazil and the USA in 2017. Brazil accounted for 53.3% of China's soybean imports in 2017 while the USA made up another 34.4%. China's soybean imports from Brazil grew by 33.3% in 2017. In contrast, China's imports of soybeans from the USA fell by 3.8% last year. We believe that China imported fewer soybeans from the USA due to the drop in the protein levels of the beans.

• According to Jakarta Globe, Unilever and Indonesia's state-owned plantation company, Perkebunan Nusantara (PTPN) have signed an agreement with palm oil mills and farmers to accelerate sustainable palm oil production under the principle of "No Deforestation, Peat and Exploitation". As part of the agreement, PTPN will provide Unilever with access to its factories and workforce while Unilever will provide the farmers with training and funding.

• SGS and Intertek reported that Malaysia's palm shipments declined by 8.8% and 9.3% respectively in January compared with December. SGS said that palm exports to the EU fell by 18.2% and shipments to China declined by 28.5%. On a positive note, India's imports of Malaysia's palm products rose by 36.7%. According to Intertek, RBD palm olein made up 35.0% of the palm shipments while crude palm oil accounted for another 24.5%.

Source: AmInvest Research - 5 Feb 2018