• Indonesian farmers are protesting against the usage of funds to subsidise biodiesel. According to Bloomberg, the Union of Palm Oil Farmers has filed a petition for judicial review of the biodiesel subsidy to Indonesia's Supreme Court. The union said that the use of export levies to subsidise biodiesel contradicts the 2014 Plantation Law. The union demands that more of the funds be spent on programmes to increase the farmers' skills, replanting and promotional activities on palm oil.
• Bloomberg cited the China National Grain and Oils Information Center as saying that stockpiles of the country's soybean imports fell by 360,000 tonnes to 6.45mil tonnes two weeks ago as crushing activities remained high and shipments dropped. About 1.9mil tonnes of soybeans were crushed two weeks ago. Going forward however, soybean crushing activities are expected to decline as plants shut down for the Chinese New Year holidays. Demand from animal feed mills is falling after the slaughtering of a large number of hogs and chickens ahead of the holidays.
• According to Radio New Zealand, authorities in Indonesia have issued four new palm oil permits in Papua despite a moratorium on palm oil expansion. Tabloid Jubi was quoted as saying that the permits cover a combined area larger than 400 sq km. The permits were facilitated by the Ministry of Environment and Forestry, which claimed that they were agreed to in principle by the previous administration in 2013 and 2014. However, the environment ministry's new director said that although it was legally obligated to issue the permits, the ministry has placed on hold more than 1.5mil hectares of land for further development.

• Bloomberg quoted the Rosario Board of Trade as saying that soybean yields in Pampas, Argentina could fall to the levels of 2008/2009 or 2011/2012 due to the drought. In Pampas, the impact of the drought has become noticeable with soybean plants losing pods, leaves or flowers. Average national soybean yields were 1.92 tonnes/ha in 2008/2009 and 2.19 tonnes/ha in 2011/2012. Two weeks ago, the Board of Trade forecasted soybean yields at 2.9 tonnes/ha. Recently, the Buenos Aires Grain Exchange cut its estimate of Argentina's 2018F soybean production from 54mil to 51mil tonnes due to the drought. Argentina accounts for about 16% of global soybean production.

• Reuters reported that Indonesia plans to file a case against the US Department of Commerce at the US Court of International Trade over anti-subsidy duties imposed on Indonesian biodiesel shipments. The Indonesian government is also planning to bring a complaint to the World Trade Organisation. Recall that the US has proposed anti-dumping duties of 34.45% to 72.28% on Indonesia's biodiesel products.

• According to Reuters also, Nestle has stopped buying palm oil from a Guatemalan company that has been accused of corruption. In a news conference, Guatemala's prosecutor accused Reforestadora de Palmas del Peten SA (REPSA) of paying bribes to receive tax credits. REPSA said that it would cooperate with the prosecutors' investigators.

• Nutrien, which is one of the largest fertiliser companies in the world, said that world potash demand in 2018F may match the 64mil tonnes achieved in 2017. It could also potentially reach 66mil tonnes. Nutrien forecasts demand from China to grow from 15.1mil tonnes in 2017 to 15.5-16mil tonnes in 2018F while in India, shipments are expected to match 2017's 4.5mil tonnes. The improvement in demand may result in increases in fertiliser prices. This would in turn, result in higher fertiliser costs for plantation companies. A few plantation companies in Malaysia have indicated that their fertiliser costs would rise by 10% to 12% in 2018F. Nutrien was formed by the merger between Canada's Potash Corp and Atrium.

Source: AmInvest Research - 12 Feb 2018

Plantation Sector - News flow for week 5 – 9 February