• Bloomberg reported that the first meeting on the ban on palm biodiesel among the EU Parliament, EU Commission and EU council countries is scheduled to take place on 27 February and will continue through May 2018. Malaysia's Plantation Industries and Commodities minister said that Malaysia's palm oil mission has yielded very promising results as five out of six of EU's biggest countries have committed not to support the discrimination against palm oil.

• According to Reuters, Unilever has laid bare its entire palm oil supply chain including all suppliers and mills it sources from, to boost transparency. Unilever said it is the first consumer goods company to publish such details. The group disclosed the location of more than 1,400 mills and over 300 direct suppliers of CPO used in products from snacks to cosmetics. Unilever hopes that by sharing the information, this would be the start of a new industry-wide movement towards supply chain transparency.

• According to www.feednavigator.com, the American Soybean Association (ASA) is concerned over potential export challenges for shipping soybeans to China if the USA imposes steel and aluminium tariffs on China's products. ASA president said that China is not only the USA's biggest customer, it also purchases more soybeans than all of USA's customers combined. An additional concern is that competitors in Argentina and Brazil would use the event to take a larger share of the soybean market in China. In our view if China imposes trade restrictions on US soybeans, this would be negative for US soybean prices. There is risk that the drop in US soybean prices may also result in a fall in CPO prices. Currently, the USA has not announced any tariff on China's steel and aluminium products yet.

• In a related development, www.agriculture.com said that Brazil's soybean harvest is falling behind. According to AgRural's survey, the harvest has been 17% completed so far vs. the five-year average of 19% and 26% a year ago. The rains are damaging crops in some regions especially in the center-west of Brazil. The silver lining is that in Mato Grosso, which is the largest soybean producing state in Brazil, an industry official said that even with the excessive rains, the crops are still considered good. About 30% to 45% of soybeans in Mato Grosso have been harvested so far.

• The same website also reported that IOI Loders Croklaan and Kerry Group have partnered with Wild Asia and Fortuna Palm Oil Mill in Sabah to implement a three-year small growers support programme. The scheme aims to support the inclusion of small holders into the supply chain, boost productivity and encourage the implementation of sustainable agricultural practices. An official with IOI Loders Croklaan said that IOI has a few non-RSPO certified mills in Telupid, Beluran and Kinabatangan with about 5,000 smallholders and growers. IOI will start with one mill first and will increase the number throughout the programme.

• According to the Solvent Extractors Association of India, inventory of edible oils at the major ports in India rose from 2.176mil tonnes as at 1 January to 2.195mil tonnes as at 1 February 2018. The inventory of 2.195mil tonnes was 26.9% higher than the 1.73mil tonnes recorded a year ago. The highest level of inventory ever recorded was 2.51mil tonnes, which was registered as at 1 January 2016 while the lowest was 1.255mil tonnes back in February 2012. The increase in the inventory of edible oils does not augur well for palm oil. There is risk that India's demand may soften in the coming months. On a positive note, soybean prices have been holding up due the drought in Argentina. This may help support CPO prices.

Source: AmInvest Research - 26 Feb 2018