• Bloomberg reported that Indonesia has spent Rp3.24trillion (US$230.7mil) on biodiesel subsidies in the first four months of the year. The country’s biodiesel consumption amounted to 970,000 kiloliters (844,948 tonnes) in 4M2018. The target is for Indonesia to achieve a biodiesel consumption of 3.2mil tonnes in 2018F, supported by subsidies of Rp9.8trillion (US$697.7mil).

• In another development, PT Perkebunan Nusantara III, the holding company of Indonesia’s state plantations, aims to increase CPO production by 30% by year 2020F. Bloomberg cited a company official as saying that the group’s CPO production is expected to rise from an estimated 2.7mil tonnes in 2018F (2017: 2.3mil tonnes) to 3.5mil tonnes by year 2020F. PT Perkebunan Nusantara plans to convert 50,000ha of rubber and tea plantations into oil palm and replant ageing oil palm trees.

• Argentina has raised the export tax on biodiesel exports from 8% to 15%. This is to entice the USA back to the negotiating table. Recall that the USA has proposed anti-subsidy duties on Argentine biodiesel imports by more than 50%. According to Bloomberg, Argentina has not shipped biodiesel to the USA since August 2017 when the preliminary anti-subsidy duties were announced.

• There are problems getting Brazilian soybeans out to the market as Brazilian truckers are on strike. As such, traders have been declaring force majeure for late delivery of soybeans due to shortages at the port terminals. Bloomberg reported that a major proportion of soybean crushing plants have stopped production as warehouses are full and companies are unable to offload the output.

• Reuters reported that although China’s state-owned companies have been given the nod to start buying US soybeans, they may not follow this through. This is because companies such as COFCO have already built up big stocks of Brazilian soybeans in anticipation of a trade war, leaving them little room to take in more. China’ soymeal inventory stands at 1.15mil tonnes currently, the highest in nine months while soybean stockpiles have jumped by 25% since mid-April to 7.01mil tonnes.

• SGS said that Malaysia’s palm shipments fell by 13.5% in the first 25 days of May compared with the same period in April. The decline in palm exports was mainly due to a 64.3% decline in India’s imports and 28.2% fall in Pakistan’s demand. On a positive note, Malaysia’s palm shipments to China rose by 42% in the first 25 days of May compared with the same period in April.

Source: AmInvest Research - 4 Jun 2018