• Bloomberg cited an industry expert as saying that corn and soybean sales in Brazil have stopped for more than a month amid uncertainties over the country’s road freight costs. As traders still have enough supplies to meet export commitments until August, it is unlikely that customers will resume soybean purchases until there is more certainty over freight costs. The government set higher freight costs on 30 May after a strike over fuel costs.

• Another industry expert was quoted as saying that there may be unusual trends in the Brazilian market depending on soybean premiums. There is a possibility that Brazil may import oilseeds for domestic processing or re-export. He added that Brazil may export 76mil tonnes of soybeans in 2018F vs. 68mil tonnes in 2017. Brazil may continue shipping soybeans through December and January if China’s tariffs reduce US soybean exports.

• According to Reuters, Wilmar International has ceased sourcing from suppliers that are allegedly associated with a company that was accused by Greenpeace of causing deforestation. Greenpeace had accused GAMA, a company set up by Wilmar’s co-founder Martua Sitorus and his brother, of causing deforestation in Indonesia. Greenpeace said an analysis of trade data showed Wilmar traded palm oil from GAMA despite being aware that GAMA was violating Wilmar’s “No Deforestation, No Peat and No Exploitation” policy by clearing rainforest.

• Reuters reported that a strike called by Argentina’s largest trade union federation in protest of President Macri’s economic policies brought the country to a standstill last Monday, freezing grain exports and halting banking activities. The labour union demanded wage hikes to keep up with inflation rates, which are more than 25% annually. In Rosario, which is a major agricultural export region, shipments of grains and other products were halted by protests by unions representing grain crushers and port workers.

• According to Bloomberg, the US Environmental Protection Agency will propose requiring refiners to blend 19.88bil gallons of biofuels in 2019F, a 3.1% increase over 2018’s requirements. The agency will maintain a 15bil gallon target for conventional renewable fuels such as corn-based ethanol.

• Bloomberg reported that Thailand will cut its biodiesel tax from 5.85 baht/litre to 5.152 baht/litre. The tax reduction will help clear excess palm oil supplies in the market. Thailand will maintain biodiesel selling prices at current levels as long as global crude oil prices do not exceed US$100/barrel. Thailand is the third largest producer of palm oil after Indonesia and Malaysia.

• SGS said that Malaysia’s palm shipments dropped by 14.1% in the first 25 days of June compared with the same period in May. Malaysia’s palm exports to the EU and China fell by 17.9% and 18.3% respectively. On a positive note, shipments to India rose by 41.6% in the first 25 days of June compared with the same period in May.

Source: AmInvest Research - 2 Jul 2018