• Bloomberg reported that Indonesia may issue a decree on palm oil moratorium this year. The government intends to issue a two- to three-year moratorium on palm oil development in the country. We believe that this is to help develop smallholders in Indonesia implement sustainable practices at their existing plantations before new land is cleared and planted with oil palm.

• According to Bloomberg, Argentina’s soybean crushing industry has criticised a government decision to stop reducing export taxes on soymeal and oil. Argentina’s president is trying to balance the country’s budget by year 2020F to meet terms set by the International Monetary Fund as part of the US$50bil credit line. As such, the Treasury Ministry has announced that the monthly reduction of 0.5 percentage points to the export tax has been halted for six months. An industry player said that this would result in a drop in Argentina’s exports of soymeal and prices.

• Xinhua said that Chinese companies are confident of securing overseas supplies of soybean and soymeal substitutes to counter the fall in imports of US soybeans. Chinese companies have been turning to competitive suppliers from South America and other parts of the world. During the May to August period, more than 36mil tonnes of soybeans from South America arrived in China, with more to come in November. State-owned grains trader COFCO has made enquiries on canola, cottonseed and sunflower seed meals from countries such as India, Canada and Ukraine.

• Reuters reported that India’s palm oil imports are likely to fall by 15% YoY to its lowest level in six years in 2017/2018E. India’s demand is expected to be hit by a hike in import taxes, a weaker rupee and tighter credit for potential buyers. From November 2017 to July 2018, India’s palm oil imports dropped by 9.5% to 6.1mil tonnes. Palm oil accounted for as much as 86% of India’s edible oil imports a decade ago but its share declined to 62% last year. Palm oil’s market share could fall further to 56% this year.

• Malaysia signed three MoUs on palm oil and rubber with China during the Prime Minister Tun Dr Mahathir Mohamad’s visit to China last week. The first MoU was signed betweenthe MPOB and Tsinghua University on the promotion of palm biofuel in China. The second MoU was signed between the Malaysian Rubber Board and Hainan State Farms Investment Holding Co on rubberised bitumen road technology and rubber tapping automation. The third MoU was signed between Sime Darby Plantation and COFCO to develop downstream applications for palm oil and palm-based products.

• SGS said that Malaysia’s palm shipments fell by 9.6% in the first 20 days of August compared with the same period in July. Malaysia’s palm exports to the EU dropped by 18.2% while shipments to China declined by 7.6%. On a positive note, India’s imports of Malaysia’s palm oil rose by 24.5% in the first 20 days of August compared with the same period in July.

Source: AmInvest Research - 27 Aug 2018