- Sector newsflow was scant last week.

- Jakarta Globe cited a report by World Resources Institute as saying that Indonesia can expand its palm oil production and avoid forest loss at the same time by reviewing its legal land classification.

- This is because although many forest estate lands are already settled or degraded, they are legally off-limits.

- The report said that about 5.3 million ha of suitable land fall under this category.

- The institute recommends that the Ministry of Forestry and Ministry of Public Works in Indonesia clarify and simplify land swap policies, so that companies can expand palm oil production in areas previously unavailable.

- Soybean prices have held above the US$12.90/bushel level last week.

- Soybean prices have been resilient. A report said that US exporters sold 120,000 tonnes of soybean for delivery by 31 August 2014 to Russia.

- Price differential between CPO and soybean oil has been narrowing. At current prices, CPO is 12.2% or US$110/tonne cheaper than soybean oil.

- The average price discount between the two commodities was 17.6% in the past five years.

- Finally, independent cargo surveyors reported that palm oil shipments from Malaysia rose by 0% to 3.8% in the first 25 days of October compared with the same period in September.

- The improvement in demand was due to EU countries, which received 20.6% more palm oil during the period and China, which bought 43.8% more.

- Shipments to India fell by 36.7% in the first 25 days of October against the same period in September.

- We believe that the buying of palm oil for the Deepavali season in November is at the tailend.

- We maintain NEUTRAL on the plantation sector. We have a BUY on Genting Plantations.

Source: Kenanga