- Last week, CPO prices rebounded by 1.7% in tandem with the 1.7% increase in soybean prices. However, soybean oil price continued to be in the doldrums.

- The recovery in soybean price was driven by expectations that buying from China would remain strong.

- According to news reports, China has been buying more soybean for processing as crushers have sold forward a lot of soybean meal.

- In terms of demand and supply, USDA (US Department of Agriculture) has forecasted US soybean production to climb by 8.4% from 3.0bil bushels in 2012/2013 to 3.3bil bushels in 2013/2014F.

- Ending inventory of US soybean is estimated to expand by 6.4% from 141mil bushels in 2012/2013 to 150mil bushels in 2013/2014F while that of soybean oil is expected to increase by 2.3% to 1.7bil pounds.

- Finally, Reuters reported that Indonesia may consider cutting the export tax on refined palm oil to offset the increase in import tariff in India.

- Indonesia’s deputy trade minister said that they will watch this development closely and recalculate its policy.

- Bernama reported that Malaysia will relook its export duty structure for crude palm oil in response to India’s recent increase in the import duty for refined palm oil.

- According to Reuters, which quoted an industry expert, exports of refined palm oil will be hit hard and margins of Indonesian refiners will be affected.

- Indonesia has imposed export taxes of 3% on refined palm oil and 12% on crude palm oil for the month of January 2014.

- Malaysia has imposed an export tax of 5% on crude palm oil for the month of February 2014. There is no export tax on refined palm oil. 

Source: AmeSecurities