-  Last week, it was reported that Pertamina only received 45% of its biodiesel tender of 5.3mil kilolitres (1.9mil tonnes) for 2014F/2015F.

-  Due to the poor response, Pertamina said that it will hold more biodiesel tenders.

-  According to the Jakarta Post, Pertamina has held two tenders since late last year.

-  In the first tender last year, Pertamina secured 1.24mil kilolitres (437,902 tonnes) of biodiesel while in the second tender held last month, the company secured 1.14mil kilolitres (402,587 tonnes).

-  The same article said that Pertamina would seek supply for Sumatra, Nusa Tenggara, parts of Kalimantan, Sulawesi and Papua with requirements amounting to 850,000 kilolitres of biodiesel (300,175 tonnes) per year.

-  We believe that the weak response to Pertamina’s biodiesel tender is due to the low selling price for biodiesel. This coupled with the rise in CPO prices would result in biodiesel being unfeasible for the manufacturers.

-  Last week, Bloomberg reported that Kellogg Co has agreed to buy palm oil only from suppliers who can prove that they do not damage rain forests.

-  Starting from 2016F onwards, palm oil will be sourced from supply chains that are deemed environmentally appropriate.

-  Suppliers must trace the palm oil to plantations that are independently verified as legally compliant.

-  This development comes as Wilmar International said that it would not buy palm oil from new peat soil plantations from 2016F onwards.

-  We believe that more multinational consumer companies would be under pressure to implement the same policy.

-  In another development, Cargill’s palm oil unit at West Kalimantan has received a certification from RSPO (Roundtable for Sustainable Palm Oil). This is Cargill’s second certification in Indonesia after South Sumatra.

Source: AmeSecurities