-  Last week, soybean price fell by 2% to US$14.70/bushel underpinned by two reasons. According to Bloomberg, there was speculation that planting in US will accelerate due to the warmer weather.

-  An industry expert said that the improved weather would increase the outlook for a record crop in US.

-  Based on the latest USDA (US Department of Agriculture) report, soybean production in US is forecasted to rise by 8.4% YoY to 3.3bil bushels in 2013/2014F.

-  However, ending soybean inventory in US is estimated to decline by 4.3% to 135mil bushels on the back of a 19.7% climb in exports.

-  Second, US exporters reported a net cancellation of 16,421 tonnes of soybean for the week ended 24 April, the first drop since August 2013. The cancellation comes amid recent reports of soybean defaults by China importers.

-  Based on the latest prices, the discrepancy between soybean oil and CPO is 12% or US$110/tonne compared with the five-year average of 15.9%.

-  According to the Jakarta Post, industrial users in Indonesia have been reluctant to use biodiesel, partly resulting in biodiesel usage falling short of target.

-  Many mining companies, which operate heavy vehicles, have been reluctant because the fuel does not meet the vehicles’ engine specifications.

-  They feared the use of higher biofuel content would damage the engines and cancel the guarantees.

-  Currently, installed biodiesel capacity in Indonesia is about 5.6mil kilolitres (1.98mil tonnes) per year in total. As many as 25 companies have been licensed to distribute the fuel.

-  Finally, independent cargo surveyors said that palm oil shipments from Malaysia inched up by 1.3% to 1.7% in April compared with March.

-  SGS reported that palm oil exports to China rose by 9.3% MoM in April while India bought 48% more. These helped cushion a 34% fall in exports to European Union and a 10.2% decline in shipments to the US. 

Source: AmeSecurities