- Last week, Reuters reported that Chinese palm oil imports may be hit as buyers struggle for funding. This follows Beijing’s crackdown on commodity financing.

- Traders said it was difficult to estimate the size of any decline in palm oil imports but an edible oil industry consultant said it could be around half a million tonnes this year.

- The same article said that the spread between local palm oil prices in China and the cost of importing cargoes has widened to a loss of 1,000 yuan (US$160) per tonne. However, a trader in Malaysia said that refined palm oil in China was quoted at only US$90/tonne less than the cost of importing cargoes.

- A palm oil producer in Malaysia said that China is not allowing additional imports as the storage tanks at the ports are packed. Financial traders in China, who bought the oil, have put their cargoes in storage in anticipation of higher prices.

- An Australian climate scientist said that a recent spike in sea temperatures and rapid movement of warm water eastwards have increased concerns that El Nino this year could be one of the strongest in several decades.

- Meteorologists have said that the prospect of an El Nino would be firmed up in the next two months although forecasting the strength of the weather is difficult to do.

- In contrast to the view of the Australian scientist, Indonesia’s Head of Meteorology, Climatology and Geophysics Agency said that the country sees a weak El Nino developing in August or September. He said that the weather pattern will not be as massive as 1997/1998 and will have limited impact on agricultural crops.

- US’ Climate Prediction Center said that chances of El Nino taking place in summer have exceeded 65%. However, there remains uncertainty as to exactly when El Nino will develop and how strong it may become.

- Finally last week, soybean price retraced on risk of oversupply and then rebounded on an increase in imports from China. USDA (US Department of Agriculture) released its monthly demand and supply forecasts last Friday.

- After declining MoM since February 2014, China’s soybean imports rose by 40.7% to 6.5mil tonnes in April. In the four months of the year, the country bought 41.2% more soybean compared with the same period last year. Incidentally, Bloomberg reported that China plans to auction 300,000 tonnes of soybean from its reserves on 13 May 2014. 

Source: AmeSecurities