- Last week, Australia’s Bureau of Meteorology said that although most of its climate models suggest El Nino is likely to take place in spring 2014, most have eased their predicted strength. Hence if an El Nino were to occur, it is increasingly unlikely to be a strong event.

- The bureau said that the warming of the tropical Pacific Ocean over the past several months has primed the climate system for an El Niño. However, a lack of atmospheric response over the past month has resulted in some cooling of the tropical Pacific Ocean.

- Also, the Agriculture Ministry has raised its forecast of Indonesia’s 2014F CPO production from 28mil tonnes to 29.5mil tonnes. This is a 7.3% increase from the CPO production of 27.5mil tonnes in 2013.

- MPOB (Malaysian Palm Oil Board) has forecast Malaysia’s CPO production to increase 1.6% from 19.2mil tonnes in 2013 to 19.5mil tonnes in 2014F.

- Jakarta Post quoted electricity company, PT PLN as saying that it had not received the biodiesel needed for its power plants and as such, it cannot meet the government’s policy of using cheaper renewable energy sources.

- PLN partly blamed PT Pertamina for failing to provide the supply of biodiesel. PLN used only 85,000 kilolitres (30,017 tonnes) of biodiesel from January to June this year, less than PLN’s target of 800,000 kilolitres (282,517 tonnes) for this year.

- Incidentally, Bloomberg reported that Pertamina may announce the winners for its biodiesel tender of one million kilolitres (353,147 tonnes) next week. The group is reviewing offers from suppliers currently. The contract is for a year.

- Soybean price for August delivery slid 1.6% last week while soybean oil price was relatively flat. Soybean price continued to fall over concerns on a bumper soybean harvest in US. Based on the latest prices, the discount between soybean oil and CPO is 9.5% or US$79/tonne compared with the five-year average of 15%.

- Two independent cargo surveyors said that palm oil shipments from Malaysia climbed by 11.4% and 14.2% in the 15 days of July compared with the same period in June. The improvement in exports was driven by China and Europe. China bought 112% more palm oil while shipments to Europe expanded by 57.6%.

- These helped offset a 69.7% fall in exports to USA. We believe that China is buying ahead of the Mooncake Festive period in September.

Source: AmeSecurities