- Platts reported that Pertamina is in talks with biodiesel producers and the Indonesiagovernment to revise the price formula for palm methyl ester to one, which is based onpalm oil prices. Currently, the price formula for biodiesel is linked to gas oil prices.

- An industry player said that the proposed change is to facilitate the calculation of thebiodiesel subsidy. Indonesia has a fixed biodiesel subsidy of Rupiah3,000/kiloliter.

- The subsidy given to Pertamina compensates for the difference between the market priceof biodiesel and retail price of subsidised gasoil.

- The industry player also said that the proposed reference price would be similar to theMalaysian formula whereby petrol companies buy biodiesel at a selling price ofRM515/tonne.

- Bloomberg reported that demand for US soybeans is easing as supplies from SouthAmerica are cheaper. An industry player in the US said that Brazil soybeans are US$10/tonne cheaper whileArgentina is selling soybeans that are US$15/tonne lower. According to USDA, sales of USsoybeans for the week ended 15 January 2015 were only 14,135 tonnes, the lowest for thattime of the year since 2004.

- Soybean and biodiesel groups in the US are criticising the government’s decision to allowimports of Argentinean biodiesel. National Biodiesel Board estimated that up to 600 milliongallons of biodiesel from Argentina could enter US due to the decision.

- Last week, soybean oil prices plunged below 30 US cents/pound on the back of poordemand. Demand from the biofuel segment has been weak as crude oil prices haveplunged. At current prices, the disparity between soybean oil and CPO is 9.0% comparedwith the five-year average of 14.0% and last year’s average of 9.9%. Also, China reported that its soybean imports climbed by 12.7% YoY in 2014 while palm oilimports fell by 11%. Imports of soybean oil eased by 1.9% in 2014 compared with 2013.

- Finally, Indonesian Palm Oil Association was reported as saying that the Governmentshould revise its export tax policy so that the Indonesian players can be more competitiveagainst Malaysia.

Source: AmeSecurities