- Platts reported that Indonesian Palm Oil Association and Indonesian Palm Oil Board (IPOB) are negotiating with the Finance Ministry to reduce the levies on exports of crude palm oil and olein. IPOB has proposed that the export levy on CPO be lowered from US$50/tonne to US$40/tonne and the export levy on olein be reduced from US$30/tonne to US$25/tonne.

- In the article, trade sources said palm exporters and plantation owners will be the most affected by the palm oil export levies. A broker said that those who sold forward CPO before 1 April are technically out of pocket by US$50/tonne. Refiners will also be affected as buyers of olein will not be paying for the US$30/tonne levy.

- Jakarta Post reported that biofuel volume in Indonesia fell by 36% YoY to 224,025 kiloliters (79,114 tonnes) in 1Q2015 due to a lack of allocation of biofuel subsidy in the state budget and widening disparity between prices of fossil fuel and biofuel. Due to the uncertainty, Pertamina did not receive enough fatty acid methyl ester in March as a supplier declined to deliver around 900,000 kiloliters (317,832 tonnes) in volume. Pertamina is planning to hold a new auction for 3mil kiloliters (1.06mil tonnes) of fatty acid methyl ester in the future.

- Bloomberg cited Belarus as saying that it has no interest in a new fertiliser trading venture with Uralkali for now. During the collapse of the previous marketing venture in 2013, Belarus said that ownership of Uralkali must change hands before Belarus would consider a return to the joint trading venture. Incidentally, Uralkali may review its production target of potash after a flood reduced its first quarter volumes. The group said that there is high risk that its Solikamsk-2 mine in Russia may be flooded with salt water, which may result in the mine being abandoned.

- Last week, USDA (US Department of Agriculture) reduced its 2014/2015F forecast of US soybean inventory from 385mil bushels to 370mil bushels. In spite of this, US soybean inventory is still expected to rise by 302.2% from 92mil bushels in 2013/2014 to 370mil bushels in 2014/2015F. USDA has not published the forecast for US soybean production for 2015F/2016F yet. USDA has also raised its 2014/2015F forecast of soybean production in Argentina from 56mil tonnes to 57mil tonnes. Global soybean inventory is estimated to expand by 35.1% from 66.3mil tonnes in 2013/2014 to 89.6mil tonnes in 2014/2015F.

- Solvent Extractors’ Association of India said that imports of refined palm oil may be cheaper when Indonesia implements its palm oil export levies. This may result in India increasing its imports of refined palm oil. Adani Wilmar was quoted as saying that the India Government should increase the import duties on refined palm oil. The tax differential between the import duties for crude and refined vegetable oils should be 15- percentage points instead of 7.5-percentage points currently. Utilisation rate of palm oil refineries in India is estimated at a low 40%.

Source: AmeSecurities Research - 13 Apr 2015