- Last week, soybean prices declined due to over-supply concerns. At current levels, the price disparity between soybean oil and CPO is 17.7% or US$129/tonne.

- USDA (US Department of Agriculture) released its monthly demand and supply estimates last week. USDA has reduced its forecast of 2015F/2016F ending soybean inventory for US by 5% from 500mil bushels to 475mil bushels. This is due to lower carryover inventory from previous season of 330mil bushels versus 350mil bushels.

- Overall, soybean production in US is expected to decline by 3% from 3.97bil bushels in 2014/2015F to 3.85bil bushels in 2015F/2016F. Ending inventory is anticipated to climb by 43.9% from 330mil bushels in 2014/2015F to 475mil bushels in 2015F/2016F.

- As at 8 June 2015, about 79% of soybeans were planted in US versus the five-year average of 81%. Roughly 69% of the crops were rated good or excellent compared with 74% a year ago.

- Indonesia’s palm oil export levy is expected to take effect from 15 June 2015 onwards. The export levies are US$50/tonne for CPO and US$30/tonne for derivative palm products. Indonesian Vegetable Oil Association said that exports of processed palm oil may fall from 12mil tonnes a year due to the levy. The association also said that it plans to send a protest letter to the Government and challenge the regulation in court.

- The Ministry of Plantation Industries and Commodities in Malaysia expects the national average of oil extraction rate to improve from 20% to 25% by 2020. Initiatives to enhance productivity include replanting oil palm trees with high yielding planting materials.

- To overcome the issue of labour shortage, the government is encouraging the palm oil industry to increase mechanisation. Malaysian Palm Oil Board is organising the second international competition on oil palm mechanisation this year.

- Independent cargo surveyors reported that Malaysia’s palm oil shipments inched up by 1.9% and 2.2% respectively in the first 10 days of June compared with the same period in May.

- The growth in exports was driven by Pakistan, which imported 35.2% more palm oil from Malaysia and USA, which received 46.3% more palm oil shipments. China’s palm oil imports fell by 30.5% while palm oil shipments to India declined by 26.9%.

Source: AmeSecurities Research - 15 Jun 2015