- Bloomberg quoted the CEO of Golden Agri Resources as saying that CPO production in Indonesia may be below the forecast of 33mil tonnes this year due to El Nino and forest fires. In 2016F, CPO output may fall to a range of 27mil to 28mil tonnes. The haze from forest fires may disrupt photosynthesis, which may affect FFB yields.

- Derom Bangun, Chairman of Indonesia Palm Oil Board said that CPO production in Indonesia may fall short of target by 300,000 tonnes to 450,000 tonnes in 2015F. CPO output may be lower by 6% in 2016F if El Nino is severe.

- Bloomberg cited a report by the Buenos Aires Grains Exchange as saying that South America is facing its worst El Nino ever. El Nino is expected to affect dairy output, wheat and sunflower crops in South America.

- However, corn and soybean are envisaged to benefit from El Nino. Risk is that farmers may face transportation delays after the heavy rains. Also, there may be fungus risks after the rains. El Nino is anticipated to bring heavy rains to Brazil, Argentine Pampas, Bolivia and Paraguay and little rain to central Argentina, northwest Argentina and south of Buenos Aires.

- According to the Jakarta Post, the Indonesian Oil Palm Estate Fund will be distributing incentives to the biodiesel industry and smallholders soon. The fund has collected more than USD70.7mil or Rp1trillion to-date. The fund is expected to collect Rp4.5trillion (USD313.2mil) this year. The fund would be paying a subsidy of Rp2,700/litre for biodiesel.

- Pertamina’s biodiesel purchases are estimated at 700,000 kilolitres (247,203 tonnes) this year while the non-subsidy biodiesel target is also about 700,000 kilolitres (247,203 tonnes). In 2016F, the amount of biodiesel production is expected to rise to 2.5mil kilolitres (882,867 tonnes) each for the subsidy and non-subsidy portion.

- Indonesia aims to replant about 15,000ha of oil palm this year and 100,000ha next year. Replanting cost is estimated at Rp40mil to Rp50mil (USD2,784 to USD3,480) per hectare. The Indonesian Oil Palm Estate Fund would be distributing the incentive as a grant and supervising it until the replanting is completed. The replanting is expected to take place in Riau, Jambi and Bengkulu. The size of the incentive was not disclosed.

- The Plantation Industries and Commodities Minister said that the implementation of B10 in Malaysia has been postponed pending approval from the Cabinet. B10 was supposed to be implemented in October 2015. The Plantation Ministry is currently preparing a paper for submission to the Cabinet.

Source: AmeSecurities Research - 10 Sep 2015