- Wall Street Journal reported that the European Union (EU) has published details of stricter new financial regulation for the commodities markets. Market participants will only be allowed to hold 5% to 35% of a commodity derivative’s total open interest. The exact percentage will be set by national regulators. Currently, there are no limits on the percentage that a single trader or producer can hold.

- The new standards also state that if a company’s speculative trading business is above a certain threshold it will be subjected to financial regulation. If more than 10% of the trading business is speculative, the company will be treated as a financial firm for regulatory purpose. The new rules have to be approved by the European Commission and are due to come into effect in early-2017.

- The US is also proposing similar regulation on derivatives. Bloomberg reported that the federal regulations are expected to be finalised in late-2016. The regulations set limits on trading positions in commodities such as natural gas, oil and corn and require traders to aggregate their positions when calculating their limit.

- USDA has announced the stock levels of the country’s grains. Inventory of soybean climbed to 191.4mil bushels as at 1 September 2015 from 91.99mil tonnes in the previous year while corn reserves rose to 1.7bil bushels as at 1 September 2015 from 1.2bil in the prior year. Bloomberg quoted producer group Aprosoha as saying that less than 1% of areas were planted with soybean in Mato Grosso, Brazil currently due to the lack of rains. Farmers were cautious of planting in current conditions.

- Bloomberg also said that the Indonesian government will impose a penalty of Rp6,000/litre to authorised subsidised biodiesel resellers if they fail to meet the monthly blending quota. The ruling, which took effect from 11 September 2015, also allows the government to revoke the business licences of the biodiesel resellers. Subsidised biodiesel resellers include Pertamina and AKR Corporindo.

- It was also reported that India has received the lowest monsoon rainfall since 2009 due to the strong El Nino. Rainfall was 14% less than the 50-year average of 89cm between June and September. Due to the poor weather, an industry expert said that India’s vegetable oil imports may jump to a record of 15mil tonnes next year. India could be importing 9.5mil to 10mil tonnes of palm oil in 2016.

- Malaysia and Indonesia have agreed to establish the Council of Palm Oil Producing Countries (CPOC) to ensure price stability and develop the downstream industry. Both countries have agreed to harmonise the standards of sustainable palm oil certification and set up a Green Economic Zone in Indonesia. Malaysia and Indonesia will invite other countries to join CPOC.

Source: AmeSecurities Research - 5 Oct 2015