- Bloomberg reported that Indonesia would start B20 blending in 2016F. Pertamina’s biodiesel consumption may rise to 5.1mil kilolitres (1.8mil tonnes) in 2016F. In November and December 2015, demand for subsidised biodiesel from Pertamina and Listrik Negara is expected to be 330,000 kilolitres (116,538 tonnes) per month.

- Oil World said that the discount of palm oil to soybean oil is expected to decline going forward. Palm oil may temporarily trade at or slightly above the price of South American soybean oil from when palm oil production is seasonally low during the January to April 2016 period. Smoke pollution in Malaysia and Indonesia may also delay harvesting in the short-term. Rainfall through the end of September 2015 indicated that conditions were dry for at least 30% of planted areas in Malaysia and Indonesia.

- Reuters cited Indonesia as saying that the new palm oil council, which is jointly being set up with Malaysia, would replace the “no deforestation” pledge with a set of standards proposed by the two countries. Indonesia wants large palm oil companies to row back on pledges made at a climate summit last year as they were hurting smallholders, who cannot afford to adopt sustainable palm oil practices. An Indonesian official said that India and China would be lobbied to accept the new palm oil standards proposed by Malaysia and Indonesia.

- In another development, Malaysia has appealed to the US Department of Labour to remove palm oil from the “List of Goods Produced by Child or Forced Labour”. Among the criteria used by the US department is the withholding of passports of foreign workers and payment of low wages.

- Last week, soybean prices rose on the back of positive export data in US. US customs data showed that China imported 7.26mil tonnes of soybeans in September 2015, which was 44% YoY higher. China’s soybean imports amounted to 78.4mil tonnes in the year ended 30 September 2015, which exceeded USDA’s forecast of 77mil tonnes. Later in the week however, soybean prices reduced its gains as processing for animal feed and vegetable oil in US slid from 135.3mil bushels in August to 126.7mil bushels in September 2015. Commodity Futures Trading Commission (CFTC) said that net speculative long positions held by hedge funds and other traders in US in soybeans amounted to 43,688 contracts as at 6 October 2015 compared with 39,917 contracts in the prior week. In comparison, there were 16,171 net short positions a year ago.

- Rabobank said that Malaysia should invest more in the downstream industry to cushion the impact of volatile commodity prices. The bank said that the downstream industry would benefit more from the downtrend in commodity prices with its ample supplies and fixed retail prices.

Source: AmeSecurities Research - 19 Oct 2015