- Bloomberg reported that Indonesia will no longer give cultivation permits for peat lands. The President instructed the Environment and Forestry Minister to review existing permits allowing development on peat land and stop issuing permits for new peat land.

- Blomberg also said that both of the presidential candidates in Argentina are planning to eliminate wheat and corn export taxes and reduce a soybean export levy. The cut in soybean export levy is expected to benefit farmers in Argentina. It is estimated that the farmers are hoarding 22mil tonnes of soybeans, which are about a third of last season’s crop or US$7.4bil worth of oilseeds. One candidate has proposed to reduce the soybean export levy from 35% to 20% while the other has proposed to cut the levy by 5-percentage points a year. The presidential elections took place last Sunday. Incidentally, Argentine farmers are planning to plant 19.8mil ha of soybeans in 2015F/2016F compared with 20mil ha in 2014/2015F.

- Bloomberg quoted a government official in Brazil as saying that the country’s soybean yields might be affected by lower fertiliser application and weather conditions. Fertiliser has become more expensive due to the depreciation of the Real. Although Central Brazil is not expected to be affected by El Nino, South Brazil may face intense rains during the soybean harvesting period. South Brazil is the second most important soybean producing region after Central Brazil. The government official also said that as long as soybean price stays above US$7.50/bushel, Brazilian farmers are profitable.

- Uralkali’s head of sales has resigned. This could potentially affect price negotiations between the group and China in the last two months of the year. Bloomberg quoted an industry expert as saying that China is likely to secure lower potash prices in 2016F. Also, Belarus is expected to take the lead in this year’s negotiations instead of Uralkali as Canpotex (the North American potash producers) would also be getting a new CEO in November 2015. Negotiations with China usually set the global benchmark price for potash in the coming year.

- Indonesian Palm Oil Board forecasts the country’s palm oil production at 31.5mil tonnes in 2015F and 33mil tonnes in 2016F. This implies that Indonesia’s CPO production in 2015F would be the same as 2014’s level. The 4.8% increase in CPO production in 2016F is expected to be driven by new mature areas and improvement in FFB yields. However, there is risk that El Nino may reduce palm oil production by 5% in regions such as Jambi, south Riau, South Sumatra and some parts of Kalimantan.

- Finally, China’s purchases of palm oil have recovered. According to customs data, the country’s soybean imports climbed by 44.3% YoY in September 2015 while its purchases of palm oil rose by 95.7%. From January to September 2015, China’s palm oil imports improved by 9.5% YoY while soybean imports expanded by 13.1%.

Source: AmeSecurities Research - 26 Oct 2015