China shuts plants due to soyabean shortage

NEWS China shuts plants due to soyabean shortage

Crushing plants in China have shut down or are planning to suspend operations due to a soyabean shortage, industry sources were reported as saying by AgriCensus.

Bunge halted operations at its crushing plants in Tianjin for 49 days from 14 February to 3 April, while the company’s plants in Nanjing had issued notices to shut down for almost one month from late February to March, the 18 February report said.

Shutdowns would also take place at Louis Dreyfus Company (LDC)'s operations in Tianjin, northern China, and Cargill’s operations in Hebei province.

According to a 18 February report by China’s industry consultancy Mysteel, many crushing plants in the southern province of Guangxi also have plans to shut down.

AgriCensus wrote that import costs for soyabeans paid by Chinese crushers had climbed as weather concerns over the outcome of South American crops had boosted rising CBOT soyabean futures and spot premiums in Brazil’s market.

Chinese buyers have had to slow their rate of soyabean purchases from global markets, particularly for crops in the current marketing year. Some Chinese soyabean processors had also cancelled orders for around 10 to 12 cargoes of Brazilian soyabeans in February, the report said.

Slow importing and pre-Lunar New Year holiday consumption had led to low domestic soyabean stocks, AgriCensus wrote.

According to data from China’s National Grain and Oil Information Centre (CNGOIC), soyabean stocks in mid-February totalled 3.95M tonnes, 1.5M tonnes lower than at the same point last year.

Plantations in Malaysia to get foreign workers

Oil palm plantations in Malaysia are expecting a new group of workers to arrive from overseas in May and June to harvest oil palm fruits, Today Online reported on 8 March.

“With foreign labour coming in, I hope production will increase from 18.1M tonnes (last year) to 20M tonnes,” Plantation Industries minister Zuraida Kamaruddin said.

About 80% of Malaysia's plantation workers are migrants, the majority from neighbouring Indonesia, according to the report.

Malaysia's oil palm plantations had faced a worsening labour shortage since the start of the COVID-19 pandemic due to border curbs preventing migrant workers from entering the country, Today Online wrote. In September, authorities approved the recruitment of 32,000 migrant workers for palm plantations, with Indonesian migrant workers originally expected to arrive in mid-February, the report said.

However, analysts were sceptical that the new workforce could be ready in time.

“Even if they (workers) arrive, it will take time for training, as you're not looking necessarily at skilled workers," Julian McGill, the Southeast Asia head at UK consultancy LMC International told Reuters.

The shortage of workers had affected production in Malaysia – the world's second largest palm oil producer – adding to global worries over vegetable oil supplies, Today Online wrote.

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IN BRIEF

INDONESIA: Exporters of used cooking oil (UCO) in Indonesia have formed an association to lobby against new regulations requiring domestic sale obligations, Argus Media reported on 25 January.

The 13-company association represents 90% of the country’s 25,000-30,000 tonnes/month UCO export capacity, according to newly-elected chairman Setiady Goenawan.

Under new regulations introduced in January to ensure domestic edible oil supply at subsidied rates, exporters of UCO, palm olein and crude palm oil (CPO) must submit proof of domestic sales to obtain export licenses.

UCO exporters were unsure why UCO had been included in the ruling as they were generally not involved in palm oil production, the report said.

ARGENTINA: The International Monetary Fund (IMF) has agreed a deal worth US$44.5bn to help the country deal with surging inflation and currency issues, AgriCensus reports.

A 28 January IMF statement said the deal would allow for spending increases on infrastructure, science and technology, but called for a strategy to reduce energy subsidies progressively.

Argentina was believed to be close to defaulting on its existing IMF agreements, before the deal.

Indonesia ups levy on palm oil exports to control prices

Top global palm oil exporter Indonesia has significantly raised its maximum palm oil export levy in a fresh bid to control domestic cooking oil prices, Reuters reported on 18 March. It also announced a policy U-turn on its move to remove export volume restrictions on palm oil products.

Taking immediate effect, the new regulation introduced higher progressive rates when the reference price for palm oil reached at least US$1,050/tonne to a maximum levy of US$375/ tonne, Reuters wrote.

Under previous rules, the maximum export levy was US$175/tonne, which was applied when the reference price reached at least US$1,000/tonne. However, the new regulation did not change the levy structure when the reference price was below US$1,000/tonne.

Indonesian exporters are required to pay an export tax on palm oil shipments on top of the export levy. The maximum export tax is currently US$200/tonne, according to the report.

The government move was welcomed by industry players, with Indonesia Palm Oil Board deputy chairman Sahat Sinaga saying the levy gave international buyers more predictability.

Authorities had been struggling to control the domestic market for cooking oil, made from refined crude palm oil, after prices surged 40% at the start of the year due to high global prices, Reuters wrote. The Indonesian government used proceeds from palm oil levies to fund programmes that included subsidising biodiesel, smallholder replanting and, more recently, subsidies for cooking oil, the report said.

SOPA urges India to build buffer stocks

SOPA says an additional 4M tonnes of mustard seed harvest would provide the country with 1.5M tonnes of additional oil Photo: Adobe Stock

The Soybean Processors Association of India (SOPA) is urging India to build a buffer stock of edible oils equal to 10% of the country’s demand which can be released in times of shortages, Krishi Jagran reported on 6 March.

India is the world’s largest importer of edible oils and Russia’s invasion of Ukraine would lead to a shortfall of around 200,000 tonnes/ month of sunflower oil imports, which could be addressed by increasing soyabean and palm oil imports, SOPA said.

“The all-time high mustard crop will somewhat balance the sunflower oil shortage in the next six months,” SOPA executive director DN Pathak said. “The additional 4M tonnes of mustard crop would give roughly 1.5M tonnes of additional mustard oil.”

Meanwhile, the government had effectively cut the duty on crude palm oil (CPO) imports from 8.25% to 5.5% in a bid to control cooking oil prices and support domestic processing companies, Live Mint newspaper wrote.

Although the basic customs duty on CPO was already nil, the Central Board of Indirect Taxes and Customs (CBIC) also cut the Agriculture Infrastructure Development Cess (AIDC) tax to 5% from 7.5% effective from 13 February.

Argentina renews domestic fund to control supply and prices

The Argentine government has renewed a fund to secure the supply of edible oils to the domestic market at low prices until the end of January 2023, AgriCensus wrote on 3 February.

Set up last February, the fund was introduced in a bid to control domestic price inflation following negotiations between the government and industry.

The fund compensates local market players by subsidising the cost of oils, effectively decoupling international prices from the domestic price. Under the scheme, the industry agreed to supply the equivalent of 29M litres/month of vegetable oil – around 75% of domestic consumption – at a discounted rate expected to cost the sector around US$190M/year, the report said.

The trust would be funded by private companies that are members of the oilseed crushing and export chamber Ciara-CEC (Ciara), although the industry group opposed the measure. Total soyabean crushing in Argentina last year was up by 18% year-on-year, rising to 42.41M tonnes – the highest cumulative volume since 2016, according to data from the Ministry of Agriculture, Livestock and Fisheries.

However, crushing margins remained negative throughout most of the second half of 2021, due to volatile soyabean prices, drought and the fall in Paraná River water levels increasing export costs, Ciara said.

NEWS Indonesia revokes plantation permits

The Indonesian government has revoked millions of hectares worth of permits for logging, plantations and mining, according to a 12 January Mongabay report.

Environmental activists cautiously welcomed the move announced on 6 January, saying it was an opportunity to conserve land by redistributing it to local and indigenous communities.

However, some senior government officials said the concessions should be reissued to other companies for development,

The affected concessions include Ministry of Environment and Forestry permits for 192 logging, plantation, mining and ecotourism operations totalling 3.13M ha; 36 Ministry of Agrarian and Spatial Planning permits for plantations (34,448 ha); and 2,078 Ministry of Energy and Mineral Resources permits for mines.

To date, Mongabay said only the forestry ministry had released the names of companies whose permits it had revoked, including many in the palm oil sector.

A preliminary analysis by environmental NGO Auriga Nusantara showed there was 2.4M ha of rainforest still standing on the lands covered by the 192 forestry ministry permits.

In other news, Mongabay reported on 26 January that the clearing of forests in Indonesia for oil palm plantations had fallen in recent years.

Indonesian environmental organisation Auriga compared forest cover in areas licensed for oil palm cultivation in 2019 with 2000. It found that the bulk of existing plantations was established on land that had not been standing forest in 2000, with deforestation associated with 3.1M ha of plantations established since 2000, out of a total of 16.2M ha planted as of 2019.

The highest annual rate of deforestation for oil palm plantations since the start of the millennium was in 2012, when 314,937ha of forest were cleared, according to Auriga. After that date, the rate declined, falling to less than 150,000ha in 2015, and less than 100,000ha from 2016 onward.

Meat alternatives need more soya and coconut oil

Plant-based meat alternatives could account for 6% of total meat consumption by 2030 if the sector continues to expand at the current rate, according to analysis by the Good Food Institute (GFI) reported by World Grain on 7 February.

The GFI estimated that just 2% of global wheat and soya production would be needed for plant-based meat in the future. However, the industry may require up to three times the projected supply of soya protein concentrate, according to the ‘Plant-based meat: Anticipating 2030 production requirements’ report.

The report urged manufacturers and ingredient suppliers to explore alternative plant

Photo: Pixabay Coconut oil's high saturated fat content makes it an essential component of many plant-based meat products

proteins, such as certain legumes, oilseeds, vegetables, nuts and cereals.

Coconut oil’s high saturated fat content and resulting functional properties made it an essential component of many plant-based meat products, with the sector requiring at least 16% of global supply by 2030. However, supply constraints and price volatility suggested that the plantbased industry should aim to diversify into alternative fats, GFI’s science and technology analysis manager Dylan Dowdy said. Novel manufacturing methods for producing similar fats, like using microbial strains or modifying more abundant plant fats, should be explored, he added.

“If alternative means of production are not developed, more investments in coconut processing capacity and cultivation are likely to be required."

COFCO and Sinograin set up new joint ventures

China’s largest food processor and manufacturer COFCO has partnered with stateowned grain company Sinograin to establish two joint ventures in grain storage and oilseed crushing and processing, Global AgInvesting reported on 19 February.

Founded in 1949, COFCO Group has become the country’s top food processor, with fully integrated chains for grain trading, rice processing, oil processing, corn processing and sugar trading and processing, along with brands, ports and wharves, equipment, storage and logistic capabilities, according to the report.

Sinograin was formed in 2000 and now oversees 98% of the country’s total grain reserves. For years, COFCO and Sinograin provided China with “two-wheel drive” advantages, with COFCO taking a market-orientated approach, and Sinograin a more policy-focused approach, Global AgInvesting wrote. The two new joint ventures were designed to account for overlapping businesses, the first being a grain storage business to be controlled by Sinograin and the second an oilseed crushing and processing business, to be managed by COFCO.

Sinograin president Deng Yiwu said the grain business would solidify its position managing the country’s central grain reserve, while the combined oilseed business would improve competitiveness.

Most of China’s key state-owned companies had evolved from former monopolies that had since come under central planning, resulting in overly large businesses, Global AgInvesting wrote. The move to combine COFCO’s and Sinograin’s operations would position COFCO as more of a rival to the world’s top agribusinesses – Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus Company, the report said.