Commodities Update — Gold prices fall; Indonesia to raise palm oil export quota; Russia reduces grain export taxes

Commodities Update — Gold prices fall; Indonesia to raise palm oil export quota; Russia reduces grain export taxes
Short Url
Updated 03 July 2022

Commodities Update — Gold prices fall; Indonesia to raise palm oil export quota; Russia reduces grain export taxes

Commodities Update — Gold prices fall; Indonesia to raise palm oil export quota; Russia reduces grain export taxes

RIYADH: Gold prices fell on Friday as a firm dollar and looming rate hikes soured appetite for the non-yielding asset, while India’s import tax hike on bullion also dampened its demand prospects.

Spot gold is currently priced at $1,811.43 per ounce, while US gold futures settled down at $1,801.50. 

Silver, Platinum fall

Spot silver is priced at $19.67 and has dropped about 6.5 percent this week, its biggest weekly fall since January 2022.

Spot platinum is priced at $892.73 per ounce, on course for its fourth consecutive weekly fall, while palladium is at $1,959.58, gaining about 4.5 percent this week.

Indonesia looks to raise palm oil export quota

Indonesia proposed raising palm oil export quotas on Friday and is considering increasing mandatory levels of biodiesel in fuel mixes to prop up prices for farmers when domestic palm oil inventories are high, a senior minister said on Saturday.

Palm oil inventories ballooned, and mills limited purchases of fresh fruit bunches from farmers after Jakarta stopped exports of crude palm oil and some other derivatives for three weeks to May 23 in a bid to contain soaring domestic cooking oil prices.

Indonesia replaced the ban with a domestic market obligation, requiring companies to supply a portion of their products to the domestic market through the government’s bulk cooking oil program and linked DMO volumes to companies’ export permits and quotas. 

DMO volumes as of the end of June were around 270,000 tons, the government said.

The government will now allow palm oil companies to export seven times the amount of their sales from currently five times, senior minister Luhut Pandjaitan said.

“I asked the Trade Ministry to increase the export multiplication factor to seven times starting July 1, with the main objective to increase farmer’s FFB prices significantly,” Luhut said in a statement.

Russia reduces grain export taxes to support exports

Sanctions-hit Russia has sharply reduced its grain export taxes after changing the formula it uses for calculating them to support shipments in the July-June marketing season, the agriculture ministry said on Friday.

Russian farmers are expected to harvest a massive wheat crop this summer, bringing a record exportable surplus in the 2022-2023 season. 

However, shipments are complicated by high export tax, a strong rouble and sanctions-inflated costs for freight and insurance.

The ministry said that the new base price for calculating the wheat export tax is set at 15,000 roubles ($283.68) per ton.

It was previously in US dollars at $200 a ton. The agriculture ministry used the base price and price indicators reported by traders to determine the level of tax weekly.

The wheat export tax is set at 4,600 roubles ($85.8) per ton from July 6-12 against $146.1 per ton from June 29 to July 5, the ministry said in a separate note.

President Vladimir Putin said this week that Russia is the world’s largest wheat exporter and aims to remain so. Despite disrupting the Black Sea supply chains, it continues to supply its traditional markets in the Middle East and Africa.

(With inputs from Reuters)


Saudi Arabia’s PIF ‘to become first sovereign fund to issue green bond’

Saudi Arabia’s PIF ‘to become first sovereign fund to issue green bond’
Updated 15 sec ago

Saudi Arabia’s PIF ‘to become first sovereign fund to issue green bond’

Saudi Arabia’s PIF ‘to become first sovereign fund to issue green bond’

RIYADH: Saudi Arabia’s Public Investment Fund will be the world’s first sovereign wealth fund to issue green bonds with its assets expected to exceed $1 trillion by 2025, the head of Debt Capital Markets and Funds at the London Stock Exchange told Al-Arabiya.

“The issuance of green bonds by the Public Investment Fund in Saudi Arabia is an important event not only for the Arab region, but also for the green bond market,” Shrey Kohli said.

The fund currently manages assets of over $600 billion. The PIF targets those sectors for investment that are in line with the framework of green bonds and the fund offers complete transparency to investors, he added.

As of now, the framework and prospectus of the PIF are available on the London Stock Exchange platform, which allows investors to gain an understanding of the fund’s strategy.

The fund has hired a large group of banks including Citi and JPMorgan to arrange a debut issuance of multi-tranche US dollar-denominated green bonds.

BNP Paribas, Citi, Deutsche Bank, Goldman Sachs and JPMorgan, mandated as joint global coordinators and active book runners.

A debut issuance in tranches of five, 10 and potentially a longer-dated tenor will follow, subject to market conditions. The issuance will be under GACI First Investment Co. and guaranteed by the PIF.

Credit Agricole, First Abu Dhabi Bank, HSBC, Mizuho, SMBC Nikko, SNB Capital, Societe Generale and Standard Chartered are also active book runners, while ANB Capital, BofA Securities, Bank of China, GIB Capital, ICBC, IMI Intesa Sanpaolo, Morgan Stanley, MUFG, Natixis, Riyad Capital and Saudi Fransi Capital are also on the deal.


SAGO buys 5k tons of wheat for $2.3m from local farmers

SAGO buys 5k tons of wheat for $2.3m from local farmers
Updated 39 min 12 sec ago

SAGO buys 5k tons of wheat for $2.3m from local farmers

SAGO buys 5k tons of wheat for $2.3m from local farmers

RIYADH: The Saudi Grains Organization has bought the 16th batch of wheat worth SR8.84 million ($2.35 million) from 18 local farmers.

It is part of the organization’s arrangements to ensure adequate wheat supply by procuring grain from abroad and through local farmers. 

The current batch of local wheat weighed 5 tons, according to a SAGO statement.

Since the beginning of the current season, it added, wheat worth SR823.53 million has been bought from local farmers.


UAE In-Focus — Dubai Metaverse Strategy aims to create 40,000 jobs; Egis completes WME acquisition

UAE In-Focus — Dubai Metaverse Strategy aims to create 40,000 jobs; Egis completes WME acquisition
Updated 02 October 2022

UAE In-Focus — Dubai Metaverse Strategy aims to create 40,000 jobs; Egis completes WME acquisition

UAE In-Focus — Dubai Metaverse Strategy aims to create 40,000 jobs; Egis completes WME acquisition

RIYADH: The Dubai Metaverse Strategy is aiming to create 40,000 virtual jobs in the next five years, as the city aims to become one of the top 10 global metaverse economies.

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum the Chairman of Dubai Executive Council and Crown Prince of Dubai, who officially launched the Metaverse Strategy said that metaverse will shape a new digital future for humanity, news agency WAM reported.

“Dubai is emerging as a major contributor to shaping a new global vision for advanced technology and a pioneer in adopting next-generation digital innovation,” said Sheikh Hamdan.

The Metaverse Strategy also aims at attracting over 1000 companies in the significant field of blockchain and metaverse.

Virtual Reality and Augmented Reality are the two main enablers of the metaverse, and it has created 6,700 jobs, along with contributing $500 million to the economy of the UAE.

Egis completes WME acquisition

French firm Egis has completed the acquisition of Dubai-based engineering consultancy WME, according to a MEED report.

The deal was initially announced in March and with its completion, WME’s managing director Peyman MoHajjer will lead the newly formed Building Engineering practice for Egis in the region.

“The joining of WME into Egis Group opens the door to create substantial growth opportunities and deliver greater benefits for customers in our key Middle East and India markets, in line with our global strategy to enhance our international presence,” said Laurent Germain, Egis Group CEO.

Alaa AbuSiam, CEO of Egis Middle East said, “Together with WME, we’re now well positioned to help our clients successfully navigate the transition to a more efficient and sustainable built environment.”

WME is a firm known for providing civil, structural, mechanical, electrical, plumbing, audio-visual, information technology, security, and infrastructure engineering services.


Qatar Investment Authority invests $2.43bn to accelerate RWE’s green energy strategy 

Qatar Investment Authority invests $2.43bn to accelerate RWE’s green energy strategy 
Updated 02 October 2022

Qatar Investment Authority invests $2.43bn to accelerate RWE’s green energy strategy 

Qatar Investment Authority invests $2.43bn to accelerate RWE’s green energy strategy 

RIYADH: The Qatar Investment Authority has agreed to invest $2.43 billion in Germany’s largest power producer RWE AG, to help it buy US firm Con Edison Inc’s Clean Energy Businesses subsidiary for $6.8 billion.

According to a Reuters report, RWE will issue a mandatory convertible bond to a QIA subsidiary, through which Qatar’s sovereign wealth fund will become a 9.1 percent shareholder in RWE.

By acquiring Con Edison’s Clean Energy Businesses, RWE is expected to become one of the major players in the US renewable energy sector.

The transaction will nearly double RWE’s US renewables portfolio to more than 7 gigawatts and grow its regional project pipeline by 7 GW to more than 24 GW.

Following the takeover, solar will account for 40 percent of RWE‘s US portfolio, up from 3 percent now, according to presentation slides.

“Our equity capital measure is the basis for financing the acquisition of Con Edison CEB and of the additional green growth in the years to come,” RWE Chief Executive Markus Krebber said in a statement late on Saturday.

He added: “I am delighted that the QIA is supporting RWE’s accelerated growth ambitions with their capital commitment.”

The deal, the biggest for RWE since the breakup of former division Innogy announced in 2018, will be earnings accretive right away, giving RWE additional core earnings of $600 million a year.

Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, said that the fund is proud to support RWE’s vision to become a leader in the global renewable energy market.

“QIA is actively investing in companies that can have a positive impact on society and shape the future of sustainability by making the energy transition a reality,” he added.

The deal comes nearly a year after RWE fleshed out its global renewables roadmap, which includes $49 billion of gross investments by 2030, with 15 billion earmarked for the US.

The transaction, which is expected to close in the first half of 2023, will make RWE the fourth-largest renewables player in the US market.

The deal plays a key role in the company’s green expansion, though still far behind the largest player NextEra with some 58 GW of generating capacity. 

Barclays and Latham and Watkins advised Con Edison on the deal.

(With input from Reuters) 


IMF plans regional office in Saudi Arabia

IMF plans regional office in Saudi Arabia
Updated 02 October 2022

IMF plans regional office in Saudi Arabia

IMF plans regional office in Saudi Arabia

RIYADH: The International Monetary Fund is considering opening a regional office in Saudi Arabia as both parties prepare to sign a memorandum of understanding in this regard on Oct. 3 in Riyadh. 

The MoU, to be signed between the Saudi Arabian ministry of finance and the IMF, will be followed by a joint press conference at Ritz Carlton in Riyadh, a ministry release said. 

The opening of a new regional office in Saudi Arabia holds significance as the IMF expects the Kingdom to become one of the world's fastest-growing economies, recording a growth of 7.6 percent in the gross domestic product this year.

It should be also noted that credit rating agency S&P has affirmed Saudi Arabia’s rating at “A-/A-2” with a positive outlook citing higher oil revenues, rising oil production, and the government’s robust reform program.