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Researchers from the NewGO programme at EFI interviewed commodity traders in the cocoa, palm oil and soy sectors about how they would respond to the proposed EU deforestation regulation. The key uncertainty is whether traders will apply EU standards across all operations or divert non-compliant volumes to other markets.
Market leakage could limit the rule's impact.
If non-compliant soy and palm oil are diverted to less regulated markets, EU prices could diverge from world prices. Feed buyers may see regional price gaps rather than a clear global move.
transparencypathway.orgalbert.gardunoDec 12, 2022After 1,905 past policy events, Soybeans moved a median +0.1% over 5 sessions (52% higher; middle half -1.4% to +1.8%), and +0.2% over 20.
After 734 past policy events, Soybean Meal moved a median -0.2% over 5 sessions (46% higher; middle half -1.9% to +1.6%), and -0.4% over 20.
After 1,570 past policy events, Palm Oil moved a median +0.2% over 5 sessions (54% higher; middle half -1.1% to +1.6%), and +0.5% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
