• Bloomberg reported that global fertiliser prices are rebounding. Phosphate prices have been climbing while potash prices have risen from the lows. Another sign is Belarus Potash Co’s benchmark deal with China that raised potash prices by 26% to US$290/tonne. Phosphate and potash prices have been going up on stronger demand from Asia and South America and output curbs in North America. An industry expert said that China usually buys potash at a discount to India but this year, the prices are the same for both countries.

• Bloomberg cited an industry expert as saying that China’s soybean reserves coupled with large commercial stockpiles may help the country meet a deficit caused by the imposition of a 25% tariff on US soybeans. The industry expert estimated China’s soybean reserves to be 5mil to 6mil tonnes currently while commercial stockpiles are envisaged to be 9.5mil tonnes. These may help cover a deficit of 10mil tonnes until supplies from Brazil reach China in March 2019. Interestingly, the soybean crushing industry in China is against the government allowing imports of soybean meal from Argentina.

• Reuters reported that Nestle will use satellites to monitor palm oil plantations for signs of deforestation as it aims to speed up its commitment to a more sustainable ingredient sourcing. Nestle is using a technology developed by Airbus and Forest Trust, which is an environmental organisation. The technology called Starling, acts as a verification system that uses radar and satellite imagery to monitor forest cover changes in almost real-time.

• USDA has released its monthly demand and supply projections for vegetable oils. USDA raised its forecast of US soybean inventory for 2018E/2019F by 7.6% from 785mil to 845mil bushels due to a 2.3% increase in production. USDA raised its estimate of soybean yield in the USA from 51.6 to 52.8 bushels per acre for 2018E/2019F. Comparing 2018E/2019F against 2017/2018E, US soybean inventory is expected to climb by 113.9% to 845mil bushels on the back of a 6.9% rise in production.

• USDA also forecasts global soybean inventory to increase by 14.3% from 94.7mil tonnes in 2017/2018E to 108.26mil tonnes in 2018E/2019F mainly due to higher stockpiles in the USA and Argentina. Argentina’s soybean production is expected to expand by 50.8% from 37.8mil tonnes in 2017/2018E to 57mil tonnes in 2018E/2019F as soybean yields recover from the drought this year.

• SGS said that Malaysia’s palm shipments surged by 75.1% in the first 20 days of September compared with the same period in August. Palm exports to China climbed by 106.3% while shipments to India rose by 20.8%. Demand from the EU was also robust, as reflected in the 104.1% increase in exports in the first 20 days of September compared with the same period in August.

Source: AmInvest Research - 24 Sept 2018