• Bloomberg reported that China has imported the lowest volume of soybeans in September in two years due to a drop in demand for US soybeans. China’s soybean imports were eight million tonnes in September 2018, the lowest for the month since year 2016. The China National Grain and Oil Information Center said that China’s soybean imports are expected to fall by 17% YoY to 20mil tonnes in 4Q2018 as the country continues to shun US soybeans and buy higher-priced soybeans from Brazil and Argentina.

• In a related development, Bloomberg said that China has cancelled 188,000 tonnes of US soybeans in the week ended 4 October 2018. China has been scrapping US soybean cargos for the fourth straight week. An industry player said that there is no reason for the cancellations to stop unless there is a miracle in trade negotiations.

• According to Bloomberg also, Argentine farmers will be storing about 20mil tonnes of soybeans, 8.4mil tonnes of wheat and 17.2mil tonnes of corn in the upcoming 2018E/2019F season. Farmers will be buying 250,000 silo bags, which will cost roughly US$500mil in total. Storing in silo bags has helped even out crop prices across Argentina by reducing the volatility of harvests in certain months. According to the same article, silo bags will keep gaining market share at the expense of traditional storage methods like grain bins.

• According to the Express Tribune of Pakistan, the Islamabad Chamber of Commerce and Industry has asked Indonesian investors to set up joint ventures in Pakistan for the production and processing of palm oil. This will help Pakistan reduce its import bills for palm products. The chamber said that Pakistan’s palm imports rose by 23% YoY in 1H2018.

• Transport Topics of the US quoted an industry expert as saying that US farmers will probably plant more corn next year instead of soybeans as demand from China has fallen. He added that soybean stockpiles are expected to be so large that farmers do not have enough storage space. Illinois is the worst hit as it lacks storage for about 100mil bushels of crops. Many farmers missed the opportunity to sell their corn and soybeans when prices were higher earlier this year.

• According to Reuters, President Trump’s plan to boost corn-based ethanol demand has drawn cheers from farmers but not the oil refining industry. The oil refining industry in the US is planning to file a lawsuit to block the move. Trump has indicated that the higher ethanol gasoline called E15 should be sold all year. Currently, only E10 is sold all year round. E15, which may trigger smog and pollution, is not allowed during summer. Trump needs approval from Congress to change the rule.

Source: AmInvest Research - 22 Oct 2018