• Bloomberg reported that the easing of the US-China trade war means that China’s demand for Brazil’s soybean is drying up. COFCO’s grains and oilseeds president in Brazil was quoted as saying that although the US and China have yet to strike a deal, soybean sales in Brazil have stagnated. Forward sales of this season’s crops in Brazil have stalled at about 24%. As a result, local soybean prices have slumped on concerns that exports will fall this year.

• Reuters cited French energy group Total as saying that the move by French lawmakers to exclude palm oil from raw materials approved for use in biofuel would place its biodiesel facility in southern France at risk. Total has invested €275mil on the plant. Previously, Total said that palm oil would account for less than half of the raw materials used with French rapeseed crops and recycled oil also being part of the feedstock. Total’s usage of palm oil in the biodiesel plant caused an uproar among environmentalists and local farmers last year.

• According to the Philippine New Agency, the government is considering tightening palm oil imports, especially those from Indonesia to prevent a flooding in the domestic market. A government official said that Indonesia exports about US$1bil worth of agricultural products to the Philippines while allowing only US$50mil worth of exports from the country.

• Platts quoted Brazil’s national crop agency as saying that the country’s 2018/2019F soybean yield will be lower than the previous season. In a monthly report, CONAB said that Brazil will harvest 118.8mil tonnes of soybean this year compared with the original forecast of 120.06mil tonnes and last year’s 119.28mil tonnes. Industry experts have been cutting estimates for Brazil’s soybean crops because of the intense drought in many regions.

• According to Bloomberg, COFCO has closed a soybean refining plant in Argentina due to a “significant reduction in local demand, unfavourable market conditions and rising idle capacity”. COFCO said that its decision to leave the refining business in Argentina means that it can focus on sourcing oilseeds and crushing them for exports.

• The US Climate Prediction Center said that there is a 65% chance that El Nino would form through spring (March to June 2019) in the Northern Hemisphere. The weather agency added that given the timing and that a weak event is favoured, a significant global impact is not anticipated during the remainder of winter even if conditions were to form.

Source: AmInvest Research - 22 Jan 2019