• The USDA released its monthly demand and supply projections for vegetable oils recently. The USDA reduced its forecast of US soybean inventory for 2019F/2020F to 900mil from 910mil bushels due to slightly higher domestic usage. Comparing 2019F/2020F against 2018/2019F, US soybean inventory is expected to surge to 900mil bushels from 438mil bushels. Soybean production in the US is anticipated to rise by 3.0% to 4.5bil bushels in 2019F/2020F from 4.4bil bushels in 2018/2019F.

• World inventory of soybean is forecast to increase by 8.8% to 107.2mil tonnes in 2019F/2020F from 98.56mil tonnes in 2018/2019F on the back of higher production in the US and Argentina. Soybean output in Argentina is estimated to surge to 55mil tonnes in 2019F/2020F from 37.8mil tonnes in 2018/2019F. Soybean yields in Argentina are expected to recover this year after being hit by a drought last year. The US is envisaged to account for 34.3% of world soybean production in 2019F/2020F while Argentina and Brazil are anticipated to make up another 47.6%.

• Reuters quoted the Malaysian Palm Oil Council (MPOC) as saying that a European Union proposal to limit the use of palm oil lacks comprehensive scientific evidence and breaches global trade rules. The MPOC added that the European Commission failed to do an assessment of the curbs on palm oil in the EU and global trade, and had used selectively chosen data. The EU wants to finalise the proposal on 14 March, after which the European Parliament will have two months to review and object to the plan.

• According to Reuters also, China’s soybean imports in February fell to their lowest monthly level in four years due to uncertainties over the trade war with the US and flat demand for soymeal. China’s soybean imports amounted to 4.46mil tonnes in February, which were 17% down YoY and 40% weaker MoM. According to a trader, China did not buy much Brazilian soybeans recently either as it is waiting to buy from the US. In addition, demand is flat due to the African swine disease outbreak.

• In a related development, China has reported a new outbreak of the African swine disease in the Guangxi autonomous region. The outbreak in the city of Guigang killed 20 animals in a farm of 3,172 pigs. Since August 2018, China has reported 111 outbreaks of the disease in 28 provinces and regions.

Source: AmInvest Research - 18 Mar 2019