• Reuters reported that sales of Brazilian soybeans have lagged due to a fall in premiums over US soybeans. This has raised concerns over a lack of storage space for the winter corn, which is planted after soybeans. The premium of Brazil’s soybeans over US soybeans is currently 40 cents/bushel compared with 70 cents/bushel in February and US$1.00/bushel a year ago. An industry expert said that storage space has also become scarce due to an increase in soybean production in Brazil without a corresponding construction of soybean storage space. Competition from the US is also weighing down on the demand for Brazil’s soybeans.

• Bloomberg reported that farmers in Argentina are delaying fixing selling prices on their soybeans as they bet that prices will improve. Farmers in Argentina have delayed signing price contracts for almost three quarters of the 12.2mil tonnes of soybeans that have been sold so far to crushers and exporters. Delaying the pricing also means that growers do not need to pay for storage as silo bags cost hundreds of dollars.

• According to Bloomberg also, the flood damage in Iowa may cost US$2bil. The Iowa Farm Bureau said that damages from the Missouri River and the Mississippi River’s flooding which has not hit yet, will make this a challenging year for Iowa farmers. Also, some fields may not be ready in time for Iowa farmers to plant soybeans. This is because after the water recedes, sand and debris must be cleaned up but the equipment may not be readily available. Other challenges include breached levees and impassable roads.

• The Malay Mail (www.malaymail.com) quoted the Malaysian Palm Oil Council as saying that Malaysia needs to navigate with tact and diplomacy and work together with other Asean countries to counter the EU’s threat against palm oil. An official said that Malaysia’s efforts could backfire if it does not work with other countries such as India or Pakistan as Malaysia is only a small country. He added that the trade between the EU and Malaysia is dominated by industrial products with the EU mainly importing machinery and appliances and exporting electrical equipment and machinery.

• The USDA (US Department of Agriculture) has released its monthly demand and supply forecasts for vegetable oils. The USDA has reduced its forecast of US soybean inventory for 2018/2019F to 895mil bushels from 900mil due to higher domestic usage. Comparing 2018/2019F against 2017/2018, US soybean inventory is expected to surge to 895mil bushels from 438mil. US soybean production is forecast to rise by 3.0% to 4,544mil bushels in 2018/2019F from 4,412mil bushels in 2017/2018.

• Global inventory of soybean is estimated to increase by 8.4% to 107.36mil tonnes in 2018/2019F from 99.05mil tonnes in 2017/2018. Although Brazil’s soybean production is forecast to fall by 4.1% to 117mil tonnes in 2018/2019F, Argentina’s soybean output is envisaged to climb by 45.5% to 55mil tonnes on the back of a recovery in yields.

Source: AmInvest Research - 15 Apr 2019