• The US Department of Agriculture (USDA) released its monthly demand and supply projections for vegetable oils last week. The USDA has reduced its forecast of US soybean inventory for 2019E/2020F by 23.9% to 795mil from 1,045mil bushels. Comparing 2019E/2020F against 2018/2019E, US soybean inventory is now expected to decline by 24.3% to 795mil bushels from 1,050mil bushels. Due to the heavy rains, which hit the US Midwest, the USDA cut its soybean planted areas in 2019E/2020F to 80.0mil from 84.6mil acres previously.

• On the back of a downward revision in US soybean production numbers, world inventory of soybean is now projected to be 104.5mil tonnes in 2019E/2020F vs. 112.66mil tonnes originally. This means that world soybean inventory is expected to fall by 7.5% to 104.5mil tonnes in 2019E/2020F from 112.98mil tonnes in 2018/2019E. Global production of soybean (ex-China) is estimated to ease by 4.9% to 330.0mil tonnes in 2019E/2020F from 346.97mil tonnes in 2018/2019E.

• Yicai Global said that Chinese scientists have created a new gene-edited soybean variety that can thrive in the southern regions of China, which have little sunshine. The genetically modified plants would help China reduce its dependency on soybean imports. Last year, China imported 88mil tonnes of soybeans compared with the domestic production of only 16mil tonnes. Currently, the best places to grow soybeans in China are Heilongjiang, Jilin and Inner Mongolia.

• According to Bloomberg also, the US Commerce Department has proposed to reduce import duties on Argentine biodiesel. If the results are final, the Commerce Department would reduce countervailing duty rates on Argentine biodiesel from an average of 72% to 10%. The anti-dumping duties of 75% on Argentine biodiesel remain unchanged. Argentina will keep pushing to get the anti-dumping duties scrapped at the US Court of International Trade. If this is unsuccessful, Argentina will take the case to the World Trade Organisation.

• Reuters reported that Total, a French oil and gas company, has produced its first batch of biofuel at its refinery in the south of France. Total invested €275mil to convert the lossmaking crude oil refinery to biofuels. As part of the agreement with the French government, Total has committed to using less than 300,000 tonnes of palm oil per year at the refinery. Total has come under criticism from farmers, who expressed concern that imported palm oil would unfairly compete with locally produced vegetable oils. The refinery has a capacity of 500,000 tonnes per year.

• Economic Times reported that India could be imposing a 10% tax on palm imports. India’s edible oils industry is concerned over the surging imports of palm oil. The Solvent Extractors Association of India said that the reduction in import duty on 1 January 2019 resulted in monthly refined palm imports rising to almost 350,000 tonnes in May 2019 from 130,000 tonnes in December 2018.

• Singapore’s Straits Times said that about 112,635 families under the Felda scheme have been offered a new deal. It will involve the introduction of high-yielding crops and livestock to safeguard their livelihoods against the volatility of CPO prices. This programme is part of the government’s RM6.23bil rescue package for Felda. The programme involves “undercropping” or planting under maturing palm trees with bananas and pineapples as well as breeding rabbits for their meat. Once the palm trees have matured, cattle rearing will be introduced.

Source: AmInvest Research - 15 Jul 2019