• Bloomberg reported that China is finally allowing soy meal imports from Argentina. Previously, China was reluctant to accept Argentine soybean meal as China was promoting its own soybean crushing industry. However, the trade war with the USA has changed that. An industry player said that Argentina and China would still need to go through bureaucracy hoops before cargoes can set sail. These include China giving final approval to Argentina’s crushing plants, which should happen next month, and the inclusion of Argentina’s soybean meal on China’s customs register, which could take five months.

• The New Straits Times quoted Agriculture and Agro-based Industry Minister Datuk Salahuddin Ayub as saying that Malaysia is looking to diversify into food crops in light of fluctuating commodity prices and Western countries’ hostility to palm oil. The food crops would be planted between existing crops and land with old oil palm trees. The minister said that prices of tropical fruits such as papaya and vegetables are rising. Currently, about five million hectares of the country’s seven million hectares of agricultural land are used to cultivate oil palm compared with one million hectares for food crops.

• Reuters reported that China’s soybean imports in August jumped 9.7% from the previous month to hit the highest level in nearly one and a half years. According to Beijing’s General Administration of Customs, August’s soybean imports of 9.48mil tonnes were higher than 8.64mil tonnes in July and 9.15mil tonnes in August 2018. An industry expert said that some cargoes from the USA were not loaded earlier and as such, customs were only cleared in August.

• The Wall Street Journal reported that even though the USA and Japan have signed a trade deal for corn, it may not result in a significant demand from Japan. Japan’s annual corn imports come up to about 11mil tonnes compared with US corn inventory, which is estimated to be 55.4mil tonnes at the end of 2019E/2020F. In addition, the damage from the army worm disease on Japan’s corn plantings is not expected to be serious. Still, an industry expert said that Japan may end up buying the extra corn from the USA to avoid President Trump’s ire. Japan may then export the additional corn to Africa or burn it as biofuel.

• Reuters cited the CEO of Belaruskali as saying that the group may reduce production of potash by almost a third in the next three to four months amid weak global demand. Global demand for potash has declined this year due to large stockpiles and as such, industry experts expect potash prices to soften. Belaruskali is one of the largest producers of potash in the world. Potash is one of the types of fertiliser used in oil palm estates.

• The USDA (US Department of Agriculture) has released its latest demand and supply forecasts for vegetable oils. The USDA has reduced its forecast of US soybean inventory for 2019E/2020F by 15.2% to 640mil from 755mil bushels. This was due to lower carry-over stocks and production. The USDA has also revised its estimate of US soybean yields downwards to 47.9 bushels per acre from 48.5 bushels per acre for 2019E/2020F. US soybean production is forecast to decline by 20.0% YoY to 3,633mil bushels in 2019E/2020F.

• On the back of lower US soybean stockpiles, the USDA has reduced its forecast of world soybean inventory to 99.19mil from 101.74mil tonnes for 2019E/2020F. Overall, world soybean production is expected to fall by 5.7% to 341.39mil tonnes in 2019E/2020F from 362.07mil tonnes in sssss2018/2019E due to lower production in the US.

Source: AmInvest Research - 17 Sept 2019