• Reuters cited policy experts as saying that Malaysia’s decision not to introduce a law to tackle companies responsible for forest fires is a “missed opportunity” to curb the annual haze and end diplomacy rows over the problem. Last year, Malaysia’s then environment minister pledged to draft a law to punish businesses and individuals that cause pollution on land they manage overseas.

• But after months of consultation with green groups, the planned legislation was dropped a few weeks ago by the government that took charge in March, in favour of a more regional approach. In media reports, Malaysia’s environment ministry cited a similar law targeting companies that was introduced in Singapore but has proven to be ineffective. Singapore’s Transboundary Haze Pollution Act 2014 has had little impact due to a lack of maps and support from the Indonesian authorities.

• Reuters quoted data from the General Administration of Customers, which showed that China’s soybean imports rose 18% YoY in July 2020 as large volumes of soybeans bought cheaply from Brazil arrived. China bought 10.09mil tonnes of soybeans in July, up from 8.63mil tonnes in July 2019 but below 11.16mil tonnes in June. China’s soybean imports surged by 17.7% YoY to 55.14mil tonnes in 7M2020. Soybean and soymeal inventories in China have risen significantly after hitting record lows early this year. Some Chinese soybean crushers, who had to curb operations early this year due to short supplies are now struggling with bulging inventories. But crushers and traders expect the problem to be short-lived due to strong demand from the livestock sector.

• The USDA (US Department of Agriculture) has released its monthly demand and supply projections for vegetable oils. It has raised its forecast of US soybean inventory by 43.5% to 610.0mil from 425.0mil bushels for 2021E/2021F. This is due to higher soybean production resulting from a higher-than-estimated soybean yield. The USDA is now forecasting US soybean yield to be 53.3 bushels per acre in 2020E/2021F vs. 49.8 bushels per acre previously. Comparing 2020E/2021F against 2019/2020E, US soybean production is expected to climb by 24.6% to 4.4bil bushels. US soybean inventory is anticipated to be 610.0mil bushels in 2020E/2021F against 615.0mil bushels in 2019/2020E.

• Due to higher US soybean inventory, the USDA has revised its forecast of world soybean stockpiles for 2020E/2021F to 95.4mil from 95.1mil tonnes. World soybean output is envisaged to increase by 9.8% to 370.4mil tonnes in 2020E/2021F from 337.3mil tonnes in 2019/2020E.

• Bloomberg reported that dry weather is threatening the chances of a bumper sugar harvest in Brazil. No major rainfall is forecast in Brazil’s centre south, which is the major growing area for sugar cane, in the next two months while rains predicted in the middle of last week may not benefit the parched areas of northern Sao Paulo, Minas Gerais and Goias. An industry expert said that for now, the sugar content is still good, which should offset any drop in yields. However, if the lack of rainfall persists, there may be limited impact on the sugar crops for this and next season.

Source: AmInvest Research - 17 Aug 2020