• PTI reported that the Solvent Extractors Association of India has urged the government to allow imports of only crude palm oil and place all refined oils under the restricted category of trade. The India government has kept only RBD palm olein under the restricted category since early this year. To increase domestic production of oilseeds, the association hascalled on the government to provide higher incentives for R&D and improve the seeds for various varieties of oilseeds.
   
• Bloomberg reported that the Australian Bureau of Meteorology has moved to La Nina Alert from La Nina Watch, increasing the chances of a La Nina at 70% probability. The change in status follows sustained cooling in the central and east tropical Pacific Ocean. Climate models suggest further cooling is likely with the majority of the models suggesting sea surface temperatures will approach or exceed La Nina thresholds in spring (October to December 2020 in the southern hemisphere).

• Reuters reported that the recent Pro Famer Crop Tour in the USA has revealed that a drought and derecho, which hit on 10 August, are expected to affect Iowa’s crops this season. According to a Gro Intelligence analysis of satellite, environmental and government data, about 52% of the corn produced in Iowa was growing on farmland affected by the derecho. In the worst-case scenario where none of the corn is salvaged, this would mean a loss of 1.38bil bushels of corn vs. the USDA’s current forecast of 15.278bil bushels of corn for the country this season. Also the latest US Drought Monitor showed that nearly 80% of Iowa was abnormally dry as at 11 August and nearly 19% were in severe drought.

• Bloomberg cited an industry expert as saying that Argentina’s government is weighing a cut to export taxes for processed soybean products. The export tax rate for raw soybean, soybean meal and soybean oil is 33% each currently. The equal tax rate has made exporting raw soybeans more competitive. Before September 2018, soybean meal and soybean oil were taxed three percentage points below raw soybeans to spur the crushing industry.

• According to Bloomberg also, farmers in Brazil are locking in sales two years in advance as prices in real (Brazilian currency) rise to a record. Farmers sold 43% of the 2020E/2021F crop through 7 August 2020, compared with 16% historically. Also, the Institute of Agribusiness in Mato Grosso said that 1.3% of the soybean production in 2022F was sold at the end of July 2020 amid a murky for economies and currencies. The majority of the sales were related to barter trading with farmers getting fertiliser and chemicals in exchange for part of the harvest.

Source: AmInvest Research - 1 Sept 2020