• Bloomberg quoted the Solvent Extractors Association of India (SEA) as saying that vegetable oil processors in India are not in favour of cutting import duties as it may discourage farmers from expanding winter plantings of crops such as rapeseed. This was in response to a recent news report that the India government may reduce import duties to mitigate food inflation. SEA said that state-run companies should not be allowed to import cooking oils at cheaper duties. SEA added that local prices may soften as monsoon-sown crops will arrive in the market.

• According to Bloomberg also, Argentina’s crop woes from La Nina may escalate while Brazil may get rain relief from the dry weather. A senior agricultural meteorologist in the US has forecast below-average rains and above-normal temperature in the Argentine regions from Chaco to Buenos Aires and parts of La Pampa in November 2020. Following dry conditions, the Buenos Aires Grain Exchange has projected lower soybean and corn output in Argentina. Brazil however, is expected to benefit from bouts of rains in the rest of the year.

• According to S&P Global Platts, sellers of Indonesian crude palm oil have started factoring in an export levy of US$120/tonne although an official announcement has not been made yet. This came after the export levy on Indonesian crude palm oil was raised to US$55/tonne in June 2020. Consequently, the gloomy outlook for crude oil prices in 2021F spurred the Indonesia government to consider the possibility of raising the export levy further to fund the biodiesel programme.

• S&P Global Platts also reported that soybean prices lost ground in the past few sessions as a drop in purchases by Chinese crushers, a second coronavirus wave in Europe and Americas, coupled with recent rains in Brazil, weighed on sentiment. China’s state-owned companies have not been purchasing US soybeans in the past couple of weeks with the same intensity as seen in September. There are differing views as to whether China’s state-owned crushers would resume buying US soybeans after the US presidential election. A Shanghai-based agriculture commodities broker said that Chinese crushers may have already finished buying their quota of US soybeans for the current season. Other market sources said that China’s private crushers’ demand for US soybeans could be les than two million tonnes in December 2020 and January 2021.

• Reuters reported that the USDA has defended its latest monthly forecast of China’s corn imports, a figure that surprised analysts as corn sales to China have already outpaced the USDA’s estimate. The chairman of USDA’s World Agricultural Outlook Board said that export sales get cancelled at times. In its last report in October 2020, the USDA left its forecast of China’s corn imports unchanged at 7mil tonnes for 2020E/2021F. However, weekly USDA export data showed that sales of US corn to China for 2020E/2021F had already reached 10.5mil tonnes by 15 October 2020 although actual shipments amounted to only 1.7mil tonnes

Source: AmInvest Research - 9 Nov 2020