• The USDA (US Department of Agriculture) has released its monthly demand and supply projections for vegetable oils. The USDA has reduced its 2020/2021F forecast of US soybean inventory by 20% to 140mil from 175mil bushels due to lower yields. US soybean yield is now estimated to be 50.2 bushels per acre vs. 50.7 bushels per acre in 2020/2021F. Comparing 2020/2021F against 2019/2020, US soybean production is expected to improve by 16.4% to 4,135mil bushels. However, US soybean stockpiles are envisaged to plunge by 73.3% to 140mil bushels in 2020/2021F due to lower carry-over inventory from the previous season.
   
• Due to a downward revision in US soybean inventory, global stockpiles of soybeans are anticipated to fall by 11.6% to 84.3mil tonnes in 2020/2021F from 95.4mil tonnes in 2019/2020. Global soybean production is forecast to rise by 7.3% to 361.0mil tonnes in 2020/2021F on the back of a 5.6% increase in output in Brazil and 16.4% expansion in output in the USA.
   
• Bloomberg reported that while the immediate outlook for Argentine soybeans remains fairly grim, things are looking up in Brazil where chances of a record harvest are increasing. In Brazil, the weather has improved enough to bolster plant development after dryness hindered sowing. An industry player was cited as saying that in Parana, which is Brazil’s second largest soybean growing state, regular rains have brought soil moisture back to normal levels. Currently, flowering and grain filing are performing well although the state has already lost 5% of its yield potential due to initial dryness.
   
• According to Bloomberg also, Argentina has backtracked on a decision to cap corn exports. Instead, the country will monitor supplies to avoid tensions in the domestic market. Argentina has agreed to remove a limit on shipments of 30,000 tonnes a day that had been put in place in the rest of the season until February 2021.
   
• S&P Global Platts said that Brazil’s soybean crush volumes are expected to remain elevated in year 2021F on high demand while the outlook for Argentina’s crushing industry is precarious as it grapples with recession and more than US$323bil of debt. An economist in Argentina said that the key challenge for Argentine processors in 2021F is likely to be low or negative crushing margins due to soaring input and logistics costs. In addition, crushers in Argentina are expected to face a supply crunch for raw soybeans in 2021F as the government’s currency control policies discourage farmers from selling.
   
• Reuters reported that the US Supreme Court has agreed to review a lower court ruling that severely limited the government’s power to exempt small refineries from the country’s biofuel law, rekindling a dispute between the oil and corn industries. Under the Renewable Fuel Standard, refiners must blend billions of gallons of corn-based ethanol and other biofuels into their fuel or buy credit from those who do. The court is expected to hear the case in April and a ruling could take several months.

Source: AmInvest Research - 18 Jan 2021