• Reuters reported that US soybean processors have booked soybean purchases well beyond their normal few weeks of supply due to soaring export demand, rising prices and fears of shortages later in the season. At least one processor in eastern Midwest has already booked its soybean needs through to May, the “most in the history of the company”, according to a soybean merchant. Other US crushing plants are believed to have booked soybean needs for 60 days or more, up from the usual 30 to 40 days. The scale of forward purchases, which crushers do not normally disclose for competitive reasons, reveals the depth of concern over the shrinking soybean supplies among the buyers.

• Buenos Aires Times said that soybean meal exports from Argentina are recovering strongly after labour strikes decimated soybean processing in December 2020. Truck deliveries to grain terminals are now back to normal and have received more than 3,000 loads a day since last Tuesday, according to a trucking agency. Soybean represented 45% of the deliveries last week.

• The Star quoted The Jakarta Post as saying that researchers have urged authorities in West Kalimantan to develop better schemes to resolve conflicts surrounding the palm oil business after decades of unresolved conflicts and ineffective resolution mechanisms. According to a report by the Royal Netherlands Institute of Southeast Asian and Caribbean Studies, about 66% of the conflicts related to palm oil in West Kalimantan in the last two decades have yet to be resolved. According to the research, the mediation process between the companies and farmers was often marred by companies providing false or incomplete information. Also, plantation companies often hire thugs to attend the mediation process to intimidate the farmers.

• S&P Global Platts reported that the resurgence of the African swine fever cases in the Guangdong province’s pig farms following the outbreak at a major pork producing companies in 20 to 22 January is unlikely to pose a serious challenge to China’s overall hog herd numbers. This is expected to support the strong recovery in China’s soybean demand. China is heavily dependent on soybean purchases as 80% of the beans are processed into animal feed. S&P Global Platts estimates China’s soybean imports to be 100mil tonnes in 2020/2021F and 110mil tonnes in 2021F/2022F.

• In a related development, Bloomberg quoted New Hope Group, which is China’s fourth largest pig producer, as saying that new strains of the African swine fever were detected last year and have been brought under control. While the new variants infected some hogs in the northern regions, they are less lethal than the disease that affected China’s farms in 2018 and 2019. Methods employed by the local companies were effective in controlling the spread of the virus strain.

• S&P Global Platts quoted AgRural as saying that Brazil’s soybean harvest for 2020/2021F has made the slowest progress in a decade as unrelenting rains hampered field activities. AgRural said that soybean farmers in Brazil had been able to harvest only 1.9% of the projected acreage as of 28 January compared with 8.9% last year. According to industry experts, Brazil’s soybean harvest is expected to pick up pace in 2H of February 2021, almost a month later than the five-year average. In spite of the delay in harvest, Brazil is expected to produce an all-time high production of 131.7mil tonnes of soybeans in 2020/2021F.

Source: AmInvest Research - 8 Feb 2021