The USDA has released its monthly demand and supply projections for vegetable oils. The USDA did not make major revisions to its forecast this month. The USDA has maintained its forecast of US soybean inventory of 120mil bushels for 2020/2021F. US soybean production is estimated to be higher at 4,135mil bushels in 2020/2021F vs. 3,552mil bushels in 2019/2020 underpinned by higher yields and planted areas. In spite of the increased production, US soybean inventory is forecast to fall by 77.1% to 120mil in 2020/2021F due to lower carry-over inventory from the previous season and higher exports.
Globally, the USDA has raised its estimate of soybean inventory by 3.7% for 2020/2021F due to higher stockpiles in Brazil. World soybean inventory for 2020/2021F is now expected to be 86.9mil tonnes vs. 83.7mil tonnes previously. The USDA has increased its forecast of soybean inventory in Brazil by 4.2% due to higher production. Overall, world soybean production is anticipated to expand by 7.1% to 363.2mil tonnes in 2020/2021F from 339.0mil tonnes in 2019/2020.
Bloomberg reported that Brazil’s requirements for the amount of biodiesel that is blended into diesel fuel would be temporarily lowered to 10% from 13% to ease the impact of pricier oil. Lower blending requirements will also reduce the country’s soybean crushing by 3.25mil tonnes, soybean oil consumption by 650,000 tonnes and soybean meal by 2.6mil tonnes. Groups representing biodiesel producers such as Abiove said that the measure will weaken Brazil’s biofuel policy.
According to Bloomberg also, Indonesia’s consumption of biodiesel was 1.94mil kiloliters (1.69mil tonnes) in 1Q2021. This was equivalent to about 21% of this year’s total target of 9.2mil kiloters (8.0mil tonnes). The biodiesel consumption of 1.94mil kiloliters (1.69mil tonnes) in 1Q2021 was lower than the 2.25mil kiloliters (1.96mil tonnes) in 1Q2020.
Reuters reported that Bayer AG is launching a new genetically modified soybean in the US, striking back against Corteva Inc in a bid to retain its dominant position supplying seeds to the US$40bil US soybean industry. Bayer’s new XtendFlex soybeans and Corteva’s Enlist E3 are shaping up to be the most popular with farmers in the coming years, according to interviews with industry players. Each seed tolerates three chemical herbicides so farmers can destroy weeds without damaging their crops. Corteva said that Enlist will account for about 30% of US soybean plantings this year or about 26mil acres. This is up from 20% in 2020, the first year that the seeds were widely available.
Reuters also said that Belarus’s potash monopoly has raised prices by 13% in a potash supply contract with India signed early this year. The Belarus Potash Company, the world’s largest producer of potash, signed its annual potash supply contract with India for 800,000 tonnes at a price of US$280/tonne vs. the previous price of US$247/tonne. Based on the higher prices, we believe that fertiliser costs for Malaysian and Indonesian plantation companies would increase in FY21F.
Xinhua reported that according to research by experts, South Africa’s introduction of the sugar tax in 2018 has led to a reduction in purchases of sugar-sweetened beverages. Researchers examined more than 3,000 households’ purchases before and after the implementation of the tax to assess any change in daily sugar, calories and volume of taxed and non-taxed beverages. The results showed that households reduced sugar by 51%, calories by 52% and 29% reduction in volume of beverages purchased per person per day following the implementation of the sugar tax.
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