• The USDA (US Department of Agriculture) released its Prospective Plantings report yesterday. American farmers are expected to plant more soybean than corn this year.

• According to the report, US farmers would be planting a record 91mil acres of soybean and 89.5mil acres of corn this season. Last season, US farmers planted 87.2mil acres of soybean and 93.4mil acres of corn.

• US farmers are planting more soybean than corn this year as fertiliser costs have surged and soybean uses less fertiliser than corn.

• Following the report, US soybean price for May fell by 47 cents to US$16.18/bushel yesterday while soybean oil price declined by US$0.225/pound to US$0.6994/pound.

• On the back of higher planted areas, US soybean production is expected to increase this year. However, the USDA has not released its forecast of US soybean production for this season yet.

• Based on the planted areas of 87.2mil acres in the last season, US soybean production was forecast to increase by 5.2% to 4,435mil bushels while soybean inventory was envisaged to be 285mil bushels (2020/2021: 257mil bushels).

• We believe that the rise in US soybean production would also lead to higher output of soybean oil this year. This may replace some of the shortage of supply in vegetable oils resulting from Russia’s invasion of Ukraine. The higher supply may also exert downward pressure on CPO prices.

• Based on yesterday’s prices, the discount between US soybean oil and CPO is 6.8% or US$104/tonne vs. the five-year average of 18.8%.

• The MPOB is expected to release its monthly inventory data on 10 April. Malaysia’s palm inventory stood at 1.52mil tonnes as of end February.

• Amspec, which is an independent cargo surveyor, has reported that Malaysia’s palm shipments rose by 6.7% in March vs. February. We believe that Malaysia’s CPO output would also be higher in March compared with February due to a higher number of working days. We maintain UNDERWEIGHT on the plantation sector.

Source: AmInvest Research - 1 Apr 2022