• Bloomberg reported that global wheat prices are so high that African consumers are starting to remove the grain from their diet. Food producers in Kenya, Egypt, Democratic Republic of Congo, Nigeria and Cameroon say they are mixing cheaper alternatives into their breads, pastries and pasta. Local rice, manioc flour and sorghum are substituting for wheat, which has spiked about 40% this year. The domestic crops are less exposed to trade disruptions and global inflation, thus offering some protection from food prices.

• According to Bloomberg also, India is planning to cut taxes on some edible oils to cool the domestic market after the war in Ukraine and Indonesia’s export ban on palm products sent prices skyrocketing. India is looking to cut the agriculture infrastructure and development cess on crude palm oil imports from 5%. The new tax amount is still being deliberated, according to sources. The cess is levied over and above basic tax rates on certain items and is used to finance agriculture infrastructure projects.

• Bloomberg quoted an official with the Indonesia Palm Oil Association as saying that the export ban on crude and refined palm products may be lifted in 2 to 4 weeks’ time. This is so that the country can maximise the opportunity to meet demand from Europe during the current situation of tight supply.

• The USDA has released its latest demand and supply projections for vegetable oils. In the report, the USDA introduced its projections for 2022F/2023F for the first time. The USDA has forecast US soybean inventory to increase to 310mil in 2022F/2023F from 235mil bushels in 2021/2022F. US soybean production is expected to rise by 4.6% to 4,640mil in 2022F/2023F on the back of higher planted areas. World soybean inventory is also envisaged to be higher at 99.6mil tonnes in 2022F/2023F vs. 85.2mil tonnes in 2021/2022F due to higher production in Argentina and Brazil. Soybean production in Brazil is anticipated to climb to 149mil tonnes in 2022F/2023F from 125mil tonnes in 2021/2022F while in Argentina, soybean output is expected to increase by 21.4% to 51mil tonnes. Recall that in 2021/2022F, soybean production in South America was severely affected by the drought.

• Reuters quoted Agrinvest Commodities as saying that Brazilian farmers will raise soybean plantings by 1.5% next season. Brazil planted 40.8mil hectares of soybeans in 2021/2022F, a 4.1% expansion. Based on a survey, Agrinvest said that 72% of farmers intended to increase their planted areas in September with 40% saying that they would expand plantings above 5% and 32% by up to 5%. In relation to the use of fertiliser, 64% said that they would reduce applications by up to 20% while 15% sad that they would cut fertiliser use above that level. An industry expert said that it is open for debate whether soy yields will be affected by reduced applications. This is because Brazil is large and heterogeneous and the analysis is on a case-by-case basis.

Source: AmInvest Research - 17 May 2022