• The USDA has released its monthly demand and supply projections for vegetable oils. The USDA reduced its forecast of US soybean inventory for 2022E/2023F by 9.7% to 280mil from 310mil bushels originally. This downward revision was brought about by lower carried over inventories from 2021/2022E. Comparing 2022E/2023F against 2021/2022E however, US soybean inventory is expected to increase to 280mil from 205mil bushels underpinned by higher planted areas. The US is anticipated to plant soybean on 91mil acres in 2022E/2032F vs. 87.2mil acres in 2021/2022E.

• The USDA raised its 2022E/2023F forecast of world soybean inventory to 100.5mil from 99.6mil tonnes previously. The upward revision was due to higher carried over inventories in Brazil and Argentina. World soybean inventory is estimated to expand to 100.5mil tonnes in 2022E/2023F from 86.2mil tonnes in 2021/2022E on the back of higher production from the US, Brazil and Argentina. World soybean output is anticipated to be 395.4mil tonnes in 2022/2023F vs. 352mil tonnes in 2021/2022E.

• Bloomberg reported that Indonesia has slashed the maximum crude palm oil export levy by nearly half to speed up shipments after lifting a temporary ban last month. Exporters must pay a maximum levy of US$200/tonne for CPO vs. US$375/tonne previously to the Indonesia Oil Palm Plantations Fund Management Agency. The new levy is valid until 31 July. The maximum rate will increase to US$240/tonne on 1 August. Also, a government official sald that the allocation for exports has been increased to 2.25mil tonnes from 1mil tonnes. Indonesia is working to “flush out” its overflowing stockpiles of palm oil as exports struggle to restart after halting in April and May.

• S&P Global Platts said that China has been actively purchasing soybeans for nearby shipments with the US Gulf soybeans starting to compete with Brazil. For July shipments, Brazilian soybeans is more competitive due to the ample supply but for July to August shipments, old crop US Gulf soybeans are cheaper. In spite of this, there is limited downside to US Gulf soybeans. A Chinese trader said that with the potential downward revision of US soybean inventories for 2021/2022E due to higher than expected exports, there will be tighter supply of US Gulf soybeans for August. Hence, Brazilian soybean prices may need to go down to compete for better demand.

• Reuters reported that Indian state fuel retailers have agreed to provide monetary relief to sugar mills and other producers of ethanol to compensate for high energy costs to boost biofuel production. India has expedited efforts to double ethanol blending with gasoline to 20% from 10% from 2025F/2026F onwards. The companies will pay an additional 1,604 rupees per kg for ethanol produced from sugar cane juice and between 1,179 and 1,493 rupees for those produced from heavy molasses.

Source: AmInvest Research - 20 Jun 2022