• The USDA has released its monthly demand and supply projections for vegetable oils. The USDA has reduced its forecast of 2022E/2023F US soybean inventory to 230mil from 280mil bushels. The downward revision was due to smaller planted areas of 88.3mil acres compared with 91mil acres previously. Comparing 2022E/2023F against 2021/2022E however, US soybean inventory is envisaged to increase to 230mil from 215mil bushels on the back of higher planted areas.

• The USDA estimates global soybean inventory to rise to 99.6mil tonnes in 2022E/2023F from 88.7mil tonnes in 2021/2022E underpinned by expansions in production in the US, Brazil and Argentina. US soybean output is expected to inch up by 1.5% to 122.6mil tonnes in 2022E/2023F while in Brazil, soybean production is envisaged to climb by 18.2% to 149mil tonnes. Soybean output in Argentina is anticipated to improve by 15.9% to 51mil tonnes in 2022E/2023F.

• Bloomberg quoted a government official as saying that Indonesia plans to raise palm content in gasoil to 35% from 30% at the end of July. There were no further details on the plan. In another development, a government official said that the plan to lower palm oil export levy is meant to boost shipments. Increased exports will reduce stockpiles and prompt companies to buy FFB from the smallholders. The local government expects to collect at least Rp25/kg from the sale/purchase of FFB. The funds will be used for regional development.

• Reuters reported that Brazil imported record volumes of potassium chloride from Canada in 1H2022, a sign that domestic farmers will have plenty of fertiliser to nourish crops, boost yields and expand planted areas when sowing starts in September. Brazil imported 2.3mil tonnes of Canadian potassium chloride between January and June, a 71.2% YoY rise. Imports of potassium chloride from Russia rose 27% YoY to 1.9mil tonnes in 1H2022. An industry expert said that the Russians were selling fertiliser to Brazilian and US importers in the middle of March. In spite of the Ukraine war and sanctions, business is still being conducted and cargoes shipped by Russia.

• Reuters quoted traders as saying that India’s palm oil imports in July are set to jump to the highest in 10 months because of a hefty correction in prices and as Indonesia allows more exports of palm oil. Dealers said that India’s palm oil imports in July may rise to 700,000 to 800,000 tonnes, the highest since September 2021. Another dealer said that palm oil’s discount has widened over rival oils and as such, it has become competitive. In India, CPO was being offered at about US$1,100/tonne including cost of insurance and freight for July shipments compared with US$1,360/tonne for crude soybean oil.
• Transport and Environment reported that the European Parliament has barred the use of biofuel feedstock including intermediate crops and palm by-products from Europe’s aviation green fuel mandate. Animal fats, however, will still be included in the definition of green fuel in Europe. Also, the European Parliament showed preference for synthetic fuels over biofuels. Lawmakers tripled the synthetic fuel volumes proposed by the Commission for 2030F and decided that in 2050F, half of the total jet fuel use in Europe will be synthetic.
• MercoPress reported that drought is wreaking havoc in Argentina and Paraguay. Argentina’s wheat crop for the 2022F/2023F season is the most delayed in a decade as a lack of rainfall and early frost are forcing farmers to delay planting the winter crop. In Argentina, the Rosario Grains Exchange said farmers are waiting for better climate conditions while the Buenos Aires Cereal Exchange said it may have to cut its estimate of wheat planted areas for 2022F/2023F again. Currently, areas planted with wheat are estimated to be 6.3mil hectares for 2022F/2023F.

Source: AmInvest Research - 18 Jul 2022