• Bloomberg quoted China’s General Administration of Customs as reporting that the country’s soybean imports fell by 5.9% YoY to 54.2mil tonnes in 7M2022. China’s soybean imports were 7.9mil tonnes in July vs. 8.3mil tonnes in June. China’s imports of vegetable oils plunged by 63.6% YoY to 2.4mil tonnes in 7M2022.

• S&P Global Platts reported that the operating rate at soybean crushing plants in China slumped to a YTD low of 53.5% at the start of August amid prolonged negative crushing margins and replacement margins. From January to May, crushers were able to achieve positive replacement margins of 100–500 yuan/tonne by selling spot cargoes of soybean meal and oils in the domestic market. However, the replacement margin for spot trading has fallen below the breakeven level since June, driven by rapid falls in soybean oil prices. Crushing activity was further pressured by falling demand for soybean oil in China, which declined by 50% YoY in June.

• S&P Global Platts quoted UN’s Food and Agricultural Organisation as saying that global food prices dipped 8.6% in July, falling for the fourth consecutive month after reaching a record high in March. The slump was led by significant declines in vegoil and cereal prices accompanied by drops in other indexes such as sugar, dairy and meat. The drop was driven by falling prices of palm, soybean, rapeseed and sunflower oils as Indonesia looked to boost exports while demand stayed sluggish through the month. The price of CPO FOB Indonesia fell 17.6% in July and was assessed to be US$937/tonne on 4 August, according to Platts pricing Data.
• According to The Star, thousands of farmers from Telangana in India’s south are busy planting oil palms as their home state aims to add more areas for palm oil within 4 years than the entire country has in decades. Telangana is targeting 2mil additional acres under oil palm cultivation in the next 4 years and is going to great lengths to achieve this goal from building large dams and irrigation canals to importing millions of germinated sprouts. According to a state official, Telangana could be producing 4mil tonnes of palm oil after 7-8 years. Currently, India produces less than 300,000 tonnes of palm oil annually.
• MercoPress quoted Brazil’s National Association of Cereal Exporters as saying that Brazil shipped 55.1mil tonnes of soybeans in 1H2022, which was 8.9% lower than 1H2021. The decline was due to lower shipments to China (1H2022: 36.9mil tonnes; 1H2021: 41.6mil tones) and the Netherlands (1H2022: 1.7mil tonnes; 1H2021: 2.5mil tonnes). In spite of this, soybean oil exports from Brazil are estimated to be 2.2mil tonnes in 2022E, up from 2mil tonnes in the previous forecast and 1.7mil tonnes in 2021. The higher demand is expected to come from countries previously purchasing sunflower oil from Ukraine.

Source: AmInvest Research - 15 Aug 2022