• The USDA has released its monthly report on grains and vegetable oils. The USDA has maintained its forecast of 200mil bushels for US soybean inventory in 2022E/2023F. Although the soybean yield has been reduced to 49.8 bushels per acre from 50.5 bushels per acre, inventory was unchanged at 200mil bushels due to higher carry-over stockpiles from the previous season. Comparing 2022E/2023F against 2021/2022E, US soybean production is expected to ease by 4% to 4,313mil bushels as yields will be affected by the drought.

• Globally however, soybean inventory is forecasted to increase by 9% to 100.5mil tonnes in 2022E/2023F on the back of higher production in Argentina and Brazil. Soybean production in Brazil is estimated to expand by 20% to 152mil tonnes in 2022E/2023F while in Argentina, soybean output is envisaged to improve by 16% to 51mil tonnes.

• Bloomberg reported that charging electric vehicles using some form of renewable power would qualify for credits under Environmental Protection Agency’s draft plans to expand a US biofuel support programme. The measure is part of a proposal to set biofuel blending requirements for gasoline and diesel that is being honed by the administration ahead of a planned release in mid-November. If finalised, the measure could expand the benefits of the Renewable Fuel Standard programme to electric vehicle makers such as Tesla Inc and operators of EV charging networks such as ChargePoint Holdings Inc.

• Bloomberg also reported that some of the world’s largest food companies are bracing for the next threat i.e. a winter with too little gas to power their factories. The food makers are pleading their case to the policy makers in the EU, cutting back on energy use and converting gas-fired plants to oil to keep Europe’s shelves filled with food staples even if natural gas supplies dry up. Multinational companies such as McDonald’s Corp have been installing burners that can switch sites to oil from gas. Most of Nestle and Danone’s sites in Europe are already purchasing electricity from renewable generators and carbon-cutting goals have pushed both away from gas for heating.

• Reuters quoted AgRural as saying that Brazilian farmers have sowed an estimated 9.6% of the estimated soybean areas. This was 10.1% below last year due to erratic weather. Constant rains and high humidity affected areas in Parana, Santa Catarina and Mato Grosso Do Sul. In spite of this, Brazil is expected to harvest a record soybean crop, exceeding 150mil tonnes in 2022E/2023F with farmers expanding planted areas to 43mil hectares.

• Economic Times reported that food prices are likely to surge in India in the coming months due to heavy showers ahead of the harvest season for crops like rice and soybean. Rains have damaged the crops right before the harvest. Rainfall cycle this year was delayed in June and while crops are now ready for harvesting, an area of low pressure brought heavy rainfall to the north-western and eastern parts of India and delayed the end of the south-west monsoon.

Source: AmInvest Research - 17 Oct 2022