• The USDA (US Department of Agriculture) has released its monthly demand and supply projections for vegetable oils. The USDA maintained its forecast of US soybean inventory of 220mil tonnes for 2022E/2023F. US soybean production is expected to ease by 2.7% to 4,346mil bushels in 2022E/2023F due to the drought. As a result, US soybean stockpiles are envisaged to decline to 220mil bushels in 2022E/2023F from 274mil bushels in 2021/2022E.

• Globally, soybean inventory is anticipated to increase to 102.7mil tonnes in 2022E/2023F from 95.6mil tonnes in 2021/2022E due to higher production in Brazil. Soybean output in Brazil is estimated to expand by 19.7% to 152mil tonnes in 2022E/2023F from 127mil tonnes in 2021/2022E. Although Argentina’s soybean production is expected to improve by 12.8% in 2022E/2023F, its inventory is forecast to decline by 1.7% to 23.5mil tonnes due to strong exports.

• Bloomberg quoted Cargil’s Brazil chief as saying that the country’s soybean exporters are prepared to meet new requirements from Europe and Amazon deforestation but an extension of the deal into key farming regions would be difficult. The EU has approved mandatory rules for companies selling soybeans, beef and cocoa, among other commodities to ensure the products do not come from deforested land after 2020. This applies to all suppliers, direct or indirect. The extension of the deal to wooded lands, including Brazil’s Cerrado will be discussed a year after the deal is implemented. Extending the deal to Cerrado would affect at least half of Brazil’s soybean acreage.

• Reuters cited the European Commission as saying that the share of palm oil in biodiesel and food industries in the EU is expected to fall significantly in the next 10 years, leading to a sharp drop in imports. In its 2022-2032 Agricultural Outlook, the Commission projected that palm oil would account for 9% of biodiesel output in 2032F, down from an average of 23% in 2019/2021. In contrast, the share of advanced biodiesel is expected to grow to 42% in 2032F from 29% in 2019/2021. The use of other vegetable oils in biodiesel such as rapeseed was expected to remain relatively stable at 50% of biodiesel feedstock.

• ICIS quoted Fitch as saying that most fertiliser prices will remain high by historical standards but urea will end 2022E lower than expected due to capacity expansions. Fitch expects urea prices to average US$630/tonne in 2022E. Fitch estimates that excluding China, 3.8mil tonnes of new urea production capacity will be added globally in 2022E. In 2023F, another 3.2mil tonnes will come on-stream and in 2024F, an additional 2.2mil tonnes.

• Bloomberg reported that Mosaic Co has temporarily curtailed potash production at its mine in Saskatchewan after weaker demand sent fertiliser prices sliding in North America. Fertiliser prices have slumped after spiking to record levels after Russia’s invasion of Ukraine. Farmers from Brazil to Canada have eased back on buying and in some cases, choosing to skip a year of potash application or to use less fertiliser. That has left a glut in the market. Potash in Brazil has fallen by more than half since hitting a high of US$1,200/tonne earlier this year.

Source: AmInvest Research - 19 Dec 2022