• Bloomberg reported that China will further boost production of soybeans to trim its dependence on imports from countries like Brazil and USA. The government plans to increase the planting areas by 6% to 667,000 ha in 2023F according to the agriculture ministry. Acreage expanded by almost 22% in 2022. Soybean production is estimated tojump 24% to 20.3mil tonnes in the year ending 30 September. China does not rely significantly on corn imports. The country produced 277mil tonnes of corn in 2022 compared with inbound shipments of 21mil tonnes.

• Bloomberg also said that Zanyu Technology Group, a Chinese manufacturer of surfactants and oleochemicals, plans to invest about CNY1bil (US$147.6mil) to build a biodiesel plant in Malaysia. Zanyu’s new factory, which will be located at the Palm Oil Industrial cluster in Lahad Datu, will have an annual capacity of 200,000 tonnes of biodiesel and 350,000 tonnes of oleochemicals. The plant is scheduled to be built in 2 phases and the first one is expected to take 24 months to complete. Upon completion, the plant will bring in pre-tax profit of CNY380mil (US$56.1mil) and revenue of CNY4bil (US$590.5mil) each year.

• Reuters reported that Germany is considering proposals to phase out biofuels made from food or animal feed crops by 2030F. Germany’s environment minister, Steffi Lemke will be sending proposals to the cabinet to withdraw from the use of crop-based biofuels to reduce greenhouse gas emissions. Use of biofuels made from garbage, waste and used edible oils would be intensified instead. Under Germany’s climate protection law, only 85mil tonnes of carbon may be emitted by the transportation sector in 2030F. In 2021, the transportation sector emitted 148mil tonnes of carbon.

• Reuters quoted S&P Global as saying that US farmers are expected to plant 90.5mil acres of corn in 2023F, up 2.2% from the previous year. S&P Global also forecasts 2023F US soybean plantings at 88mil acres, 0.6% higher than the 87.5mil acres in 2022. Wheat plantings for 2023F are seen at 49.8mil acres, up from 45.7mil acres in 2022.

• According to Reuters also, China’s soybean imports from the US dropped 10% in 2022, reducing the USA’s share of the country’s soybean market to less than a third. Brazil maintained its 60% share of the China market while US market share slipped slightly to below 32%. Uruguay was the main winner, with exports doubling from 886,000 tonnes in 2021 to 1.79mil tonnes in 2022. Overall, soybean imports by China dropped by 5.6% to 91.1mil tonnes in 2022 due to high prices and weak demand.

• SBS cited the Australian Medical Association as saying that Australia should follow the global trend and impose a tax on sugar-sweetened drinks or remain the “odd one out”. The medical association has released a new report showing that another 40 countries have introduced a sugar tax since June 2021, bringing the total to 85. The federal government could impose a tax of 40 cents for every 100 grams of sugar that manufacturers add to drinks. This would also generate a revenue of AUD814mil that could go towards preventative health measures.

Source: AmInvest Research - 30 Jan 2023