• The USDA released its monthly demand and supply projections last week. The USDA has raised its forecast of US soybean inventory for 2022/2023F to 225mil from 210mil bushels due to lower domestic consumption. Comparing 2022/2023F against 2021/2022, however, US soybean inventory is expected to fall to 225mil from 274mil bushels as production declines by 4%.

• World soybean inventory is estimated to rise by 3% to 102mil tonnes in 2022/2023F from 98.8mil tonnes in 2021/2022. The increase in world stockpiles in 2022/2023F is envisaged to be underpinned by an 18% expansion in Brazil’s soybean production. Soybean output in Brazil is anticipated to climb to 153mil tonnes in 2022/2023F from 129.5mil tonnes in 2021/2022.

• Bloomberg reported that Cargill will invest US$240mil in projects that will improve Brazil’s sustainable agriculture, energy and food production. This is via a partnership with the stateowned bank Banco do Brasil SA. Banco do Brasil will be the intermediary between Cargill and companies that will receive the funding in a transaction known as “ESG Time Deposit”. Funded projects must comply with Banco do Brasil’s Sustainable Finance Framework.

• According to Reuters, US farmers are planning to boost corn acreage in 2023F, eyeing lower prices of fertiliser needed to grow the crop. The decline in the cost of inputs such as fertiliser in 2H2022 sparked hopes that corn would be profitable in 2023F even though it usually requires a more active management style and greater financial investment than soybean. US farmers alternate between soybean and corn to maintain soil health. After favouring soybeans last year when fertiliser prices spiked, many are set to devote the majority of the fields to corn.

• Reuters quoted an industry expert as saying that Brazilian farmers have harvested more than 14mil tonnes of soybeans so far in the 2022/2023F season. The volumes represent 9% of the country’s planted areas vs. 16% in the last season. The volume would have been greater had it not been for rains disrupting the work of harvesters. According to a January estimate by AgRural, Brazil is expected to reap a record 152.9mil tonnes of soybeans this season.

• Reuters also cited dealers as saying that India’s January palm oil imports fell by 31% from a month ago to their lowest in months as a narrowing discount to rival oils prompted refiners to increase purchases of soybean and sunflower oils. The reduction in palm imports by India could weigh on Malaysian palm oil prices but support soybean oil and help Russia and Ukraine in bringing down their sunflower oil stocks. The dealers said that palm oil’s discount to soybean oil has shrunk to less than US$300/tonne from as high as US$500/tonne in the December quarter. Palm oil’s share of India’s vegetable oil imports has also fallen to below 50% in January from 71% in December.

• Biodiesel Magazine reported that US production capacity for renewable diesel could more than double from current levels by the end of 2025F. This is based on several announcements for projects that are either under construction or could start development soon. The factors behind growing US renewable diesel capacity are rising targets for state and federal renewable fuel programs and biomass-related diesel tax credits. The Inflation Reduction Act of 2022 extended the biomass-based diesel tax credits through 2024.

Source: AmInvest Research - 13 Feb 2023