• The USDA released its monthly demand and supply projections for vegetable oils last week. The USDA left most of its forecasts unchanged. US soybean inventory is estimated to be 210mil bushels in 2022/2023F, 23.4% lower than 274mil bushels in 2021/2022. US soybean production is expected to decline by 4.2% to 4,276mil bushels in 2022/2023F due to lower yields.

• World soybean inventory is envisaged to inch up to 100.3mil tonnes in 2022/2023F from 99.7mil tonnes in 2021/2022 driven by higher production in Brazil. Soybean output in Brazil is anticipated to expand by 18% to 154mil tonnes in 2022/2023F.

• S&P Global Platts quoted sources as saying that soybean demand from China is expected to ease until May amid poor crushing margins and reduced use of soybean meal in animal feed. The country’s demand for April is seen plunging 20% from previous estimates to 8mil tonnes while for May, demand is seen falling by 10% to 9mil tonnes. An oversupply of soybeans earlier this year has led to high inventories, which weighed heavily on crushing margins. While soybean meal remains the most widely use protein feed ingredient in China, its share of the feed mix has been steadily declining since the Ministry of Agriculture and Rural Affairs issued guidelines in 2021 on reducing soybean meal usage in animal feed. The ministry targeted to reduce the soybean meal inclusion rate in feed by 1 pp in 2022 from 15.3% in 2021 and revising it further to 13.5% by 2025F.

• Reuters reported that Mexico has found unexpected allies as it tries to limit imports of genetically modified (GM) corn i.e. US farmers who grow the crops. In February, Mexico said that it would ban GM corn for consumption by people, reversing previous announcements. Mexico is the largest buyer of US corn, and the proposed restrictions threaten to disrupt some of the US$5bil corn that the US ships to Mexico annually or 95% of Mexico’s corn imports. According to a USDA report, Mexico’s proposed restriction of GM corn for human consumption is expected to affect imports of US white corn, which are used primarily for tortillas.

• Biodiesel Magazine quoted the US Energy Information Administration as saying that total US operable biofuels production capacity expanded to 22.2bil gallons in January with gains for both renewable diesel and ethanol. Total feedstock consumption was 27.2bil pounds in January, up 968mil pounds compared to 26.2bil pounds in the previous month. US biofuel producers consumed 24.7bil pounds of corn in January, up from 23.8bil pounds in December but down from 26bil pounds a year ago.

• FeedNavigator reported that FEDIAF, the EU pet food organisation warned about threat to its sector along with the animal feed and oleochemical industries of the use of Category 3 animal fats in European biofuel production. Even though Category 3 animal fats are not mentioned in the Annex IX of the Renewable Energy Directive (RED) as feedstock for sustainable biofuels, they are increasingly being used and marketed as such. Data from EFPRA, the group representing the European animal by-product processing sector, showed that demand for animal fats Category 3 in biofuel production grew by more than 80% between 2018 and 2020.

Source: AmInvest Research - 17 Apr 2023