• Reuters quoted Cargill’s chief commodity trader in Brazil as saying that Chinese demand for Brazilian soybeans this year has been lower than expected, which explains why Brazil’s record harvest has not yielded monthly export records. He added that the weaker-than-expected demand from China is expected to allow more constant Brazilian grain exports throughout the year, which should reduce stress on logistics.

• In a related development, Bloomberg reported that Cargill plans to boost investments to increase its soybean processing, biofuels output, storage and export capacity in Brazil. The company is also looking to invest into ports as well as modernise and increase the capacity of its warehouses in Brazil. A company official said that currently, the soybean harvest in Brazil is so big that the country is shipping the oilseed to Argentina and the US.

• Bloomberg also said that the European Union (EU) has reached a deal to spur the use of more climate-friendly jet fuels to gradually start bringing the aviation sector in line with its green goals. The European Parliament and member states agreed that the share of sustainable aviation fuels made available in the region’s airports should be at a total of 6% by 2030F, of which 1.2% should be synthetically produced using renewable electricity and carbon captured from the atmosphere. By 2050F, the share should be 70% for renewable electricity and 35% for carbon capture.

• According to Reuters, Argentina’s government has announced the approval of a US$394mil loan for irrigation projects, following steep losses from a historic drought that has deepened a severe economic crisis in the country. Over 30 irrigation projects are already under way in Argentina’s top agricultural provinces of Buenos Aires, Santa Fe and Cordoba. The irrigation projects will be financed by local funds as well as multilateral organisations such as the World Bank and Inter-American Development Bank.

• According to Bloomberg, Europe’s push for more green fuel has helped to build an industry in China that collects, recycles and ships waste such as used cooking oil. A flood of biofuel is now threatening European producers and sparking fears about fraudulent exports. Producers in the European Union are worried that they are being undercut by companies in Asia that are mixing fuels with cheaper feedstock and mislabelling them in order to qualify for incentives. These concerns have been underscored by a surge in Chinese biodiesel exports to the EU. They have been accompanied by China importing volumes of palm waste from Indonesia and Malaysia that some in the industry say, are too large.

Source: AmInvest Research - 8 May 2023