• USDA has released its monthly demand and supply projections for vegetable oils, introducing its forecasts for 2023E/2024F in the report. The USDA estimates US soybean inventory to  climb by 55.8% to 335mil bushels in 2023E/2024F from 215mil bushels in 2022/2023E due to higher production. US soybean production is anticipated to expand by 5.5% to 4,510mil  bushels in 2023E/2024F on the back of stronger yields. Soybean yield is expected to be 52  bushels per acre in 2023E/2024F vs. 49.5 bushels per acre in 2022/2023E.

• USDA also forecasts global soybean inventory to rise by 21.2% to 122.5mil tonnes in  2023E/2024F from 101mil tonnes in 2022/2023E. The increase in inventory is envisaged to be  driven by higher production in the US, Brazil, and Argentina. Soybean output in Brazil is  estimated to be 163mil tonnes in 2023E/2024F compared with 155mil tonnes in 2022/2023E.  Soybean production in Argentina is anticipated to rebound to 48mil tonnes in 2023E/2024  (2022/2023E: 27mil tonnes) after being affected by drought in the previous year.

• Bloomberg reported that China may cancel more purchases of corn from the US as the  country can buy cheaper corn from Brazil while some local producers of hog feed are  replacing corn with wheat. China went on a corn buying spree in March with purchases of  almost 4mil tonnes from the US. But US corn is now less competitive with supplies from  Brazil coming in US$30/tonne cheaper for delivery in 3Q2023. In addition, wheat prices are  180 Yuan/tonne (US$26) cheaper than corn in Henan and may decline further due to a bumper  harvest.

• Reuters reported that Conab has raised its forecast for Brazil’s soybean and corn production,  citing favourable conditions even as farmers dealt with the effects of La Nina early in the  season. In its May forecast report, Conab predicted that Brazilian farmers will harvest a  record 154.8mil tonnes of soybean this season, 23.3% higher than last year and a record  125.5mil tonnes of corn, 11% above last year.

• According to Reuters, some of Malaysia’s largest palm oil producers are not hiring workers  from Bangladesh because of concerns over exploitative practices during the recruitment  process. IOI Corporation said that the main reason was due to the high rate of abscondment  among Bangladesh workers who were not aware of going to work in plantation estates.

• Reuters also reported that Canada’s Nutrien may consider further slowing its expansion of  potash capacity after falling prices and sales volume led the world’s largest fertiliser  producer to cut its annual profit guidance. Currently, Nutrien is increasing Canadian potash  production by 20% to 18mil tonnes annually by 2026F, a delay of a year from its original plan.  On a positive note, demand for the company’s potash is growing in North America and Brazil,  with Russia and Belarus expected to export 30% less this year compared to 2021.

Source: AmInvest Research - 22 May 2023