• ICIS reported that Canpotex has signed a 6-month standard grade MOP (potash) supply contract with China at US$307/tonne CFR (cost of freight). The new agreement runs to 31 December 2023 and is US$115/tonne below the key bellwether contract signed with Indian potash importers at US$422/tonne (CFR) in early April. The news of the China contract came as a surprise to many potash players, who had assumed that China may not sign a long-term agreement due to steady supply via rail from Russia and Belarus.

• The USDA (US Department of Agriculture) has released its monthly demand and supply projections for vegetable oils. The USDA has raised its estimate of US soybean inventory for 2023E/2024F to 350mil bushels from 335mil bushels due to higher carry-over inventory from the previous year. Comparing 2023E/2024F against 2022/2023E, US soybean inventory is forecast to surge by 52.2% to 350mil bushels from 230mil bushels. US soybean production is expected to climb to 4,510mil bushels in 2023E/2024F from 4,276mil bushels in 2022/2023E on the back of higher yields.

• World soybean inventory is anticipated to expand by 21.7% to 123.3mil tonnesin 2023E/2024F from 101.3mil tonnes in 2022/2023E, underpinned by increased production in the US and South America. Soybean output in Brazil is envisaged to grow by 4.5% to 163mil tonnes in 2023E/2024F while in Argentina, soybean production is expected to rebound by 92% to 48mil tonnes after being affected by drought in the previous year.

• Bloomberg quoted China’s agriculture ministry as saying that China’s corn imports in 2023E/2024F are not expected to expand much because of a bumper domestic harvest. According to the China Agricultural Supply and Demand Estimates, demand for corn remains weak as pig farming continues to suffer from losses. China raised its forecast for edible oils output in 2022/2023E by 690,000 tonnes to 29.9mil tonnes as rapeseed imports were higher than expected.

• According to Bloomberg also, Bunge is close to a deal to acquire Glencore backed Viterra. Bunge shareholders would hold a significant majority in the deal. Combining Bunge and Viterra would create a trader big enough to take on Cargill and Archer Danields Midland Co.

• Reuters cited the Rosario Grains Exchange as saying that Argentina’s main grains port is seeing the lowest number of trucks with soybean and corn in at least 22 years. This came after a historic drought battered the production of the 2 crops. The Rosario Grains Exchange said that 280,000 trucks with soybean and corn entered the port during the March to May period, less than half the number in 2022 and 2% below the average in the past 5 years. The vast majority of Argentina’s grains production is transported by trucks of which 3/4 goes through the inland river ports at Rosario.

Source: AmInvest Research - 19 Jun 2023