• The USDA has released its monthly demand and supply projections for vegetable oils. The USDA has reduced its estimate of US soybean inventory for 2023E/2024F to 300mil from 350mil bushels. This was mainly due to a 4.6% downward revision in soybean planted areas. US farmers will now be planting soybeans on 83.5mil acres instead of 87.5mil acres previously. Comparing 2023E/2024F against 2022/2023E, US soybean production is expected to be relatively flat at 4.3bil bushels.

• On the back of lower US soybean stockpiles, the USDA has reduced its estimate of world soybean inventory for 2023E/2024F to 121mil from 123.3mil tonnes. Comparing 2023E/2024F against 2022/2023E, however, world soybean inventory is expected to climb by 17.6% to 121mil tonnes underpinned by higher production in Brazil and South America. Soybean output in Brazil is anticipated to expand by 4.5% to 163mil tonnes in 2023E/2024F while in Argentina, soybean production is expected to surge by almost 2-fold to 48mil tonnes.

• Reuters reported that US corn export dominance is fading in an increasingly competitive market as Brazil, aided by a new supply agreement with China, is set to out-ship the US for the 2nd time this season. Meanwhile Mexico, USA’s other top market, is preparing to limit imports of genetically modified corn that comprises more than 90% of US harvest. Through mid-June, US corn export sales to China for shipments ahead of next harvest were down 48% from a year ago, USDA data showed. China’s overall corn imports are down 10% this year as buyers wait for ample supplies of cheap Brazilian corn in the coming months.

• Euractiv.com reported that European biofuel companies have reiterated calls for the European Commission to dampen the flood of Chinese biofuels entering the EU market, arguing that Chinese manufacturers are fraudulently exporting biodiesel made from restricted feedstock. The massive increase in biofuel exports from China has caused biodiesel prices in the EU to collapse, threatening the future of advanced biodiesel production in Europe. According to an analysis by S&P Global Commodity Insights, January and February 2023 saw an 80% YoY increase in Chinese biodiesel imports to 300,0000 tonnes.

• Ethanol Producer Magazine in the US quoted the US Energy Information Administration as saying that total operatable biofuels production capacity in the US expanded in April. US biofuels capacity was 23.1bil gallons per year in April this year compared with 21.5bil gallons per year a year ago. Fuel ethanol capacity reached 17.8bil gallons per year in April, up 36mil gallons per year compared to March and up 430mil gallons per year compared to a year ago. However, biodiesel capacity was 2.1bil gallons per year in April, lower than last year’s 2.2bil gallons per year.

• Business Daily of Kenya cited a Malaysian-based edible oils dealer owning a manufacturing plant in Kenya as saying that inadequate land may slow down the country’s plan for largescale farming aimed at gradually substituting an annual import bill of SH100bil. Pacific InterLink Group said that land around the lake region in west Kenya has been fragmented to levels that questions the viability of large-scale farming of oil palm trees. Oil palm is largely grown in west Kenya in a small scale. Kenya’s edible oil processors Bidco, Kapa Oil, Pwani Oil, Menengai and Golden Africa source CPO mainly from Malaysia. Kenya is estimated to consume 875,000 tonnes of palm oil yearly.

Source: AmInvest Research - 17 Jul 2023