AmInvest Research Reports

Plantation - News flow for week 24 - 28 July

AmInvest
Publish date: Mon, 31 Jul 2023, 09:19 AM
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  • Bloomberg reported that Brazil is pushing the US out of China’s soybean market. Brazil is starting to dominate even during the typical seasonal lull. Chinese buyers are snapping up Brazilian soybeans for delivery in October, a time of the year when US exports are typically at their peak. The sales come as Brazil is reaping a record crop and offering much lower prices than rival producers. Geopolitical tensions have also prompted China to seek deeper ties with Brazil and reduce reliance on US. Also, it is currently profitable for Chinese processors to crush Brazilian beans to make cooking oil and animal feed whereas margins are negative for US supplies.
  • World Grain quoted the Foreign Agricultural Service (FAS) of the USDA as saying that Argentina’s drought-scarred soybean crop is now estimated to be 21.3mil tonnes for 2022/2023E vs. 23.9mil tonnes previously. The forecast was based on interviews with local participants, traders and farmers, who said that final yields were lower than expected. Although soybean crush is anticipated to be only 29.5mil tonnes in 2022/2023E, it is envisaged to rebound to 41mil tonnes in 2023E/2024F. Soybean sales in Argentina have been driven primarily by government programmes offering exchange rate incentives and farmers are holding remaining soybeans in anticipation of similar future programmes.
  • EnergyPortal.EU reported that the Indonesian government has announced an amnesty programme aimed at legalising millions of hectares of illegal oil palm plantations established in forest areas. The programme, set to run until the end of the year, has drawn criticism from activists, who argue that it prioritises corporate interests over environmental concerns. Luhut Pandjaitan, the chief minister in charge of investments, justified the amnesty programme as the only feasible solution, stating that revoking illegal plantations is not feasible. Between 2012 and 2020, the government introduced 3 waves of amnesty programme with the latest being under the Omnibus Law. The law extends the grace period to 3 years from 1 and replaces criminal sanctions with administrative ones.
  • ICIS reported that Nutrien has released its potash refill programme for US terminals with the producer taking orders for deliveries in 3Q and 4Q2023. The reference price is US$370/short tonne FOB for MidWest terminals with Nutrien taking orders at this price level for delivery in 3Q2023 until 28 July, which will then raise the reference price by US$30/tonne for delivery in 4Q2023. As for the workers’ strike, it appears that there will be resolution as the International Longshore and Warehouse Union Canada has reached a new tentative deal with the BC Maritime Employers Association.
  • Reuters said that recent rainfall in China’s north-eastern breadbasket has relieved drought across most of the regions and replenished soil moisture. According to a government official, areas hit by drought in the northeast exceeded 1.3mil hectares in May and June. The agriculture ministry is preparations for drought later in the summer and for early frost. The areas planted with corn have increased this year due to good prices.

Source: AmInvest Research - 31 Jul 2023

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