• Bloomberg reported that China’s voracious appetite for South American soybeans has continued into a period typically dominated by US. Importers have booked at least 20 cargoes from Brazil and Argentina in the past 2 weeks for delivery to China in October, November and December. According to shipping agency Alphamar Agencia Maritime, there are currently 105 vessels set to be loaded with Brazilian soybeans for delivery to China in the first few days of November. This is equivalent to 6.3mil tonnes.

• Bloomberg also reported that credits used to show compliance with US federal biofuel mandates have plunged to their cheapest levels since January 2021, cutting costs for US fuel makers that do not have ready supplies for blending. The values have fallen due to cheap soybean oil, a main feedstock for biodiesel and renewable diesel. Meanwhile, petroleum diesel costs have gone up on tight global supplies. Renewable Identification Numbers (RIN) or credits generated from blending biodiesel have declined to US$1.00 per RIN, 37% lower than 2 months earlier.

• BBC reported that ships carrying grains are once again sailing from the Black Sea despite Russia pulling out of a deal to allow them to pass safely through the Black Sea. The 2 cargo ships took a new route, close to the sea’s western coast, through Romanian and Bulgarian territorial waters so that they are safe from Russian warships. Ukraine has also been exporting an increasing amount of grains from Reni and Izmail on the Danube River.

• According to Reuters, Argentina’s sales of upcoming wheat crops are the slowest in 7 years. They have been delayed by farmers waiting for heavier rainfall and gambling on the results of the country’s presidential elections on 22 October as some candidates have pledged tax cuts on grain exports. Latest government data showed that Argentina has recorded just 1.5mil tonnes of pre-sales of 2023E/2024F harvest by 13 September. This was the slowest since 2016/2017. Also, El Nino has brought wetter weather, but there are still wheat areas that need more water. Rain is expected to come in October.

• Bloomberg reported that a global sugar crunch that drove prices to an 11-year high is finally poised to ease. Corn output from Brazil is surging, making grain more profitable to use in producing ethanol. As a result, mills that crush costlier cane are looking to produce more sugar and less biofuel. Corn is taking a bigger share of the ethanol market in Brazil. Ethanol from corn will account for nearly a fifth of all fuel output this season, from nearly zero 5 years ago.

Source: AmInvest Research - 2 Oct 2023