• The USDA has released its monthly demand and supply projections for vegetable oils. The USDA has maintained its forecasts for US soybean. US soybean inventory is expected to fall to 245mil bushels in 2023E/2024F from 268mil bushels in 2022/2023E as planted areas decline to 83.6mil from 87.5mil acres. US soybean production is anticipated to be 4,129mil bushels in 2023E/2024F compared to 4,270mil bushels in 2022/2023E.

• In spite of lower stocks in the US, world soybean inventory is envisaged to increase by 12% to 114.2mil tonnes in 2023E/2024F from 101.9mil tonnes in 2022/2023E due to higher stocks in Brazil and Argentina. In the absence of drought, soybean production in Argentina is expected to rebound to 48mil tonnes in 2023E/2024F from 25mil tonnes a year ago. Soybean output in Brazil is estimated to inch up to 161mil tonnes from 160mil tonnes.

• In a related development, Bloomberg reported that Brazil will export a record number of soybeans in the current season as higher leftover supplies from last year prompted the USDA to raise its forecast for shipments. The USDA estimates that Brazilian exports will reach 99.5mil tonnes in 2023E/2024F compared to its previous forecast of 97.5mil tonnes. Also, although the dry weather prompted the USDA to reduce its projection for Brazil’s production, the harvest is still expected to be bigger than the previous season.

• According to Bloomberg also, Indonesia may collect 29trillion Rupiah of levy from exports of CPO in 2024F, lower than the 30trillion set for 2023E. Export volumes of palm oil are expected to be weaker in 2024F due to competition with soybean oil.

• Reuters reported that US farmers are likely to plant more soybeans in 2024F as rising demand for soy-based biofuels boost profits. Many farmers are planning to cut back on corn acreage as futures prices for the grain is hovering around 3-year lows. A larger US soybean crop would help meeting booming demand for renewable diesel fuel and animal feed at a time when drought is slashing production in Brazil. Along with the normal crop rotation to keep soils healthy, farmers also look at the profitability of each crop. They factor in seed costs which are high this year along with inputs such as pesticides and fertiliser. Corn needs more fertiliser than soybeans.

• Reuters quoted the Buenos Aires Grain Exchange as saying that abundant rainfall over Argentina’s farming heartland in the recent weeks is favouring production of soybean, corn and wheat. Argentina’s 2022/2023E season was battered by a fierce drought triggered by La Nina but rains brought by El Nino could help the country secure a better harvest in 2023E/2024F. In a weekly crop report, the exchange said that 98% of planted soybeans were in normal to excellent conditions thanks to “optimal moisture”. Argentina farmers have so far planted 51.7% out of the projected 17.3mil hectares.

Source: AmInvest Research - 18 Dec 2023