• Bloomberg reported that a surprise tax change in Brazil is disrupting business and drawing the ire of groups representing some of the world’s top crop traders such as Cargill Inc and Bunge Global SA. Companies including Archer Daniels Midland withdrew new offers for commodities such as soybeans, according to sources. Traders were taken by surprise and needed more clarity on the new policy, which limits the ability of companies to monetise tax credits. Abiove, an industry group that represents major crop merchants, said that the decision is “disrespectful” and would slash profits for soybean processors.

• According to Bloomberg also, the tax change in Brazil has prompted Chinese buyers to snatch up US supplies. Importers in China purchased at least 208,000 tonnes of soybeans since the change was announced. The flash sales were the first transactions of the kind since January. Brazil’s Finance Minister is considering withdrawing the decision after drawing the ire of companies and Congress, according to sources.

• USDA has released its monthly demand and supply projections for vegetable oils, raising its forecast of US soybean inventory for 2024F/2025F to 455mil bushels from 445mil bushels due to higher carry-over stocks from the previous season. Comparing 2024F/2025F against 2023/2024F, US soybean production is expected to expand to 4,450mil bushels from 4,165mil bushels.

• USDA also forecasts world soybean inventories to be higher at 127.9mil tonnes in 2024F/2025F vs. 111.1mil tonnes in 2023/2024F. World soybean production is envisaged to climb by 6.7% to 422.3mil tonnes in 2024F/2025F from 395.9mil tonnes in 2023/2024F on the back of higher output in Brazil, USA and Argentina.

• Reuters cited American Soybean Association as saying that US farmers have asked policymakers not to involve food in a trade war with China. Since the trade war under the Trump administration, the US has significantly lost its market share in China with shipments of products such as soybeans, sorghum and pork being impacted. The US is dependent on China for its farm exports but cheaper supplies from Brazil and Argentina have curbed its market share.

• Biofuels International reported that France and Germany have called on the EU to adopt stricter checks on overseas suppliers of biofuel as the EU investigates allegations of fraud in imports from Asia. The Commission is conducting several probes into biofuel imports including one on biodiesel from Indonesia circumventing EU duties and another on dumping of low-priced biodiesel from China.

• Reuters reported that Turkey will halt wheat imports from 21 June until at least 15 October to protect farmers from price fluctuations, ensure domestic procurement of raw materials and create a favourable market for producers. Turkey is the world’s 5th largest wheat importer, buying mostly from Russia. According to a trader, Russia is likely to be the main loser. Russian supplies somewhere between 60% and 75% of Turkey’s wheat imports and the ban is coming into force just as Russia’s new crops needs to be marketed.

Source: AmInvest Research - 18 Jun 2024