• The USDA released the monthly demand and supply projections for vegetable oils last week. There were not significant revisions in the USDA's forecast. US soybean inventory is forecast to be unchanged at 475mil bushels in 2017F/2018F. World soybean inventory is estimated to be 97.5mil tonnes in 2017F/2018F vs. 95.96mil tonnes in 2016/2017F. The increase in world soybean inventory is driven mainly by a 2.9% increase in soybean output in the US.

• Bloomberg quoted Argentina's Agroindustry Ministry as saying that heavy rains in Buenos Aires, La Pampas and Entre Rios may affect corn and soy plantings for 2017F/2018F. Rains during the weekends amounted to two to five inches in these provinces and many areas have already received more than average rainfall for the whole of September. Currently, the USDA is forecasting soybean production in Argentina to ease from 57.8mil tonnes in 2016/2017F to 57.0mil tonnes in 2017F/2018F.

• On the other hand, Reuters reported that soybean plantings in the key regions of Brazil may be delayed due to scarce rains in states like Mato Grosso, Parana and Mato Grosso do Sul. The absence of rains over the next 10 days in these regions may push back soybean plantings this year. A weather expert predicted isolated rains in the south and center-west regions of Brazil only in the last 10 days of September.

• Reuters also said that India's soybean production may drop by 22% in 2017F/2018F after a decline in the planting areas and prolonged dry spell in key growing regions. The fall in soybean production may result in higher imports of soybean oil and palm oil in 2017F/2018F. Soybean planted areas in India are forecast to slide by 8.4% to 10.5mil hectares this season. Also, a prolonged dry spell in July and August this year affected soybean crops in Madhya Pradesh and Maharashtra, which account for almost 85% of the country's soybean output.

• Jakarta Post reported that Indonesia plans to increase palm oil production to 42mil tonnes by year 2020F to maintain its global lead. The Indonesian Palm Oil Producers Association said that the country will pursue this through increasing the productivity of existing plantations and not through the expansion of new areas. An official with the association added that the productivity of the smallholders was currently half or a third of the productivity levels of the corporations.

• Indonesia Investments said that Indonesian entrepreneurs have been urging the government to sign more bilateral free trade agreements. Indonesia's export products have been losing out as regional counterparts such as Malaysia, Thailand and Vietnam enjoy zero or low import duties on their products with trading partners under such agreements. Shipments of Indonesia's CPO to Turkey have been declining as Turkish importers switched to CPO from Malaysia. Malaysia's CPO have lower import duties due to the free trade agreement signed between Malaysia and Turkey in 2015.

• SGS and Intertek said that Malaysia's palm oil shipments rose by 9.3% and 6.9% in the first 10 days of September compared with the same period in August. According to SGS, palm shipments to the EU rose by 33.8% while exports to China increased by 59.5%. These helped offset a 14.4% fall in exports to India.

Source: AmInvest Research - 18 Sept 2017