• The USDA (US Department of Agriculture) has released its monthly demand and supply projections on vegetable oils. The USDA has reduced its forecast of 2017F/2018F US soybean inventory by 9.5% from 475mil to 430mil bushels. This was due to lower soybean yield of 49.5 bushels per acre vs. 49.9 bushels per acre originally. In spite of the downward revision in forecast, US soybean inventory is still expected to rise from 301mil in 2016/2017F to 430mil bushels in 2017F/2018F. US soybean production is envisaged to increase from 4.3bil bushels in 2016/2017F to 4.4bil bushels in 2017F/2018F.

• World soybean production is forecast to inch down from 351.25mil tonnes in 2016/2017F to 347.88mil tonnes in 2017F/2018F due to lower output from Brazil. Soybean production in Brazil is estimated to be 107mil tonnes in 2017F/2018F compared with 114.1mil tonnes in 2016/2017F dragged by lower yields. World soybean inventory is anticipated to inch up from 94.86mil tonnes in 2016/2017F to 96.05mil tonnes in 2017F/2018F on higher production from the US.

• Bloomberg reported that China has only sold 0.2% or 160 tonnes out of 84,588 tonnes of soybeans offered in an auction a few weeks ago. We think that the weak demand is due to the unattractive price of the soybeans. The soybeans sold were from the 2010 crop season. Since soybean auctions started at end-September 2017, China has sold about 215,629 tonnes of soybeans. The target is to sell 300,000 tonnes of soybeans.

• According to Bloomberg also, Indonesia may delay the B30 biodiesel blending target. The country's National Energy Council will propose to the government to delay the B30 biodiesel mandate from the initial deadline of 2020. We attribute this to poor demand as fossil fuel is still cheaper and subsidies are insufficient.

• Reuters reported that China's top corn producing province is cutting subsidy for farmers by 13% this year as farmers are encouraged to switch to other crops such as soybean. Heilongjiang will give corn farmers 133.46 yuan (US$20.30) per 0.067 hectares of corn this year compared with 153.92 yuan last year. Interestingly, the subsidies for soybean farmers of 173.46 yuan per acre higher than those for corn farmers. This is the first time Beijing is giving soybean farmers "grower subsidy" after Beijing abandoned a subsidy, which was linked to market prices. Beijing has about 180mil tonnes of corn in warehouses currently due to a stockpiling programme, which has since ended.

• Express Tribune said that apart from a few leading brands, most ghee and edible oils in Pakistan are harmful for human consumption. A representative of the Pakistan Vanaspati Manufacturers Association said that hardly 40% of ghee and cooking oil in the market are good for human consumption. He added that most of the edible oils in the market are not fortified with Vitamins A and D, as required by international standards.

• SGS and Intertek said that Malaysia's palm oil shipments rose by 8.7% and 10.3% respectively in the first 15 days of October compared with the same period in September. According to SGS, Malaysia's palm exports to China improved by 14.7% while the EU received 50.1% more shipments. On a negative note, the USA's imports of Malaysia's palm oil fell by 56.1%. Intertek said that RBD palm olein accounted for 37.1% of the country's palm exports in the first 15 days of October while crude palm oil made up another 16.9%

Source: AmInvest Research - 23 Oct 2017