• Bloomberg reported that soybean and soybean meal prices in China fell last week on expectations that large volumes of soybean are arriving in the coming months. An industry expert said that China has booked more than 20 cargoes of soybeans from Brazil as premiums over US soybean prices fell. Domestic soymeal prices may also come under pressure due to flat or weak demand. In addition, China will be offering seven million tonnes of corn from its state reserves on 19 or 20 April. Corn is also used to make animal feed in China.

• Rabobank said that South America’s global soymeal market share will decline if China taxes US soybeans as US crushing margin will widen and increase soymeal exports. Reduced demand for US soybeans would lower US prices. The fall in US soybean prices would widen crushing margins and increase the crushing rates as the USA becomes a dominant soymeal exporter. In addition, we believe that demand for US soymeal may rise as China’s proposed tariffs are on the beans and not the meal.

• According to Reuters also, Argentina has purchased an additional 120,000 tonnes of soybean from the USA after buying the same volume on the previous day. The purchases were made by Vicentin SAIC, a local oilseed processor. The buying was partly prompted by a shortfall in domestic production due to the drought in the country. We believe that Argentina’s purchases can also be attributed to the impact of China’s proposed 25% tariff on US soybeans, which had resulted in the prices of US soybean being lower than Brazil or Argentina.

• Reuters reported that Argentine biodiesel producer, Ecofuel, exported 29,000 tonnes of biodiesel to Canada last month and plans to make the same volume of shipment this month. The deal, which marks Argentina’s first biodiesel exports to Canada came after the USA imposed tariffs on biodiesel imports from Argentina and Indonesia. An industry consultant said that while Canada cannot compensate for the loss of the US market, which accounted for 1.5mil tonnes in 2016, Canada has the potential to buy around 200,000 tonnes of Argentine biodiesel a year.

• Reuters cited the Council of Palm Oil Producing Countries (CPOPC) as saying that the decision of Iceland, which is a British supermarket chain, to remove palm oil from its own brand food products, is misleading. The claims made against palm oil are “misleading the consumers on the environmental benefits of other vegetable oils”, said Mahendra Siregar, the executive director of CPOPC. A few weeks ago, Iceland said that it would be removing palm oil from all of its own brand products by end-2018 due to concerns over rainforest destruction. Iceland operates around 900 stores and has already removed palm oil from half of its own brand products.

• SGS said that Malaysia’s palm shipments rose by 5.7% in the first 15 days of April compared with the same period in March. Palm exports to the EU increased by 8.7% while Pakistan received 45.2% more shipments. These helped offset a 37.1% drop in exports to India and 56% fall in shipments to China.

Source: AmInvest Research - 23 Apr 2018