-  US Department of Agriculture (USDA) released the Prospective Plantings and Grains Stock Reports yesterday. The report indicated that grain inventories in the US were higher than market expectations.

-  According to the Grains Stock Report, corn inventories in the US amounted to 5.4 billion bushels as at 1 March 2013, 8% higher than consensus estimate of 5 billion bushels.

-  As a result, corn prices fell by the maximum allowed yesterday while soybean prices fell the most since September 2012. Based on the closing prices, the price discount between soybean oil and CPO is 30% or US$330/tonne.

-  Soybean inventories in the US stood at 999 million bushels as at 1 March 2013, about 5% higher than the market expectation of 948 million bushels.

-  In spite of the higher-than-expected inventories, US soybean inventories of 999 million bushels were 27% lower than the 1.37 billion bushels recorded a year ago.

-  Driving US soybean inventories down were robust exports to China and the decline in supply resulting from the drought in the US last year.

-  US corn inventories declined 10% from 6.0 billion bushels as at 1 March 2012.

-  In terms of planted areas, US farmers are planning to plant slightly more corn and marginally less soybean.

-  Corn planted areas are forecast to have inched up from 97.16 million acres as at 1 March 2012 to 97.28 million acres as at 1 March 2013.

-  Planted areas for soybean are estimated to have edged down from 77.198 million acres last year to 77.126 million acres as at 1 March 2013. This was below the market expectation of an increase in planted areas to 78.351 million acres.

-  We maintain our positive stance on the plantation sector as we expect palm inventories to ease in the coming months. It is reported today that Sime Darby Bhd and Felda Global Ventures Holding Bhd are forming a consortium called Biodiesel Malaysia Sdn Bhd. This is part of the government’s plan to implement the use of the B10 biodiesel nationwide by the middle of 2014F.

Source: AmeSecurities