- Last week, soybean and corn prices rose as rains may delay the harvest of a bumper crop in the US. As of 16 October, about 40% of soybean crop were harvested versus the five year average of 53%.

- Also, USDA (US Department of Agriculture) released its monthly estimates of demand and supply for vegetable oils last week.

- USDA revised its 2014F/2015F forecast of ending inventory for US soybean downwards by 5.3% from 475mil bushels to 450mil bushels. The revision was due to lower carry-over inventory and areas harvested. Production of US soybean was relatively unchanged at 3.9bil bushels for 2014F/2015F.

- In spite of the downward revision, ending inventory of US soybean is still expected to climb 389.1% from 92mil bushels in 2013/2014F to 450mil bushels in 2014F/2015F.

- Globally, USDA’s estimate of ending inventory of soybean was raised marginally from 90.17mil tonnes to 90.67mil tonnes for 2014F/2015F. The upward revision was due to a decline in domestic crushing.

- Production of global soybean is envisaged to expand 9.2% from 285.0mil tonnes in 2013/2014F to 311.2mil tonnes in 2014F/2015F. The US is expected to account for 34.3% of global soybean production while Brazil is estimated to account for another 30.2%. Argentina is forecast to account for 17.7% of global soybean output in 2014F/2015F.

- Bloomberg reported that palm oil inventory at the major ports in China amounted to 570,000 tonnes as at 16 October compared with 660,000 tonnes as at 9 October 2014. This is the lowest level since December 2011 when palm oil inventory in China was 520,000 tonnes.

- The fall in palm oil inventory at the major ports in China is in line with the weak palm oil shipment numbers reported by the independent cargo surveyors.

- SGS reported that Malaysia’s palm oil shipments to China edged down 5.3% in the 15 days of October compared with the same period in September. India’s purchases of palm oil were also weak as reflected in the 48.5% fall in exports.

- Silver lining is the 161.9% climb in palm oil shipments to the US. In total, Malaysia’s palm oil exports contracted 15.5% in the 15 days of October compared with the same period in September.

Source: AmeSecurities