- USDA (US Department of Agriculture) released its Prospective Planting and Grains Stocks Reports yesterday. As a result, corn prices slid by 4.6% to US$3.76/bushel while soybean prices inched up from US$9.67/bushel to US$9.73/bushel.

- Although American farmers are planning to plant more soybeans in 2015F, soybean prices held up as the planted areas and US soybean inventories fell short of consensus estimates.

- American farmers said that they intend to plant soybean on 84.6mil acres this year versus consensus estimate of 85.9mil acres.

- The planted area of 84.6mil acres is 1.1% higher than the 83.7mil acres achieved in 2014. In contrast, planted areas of corn are expected to fall by 1.5% from 90.6mil acres in 2014 to 89.2mil acres in 2015F.

- US soybean inventories stood at 1.33bil bushels as at 1 March 2015, 34.2% higher than the 993.8mil bushels recorded as at 1 March 2014. Compared with the inventories of 2.5bil bushels as at 1 December 2014, the March ending figure was a 47.2% decline.

- Consensus was forecasting a soybean inventory number of 1.35bil bushels as at 1 March 2015.

- US corn inventories rose by 10.5% YoY to 7.7bil bushels as at 1 March 2015 but shrank by 30.9% from December’s level of 11.2bil bushels.

- With the small 1.1% increase in soybean planted areas in US, we believe that the country’s soybean production would inch up again in 2015F. However, the level of soybean output growth in 2015F is envisaged to be smaller than 2014’s surge.

 - US soybean output expanded by 18.2% to almost 4bil bushels in 2014 on the back of a 9.0% climb in planted areas.

 - In conclusion barring adverse weather conditions, soybean prices are likely to remain unexciting due to the potential rise in production in US. In addition, industry players are expecting a bumper harvest in South America. The large supply of soybean is envisaged to cap any upside to CPO prices for now. Maintain Neutral on the plantation sector.

Source: AmeSecurities