In its Dec15 monthly crop production report, the USDA left its US soybean production, supply and usage forecasts for 2015/16 unchanged at 3,981m bushels, 4,203m bushels and 3,738m bushels from a month ago. US soybean ending stocks are also unchanged at 465m bushels, the highest since 2006/07 and above market estimate of 462m bushels. Global oilseed and soybean production are estimated at 529.0m MT (down 2.0m MT from a month ago) and 320.1m MT (down 0.9m MT) while global oilseed ending stocks are projected at 95.1m MT (up 1.0m MT). (Source; USDA)

Comment: The Dec15 reports is fairly neutral as there were no major revisions to estimates, which are more likely to happen in the Jan16 forecasts. With regard to CPO, market attention is likely to shift to the MPOB Nov15 statistics to be released this afternoon. Meanwhile, growing conditions for corn and soybeans in Brazil and Argentina are improving with rain and scatter showers. The El Nino weather is near peak according to the Australian weather bureau and some indicators are showing signs of easing. Our 2016/17 CPO ASP assumption is RM2,400/MT and the Plantation sector is rated at NEUTRAL.

Source: Affin Hwang Capital Research - 10 Dec 2015