US Agriculture Exports: Day 3 Highlights on Trade Deals, Weather, and Aquafeed

Day 3 of the AG Supply Chain Asia 2021 conference moved on to policy, economics, and weather factors relevant to the US grain industry. There were some interesting news and updates on these fronts, including ongoing evaluation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) by the new Biden administration, expectations that the USD80 billion of farm purchases by China will push up US produce prices, and predictions of La Nina dissipating in the first month of spring in North America, resulting in sudden spells of precipitation to the region.

Source: Garriss (2021)

Interestingly, the third day of the conference also included presentation on aquaculture and aquafeed, particularly shrimp. It gave several interesting insights into the industry, such as projections of the aquaculture supply chain are also discussed, such as declining live marine fish processing, forcing players to look for ways that would allow them to keep their produce over a much longer period of time. Notably, however, the presentation emphasised on the sustainability of aquaculture practices, particularly that of unused feed, i.e., uneaten feed and feed passed into faeces, discharging into lakes and destroying the quality of water, and offered a distiller’s dried grain with soluble (DDGS) as a possible alternative to the usual soybean meal and wheat flour fed to shrimps.

US Agriculture Exports: Day 2 Highlights on Supply and Logistics

The 3rd Agricultural Supply Chain 2021 has just ended its three-day run covering a wide range of topics surrounding the US grain and corn industry, and supplemented with discussions from agricultural and trade experts.

Day 2 of the conference focused primarily on the US and global agribusiness supply chain. Unsurprisingly, one subject matter of interest is how the Covid-19 pandemic has affected the industry. Production-wise, the pandemic has resulted in a significant loss of more than USD 4.7 billion between January and June 2020 for US soybean farmers and crushers, although projections have suggested much more optimistic conditions for crushers in 2021, with positive projections including strong demand for soybean meal productions and protein-based products.

Source: National Oilseed Processors Association (2021)

From a logistics and transportation viewpoint, one expert discussed the undergoing changes in the transportation network of the food supply chain in general as the world adapts to the “new normal” resulting from the Covid-19 pandemic.

Source: IHS Markit (2021)

Again, discussions on the impact of the coronavirus outbreak on the agribusiness supply chain is timely. News is surfacing about shipping carriers rejecting an estimated 177,938 containers of US agricultural products during October and November 2020, preferring allegedly more profitable Chinese exports instead. This occurred during a peak season for agricultural products, following the harvest of crops, and according to port trade data, has resulted in a loss of USD632 million from the Port of New York and New Jersey alone. US exporters have been petitioning the Federal Maritime Commission, warning that the delays from these refusals are undermining industry reputation and threatening profits.

Rising Soybean Demand in China Threatens Oil Palm

We are currently attending the 3rd Agricultural Supply Chain Asia 2021, a three-day conference organised by the US Soybean Export Council and US Grains Council, aiming to provide the latest updates on corn and soybean sectors.

Source: Bloomberg, 2021

The conference is timely, given the recent market development in the soybean industry. China’s palm oil imports are expected to dip following large amounts of soybean purchases recently made. As palm oil’s top contender, and the primary source of animal feed, the major Chinese importers are, according to Bloomberg, “scooping up unprecedented quantities of soybeans and corn on world markets to feed domestic hog herds that are rebounding after being devastated by the African swine fever.” Interestingly, there have been a resurgence of the African swine fever (as well as a new strain of the virus), expectations are that a possible outbreak would not be as deadly as that in 2019.

Accordingly, soy stocks in the US and other key origins, are forecasted at lows. But traders point out that world stocks have shifted to South America in the last few years (and the US operates on tighter stocks due to higher logistics costs and seasonal factors), so the world stock-to-use ratio may not be so bad (see DTn graph at the bottom ). The question now is how this would affect the palm oil trade, especially in light of the improving weather conditions in Brazil and Argentina over the past two weeks.

By Nadirah SHARIF, 26 Nov 2021

Editor: This reminds of our chat with some traders about the Malaysia palm oil stocks situation. While these were reported at multi-year lows, some pointed out that tanks were surprisingly full. Are well monitored stocks figures getting less reliable and/or representative? Commodity reporters have in recent years noted that the Malaysia MPOB (official count) stocks are perceived as less reliable. For Malaysia it is worth asking if more tank farms ended up in customs free zones. For palm oil, there is also attention on (mostly unofficial) estimates of stocks for Indonesia, China and India.

A Game of Thrones: US Post Elections, 17 Nov 2020

The 2020 US elections are finally over, although the horizon seems to promise yet more drama up until Joe Biden’s inauguration early next year. As the world settles into the results, our PolTracker team members decided to give their thoughts on the matter. Click here to read more.

IVPA: Is COVID a Bull or a Bear for Veg Oils?

On 29th May 2020, Segi Enam Advisors attended a global webinar organised by the Indian Vegetable Producers’ Association. The webinar sought to address the effects of the Covid-19 pandemic on the supply chain of vegetable oils around the world, as well as other relevant trade and policy issues.

There were several interesting takeaways from the session:

1. In India, the demand for palm oil from the hotel, restaurant, and catering industry (HoReCa) has collapsed due to the lock-down. The pandemic has also called India’s food security into question, with suggestions for the government to enact policies to ensure smooth movement of the vegetable oil supply chain, particularly with regard to interstate logistics.

2. Total Indonesian and Malaysian palm oil exports to China and India has fallen sharply in the first quarter of 2020, although it was pointed out that sales to China are known to have recovered by April 2020. Globally, while the output of vegetable oils was not as badly affected as initially expected, demand has dipped much more significantly due to the lock-downs enforced across the globe.

3. In Argentina, there are transportation problems within the agriculture industry. The main cause is the low water levels of the Parana River, which transports approximately 96% of agriculture products, a situation further aggravated by Covid-19 (although it should be noted that these logistical issues preceded the outbreak). Experts project an improvement by Aug-Sep 2020.

4. The bilateral agreement signed by China and the US is now uncertain, especially in light of the coronavirus outbreak and recent developments in Hong Kong. It was also suggested that globalisation will not roll back but will have fewer Chinese characteristics, as supply chains are restructured and governments consider protectionist measures.

Click here to watch the video recording of the webinar.