Soybean crush in the USA for 2021/22 season is expected to set a new record volume. The estimated soybean crush forecast by USDA is at 60.5 million MT, increasing by 2.3% when compared to the previous season. High soybean oil price is largely responsible for the big crush volumes, even as the bean price continue to increase.
With high crush volume, there will be high soybean oil production in the USA. According to USDA, the soybean oil production looks to rise in 2021/22 to 11.8 million MT, up by 2.2%. Most of the growth is destined for domestic consumption. Larger domestic consumption will reduce exports, tighten soybean oil stocks and support higher prices. In addition, demand for biofuels is expected to grow under renewable fuel mandates particularly the Renewable Fuels Standard and California’s Low Carbon Fuel Standard. Also, the Blender’s Tax Credit for biodiesel is renewed until January 2022 and is expected to provide strong growth in renewable fuels.
Due to large domestic consumption, export of soybean and soybean oil will be on declining trends. The USA soybean export is projected to fall to 56.4 million MT, declining by 8.9% to make way for crushing activity (USDA). Low export pace is also forecast on soybean oil at 658 thousand MT, declining by 24%, leading to low ending stock estimated at 686 thousand MT, declining by 17% (USDA).
USA Palm Oil Outlook
Following high soybean crush and large soybean oil production, the USA will be less dependent on oils and fats import for its domestic requirements. For Jan-May 2021, the overall Malaysian palm oil and palm products exported to USA recorded a total of 274,295 MT, declining by 37% when compared to the same period of last year. This year, the most exported component is palm based oleo at 48% followed by palm oil (43%), palm kernel oil (6%) and finished product (3%). In the previous period of Jan-May 2020, it was palm oil that accounted for the largest component of export to USA at 57% followed by palm based oleo (34%), palm kernel oil (34%) and finished products (2%) (Refer to Chart 1).
Chart 1 : Export Performance to USA (Malaysian Palm Oil and Palm Products)
From the above chart, it can be summarized that USA is shifting its import basket to palm based oleo. Part of the reason is because of its current high soybean oil production as discussed above. Under palm based oleo export from Malaysia to USA, the highest increment in terms of volume is recorded by purified/refined glycerine, increasing by 5,864 MT or by 23%. However, this may only be a short term trend because it is based on the current scenario and only using a half year (Jan-May)data comparison.
Under the component of palm oil, the top three products exported to USA are RBD palm olein, RBD palm oil and RBD palm stearin. As of Jan-May 2021, the export of all three products is showing a declining trend (Refer to Chart 2). This had cause the Malaysian palm export to USA to drop by 52%, recording only 119,413 MT compared to last year’s figure at 247,793 MT.
Chart 2 : Malaysian Palm Oil Export to USA
In view of high crushing activity and large soybean oil production in the USA, the country’s dependent on oils and fats import will reduce. Growing domestic consumption will be fulfilled by its locally produced soybean oil. In USA, soybean planting begins in April till June while soybean harvest occurs in September till November. Therefore, the growing domestic demand for soybean oil in USA is expected to remain until the next harvest, leading to low palm oil import throughout the period.
Prepared by Nur Adibah Mohd Razali
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