Equity Analysis /

Thai:Agro&Food-USDA’s Jan report—positive but already factored into global price

  • USDA’s Jan report—positive on big cut in SA stocks

  • La Niña probability to diminish in 2H22—not a good call for SB

  • More rainfall in South America expected in 1Q22

Bualuang Securities
20 January 2022

Despite the recent 18% rise of global soybean (SB) price (from its recent low of US$11.78/bushel on Nov 8 to its recent high of $14.02/bushel on Jan 7 and $13.91/bushel on Jan 19) in response to the South American drought, we think that the global price has already factored in the drought’s impact and it is in line with our estimate of $13-15/bushel if the La Niña-related drought impact plays out. With the weather shift from La Niña in 4Q21-1Q22 to ENSO-neutral in 2Q22 through 2H22, we think that SB is no longer a good investment call in 2022. Our HOLD rating stands on TVO for a 6% dividend yield amid its 2022 earnings and GM drop.   

USDA’s Jan report—positive on big cut in SA stocks

In its Jan 12 World Agricultural Supply and Demand Estimates report, USDA revised up 2021/22 US SB stocks by 3% MoM (by 10m to 350m bushels) to factor in higher US yields (from 51.2 to 51.4 bushels/acre) leading US production to rise by 0.2% (by 10m to 4.44bn bushels). This was led by the record yields and productivity achieved in several States. The 51.4 bushel/acre yield is the second highest since 2016/17.