Evening Report | November 22, 2022
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OECD: Global recession should be avoided next year... The global economy should avoid a recession next year but the worst energy crisis since the 1970s will trigger a sharp slowdown with Europe hit hardest, the Organization for Economic Cooperation and Development (OECD) said, urging central banks to keep hiking interest rates. World economic growth is set to slow from 3.1% this year to 2.2% next year before accelerating to 2.7% in 2024, OECD said, marginally raising its 2022 forecast. It forecast the euro zone economy would slow from 3.3% growth this year to 0.5% in 2023 before recovering to expand by 1.4% in 2024. That was slightly better than OECD’s last outlook in September, when 3.1% growth was estimated for this year and 0.3% in 2023.
U.S. economic growth is expected to slow from 1.8% this year to 0.5% in 2023 before rising to 1.0% in 2024. OECD had previously expected U.S. growth of only 1.5% this year and its estimate for 2023 was unchanged.
Growth in China was seen rising from 3.3% this year to 4.6% in 2023 and 4.1% in 2024, compared with previous forecasts of 3.2% this year and 4.7% for 2023.
U.S. beef stockpiles drop less than average in October… U.S. beef stocks totaled 509.9 million lbs. at the end of October, down 16.3 million lbs. (3.2%) from the end of September but up 36.1 million lbs. (7.6%) from a year earlier, according to USDA’s Cold Storage Report today. The drawdown in beef stockpiles during October was slightly under the average of 17.6 million lbs. for the month during the previous five years.
Nationwide pork supplies in cold storage totaled 511.1 million lbs. at the end of October, down 25.9 million lbs. (4.8%) from a month earlier but up 68.7 million lbs. (16%) from a year earlier. This year’s October drawdown in pork supplies exceeded the five-year average of 14.4 million lbs. Frozen poultry supplies at the end of October totaled 1.159 billion lbs., down 108 million lbs. (8.5%) from the end of September but up 98 million lbs. (9.2%) from a year earlier.
Brazil to keep 10% biodiesel mandate in place through March... Brazil’s mandatory blend of biodiesel in diesel fuel will stay at 10% through March 31, 2023, according to the Brazilian Mines and Energy Ministry, but will increase April 1 to 15%. The new Brazilian administration that takes office in January could change the action.
Biodiesel produced via “any technological route of production” would be allowed in the fuel mixture but the oil, gas and biofuel regulatory agency would have to approve the biodiesel used in the blend. With soybean oil accounting for around 70% of biodiesel, some note an increase to 15% would push soybean demand for biofuel to around 30 MMT in 2023.
Biofuel organizations are disgruntled at the determination as it could make R5 diesel (a co-processed fuel with 95% diesel and 5% vegetable oil) produced by Petrobras eligible for the mixture. Biofuel industry officials maintain the Petrobras fuel is not biofuel pointing to the view by ANP, the oil, gas and biofuel regulator, that the fuel is not biofuel.
Brazilian corn exports could jump exponentially in 2023… Brazil is poised to export 40 to 50 MMT of corn next year, after a new trade protocol with China and a potential bumper crop. Corn exports to China alone could be as much as 5 MMT next year, making it a key supplier to the country alongside the U.S. China’s import demand is 18 MMT for the 2022-23 cycle, according to USDA. Brazil export volumes could reach a record high after Beijing authorized a number of Brazilian corn exporters under the new protocol.
At least three vessels were named to ship Brazilian corn to China, Agrinvest analyst Eduardo Vanin wrote in a note to clients, citing shipping schedules data, with expectations of more in the coming weeks. Traders in Asia have talked about six to eight vessels named to take Brazil’s corn to China as well.
Chinese customs updated its list of approved Brazilian corn exporters earlier this this month, a move the Brasilia government said could jumpstart sales to the world’s second-largest economy.
