CHICAGO: When it comes to assessing demand for US soybeans, never underestimate the Chinese.
China's penchant for the oilseed has mushroomed in recent years, complementing growth in the country's livestock sector, particularly meat. As the world's largest soybean consumer, China will use over 40 percent more soybeans than the world will have in storage next year.
The United States just began its 2016-17 soybean marketing year, and China will have a big say in how much supply is left over at the close of next August.
The increasing likelihood of a record-large soybean crop in the United States, one of China's key suppliers, may have at least temporarily masked some of the risk to the domestic balance sheet.
Analysts expect US soybean production to increase in Monday's US Department of Agriculture supply and demand report, but they expect 2016-17 ending stocks to remain relatively unchanged near 330 million bushels.
Although this reflects that huge yields will be offset by increasing demand, there is the potential for demand to pull US soybean inventory even lower throughout the next year if China's recent habits remain the same.
CHINA BY THE NUMBERS
In 1996-97, China imported just over 2 million tons of soybeans and a decade later this figure had climbed to 29 million tons.
The US Department of Agriculture has projected China to import 87 million tons in the 2016-17 marketing year, which will begin on Oct. 1. This is the equivalent of 3.197 billion bushels, and for comparative purposes, the United States produced 3.929 billion bushels of soybeans last year.
To put China's massive soybean demand trend into perspective, the East Asian country now accounts for nearly two-thirds of the world's imports of the oilseed. When subtracting China from the mix, the global soybean import trend over the past 20 years is practically rendered flat.
As the world's two biggest soybean producers, the United States and Brazil are naturally China's primary suppliers. Over the last couple of years, the two countries have been responsible for 85 to 90 percent of China's total soybean imports.
Not surprisingly, China buys the majority of soybeans that Brazil and the United States export. In 2014-15, some 72 percent of Brazil's shipments were imported by China, and the corresponding figure for the United States was 59 percent.
The United States supplies the first half of China's marketing year while Brazil takes over the second half. Peak soybean shipments from the United States to China occur around December, and Brazil will peak between April and May.
LITTLE INCREASES ARE HUGE
In May 2014, the US Department of Agriculture placed Chinese soybean imports for the new 2014-15 marketing year at 72 million tons. At the conclusion of the season in late 2015, China had actually imported 78.35 million tons.
In May 2015, the initial estimate for the nearly completed 2015-16 year was 77.5 million tons. As of last month, USDA expected that China will import 83 million tons of soybeans in the current marketing year.
The lesson? China's soybean appetite seems limitless, as its annual imports have been significantly underestimated in the past two years.
The difference in the initial and final Chinese soybean import figures from 2014-15 was 233 million bushels, very close to the 255 million bushels that the United States is estimated to have left over after its recently concluded 2015-16 marketing year.
China may not reach 83 million tonnes in 2015-16, though, as Shanghai-based analyst JC Intelligence Co Ltd. (JCI) said on Thursday that September soybean imports may fall below 6 million tons.
This would be well below last September's 7.3 million tons.
Through August, China has imported 76 million tons of soybeans. But even an optimistic assumption of 6 million tons imported during September would land the final volume about 6 percent higher than the initial assumptions — a difference of 165 million bushels.
The brief slowdown in imports should be only temporary, according to JCI. Chinese demand for US soybeans received a boost last week as a delegation of buyers signed agreements to purchase nearly 4 million tons at a signing ceremony in Indianapolis.
In the United States, about 41 percent of the expected soybean export volume for 2016-17 has been booked through Aug. 25. This rate is very comparable to previous years and implies that US soybean shippers are about to get pretty busy in a couple of months, especially if sales continue on a strong course.
Maybe it is hard to imagine that China's potential 87 million-ton haul could edge much higher over the next year or so, but then again, it was probably difficult to fathom a volume over 30 million tons just a decade ago.
Of course, Brazil's harvest early next year will be crucial in just how much of the oilseed China can acquire, as well as the timing and the source. But the United States will take the leading role in supplying China with soybeans for at least the next six months, and it is a good idea to pay attention because increasing Chinese demand could cut down US supply in a jiffy.
— Karen Braun is a Reuters market analyst. Views expressed are her own.
China imports will keep US soybean market on its toes
China imports will keep US soybean market on its toes
Saudi tourism fund signs MoU for development of resorts in Kingdom
RIYADH: Saudi Arabia is set to witness the development of new luxury resorts as the Tourism Development Fund signed a memorandum of understanding with Karisma Hotels and Resorts International, the Saudi Press Agency reported.
The signing took place at the International Hospitality Investment Forum in Berlin on Wednesday. The MoU seeks to explore opportunities for developing resorts and enhancing new areas of the tourism and hospitality sector in the Kingdom.
The agreement outlines a roadmap to determining a methodology for investing and providing financial and non-financial support to a vibrant ecosystem of investors, clients, and partners.
“The Tourism Development Fund is unlocking a great potential with Karisma Hotels and Resorts as we join forces to explore the feasibility of funding and supportive innovative projects that will significantly contribute to the growth of the tourism sector,” SPA quoted TDF CEO Qusai Al-Fakhri as saying.
The fund aims to connect the world with opportunities in the Kingdom’s fast-growing tourism sector. It offers financial and non-financial support to international and local investors.
“We are proud to announce the company’s significant entrance into Saudi Arabia with multiple hotel developments throughout the Kingdom in collaboration with our partners and local developers. Karisma will introduce first-of-its-kind experiential leisure hotels in partnership with worldwide acclaimed brands, bringing a new offering of leisure vacations to the Kingdom,” Esteban Velasquez, CEO of Karisma Hotels and Resorts, said.
Saudi Arabia’s tourism sector has revised its 2030 target to 150 million visitors, up from the initial 100 million.
The tourism sector has become important to the national economy, as spending on tourism by domestic and international tourists exceeded SR250 billion ($66.7 billion) in 2023. The sector is set to contribute 10 percent to the non-oil gross domestic product and create 1 million job opportunities by 2030. This spending represented more than 4 percent of the Kingdom’s GDP and 7 percent of the non-oil GDP, highlighting the significance of the tourism sector to the Kingdom’s economy.
During a panel discussion, Mahmoud Abdulhadi, deputy minister of investment attraction, underscored the Kingdom’s potential opportunities for both international and local businesses to invest in the tourism industry.
He noted that the Hospitality Investment Enablers initiative, announced by the Ministry of Tourism within the Investment Enablers Program, is in line with Vision 2030's strategic goals
The top official said the initiative aims to increase and diversify tourism offerings, enhance the capacity of tourism hospitality facilities in tourist destinations, and attract private investments in the hospitality sector.
Closing Bell: TASI loses 34.45 points to close at 12,465
RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,465.98 points on Wednesday, dipping 34.45 points or 0.28 percent.
The parallel market, Nomu, gained 92.53 points or 0.35 percent to close at 26,401.91.
Meanwhile, the MSCI Tadawul 30 Index also slightly declined 9.29 points or 0.59 percent to conclude at 1,569.13.
The main index posted a trading value of SR9.5 billion ($2.55 billion), with 96 stocks advancing and 131 declining.
Ash-Sharqiyah Development Co. was the top performer on TASI as its share price surged 9.95 percent to SR21.44. Batic Investments and Logistics Co. followed with its share pricing jumping 9.27 percent to close at SR2.83.
Saudi Ground Services Co. also performed well, climbing 9.09 percent to SR58.80. The Mediterranean and Gulf Insurance and Reinsurance Co. and Almunajem Foods Co. increased 8.53 and 6.32 percent to SR28 and SR117.80, respectively.
Conversely, Fawaz Abdulaziz Alhokair Co. recorded the most significant dip, declining 5.16 percent to SR11.40.
Astra Industrial Group and Etihad Etisalat Co. also experienced setbacks, with their shares dropping to SR175.40 and SR51.39, reflecting declines of 3.73 and 3.39 percent, respectively.
Saudi Chemical Co. and Saudi Real Estate Co. also reported significant losses of 3.08 percent and 2.88 percent to SR7.87 and SR22.22, respectively.
Nomu’s top performer was Future Care Trading Co., which saw a 10.68 percent jump to SR9.64.
Ladun Investment Co. and Mayar Holding Co. also recorded notable gains, with their shares closing at SR5.63 and SR4.10, marking an increase of 9.96 and 7.89 percent, respectively.
Lana Medical Co. and Al-Modawat Specialized Medical Co. also fared well, as their share price increased by 7.25 and 6.92 percent, closing at SR42.90 and SR151.40.
On Nomu, Alqemam for Computer Systems Co. was the worst performer, declining by 9.72 percent to SR90.10. Other underperformers included Saudi Parts Center Co. and Clean Life Co., whose share prices dropped 6.10 percent and 5.71 percent to SR60.0 and SR94.20, respectively.
Chinese businesses shown NEOM opportunities as ‘Discover’ tour hits Beijing, Shanghai
RIYADH: Opportunities for Chinese companies to engage with and invest in NEOM have been showcased in Beijing and Shanghai, attracting significant interest from several companies.
The giga-project kicked off the Chinese leg of its global “Discover NEOM” tour in the capital on April 15, followed by a visit to the country’s biggest city on April 17, attracting a cumulation of over 500 business and industry leaders.
Organized in partnership with the China Council for the Promotion of International Trade Beijing and CCPIT Shanghai, the events featured presentations by NEOM’s leadership team that highlighted on-the-ground progress and milestones, as well as detailed overviews of the initiative’s diverse economic sectors.
Numerous opportunities for Chinese companies to engage and invest in the advanced urban and economic zone were showcased during these gatherings, eliciting significant interest. Many companies expressed enthusiasm and discussed concrete next steps with NEOM’s leadership, according to a release.
“We are grateful to CCPIT Beijing and CCPIT Shanghai for supporting our visit to China and for the opportunity to present NEOM’s vision,” Nadhmi Al-Nasr, CEO of NEOM, said.
“To date, NEOM has already engaged with over 15 major Chinese businesses and invested in a number of Chinese startups to support the growth and diversification of NEOM. Collaboration with China will continue to play a vital role in the development of NEOM, and we look forward to strengthening our engagement with the country’s business community,” he added.
Over 100 Chinese building companies participated in the event’s construction-focused forum, which presented many collaboration opportunities.
Furthermore, the private showcase, “Discover NEOM: A New Future by Design,” was a highlight of the events.
It offered guests an immersive experience exploring NEOM’s developments. These included THE LINE, a 170-km-long city designed as the future of urban living; Oxagon, which is reshaping the traditional industrial model; Trojena, NEOM’s mountain resort; and Sindalah, a luxury island destination in the Red Sea set to open later this year.
“Both Beijing and NEOM are accelerating the development of new modes of productivity, deepening comprehensive reforms, promoting scientific and technological innovation, and working to ensure the protection of our environment,” Guo Huaigang, chairman of CCPIT Beijing, said.
“We look forward to the role our cooperation can have in Beijing’s future prosperity,” he added.
Expressing Shanghai’s interest in fostering its relationship with Saudi Arabia, Zhao Zhuping, deputy secretary general of the Shanghai Municipal Government, stated that the entity looks forward to deepening mutually beneficial engagement with NEOM.
“Discover NEOM China” marks the latest installment of NEOM’s global roadshow, following engagements in major international cities such as Seoul, Tokyo, and Singapore, as well as New York, Boston, and Miami.
Paris, Berlin, and London have also been visited by the expedition.
Saudi crude production hits 7-month high in February
- The Kingdom’s crude exports rose to 6.32 million bpd or 0.32 percent: JODI data
RIYADH: Saudi Arabia’s crude production reached a seven-month high of 9.01 million barrels per day in February, data from the Joint Organizations Data Initiative showed.
This represented a rise of 55,000 bpd or 0.61 percent compared to the previous month.
Furthermore, the data indicated that the Kingdom’s crude exports rose to 6.32 million bpd, reflecting a monthly increase of 0.32 percent.
In early April, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, chose to keep their existing output policy unchanged as oil prices hit a five-month high.
Led by Saudi Arabia and Russia, OPEC+ extended voluntary output cuts of 2.2 million bpd until June to bolster the market. The decision was reached during the 53rd meeting of the Joint Ministerial Monitoring Committee on April 3.
Oil prices surged due to supply constraints, attacks on Russian energy infrastructure, and conflicts in the Middle East, with Brent crude exceeding $89 a barrel.
This extension of cuts, alongside voluntary reductions announced in April 2023, including 500,000 bpd cuts from both Saudi Arabia and Russia, now extends through December of this year.
As a result of this decision, despite the monthly increase, crude output remains approximately 14 percent lower than the levels observed during the same month last year.
The next JMMC meeting is scheduled for June 1.
Refinery output
Meanwhile, refinery crude output, representing the processed volume of crude oil yielding gasoline, diesel, jet fuel, and heating oil, surged to a five-month high. It increased by 10 percent compared to the previous month, reaching 2.68 million bpd, according to JODI data. This also marked a 10 percent increase from the 2.44 million bpd recorded during the same period last year.
As one of the world’s leading oil producers, Saudi Arabia plays a crucial role in supplying these refined products to meet global energy demands.
In February, diesel, constituting 38 percent of the total output, declined by 7 percent to 1.02 million bpd, with its percentage share decreasing from 45 percent in January. Motor aviation or jet fuel maintained a 22 percent share, experiencing an 11 percent increase to 597,000 bpd. Meanwhile, fuel oil, making up 17 percent of the total refinery output, saw a slight uptick of 0.22 percent, totaling 455,000 bpd.
Conversely, refinery output exports surged to a 10-month high, reaching 1.39 million bpd, a 12 percent monthly increase. The most significant rise was observed in motor and aviation oil, up by 45 percent to 275,000 bpd. Fuel oil exports followed with a 38 percent increase to 219,000 bpd, while diesel oil saw a 13 percent rise to 629,000 bpd.
In February, 62 percent of refinery diesel oil output was exported, marking the highest percentage in eight months. Fuel oil and motor and aviation gasoline followed suit with export percentages of 48 percent and 46 percent, respectively.
Direct crude usage
Saudi Arabia’s direct burn of crude oil, involving the utilization of oil without substantial refining processes, experienced an increase of 52,000 bpd in February, representing a 17 percent rise compared to the preceding month. The total direct burn for the month amounted to 360,000 bpd.
The Ministry of Energy aims to enhance the contributions of natural gas and renewable sources as part of the Kingdom’s goal to achieve an optimal, highly efficient, and cost-effective energy mix.
This involves replacing liquid fuel with natural gas and integrating renewables to constitute approximately 50 percent of the electricity production energy mix by 2030.
Zain KSA introduces first 100% Saudi-made fleet tracking solution for businesses
RIYADH: Saudi telecom provider Zain KSA has become the first operator in the Kingdom to offer a 100 percent locally made fleet tracking system for businesses.
The new system is expected to empower businesses in Saudi Arabia to make informed decisions through comprehensive reports generated from precise data collection.
The launch of the system, entirely made in the Kingdom for the business sector, integrates cutting-edge tracking devices that are locally designed, manufactured, and assembled under the country’s “Saudi Made” program, the company said in a statement.
The telecom company further explained that the monitoring solution is a comprehensive cloud-based platform, providing businesses of all sizes with tools to optimize logistics operations, enhance travel routes, and minimize fuel consumption. This, in turn, reduces carbon emissions, preserves the environment, and fosters sustainability.
Saad bin Abdulrahman Al-Sadhan, chief business and wholesale officer at Zain KSA, said: “We are proud to be the first telecom and digital services provider to offer an integrated solution designed and developed in the Kingdom, aligning with our sustainability strategy of supporting local content.”
He added that their achievement aligns with the aspirations of the country’s leadership and Vision 2030 in enhancing the digital economy and localizing technology.
He also emphasized his company’s commitment to building an integrated technological ecosystem aiming at leveraging digitization and automation to serve and empower the productive, service, and logistical sectors across the Kingdom.
The executive further said that their fleet management method is a direct result of this commitment, and they take immense pride in being at the forefront of companies providing 100 percent national digital solutions.
The firm said in its release that by offering real-time GPS tracking, its system enhances road safety and security across the transportation and logistics sectors, empowering decision-makers with crucial insights through comprehensive reports based on accurate data.
It added that the system allows for informed decisions that boost operational efficiency and save costs.
