Global Ag News for Apr 28.22

TODAY – DOE: U.S. Ethanol Stocks Fall 1.5% to 23.965M Bbl

Wheat prices overnight are up 12 1/2 in SRW, up 7 1/2 in HRW, up 6 1/4 in HRS; Corn is up 5 3/4; Soybeans down 1/2; Soymeal up $0.07; Soyoil down 0.88.

For the week so far wheat prices are up 28 1/2 in SRW, up 12 in HRW, up 38 1/4 in HRS; Corn is up 29; Soybeans up 4 1/4; Soymeal down $1.04; Soyoil up 3.33. For the month to date wheat prices are up 101 3/4 in SRW, up 131 3/4 in HRW, up 124 1/4 in HRS; Corn is up 85; Soybeans up 94 1/4; Soymeal down $17.70; Soyoil up 15.20.

Year-To-Date nearby futures are up 42% in SRW, up 44% in HRW, up 22% in HRS; Corn is up 39%; Soybeans up 30%; Soymeal up 10%; Soyoil up 55%.

Chinese Ag futures (SEP 22) Soybeans up 26 yuan; Soymeal up 25; Soyoil up 170; Palm oil up 364; Corn up 21 — Malaysian palm oil prices overnight were down 77 ringgit (-1.10%) at 6910.

There were no changes in registrations. Registration total: 2,185 SRW Wheat contracts; 1 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 154 HRW Wheat.

Preliminary changes in futures Open Interest as of April 27 were: SRW Wheat down 705 contracts, HRW Wheat down 1,168, Corn down 2,237, Soybeans down 20,203, Soymeal down 2,852, Soyoil down 3,893.

Northern Plains Forecast: Scattered showers Friday-Sunday. Temperatures near to below normal Thursday-Friday, below normal Saturday-Sunday. 6-to-10-day outlook: Isolated to scattered showers Monday-Friday. Temperatures below normal Monday-Wednesday, near to below normal Thursday, near to above normal Friday.

Central/Southern Plains Forecast: Isolated to scattered showers through Sunday. Temperatures near to above normal through Friday, near to below normal north and above normal south Saturday-Sunday. 6-to-10-day outlook: Isolated to scattered showers Monday-Thursday. Mostly dry Friday. Temperatures near to below normal north and above normal south Monday-Friday.

Western Midwest Forecast: Isolated to scattered showers Thursday-Sunday. Temperatures near to below normal Thursday, near to above normal Friday-Saturday, near to below normal Sunday.

Eastern Midwest Forecast: Isolated to scattered showers Thursday-Sunday. Temperatures below to well below normal Thursday, near to below normal Friday, near to above normal Saturday-Sunday. 6-to-10-day outlook: Isolated to scattered showers Monday-Friday. Temperatures near to below normal north and near to above normal south Monday-Friday.

Canadian Prairies Forecast:  Isolated showers through Friday. Temperatures near to below normal Thursday-Friday. Isolated showers Saturday-Sunday. Temperatures near to below normal Saturday-Sunday. 6-10 Day Outlook: Mostly dry Monday-Thursday. Isolated showers Friday. Temperatures near to above normal west and near to below normal east Monday-Tuesday, near to above normal Wednesday-Friday.

 Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana: Scattered showers through Sunday, mostly south. Temperatures above normal through Sunday. Mato Grosso, MGDS and southern Goias: Mostly dry through Sunday. Temperatures above normal through Sunday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires: Mostly dry Thursday-Sunday. Temperatures below normal Thursday-Sunday. La Pampa, Southern Buenos Aires: Mostly dry Thursday-Sunday. Temperatures below normal Thursday-Sunday.

The player sheet for 4/27 had funds: net sellers of 1,500 contracts of  SRW wheat, buyers of 8,500 corn, sellers of 10,500 soybeans, buyers of 3,500 soymeal, and  buyers of 9,000 soyoil.

TENDERS

• DURUM WHEAT SALE: Algeria’s state grains agency OAIC is believed to have purchased between 230,000 to 250,000 tonnes of durum wheat in a tender which closed on Tuesday
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Wednesday
• ANIMAL FEED BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
• SOYMEAL SALE: Two South Korean importers have purchased a total of 119,000 tonnes of soymeal in private deals without international tenders being issued

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• VEGOILS TENDER: Egypt’s state grains buyer said it was seeking vegetable oils for arrival June 10-30 and/or July 1-20 in an international purchasing tender.
• SUNOIL TENDER: Turkey’s state grain board TMO issued an international tender to purchase and import about 18,000 tonnes of crude sunflower oil
• MILLING WHEAT TENDERS: Turkey’s state grain board TMO issued two import tenders to buy a total of around 480,000 tonnes of milling wheat

Renewable Credits Hike Hits Pump Prices as Feedstock Cost Soars

Biofuels blending credits, or RINs, surged to highs not seen since August after record soybean oil prices lifted the cost to produce renewable diesel, adding to already high pump prices ahead of peak summer driving season in the U.S.

• Biomass-based diesel RINs, known as D4 RINs, rose above $1.8 per RIN this week, the highest level in more than eight months
• Futures prices for soybean oil, a main feedstock for biomass-based diesel, has been trading at record highs since last week, after Indonesia’s ban of palm oil exports buoyed demand for alternatives
• An aggregate of RINs, known as RVO, rose to $8.5/bbl on Wednesday, up from $7/bbl two weeks earlier. This cost adds about 20 cents a gallon to gasoline and diesel pump prices, which have been hovering near record highs since Russia’s invasion of Ukraine
• Ethanol RINs, known as D6 RINs, surged to $1.5 per credit on Wednesday
• NOTE: The cost of RINs is baked into futures and physical prices for fuel traded in the U.S.
• NOTE: The Biden administration’s decision to expand sales of higher-ethanol gasoline barely moved the needle on renewable credit costs given the limited impact it is expected to have on credit generation

Jokowi Says Palm Oil Export Ban to be Lifted Once Local Need Met

Indonesia will lift the edible oil export ban once domestic demand is fulfilled, as the country also needs tax revenue, exports and trade surplus, President Joko Widodo said in a Wednesday speech.

• Fulfilling local demand for staple food is govt’s main concern in any decision-making
• “As the world’s biggest palm oil producer, it is ironic that we are having difficulty in getting cooking oil. I ask all palm oil market participants to look at this situation better, with more clarity. I as the president can’t possibly let this happen,” he said
• Govt decided to ban exports after earlier policy moves weren’t effective to improve situation
• Ban applies to shipments from all areas, including bonded zones
• The policy may potentially reduce output, cause unsold harvest
• Jokowi urges palm oil producers to prioritize domestic supply as production capacity is enough to fulfill demand including for exports

Indonesia Detains Palm Oil Tankers Bound for India, UAE Amid Ban

Indonesia has detained two tankers carrying palm oil heading to India and the United Arab Emirates on alleged violation of export controls, according to a statement from the Navy on Thursday.

• MT World Progress, loaded with 34,854 tons of palm olein, didn’t have proper documentations; the ship was captured in Malaka Strait on Wednesday after departing from Dumai port on course for India
• MT Annabelle, which departed from Pontianak to go to UAE carrying 13,357.425 tons of CPO and methanol, also didn’t have proper permits
• Both vessels were diverted to the nearest Naval base for further investigations
• The Navy says it will increase monitoring and security in Indonesia’s water after the govt. officially bans exports of cooking oil products to prevent smuggling
• About five vessels carrying palm oil products were detained in the last two weeks and are under further investigation

Brazil’s second corn crop threatened by dry April in top grains state

Brazil’s top grain-producing state is facing its driest April in 17 years, threatening a key second corn crop in the agricultural powerhouse, weather service EarthDaily Agro predicts.

Accumulated April rainfall in Mato Grosso state is likely to total 30 millimeters (1.18 inches), 70% below the average for the last decade, EarthDaily Agro, which monitors agricultural areas via satellite images, estimates.

“Corn producers are increasingly concerned with the drought that has lasted more than a month in several municipalities,” an EarthDaily Agro report seen by Reuters says.

Mato Grosso is expected to produce around 40 million tonnes in its second corn crop, nearly half Brazil’s total output of 88.5 million tonnes, the government’s food supply and statistics agency Conab estimates.

A setback for Brazil’s corn crop, expected to total a record of more than 115 million tonnes this year including the first planting, could hurt exports and domestic supplies, driving up prices that are already at historically high levels.

“The Normalized Difference Vegetation Index (NDVI) has deteriorated slightly in recent days (in Mato Grosso), showing the first effects of water stress. Soil moisture is low and expected to drop even further in the short term, curtailing the second crop’s potential,” EarthDaily Agro said in its report.

It did not provide more detailed analysis on the impact of the drought, with neighboring grain-producing state Goias expected to have only 12.5 millimeters of accumulated rainfall in April, compared with an 80 millimeter average.

In 2016, when corn areas were hit by drought, precipitation volumes reached 6.7 millimeters, EarthDaily Agro said.

Reuters reported last week that farmers in the region were worried about a dry forecast for the second half of April after Brazil’s first corn crop was hit by a lack of rain.

Brazil’s second corn yield down as hot and dry weather dominates the Central-West – Refinitiv Commodities Research

2021/22 BRAZIL CORN PRODUCTION: 113.0 [104.7–118.5] MILLION TONS, DOWN 2% FROM LAST UPDATE

Continued hot/dry weather and limited rainfall expectations in core second crop areas of the Central-West (and areas to the south) cut 2021/22 Brazil total corn production by 2% to 113.0 [104.7–118.5] million tons, despite high vegetation density levels throughout the region. Our current median estimate is 3 million ton below the USDA World Agricultural Outlook Board (WAOB)’s 116 million tons, which assumes total corn sowings at 21.1 million hectares and national level yield of 5.5 tons per hectare (tph) (vs. Refinitiv Ag Research’s 21 million hectares and 5.38 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 115.6 million tons and 21.2 million hectares, respectively. As of 23 April, Brazil’s first corn is 65.7% harvested according to the latest CONAB crop progress report (25 April), slightly behind last year’s pace (<1%). Unfortunately for farmers, the latest EC/GFS model forecasts indicate hot and dry conditions are expected to linger in much of the Central-West and the South, where >90% of Brazil’s second corn is grown. Continued lack of rain amid hot weather will eventually further lower yield prospects as the prime growing season unfolds, despite still decent topsoil moisture conditions there.

Deere Sees Strong Tractor Demand in Brazil Helping Higher Costs

• Supply chains have come into chaos amid war, Latam head says
• Crop demand has been greater than challenges in the industry

It’s getting more expensive to produce tractors. But fortunately for machinery makers like Deere & Co., strong demand in Brazil is softening the blow, according to Antonio Carrere, who heads Deere & Co. operations in Latin America.

Demand for food has outstripped supplies amid shrinking global stockpiles, adverse weather for crops and shipping turmoil caused by the pandemic and the Ukraine war. That’s helping farmers’ profits and supporting demand for agricultural machinery as a consequence.

“Costs to produce machines have been rising significantly due to rising prices or challenges of logistics and global supply chains,” Carrere said in a telephone interview. “But global demand for food continues to be greater than the challenges we have been facing.”

The world’s top soybean, sugar and coffee supplier became the biggest market for harvesting and planting machines last year, with Brazilian farmers buying more of those machines than U.S. producers, said Carrere, who took over Deere’s Latin American operations in November. The appetite for technology in the South American nation is “huge” and that will continue.

“Brazil has been called on to boost food supplies due to short-term circumstances — the war and effects of the pandemic,” he said. “The world is demanding more food and fiber, and the only place where it’s possible to increase production is Brazil and Latin America.”

EU Wheat Harvest Seen Falling 3M Tons in 2022-23: USDA FAS

EU wheat production is seen at 135.3m tons in the 2022-23 season, down from 138.3m tons in the prior year, USDA’s Foreign Agricultural Service says in a report.

• Farmers reduced wheat plantings in favor of rapeseed, especially in France
• Exports seen remaining at “high level” because of the war in Ukraine
• Estimated at 33.9m tons, about steady with official USDA estimate of 34m tons in current year

India’s heat wave will impact Modi’s wheat export plans

India has been experiencing relentless heat waves for the second month in a row. This has now begun to wilt the country’s agriculture sector, especially wheat production.

A low yield, coupled with rising food inflation, would force the government to prioritise domestic consumption over exports, potentially tripping up prime minister Narendra Modi’s recent offer to help feed the world.

Hottest months in a century

After its hottest March in 122 years, India is now experiencing its hottest April in over a century. Temperatures are soaring close to 40°C, enough for the India meteorological department to sound a yellow alert yesterday (April 27). The heat maps now look like seething cauldrons for the region covering India, Pakistan, and Bangladesh.

In New Delhi, the maximum temperature hovered around 42°C yesterday. It recorded the highest number of heat-wave days in a month in the past decade. And it is only April yet. India’s peak summer season in May to June, before the monsoon rains hit its coasts, is yet to come.

As climate change makes extreme heat waves and harsh monsoons more common in southeast Asia, the human and economic costs are expected to be steep.

Heat wave and cost to agriculture

India was hoping to ride the tide of the Russia-Ukraine war and help boost its wheat exports. Modi, during his talks with US president Joe Biden on April 11, said that if the World Trade Organization were to allow it, India’s wheat produce could “feed the world.” However, an extremely hot and dry March has resulted in an output that is far below projections.

Wheat harvest arrivals in Punjab’s agriculture markets so far are at least 20% lower than they were in 2021, data analysed by The Hindu newspaper show. The state is India’s biggest producer of the foodgrain.

Crop yield per acre has also been lower this year than the last. On average, each acre yielded 19.8 quintals of wheat in 2021, while it is down to 17.8 quintals per acre, The Hindu reported.

According to Sadhvi Niranjan Jyoti, the junior minister for food and public distribution, farmers were forced to harvest their crops early because of rising temperatures in March. The produce in some cases was less than even half of a good crop year’s, Jyoti told parliament.

The extreme heat has also led to a loss of work hours: India stands to lose over 100 billion work hours every year if such heat waves persist, according to a December 2021 study published in science journal Nature.

Fertilizer Buyers Pull Back, Delay Purchases as High Prices Bite

U.S. fertilizer prices were mixed as cold, wet weather delays field work and farmers pull back on expensive inputs. India re-entered the market with a small urea tender, but a larger one is expected soon. Chinese urea supply is thin, suggesting limited tons from the marginal producer when the export ban is lifted in 2Q.

Urea Prices Continue to Dive in Wednesday Whisper

New Orleans urea prices continued to drop, trading as low as $620 a short ton free-on-board, down from the week-ago $750/st. The inland U.S. market followed and prices in Brazil continued to slide as well. Wet weather, lower corn acreage estimates and traders opting to exit the market were all cited as reasons for the erosion by market participants. Phosphate prices continued to weaken in New Orleans, the Southern Plains and Brazil. Potash price ideas were mixed depending on location.