Global Ag News for Apr 3.23

TOP HEADLINES

Argentina to launch ‘soy dollar’ on Monday to aid agriculture sector

Argentina’s government will launch a new “soy dollar” preferential exchange rate for farm exports on Monday, a spokesperson from the economy ministry said, to boost agricultural shipments and increase the depleted foreign reserves in the central bank (BCRA).

The government of President Alberto Fernandez hopes the plan – to be announced by Economy Minister Sergio Massa – will lead agro-export companies to bring in some $15 billion between the second and third quarters of 2023, including to regional economies.

“The announcement (of measures) is on Massa’s agenda for tomorrow (Monday),” the spokesperson told Reuters on Sunday.

Argentina’s agricultural sector last year lost some $20 billion after a fierce drought hit crops of soybeans, corn and wheat, according to analysts, slowing the economy amid galloping inflation that accelerated by more than 100% year-on-year.

The soy dollar rate was used twice last year to stimulate sales.

“The delicate situation of (the BCRA’s) net (foreign) reserves requires the government to take measures to strengthen them in the short term,” consulting firm Delphos Investment said.

Analysts consulted by Reuters expect the new special exchange rate for the so-called “soy dollar” to be between 270 and 300 Argentina pesos per dollar.

The new rate could be applied immediately as an export incentive for soybeans, and maintained for the next 90 days to boost foreign trade in regional economies, a source from the ministry of agriculture said.

The South American country, suffering a prolonged financial crisis, is the world’s top exporter of soy oil and meal and the No. 3 for corn, which are the main sources of its foreign currency income.

The International Monetary Fund (IMF) executive board on Saturday approved changes to Argentina’s reserves accumulation target set in their $44 billion program.

The BCRA saw sales of dollars increase in March, with reserves dropping by $1.9 billion last month, with reserves depleting by around $3 billion in the first quarter.

FUTURES & WEATHER

Wheat prices overnight are up 11 in SRW, up 14 1/2 in HRW, up 12 1/4 in HRS; Corn is up 6 1/2; Soybeans up 8 1/4; Soymeal down $0.19; Soyoil up 1.07.

Markets finished last week with wheat prices up 5 1/4 in SRW, up 32 in HRW, up 34 1/2 in HRS; Corn is up 18 1/2; Soybeans up 71 1/2; Soymeal up $1.81; Soyoil up 2.01.

For the month to date wheat prices are up 11 in SRW, up 14 1/2 in HRW, up 12 1/4 in HRS; Corn is up 6 1/2; Soybeans up 8 1/4; Soymeal down $1.90; Soyoil up 1.07.

Year-To-Date nearby futures are down 11.2% in SRW, up 0.5% in HRW, down 3.3% in HRS; Corn is down 1.7%; Soybeans down 0.4%; Soymeal down 3.0%; Soyoil down 11.4%.

Chinese Ag futures (JUL 23) Soybeans down 10 yuan; Soymeal up 58; Soyoil up 114; Palm oil up 130; Corn up 3 — Malaysian palm oil prices overnight were up 124 ringgit (+3.30%) at 3885.

There were changes in registrations: -78 Soybeans. Registration total: 2,537 SRW Wheat contracts; 23 Oats; 29 Corn; 88 Soybeans; 613 Soyoil; 1 Soymeal; 37 HRW Wheat.

Preliminary changes in futures Open Interest as of March 31 were: SRW Wheat up 60 contracts, HRW Wheat up 197, Corn up 3,164, Soybeans down 5,366, Soymeal up 8,213, Soyoil up 3,737.

Northern Plains Forecast: Heavy snow fell in South Dakota on Friday, though a lot of that melted over the weekend with full sun and a brief little warmup. That does not last long as a blizzard is expected in the region Monday night into early Wednesday which should bring another round of hefty amounts across a vast area of the region and strong winds to cause blowing, drifting, and damage. A cool shot follows the system going through the weekend. Heavy snowpack that continues to be in the region is a major concern for flooding, especially given potential for a quick rise in mid-April.

Central/Southern Plains Forecast: Strong to severe storms moved across northern Texas and Oklahoma on Sunday, but missed the drought areas with any of the significant precipitation. Another strong storm system will be moving out of the West on Monday night and Tuesday. The system will track farther north than last week’s system, with most of the impacts to the north with the blizzard. The far east could get in on some severe storms, however. But the drought areas again will be bypassed, with strong winds being the concern yet again for both damage and blowing dust. Wheat continues to have a rough go with weather conditions.

Midwest Forecast: A major spring storm moved through on Friday and Saturday, bringing widespread severe storms and damage, strong winds, and heavy snow across the northwest. Another strong storm will move through Tuesday and Wednesday with a renewed risk for widespread severe storms and strong winds. Snow will be more limited to the far northwest with this system, however. Wet conditions and a burst of chilly air will continue to keep fieldwork and early planting slow.

Delta Forecast: Another round of severe thunderstorms and severe weather moved through last Friday. Storms will move through Sunday night followed by another round of scattered thunderstorms and potential severe weather on Wednesday. The front to this system will likely stall in the region, continuing showers through the weekend, especially across the south. Wet soils are keeping fieldwork and planting slow.

Brazil Grains & Oilseeds Forecast: Wet season showers continue to be isolated through central Brazil through April, though may be enhanced at times by a couple of fronts moving up from Argentina. Still, precipitation is forecast to be below normal, leaving some concern for enough available soil moisture for developing safrinha corn. The systems moving through the south may be able to keep soil moisture in a good position for the rest of the month.

Argentina Grains & Oilseeds Forecast: Despite better weather in the last couple of weeks, corn and soybean conditions continue to be poor as the rains have been too late to have a positive impact on yield potential. The rains have been able to stabilize crop conditions, however. Another front moves through early this week, but should be followed by drier conditions for the rest of the week. A stronger cold front may move through next week, which would bring more showers, but also the potential for frosts.

European Forecast: Widespread precipitation moved through over the weekend. Colder air is spreading through the continent this week, which should bring widespread frosty mornings, but should not cause a lot of damage. Areas of mixed rain and snow will develop in the cooler air through the coming weekend. Spain and Italy did not receive nearly the rain that is needed and rain this week will be limited as well. More is needed in these areas while the rest of the continent is in good shape so far this spring.

Black Sea Forecast: Periods of showers will continue to move through the region for the next week, but also come with cooler temperatures for Ukraine, which may slow development of winter grains. Overall though, growing conditions are mostly favorable across the region.

The player sheet for 3/31 had funds: net buyers of 1,000 contracts of SRW wheat, buyers of 5,000 corn, buyers of 11,000 soybeans, buyers of 3,500 soymeal, and  buyers of 3,500 soyoil.

PENDING TENDERS

• CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 70,000 tonnes of animal feed corn to be sourced from Argentina or Brazil
• RICE TENDER: South Korea’s Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 121,800 tonnes of rice
• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.
• FEED BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase up to 120,000 tonnes of animal feed barley.

TODAY

CROP SURVEY: US Soybean Crush and Corn for Ethanol

The following is from a Bloomberg survey of seven anlaysts.

• Soybean crush seen at 175.4m bu in Feb., a 0.6% rise from a year ago
• Crude and once-refined soybean-oil reserves at end of February seen at 2.351b lbs, down from 2.566b
• Corn used in ethanol production seen up 0.1% y/y to 406.4m bu
• The USDA is scheduled to release its February Fats and Oils report along with the Grain Crushings report on April 3 at 3pm

Brazil 2022/2023 Second Corn Crop Seen At 92.2 Million Tns Versus 87.7 Million Tns In Previous Forecast – Safras & Mercado

BRAZIL 2022/2023 CORN CROP SEEN AT 130.289 MILLION TNS VERSUS 125.344 MILLION TNS IN PREVIOUS FORECAST – SAFRAS & MERCADO

BRAZIL 2022/2023 SECOND CORN CROP SEEN AT 92.2 MILLION TNS VERSUS 87.7 MILLION TNS IN PREVIOUS FORECAST – SAFRAS & MERCADO

Ukraine’s farms sow 500,000 ha of spring crops so far – ministry

All Ukrainian regions have started 2023 spring sowing, seeding a total of 500,000 hectares of various crops, the agriculture ministry said on Friday.

Ukraine has said it expects a reduced sowing area this year because of the invasion and occupation of a significant part of the country by Russia.

A ministry statement said that farmers had sown 107,700 hectares of spring wheat, 307,400 hectares of barley, 57,700 hectares of peas and 26,400 hectares of oats as of March 31.

The ministry last week said that the grain sowing area could decrease by 1.4 million hectares to 10.2 million in 2023 while the area sown to oilseeds could rise.

The ministry also said the 2023 grain harvest could drop to 44.3 million tonnes from 53.1 million tonnes while oilseed output could rise to 19.2 million tonnes from 18.2 million tonnes.

Strategie Grains cuts EU rapeseed crop forecast

Consultancy Strategie Grains cut its forecast for 2023 European Union rapeseed output to 19.5 million tonnes on dry weather in southeastern Europe, but the estimate could be raised at a later stage, provided the bloc sees good crop conditions, it said.

“Rapeseed production is forecast up very slightly at the moment, but if growing conditions are good during the flowering stage, the yield could be revised up, as well as production,” Strategie Grains said in an oilseed report.

The new rapeseed crop forecast compares to 19.6 million tonnes expected last month and 19.4 million tonnes harvested last year.

In western EU countries, rapeseed fields are in good condition and the return of rain in much of the bloc benefited rapeseed, notably in Romania and Bulgaria, where it was keenly awaited. However, there were some acreage losses in Bulgaria because the rain came too late, it said.

In contrast, the consultancy raised its forecast for this year’s sunflower seed harvest to 11.3 million tonnes from 11.2 million previously, 23% above last year’s crop.

It noted, however, that sunflower planting operations in Spain were affected by an ongoing lack of rainfall and that conditions were also very dry in Italy.

EU soybean output was still forecast at 3.2 million tonnes, up 28% from last year.

Hefty supply prospects have pressured rapeseed prices in the past weeks with the first new-crop contract August COMQ3 on Euronext futures losing more than 11% in the month of March to close at 470 euros on Friday. That was down from 780 euros recorded mid-May last year.

Despite a looming tightness in the oilseed complex as a historic drought hits Argentina’s soybeans, rapeseed prices could shed an additional 60 and 95 euros per tonne, depending on deliveries, if current EU and world production forecasts are confirmed, Strategie Grains estimated.

“If the rapeseed harvest in 2023/24 reaches the forecast level, new marketing year prices are expected to be lower on average than in 2022/23,” it said.

SOYBEAN/CEPEA: Lower supply from Argentina halts price drops in Brazil

Agents in the soybean market have been monitoring the harvesting in South America and the first sowing estimates in the United States. While the Brazilian harvest is in progress and the output may set a record, in Argentina, production estimates have been revised down. This scenario in Argentina ended up raising the prices for soybean and by-products in the USA and limiting the downward trend of quotations in Brazil this week.

According to the Buenos Aires Stock Exchange, the production of soybean in Argentina is estimated at 25 million tons, 44.4% below the average of the last five seasons. Thus, imports needs – even for Argentina – are expected to increase, while importers of soybean meal and oil tend to search for them in Brazil and in the US.

For Brazil, this is a favorable scenario in a year of a possible record output, while valuations may lead more farmers to sow soybean in the USA in the 2023/24 season.

In the US, price rises were influenced by the dollar depreciation in the international market, which makes their commodities more attractive to foreigners. The American currency dropped 3.6% against the Real in the last seven days, closing at BRL 5.101 on Thursday, 30. Comparing the averages in February and in March, the US dollar has increased 0.6%, to BRL 5.209 in March.

BRAZIL – In light of the recent valuations abroad, liquidity has increased in Brazil this week, and price drops were halted. Still, between March 23 and 30, the ESALQ/BM&FBovespa Paranaguá (PR) Index dropped 0.7%, to BRL 153.06 (USD 30.01)/bag on Thursday (30). Comparing the monthly averages in February and in March, this Index decreased 5.9%, with the average in March being the lowest since June/20, in real terms (based on the IGP-DI from Feb/23).

The CEPEA/ESALQ Paraná Index for soybean dropped 0.2% in the same period, to BRL 147.31 (USD 28.88) per 60-kg bag on Thursday. The monthly average of this Index in March is 6.1% lower than that in February, at BRL 155.54/bag, also the lowest, in real terms, since June/20.

On the average of the regions surveyed by Cepea, soybean prices dropped 1.7% in the over-the-counter market (paid to farmers) and 2.3% in the wholesale market (deals between processors). The monthly averages decreased 6.4% and 6.2%, respectively.

CROPS – According to Conab, by March 25th, 69.1% of the 2022/23 crop of soybean – estimated at 151.41 million tons – had been harvested in Brazil, less than the 75.8% harvested in the same period last year.

CORN/CEPEA: With higher supply and weak demand, quotations continue to fade

While Brazilian corn farmers need to sell the summer crop, purchasers (domestic and foreigners) have reduced the volumes acquired. In this scenario, corn prices are fading in Brazil.

As for sellers, many of them have been willing to lower asking prices and make prompt deliveries – this scenario is being observed in many regions, majorly in those where the summer crop is produced, such as Paraná. Farmer are prioritizing corn sales rather than soybean sales, either to wait for higher rises in the prices of soybean or because they do not have room to stock the cereal.

As for demand, Brazilian purchasers are not closing many deals, signaling to have corn stocked for the short term. As for exporters, purchases have been low in the spot market, however, shipments of the corn previously purchased have been high. Agents seem interested in closing contracts for exports in the second semester, however, at lower prices.

Concerning the second crop, farmers are trying to close anticipated deals, however, purchasers are cautious, opting to wait for the progress of the harvest.

PRICES – Between March 23 and 30, on the average of the regions surveyed by Cepea, prices dropped 2.5% in the over-the-counter market (paid to farmers) and 1.4% in the wholesale market (deals between processors). The ESALQ/BM&FBovespa Index for corn (Campinas, SP) dropped 1.2% in seven days and 3.7% in March (until the 30th), closing at BRL 82.9 (USD 16.25) per 60-kg bag on Thursday, 30, the lowest, in nominal terms, since August 24th, 2022 (BRL 82.77/bag).

CROPS – Crop activities are advancing in Brazil, favored by lower rainfall. According to Conab, by March 25th, 41% of the summer crop of corn had been harvested, and 91.1% of the second crop had been sown.

Russia’s Wheat-Export Tax to Fall to 5,179 Rubles/Ton: Interfax

Russia’s wheat-export duty will drop next week to 5,179 rubles ($66.63) a ton from 5,410 rubles this week, Interfax reported, citing the agriculture ministry.

NOTE: Russia started calculating the export tax in rubles in July; previously, it was calculated in dollars, and the amount was markedly higher

Malaysia, China ink partnership to stabilize palm oil supply chain

Malaysia said on Sunday it has signed a memorandum of understanding with a China government-backed trade association to enhance palm oil trade and cooperation.

The Malaysian Palm Oil Board said its partnership with the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products will help Malaysia regain market share in the world’s most populous country.

Malaysia, the world’s second-largest palm producer, and China, the world’s second-largest buyer, will jointly promote the use of Malaysia’s sustainable palm oil in China, as well as the design and implementation of new technologies such as artificial intelligence in oil palm plantations.

“China wishes to work with Malaysia in order to secure the palm oil supply to the country,” the Malaysian board said in a statement. The memorandum “will help gain China’s confidence towards Malaysian palm oil.”

The agreement “shall facilitate China’s participation on the technology exploration in the oil palm mechanisation in Malaysia, which will help to increase productivity and reduce reliance on human labour in the plantation,” it said.

In 2022, Malaysia exported 3.14 million tonnes of palm oil and palm products to China, making China its most important trading partner for the edible oil after India.

India Predicts a Hotter Summer, Raising Power Supply Worries

• Prolonged heat waves expected in most parts through June
• Temperatures in March were mostly below-average due to rains

Several parts of India are forecast to witness hotter-than-usual weather through June, raising the risk of more strain on the power network as people turn to air conditioners to find reprieve from heat waves.

Most areas of central, eastern and northwestern states of the nation are likely to experience heat waves during the three-month summer season, Mrutyunjay Mohapatra, director general of the India Meteorological Department, said in New Delhi on Saturday.

Climate change is increasing global temperatures and worsening the frequency and intensity of extreme weather events. This year, there’s been increased focus on India’s weather outlook after the subcontinent suffered a punishing heat wave in 2022 that caused widespread human suffering and affected global wheat supplies.

Some states of India received unseasonal rains in March, damaging wheat, mustard and onion crops and raising the risk of an increase in prices. While farmers pray for sunshine for the drenched crop to dry, they remain wary of extreme heat waves that could further erode yields. Rainfall across the country was 26% above normal in March, Mohapatra said.

Preparations are underway for a spike in temperatures. The power ministry predicts that peak electricity demand will climb to a new record in April as people crank up their air conditioners, fans and refrigeration units. It’s ordered power plants to import coal, the country’s dominant power-station fuel, as domestic output may not be sufficient.

Diesel consumption rises during summer as it encourages people to travel to cooler mountains from plains and at the same time use of diesel-fueled backup generators increases to make up for shortages from the grid. Consumption of gas could also climb as the government has mandated use of idling gas-fired power plants to meet the summer demand.

The weather office said that temperatures in March were below-normal in most parts of the country, helped by unseasonal showers. Rainfall was above normal in central, southern, eastern and northeastern regions last month, according to the weather office. The country’s northwestern region received below-average rains, it said.

For the month of April, longer-than-normal heat waves are expected in parts of Bihar, Jharkhand, Uttar Pradesh, Odisha, West Bengal, Maharashtra, Gujarat, Punjab, Haryana and Chhattisgarh, the weather office said.

The number of Indian states hit by heat waves since 2015 more than doubled to 23 by 2020. The country describes heat wave as a period of abnormally high temperatures, more than the normal maximum temperature that occurs during the hot weather season.

US Fertilizer Prices Slide as Weather Hinders Spring Fieldwork

Most nitrogen prices remain weak in the US as buyers defer purchases and wet weather delays application. A brisk spring season is still expected, however, with USDA projecting 92 million planted corn acres in 2023. China’s domestic stockpiles and urea production rates are rising as the world’s marginal producer pins hopes on a big crop.

Tampa Ammonia Plummets as Nitrogen Fertilizers Slump

The Tampa ammonia price for April dropped dramatically, to $435 a metric ton (mt) vs. the March price of $590, with plentiful supplies and lower natural gas prices in the US and Europe cited for the fall. Prices were also pressured inland as wet weather continues to delay spring application, with ammonia terminals in the Northern Plains slipping to $625-$650 a short ton (st) vs. the prior $670-$700 range. Other nitrogen prices were lower as well. New Orleans (NOLA) urea fell $10-$15/st from last week, and urea ammonium nitrate (UAN) was down $5-$10 at NOLA and more at terminals in the Northeast and Eastern Canada.

Phosphates and potash were generally flat at NOLA and inland, though prices for both were down again in Brazil, with potash dropping to $400-$440/mt vs. last week’s $440-$460.

Eleven killed in stampede for food aid in southern Pakistan

Eleven people were killed in a stampede during the distribution of food aid in the southern Pakistani city of Karachi on Friday, a health official said, one of several such incidents in recent weeks as the country’s economic crisis bites.

The dead included five women and three children, police said, while five other people were hospitalised following the incident, which occurred at a charity-run distribution site set up at a local factory.

Thousands of people have gathered at flour distribution centres set up across the country, some as part of a government-backed programme to ease the impact of inflation, which is running above 30%, a 50-year high.

At least five other people have been killed and several injured in recent weeks at sites in other provinces in Pakistan. Thousands of bags of flour have also been looted from trucks and distribution points, according to official records.

The stampedes underscore people’s desperation in the face of soaring costs, exacerbated by Pakistan’s falling currency and a removal of subsidies agreed with the International Monetary Fund to unlock the latest tranche of its financial support packages.

The costs of basic goods have surged, with flour prices rising more than 45% in the past year.

The Pakistani government has launched the flour distribution programme to reach millions of families in need during the holy Islamic month of Ramadan that began last week.

China sugar production seen at lowest in 7 years, report says

Sugar production in China, one of the world’s largest consumers of the sweetener, is seen falling to 9 million tonnes in 2022/23 season (Oct-Sept), more than half a million tonnes smaller than in the previous crop and the lowest in seven years.

According to a report released on Friday by broker and supply chain services provider Czarnikow, dry weather in the main sugarcane province of Guangxi was the main reason for the smaller production in the current crop.

Czarnikow analyst Rosa Li said that as a result of the poor crop, the local supply deficit will rise to 6.5 million tonnes, the second-highest ever.

The analyst said China will have to boost imports of raw and liquid sugar to balance local supplies, particularly due to increased consumption after the end of COVID-19 pandemic-related restrictions.

Czarnikow estimates China will import 5.4 million tonnes of sugar in 2022/23, and believes sugar smuggling will increase.

Sugar prices on Friday SBc1 hit the highest level in more than six years as other countries as well faced problems with production.

US Weekly Beef and Pork Production Estimates: USDA

US federally inspected beef production rises to 535m pounds for the week ending April 1 from 515m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter up 4% from a week ago to 651m head
• Pork production up 1.8% from a week ago, hog slaughter rises 1.6%
• For the year, beef production is 4% below last year’s level at this time, and pork is 1% above

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