Global Ag News for Aug 11.23
Russia Tightens Grip on Global Wheat With Even Bigger Exports
Russia’s already huge wheat exports are expected to get even bigger, with the country tightening its grip on global trade for the staple crop.
The US Department of Agriculture edged up its estimate for the nation’s cargoes to 48 million metric tons for the 2023-24 season. To put that in perspective, that means almost a quarter of world wheat trade will now stem from Russia.
Russia’s shipments are coming as quality problems are popping up around the world. The USDA says global inventories will fall to the lowest since the 2015-16 season.
FUTURES & WEATHER
Wheat prices overnight are down 1 1/2 in SRW, down 3 1/2 in HRW, down 2 in HRS; Corn is down 1/2; Soybeans up 13; Soymeal up $3.40; Soyoil up 0.57.
Markets finished last week with wheat prices down 28 3/4 in SRW, down 19 3/4 in HRW, down 11 1/4 in HRS; Corn is down 9 1/4; Soybeans up 18 1/4; Soymeal up $0.50; Soyoil up 0.94.
For the month to date wheat prices are down 39 1/2 in SRW, down 67 in HRW, down 42 3/4 in HRS; Corn is down 26 1/4; Soybeans down 11 1/4; Soymeal down $3.80; Soyoil up 0.80.
Year-To-Date nearby futures are down 21.0% in SRW, down 15.3% in HRW, down 13.4% in HRS; Corn is down 30.0%; Soybeans down 7.8%; Soymeal down 8.7%; Soyoil up 4.0%.
Chinese Ag futures (NOV 23) Soybeans down 12 yuan; Soymeal down 8; Soyoil up 36; Palm oil down 8; Corn down 42 — Malaysian palm oil prices overnight were down 22 ringgit (-0.59%) at 3695.
There were changes in registrations (-11 Soybeans, -7 Soyoil). Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 0 Soybeans; 64 Soyoil; 0 Soymeal; 147 HRW Wheat.
Preliminary changes in futures Open Interest as of August 11 were: SRW Wheat up 10,612 contracts, HRW Wheat down 173, Corn down 5,429, Soybeans up 8,398, Soymeal up 3,458, Soyoil down 3,023.
Northern Plains: Areas of moderate to heavy rain moved through over the weekend. A couple of fronts will move through this week, but are likely to be dry. Another front will stall out in the region Friday through a good portion of next week, being a focus for showers and thunderstorms. The rainfall will help filling corn and soybeans.
Central/Southern Plains: Scattered showers and thunderstorms moved through over the weekend with some areas of heavy rain. This week should be much quieter as the storm track gets pushed northward and heat builds by the weekend. Some showers may still develop over the north and northwest at times through next week, and be useful where they fall as crops are still vulnerable to dryness as they fill.
Midwest: Areas of heavy rain moved through over the weekend and have been relatively widespread. That continues as a system moves through on Monday. Another front will move through Wednesday night and Thursday with scattered showers for northern and eastern areas. Heat will build northward this weekend, but a front will stall out over far northern areas, which may continue rainfall chances there next week.
Delta: Scattered showers went through northern areas this weekend while heat continued to bake areas across the south in drought. After a brief break from the heat, it will build back in this weekend. Limited showers are not enough to combat the heat in many places as soybeans and cotton finish filling.
Europe: Good soil moisture from recent precipitation is favorable for corn and summer grain growth for most areas, but unfavorable for the remaining winter wheat harvest. A trough near the British Isles sent some pieces of energy and rainfall into Europe over the weekend and will be enhanced by another this coming weekend into next week. Rainfall will be variable and more prone to northwest areas. Temperatures have increased significantly since the weekend and are forecast to remain warm to hot through next week. That heat could be unfavorable for any summer crops with limited soil moisture.
The player sheet for Aug. 11 had funds: net sellers of 4,000 contracts of SRW wheat, sellers of 8,500 corn, sellers of 5,000 soybeans, sellers of 2,000 soymeal, and sellers of 2,000 soyoil.
- CORN SALES: The U.S. Department of Agriculture confirmed private sales of 143,637 metric tons of U.S. corn for delivery to Mexico in the 2023/24 marketing year that begins Sept. 1.
- WHEAT PURCHASE: Tunisia’s state grains agency is believed to have purchased about 25,000 metric tons of soft wheat in an international tender on Friday
- CORN PURCHASE: Algerian state agency ONAB is believed to have bought an unknown volume of animal feed corn expected to be sourced from Argentina in an international tender for up to 80,000 metric tons which closed on Thursday.
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 130,200 metric tons of rice all to be sourced from China.
- SOYMEAL TENDER: South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 120,000 metric tons of soymeal,
- WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
- WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.
- VEGETABLE OILS TENDER: Egypt’s GASC is seeking refined sunflower oil in one-litre bottles in an international tender. It is seeking at least 5,000 metric tons of oils, free of customs, on behalf of the Holding Company for Food Industries, for delivery during October and/or November and/or December. Deadline for submitting offers is Aug. 17.
- WHEAT TENDER: A Syrian state grains agency issued an international tender to purchase and import 200,000 metric tons of soft milling wheat.
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by Nov. 30 and arrive in Japan by Jan. 25 via a simultaneous buy and sell (SBS) auction that will be held on Aug. 23.
China’s soybean imports up 15% in January-July
BEIJING – China imported 62.3 million tonnes of soybeans in the first seven months of this year, up 15 percent from a year earlier, customs data showed.
In July alone, the country’s soybean imports reached 9.73 million tonnes, down from 10.27 million tonnes in June but more than the 7.88 million tonnes imported in the same month last year, according to data from the General Administration of Customs.
The per-tonne value of the soybean imports increased 1.3 percent year-on-year in the first seven months to 4,334.6 yuan (about $605.39).
The country, as the world’s largest soybean importer, imported a total of 91.08 million tonnes of soybeans last year. Imported soybeans are usually crushed into meal for animal feed in China.
NOPA July US soybean crush seen at 171.337 million bushels
The U.S. soybean crush likely increased in July from a nine-month low in the previous month, although seasonal maintenance downtime continued to restrict the processing pace, analysts said ahead of a monthly National Oilseed Processors Association (NOPA) report due on Tuesday.
NOPA members, which handle about 95% of all soybeans processed in the United States, were estimated to have crushed 171.337 million bushels last month, according to the average of estimates from 10 analysts.
If realized, the July crush would be up 3.8% from the 165.023 million bushels processed in June and up 0.7% from the July 2022 crush of 170.220 million bushels. It would also be the second largest July crush on record, behind only 2020.
The estimate implies a daily crush rate of 5.527 million bushels, which would be up from 5.501 million bushels a day in June and the first increase in four months, according to NOPA data.
The crush typically slows ahead of the autumn harvest as processors idle facilities for seasonal maintenance and as supplies of soybeans are drawn down. Mechanical issues and other problems prolonged downtime at some facilities this summer, further limiting the crush, analysts said.
Estimates for the July 2023 crush ranged from 165.100 million to 178.000 million bushels, with a median of 170.408 million bushels.
The monthly NOPA report is scheduled for release at 11 a.m. CDT (1600 GMT) on Tuesday. NOPA issues crush data on the 15th of each month, or the next business day.
Soyoil supplies held by NOPA members as of July 31 were forecast at 1.687 billion pounds, based on estimates from seven analysts.
Soyoil stocks at the end of June totaled 1.690 billion pounds, while stocks at the end of July 2022 stood at 1.684 billion pounds.
Soyoil stocks estimates ranged from 1.620 billion to 1.740 billion pounds, with a median of 1.702 billion pounds.
India July Vegetable Oil Imports Rise to 1.77m Tons: SEA
India’s vegetable oil imports rose to 1.77m tons in July from 1.31m tons in June, according to the Solvent Extractors’ Association of India.
- Palm oil imports rose to 1.09m tons from 683,133 tons in June
- Soybean oil imports fell to 342,270 tons from 437,658 tons in June
- Sunflower oil imports rose to 327,259 tons from 190,785 tons in June
SOYBEAN/CEPEA: Amid high demand, soy oil price rises in BR
Soy oil prices have increased in Brazil this week, boosted by high demand from biodiesel processors. This scenario raised the dispute with international purchasers, since the world demand for the Brazilian soy oil has been high too.
Between August 3-10, the price for soy oil (degummed) rose 3.8% in São Paulo (with 12% ICMS), to BRL 5,187.92/ton on Thursday, 10. With the recent valuations, agents from food processors reported difficulties to purchase soy oil
Soy oil exports have been at record levels. Between January and July 2023, Brazil exported 1.6 million tons of the product, according to Secex (Foreign Trade Secretariat). Of the total, 974.2 thousand tons were sent to India (the top importer of this by-product in the world), 8.72% more than the volume shipped to the country in the same period last year. To China, Brazil exported 188.7 thousand tons in the first seven months of 2023, 109.91% up from that shipped in the same period of 2022. Brazilian exports of soy oil also increased to Algeria (+44%), Netherlands (+110%), South Korea (+117%), Malta (6.9%) Cayman Islands (157.14%) Singapore (+54.41%) and South Africa (+33%). Still according to Secex, to Pakistan, soy oil shipments increased by more than 28 times. Also, other 20 countries have received the Brazilian soy oil, so far.
With the higher demand for soy oil, the prices for soybean meal have dropped – higher oil production raises meal surplus. The demand for soybean meal – which was on the rise – resumed fading in early August. Thus, agents expect to buy batches at lower prices, based on the nearness of the season in the United States. Thus, on the average of the regions surveyed by Cepea, the prices for soybean meal dropped 1.3% between August 3-10.
SOYBEAN – Soybean prices have been stable in the domestic market. Although the remaining from the 22/23 crop is high in Brazil, national growers have been away from the domestic spot market.
Between August 3-10, on the average of the regions surveyed by Cepea, soybean prices rose a slight 0.2% in the over-the-counter market (paid to farmers) and 0.6% in the wholesale market (deals between processors). In the same period, the CEPEA/ESALQ Index Paraná increased a slight 0.1%, to BRL 138.82 (USD 28.45) per 60-kg bag on August 10th. On the other hand, the ESALQ/BM&FBovespa Paranaguá (PR) Index decreased 0.4%, to BRL 146.77/bag (USD 30.08) per 60-kg bag on Thursday, 10th.
CORN/CEPEA: Higher availability continues to press down corn prices in BR
The progress of the harvesting for the second crop of corn in Brazil added to new official estimates pointing to a record output in Brazil plus better weather conditions in the United States are keeping purchasers away from the national spot market. In this context, liquidity has been low, and prices are fading.
Between August 3-10, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) dropped 1.5%, closing at BRL 52.65 (USD 10.79)/bag on Thursday, 10, the lowest nominal level since August 2020.
On the average of the regions surveyed by Cepea, corn prices rose a slight 0.4% in the over-the-counter market (paid to farmers) but decreased 0.5% in the wholesale market (deals between processors).
PORTS – Despite the progress of the harvesting, liquidity has been low at Brazilian ports. Growers are delivering the corn previously purchased. Besides, soybean exports have been high, hampering corn logistics. Still, prices at ports have been higher than in the interior of Brazil.
On August 10th, the average prices at the ports of Paranaguá (PR) and Santos (SP) closed at BRL 57.62 and at BRL 59.37 per 60-kg bag, 0.6% and 3.6% lower than that on August 3rd, respectively. The US dollar dropped 0.2% in seven days, to BRL 4.88 on Thursday, 10.
ESTIMATES – In a report released this week, Conab has revised up the production estimates for the second crop of corn to 100.18 million tons, a new record, two million tons above that estimated in July and higher than the 14.7 million tons from the previous season.
Thus, the Brazilian corn production in the 2022/23 crop is forecast to total 129.96 million tons, a record. Consumption estimates have been kept at 79.4 million tons, while exports were revised up to 50 million tons, two million tons up from that forecast in July. If these estimates are confirmed, by January 2024, ending stocks will total 10.5 million tons, 28% higher than that last season.
CROPS – The dry weather in most corn-producing regions in Brazil is favoring the harvesting. According to Conab, 64% of the national corn crop had been harvested by August 3.
Brazil Farmers Harvest 72.84% Of Second Corn Versus 83.41% At This Time Last Year – Patria Agronegocios
BRAZIL FARMERS HARVEST 72.84% OF SECOND CORN VERSUS 83.41% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS
Ukraine 2023 grain crop may rise 5% – 1st deputy agriculture minister
Ukraine’s grain harvest this year is exceeding expectations and could be 5% higher than in 2022 thanks to favourable weather, a senior agriculture ministry official said on Saturday.
Ukraine is a major global grain producer and exporter but its production has been affected by Russia’s full-scale invasion, which began in February 2022.
“This (the harvest) is more than expected; thanks to good weather and rains in the summer, production could be 5% higher than in 2022,” Taras Vysotskyi, the first deputy agriculture minister, told national television.
He did not give an estimated volume for the harvest, but said farmers had already threshed around 23 million metric tons of grain.
The ministry said this week it saw 2023 grain output at around 56.4 million tons, or 2% more than in 2022.
It also said farmers had harvested 17.7 million tons of wheat and 4.9 million tons of barley as of Aug. 11, and the grain yield averaged 4.37 tons per hectare.
Ukraine starts registering ships for Black Sea corridor – agency
Ukraine, which is seeking to form safe shipping routes in the Black Sea, has started registering ships willing to use the corridor it announced earlier this week, a local news agency said on Saturday.
Ukraine on Thursday announced a “humanitarian corridor” in the Black Sea to release cargo ships that have been trapped in its ports since Russia launched a full-scale invasion of Ukraine on Feb. 24, 2022.
The corridor is a new test of Russia’s de facto blockade since Moscow abandoned a deal last month to let Kyiv export grain.
“Registration is now open and the coordinator is already working,” Interfax Ukraine quoted Ukrainian Navy spokesman Dmytro Pletenchuk as saying.
He gave no more details while an industry source told Reuters on Friday that no ships had yet passed through the corridor.
“Of course, everything will take place under the supervision of the Ukrainian Armed Forces. We are doing everything we can to ensure security,” Pletenchuk said.
Russia has not indicated whether it would respect the shipping corridor, and shipping and insurance sources have expressed concerns about safety.
At least initially, the route would apply to vessels such as container ships that have been stuck in Ukrainian ports since the war began, and were not covered by the deal that opened the ports for grain shipments last year.
Russia Opens Fire to Force Black Sea Cargo Ship Inspection
- First reported incident since the grain deal collapsed
- Tensions have been running high in the key shipping region
The Russian navy opened fire on a cargo vessel in the Black Sea to force it to stop for checks, the defense ministry said, the first such confirmed incident since Moscow withdrew from a key grain export deal in July.
The dry freight vessel Sukru Okan, sailing under the flag of Palau, had been heading to Ukraine’s port of Izmail when the naval patrol ship Vasiliy Bykov came across it in the southwestern part of sea early Sunday morning.
The navy ordered the vessel to stop for inspection and when the operators of the Sukru Okan didn’t respond, opened fire, Russia’s ministry said.
When the vessel finally stopped, Russia sent a group of soldiers in a helicopter to board it for inspection. They later allowed the ship to resume its journey to Ukraine, the ministry said, without elaborating what cargo — if any — it was carrying.
Russian President Vladimir Putin in July let lapse the agreement, brokered by Turkey and the UN, that allowed the safe passage of vessels exporting Ukrainian grains and other foodstuffs from ports near Odesa.
China Faces Early Attack From Crop Pests After Extreme Weather
- Fall armyworm detected in nation’s north earlier than usual
- Rice and corn fields at risk from insects and plant disease
China’s farmers are facing an earlier than expected assault on their crops this year as extreme weather accelerates the spread and growth of destructive diseases and pests such as the dreaded fall armyworm.
At risk are key crops including corn and rice, a globally important food staple that’s already seeing threats to supply elsewhere in Asia. China is the world’s biggest producer and importer of the grain that feeds billions.
Plant pests that ravage crops are becoming more destructive and posing a bigger threat to the world’s food security due to climate change, according to the Food and Agriculture Organization, a UN agency. China’s government said heavy rains and winds, including those whipped up recently by deadly Typhoon Doksuri, have helped with the migration of insects and spread of disease.
The caterpillar larva of a fall armyworm.
Insects that devour rice paddies and corn fields have appeared earlier in major growing regions in China’s north and south this year, according to a unit of the Ministry of Agriculture and Rural Affairs. Along with the recent rains and flooding, warmer weather has also aided the spread of pests.
“More extreme weather events, brought on by climate change, has a significant impact on migration and occurrence of crop diseases and insects,” said Hu Gao, a professor at Nanjing Agricultural University. “It’s getting harder to predict, as the incursion has become a bit irregular.”
Hu’s key focus is the planthopper and leaf roller, two common invaders of rice paddies. He says the occurrence of the insects in southern China — where most of the nation’s crop is grown — is more severe than the past few years, although he added that the impact on production is so far limited.
US Beef Production Falls 1.7% This Week, Pork Rises: USDA
US federally inspected beef production falls to 490m pounds for the week ending Aug. 12 from 499m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter down 1.6% from a week ago to 603m head
- Pork production up 0.4% from a week ago, hog slaughter rises 0.7%
- For the year, beef production is 4.9% below last year’s level at this time, and pork is 0.4% above
US Fertilizer Prices Mixed as Summer Fill Season Closes
Nitrogen and potash were steady in the US and Canada in the wake of recently closed summer fill programs, while phosphates edged higher on concerns of tight supply for fall application. India’s Aug. 9 tender revealed a more than 40% price jump, supporting margins for producers, including CF Industries, Nutrien and Yara.
US Phosphate Prices Jump on Autumn Supply Concerns
Tight supply in advance of the US fall application season pushed phosphates higher at New Orleans (NOLA) and inland, with barge and terminal prices jumping $20-$30 a short ton (st) vs. last week. Though inland prices were largely unchanged, NOLA urea dropped to $355-$395/st vs. last week’s $375-$445 following India’s latest tender. US urea ammonium nitrate, ammonium sulfate and potash prices were mostly unchanged in the wake of recent fill programs, with some suppliers launching post-fill offers.
Offers into India’s latest urea tender were up $115 a metric ton (mt) vs. the last one in June, but the prices were lower than expected and the country might not be able to secure the 1.5 million mt needed, requiring another tender this fall. Urea prices dropped slightly in China, the Middle East and Brazil as a result.
Brazil Urea Slips After India’s Tender Disclosure
Though urea offers in the latest India tender were up from the previous one in June, prices in Brazil fell $25 a metric ton as offers get adjusted to new international benchmarks. Thin supply continues to push phosphates higher in Brazil, while potash edged lower on Russian competition.
Urea, Potash Prices Fall in Brazil; Phosphates Improve
As the Indian tender results were disclosed, urea prices lost traction in Brazil as sellers attempted to partially offset supply risks. Urea offers in the India tender increased $115 a metric ton (mt) vs. the last tender in June, but failed to match traders’ expectations, resulting in a 5.6% decline in Brazil prices after a 60% pricing surge in recent weeks. Though imports during the first six months are 8% below last year and demand is expected to strengthen, urea prices may be pressured to fall further if farmers delay purchases until the end of 3Q or start of 4Q.
Potash prices in Brazil were down 2.1% vs. last week due to discounted offers for Russian tons, while phosphates increased 3% amid global supply constraints.
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