Global Ag News for Aug 11.23
Weather-Roiling El Nino Is Expected to Last Through US Winter
The El Niño climate pattern that can disrupt global weather systems is likely to persist well into 2024, according to the US Climate Prediction Center.
- El Niño pattern began in June, and odds of conditions persisting through April are at least 90%, according to advisory
- Odds of El Niño lasting through February are at least 97%
- El Niño characterized by warmer-than-average water temperatures in the central and eastern Pacific Ocean
- Warm ocean waters can upset weather patterns around the world, leading to drought in Australia and India, increased rain during California winters and wind shear across the Atlantic Ocean and Gulf of Mexico that blunts hurricane season
- “El Niño is anticipated to continue through the Northern Hemisphere winter”: Climate Prediction Center
FUTURES & WEATHER
Wheat prices overnight are down 5 in SRW, down 1/4 in HRW, up 2 1/4 in HRS; Corn is down 1 1/2; Soybeans up 5 1/2; Soymeal up $0.80; Soyoil up 0.25.
For the week so far wheat prices are down 1 1/2 in SRW, up 9 3/4 in HRW, down 3 in HRS; Corn is down 2 1/2; Soybeans down 9 3/4; Soymeal down $3.20; Soyoil down 0.81.
For the month to date wheat prices are down 33 in SRW, down 50 1/2 in HRW, down 36 1/2 in HRS; Corn is down 18 1/4; Soybeans down 8; Soymeal down $1.40; Soyoil up 0.74.
Year-To-Date nearby futures are down 20.0% in SRW, down 13.5% in HRW, down 12.7% in HRS; Corn is down 29.0%; Soybeans down 10.9%; Soymeal down 10.2%; Soyoil up 4.6%.
Chinese Ag futures (NOV 23) Soybeans down 15 yuan; Soymeal up 37; Soyoil down 24; Palm oil down 42; Corn up 18 — Malaysian palm oil prices overnight were down 8 ringgit (-0.21%) at 3720.
There were no changes in registrations. Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 11 Soybeans; 71 Soyoil; 0 Soymeal; 147 HRW Wheat.
Preliminary changes in futures Open Interest as of August 10 were: SRW Wheat up 1,848 contracts, HRW Wheat up 320, Corn down 7,269, Soybeans down 10,513, Soymeal down 1,326, Soyoil up 412.
Northern Plains: The pattern remains active and cool in the Northern Plains through next week with multiple chances of precipitation, favorable for filling corn and soybeans where they hit, but disrupting the wheat harvest. Showers are likely to be spottier here than where they occur elsewhere in the Corn Belt, however.
Central/Southern Plains: A front continues to be active around Oklahoma but will stay near the dividing line between mild temperatures north and hot temperatures south through much of next week. Systems will pass by off to the north, with chances for precipitation continuing. Outside of being hot and fairly dry in Texas, the forecast is favorable for filling corn and soybeans.
Midwest: Several systems will move through the Midwest with favorable rainfall through next week that could lead to further drought reduction. Temperatures will be variable but generally near to below normal through the period as well, favorable for filling corn and soybeans.
Delta: A front has stalled across the Delta and will be a focal point for shower development for the next week while systems moving through the Corn Belt could provide additional precipitation for northern areas as well. Drought areas in the south will remain hotter and drier, unfavorable for soybeans and cotton there.
The player sheet for Aug. 10 had funds: buyers of 500 corn, sellers of 2,000 soybeans, and buyers of 1,000 soymeal.
- CORN PURCHASE: South Korea’s Feed Leaders Committee (FLC) purchased around 66,000 metric tons of animal feed corn in a private deal on Thursday without issuing an international tender.
- WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 93,972 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
- WHEAT TENDER: Tunisia’s state grains agency issued an international tender to purchase an estimated 25,000 metric tons of soft milling wheat.
- CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 80,000 metric tons of animal feed corn to be sourced from Argentina
- 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.
US Sold 1.5M Tons of Soybeans Last Week; 909K of Corn: USDA
USDA releases net export sales report on website for week ending Aug. 3.
- Soybean sales fell to 1,503k tons vs 2,721k in previous week
- All wheat sales rose to 561k tons vs 435k in previous week
- Corn sales rose to 909k tons vs 456k in previous week
US Export Sales of Soybeans, Corn and Wheat by Country
The following shows US export sales of soybeans, corn and wheat by biggest net buyers for week ending Aug. 3, according to data on the USDA’s website.
- China was the top buyer of soybeans in the week with 768k tons
- Mexico was the top buyer of corn and Philippines led in wheat
US Export Sales of Pork and Beef by Country
The following shows US export sales of pork and beef product by biggest net buyers for week ending Aug. 3, according to data on the USDA’s website.
- Mexico bought 6k tons of the 22.3k tons of pork sold in the week
- South Korea led in beef purchases
Brazil 2022-23 Corn Crop Seen at 130M Tons: Conab
Output est. raised from 127.8m tons, Brazil’s national supply co. says in its monthly report.
- Analysts in a Bloomberg survey were expecting 135.5m tons
- Yield seen higher at 5,855 kg/ha vs 5,767 kg/ha last month
- Area planted raised to 22.196m ha vs 22.157m ha last month
- Soybean production seen little changed at 154.6m tons
Brazil’s 2023 soybean output seen at 157 mln tns – Abiove
- BRAZIL’S 2023 SOYBEAN OUTPUT SEEN AT 157 MILLION TNS VERSUS 156.5 MILLION TNS IN PREVIOUS FORECAST – CRUSHERS GROUP ABIOVE
- BRAZIL’S 2023 SOYBEAN EXPORTS SEEN AT 98.5 MILLION TNS VERSUS 97.5 MILLION TNS IN PREVIOUS FORECAST – ABIOVE
- BRAZIL’S 2023 SOYBEAN CRUSHING SEEN AT 53.5 MILLION TNS, STABLE FROM PREVIOUS FORECAST – ABIOVE
Argentine Corn, Wheat Crop Estimates Aug. 10: Exchange
The Buenos Aires Grain Exchange releases weekly report on website.
- 2022-23 corn production est. maintained at 34m tons, with 81% of the crop harvested
- 2023-24 wheat planting completed, area est. unchanged at 6m ha
Argentina Soy Acreage Seen Expanding for First Time in a Decade
Farmers are forecast to plant 17m hectares (42m acres) of soy next season, 1m more than last year, the Rosario Board of Trade said in a monthly report.
- It would be the first y/y increase in nearly a decade
- In 2014-15 the planted area was 20.3m hectares; acreage has fallen steadily over the last nine years as farmers shifted to corn
- One of the reasons for the projected increase in 2023-24 is last season’s brutal drought that hurt farmer finances
- NOTE: Soy is cheaper to grow than corn
- With normal weather, soy plants could produce 48m metric tons vs. 20m in 2022-23
- NOTE: Soy planting mainly happens in 4Q
- 2023-24 corn planting seen unchanged y/y, with 7m hectares of trade quality
- Farmers who couldn’t plant wheat because of the continued dryness will seek to sow corn
- Higher fertilizer costs put a ceiling on acreage growth
- Production potential is 56m tons
- 2022-23 output seen at 34m, up 6.3% from last month
- Ongoing lack of rain is becoming a problem for wheat, even if plants have low water requirements at this early stage
- Production estimate unchanged at 15.6m tons
- In a separate report on Thursday, the Buenos Aires Grain Exchange said the most developed plants are already suffering the dryness
- Dryness is also impeding sunflower planting: Buenos Aires
- Ongoing lack of rain is becoming a problem for wheat, even if plants have low water requirements at this early stage
Ukraine 2023 grain, oilseed and sugar beet forecasts
Ukraine is likely to increase the combined 2023 grain and oilseeds harvest to about 76.7 million metric tons from 76.2 million tons in 2022 owing to higher yields, agriculture ministry data shows.
Ukraine Harvests Nearly 23m Tons of Grain so Far: Ministry
Ukrainian farmers have harvested almost 23m tons of early grains so far, Ukraine’s Agriculture Ministry says on website.
- This includes 17.7m tons of wheat and 4.9m tons of barley
- Odesa farmers already finished grain harvest, Zaporizhzhia region harvested 90% of available area
- READ, Aug. 10: Ukraine Government Raises 2023 Grain Crop Outlook to 56.4M Tons
- NOTE: Ukraine harvested 23.4m tons of grain as of Aug. 19 last year
Ukrainian Navy Designates Temporary Corridors for Trade Vessels
- Trade ships will be admitted into corridors amid military risk
- Routes to allow passage of ships in and out of Ukrainian ports
The Ukrainian navy designated new temporary Black Sea sea routes for trade vessels that are willing to navigate waters threatened by Russian forces.
The routes will focus on allowing ships to exit Ukrainian ports at Chornomorsk, Odesa and Pivdennyi, the Navy said in a statement on Facebook. Russia’s Defense Ministry said last month that all ships headed to Ukraine’s ports would be considered as potentially carrying military cargo.
“Vessels whose owners and captains officially confirm that they are ready to sail in the current conditions will be allowed to pass through the routes,” the statement said. It wasn’t immediately clear how many ships would be willing to sail in such conditions.
The routes will allow ships to move in and out of Ukrainian ports even amid Russia’s military threat and the risk of mining, it said.
The last ship with Ukrainian food cargo left the port of Odesa on July 16 as Russia pulled out of the Black Sea grain deal and continued attacks on Ukrainian port infrastructure.
Grain silos ablaze in western French port
French firefighters were battling a major blaze in grain storage silos Thursday in the western port of La Rochelle, authorities said.
The fire, which started around 0600 GMT, created a cloud of smoke visible for kilometres (miles) and is still raging, said officials of the Charente-Maritime region.
The four silos on fire are in a row and contain wheat, a spokeswoman for the fire brigade told AFP, adding the fire still risks spreading.
The site and nearby facilities have all been evacuated.
“We are in the process of confirming how many silos are impacted and putting ourselves in a position to protect the other silos,” she added, emphasising there was no immediate indication of an explosion risk.
Nearly one hundred firefighters had been mobilised and “requests for reinforcements” were in progress, the prefecture said.
US Halts Import of Rare Vessel of Polish Wheat at Houston
- Authorities are citing contamination with corn, people say
- Polish wheat is arriving in the US after drought hurt crops
The US is holding back a rare cargo of Polish wheat being imported into Houston, a move that may spark tensions with the European Union, according to people familiar with the matter.
The vessel Yochow carrying about 30,000 tons of Polish wheat is being prevented from unloading at the port of Houston, according to shipping data and the people, who asked not to be identified because the information is private. Authorities are citing contamination with corn, the people said.
The US is resorting to purchases of European wheat after a drought pushed local prices higher. While there are enough American supplies for the nation’s flour mills, it’s cheaper to bring in grain from Poland than to haul it from the Midwest to places like Texas and Florida.
The rare imports are a blow to US farmers, which have been losing power in the global market for years to top shipper Russia. A final rejection of cargo could spark tensions with the EU. The US has in the past accused other countries of imposing non-tariff barriers to trade when American cargoes were rejected in places like China.
US Customs and Border Protection didn’t provide a comment.
The Yochow vessel left Poland on July 13 and arrived in Houston on Aug. 6, according to ship-tracking data. EU data shows two cargoes — one carrying about 29,000 tons and another 33,000 tons — sailed from Poland to the US in July.
Floods, Heat Waves Hit China’s Crops From Corn to Cotton: CASDE
China warned that rains in the northeast may inundate corn crops and affect growth after recent extreme weather across the country impacted grains to cotton, according to a monthly government report.
- Heavy rains caused by Typhoon Doksuri recently flooded some corn fields in the north and northeastern regions, the latest China Agricultural Supply & Demand Estimates report show
- Peanut production was also affected by heavy rains, and the impact on output is yet to be estimated
- Heat waves scorched cotton in the northwestern region of Xinjiang
- China cut its estimate for sugar imports in the 2022/23 year ending Sept. 30 to 3.8m tons as the cost of out-of-quota imports continues to be higher than domestic sugar
- The estimate was trimmed 24% from last month’s forecast
- Forecasts for output, consumption and imports of corn, soybeans and sugar in 2023-24 remain unchanged
Russia Wheat Export Tax to Rise to 3,713 Rubles/Ton: Interfax
Russia will increase its wheat export duty next week to 3,713 rubles ($37.80) a ton, from 2,916 rubles, Interfax reported, citing the Agriculture Ministry.
- NOTE: The ministry sets the tax weekly based on data from export contracts that were registered a week before, according to a government decree
Indonesia’s Bulog to Speed Up Rice Import to Build Stockpiles
Indonesia’s state food logistic company, Bulog is speeding up imports to build stockpiles in anticipation for El Niño impact, according to company’s statement on Friday.
- Bulog imported 1.6m tons of rice out of 2.3 million tons of total quota this year
- The 2m tons assigned in early 2023, while the 300,000 tons is left over quota from 2022
- Bulog bought 780,000 tons of rice from local farmers and will continue to buy
- Bulog’s rice stockpiles stood at 1.33m tons currently
Brazil beef execs urge new sales deals to cut dependence on China
Beef industry executives in Brazil, the world’s biggest exporter of that protein, said on Thursday it is paramount that local companies are able to access new markets in order reduce dependence on Chinese import demand.
Eduardo Pedroso, cattle origination director at JBS SA JBSS3.SA, said during a panel discussion that China alone buys what both Japan and South Korea import, referring to markets Brazil aims to access through government trade deals.
At the moment, Japan and South Korea are primarily served by Australian beefpackers.
Pedroso also noted that Brazilian beefpackers can comply with any requirements that may be imposed by importers.
China is the main destination of Brazilian beef and many other food staples. JBS, the world’s largest meat company, sent about 26% of its global exports to China last year.
While selling to China helped “professionalize” relations between processors and cattle ranchers in Brazil, Pedroso said access to new markets is “vital for the survivor of our sector.”
Sergio de Zen, market intelligence director at rival Minerva BEEF3.SA, said China’s beef consumption is still considered low.
He, however, noted this is gradually changing as younger Chinese consumers eat more beef than previous generations.
During the pandemic, global economic stimulus spurred demand and meat consumption exploded. However, De Zen said, that created inflation and subsequently higher interest rates, hurting demand in the aftermath of the global health crisis.
“China had a boom of beef consumption,” De Zen said. As interest rates rose to rein in prices, consumers started buying less. “China was not immune” to this phenomenon, De Zen added.
U.S. forecasters raise 2023 hurricane forecast
U.S. government forecasters on Thursday said they expect a more dangerous Atlantic storm season than previously projected, raising their Atlantic hurricane outlook due to high sea surface temperatures.
The U.S. National Oceanic and Atmospheric Administration (NOAA) forecast 14-21 named storms, with 6-11 potentially becoming hurricanes with winds of 74 miles per hour (119 kmh) or greater. Two to five of those hurricanes could become major events with sustained winds above 111 miles per hour (179 kmh), NOAA said.
In May, NOAA had predicted 12-17 named storms, 5-8 hurricanes and one to four major hurricanes. The raised outlook follows a similar projection by Colorado State University researchers.
An average Atlantic season has 14 named storms, seven hurricanes and three major hurricanes. The season lasts to the end of November.
NOAA’s forecast was raised “to account for record warm sea surface temperatures in the Atlantic,” said meteorologist Matthew Rosencrans with the agency’s Climate Prediction Center. Sea surface temperatures in the Atlantic where storms generally form are the warmest since 1950, he said.
El Nino, a weather system that forms from warm ocean surface temperatures in the central and eastern Pacific, increases vertical wind shear across the southern United States, lessening or breaking up tropical storms.
But this year’s El Nino may not develop soon enough to reduce the number of storms and their intensity, said Rosencrans.
Storms have not been unusually frequent so far.
“This season is actually right on a schedule,” said Jim Foerster, chief meteorologist at DTN, an agricultural, energy and weather data services provider.
“We normally have our 4th named storm on August 14th and first hurricane on August 11th, and we are at 4 named storms and one hurricane.”
Pacific winds have been blamed for fanning fierce wildfires in Hawaii this week. Hawaii is normally at increased risk of tropical cyclones during El Nino years.
Hurricane Dora’s epicentre currently lies hundreds of miles southwest of the archipelago. It is too early to say whether El Nino had contributed to the storm’s formation, said Chris Hewitt, director of climate services at the World Meteorological Organization.
Major hurricanes can disrupt offshore crude oil and natural gas production in the Gulf of Mexico as well as heavily damage refineries along the Gulf Coast states of Texas, Louisiana and Mississippi.
Drought Continues to Ease in US Corn and Soybean Regions: Aug. 8
The following table shows the percent of US agricultural production within an area that experienced drought for the week ending Aug. 8, according to the USDA’s weekly drought report.
- Corn crops experiencing moderate to intense drought dropped by 8 percentage points from the previous week to 49%
- Drought has eased in corn fields since peaking at 70% in late June
- Soybean crops in drought also declined by 8 points, falling to 43%
- Durum wheat in drought shot up by 20 points to 38%
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.