Global Ag News for Aug 21.23
Romanian PM hopes 60% of Ukrainian grain exports will go through Romania
Roughly 60% of Ukraine’s grain exports could transit through neighbouring Romania after Russia quit a U.N.-brokered safe passage deal through the Black Sea, Romanian Prime Minister Marcel Ciolacu said on Friday.
Ukraine is one of the world’s top grain exporters and Russia has been attacking its agricultural and port infrastructure after refusing to extend the year-old safe passage corridor.
Even before the deal fell through, Romania’s Black Sea port of Constanta had emerged as Ukraine’s biggest alternative shipping route.
Ukraine shipped 8.1 million tonnes of grain through Constanta in the first seven months of the year, and 8.6 million tonnes overall in 2022.
“We hope that over 60% of the total volume of Ukrainian grain exports will transit Romania,” Ciolacu said after meeting Ukraine’s Prime Minister Denys Shmyhal in Bucharest.
He said Romania was trying to improve its connecting infrastructure by rail, road, river and sea, as well as at border crossings.
Earlier this month, Romanian Transport Minister Sorin Grindeanu said European Union and NATO state Romania aimed to double the monthly transit capacity of Ukrainian grain to Constanta to 4 million tonnes in the coming months.
Ciolacu also said Romania, which is one of the EU’s largest grain exporters, would balance efforts to boost the transit of Ukrainian grain to international markets to protect local farmers.
Romania is one of five eastern EU countries that saw a surge of Ukrainian grain imports since Russia’s invasion, which distorted local markets and prompted protests from farmers, leading the EU to approve temporary trade restrictions.
The import ban expires on Sept. 15 and the five states have asked for it to be extended at least until the end of the year.
FUTURES & WEATHER
Wheat prices overnight are down 1 in SRW, down 3 1/4 in HRW, down 2 1/2 in HRS; Corn is up 5; Soybeans up 23 1/2; Soymeal up $7.50; Soyoil up 0.85.
Markets finished last week with wheat prices down 3 1/2 in SRW, down 1 3/4 in HRW, down 4 3/4 in HRS; Corn is up 10 1/4; Soybeans up 50 3/4; Soymeal up $4.50; Soyoil up 3.79.
For the month to date wheat prices are down 53 3/4 in SRW, down 72 in HRW, down 54 1/4 in HRS; Corn is down 15; Soybeans up 45; Soymeal up $0.60; Soyoil up 4.95.
Year-To-Date nearby futures are down 22.7% in SRW, down 15.5% in HRW, down 15.0% in HRS; Corn is down 28.6%; Soybeans down 9.1%; Soymeal down 14.2%; Soyoil up 8.3%.
Chinese Ag futures (NOV 23) Soybeans down 8 yuan; Soymeal up 86; Soyoil up 38; Palm oil up 34; Corn up 12 — Malaysian palm oil prices overnight were up 64 ringgit (+1.65%) at 3935.
There were no changes in registrations. Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 0 Soybeans; 117 Soyoil; 0 Soymeal; 147 HRW Wheat.
Preliminary changes in futures Open Interest as of August 18 were: SRW Wheat down 984 contracts, HRW Wheat up 540, Corn down 839, Soybeans up 1,279, Soymeal down 4,531, Soyoil up 1,365.
Northern Plains: A front moved into the region and stalled out this weekend, keeping heat suppressed to the south. The front will waffle around the region for most of the week, leading to areas of showers and wavering temperatures. The front will get pushed southward on Friday and clear out the region. Heat will return behind it early next week, however, making for mixed conditions for filling corn and soybeans. Potential showers could delay the wheat harvest.
Central/Southern Plains: Hot and dry conditions over the weekend continue for much of this week, causing stress for filling corn and soybeans. The heat will quickly sap any built up soil moisture. A front will sag south through the region late this week and weekend, bringing briefly milder temperatures and potential rainfall that would prove beneficial if it occurs. Another round of heat is likely to build back in next week.
Midwest: Heat built into the region over the weekend, but did have a day’s break across the north with a front settling in. That front will remain stuck over northern areas much of the week and provide opportunity for some rainfall. The front will get pushed southward late this week and weekend, offering a brief relief from the heat. Above-normal temperatures are likely to build back in next week for a time. Heat will be most intense in the southwest and sap any available soil moisture quickly. The front’s movement southward could offer some better showers in the region, which would be helpful for filling corn and soybeans.
Delta: Hot and dry conditions built back into the region over the weekend, which continues all week long. A front sagging south will move into the region this coming weekend, which will reduce the heat and potentially bring some showers as well. Any rainfall would be helpful for filling soybeans and cotton.
Black Sea: Hotter and drier conditions in the region lately have been stressful for filling corn and sunflowers, but beneficial for the remaining winter wheat harvest. A front will bring a relief to temperatures in the east this week, but western areas will remain hot until a front goes by this coming weekend. That front will likely come with beneficial showers for the region going into next week.
Europe: Recent heat has increased moisture needs across the continent since last week. The heat continues for most of the week before a system finally brings a cold front through this weekend. Besides cooler temperatures, increased rainfall will be helpful for filling spring grains like corn. Stressful heat before the front could have a damaging effect in areas with limited soil moisture.
The player sheet for Aug. 18 had funds: net buyers of 8,500 contracts of SRW wheat, buyers of 5,500 corn, buyers of 9,000 soybeans, buyers of 3,500 soymeal, and buyers of 1,500 soyoil.
- CORN SALES: The U.S. Department of Agriculture confirmed private sales of 112,000 metric tons of U.S. corn for delivery to Mexico in the 2023/24 marketing year that begins Sept. 1.
- CORN AND SOYMEAL TENDERS: Iranian state-owned animal feed importer SLALOM issued two international tenders to purchase up to 180,000 metric tons of animal feed corn and 120,000 metric tons of soymeal
- VEGETABLE OILS TENDER: Egypt’s GASC is seeking refined sunflower oil in one-liner 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 was Aug. 17.
- 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
- WHEAT TENDER: A Syrian state grains agency issued an international tender to purchase and import 200,000 metric tons of soft milling wheat.
- FEED BARLEY TENDER: Jordan’s state grains buyer issued a new international tender to purchase up to 120,000 metric tons of animal feed barley.
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (GAFF) 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 (SIBS) auction that will be held on Aug. 23.
US Cattle on Feed Fell to 11.03M Head on Aug. 1
The feedlot herd fell 2.3% from a year ago, according to the USDA’s monthly report. Analysts were expecting a drop of 1.6%
- Placements onto feedlots down 8.3% y/y to 1.618m head
- Cattle marketed from feedlots declined 5.3% to 1.727m head
Brazil govt buys 30,600 T of corn to boost food stocks amid bumper crop
The Brazilian government has purchased 30,600 metric tonnes of corn from farmers in Mato Grosso state, in the first confirmed deals to boost public food stocks, food supply and statistics agency Conab said on Friday.
In a statement sent to Reuters with previously unreported details of the corn purchase program, Conab said Brazilian corn farmers have so far expressed an interest to sell 388,700 tonnes to the government, which aims to buy as much as 500,000 tons of corn.
The government’s corn purchase program was announced in June, when prices of the commodity fell after a bumper harvest in Brazil.
Corn prices remain under pressure despite the expectation of record Brazilian corn exports for August, with prices in Chicago close to the lowest levels since 2020. Abundant supplies will allow Brazil to surpass the U.S. as the world’s largest corn exporter this year.
Brazil’s corn purchase program marks a shift from the policies enforced by the previous administration, which did not work to increase public food stocks.
Under Conab’s rules, the sales limit per farmer varies according to the state.
In Mato Grosso, Brazil’s top grain growing state, each farmer can sell up to 30,000 60-kilogram bags to the state-owned company.
In Mato Grosso do Sul and Goias, the limit is 10,000 bags, while in the other states, the acquisition is limited to around 3,300 bags, Conab said.
Brazil farmers harvest 77.9% of 2023 second corn crop, says Patria
Brazilian farmers had harvested by this week 77.88% of the area planted for their second corn crop, agribusiness consultancy Patria AgroNegocios said on Friday, up 5 percentage points from the previous week.
Work in the fields still lags behind the previous season, when at the same time 87.47% of Brazilian corn fields had been reaped, and the long-term average of 85.46% for the period, Patria said in a statement.
Rains affected the harvest pace in the states of Parana, Sao Paulo and Mato Grosso do Sul this week, the consultancy said in a statement, adding that more showers are forecast to hit the center-south region next week.
Ukraine may use new Black Sea route for grain shipments – producers
Ukraine is considering using its newly-tested wartime Black Sea export corridor for grain shipments after other cargo ships follow the first successful evacuation of a vessel on the route last week, a senior agricultural official said on Monday.
Russia has blockaded Ukrainian ports since it invaded its neighbour in Feb. 2022 and threatened to treat all vessels as potential military targets after pulling out of a U.N.-backed safe passage deal last month.
In response, Ukraine announced a “humanitarian corridor” hugging the sea’s western coastline near Romania and Bulgaria. A Hong Kong-flagged container ship stuck in Odesa port since the invasion travelled the route last week without being fired upon.
“Only one commercial vessel has passed through so far, it has shown readiness to move by alternative routes,” Denys Marchuk, deputy head of the Agrarian Council, Ukraine’s largest agribusiness organisation, told national television.
“Further, there should be a movement of potentially 7-8 more ships… then perhaps in the future these alternative routes will become a corridor for the movement of ships that are travelling with cargoes of grain and oilseeds,” he said.
The Financial Times said Kyiv was finalising a scheme with global insurers to cover grain ships travelling to and from its Black Sea ports, citing Ukraine’s Deputy Economy Minister Oleksandr Gryban.
Ukraine is a global major grain grower and exporter and normally ships millions of metric tons of food from its deep-water Black Sea ports of Odesa and Mykolaiv, but has had to rely on its Danube river ports after Russia pulled out of the deal.
To attract ship owners to Ukrainian ports which have come under fire from Russian forces, Marchuk said Ukraine had already allocated 20 billion hryvnias ($547 million) for ship insurance.
Ukraine in Talks With Global Insurers to Cover Grain Ships: FT
Ukraine is talks with global insurers, including Lloyd’s of London, to cover grain ships sailing to and from its Black Sea ports, Financial Times reports, citing an interview with deputy economy minister Oleksandr Gryban.
- Deal is “currently being pursued and actively discussed” between the relevant ministries, local banks and international insurance companies: Gryban
- “It depends on how the structure goes and what the level of risk-sharing is going to be between the government and private insurance companies”
- Could be finalized as early as next month and can cover as many as five to 30 ships to travel through the “danger spot” of Ukrainian waters
- Continued exports of agricultural products from Ukraine were “crucial in addressing risks to global food security,” Lloyd’s told the newspaper
- Would assist in facilitating grain transportation
China July Cotton Imports -6.7% Y/y, Corn +9.2% Y/y: Details
China’s exports of rare-earth products rose 11.1% from a year ago in July, according to figures released by the Beijing-based Customs General Administration.
- Soybean imports +23.4% y/y to 9.73M tons
- Corn imports +9.2% y/y to 1.68M tons
- Wheat imports -9.1% y/y to 0.71M tons
China July soybean imports from U.S. tumble, Brazil shipments surge
China’s soybean imports from the United States tumbled 63% in July from a year earlier while shipments from Brazil, its top supplier, surged 32%, data showed on Sunday, spurred by a bumper crop and lower prices in the Latin American country.
China, the world’s top buyer of soybeans, imported 142,150 metric tons of the oilseed from the United States in July, down from 381,568 tons a year earlier, data from the General Administration of Customs showed.
However, the United States remained China’s second-largest soybean supplier, accounting for 31.9% of China’s total soybean imports in the first seven months of the year. CNC-SOY-IMP
For the January-to-July period, soybean shipments from the United States rose 10.8% year-on-year to 19.85 million tons.
China’s soybean imports from Brazil rose 32.4% in July from a year earlier to 9.23 million tons, as Chinese buyers took advantage of cheaper prices.
From January to July, China imported 38.9 million metric tons from Brazil, up 12.2% on year. Brazil accounted for 62.4% of China’s soybean imports year to date.
For corn, July imports from the U.S. rose 15.2% year-on-year to 1.74 million metric tons, while second-largest supplier Ukraine shipped 1.1 million metric tons.
Corn imports from Bulgaria reached 393,655 metric tons in July, making it the third-largest supplier.
Brazilian corn arrivals ranked fourth in July at 115,500 million metric tons. Brazil’s maize exports via southern ports rose 221% in the first half of the year amid Ukraine’s absence from the market.
COFCO brings Brazil’s first biodiesel pipeline online
The Brazilian unit of China’s COFCO International started operating the South American country’s first biodiesel pipeline connecting its plant in Rondonopolis, at the heart of Brazil’s farm country, to nearby distributors.
According to a statement on Friday, the 3-kilometer (2-mile) pipeline will eliminate up to 12,000 tanker truck trips per year, reducing road traffic and emissions.
The plant produces biodiesel from soybeans outside of areas of deforestation or native forest conversion, COFCO said.
“Our customers are excited about the prospect of getting a cheaper and more sustainable fuel,” said Guilherme Achcar, the commercial director in Brazil for the overseas trading business of China’s state-owned food group COFCO Corp.
Rondonopolis, in addition to being one of the most important agricultural hubs in Mato Grosso, Brazil’s top grain producer, is also connected by rail to ports like Santos in the southeast.
COFCO’s Rondonopolis biodiesel plant is certified by Brazil’s national biofuel program, known as RenovaBio.
The Rondonopolis unit has a biodiesel production capacity of 370.8 million liters per year, while the new pipeline can pump 280 cubic meters per hour.
EU Mulls Subsidizing Transport for Ukraine’s Grain: Polish Radio
The European Commission is “seriously considering” subsidizing transport of Ukrainian grain through its member states after several countries banned imports, according to Poland’s public radio.
The issue of supporting the cost of transiting Ukrainian grain is being discussed at meetings of representatives of Poland, Hungary, Slovakia, Romania and Bulgaria, together with the EU’s executive arm and Ukraine, the public radio reported on Saturday, without saying where it got the information.
The estimated cost of subsidies may be around 30 euros ($32.62) per ton of grain, according to the report.
Earlier this year, the five EU member states bordering Ukraine secured a temporary ban on the sale of Ukrainian grain until mid-September in the wake of rising complaints from local farmers about an impact on their business. The five states are seeking to ensure potential subsidies will be accompanied by a decision to extend the ban until end-2023. The current rules don’t apply to goods transiting their territory.
In recent weeks, Ukraine’s export infrastructure was severely damaged by stepped-up attacks on its ports after Moscow pulled out of the grain agreement allowing Kyiv to ship grains via the Black Sea.
China plans subsidies to support corn, soybean output in north – state media
China’s Ministry of Finance has arranged for a one-time subsidy fund of 2.4 billion yuan ($329.67 million) for fertilisers and pesticides for corn and soybeans grown in the north of the country, state media said on Monday.
The funds, approved on Friday, will support use of crop chemicals to boost resistance and reduce losses in the country’s major autumn crops, the report by state broadcaster CCTV said.
China’s north and northeast, its top grain-producing regions, were inundated with heavy rain and flooding in recent weeks, raising concerns of higher levels of pests and damage to grain output.
Some forecasters have lowered estimates for China’s upcoming corn harvest though the Ministry of Agriculture and Rural Affairs kept its outlook unchanged at 282.34 million metric tons.
Egypt’s Total Consumption of Wheat to Reach 19m to 20m Tons/Yr
Egypt expects to import 10m tons of wheat per year to meet local demand, representing about 50% of its annual consumption, President Abdel-Fattah El-Sisi said at an event in Cairo in a video posted on Facebook.
- Egypt’s total wheat consumption is about 19m to 20m tons/yr
- Egypt produces about 10m tons of wheat/yr: Sisi
- The country will add 3m feddan to its agriculture lands within a year
- NOTE: 1 feddan = about 1.038 acres
- Cabinet is considering new procedures to deal with commodity prices in local market: Sisi said
- Separately, Egypt needs to import over 500k tons of heavy fuel oil each month for electricity power plants to overcome power cuts, he said
Ukrainian Sunoil Maker Sees $20 Million in Damage From Strikes
- Kernel says repairs from airstrikes could take a year
- Russia has increased attacks on export facilities since July
Kernel Holding SA, Ukraine’s largest sunflower oil producer, estimated the cost of fixing or replacing equipment damaged by recent Russian airstrikes at $20 million or more.
In addition, about $12 million in commodity inventories were destroyed in the attacks, Kernel said in a stock exchange filing late Friday.
Like other Ukrainian agricultural companies publicly-traded Kernel has been significantly affected by the war against Russia now approaching the end of its 18th month.
Read more: Third of Ukraine Crop Exports Wiped Out After Black Sea Block
Export infrastructure has been damaged by stepped-up attacks on Ukraine’s ports after Moscow pulled out of the grain agreement allowing Kyiv to ship grains and other foodstuffs via the Black Sea.
Russia since late July has targeted seaports in Odesa and Chornomorsk, the Danube River port of Reni, and facilities in Ukraine’s western Kmelnytskyi region. Kernel expects repairs to take as long as a year.
“These relentless attacks have had a profound and multi-faceted impact on the group’s operations, with crucial export and storage facilities incapacitated, valuable commodities lost, and substantial infrastructural damage incurred across various sites,” the company said.
Read more: Romania Aims to Double Its Capacity to Export Ukrainian Grains
Kernel said it has made a series of acquisitions to boost its resilience, including $19.4 million to buy “assets used in the transshipment of vegetable oils in the port of Chornomorsk,” and almost $25 million to purchase a sunflower oil transshipment terminal in Reni, which sits across the Danube from Romania.
“It is the only terminal with proper intake, storage, and off-loading capacities among Ukrainian Danube River ports, allowing the export of sunflower oil even in case of the blockade of the Black Sea ports,” the company said.
Third of Ukraine Crop Exports Wiped Out After Black Sea Block
- Exports via alternative routes have proved challenging
- Sales of grain, oilseeds are key source of income for Ukraine
The Kremlin’s efforts to paralyze Ukrainian food shipments are succeeding, with a third of the country’s crop exports wiped out since its Black Sea ports were effectively blocked last month.
The drop marks a significant setback for Ukraine’s economy and global food security, even with a €1-billion push by the European Union to build out alternative routes since the start of Russia’s invasion. The US this week said it’s working with European partners to keep grain exports flowing, relying on rivers like the Danube and other avenues after sea passage has become unsafe.
“The key question is the river ports,” said Evghenia Sleptsova, senior economist at Oxford Economics. But ramping up volumes through those could prove difficult “now Russia started bombing Izmail and Reni,” two ports along the Danube which were attacked earlier this week.
Ukraine was only able to export 3.2 million tons of grains, vegetable oils and meals in the four weeks through August 15, down from 4.4 and 4.8 million tons in May and June when the Black Sea deal was still in place, according to estimates from analyst UkrAgroConsult. Crop stockpiles are now expected to swell through next year as better-than-expected harvests face fewer routes to market.
Even in wartime, Ukraine is still an important grain exporter globally, and the Black Sea deal that Russia quit on July 17 helped calm global prices and maintain flows to consumers. Russia’s own grain trade is benefitting from Ukraine’s weakness. Its crop exports are booming, and are expected to make up nearly a quarter of global wheat trade in the 2023-24 season.
Ukrainian President Volodymyr Zelenskiy said that within a month after the grain deal broke down there have already been seven attacks on ports with drones and missiles, signaling how challenging it has been to find reliable workarounds.
There are also logistical hurdles: It takes four times as long for some cargoes to get to the Danube now compared to a month ago because of traffic jams, according to Alex Lissitsa, member of the board of Ukrainian Agribusiness Club.
The delays and smaller shipment volumes are also leading to higher transport costs. Olena Vorona, operational director at the supplier Agrotrade Group, said her company completely reoriented flows to Danube ports and railways even before the grain deal collapsed, but transport costs are up to 50% higher.
“In many regions, farmers will most likely think about reducing the sowing of winter cereals, because the prices offered by the market do not cover the costs,” said Lissitsa.
Meanwhile, Ukraine’s railroad operator said that waiting times at border crossings toward European countries are currently about 5-6 days. Its chief, Yevhen Lyashchenko, told Bloomberg it’s preparing for rail exports to increase.
That might not be enough to stave off a broader slowdown, though. Ukraine’s grain and oilseed exports could fall by a quarter in the second half of the year compared to the first half, according to Oxford Economics’ Sleptsova.
“That would be a drag of 3% on Ukraine’s gross domestic product in the second half of the year,” she said.
SOYBEAN/CEPEA: Dollar and expectation for higher demand raise prices in BR
The dollar appreciation against the Real, expectations for higher demand from abroad and the absence of many growers from the market have boosted soybean prices this week. However, liquidity was low in the national spot market because of the lack of port quota.
Between August 10-17, on the average of the regions surveyed by Cepea, soybean prices rose 0.8% in the over-the-counter market (paid to farmers) and 1.1% in the wholesale market (deals between processors). In the same period, the CEPEA/ESALQ Index Paraná increased a slight 0.7%, to BRL 139.85 (USD 28.07) per 60-kg bag on August 17th. The ESALQ/BM&FBovespa Paranaguá (PR) Index increased 1.2%, to BRL 148.49/bag (USD 29.80) per 60-kg bag on Thursday, 17th. The US dollar rose 2.1% in the period, to BRL 4.982 on Thursday, 17.
In the market of soybean meal, quotations followed different directions between the regions surveyed, since some purchasers have built stocks for the mid-term, while others raised the volumes purchased for the short term. Thus, on the average of the regions surveyed by Cepea, meal prices remained stable between August 10-17.
On the other hand, soy oil prices dropped in the Brazil over the last days, pressed down by the disinterest of purchasers – most of them bought high volumes last week. Thus, the price for soy oil (degummed) decreased 3.4% in São Paulo (with 12% ICMS) between August 10-17, to BRL 5,010.80/ton on Thursday, 17th.
WORLD SUPPLY AND DEMAND – In a report released on August 11th, the USDA estimated the world production of soybean in the 2022/23 season at 369.74 million tons, and soybean processing, at 311.55 million tons. Compared to that previously reported, processing estimates increased in China, to 92 million tons.
China is also forecast to import higher volumes of soybean, around 100 million tons – a record. International soybean trades in the 2022/23 season are forecast to total 168.95 million tons, of which 94 million from Brazil between October/22 and September/23. Of this total, Brazil had already shipped 84.49 million tons by August 11th, according to data from Secex.
CORN/CEPEA: Downward trend of prices weakens; harvest advances in BR
Although the corn harvest is in progress in the major Brazilian regions that produce second crops, the downward trend of prices has weakened this week. This scenario results from the absence of some sellers from the market – these agents are aware of the recent increase in the Brazilian exports of corn and the US dollar appreciation.
Many purchasers are avoiding buying large batches of corn, expecting prices to drop more steeply. These agents are based on estimates for a record output in Brazil, difficulties in warehousing corn and the payment of some debts related to the crop.
PRICES – Between August 10 and 17, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) rose 1.1%, closing at BRL 53.22 (USD 10.68)/bag on Thursday, 17. However, this month, the corn Index has decreased 0.7%, still at the lowest levels of the year.
On the average of the regions surveyed by Cepea, corn prices rose 0.5% in the over-the-counter market (paid to farmers) and 1% in the wholesale market (deals between processors). However, in central-western Brazil, where the harvest has most advanced, values decreased. In Sorriso (MT), Dourados (MS) and Anápolis (GO), quotations dropped 0.9%, 1.4% and 1%, respectively.
PORTS – Corn sales are still low in the spot market of Brazilian ports, however, exports are increasing as the harvest advances and as the batches previously traded are delivered. Prices have increased at ports too, boosted by the dollar appreciation and sporadic demand from abroad. At the ports of Paranaguá (PR) and Santos (SP), the averages closed at BRL 58.1/bag and at BRL 60.92/bag on Thursday, 17, 0.8% and 2.6% up from that on August 10th.
HARVEST – Crops activities are being favored by the dry weather in Brazil, having surpassed 90% in the States of Piauí, Tocantins, Maranhão and Mato Grosso, according to data from Conab on August 12th. The national average of the harvest is currently at 72.4%.
China’s Northern Farmers Brace for More Heavy Rains and Floods
China’s northeastern grain basket is bracing for another deluge of heavy rain, heaping more pain on farmers in the region who have already seen fields flooded and crops damaged by wild weather this month.
Heavy rains are expected in some areas over Monday and Tuesday, and there’s a high risk of flooding in parts of Heilongjiang and Jilin provinces, according to the National Meteorological Center. That could inundate corn and soybeans and impact crop growth, the weather agency said on its website.
Drainage operation at a flooded field in Shangzhi City, Heilongjiang Province on Aug. 11.
China’s northeastern provinces are an agricultural powerhouse, accounting for around 45% of the national corn harvest and 60% of the country’s soybeans. The region has been battered by torrential rains, including from the remnants of Typhoon Khanun that swept through South Korea, which have flooded crops.
Some fields are still being drained and more rains threaten to saturate crops, according to a statement from the agriculture ministry issued late Saturday. The government department urged local authorities to prepare for more volatile weather and secure grain production across the nation.
Soil moisture levels remain too high in parts of Heilongjiang and Jilin, delaying the growth of crops such as corn and soybeans, while heavy rains have flooded some low-lying land in Liaoning over the past week, the weather agency said. However, favorable temperatures and sunlight in the northeast over the next 10 days may help to drain flooded fields, according to the agency.
Other areas are expecting more rain, including parts of Shaanxi and Henan provinces, and southwestern and southern China, which is likely to affect some rice and corn crops, according to the weather agency.
India faces record low rains in August, posing threat to summer crops
India is heading for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Niño weather pattern, two weather department officials told Reuters on Friday.
August rainfall, expected to be the lowest since records began in 1901, could dent yields of summer-sown crops, from rice to soybeans, boosting prices and overall food inflation, which jumped in July to the highest since January 2020.
The monsoon, vital for the $3-trillion economy, delivers nearly 70% of the rain India needs to water farms and refill reservoirs and aquifers.
“The monsoon is not reviving as we had expected,” said a senior official of the India Meteorological Department (IMD), who sought anonymity as the matter is a sensitive one.
“We are going to end the month with a significant deficit in the southern, western, and central parts.”
India is on course to receive an average of less than 180 mm (7 inches) of rainfall this month, he added, based on rains so far and expectations for the rest of the month.
The weather authorities are expected to announce August totals of rainfall and the forecast for September on Aug. 31 or Sept. 1.
India received just 90.7 mm (3.6 inches) in the first 17 days of August, nearly 40% lower than normal. The month’s normal average is 254.9 mm (10 inches), he said.
Earlier, the IMD had anticipated a rainfall deficit of up to 8% in August. The lowest August rainfall on record was in 2005, with 191.2 mm (7.5 inches).
Monsoon rainfall is expected to improve over the next two weeks in the northeast and some central regions, but dry conditions in northwestern and southern states are likely to persist, said another IMD official.
“Normally, we experience a dry spell of five to seven days in August,” said the official, who also spoke on condition of anonymity. “However, this year the dry spell has been unusually prolonged in southern India. The El Niño weather pattern has begun to impact the Indian monsoon.”
El Niño, a warming of waters that usually stifles rainfall over the Indian subcontinent, has emerged in the tropical Pacific for the first time in seven years. This monsoon has been uneven, with June rains 10% below average but July rains rebounding to 13% above average.
Summer rains are crucial as nearly half of India’s farmland lacks irrigation. Farmers typically start planting rice, corn, cotton, soybeans, sugarcane and peanuts, among other crops, from June 1, when the monsoon begins to lash the southern state of Kerala.
The lengthy dry spell has led to extremely low soil moisture, which could inhibit growth of crops, said Harish Galipelli, director of trading firm ILA Commodities India Pvt Ltd.
“Crops are in dire need of rainfall,” he added. “Any further delay could lead to reduced yields.”
USDA attaché sees China beef imports declining in 2024, pork imports flat
Following are selected highlights from a report issued by the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) post in Beijing:
“The economy of People’s Republic of China (PRC) is facing headwinds for the remainder of 2023 that should continue into 2024 even though officials are exploring various stimulus efforts. The headwinds will impact consumption, production, and trade for both pork and beef. FAS China forecasts beef imports will decline in 2024 owing to flat demand and forecasts that pork imports for 2024 will remain relatively flat. Live cattle imports in 2024 are forecast to grow as Myanmar received official market access in July 2023.”
US Beef Production Up 2.2% This Week, Pork Rises: USDA
US federally inspected beef production rises to 501m pounds for the week ending Aug. 19 from 490m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter up 2.2% from a week ago to 616m head
- Pork production up 2.2% from a week ago, hog slaughter rises 2.5%
- For the year, beef production is 5% below last year’s level at this time, and pork is 0.3% above
US Atlantic hurricane activity picks up with five systems on watch
Tropical Storm Franklin over the eastern Caribbean and a disturbance in the Gulf of Mexico are expected to strengthen over the next two days as U.S. forecasters monitor three other weather systems in the Atlantic.
Franklin, with sustained winds of 50 mph (85 kph), should approach the southern coast of Hispaniola island on Tuesday, bringing heavy rain to parts of it and neighboring Puerto Rico through the middle of the week.
Ahead of it lies a trough of low pressure, which has a 70% chance of becoming a tropical depression or storm as it approaches the western Gulf of Mexico coast by Tuesday, the U.S. National Hurricane Center (NHC) said.
In its latest advisory, the NHC said Tropical Depression Six, near the Leeward Islands was expected to become a remnant low on Sunday night.
Next in line is Tropical Storm Emily in the central Atlantic, which could become a post-tropical cyclone in about 36 hours, the Miami-based forecaster said.
Meanwhile, a tropical disturbance near the Cape Verde Islands has a 30% chance of becoming a cyclone over the next two days and a tropical depression is likely to form later this week.
While the Atlantic has seen relatively mild activity this year, on the U.S. West Coast, the Tropical Storm Hilary unleashed furious flash floods east and west of Los Angeles on Sunday after barreling through Mexico’s Baja California peninsula with deadly force.
India Buys Up Chinese Urea as Fertilizer Bucks Economic Slowdown
India’s Aug. 9 urea tender showed a price jump of over 40%, with supply from China a majority of the 1.7 million metric tons booked. Urea prices were down slightly in the US, and potash was steady in North America, in the wake of recently closed summer fill programs. Phosphates edged higher on concerns of tight supply for fall application
Tight Supply Pushes Phosphates Higher While Urea Slips
Urea prices fell again at New Orleans (NOLA) and in the inland US in the wake of India’s latest tender results. NOLA dropped to $350-$370 a short ton (st) vs. last week’s $355-$395 and inland prices slipped $20-$30. Ammonia prices were up $40-$50/st in the Corn Belt as curtailed global production signaled a likely increase in the Tampa ammonia price for September. Tight supply pushed phosphate prices higher at NOLA and in several inland regions, with monoammonium phosphate (MAP) jumping $30 in the western US to $720-$740/st. Potash was up slightly at NOLA and inland, though new sales were few in the wake of higher producer postings following summer fill programs.
Resets for several specialty fertilizers pushed prices lower for ammonium thiosulfate and sulfate of potash in the western US in mid-August.
Brazil Urea Drops, Potash and Phosphates Stronger
As the results of India’s urea tender were disclosed, urea prices in Brazil fell another 7% week over week amid oversupply speculation. India awarded 1.7 million metric tons (mt) in the tender, with 1.1 million coming from China. The falling urea market in Brazil followed a 60% pricing surge earlier in 2Q, but demand remains low in the domestic market despite softening prices. Weak corn prices are compromising barter ratios, suggesting that urea may face additional downward pressure if farmers delay purchases until the end of 3Q or start of 4Q.
Phosphates in Brazil moved up another $15/mt on skimpy supply, while potash prices were up 4.3% from the previous week as suppliers sought better margins on deliveries for the approaching planting season.
India Ramps Up Efforts to Shield Buyers From Expensive Onions
India will boost its purchases of onions and release stockpiles to be sold at a subsidized rate as the government accelerates measures to tackle the rising cost of food ahead of elections next year.
The nation is seeking to acquire an additional 200,000 tons of onions after reaching its initial target of 300,000 tons, according to a notice issued by the department of consumer affairs. That follows the implementation on Saturday of a 40% tax on exports of the vegetable through the end of the year.
The government of Prime Minister Narendra Modi has taken several steps to try and cool surging food prices, including a recent ban on the export of some rice varieties. The department of consumer affairs described the new measures announced Sunday to tackle onion prices as an “unprecedented move.”
Consumers will be able to buy onions released from stockpiles at 25 rupees (30 cents) a kilogram from Monday through retail outlets and mobile vans operated by the National Co-operative Consumers Federation of India Ltd., or NCCF, the government said. About 1,400 tons from the “buffer” has been sent to targeted markets to augment supply, according to the notice.
Retail prices of onions were at 35 rupees a kilogram in Delhi on Friday, an increase of about 17% from Jan. 1, according to data compiled by the food ministry. The national average was 30.5 rupees that day.
The NCCF and National Agricultural Cooperative Marketing Federation of India Ltd. have been directed to each buy 100,000 tons to meet the new 500,000 ton procurement target.
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.