Global Ag News for Aug 3.23

TOP HEADLINES

India Seeks to Import 9 Million Tons of Wheat from Russia: ET

Indian government is examining plans to import 9 million tons of wheat from Russia to boost domestic stockpiles amid rising prices, the Economic Times reports, citing unidentified people familiar with the matter.

• The two governments are discussing the supplies
• Traders and other market participants forecast 2023 harvest to total as much as 103 million tons, below the government’s estimate of almost 113 million tons
• In February-March, unseasonal rains and hailstorms damaged the ripening crop in some parts of the country

FUTURES & WEATHER

Wheat prices overnight are up 3 in SRW, up 1/4 in HRW, up 5 1/4 in HRS; Corn is up 1/2; Soybeans up 6; Soymeal up $5.10; Soyoil down 0.45.

For the week so far wheat prices are down 61 1/2 in SRW, down 69 in HRW, down 41 3/4 in HRS; Corn is down 29 1/4; Soybeans down 55 1/4; Soymeal down $8.50; Soyoil down 2.14.

For the month to date wheat prices are down 22 3/4 in SRW, down 25 1/2 in HRW, down 1 1/2 in HRS; Corn is down 12; Soybeans down 4 1/2; Soymeal up $1.40; Soyoil up 0.27.

Year-To-Date nearby futures are down 18.8% in SRW, down 11.3% in HRW, down 9.0% in HRS; Corn is down 28.0%; Soybeans down 5.8%; Soymeal down 5.6%; Soyoil up 5.5%.

Chinese Ag futures (SEP 23) Soybeans down 41 yuan; Soymeal down 9; Soyoil down 4; Palm oil down 34; Corn up 35 — Malaysian palm oil prices overnight were down 91 ringgit (-2.32%) at 3824.

There were changes in registrations (-55 Soyoil). Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 11 Soybeans; 264 Soyoil; 0 Soymeal; 147 HRW Wheat.

Preliminary changes in futures Open Interest as of August 2 were: SRW Wheat up 5,343 contracts, HRW Wheat down 663, Corn down 17,144, Soybeans down 120, Soymeal down 1,020, Soyoil up 2,836.

Northern Plains: Scattered showers and thunderstorms have been moving through the region with areas of good rainfall and severe weather, but not all areas have been hit. Several disturbances will move through over the next week with periods of showers which may help out corn and soybeans, but it is getting too late to be of much help for wheat. Temperatures will be mostly mild, limiting stress for areas that have been missed.

Central/Southern Plains: A front continues to be stalled across the northern end of the region, bringing areas of showers and thunderstorms, severe weather, and milder temperatures to northern areas. The south continues to bake in the heat. A system moving through this weekend will reinforce that front, though may push it farther south. Showers will continue along and north of the front next week, and cooler temperatures will move in as well.

Midwest: A front will remain stalled off to the southwest, but will bring areas of thunderstorms and heavy rain for the next few days. A system moving through this weekend will bring more widespread rainfall and more disturbances are forecast to bring precipitation through next week. Outside of a day or two of heat, temperatures will remain mild, favorable for filling corn and pod-setting soybeans.

Canadian Prairies: Isolated showers moved through early this week. Another system looks to move through Thursday and Friday with more. Precipitation will not be widespread or overly helpful. Crops are starting to reach maturity and rainfall will be less beneficial from now on.

The player sheet for Aug. 2 had funds: net sellers of 7,500 contracts of SRW wheat, sellers of 7,000 corn, sellers of 11,000 soybeans, sellers of 3,500 soymeal, and  sellers of 500 soyoil.

TENDERS

• WHEAT PURCHASE: Egypt’s state grains buyer, the General Authority for Supply Commodities, bought 360,000 metric tons of wheat in an international tender.
• CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 metric tons of animal feed corn expected to be sourced from Brazil.
• CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 120,000 metric tons of animal feed corn to be sourced from Argentina or Brazil. The deadline for submission of price offers is Aug. 3.
• DURUM TENDER UPDATE: Algeria’s state grains agency OAIC is believed to have rejected all offers and made no purchase in an international tender for a nominal 50,000 metric tons of durum wheat. Traders said prices were regarded as too high.

PENDING TENDERS

• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries is seeking to buy a total of 86,290 metric tons of food-quality wheat from the United States and Canada in a regular tender.
• WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 metric tons of milling wheat.

TODAY

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending July 27.

• Corn est. range 350k – 1,200k tons, with avg of 658k
• Soybean est. range 1,650k – 2,750k tons, with avg of 2,115k

Bunge Sees Soy Oil Tightness in US on Renewable Diesel Push

Renewable diesel output is ramping up in the US, lifting demand for soybean oil and signaling tighter supplies ahead for the feedstock, according to crop trader Bunge Ltd.

The push for more renewable diesel use will keep the market for soybean oil “pretty tight going forward” given limited crop crushing capacity, Chief Financial Officer John Neppl said Wednesday during an earnings call. That should be the case even if production of the biofuel fails to exceed only modest targets recently set by the US Environmental Protection Agency, he added. “We feel pretty good about where it’s headed.”

Read More: Record Brazil Soy Crop Prompts Trader Bunge to Boost Outlook

Bunge expects more of the soybeans harvested in the US to remain available for domestic production of vegetable oil and meal as bumper Brazilian crops help meet demand from China, the world’s largest consumer of the oilseed. That should help improve crushing profits in the US.

Brazil’s soybean deliveries to China to increase, challenging US producers

Chinese buyers of soybeans have been booking extra supplies from Brazil for delivery in September and October, taking advantage of Brazil’s bumper harvest of the crop, Mercopress reported on August 1.

According to Alphamar shipping agency, Chinese buyers are booking deliveries early, and there are already five vessels scheduled to pick up cargoes in Brazil in September. “There’s huge stocks at farms now that will find their way to the ports over the next few months, so we will see more vessels on the lineup soon,” said Arthur Neto, Alphamar’s commercial director.

This is good news for Brazil’s agricultural sector, but it may cause difficulties for the US, where the soybean harvest is expected to be poorer due to hot weather. The US has typically been the leading exporter of soybeans to China. However, Brazil’s share of the Chinese market has been increasing steadily, and traders are taking advantage of the South American country’s high output in the first half of 2023.

According to Mercopress, which cited a news report by Economic Indian Times News, record high production has allowed Brazilian exporters to offer competitive rates for soybeans, and low shipping rates have helped make deals even more attractive.

“We still have competitive premiums for at least another month or so,” said Thiago Milani, head of the Brazilian agricultural trading firm 3Tentos, referring to shipping rates.

In contrast to Brazil’s success, US farmers have lost their edge in the global soybean market. US-China trade tensions, Brazilian efforts to increase its sales to China and unfavourable weather conditions are all shifting the balance.

Hot and dry weather has been a particular problem in this US this year. In June, the country’s soy crop was reported to be in the worst condition in three decades. Rains have returned to the Midwest since then, but the recent heat wave has pushed US prices up again, with soybean futures in Chicago up 5% this quarter to about $14.20 per bushel.

Under these conditions, Chinese processors can earn higher profits if they use Brazilian soybeans to make cooking oil and animal feed, whereas margins are negative for US supplies, according to Bloomberg data cited by Mercopress.

Putin Reiterates Grain Deal Renewed Only if Requirements Met

Russia says it’s ready to return to the Istanbul agreements on grain shipments from Ukraine as soon as the West fulfills all the obligations to Russia, Kremlin says in a press-release after the phone call between Russia and Turkey presidents.

• Putin, Erdogan also discussed prospects for the further development of trade and economic ties, the implementation of strategic joint projects in the energy sector, as well as cooperation in the tourism industry
• NOTE: Russia ended the Ukraine grain-export deal brokered by the United Nations and Turkey that had ensured safe passage of almost 33 million tons of crops via the Black Sea

Rains Stall German Harvest, Dry Stretch Urgently Needed: DBV

Abundant rainfall in much of Germany the past two weeks has held back harvests, farming lobby DBV said in a report.

• Winter-barley harvest is largely done, but less than a fifth of wheat and rye has been collected
  • About half of rapeseed is also yet to be harvested
• More stable and drier weather urgently needed in coming weeks
• Group plans to issue a final harvest report on Aug. 22

U.S. corn growers see limits to Brazilian exports

After the U.S. Department of Agriculture (USDA) predicted that Brazil would overtake the United States as the world’s leading exporter of corn, the National Corn Growers Association said in a report that Brazil’s growth this season may not be sustainable in the coming years. According to the USDA, Brazil is expected to ship 56 million tonnes, making it the world’s largest supplier of grain, compared to 41.9 million tonnes exported by the U.S.

In addition to production and exchange rate costs, the association highlighted infrastructure bottlenecks in Brazil as limiting factors to the expansion of cultivation and exports in the country, whose growth has reached 500% in the last decade.

In transportation, for example, the report recalls that the two countries have a strong presence of trucks in the flow of production, accounting for about 60% of exports. However, while the United States has paved 70% of its roads, Brazil has paved only 25%.

“Another infrastructure challenge for Brazil is the growing grain storage capacity deficit. The 35% increase in grain storage capacity from 2010 to 2022 hasn’t kept pace with the 82% increase in grain production in that time,” the analysis said.

While noting that 80% of the new land planted in Brazil has come from the conversion of degraded pasture into crops, the association recalls that the majority option of planting as the second crop after soybeans result in 50% lower productivity, even with twice the use of fertilizers, when compared to U.S. production.

The document also highlights domestic demand as another limiting factor, specifically citing corn ethanol production in the country. The activity, notes the study, requires 8% of the national production of grain (10.16 million tonnes), with a projection to reach 22.86 million tonnes by 2030.

“Brazilian farmers’ appetite for corn production will depend on the relative costs and price, investments in infrastructure, and demand sources. Expanding ethanol production in Brazil could use more corn and temper the rapid growth in exports. But rising demand could also fuel production expansions that would provide corn to meet growth in both domestic use and export categories,” the analysis concludes.

Top Fertilizer Maker Halts Potash Expansion as Profits Fall

• Nutrien facing ‘unprecedented volatility’ in markets, CEO Says
• Company has slashed outlook on full-year profits on low prices

Nutrien Ltd., the world’s largest maker of fertilizers, is halting expansion of its potash production as profits fall.

The Canadian company, which aimed to boost annual output of the crop nutrient to 18 million metric tons, said it’s “indefinitely pausing” the plans due to low prices, according to an earnings statement on Wednesday. It also is suspending work on a clean ammonia project as part of measures aimed at reducing costs.

Second-quarter earnings before one-time items fell 57% from a year earlier to $2.53 per share, trailing the average of analyst estimates. The company slashed its outlook on full-year earnings by more than $1 billion to as low as $5.5 billion.

Nutrien’s profits have been impacted by “unprecedented volatility” in global crop input markets over the last 18 months, Chief Executive Officer Ken Seitz said in the statement. The company also has been impacted by a strike at the port of Vancouver and an outage at Canpotex’s Portland terminal. While demand has strengthened in key markets including North America, “the process of recovery has been more uneven in offshore markets.”

The company’s statement contrasts with a more bullish tone by some of its rivals. Mosaic Co. Chief Executive Officer Joc ORourke said Wednesday in a conference call with analysts the company is “already seeing robust demand in several of our key markets.” CF Industries Holdings Inc. posted estimate-beating second-quarter profits, citing robust demand and tight inventories for nitrogen.

Last year, trade constraints along with Russia’s invasion of Ukraine sparked a huge price rally that eventually prompted farmers around the world to slash fertilizer use.

Prices for a basket of key fertilizers in North America have bounced back since reaching a 29-month low in June, though they’re still more than 50% below last year’s highs, according to data from Green Markets. Healthy profits for crop producers, tighter inventories and much lower prices for fertilizers are expected to pave the way for a rebound in the industry.

The fertilizer industry also is battled with supply constraints amid sanctions on Belarusian exports and port issues in North America. Nutrien has also been forced to curb output at its Trinidad & Tobago plant, one of the world’s largest nitrogen complexes, because of natural gas shortages.

US Fertilizers Rise as Producers Reset from Summer Fill

Nitrogen and phosphates were up in the US and Canada as producers reset summer prices and fall prepay offers, while potash edged higher after the close of summer fill programs. New ammonia prepay offers in the Corn Belt at $450-$485 a short ton hint at a winter ceiling. Brazilian potash pricing is still trailing rest-of-world levels.

US Barge, Inland Fertilizers Strengthen

Nitrogen and phosphate prices continued to strengthen at New Orleans (NOLA) and inland. NOLA urea barges were reported at $400-$425 a short ton (st), the upper end of the prior week’s range, and most inland terminals were up $10-$20/st vs. last week. Inland urea ammonium nitrate (UAN) prices moved up $15-$20/st following a new round or postings from CF Industries on July 31, and AdvanSix announced a $10/st ammonium sulfate increase in the Midwest on Aug. 2. NOLA phosphates continued to climb as well, sparking a $10/st increase at most inland terminals. Corn Belt potash reference prices were also up $30/st for 4Q tons following the close of Nutrien’s summer fill program.

 

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