Global Ag News for Dec 8.22
Overwhelmingly favorable early season conditions bode well for Brazil corn yield potential
Overwhelmingly favorable early season conditions and positive long-term weather outlooks continue to increase (<1%) 2022/23 Brazil corn production to 128.3 [116.0–139.7] million tons, amid recent pickup in sowing. Our current median estimate is now 2.3 million tons above the USDA’s World Agricultural Outlook Board (WAOB)’s 126 million tons, which assumes total corn sowings at 22.7 million hectares and national level yield of 5.55 tons per hectare (tph) (vs. Refinitiv Ag Research’s 22.4 million hectares and 5.73 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 126.4 million tons and 22.3 million hectares, respectively.
Despite a slowdown in sowing pace early in the season, conditions remain overwhelmingly positive throughout the key first crop corn producing areas. Essentially all producing regions received at least 20 mm of rainfall over the past two weeks, near to above normal across the South and the Southeast/Central-West where most (>90%) of the first corn is grown. Even the areas that remained largely dry until October – including the western parts of the Central-West (e.g. Mato Grosso) and the eastern parts of the Southeast (e.g. Minas Gerais) – have seen a great recovery in soil moisture during November and early December, now reaching almost normal levels amid continued favorable outlooks. Excessive moisture might rather trigger flooding concerns in the northern areas of the South (e.g. Paraná) and areas to the west (e.g. Mato Grosso do Sul), warranting attention.
As of 03 December, Brazil’s first corn is 71.2% planted nationally according to the latest CONAB crop progress report (05 December), still behind last year’s pace of 77.9%, but the gap has been greatly reduced reflecting recent sowing efforts. The Refinitiv Weather Research team’s recently released ENSO report for December-February indicates a mostly favorable temperature and precipitation outlook for Brazil’s major crop growing regions. Barring any unexpected extreme weather events, corn production should be well on track for a record-breaking season.
FUTURES & WEATHER
Wheat prices overnight are up 3 3/4 in SRW, up 1 1/4 in HRW, up 2 1/4 in HRS; Corn is up 1 3/4; Soybeans up 7 1/4; Soymeal up $0.19; Soyoil up 0.44.
For the week so far wheat prices are down 11 in SRW, down 22 1/2 in HRW, down 17 in HRS; Corn is down 3 3/4; Soybeans up 38; Soymeal up $3.56; Soyoil down 4.01.
For the month to date wheat prices are down 42 1/4 in SRW, down 49 3/4 in HRW, down 38 3/4 in HRS; Corn is down 24; Soybeans up 9 3/4; Soymeal up $42.90; Soyoil down 9.68.
Year-To-Date nearby futures are down -6% in SRW, up 8% in HRW, down -7% in HRS; Corn is up 6%; Soybeans up 11%; Soymeal up 12%; Soyoil up 12%.
Chinese Ag futures (MAR 23) Soybeans up 30 yuan; Soymeal up 95; Soyoil down 2; Palm oil down 116; Corn up 13 — Malaysian palm oil prices overnight were down 26 ringgit (-0.66%) at 3943.
There were changes in registrations (-1 Oats, -10 HRW Wheat). Registration total: 3,056 SRW Wheat contracts; 2 Oats; 308 Corn; 121 Soybeans; 689 Soyoil; 291 Soymeal; 495 HRW Wheat.
Preliminary changes in futures Open Interest as of December 7 were: SRW Wheat down 307 contracts, HRW Wheat up 2,662, Corn down 2,820, Soybeans up 10,831, Soymeal down 217, Soyoil down 3,715.
Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana: Mostly dry Thursday. Isolated to scattered showers Friday-Sunday. Temperatures above normal through Sunday. Mato Grosso, MGDS and southern Goias: Scattered showers through Sunday. Temperatures near normal through Sunday.
Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry Thursday. Isolated showers Friday-Sunday. Temperatures well above normal through Sunday. La Pampa, Southern Buenos Aires: Mostly dry Thursday. Isolated showers north Friday-Sunday. Temperatures above to well above normal through Sunday.
Northern Plains Forecast: Scattered showers south and east Thursday-Friday. Mostly dry Saturday-Sunday. Temperatures variable Thursday-Saturday, near to above normal Sunday. Outlook: Isolated to scattered showers Monday-Thursday. Mostly dry Friday. Temperatures below normal west and above normal east Monday-Thursday, below to well below normal Friday.
Central/Southern Plains Forecast: Scattered showers Thursday. Mostly dry Friday. Scattered showers Saturday-Sunday. Temperatures near to below normal north and above normal south through Saturday. Temperatures near to above normal Sunday. Outlook: Isolated to scattered showers Monday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Monday-Tuesday, near to above normal Wednesday, and near to below normal Thursday-Friday.
Western Midwest Forecast: Scattered showers Thursday-Friday. Mostly dry Saturday. Scattered showers Sunday. Temperatures near to below normal north and above normal south Thursday, above normal Friday-Saturday. Temperatures near to above normal Sunday.
Eastern Midwest Forecast: Scattered showers Thursday-Friday. Mostly dry Saturday. Scattered showers Sunday. Temperatures near to above normal through Sunday. Outlook: Mostly dry Monday. Scattered showers Tuesday-Thursday. Mostly dry Friday. Temperatures near to above normal Monday-Wednesday, near normal Thursday, and below normal Friday.
The player sheet for Dec. 7 had funds: net buyers of 8,000 contracts of SRW wheat, buyers of 2,500 corn, buyers of 7,000 soybeans, buyers of 3,500 soymeal, and sellers of 3,000 soyoil.
- SOYBEAN PURCHASE: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has bought about 65,000 tonnes of soybeans free of genetically-modified organisms (GMOs) in an international tender for up to 70,000 tonnes which closed on Dec. 5, European traders said on Wednesday.
- WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 42,750 tonnes of milling wheat to be sourced from the United States in a tender that closed on Wednesday
- CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from Brazil in an international tender on Wednesday
- CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 65,000 tonnes of animal feed corn expected to be supplied from South America or South Africa in a private deal on Tuesday without an international tender being issued, European traders said on Wednesday.
- FEED WHEAT PURCHASE: A group of importers in Thailand is believed to have purchased about 65,000 tonnes of animal feed wheat to be sourced from optional origins on Wednesday
- CORN PURCHASE: Importers in Taiwan on Wednesday purchased about 130,000 of animal feed corn to be sourced from Brazil in two private deals
- CORN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has issued new international tenders to purchase around 25,000 tonnes of food-quality soybeans free of genetically-modified organisms (GMOs).
- WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 8, 2023 and arrive in Japan by March 9, via a simultaneous buy and sell (SBS) auction that will be held on Dec. 14.
- WHEAT AND SOYMEAL TENDER: A group of importers in the Philippines has issued an international tender to purchase up to 110,000 tonnes of feed wheat and up to 135,000 tonnes of soymeal to be sourced from optional origins
- WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy 154,957 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Dec. 8.
- WHEAT TENDER: Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins
- RICE TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of rice.
DOE: US Ethanol Stocks Rise 1.4% to 23.257M Bbl
According to the US Department of Energy’s weekly petroleum report.
- Analysts were expecting 22.884 mln bbl
- Plant production at 1.077m b/d, compared to survey avg of 1.017m
GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report
Estimate ranges are based on a Bloomberg survey of four analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Dec. 1.
- Corn est. range 500k – 950k tons, with avg of 725k
- Soybean est. range 600k – 1,100k tons, with avg of 825k
Argentine government says 74.2% of 2021/22 soybean crop sold so far
Argentina soybean sales surged last week to 74.2% of the current harvest, helped by a preferential exchange rate, though sales trailed the totals seen at the same point last year, the government said Wednesday.
Producers sold 556,000 tonnes in the week of Nov. 24-30, the highest weekly figure in months, the agricultural secretariat said, though the season’s sales so far still lag the 76.9% of last season’s crop sold at the same point a year ago.
Argentina is the world’s top exporter of processed soy, and the grain is a critical source of foreign currency for the government.
Last week, sales spiked after officials reinstated a temporary preferential exchange rate for producers, the so-called “soy dollar” foreign exchange rate.
The secretariat also reported Wednesday that the country had sold 72.8% of its 59-million-tonne 2021/22 corn crop, down from the 75.3% seen in the same period the previous cycle.
The planting of corn for the 2022/23 cycle began in September in Argentina, the third largest exporter of the cereal, although a prolonged drought slowed its growth and resulted in the smallest area planted in six years, data from the major Rosario grains exchange showed.
The drought has also hurt Argentina’s important wheat crop. Until last week 6 million tonnes of the 2022/23 wheat campaign had been sold, or about 44.6% of the total 22/23 crop, which the government estimates will total 13.4 million tonnes.
Brazil soy exports seen reaching 1.7 mln tns in December – Anec
- BRAZIL SOY EXPORTS SEEN REACHING 1.7 MILLION TNS IN DECEMBER – ANEC
- BRAZIL SOYMEAL EXPORTS SEEN REACHING 1.54 MILLION TNS IN DECEMBER – ANEC
- BRAZIL CORN EXPORTS SEEN REACHING 5.43 MILLION TNS IN DECEMBER – ANEC
- BRAZIL WHEAT EXPORTS SEEN REACHING 658,733 TNS IN DECEMBER – ANEC
- BRAZIL 2022 SOYBEAN EXPORTS SEEN AT 78.09 MILLION TNS VERSUS 86.6 MILLION TNS IN 2021 – ANEC
- BRAZIL 2022 WHEAT EXPORTS SEEN AT 3.17 MILLION TNS VERSUS 1.1 MILLION TNS IN 2021 – ANEC
Argentine Soy, Corn, Wheat Estimates Dec. 7: Exchange
The Buenos Aires Grain Exchange releases weekly report on website.
- 2022-23 soybean and corn area estimates both are unchanged from the previous week
- 2022-23 wheat harvest advanced to 42% complete from 23%
SovEcon Hikes Russia 2022-23 Wheat Export Forecast to 43.9m Tons
Consultant SovEcon slightly raised its Russian wheat export forecast for 2022-23 to 43.9m tons from 43.7m tons, Managing Director Andrey Sizov said in a report.
- Total exports in the first half of season from July-December are estimated at 22.8m tons, close to the 5-year average
- It expects shipments to slow in 1Q 2023
- “Near-term exports will be limited by stormy weather in the Black Sea, stopped river navigation inside the country, and lack of grain rail-cars”
Ukraine’s Grain Exports Down 30% Y/y in Season Through Dec. 5
Ukraine’s grain exports during the season that began July 1 totaled 18.3m tons as of Dec. 5, down 30% y/y, the country’s agriculture ministry says on its website.
- Total includes:
- 6.93m tons of wheat, down 53% y/y
- 1.48m tons of barley, down 70% y/y
- 9.79m tons of corn, up 58% y/y
- NOTE: Data may include grain that is aimed for exports, but hasn’t left the country yet
Mexico Proposed Extra Year for US Corn Transition, Minister Says
Mexico has proposed an extra year to carry out its transition toward banning GMO corn imports, Economy Minister Raquel Buenrostro told reporters on Wednesday.
- US and Mexico officials to meet Dec 16 to discuss corn: Buenrostro
- Mexico has been finding solutions with energy companies amid US, Canada’s USMCA dispute with the country
- Mexico government’s USMCA response wasn’t coordinated but is now more transparent; country is answering third round of questions during talks with US, Canada
- Nation must have solid energy resources in order to bring investment
- USMCA panel must be last resort, Deputy Economy Minister Encinas said at same event
Cargill Says Tough to Extend EU Amazon Soy Rules Across Brazil
Brazil’s soybean exporters are prepared to meet new requirements from Europe on Amazon deforestation, but an extension into key farming regions would be more difficult, according to Paulo Sousa, Cargill Inc.’s Brazil chief.
The European Union approved this week mandatory rules for companies selling soybeans, beef and cocoa, among other commodities, to ensure those products don’t come from deforested lands after 2020, and apply to all companies’ suppliers, direct and indirect. The extension of the deal to wooded lands, including Brazil’s Cerrado, will be discussed one year after the entry into force.
Extending the zero deforestation pledge to Cerrado, a savanna that is a hive of biodiversity, would affect at least half of Brazil’s soybean acreage versus about 15% in the Amazon region. While EU buys less than 10% of top-producer Brazil’s soybeans, the bloc is very influential and leads consumer trends around the globe, he said.
Some of the world’s largest food companies and grocers have urged commodity suppliers to stop trading soybeans associated with deforestation in the Cerrado region.
Some isolated commitments to track direct soybean suppliers in the area have been made, but there isn’t a broader effort to monitor indirect suppliers, such as cooperatives or local trading firms. It would be more challenging to track production in the Cerrado due to characteristics of the region and the high number of indirect suppliers, according to Sousa.
France’s Rouen Grain Exports Rise 40% in Week to Dec. 7
Grain exports from France’s Rouen port totaled 211,093 tons, compared with 151,310 tons a week earlier, according to an emailed report.
Winter Fertilizer Price Reset Approaches as Americas Demand Ebbs
Farmers in the US Corn Belt continued to apply autumn fertilizers in late November, with ammonia, phosphates and potash all moving to the field in some Midwest locations. Most crop-nutrient prices were flat or down in late November, as the winter reset approaches. Imports in Brazil are falling below trend expectations as pricey fertilizer nips demand.
Corn Belt Ammonia Prices Start to Slip
This week, ammonia prices in the Corn Belt began to slide with the winding down of the fall application season. New Orleans (NOLA) urea, however, rebounded from last week’s low, while urea at other US and Brazil locations remained under pressure. NOLA phosphates were flat-to-weak depending on grade, while inland US product remained soft. Potash prices continued to fall after The Mosaic Co.’s Dec. 6 announcement that it was cutting production.
Brazil Urea Declines Continue; Potash, Phosphates Stable
Urea prices in Brazil slipped to a low of $510-$512 a metric ton (mt) this week, with new bids targeting lower levels. Phosphate-import prices remained at a high of $630/mt despite reports of inland tons at lower levels. Potash prices were steady amid hints of further declines.
Urea Prices Keep Sliding in Brazil: Wednesday Whisper
Urea prices in Brazil edged lower to $510-$530 a metric ton (mt), extending a decline that started in October when prices peaked at $680-$690/mt. The $20 decrease from last week’s $530-$550/mt, along with new bids from buyers below $500, reinforced expectations that urea will keep losing value in the Brazilian market. MAP prices stabilized at $600-$630/mt, and potash also remained within last week’s range of $500-$530/mt as global demand destruction triggered recent production curtailments from potash producers scrambling to balance the market.
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