Global Ag News for Feb 12.24

TOP HEADLINES

Indian police block roads to halt farmers marching to New Delhi

Indian police on Monday blocked roads to halt farmers who were marching to New Delhi to press for the better crop prices promised to them in 2021 when thousands of growers camped out on major highways leading to the country’s capital.

Some government ministers are expected to meet farm union leaders on Monday to avoid a repeat of the year-long protest, which was aimed at forcing the government to repeal farm laws designed to deregulate vast agricultural markets.

The march comes just months before national elections in India, in which Prime Minister Narendra Modi is widely expected to win a third term.

FUTURES & WEATHER

Wheat prices overnight are down 5 1/4 in SRW, down 4 1/2 in HRW, down 2 1/4 in HRS; Corn is up 1 1/2; Soybeans up 5; Soymeal up $3.10; Soyoil down 0.59.

Markets finished last week with wheat prices up 1 1/4 in SRW, down 17 in HRW, down 9 in HRS; Corn is down 12 1/4; Soybeans down 7 3/4; Soymeal down $12.20; Soyoil up 1.38.

For the month to date wheat prices are down 3 3/4 in SRW, down 25 in HRW, down 10 1/4 in HRS; Corn is down 17 3/4; Soybeans down 33 3/4; Soymeal down $20.50; Soyoil up 0.62.

Year-To-Date nearby futures are down 5.8% in SRW, down 7.0% in HRW, down 5.7% in HRS; Corn is down 8.6%; Soybeans down 8.1%; Soymeal down 9.1%; Soyoil down 2.6%.

Malaysian palm oil prices overnight were up 10 ringgit (+0.26%) at 3884.  China’s markets are closed until February 17^th.

There were no changes in registrations. Registration total: 772 SRW Wheat contracts; 0 Oats; 6 Corn; 468 Soybeans; 125 Soyoil; 1 Soymeal; 104 HRW Wheat.

Preliminary changes in futures Open Interest as of February 9 were: SRW Wheat down 5,171 contracts, HRW Wheat down 1,065, Corn up 3,521, Soybeans down 2,636, Soymeal down 210, Soyoil down 13,169.

Brazil: Scattered showers continued across central Brazil over the weekend while being very isolated across the south. This week that will flip as showers become isolated in central Brazil and fronts moving north from Argentina bring heavier rain to southern areas. The south has been too dry for several weeks and needs the rain. By the weekend, showers are forecast to be widespread and heavy for much of the country, beneficial for everything but fieldwork as soybeans are still being harvest and safrinha corn is still being planted. Southern areas will not be wet for long as it gets unfavorably dry again next week.

Argentina: Heavy rain fell last week and continued over the weekend as well, putting an end to the hot and dry conditions that caused corn and soybeans to suffer from mid-January. Another front will move through Monday into Tuesday with another round of widespread heavy rain. Another system is forecast to move into the country next weekend, keeping the moisture coming back that could turn conditions back around and make them favorable again.

Europe: Scattered showers went through most of the continent over the weekend, including southern areas that have been that had been dry. Showers continue in the south on Monday but the main storm track will be farther north for most of this week, though some showers may go through southeastern areas and Italy this weekend. While crops are vulnerable to winterkill with no significant snow cover, there are no risks of arctic freeze.

Australia: Some isolated showers went through Queensland over the weekend, but many areas stayed dry. Eastern areas will catch some showers moving through this week, but most of these will be isolated. Heat across the west and southeast could be detrimental for cotton and sorghum.

Northern Plains: Some isolated snow showers flew around over the weekend, but most areas stayed dry. Several small systems will move through over the next couple of weeks. They may not bring much precipitation, though some streaks of heavier snow will be possible. But they will also have a tendency to bring down some colder air starting on Wednesday.

Central/Southern Plains: A system developed over the weekend and brought some moderate to heavy snow across the south and west. Precipitation ends early Monday. A clipper will move off to the north on Wednesday and could bring some showers to northern areas. Another could do something similar on Thursday and Friday. But that one may be able to tap into more moisture from the south going into the weekend. Clippers are likely to move through the area next week as well. Temperatures could vary wildly between these systems.

Midwest: A band of showers and thunderstorms went across the southern end of the region over the weekend and another storm is going to bring more showers to the south Monday into early Tuesday. It may be just cold enough for some snow in some sections. A clipper will move through Wednesday and Thursday and bring more scattered showers but also some colder air. Clippers will be common then through next week and temperatures could vary significantly from day to day as systems come and go.

Delta: Heavy rain and thunderstorms went through over the weekend and continue in northern areas on Monday, which includes some accumulating snow. The heavy rain continues to ease drought conditions and flooding has been more significant recently. Another system will come through on Friday and Saturday with more potential for heavy rain.

The player sheet for Feb. 9 had funds: net buyers of 3,000 contracts of SRW wheat, sellers of 3,000 corn, buyers of 4,500 soybeans, sellers of 2,000 soymeal, and sellers of 1,000 soyoil.

PENDING TENDERS

• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat that can be sourced from optional origins
• BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. issued an international tender to purchase an estimated 88,800 metric tons of rice to be sourced from the United States and China.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• RICE TENDER: Indonesia is seeking to import 200,000 metric tons of rice from Thailand, its state food procurement agency (Bulog) said on Monday.
• CORN TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities, said on Sunday it was seeking at least 50,000 metric tons of imported yellow corn in a tender for shipment Mar. 15-25 and/or Mar. 26 – Apr. 5.

 

TODAY

 

Brazil 2023/2024 soybean crop forecast trimmed twice in a day

Two agribusiness consultancies on Friday lowered Brazil’s soybean crop estimates citing dry and hot weather in major growing states like Mato Grosso.

National soybean production in 2023/24 is expected to total 149.076 million metric tons, a 5.5% drop over the previous season’s harvest, which stood at 157.83 million tons, according to a fresh a estimate by Safras & Mercado.

Last month, the projection was for production of 151.36 million tons, but adverse weather conditions spoiled the crop’s prospects, according to Safras data.

Cogo, another agribusiness consultancy, also reduced the projection for the season’s soybean harvest to 148.5 million tons on Friday.

That compares to 155.2 million of Cogo’s previous forecast and is 9.1% below the initial estimate of 163.4 million tons, when the country seemed poised to produce a record harvest driven by strong yields and area expansions.

“Good yields in the South and Southeast regions should compensate for part of the losses expected for the Center-West, North and MATOPIBA regions,” Cogo said.

If rains do return to Rio Grande do Sul next week, as expected, the state should produce a record soybean crop this year, Cogo said.

Brazil 2023/24 Soy Output Estimate Cut to 149.1M Tons: Safras

Estimate for 2023/24 soy output cut to 149.1m mt, compared to a prior estimate of 151.4m mt, according to an emailed report from Safras&Mercado consulting firm.

• New estimate would mean a -5.5% drop from Brazil output in the previous season
• Area estimated at 45.4m ha, compared to 44.7m ha in 2022/23
• Average yield this season seen at3.299 kg/ha
• Advancement of work on harvest begins to reveal the reality of the Brazilian season, especially in states that suffered from low humidity and high temperatures during the last quarter of 2023, Safras said

Brazil Farmers Harvest 23.83% Of 2023/2024 Soybean Area Versus 17.39% At This Time Last Year – Patria Agronegocios

BRAZIL FARMERS HARVEST 23.83% OF 2023/2024 SOYBEAN AREA VERSUS 17.39% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS

BrasilAgro Expects to Announce Purchase, Sale of Lands

There is liquidity in rural real estate assets in Brazil due to agricultural commodities prices drop, especially soybeans, BrasilAgro CEO Andre Guillaumon said in conference call.

• “In commodity down cycles, the company tends to buy more” land: Guillaumon
  • Price of a bag of soybeans at Paranagua port, in Parana state, fell 36.5% last year, according to the company
• BrasilAgro forecasts soybean production 6% lower than initially estimated and second-crop corn production 36% lower, due to reductions in planted areas resulting from dry climate that compromised cultivation in the ideal period
  • Expectation is for good productivity of company’s crops
  • Reduction in production will not necessarily mean a drop in margin: Guillaumon

SOYBEAN/CEPEA: Firm international demand and dollar increase boost prices in BR

The firm international demand, the dollar valuation against Real and concerns about the low productivity in the 2023/24 Brazilian crop have increased soybean prices this week in the domestic market. Conab reduced production estimates significantly for the current season, which may be smaller than the previous, while the USDA indicated slight oscillations, increasing world ending stocks, which reinforced international decreases, limiting price rises in Brazil.

Dollar quotes moved up 1.5% from February 1st to 8th, at BRL 4.991 on Feb 8th. In the same comparison, the ESALQ/BM&FBovespa Index (Paranaguá) rose 0.3%, closing at BRL 118.47 per 60-kg bag on Feb. 8th. The CEPEA/ESALQ Index (Paraná) upped 0.9%, to close at BRL 112.46 per 60-kg bag.

On the average of the regions surveyed by Cepea, soybean prices increased 0.2% in the over-the-counter market (paid to farmers), but dropped 0.6% in the wholesale market (deals between processors).

Conab estimates that the 2023/24 area may total 45.1 million hectares, 2.3% up compared to the previous season. However, productivity is likely to reduce 5.5% in this crop, which may result in a supply of 149.4 million tons (-3.4% compared to the crop before)

The USDA points to a slight decrease for the 2023/24 Brazilian production, at 156 million tons. The global production is forecast at the record of 398.2 million tons, +5.3% compared to 2022/23.

BYPRODUCTS – On the average of the regions surveyed by Cepea, soymeal prices moved down 3.4% in the last seven days. The Brazilian value of soy oil upped 0.3%, at 4.806,10 BRL per ton (in São Paulo city with 12% ICMS) on February 8th.

CORN/CEPEA: Possible lower 2023/24 production refrains sellers from trades; prices rise

Corn prices are moving up again the Brazilian market, after the significant decrease verified in January. Price rises are attributed to the fact that sellers are refrained, based on the possible lower production in the 2023/24 season. So far, official estimates indicate smaller production. On the other hand, price increases were limited by the weak demand, since consumers have been closing only a few trades, preferring to use stocks.

The ESALQ/BM&FBovespa Index (Campinas, SP) upped 2.1% from February 1st to 8th, closing at BRL 62.71 per 60-kilo bag on Feb. 8th. On the average of the regions surveyed by Cepea, corn values decreased 0.8% in the wholesale market (deals between processors), but rose 0.8% in the over-the-counter market (paid to farmers) over the last seven days.

Abroad, the higher supply compared to the demand has pressed down futures at CME Group. Data from the USDA indicate production at 389.69 million tons in the US 2023/24 season, 12% more than the previous.

ESTIMATES – Conab indicates that the 2023/24 Brazilian crop may total 113.69 million tons, downing 14% in relation to the previous. The first crop is expected at 23.6 million tons, 14% down compared to 2022/23. The second season is estimated to total 88.09 million tons, for a decrease of 14% in the same comparison. The third crop, in turn, which is verified in the North and Northeast in Brazil, may produce 1.99 million tons (-7.6%).

Conab projects the domestic consumption at 84.11 million tons, moving up 4.5 million tons compared to that on the season before. Imports are expected at 2.5 million tons. Thus, Brazil would have an exportable surplus of 38.5 million tons in the 2023/24 crop. Exports are forecast at 32 million tons. In this scenario, only 6.46 million tons may remain at the end of the season.

The USDA, in turn, continues to indicate a high global production in the 2023/24 season, at 1.23 billion tons.

CROPS – According to data from Conab, harvesting activities reached 13.8% of the area in Brazil up to February 3, while the sowing hit 19.8% of the total.

SHIPMENTS – Brazilian corn exports totaled 4.87 million tons in January, 21% less than in the same month in 2023. In the 2022/23 season (from Feb/23 to Jan/24), the volume is 54.64 million tons, more than the 47.49 million tons verified in the last crop – data from Secex.

Brazil Corn Ethanol Craze Is About to End, Major Producer Says

• Lower prices of biofuel are seen putting a cap on new projects
• A corn boom recently forced cane mills to produce more sugar

A corn ethanol boom that reshaped Brazil’s biofuel industry is nearing an end, according to São Martinho SA, one of the country’s largest producers of the fuel.

Weakness in prices is making it harder for companies to keep investing in new ethanol plants, São Martinho Chief Financial Officer Felipe Vicchiato told investors Friday. The company makes ethanol from sugar cane and recently started up a new corn plant, but the executive said plans for expanding into corn are no longer economical.

“The bill just doesn’t add up,” Vicchiato said. He added that corn ethanol production will still grow by about 2.5 billion liters in the coming years as some of the recently announced investments start to ramp up.

The pessimistic outlook is a big shift for Brazil, a country that saw an explosion of corn ethanol plants recently take over an industry that was traditionally dominated by sugar cane. That has hurt financial results of cane mills, which then shifted to produce increasingly more sugar.

Profitability of corn ethanol mills is also being hurt by lower prices of DDGS, a byproduct of corn ethanol used in animal feed. Recent declines in soymeal costs helped push down the price of such products, Vicchiato added.

India Jan. Vegetable Oil Imports Fall 8.5% M/m to 1.2m Tons

India’s vegetable oil imports were 1.2m tons in January, down from 1.31m tons a year earlier, according to the Solvent Extractors’ Association of India.

• Palm oil imports were 782,983 tons in January vs 894,186 tons a month earlier
• Soybean oil imports were 188,859 tons vs 152,650 tons
• Sunflower oil imports were 220,079 tons vs 260,850 tons
• India’s edible oil stockpiles at 2.65m tons as of Feb. 1, compared with 2.9m tons a month earlier

Ukraine plans same 2024 sowing area as 2023, has concerns on wheat quality -minister

• Ukraine prepares for third sowing season since invasion
• Corn and oilseeds to dominate crops
• War forces farmers to save money on quality seeds

Ukraine expects its 2024 spring sowing area to be the same as last year, though it could see a slight decrease in the worst case scenario, Agriculture Minister Mykola Solsky told Reuters on Friday.

Ukraine is a major global grain and oilseeds producer but its harvests have decreased since Russia invaded and occupied significant swathes of territory. The war, now in its 24th month and with no end in sight, has driven up global grain prices and disrupted supplies, especially to poorer countries.

“I don’t expect any drastic changes in terms of sowing area. If the sowing area is smaller, it will be a very insignificant decrease,” Solsky said in an interview, providing the first official outlook for the 2024 sowing season.

Ukrainian farmers sowed a total of 12.75 million hectares of spring crops for the 2023 harvest, including 5.7 million hectares of various grains.

The acreage included 4 million hectares of corn, 5.3 million hectares of sunflower and 1.78 million hectares of soy beans.

Solsky said farmers had sown a smaller area of winter wheat last autumn due to poor weather and this could force them to increase the area sown to spring wheat. Ukraine sowed 280,000 hectares of spring wheat last year.

Ukraine sowed 4.2 million hectares of winter wheat for the 2024 harvest versus around 4.4 million hectares a year earlier.

“There will definitely be no increase in the overall sowing area. I admit its reduction, and the question immediately arises what to sow then? We have three options only – sunflower, soy and corn,” the minister said.

He said farmers would try to increase the area sown to soy, but a lack of high quality soy seeds could prove a serious obstacle. He also noted that relatively low sunflower seed prices and a mandatory crop rotation would prevent a future increase in the area sown to sunflowers.

Ukraine harvested around 28.7 million metric tons of corn in the 2023 harvest, threshing almost 91% of the sown area. Some corn still remains unharvested in the fields.

QUALITY CONCERNS

Solsky said farmers’ shortage of funds caused by the war and difficulties with exports had forced them to save money and use lower quality wheat seed.

He said winter wheat had survived the winter so far without serious damage but the quality of the future harvest was unclear.

“There is one problem – it seems to me that our seeds are getting worse and worse,” Solsky said.

“It seems to me that farmers are saving money on winter wheat seeds… and (this is) one of the reasons for the worse quality of wheat.”

Ukrainian farmers’ incomes have declined significantly due to difficulties in exporting the 2022 and 2023 harvests resulting from limited shipping capacity from seaports and the expensive logistics of using land corridors. It is crucial for Ukraine to preserve its farming industry. Before Russia’s full-scale invasion, Ukraine was the world’s fourth-largest grain supplier and in value terms the commodity accounted for half of all Ukrainian exports. Ukraine harvested almost 110 million metric tons of grains and oilseeds before the war, but in 2023 the combined harvest had fallen to just over 81 million tons because much of the territory was occupied or mined.

Ship in Red Sea Signals All-Muslim Crew to Avoid Houthi Attack

• Livestock carrier set destination as “All Crew Muslims”
• Yemen militants targeting Israel-linked ships over war in Gaza

Commercial ships in the Red Sea are getting more creative in their efforts to avoid attacks by Yemen’s Houthi militants.

Livestock carrier Cattle Force appealed to the Houthis as co-religionists in an apparent bid to ensure safe passage. On Sunday, as it approached the narrow Bab el-Mandeb Strait off Yemen’s coast, it changed its destination signal — something widely available on the internet for most vessels — from an Iraqi port to: “All Crew Muslims.”

Houthis Say They Targeted ‘Star Iris’ Ship in Red Sea

Once safely through the strait on Monday morning, it switched back to Iraq’s Umm Qasr, according to tracking data analyzed by Bloomberg.

The change was an apparent message to the Houthis, who say they’re targeting ships linked to Israel and its allies to pressure them over the war in Gaza. The Houthi campaign has upended global shipping and pushed up transport costs as ships face detours and extra fees for insurance and security. Commercial ships previously signaled destinations like “No Relation to Israel” to avoid targeting by the Iran-backed militia.

Togo-flagged Cattle Force is sanctioned by the US due to its owner, UAE-based Swedish Management, which the US alleges is involved in Iran’s oil and petrochemical exports. Swedish Management’s website didn’t work as of Monday.

Indonesia Hands Out Free Rice Seeds, Machines for Flooded Fields

The agriculture ministry distributed rice seeds and machines to help farmers harvest their crops earlier and replant flooded rice fields, according to a statement on Monday.

• Total aid is valued at 30 billion rupiah ($2 million) for three regencies in Central Java
• Free seeds will be enough to cover 10,000 hectares of rice fields
• Govt doesn’t expect floods to impact national rice production
• At least 11 regencies in Sumatra, West and Central Java, and Sulawesi may experience disruption during harvest due to high rain intensity and potential floods, according to Edy Priyono, deputy at the presidential staff office in separate statement

US Beef Production Falls 3.1% This Week, Pork Down: USDA

US federally inspected beef production falls to 520m pounds for the week ending Feb. 10 from 537m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter down 2.4% from a week ago to 622m head
• Pork production down 2.8% from a week ago, hog slaughter falls 2.6%
• For the year, beef production is 4.3% below last year’s level at this time, and pork is 0.1% below

Argentina Crop Science Firm Eyes Agriculture Boom Under Milei

• Bioceres sees farmers investing, but warns of FX challenges
• CEO speaks in interview after firm posts quarterly profit jump

Argentina’s Bioceres Crop Solutions Corp. is eyeing an agricultural boom in its home nation as President Javier Milei seeks to deregulate the economy and unleash the free market.

Milei devalued Argentina’s peso by 54% when he took office in December, boosting revenues for farmers whose soybean, corn and wheat sales are linked to the US dollar. The boon increases the likelihood they’ll invest in the seeds, pesticides and fertilizers sold by agribusiness companies like Bioceres.

“There’s a direct increase in farmers’ purchasing power,” Chief Executive Officer Federico Trucco said in an interview. “And when farmers go from a defensive mindset to one where they’re looking to maximize production, they invest in more technology and more precise technology like ours — and we can see that partly reflected in our earnings.”

Bioceres posted quarterly earnings on Thursday after markets closed that topped analysts’ estimates. The company’s US shares jumped as much as 8.9% on Friday in New York, the biggest intraday increase since May, before paring some gains.

Beleaguered Argentine growers plagued by years of heavy taxation, exports meddling and government hostility have supported Milei’s free-market platform in a bid to catch up to rivals in the US and Brazil.

The farmers hoarded harvests over the last few years, betting the government would have to loosen its grip on an exchange rate it tightly controlled to quell fast inflation. The strong peso also hurt corporate balance sheets, including at Bioceres, since sales tied to the US dollar trailed consumer price index-linked salaries and other costs.

The situation on both fronts is improving after Milei’s devaluation, but Trucco nevertheless voiced concern about the exchange rate becoming overvalued again. Monthly inflation in January is estimated to have been around 20% while the central bank’s depreciation of the peso was pegged at just 2%.

“We’re a global company with all our revenues in dollars, but a part of our cost structure is in pesos, so the devaluation has made us more competitive from Argentina,” he said. “Sustaining that competitiveness depends on the advantage created by the devaluation continuing in time and inflation not eroding it over the coming months.”

Argentine agriculture company Cresud SA said it was also optimistic for the Milei era in a Friday earnings call as the peso devaluation and fewer currency controls combine with better weather, bolstering farmer balance sheets across the Pampas growing belt.

“Milei is trying to change many pockets of the country and all kinds of distortions in the market, so we think farmers are going to be much better,” Cresud CEO Alejandro Elsztain said in the call.

Farmer sentiment toward Milei soured slightly after he tried to hike export taxes as he prioritizes balancing the government’s books over other issues. But Bioceres still sees good times ahead for Argentine growers.

“There’s an emotional side to this, which is going from a government that treated you badly to one that treats you a bit better,” Trucco said. “And I believe that a positive mood translates into action: farm-input purchases and planting more acreage.”

Trade Case Propels US Phosphate Prices to Highest in World

Mosaic’s successful request for US countervailing subsidy rates has boosted US phosphate prices, which are trading at a premium of more than $100 compared with other regions. We expect the trend to continue in 1H. Mosaic’s adjusted annual Ebitda rises by $105 million for each $10-a-ton increase in diammonium phosphate costs.

The US Commerce Department issued countervailing duties of 20% on Moroccan producer OCP, 9% and 47% on Russian producers PhosAgro and EuroChem, respectively, and 17% on all other Russian producers. The duties will remain in place for five years, but are under review by the ITC and Commerce.

Brazil’s Urea Prices Increase Despite Falling Domestic Demand

Rising international demand continued to drive urea prices higher in Brazil this week, despite a domestic lull as activity winds down for the second corn crop. The focus now shifts to potash and phosphates for the 2024-25 soybean crop, yet both fertilizer markets face pressure from falling commodity prices.

Urea Tests Highs as Potash, Phosphates Seek Buyers

Urea climbed 3.2% in Brazil on surging global prices, but sellers were struggling to find new buyers as nitrogen sales slow ahead of corn planting and demand shifts to potash and phosphates for the 2024-25 soybean season. Potash and monoammonium phosphate (MAP) import prices were generally stable, though potash eased on plentiful supply to $280-$300 a metric ton (mt) from last week’s $285-$300.

Inland potash sales were boosted by offers of aggressive discounts and improved affordability, even as commodity prices have fallen to four-year lows in recent weeks. The barter rates for soybeans have become challenging as a result, especially for MAP.

 

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