Global Ag News for Feb 20.24

TOP HEADLINES

USDA says weekly US pork export sales report was incorrect

U.S. data published on Thursday that showed large increases in weekly pork export sales and shipments was incorrect and will be updated next week, the U.S. Department of Agriculture said on Friday.

FUTURES & WEATHER

Wheat prices overnight are down 1 3/4 in SRW, down 1/4 in HRW, down 3 in HRS; Corn is up 2 1/2; Soybeans up 10 1/4; Soymeal up $2.90; Soyoil up 0.16.

Markets finished last week with wheat prices down 42 1/2 in SRW, down 35 3/4 in HRW, down 28 1/2 in HRS; Corn is down 10 1/2; Soybeans down 11 1/2; Soymeal down $1.10; Soyoil down 1.18.

For the month to date wheat prices are down 48 in SRW, down 59 in HRW, down 45 1/2 in HRS; Corn is down 26 1/2; Soybeans down 46 1/4; Soymeal down $22.30; Soyoil down 0.30.

Year-To-Date nearby futures are down 11.1% in SRW, down 11.5% in HRW, down 10.0% in HRS; Corn is down 11.0%; Soybeans down 8.6%; Soymeal down 9.5%; Soyoil down 4.3%.

Chinese Ag futures (MAY 24) Soybeans up 16 yuan; Soymeal up 17; Soyoil up 106; Palm oil up 104; Corn up 12 — Malaysian Palm is down 5.

Malaysian palm oil prices overnight were down 5 ringgit (-0.13%) at 3860.

Brazil: Wet season showers in central Brazil exploded over the weekend, bringing heavy amounts to most of the region. Southern areas saw just some isolated amounts. The heavy rain is preferred as most of the safrinha corn planting has been completed and the region is short of subsoil moisture. Southern areas could use more rainfall, however. Scattered showers continue in much of the country through this weekend. A front coming north from Argentina will bring heavier showers this weekend into next week.

Argentina: Limited showers moved through over the weekend as a front moved through. A front moving through on Thursday should bring some needed showers and another Sunday into Monday should do something similar. A more active pattern is forecast in early March.

Europe: Scattered showers went through northern areas of the continent over the weekend but also hit parts of the southeast as well, including Italy. A large storm system will move through starting on Wednesday with widespread impacts throughout the continent. In addition to widespread precipitation, temperatures will drop across the western half of the continent, but only back to normal.

Australia: Scattered showers went through eastern New South Wales this weekend while the rest of the country was largely dry. Eastern areas will again see potential for showers this week. Southwestern areas will watch for the potential of tropical remnants to move through this weekend. Soil moisture is low in many areas well ahead of the harvest and subsequent wheat planting and will need much more rain to fall over the next couple of months.

Northern Plains: It was dry over the weekend with rising temperatures. It should be mostly warm and dry through the weekend. A larger storm system is likely to move through early next week with widepsread precipitation possible, including some snow.

Central/Southern Plains: Some isolated snow moved through over the weekend but quickly melted off with rising temperatures. A system will move through Wednesday night and early Thursday with some limited showers. Otherwise it should be dry through the weekend. A larger system will move through early next week with potential for widespread precipitation and a brief drop in temperatures.

Midwest: A system moved through late last week and early this weekend with some scattered showers including some brief snow. Rising temperatures over the weekend melted off most of the new snow, however. Well above normal temperatures this week will mean that a system that comes through on Thursday will spread rain across the southern half of the region. A smaller clipper system may bring showers to eastern areas this weekend.

Delta: A system will move through on Thursday with scattered rain showers and continue the building of soil moisture in the region, as should a system for early-to-mid next week.

The player sheet for Feb. 16 had funds: net sellers of 3,500 contracts of SRW wheat, sellers of 1,500 corn, sellers of 3,500 soybeans, buyers of 3,500 soymeal, and sellers of 2,000 soyoil.

PENDING TENDERS

  • WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 115,921 metric tons of food-quality wheat from the U.S., Canada and Australia in a regular tender that will close on Thursday.
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat sourced from optional origins
  • 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.
  • FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by Feb. 28 and arrive in Japan by March 21, via a simultaneous buy and sell (SBS) auction, which will be held on Feb. 21.

 

Globe with candlestick charting

 

TODAY

 

Brazil 2023/24 Corn Output Estimate Cut to 125.9M Tons: Safras

Compares with previous estimate of 129.2m metric tons in December and 140.1m tons in the 2022/23 season, according to a report from consulting firm Safras & Mercado.

  • Estimate cut due to climate issues, with El Nino hurting planting and development of summer crop in south of Brazil
    • Forecast also reflects a cut on summer crop
    • Estimate for summer crop cut to 25.6m ton
  • Corn area estimated at 20.9m ha, a 6.2% drop from the 2022/23 season
  • Corn yield seen at an average of 6,020 kg/ha, vs 6,115 kg/ha in previous estimate and 6,286 kg/ha last season

Brazil Farmers Harvest 31.10% Of 2023/2024 Soybean Area Versus 24.78% At This Time Last Year – Patria Agronegocios

BRAZIL FARMERS HARVEST 31.10% OF 2023/2024 SOYBEAN AREA VERSUS 24.78% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS

Brazil 2023/24 Soy Harvest 32% Done as of Feb. 15: AgRural

Compares with 23% a week earlier and 25% a year before, according to an emailed report from consulting firm AgRural.

  • AgRural highlighted harvest result in Mato Grosso and Parana states
  • Summer corn harvest is 59% complete in Center-South; it was at 38% a week earlier and at 40% a year before

Brazil 2023/24 Soybean Harvest 29.4% Done as of Feb. 16: Safras

Compares with 21.6% a week earlier and 20.9% a year before, according to an emailed report from consulting firm Safras & Mercado.

  • 5-year average is 24.4%

Brazil Summer Corn Harvest 29% Completed as of Feb. 16: Safras

Compares with 22.2% a year earlier and 5-year average of 26.3%, consulting firm Safras & Mercado says in report.

  • Harvest is 52.4% done in Rio Grande do Sul state, 42.9% in Santa Catarina, 30.3% in Parana, 13% in Sao Paulo, 4.4% in Minas Gerais and 0.7% in Goias and Distrito Federal
  • Work has not started in Mato Grosso do Sul and Mato Grosso
  • Safras sees Brazil 2023/24 summer corn planted area at 3.972m hectares

SOYBEAN/CEPEA: Soy may gain room from corn in the US; prices move down

Producers from the United States have been increasing the interest to grow soy in the 2024/25 crop instead of corn. This scenario may be linked to the price relation between these two products – the soy advantage over corn has been above-average since 2000, which has been verified despite high stocks and low soybean prices in the current season. Therefore, soy prices in the US may be low in the next crop-year, which would tend to be transferred to other producing countries.

Considering the first contracts of soybean and corn at CME Group, it is verified that, between the beginning of 2000 until February 15, 2024, the price relation average indicates that soy values are 2.5 above corn quotations.

In the same period, the lowest price relation is 2.02, in the 2010/11 season. The highest relation (3.08), in turn, was observed in 2003/04 and 2013/14 crops. In the current 2023/24 season, it is at 2.75, higher than the average over the last 20 years, which highlights the soy attractiveness in relation to corn.

In the spot market in Brazil, trades are below BRL 120.00 per 60-kilo bag. Besides the international price decrease, domestic quotations have been pressed down by low demand in both domestic and international scenarios, mainly from China.

From February 8-12, the ESALQ/BM&FBovespa Index (Paranaguá) downed 1%, closing at BRL 117.29 per 60-kg bag on Feb. 15. The CEPEA/ESALQ Index (Paraná) decreased 0.9%, to close at BRL 111.47 per 60-kg bag.

CORN/CEPEA: Pace of trades is slow; Index continues at BRL 62/bag

Carnaval in Brazil this week has slowed down corn trades in the Brazilian spot market. While consumers continue to use inventories, producers are progressing with crop activities.

The ESALQ/BM&FBovespa Index (Campinas, SP) has been operating at around BRL 62.00 per 60-kilo bag since the beginning of this month. Between February 8 and 15, the Index downed only 0.9%, closing at BRL 62.12/bag on Feb. 15.

On the average of the regions surveyed by Cepea, corn values dropped 1% in the wholesale market (deals between processors), but increased 1.6% in the over-the-counter market (paid to farmers) over the last seven days.

Players are focused on the soy harvest and on the shortage of transportation, which has been boosting freight values for corn. In case this context continues, corn prices may move up in the coming weeks.

Abroad, price drops were linked to favorable perspectives for the second corn crop in Brazil – despite the production decrease, current weather conditions are likely to help the crops development – and to the high availability in the US in the 2023/24 season (forecast by the USDA at 389 million tons).

SHIPMENTS – In the first seven working days of February, Brazilian corn exports totaled 1.01 million tons, which already represents 44.5% of the total shipped in Feb/23 – data from Secex. If this pace continues, Brazil may export 3.05 million tons this month.

CROPS – Rains are back in most producing regions in Brazil, which is currently affecting the summer crop harvest; however, is favoring the second crop development. According to data from Conab, 18.6% of the summer crop area had been harvested until Feb. 10. As for the second crop sowing activities, the percentage hit 31.5% – Conab data.

Brazil’s biggest farm coop grapples with surging grain inventories

Brazil’s largest farm cooperative entered 2024 with grain stocks over 50% higher than in 2023 driven by a bumper crop last season and sluggish farmer selling, Coamo’s President Airton Galinari said late on Thursday. The situation reinforces that supply pressure could continue to weigh on grain prices and dampen farmer sentiment in Brazil, the world’s biggest soybean exporter and producer and a major corn exporter.

Coamo, based in Parana state, reported carryover stocks at 3.66 million metric tons, including soy, corn and wheat. The volume represents more than 36% of the total of nearly 10 million tons received by the cooperative last year.

On Friday, Chicago wheat futures touched a 2-1/2-month low while corn and soybeans consolidated near three-year lows, after official forecasts of higher U.S. grain stocks.

In addition to having full silos from the previous harvest, Coamo is dealing with advanced soybean deliveries from the 2024 crop, pressuring its own storage capacity, currently at 6 million tons. Coamo received more than 30% of the total soybeans it had expected from the current crop, which is early, according to Galinari. But the beans keep pouring in.

Farmers can deliver grains to the cooperative without finalizing a sale for up to a year. But because prices are low, farmers have only settled sales for less than 10% of their new soybeans while in previous years, done deals represented 30% to 40% of the new soy at this time, Galinari noted.

From a Brazilian farmers perspective, the situation may worsen before it gets better. After a drought destroyed soy fields in competitor and neighbor Argentina, the country will reap twice as much beans as in the last season, replenishing world stocks. In the meantime in Brazil, farmers may be forced to sell grains to pay up bills due in April and May, generating even more downward price pressure, Coamo’s executive said.

WHEAT/CEPEA: Prices are at 2020 levels; liquidity is low

Both domestic and international wheat prices are operating at levels verified in 2020, influenced by expectations that the global supply may be higher than the demand in this season.

Thus, only a few trades were closed in the spot market in Brazil last week. Moreover, while farmers are focused on the summer crop harvest, wheat processing mills claim to have stocks for the mid-term. The low demand for wheat bran (due to the high supply of corn) has also reinforced low liquidity in the wheat market over the last days.

The relatively stable exchange rate between BRL and USD over the last days and below the average of the last four years increased the attractiveness of the imported product. Dollar quotations rose 0.2% against Real from February 9 to 16, closing at BRL 4.966 on Feb. 16. From 2020 to 2023, the dollar average was BRL 5.18.

As a result, the daily average of imports this month is 82% higher than that verified in February 2023 – Secex data.

According to data from Cepea, between February 9 and 16, the prices paid to wheat farmers (over-the-counter market) dropped 0.1% in Santa Catarina. In Paraná, values rose only 0.05%, but remained stable in Rio Grande do Sul. In the wholesale market (deals between processors), values moved down 0.2% in Paraná and 0.05% in Santa Catarina. Prices upped 0.01% in São Paulo and 0.27% in Rio Grande do Sul. The low supply of PH 78 wheat and the high availability of low-quality product in Brazil limited price drops.

Considering wheat prices traded in months of February each year, current values are at the lowest levels since 2020. Comparing the average last week (Feb. 14-16) to the average in the previous week (Feb. 5-9), values of wheat bran in bags downed 1.3%, and prices of the product in bulk, 0.02%.

India expects record rapeseed output due to bigger area, favorable weather

India’s rapeseed and mustard output is likely to reach a record high in 2024 due to an expansion in the planted area and favourable weather conditions in key producing states, industry officials said.

Higher rapeseed output will help the world’s biggest vegetable oil importer to cut back on expensive imports of palm oil FCPOc3, soyoil BOc1 and sunflower oil.

“Farmers have expanded area under rapeseed. Our recent survey is showing the crop is in good condition in almost all states,” B.V. Mehta, executive director of Solvent Extractors’ Association of India, told Reuters.

Area under rapeseed has risen by around 5% from a year ago to 10 million hectares, Mehta added.

India produced 11.5 million metric tons of rapeseed in 2022/23 and in the current year production could rise by 300,000 to 500,000 tons industry officials said.

“The crop is in excellent condition. If things keep rolling smoothly in the next couple of weeks, production of 12 million tons is possible,” said Anil Chatar, a trader based in Jaipur in the north-western state of Rajasthan, the biggest producing state in the country.

HEAT WAVE CONCERN

Until last week, the weather was favourable but temperatures have started to rise, raising fears of a heatwave that could lead to the early maturity of crops and reduce the size of the seeds, said a New Delhi-based dealer with a global trade house.

In the past, higher temperatures in February and March have dashed prospects of high yields, he said. In some districts of Rajasthan, the maximum temperature this week was nearly 6 degrees Celsius above normal, data from the weather department showed.

New season supplies would pick up from the next month, said Chatar. Rapeseed prices are trading below the government-fixed floor price of 5,650 rupees per 100 kg, and they could fall further unless the government ramps up procurement, he said.

India meets more than 70% of its cooking oil demand through imports of palm oil, soybean oil, and sunflower oil from Malaysia, Indonesia, Brazil, Argentina, Ukraine, and Russia. Rapeseed crushing would pick up from April, and higher supplies of oil would limit imports of vegetable oils, the New Delhi-based dealer said.

Indonesia Jan. Palm Oil Exports Rise 2.1% M/m: Intertek

Indonesia’s palm oil exports rose 2.1% m/m in January, according to Intertek Testing Services.

  • Palm oil exports were 2.13m tons
  • Crude palm oil shipments were 306,023 tons
  • RBD palm olein shipments were 753,959 tons
  • RBD palm oil shipments were 460,119 tons
  • Palm oil sales to European Union was 424,137 tons
  • Palm oil sales to India was 653,220 tons
  • Palm oil sales to China was 292,483 tons

BMI Lifts 2024 Palm Oil Price Outlook; El Niño Impact Seen Muted

BMI raises its average price forecast for Malaysian benchmark palm oil futures to 3,750 ringgit ($783) a ton in 2024, up from 3,515 ringgit previously, according to a Feb. 19 report.

  • NOTE: Prices averaged 3,796 ringgit in 2023
  • The revision reflects the “persistence of price strength” that started in 3Q, which saw contracts rise by 23% from the start of June to the start of September, said BMI, a Fitch Solutions company
  • However, prices may still soften from current levels through the year, capped by price trends in the wider edible oils complex, expectations of large soybean harvests in major producers, and weak demand in China
  • El Niño’s impact on cultivation conditions in Indonesia and Malaysia is thought to be “quite subdued”, and may dissipate between April-June
  • Expected transition to La Niña conditions between June-August could weigh on market sentiment
  • Average palm oil prices seen falling to 3,500 ringgit in 2025 on the potential for a La Niña event to support oil palm cultivation
  • BMI’s price outlook takes into account a deceleration of palm oil export growth in the world’s top growers, as Indonesia commits to higher domestic biodiesel mandates
  • Global palm oil sector expected to generate a production surplus of 2m tons in 2023-24, the lowest in three seasons
    • Surplus of 2.5m tons seen in 2024-25, followed by increases of 0.2m-0.3m tons thereafter
  • Risks to forecasts include biodiesel policies, prices of alternative edible oils, sustainable production efforts

EL Nino Continues to Weaken Even With Recent Fluctuations: BOM

El Nino persists, although a steady weakening trend is evident in the oceanic indicators, Australia’s Bureau of Meteorology said.

  • International climate models suggest the central tropical Pacific Ocean will continue to cool in the coming months, with four of seven climate models indicating the central Pacific is likely to return to neutral El Nino–Southern Oscillation levels in April
  • All models show neutral in May
  • The Indian Ocean Dipole is neutral and expected to remain so until at least April
  • The Madden–Julian Oscillation has weakened significantly in the central Pacific Ocean in the past week and is now weak or indiscernible

Weather damages only 1-2% of Ukraine 2024 winter wheat crop, ministry says

Only 1-2% of the Ukrainian winter wheat crop will not survive the current winter, the agriculture ministry said on Sunday, citing data from scientists.

Winter wheat accounts for more than 95% of Ukraine’s overall wheat output. During winter, up to 7% of the winter sowing area usually dies, mainly due to heavy frosts and ice crust on fields, but the winter has been milder this year.

Farmers sowed about 4.2 million hectares of winter wheat for the 2024 harvest.

“The results of plant regrowth… showed that the survival rate of winter cereals (wheat, rye) was 98-99%,” the ministry said in a statement.

It added that up to 5% of winter barley was also damaged this winter.

Russian wheat exports could total 52.9 mln tonnes in current season, 48.1 mln tonnes in future one – consensus forecast

The Center for Price Indices (a subsidiary of Gazprombank), which began publishing quarterly consensus forecasts of professional analysts on the agricultural market last November, has updated its estimates in February.

“On key indicators, analysts’ views have become more optimistic since November 2023. Expectations for wheat exports in the current agricultural season (July 2023-June 2024) have been significantly revised upwards -from 50.4 million to 52.9 million tonnes,” the center said in a statement.

The estimate of wheat exports in the new season (July 2024-June 2025) has been raised as well. The consensus forecast is now 48.1 million tonnes compared with 46.4 million tons in November.

The grain harvest for the new farming year is forecast at 141.5 million tonnes compared with 134.2 million tons in the previous estimate, including wheat at 90.5 million tonnes compared to 87.3 million tonnes.

“But there was a surprising consensus on sunflower oil production and exports. Against the background of actual growth in the gross sunflower harvest, analysts revised the parameters of oil output in the current agricultural year (September 2023 – August 2024) from 7 million to 6.8 million tonnes, exports – from 4.6 million to 4.3 million tonnes,” the statement said. “The difference of opinions on the volume of exports of the second most important product of Russian agricultural exports, although it is already the equator of the season, indicates the lack of market understanding of the strategies of oil and fat companies amid growing supply of raw materials for processing. According to optimists, next season Russia may even take first place in sunflower oil exports,” it said.

The consensus forecast for two of the three types of oilseeds for the new season is lower than previous estimates. Thus, the sunflower harvest may amount to 15.5 million tonnes (15.6 million tonnes in the November forecast), rapeseed – 4.2 million tonnes (4.3 million tonnes). Soybean harvest estimates are unchanged at 5.9 million tonnes.

Sunflower oil production is forecast at 6.4 million tonnes vs. 6.8 million tonnes, with exports at 4.2 million tons vs. 4.5 million tons in the November consensus forecast.

Black Sea Nitrogen Fertilizer Price Drops 2.87%

Nitrogen fertilizer, represented by Black Sea urea, fell 2.87% to $305 per metric ton in the week ended Feb. 16, according to Green Markets data compiled by Bloomberg Intelligence.

  • Black Sea urea rose 24.5% during the last month and was down 12.9% during the last 3 months
  • Major Urea nitrogen benchmark prices were mixed
  • Shares of Acron PJSC were up, while Yara International ASA was down in the latest week
  • Major UAN nitrogen benchmark prices were mixed
  • Major Ammonia nitrogen benchmark prices were unchanged
  • Natural gas, which drives producer costs, has decreased 13% during the last week and was down 35% during the last month
  • The price of corn, a driver of fertilizer purchases, decreased 2.5% during the last week and was down 5.5% during the last month

Poland Sees Risk of New Food Trade Dispute With Ukraine at WTO

The Polish government needs support from the European Commission in negotiations to curb the import of agricultural goods from Ukraine, as Ukraine is also preparing another complaint against Poland to the World Trade Organization, Deputy Agriculture Minister Michal Kolodziejczak says in interview with TVN24 television.

  • By the end of the week Polish government should publish list of companies that imported Ukrainian grains, causing market disruption
  • While some import was legal, the publication may become a “shame list” for some local producers, including rapeseed oil makers, who claimed that they offer Polish products
  • Agriculture Ministry wants to discuss the list with competition watchdog UOKiK before publication

US Beef Production Falls 2.5% This Week, Pork Down

US federally inspected beef production falls to 507m pounds for the week ending Feb. 17 from 520m in the previous week, according to USDA estimates published on the agency’s website.

  • Cattle slaughter down 2.3% from a week ago to 608m head
  • Pork production down 2.5% from a week ago, hog slaughter falls 2.4%
  • For the year, beef production is 4.2% below last year’s level at this time, and pork is 0.3% above

Argentina February inflation seen closer to 10% in ‘substantial’ drop, says minister

Argentina Economy Minister Luis Caputo said on Monday that the South American nation’s monthly inflation in February will be closer to 10% than to 20%. Annual inflation in Latin America’s third-largest economy recently reached 254% as the monthly figure topped 25%.

“I don’t like to get ahead of the numbers,” but “inflation for now is falling faster” than analysts expected, Caputo said on the local channel LN+.

Libertarian President Javier Milei took office in December promising to combat a rising poverty rate and undo regulations and privileges he says are holding back the economy. While the government has struggled to win Congress’ approval for a mammoth reform package, it saw a victory on the economic front on Feb. 16 when the economy ministry reported Argentina’s first monthly budget surplus in 12 years.

Caputo on Monday predicted this month’s inflation would reflect well on the government’s early actions, which have included a 54% peso devaluation, reductions to energy and transportation subsidies and tax hikes.

“We are going to see a substantial drop (in February) that is a product of the fiscal and monetary control that we are carrying out,” he said.

 

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