Global Ag News for Feb 26.24

TOP HEADLINES

China’s record-breaking cold wave prompts fears over vegetable crops

Cold weather in China during the beginning of the spring season is threatening vegetable and oilseed crops, prompting the government to dispatch experts to support farmers. The National Meteorological Centre issued its highest alert for cold temperatures for the third straight day on Sunday after a cold snap plunged temperatures down to record lows for the season.

Over 400 weather stations in China broke the lowest daily high-temperature record for late February, according to preliminary data shared by Jim Yang, a meteorologist with the Chinese Meteorological Association. Temperatures are expected to remain 5 to 7 degrees Celsius lower than seasonal norms in central-southern and northwestern China for the first half of the week, according to forecasts. This temperature dip is causing stress to seasonal crops like vegetables and oilseeds, something China is planning to boost production of to reduce reliance on imports and bolster food security. Already, the production of crops like cucumbers and capsicums was expected to fall by 10 to 20 per cent.

The Chinese Academy of Agricultural Sciences has deployed 40 teams of experts across the country to assess and minimise damage to spring vegetable crops. The teams are supposed to monitor weather changes and provide technical advice to farmers.

“The country has continued to experience extreme meteorological disasters and several sudden temperature drops, which has had a great impact on our vegetable production,” said the academy, a research organisation affiliated with the Ministry of Agriculture and Rural Affairs.

Oilseed crops, like soybeans, rapeseed and peanuts, could also see serious damage due to freezing rain and snow in Hunan and Hubei provinces, the top oilseed producing regions, according to a report by China-based commodity consultancy Mysteel released last week. Up to 30 per cent of the rapeseed crops could be damaged or become more susceptible to fungal diseases, the report said.

Additionally, heavy snowfall may impact greenhouses and livestock production in provinces like Shandong and Henan, while low temperatures and rain could affect winter wheat in southern China. The country is increasing its focus on food security due to the ongoing trade war with the United States and the economic stress brought by the Covid-19 pandemic.

But back-to-back cold snaps and erratic weather are challenging food production in the country. The latest cold snap comes after blizzards disrupted the Lunar New Year celebrations, sparking travel chaos. China has been witnessing prolonged heatwaves and droughts in the summer. Despite the warming trend surpassing the global average of record breaking heat, the intensity of extreme cold waves has not reduced, but the impact of strong cold air or cold waves has increased.

FUTURES & WEATHER

Wheat prices overnight are down 3 3/4 in SRW, down 3 3/4 in HRW, down 3 1/4 in HRS; Corn is down 2 1/4; Soybeans down 2; Soymeal up $0.20; Soyoil down 0.10.

Markets finished last week with wheat prices up 6 1/4 in SRW, up 1/4 in HRW, down 12 in HRS; Corn is down 18 1/4; Soybeans down 36 1/2; Soymeal down $10.70; Soyoil down 1.58.

For the month to date wheat prices are down 40 in SRW, down 58 1/2 in HRW, down 54 1/2 in HRS; Corn is down 47 1/4; Soybeans down 93; Soymeal down $35.90; Soyoil down 2.08.

Year-To-Date nearby futures are down 9.5% in SRW, down 12.0% in HRW, down 11.6% in HRS; Corn is down 15.7%; Soybeans down 12.5%; Soymeal down 13.8%; Soyoil down 8.1%.

Chinese Ag futures (MAY 24) Soybeans down 44 yuan; Soymeal up 4; Soyoil down 28; Palm oil up 2; Corn up 6 — Malaysian Palm is up 15. Malaysian palm oil prices overnight were up 15 ringgit (+0.39%) at 3868.

There were no changes in registrations. Registration total: 573 SRW Wheat contracts; 0 Oats; 6 Corn; 219 Soybeans; 125 Soyoil; 1 Soymeal; 56 HRW Wheat.

Preliminary changes in futures Open Interest as of February 23 were: SRW Wheat down 6,140 contracts, HRW Wheat down 76, Corn down 12,518, Soybeans down 22,985, Soymeal down 18,616, Soyoil down 2,500.

Brazil: Wet season showers in central Brazil continued over the weekend but they’ll be isolated this week. That won’t last for long though as they fill back in this weekend. Southern areas saw showers increasing on Sunday and will see waves of showers through Thursday as a front waffles around the region. Showers are forecast to be more sporadic and shifting next week, but fairly widespread, which should help with the long-season crops in the south and the safrinha corn in the central.

Argentina: Scattered showers fell across northern areas with a somewhat stalled front this weekend. That front will waffle around northern areas through Wednesday. Smaller disturbances will move through southern Argentina this week with more muted shower potential with a better shot this weekend. Showers are not perfect, but as long as they keep coming with enough frequency, crop conditions may not fall from the overall good ratings currently enjoyed in the country. Some spots may be missed, however.

Europe: A large storm system started to bring waves of showers across most of the continent over the weekend. The main low will move into the Mediterranean and continue showers there throughout the week. More systems will try to follow a similar path later this week and next week, which would be beneficial for Spain and Italy, but be too wet in France and the UK. Temperatures continue to be much warmer than normal across the eastern half of the continent, promoting early awakening from dormancy and growth.

Australia: The remnants of Tropical Cyclone Lincoln went through western areas with some heavy rain over the weekend, but was mostly across northern areas of farmland. Northeastern areas also saw showers this weekend. Mostly dry conditions are expected for this week, but showers should pop up this weekend in variable fashion across much of the country. 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.

Central/Southern Plains: It was very warm and dry over the weekend. A strong cold front will move through on Tuesday with limited showers, but strong winds and a quick burst of cooler air. That won’t last long as temperatures soar back above normal again on Thursday. A secondary piece to the storm should bring some showers across the south on Thursday. Warm temperatures again could be significant going through the weekend, but another strong system will move through Sunday and Monday. That system will likely bring areas of heavier precipitation, including potential for heavy snow across the north, strong winds, and another drop in temperatures and they may settle into a more seasonable range.

Midwest: Some light to moderate snow moved through eastern areas of the region Friday into Saturday, but quickly melted in the above-normal temperatures that followed. Extreme warmth continues early this week ahead of a very strong cold front that will move through Tuesday and Wednesday. Widespread showers, including some light snow will move through. Winds will be strong and temperatures will drop significantly behind the front. But that will only last about a day or so before temperatures pop right back up well above normal again for Thursday or Friday. Another big storm system is forecast to move through early next week as well, and could have similar impacts.

Delta: It was dry over the weekend. A cold front will move through with some isolated showers on Wednesday and more showers will follow behind it on Thursday night into Friday. Another system will move through with more showers early next week. Soil moisture continues to be much improved ahead of spring planting.

The player sheet for Feb. 23 had funds: net sellers of 5,000 contracts of SRW wheat, sellers of 5,000 corn, sellers of 6,000 soybeans, sellers of 2,500 soymeal, and sellers of 1,500 soyoil.

TENDERS

  • WHEAT SALE: Tunisia’s state grains agency is believed to have purchased about 100,000 metric tons of soft wheat in an international tender on Friday
  • WHEAT PURCHASE: South Korean flour mills bought an estimated 172,300 metric tons of wheat in a tender on Friday to be sourced from the United States, Canada and Australia.

PENDING TENDERS

  • 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 GRAIN TENDERS: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 120,000 tonnes of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal
  • WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
  • MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.

 

Map of China and India

 

TODAY

 

US Export Sales of Soybeans, Corn and Wheat by Country

The following shows US export sales of soybeans, corn and wheat by biggest net buyers for week ending Feb. 15, according to data on the USDA’s website.

  • Top buyer of soybeans: China with 392k tons
  • Top buyer of corn: Japan with 344k tons
  • Top buyer of wheat: Mexico with 59k tons

US Export Sales of Pork and Beef by Country

The following shows US export sales of pork and beef product by biggest net buyers for week ending Feb. 15, according to data on the USDA’s website.

  • Mexico bought 13.2k tons of the 28.9k tons of pork sold in the week
  • Japan led in beef purchases

US Cattle on Feed Rose to 11.8M Head on Feb. 1

The feedlot herd rose 0.4% from a year ago, according to the USDA’s monthly report. Analysts were expecting a rise of 0.1%

  • Placements onto feedlots down 7.4% y/y to 1.792m head
  • Cattle marketed from feedlots declined 0.1% to 1.844m head

Argentina’s hoped-for record corn harvest threatened by sliding prices -exchange

A highly anticipated record corn harvest in Argentina could see its benefits curbed by a global decline in prices, the country’s Rosario grains exchange said on Friday, in a possible blow to a new government battling the economy’s worst crisis in decades.

Corn exports from Argentina, the world’s third biggest supplier, are expected to rise 53% compared to last season thanks to ample rainfall favoring the harvest estimated at a record 57 million metric tons. The South American country exports its corn mostly to buyers in Vietnam, Algeria and South Korea. Local farmers have benefited from frequent rainfall linked to the weather phenomenon known as El Nino, providing a much-needed respite after the previous season was crippled by a historic drought that saw the country produce just 36 million tons of corn. External sales value, however, should increase just 20% from last season to some $7.66 billion, the exchange warned.

“This is considerably lower than the volume increase,” it said, stressing that the rise is dependent on current prices holding steady.

Falling corn prices could be a blow to the government of libertarian President Javier Milei, who took office in December and is facing an economy with net negative foreign reserves, annual inflation above 200% and a surging poverty rate. The government currently levies a 12% export tax on corn.

According to the exchange, Argentina’s main agricultural heartlands received between 20 and 50 millimeters of rain over the last 24 hours, helping sustain the country’s corn and soybean crops through their key development stages. A state weather agency predicted on Wednesday that parts of northeastern Argentina would also see fresh rains from Sunday through early next week. Farmers are set to begin harvesting their corn and soy crops next month.

Brazil Farmers Harvest 38.03% Of 2023/2024 Soybean Area Versus 34.51% At This Time Last Year – Patria Agronegocios

BRAZIL FARMERS HARVEST 38.03% OF 2023/2024 SOYBEAN AREA VERSUS 34.51% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS

SOYBEAN/CEPEA: Firm demand and possible lower productivity in Argentina boost values

Purchasers in Brazil increased their bids this week for both domestic and international markets. This behavior is a result of the fact that sellers have been refrained from closing deals for some weeks now and to the possibility of smaller productivity in soybean crops in Argentina, because of unfavorable weather conditions from late January to early February.

Bolsa de Cereales and Rosário indicate that the productivity may be lower, but recent rains may lead to a recovery of crops. For time being, a good crop is still expected in South America, which has limited price rises.

From February 15-22, the ESALQ/BM&FBovespa Index (Paranaguá) increased 0.5%, closing at BRL 117.82 per 60-kg bag on Feb. 22. The CEPEA/ESALQ Index (Paraná) rose 1%, to close at BRL 112.60 per 60-kg bag.

On the average of the regions surveyed by Cepea, soybean prices decreased 0.5% in the over-the-counter market (paid to farmers) and 0.7% in the wholesale market (deals between processors). Dollar quotations dropped only 0.4% against Real from Feb. 15-22, closing at BRL 4.95.

CROPS – The soybean harvest had totaled 29.4% of the area until Feb. 17, more than the 23% verified a year ago, according to data from Conab.

BYPRODUCTS – On the average of the regions surveyed by Cepea, soymeal prices dropped 1.4% in the last seven days. The Brazilian value of soy oil moved down 0.6%, at 4.805,92 BRL per ton (in São Paulo city with 12% ICMS) on February 22.

CORN/CEPEA: Prices oscillate slightly in Brazil

In Brazil, consumers have been using corn from stocks, while sellers continue focused on the summer crop harvest and on the sowing/development of the second crop. In spite of the 2023/24 production decrease, better weather conditions are expected to favor both summer crops planted late and second crops that are developing.

In this scenario, corn prices continue to present only slight oscillations in many regions surveyed by Cepea. Abroad, in turn, corn futures at CME Group were pressed down by the high supply in the United States in the 2023/24 season, the possible high availability in 2024/25 and advances of the second crop planting in Brazil.

Between February 15 and 22, the ESALQ/BM&FBovespa Index (Campinas, SP) upped 1.2%, closing at BRL 62.87/bag on Feb. 22. The Index has been at around BRL 62/bag since early February. On the average of the regions surveyed by Cepea, corn values increased 0.8% in the wholesale market (deals between processors), but dropped 0.6% in the over-the-counter market (paid to farmers) over the last seven days.

Corn trades for future delivery are moving at a slow pace, since producers consider that the current price level is low. Data from Imea indicate that 19.21% of the 2023/24 season had been traded up to Feb. 12, advancing 1.44 percentage point compared to that verified in January, but still 5.96 p.p. below that observed in the 2022/23 crop. In Paraná, according to Seab/Deral, the percentage of the summer crop corn traded is at 5%, and for the second crop, 2%.

PORTS – The pace of Brazilian shipments continues firm this month. In the first 10 working days of February, the daily average of exports is 15% higher than that in February/23, according to data from Secex. Up to the third week of the month, sales had totaled 1.45 million tons, 64% of the volume verified in the same month last year.

CROPS – Due to the rainfall in several producing regions, the pace of both harvest and planting activities reduced over the last days. The summer crop harvest hit 21.4% of the area in Brazil, while sowing activities of the second crop totaled 45.3% until Feb. 17 – data from Conab.

Brazil to export soybeans to the US, shipping data shows

At least three U.S.-bound cargo ships are preparing to load with soybeans at two ports in Northern Brazil in the first such bulk shipments since last summer, according to shipping lineup data seen by Reuters.

The unusual shipments from Brazil, the top global soy supplier, to the United States, the No. 2 exporter, are expected to arrive by early spring, several weeks earlier than past Brazil-to-U.S. shipments as current prices for importing beans from the South American nation are considerably lower, analysts said.

Although U.S. farmers harvested a sizable crop last autumn, Brazilian farmers gathered a record crop last year and are currently harvesting what is projected to be their second-largest crop on record.

“As Brazil has very low prices, we have a difference of around $50 per ton between FOB (free on board) port prices here and there in the USA. This more than covers the logistical cost of getting Brazilian soy into the U.S.,” said Daniele Siqueira, analyst with AgRural.

Brazilian soy exports to the United States soared to around 420,000 tons in 2023, up from only about 4,000 tons the previous year, according to Brazil’s Agriculture Ministry.

Shipments scheduled for 2024 already total more than 100,000 tons, according to maritime agencies.

The vessel Yasa Mimosa is at anchor near Santarem port and the vessel UBC Tilbury is anchored near Itacoatiara port, each waiting to load with around 35,000 metric tons of soybeans bound for the United States, according to data from shipping agency Cargonave.

A third vessel, the Kian, is scheduled to arrive at Itacoatiara next week for loading with around 34,000 tons of soybeans, shipping lineup showed.

The charterer of all three vessels was livestock and poultry producer Perdue Farms, which operates a port terminal and crushing facilities on the U.S. East Coast. A Perdue Farms spokesman declined to comment on the shipments.

Brazil’s Paranagua port resumes operations after berths shut by fire

An important export terminal for agricultural commodities at the Paranagua port in southern Brazil resumed operations on Saturday after three of its berths were temporarily halted due to a fire earlier this week.

The local port authority said in a statement that operations at Paranagua’s Export Corridor were resumed at 1 p.m. local time (1600 GMT), with berths 212 and 213 performing export operations and berth 214 an import operation.

Maintenance was being carried out on the affected equipment, which are expected to also fully resume operations in the coming days, the port authority said.

“All berths are operational,” it added. “The causes of the fire will be investigated by authorities.”

Ukraine deputy PM says 160 tons of Ukrainian grain destroyed in Poland

Around 160 tons of Ukrainian grain was destroyed at a Polish railway station amid large-scale protests in what a senior Ukrainian official said on Sunday was an act of “impunity and irresponsibility”.

Polish farmers protesting this month against what they say is unfair competition from Ukraine and European Union environment regulations have blocked border crossings with Ukraine and motorways, and spilled Ukrainian produce from train wagons.

“These pictures show 160 tons of destroyed Ukrainian grain. The grain was in transit to the port of Gdansk and then to other countries,” Deputy Prime Minister Oleksandr Kubrakov posted on X with photographs of mounds of grain spilled from train wagons.

“The fourth case of vandalism at Polish railway stations. The fourth case of impunity and irresponsibility.”

Previous incidents of grain being spilled from trains took place on the border with Ukraine.

“We know that protests that take the form of spilling grain are not good,” Polish Agriculture Minister Czeslaw Siekierski told a news conference. But he added that he thought that sometimes the reaction to such incidents from the Ukrainian side went too far.

Lidia Kowalska, a police spokesperson from the northern Polish city of Bydgoszcz, said the incident took place in the nearby village of Kotomierz and the product spilled was corn.

“The details and circumstances are being investigated,” she told Reuters. “At 0930 we received a report about grain that had spilled out, it turned out that it was from eight wagons.”

China says January sow herd at 40.67 mln, down 1.8% m/m

China had 40.67 million sows at the end of January, down 1.8% month-on-month and down 6.9% from the previous year, the Ministry of Agriculture and Rural Affairs said on Monday.

The number of pigs slaughtered by pig enterprises in January jumped by 28.6% from a year before to 37.25 million heads, a 6.4% drop from the prior month.

US Beef Production Falls 3% This Week, Pork Rises: USDA

US federally inspected beef production falls to 492m pounds for the week ending Feb. 24 from 507m in the previous week, according to USDA estimates published on the agency’s website.

  • Cattle slaughter down 2.5% from a week ago to 593m head
  • Pork production up 0.5% from a week ago, hog slaughter rises 0.7%
  • For the year, beef production is 4.3% below last year’s level at this time, and pork is 1.3% above

Brazil Fertilizer Market Shifts to Attend Soybean 2024/25 Crop

Nitrogen prices fell in Brazil as buying winds down for the second corn crop and the focus shifts to potash and phosphates for the 2024/25 soybean crop. Potash compelling affordability and increased supplier’s competition could spur a demand anticipation, but phosphate demand might face further pressure from falling commodity prices and tightening supplies.

Potash Falls Amid Competition, Nitrogen Follows on Seasonal Lull

As second-corn crop sowing accelerates in Brazil and demand shifts to attend soybean 2024/25, urea prices fall 5.1% amid seasonal lull while potash average prices drop to 3-year lows ($285/mt) on high competition. Low commodity prices are a headwind for phosphates trades as farmers’ margins get compromised. Affordability is also affected by stronger monoammonium phosphate (MAP) prices as Moroccan and North America producers might divert supplies to regions with better netbacks. As soybean 2024/25 sowing starts only in September, there’s still time for farmers to prepare for the application season, possibly delaying purchases as a result.

Brazil’s National Supplies Company (Conab) reported that corn planting is now 45.3% complete, up from last year’s 33.3% progress at this time. The acceleration supports optimism over yields.

 

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.

© 2024 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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now