Global Ag News for Jan 13 22

 TODAY – EXPORT SALES

Wheat prices overnight are down 6 1/2 in SRW, down 11 1/4 in HRW, unchanged in HRS; Corn is down 3 1/2; Soybeans down 9 1/2; Soymeal down $0.44; Soyoil down 0.07.

For the week so far wheat prices are down 7 1/4 in SRW, down 8 1/4 in HRW, down 2 3/4 in HRS; Corn is down 11 1/4; Soybeans down 20 1/2; Soymeal down $1.32; Soyoil up 0.52. For the month to date wheat prices are down 19 1/2 in SRW, down 34 3/4 in HRW, down 61 1/2 in HRS; Corn is up 2 1/4; Soybeans up 50 1/2; Soymeal up $12.70; Soyoil up 2.77.

Chinese Ag futures (MAY 22) Soybeans down 21 yuan ; Soymeal up 3; Soyoil up 42; Palm oil up 72; Corn up 10 — Malasyian Palm is up 121. Malaysian palm oil prices overnight were up 121 ringgit (+2.40%) at 5161.

There were no changes in registrations. Registration total: 1,900 SRW Wheat contracts; 25 Oats; 50 Corn; 371 Soybeans; 143 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of January 12 were: SRW Wheat down 890 contracts, HRW Wheat up 224, Corn up 9,341, Soybeans up 9,132, Soymeal up 1,409, Soyoil up 188.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers north through Friday. Scattered showers Saturday-Sunday. Temperatures near to above normal through Thursday, above normal Friday-Sunday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Thursday. Isolated showers Friday-Sunday. Temperatures near normal through Friday, near to above normal Saturday-Sunday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry through Friday. Isolated showers Saturday-Sunday. Temperatures above to well above normal through Saturday, near to above normal Sunday. La Pampa, Southern Buenos Aires Forecast: Mostly dry through Friday. Isolated showers Saturday-Sunday. Temperatures above to well above normal through Saturday, near to above normal Sunday.

The player sheet for Jan. 12 had funds: net sellers of 8,500 contracts of  SRW wheat, sellers of 2,500 corn, sellers of 5,500 soybeans, buyers of 2,000 soymeal, and  buyers of 1,500 soyoil.

TENDERS

  • SOYBEAN, CORN SALES: The U.S. Department of Agriculture confirmed private sales of 132,000 of U.S. soybeans to China for delivery in the 2022/23 marketing year. The agency also confirmed 100,000 tonnes in corn sales for shipment to unknown destinations in the 2021/22 season.
  • BARLEY TENDER: Turkey’s state grain board TMO has issued an international tender to purchase 345,000 tonnes of animal feed barley
  • MILLING WHEAT TENDER: Iranian state agency the Government Trading Corporation (GTC) has issued an international tender to purchase about 60,000 tonnes of milling wheat
  • FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 80,000 tonnes of feed wheat and 100,000 tonnes of feed barley to be loaded by Feb. 15 and arrive in Japan by March 17, via a simultaneous buy and sell (SBS) auction that will be held on Jan. 19.

PENDING TENDERS

  • RICE TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of rice with import using land transport by railway
  • WHEAT TENDER: Iraq’s state grains buyer has extended the deadline for validity of price offers in tender to buy a nominal 50,000 tonnes of milling wheat in which only a limited number of trading companies were asked to participate
  • WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 107,555 tonnes of food-quality wheat from the United States and Canada in regular tenders that will close on Jan. 13.
  • WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy milling wheat to be sourced from optional origins
  • RICE TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of rice
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins
  • WHEAT TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 335,000 tonnes of milling wheat

USDA Cuts Estimate for Brazilian Soybean Crop: WASDE Takeaways

  • Brazilian beans: USDA was more aggressive than analysts expected in its chop to soybean production, coming in lower than Brazil’s trim yesterday. The South American weather market is here and is sure to dominate headlines for the next weeks
  • Big crop gets bigger: So much for the wild U.S. weather during last year’s growing season, when conditions were seen as too dry in the western half of the Corn Belt and too wet in the east. The American corn crop got 2.5% bigger from August to January, even as future demand for U.S. exports to top importer China may be squelched by a bigger harvest in Ukraine.
  • Wheat swells: Chicago wheat futures saw the biggest loss in the latest WASDE’s wake, with world stockpiles bigger than expected, and U.S. plantings in line with the consensus. That could help take the edge off food inflation. Still, weather woes, including dryness in the U.S., will be in focus over and the stockpile figure remains at a five-year low.
  • No drama January: The first WASDE of the year can often jolt the market, given the massive amount of data dropped. But this year was relatively steady given the backdrop of farm inflation and wild weather variations. So all those questions going into today on South American harvests, plantings and China demand for the world’s grains are just as relevant as yesterday.
  • Uncertainties ahead: From still-high fertilizer prices to worries over longer-term drought, there’s still plenty of unknowns that could drive higher grain prices. Farmers for the most part have been responding to elevated prices by planting more but Mother Nature has a say in whether crop totals can increase enough to satisfy demand.

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

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thurs for week ending Jan 6.

  • Corn est. range 425k – 1,600k tons, with avg of 810k
  • Soybean est. range 500k – 1,600k tons, with avg of 905k

Planalytics Lowers Argentine Soy Crop Forecast to 2.86 Tons/Ha

Outlook for this year’s crop yield is down from previous forecast of 2.89 tons/hectare, according to data issued by Planalytics on Wednesday.

  • Declines across three major growing regions
  • Yield in key provinces versus previous Planalytics forecast (in tons/hectare):
    • Buenos Aires 2.72 vs 2.75
    • Sante Fe 3.17 vs 3.20
    • Cordoba 3.17 vs 3.20
  • Soybean forecasts updated each fortnight until Feb. 9

Planalytics Lowers Brazil Soy Forecast to 3.44 Tons/Ha

Outlook for this year’s crop yield is down from previous forecast of 3.52 tons/hectare, according to data issued by Planalytics on Wednesday.

  • Declines across all of Brazil’s major growing regions
  • Yield in key states versus previous Planalytics forecast (in tons/hectare):
    • Mato Grosso 3.59 vs 3.62
    • Parana 3.19 vs 3.41
    • Rio Grande do Sul 3.06 vs 3.18
    • Goias 3. 68 vs 3.73
  • Soybean forecasts updated each fortnight until Feb. 9

Heavy Rain Affected 127,000 Farmers in Brazil’s Minas Gerais

Recent rains have affected about 127,000 farmers in Minas Gerais, Brazil’s biggest coffee-producing state and fifth largest corn producer, according to a preliminary study conducted by state agriculture agency Emater.

  • About 416 cities (48.7% of total) have reported some damage because of the rains
  • 23.3% of corn planted area was affected
  • Milk collection is down 9% on average
  • As for the production of vegetables, 37% of the area is estimated to be compromised
  • Production of first crop Brazilian soybeans was the most affected, with 42.2% of the area to be harvested

Abiove projects Brazil soy production will drop by nearly 5 mln T from previous forecast

A trade group representing global soy crushers such as Cargill CARGIL.UL and Bunge in Brazil on Wednesday reduced its soybean output forecast for the 2021/2022 season, citing a drought in Southern Brazil.

In a statement on Wednesday, Abiove said it expected Brazil to produce 4.8 million fewer tonnes of soy this year, pegging total output at 140 million tonnes. Because of lower product availability, Abiove also cut its export projection by 2% to 91.1 million tonnes.

Argentina drought, river woes push soy crushers into losses – chamber

Argentina’s soybean crushing industry closed 2021 with idle capacity of 50% and negative margins due to drought and low water levels in the Parana River which are pushing up transportation costs, a sector chamber said on Wednesday.

The CIARA oilseeds industry chamber said in a monthly report that low sales from farmers had hit crushing production in the world’s top exporter of processed soybean oil and meal, which is crushed in huge mills alongside the Parana waterway.

“With the volume of soybean milling in December (2.9 million tonnes) there was a new increase in the idle capacity of the industry, now reaching almost 50%,” the chamber said. The country has seen idle capacity reach up to 60% in recent years.

The Parana River has dropped to a recent record low level at inland grains port hub Rosario, which Reuters reported this week, forcing cargo ships to load 30% less grains than normal. Dry weather is also likely to hit harvests.

“The return of the Parana River decline is causing an increase in export costs; all these variables together led to the return of negative milling margins,” CIARA said.

Argentina’s government said earlier on Wednesday that local farmers were lagging behind in soy sales versus the previous harvest season. In total, the mills have bought 29.3 million tonnes of soy from the 2020/21 cycle.

Argentine farmers are now sowing soy for the 2021/22 cycle.

Argentine farmers sold 37.3 mln tonnes of 2020/21 soybeans -govt

Argentine farmers have sold 37.3 million tonnes of soybeans from the 2020/21 season so far, the Agriculture Ministry said on Wednesday in a report that included data through Jan. 5.

The rhythm of sales was behind that of the previous season. At this time last year sales of 38 million tonnes of the oilseed had been registered, according to official data.

The 2020/21 soybean harvest in Argentina ended in June at 43.1 million tonnes, according to the Buenos Aires Grains Exchange, which estimated the 2019/20 crop at 49 million tonnes.

Foreign exchange from agricultural exports is essential for Argentina’s battered economy, which is only now beginning to grow after more than two years of stagflation exacerbated in 2020 by the COVID-19 pandemic.

Argentine farmers are now planting 2021/22 soy. The grains exchange expects 44 million tonnes to be harvested. Farmers have sold 4.9 million tonnes of grains from that season, as planting reaches its final stages.

Argentina to Subsidize Corn, Wheat to Keep Prices Down: Destape

Argentina plans to create a fund to subsidize local consumption of wheat and corn, Domestic Trade Secretary Roberto Feletti tells El Destape news website.

  • The idea is to decouple prices at home from international ones, Feletti said: El Destape
  • Feletti said the government wants food to be affordable for workers: El Destape
  • NOTE: Exporters would contribute to the fund, with the money being paid out to large industrial consumers of wheat and corn, according to local news reports

US renewable fuel credits fall 6% after Reuters report

U.S. renewable fuel credit prices fell nearly 6% on Wednesday after a Reuters report said the Biden administration is considering lowering the 2022 ethanol blending mandate below the proposed 15 billion gallons, citing sources.

Renewable fuel (D6) credits RIN-D6-US traded at $1.20 cents each on Wednesday, down from $1.27 each on Tuesday, traders said.

U.S. Urea Remains Pressured

New Orleans urea prices kept falling in early week trading, reported in the low $600s per short ton free on board (st/fob). A week-ago rebound to nearly $700/st soon faltered. Inland prices also softened. Market participants pointed to a significant uptick in U.S. imports from July-November as reason for the pressure. Prices for other nitrogen products, ammonium sulfate and urea ammonium nitrate firmed, and ammonia was stable. New Orleans dry phosphate prices continued to drift lower, as did the inland market. Warehouse potash prices have slipped $15-$20/st since mid-December.

Low vegetation density levels throughout the southeast slash Paraguay soy production – Refinitiv Commodities Research

2021/22 PARAGUAY SOYBEAN PRODUCTION: 9.25 [8.53–10.12] MILLION TONS, DOWN 5% FROM LAST UPDATE

Low vegetation density levels throughout key producing areas of the southeastern Oriental Region cut 2021/22 Paraguay soybean production by 5% to 9.25 [8.53–10.12] million tons. Our median production estimate is below the USDA World Agricultural Outlook Board (WAOB)’s 10.0 million tons, which assumes national level area and yield at 3.4 million hectares and 2.94 tons per hectare (tph), respectively (vs. Refinitiv Ag Research’s 3.36 million hectares and 2.75 tph, respectively).

Unfavorable warmth/dryness across the northern Pampas lower Argentina soy production – Refinitiv Commodities Research

2021/22 ARGENTINA SOYBEAN PRODUCTION: 45.4 [41.3–48.9] MILLION TONS, DOWN <1% FROM LAST UPDATE

Continued unfavorable warmth and dryness across the northern Pampas fractionally lower 2021/22 Argentina soybean production to 45.4 [41.3–48.9] million tons, despite decent planting progress and relatively healthy soil moisture in the southern counterpart. Our current estimate puts planted area at 16.3 million hectares, slightly above the Bolsa de Comercio in Rosario’s 16.2 million hectares, but below 16.5 million hectares reported by Bolsa de Cereales in Buenos Aires.

Palm Oil Will Stay Above 4,700 Ringgit Over Next Six Months: LMC

Palm oil will likely ease over the next six months but remain above 4,700 ringgit ($1,124) a ton as supply constraints that have pushed prices to record highs are set to persist, according to LMC International.

It will take another 12 months before palm oil production in Southeast Asia recovers to end-2019 levels, Julian Conway McGill, LMC’s regional head, said in slides prepared for a seminar. This will imply three full years of zero growth as output from Malaysia and Indonesia shrank in 2020 and 2021, he said.

Palm oil prices have more than doubled in the past three years, driven by a severe labor crunch in Malaysia and tight global vegetable oil supplies. The Covid-19 pandemic shuttered borders in the No. 2 grower and froze new recruitment of foreign workers, sending annual production to a five-year low.

The weak output from Malaysia was no surprise but the decline in Indonesia’s production after one of its strongest first-half performance came as a shock, McGill said. He expects Malaysian production to rise 2.6% this year to 18.6 million tons and Indonesia’s output to climb 5% to about 47 million tons.

Other details from the slides:

  • Tight palm oil supplies and higher soybean crushing will shift Indian imports toward soybean and sunflower oils. The market should keep an eye on Indian policies toward genetically modified soybean oil.
  • Soybean crushing was below 2020 levels in most major producers and importers despite an excellent soybean crop. This has limited the volume of oil produced.
  • As crushing margins improve, U.S. soybean oil supplies will become more competitive. In China, crushing has been undermined by power cuts despite better margins, but should rise after Lunar New Year.

Palm Oil Prices to Average 3,800 Ringgit/Ton This Year: MPOB

Average price of crude palm oil is expected to drop to 3,800 ringgit a ton this year from 4,407 ringgit in 2021, according to Ahmad Parveez Ghulam Kadir, director general of the Malaysian Palm Oil Board.

Current high prices are not sustainable in 2022 as production is forecast to increase, Ahmad Parveez said at an industry conference Thursday

Prices of other major vegetable oils are also expected to decline amid a recovery in production, which will weigh on palm

Challenges to palm oil consumption include the use of mineral oil hydrocarbons in food products

Malaysia must ensure its palm oil products are free from contaminants, while complying with other sustainable criteria

The MPOB is working with industry participants to address the issue

MPOB forecasts for 2022:

  • Malaysian palm oil output seen at 19m tons this year, +4.9% y/y
  • Palm oil exports likely at 17m tons, +9.3% y/y
  • Export revenue seen at 95b ringgit, -10.8% y/y
  • End-2022 stockpiles expected at 1.95m tons, +23.4% y/y

EU Wheat Prices Likely Past Peak for Season: Strategie Grains

EU grain export prospects are weakening due to stiff competition from Argentina and Black Sea wheat in African import markets, especially French wheat into Algeria, consultant Strategie Grains says in a report.

  • Barley demand in major importer Saudi Arabia is also waning, and corn exports from Bulgaria and Romania have lost momentum
  • That’s helped push European prices down from “very high levels” reached in November
  • “It should continue to create bear pressure on wheat and barley prices prior to the end of the campaign”
  • For 2022-23, EU wheat stockpiles could hold about steady y/y
  • Harvest is seen ~2m tons lower, but exports could also fall

Malaysia’s Biodiesel Production to More Than Double Through 2030

Malaysia’s biodiesel production may rise from 1m tons last year to 2.5m tons by 2030, according to the Malaysian Biodiesel Association. Output is expected to rise to 1.2m tons this year and 1.5m in 2025, MBA President Unnikrishnan Unnithan said in slides at a seminar.

  1. Africa Floods Risk 75% of Corn in Key Production Area

Almost three-quarters of corn in South Africa’s key production areas have been damaged after heavy summer rains, Business Insider South Africa reports, citing Christo van der Rheede, executive director at farmers’ group AgriSA.

  • Excessive rain in regions, including the Free State and KwaZulu-Natal provinces, mean almost 2 million tons of essential crops that include corn may be lost
  • Some of the damaged corn has already been deemed unfit for human consumption

Brazil faces another year of high food inflation due to drought

Brazilian consumers could see another round of stiff rises in food prices this year as meatpackers grapple with higher costs due to a drought hurting the crops used to feed livestock.

Meat industry group ABPA says there is no relief in sight before Brazil starts harvesting its mid-year corn crop.

“We see the need for companies to continue to pass on costs,” Ricardo Santin, the head of ABPA, said in an interview.

Given a weaker outlook for the domestic harvest, companies such as BRF SA and JBS SA may have to import cereal, as they did in 2021, he said.

Private analysts are slashing their crop forecasts due to hot, dry weather in Brazil’s southern states, while state crop agency Conab has been conservative, trimming its outlook but projecting a larger soy and corn crop than last year.

Meat prices in Brazil rose 8.45% in 2021, according to government statistics agency IBGE, contributing to overall food inflation of 7.94% and fuelling a 10.06% rise in the benchmark consumer price index, the highest for a calendar year since 2015.

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