Global Ag News for Jan 17.23
Mexico Slaps 50% Tariff on Corn Exports to Tame Tortilla Prices
Mexico introduced a temporary 50% tariff on exports of white corn used in basic food as it seeks to contain a spike in the price of tortillas, one of the country’s staples.
The duty, which will be in place through June 30, seeks to guarantee that local production remains in the country and that white corn prices stabilize, according to the decree signed by President Andres Manuel Lopez Obrador and published Monday. Imports of the grain used for human consumption will be exempted of tariffs.
White corn is a key source of calories in the diet of Mexican consumers, representing 89% of the country’s grain production, the decree said. On average, Mexicans consume more than 330 kilograms of white corn per person annually, it said.
Mexico is struggling to contain a spike in food prices that led to inflation reaching 8.7% during the third quarter, the highest level in more than two decades. Last year, the Lopez Obrador administration reached an agreement with some of the country’s top businesses to contain the cost of basic goods by removing import barriers and red tape.
FUTURES & WEATHER
Wheat prices overnight are down 13 1/4 in SRW, down 13 1/2 in HRW, down 15 in HRS; Corn is down 5 1/2; Soybeans down 11 3/4; Soymeal down $0.67; Soyoil down 0.07.
Markets finished last week with wheat prices down 8 1/4 in SRW, up 3 1/2 in HRW, down 1 1/2 in HRS; Corn is up 16 3/4; Soybeans up 28 1/2; Soymeal up $0.02; Soyoil down 0.62.
For the month to date wheat prices are down 61 1/2 in SRW, down 57 3/4 in HRW, down 41 1/2 in HRS; Corn is down 9; Soybeans down 8; Soymeal down $1.40; Soyoil down 1.08.
Year-To-Date nearby futures are down 7.8% in SRW, down 6.5% in HRW, down 4.4% in HRS; Corn is down 1.3%; Soybeans down 0.2%; Soymeal down 1.9%; Soyoil down 1.3%.
Chinese Ag futures (MAR 23) Soybeans up 74 yuan; Soymeal down 16; Soyoil up 36; Palm oil up 34; Corn up 3 — Malaysian palm oil prices overnight were down 57 ringgit (-1.48%) at 3795.
There were changes in registrations (-1 SRW Wheat, 517 Soybeans, 112 Soymeal). Registration total: 2,787 SRW Wheat contracts; 0 Oats; 154 Corn; 1,182 Soybeans; 479 Soyoil; 112 Soymeal; 280 HRW Wheat.
Preliminary changes in futures Open Interest as of January 13 were: SRW Wheat down 116 contracts, HRW Wheat up 3,404, Corn up 11,375, Soybeans up 11,032, Soymeal down 243, Soyoil down 85.
The player sheet for Jan. 13 had funds: net buyers of 1,000 contracts of SRW wheat, buyers of 2,000 corn, buyers of 4,000 soybeans, sellers of 3,000 soymeal, and sellers of 1,000 soyoil.
- CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 68,000 tonnes of animal feed corn expected to be supplied from either the United States or South America in a private deal on Thursday without an international tender being issued
- FEED WHEAT PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased about 130,000 tonnes of animal feed wheat in two private deals this week without issuing an international tender.
- WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 45,200 tonnes of milling wheat to be sourced from the United States in a tender on Friday.
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 113,460 tonnes of rice to be sourced from the United States. The deadline for submissions of price offers was Dec. 29.
- SUNFLOWER OIL TENDER: Turkey’s state grain board TMO issued an international tender to purchase about 24,000 tonnes of crude sunflower oil.
- SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 19,000 tonnes of food-quality soybeans free of genetically-modified organisms (GMOs).
Brazil Port Gridlock Looms for Sugar, Soy, Corn Exports: StoneX
Bigger Brazilian grain supplies, and shortfalls elsewhere because of drought in Argentina, will likely contribute to port congestion in the country in the coming months, according to Ricardo Nogueira, an analyst at StoneX Financial.
- “March-May exports are expected to be 2m-2.5m mt higher than last year for soybeans and corn, on account of the good local harvest and shortfall due to the drought in Argentina,” Nogueira said in a report
- The situation will create a “logistical dispute for space,” the Sao Paulo-based analyst wrote
- For sugar prices, “some traders are already anticipating this, and that is why we are seeing a well-supported market for the March and May futures, contradicting the large surplus we see for the 2nd half”
SOYBEAN/CEPEA: Prices drop in BR; agents focus on crops
Soybean prices have dropped in the Brazilian market this week, pressed down by the dollar depreciation, lower export premium and estimates for a record crop in the 2022/23 season in Brazil, forecast at 152.71 million tons by Conab and at 153 million tons by the USDA.
Thus, liquidity continues low in the Brazilian market. Between Jan. 5th and 12th, the dollar dropped a steep 5%, closing at BRL 5.094 on Thursday, 12. On the average of the regions surveyed by Cepea, soybean prices faded 2.7% in the over-the-counter market (paid to farmers) and 1.7% in the wholesale (deals between processors) market. In the same period, the ESALQ/BM&FBovespa Paranaguá (PR) Index decreased 2.8% in the last seven days, to BRL 177.43 (USD 34.83) per 60-kilo bag on Thursday, 12. The CEPEA/ESALQ Paraná Index dropped 3.5%, closing at BRL 170.67 (USD 33.50) per 60-kilo bag.
However, price drops have been limited by the lack of sellers in the spot market – farmers are currently focused on crops activities and are showing no interest in trading the remaining of the 2021/22 season.
So far, the harvesting of the 2022/23 crop has begun in Mato Grosso, majorly in the areas allocated to the second crop of cotton. Productivity may decrease in some areas of MT because of a water deficit; however, this decrease may be offset by high productivity in other regions within the state, according to Conab. The number of Asian soybean rust cases is a lot lower this season, with only six cases spotted, against 262 in the 2021/22 season.
In Goiás, lower productivity may reduce the output compared to that last season. In Minas Gerais, soybean crops were damaged by the drought last year, which may lower productivity. However, as a larger area has been sown, production is expected to be higher than the last.
In Mato Grosso do Sul, the output may be 49.4% higher than the last one, due to higher productivity. However, farmers are concerned about pests’ infestations.
For São Paulo, productivity is expected to increase, however, there have been more cases of Asian soybean rust in crops: 11, against four last season, according to Embrapa.
In Southern Brazil, the 2022/23 soybean output is estimated to increase, despite irregular rains during sowing. The recent rains have helped many areas to recover, majorly in PR and RS. It is important to mention that, in PR, 31 cases of Asian soybean rust have been spotted, a lot more than the five cases from last season.
In the Matopiba, Conab estimates productivity to increase. Although the crops in Maranhão were damaged by the drought at the beginning of sowing, recent rains have favored crops.
CORN/CEPEA: Exports are high, but dollar presses down quotations at Brazilian ports
Corn prices dropped steeply at Brazilian ports in the second week of January, opposite to the national corn exports – which have been high this month. Pressure on quotations came from the US dollar depreciation, which limits the export parity value.
The devaluations observed at port were partially passed on to the prices in the interior of Brazil. Besides, agents have been focused on the beginning of the corn harvesting in southern Brazil, whose output is expected to be higher than that last season, although crops productivity was limited by weather issues.
Considering exports data from this month and valuations abroad, domestic prices could have been firm. According to Secex, in five working days, Brazil exported 1.87 million tons of corn, against 2.73 million tons in January/22. If exports continue high, with a daily average of 375.31 thousand tons/day, they may total 7.8 million tons in January. However, Anec (Brazilian Association of Grains Exporters) estimates Brazilian corn shipments will hit 5 million tons in January.
As for prices, between January 5 and 12, quotations decreased 3.6% at the port of Paranaguá (PR) and 4.8% at the port of Santos (SP), averaging BRL 87.25/60-kg bag and BRL 88.15/bag, respectively, on Jan. 12th. The American currency dropped a steep 5%, to BRL 5.09 on Thursday, 12.
Corn prices also dropped in some typical consuming regions in Brazil. In Campinas (SP), the ESALQ/BM&FBovespa Index for corn decreased 1% in the last seven days, to BRL 86.86 (USD 17.05) per 60-kilo bag on Thursday, 12.
However, in important regions that produce the summer crop in southern Brazil, such as Santa Rosa (RS), Ijuí (RS) and Northern PR, prices rose. Thus, on the average of the regions surveyed by Cepea, prices dropped 0.4% in the wholesale market (deals between processors) but increased 0.2% in the over-the-counter market (paid to farmers).
ESTIMATES – On Thursday, 12, Conab released new crop estimates, revising down the output from the first crop of corn in Brazil, influenced by the hot and dry weather in Rio Grande do Sul and excessive rains and low temperatures in Paraná and Santa Catarina.
According to Conab, as the productivity of the summer crop has been hampered, the output is expected at 26.46 million tons, 3% down from that estimated in December but still 5.7% up from that in 2021/22.
For the second and third crops, with a larger area and expectations for favorable weather, the outputs are forecast to be high. Considering the three crops, the Brazilian corn output is estimated at 125.06 million tons in 2023, 96.27 million tons in the second crop and 2.33 million in the third crop, increases of 10%, 12% and 5.4% compared to the previous season, according to Conab.
Brazil 2022/23 Soy Harvest 0.6% Done as of Jan. 12: AgRural
Compares with 0.04% a week earlier and 1.2% a year before, consulting firm AgRural says in emailed report.
- Works are focused on Mato Grosso and Rondonia states; harvest has not started in Brazil South region
- Summer corn harvest is 4.5% done, compared to 2.3% a week earlier and 6.3% a year before
Malaysia Jan. 1-15 Palm Oil Exports -36.94% M/m: Intertek
Malaysia’s palm oil exports fell 36.94% m/m during Jan. 1-15, according to Intertek Testing Services.
- Total exports for Jan. 1-15: 409,731 tons
- Crude palm oil exports: 61,000 tons, 14.9% of total
- EU led all destinations for total exports: 131,900 tons
Brazil soy farmers to reap record crop driven by growth in area -Reuters poll
Brazilian soybean growers will harvest a record soy crop just below 153 million tonnes in the 2022/2023 cycle driven by a rise in planted area and favorable weather in most parts of the country, according to a Reuters poll on Monday.
Though forecasters have cut output projections for southern Brazil due to a persistent drought in Rio Grande do Sul state, production increases in other parts of the world’s biggest soybean supplier will offset losses there, poll data shows.
The new projection, based on assessments by 14 forecasters, represents an advance of around 2 million tonnes compared with the previous survey by Reuters, made in October.
One of the main drivers of the rise in production is a bigger planted area, which analysts believe will reach 43.4 million hectares (107.2 million acres) this season, up from 42.83 million hectares in the previous poll.
The findings of the survey, if confirmed, will represent increases of 21.8% in output and 4.58% in area sowed compared with the past season, when a drought spoiled part of the crop in southern Brazil.
“Everything leads to believe that we are going to harvest over 150 million tonnes,” said Luiz Fernando Roque, analyst with agribusiness consultancy Safras & Mercado. “Even with the (expected) losses in Rio Grande do Sul state, the record harvest is guaranteed.”
While Rio Grande do Sul will lose part of its soy crop again this season, the extent of the damage remains unclear, the analysts say.
Rains are expected to return as February approaches, which could limit the damage to crops. But if that precipitation is not confirmed, there is room for an aggravation of the scenario in Rio Grande do Sul, Roque noted.
Ukraine’s Corn Quality Much Worse Than Last Year: Minister
Quality of Ukraine’s corn would be “significantly lower” than last year, as nearly 15% of maize is unharvested, Agriculture Minister Mykola Solskyi tells reporters in Kyiv.
- Quality losses may range from “several percent” to as much as 15%
- Details on corn quality could be given in late February
- “Due to warm winter there is no critical situation with winter crops, but it doesn’t help either, as any warm weather triggers early maturing of winter wheat and barley”
- NOTE: Ukraine’s harvesting of corn has been significantly delayed due to weather conditions, power issues, as Russia deliberately targets Ukraine’s energy grid, causing repeated blackouts all over the country
Ukraine’s Black Sea Crop Exports Fall 20% in Week to Jan. 15
Crop exports from Ukraine’s ports under the Black Sea Grain Initiative totaled about 490,825 tons in the week to Jan. 15, according to data posted by the Joint Coordination Centre.
- The total compares to about 610,996 tons the prior week
- Currently, 30 inbound and outbound vessels are waiting for inspection, compared with 27 last week; 79 applications for participation have been submitted, compared with 71 last week
- NOTE: JCC recently split its reporting of the queue into those waiting for inspection and those who submitted applications
- NOTE: Bad weather halted vessel departures for part of last week
- TOTAL TONNAGE: More than 17.4m tons of crops have shipped since the initiative was agreed in late July
WHEAT/CEPEA: Production estimates are revised up again; quotations drop
The estimates for wheat production in Brazil and abroad were revised up again, according to data released by Conab and the USDA last week – both are expected to set records. Still, the world consumption of wheat is expected to be higher than the output. Prices are still dropping the Brazilian wholesale market, as well as the US dollar is – between Jan. 6th and 13th, the America currency decreased 2.8%, closing at BRL 5.094 on Friday, 13.
Although the harvesting has ended, Conab revised up the production estimates for wheat in the Brazilian 2022 season, to 9.76 million tons, 27.2% up from that in 2021 and a national record. Productivity is forecast at 3.16 tons/hectare, 12.9% higher than the previous. The area with wheat crops totaled 3.08 million hectares, 12.7% larger, in the same comparison.
With the national production higher, the estimates for the volume to be imported were revised down by 100 thousand tons, to 6 million tons between Aug/22 and Jul/23, 1.3% lower than that last season. Thus, the domestic availability of wheat is estimates at 16.48 million tons, and consumption in Brazil, at 12.29 million tons. Record availability and consumption are expected to result in an also record surplus in Brazil, which may hit 4.2 million tons. Exports estimates were kept at 3 million tons (Aug/22-Jul/23). Thus ending stocks were revised up to 1.19 million tons in Jul23.
BRAZILIAN MARKET – According to Cepea surveys, between Jan. 6th and 13th, the price paid to wheat farmers rose 0.29% in Paraná and 0.08% in Rio Grande do Sul but dropped 0.23% in Santa Catarina. In the wholesale market (deals between processors), quotations decreased 2.33% in PR, 1.12% in São Paulo, 0.43% in SC and 0.24% in RS.
Based on data from Conab (Brazil’s National Company for Food Supply), between January 2 and 6, the import parity price for the wheat from Argentina delivered to Paraná State was USD 380.32/ton. Considering the average of the US dollar in that period, at BRL 5.3701, the wheat imported was sold at BRL 2,042.36/ton, while for the Brazilian wheat traded in Paraná, the average was lower, at BRL 1,717.67/ton, according to data from Cepea. In Rio Grande do Sul, the import parity for the product from Argentina would be of USD 357.10/ton (BRL 1,917.68/ton), against BRL 1,510.91/ton on the average of the state surveyed by Cepea.
Traffic resumes after Ukraine cargo ship grounded near Istanbul
The cargo ship MKK 1, travelling from Ukraine to Turkey, was grounded in Istanbul’s Bosphorus Strait on Monday and traffic in the strait was suspended for a few hours, shipping agents Tribeca said.
Several tugs were among vessels sent to provide assistance to the ship, the coastguard authority said. It said no damage or spill was reported.
Television footage showed the bow of the ship, carrying 13,000 tonnes of peas, grounded close to the coastline on the Asian side of the Bosphorus.
The Joint Coordination Centre in Istanbul, which runs the U.N.-brokered Black Sea grain deal operations, said at the weekend the ship was travelling from Pivdennyi to the Turkish Mediterranean port of Mersin.
Tribeca said the Palau-flagged general cargo ship was grounded at Acarburnu at the northern end of the strait early on Monday as it headed southbound.
India Dec. Oilmeals Exports Rise to 433,430 Tons
India’s oilmeals exports rose to 433,430 tons in December from 407,193 tons in November, according to the Solvent Extractors’ Association of India.
- Rapeseed meal exports rose to 194,748 tons from 134,952 tons in November
- Soymeal exports fell to 121,138 tons from 164,075 tons in November
- Rice-bran extract exports rose to 65,658 tons from 55,888 tons in November
- Castorseed meal exports rose to 47,727 tons from 45,424 tons in November
Farmers in India Boost Planting of Winter-Sown Wheat, Oilseeds
Wheat planting in the world’s second-biggest grower rose 1.4% from a year earlier to 33.72m hectares (83m acres) as of Jan. 13, according to the farm ministry.
The area under winter-sown pulses increased 1% to 16.11m hectares, while the planting of oilseeds rose to about 10.75m hectares from 9.97m, the ministry said on Friday. Sowing operations are still continuing in some parts of the country.
Egypt to Launch New Bread Debit Card System Next Week
New payment card will allow citizens not covered by the ration card to buy bread from bakeries that sell subsidized bread, Supply Minister Aly El-Moselhy says.
Those loaves will be sold at cost higher than bread provided under subsidy program
US Beef Production Up 17.1% This Week, Pork Rises: USDA
US federally inspected beef production rises to 548m pounds for the week ending Jan. 14 from 468m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter up 17.4% from a week ago to 661m head
- Pork production up 17.3% from a week ago, hog slaughter rises 17.1%
- For the year, beef production is 2.1% below last year’s level at this time, and pork is 0.1% below
China’s Hog Inventory Recorded Marginal Increase Last Year
China’s inventory of pigs rose 0.7% from a year earlier to 452.56 million in 2022, the National Bureau of Statistics said on Tuesday.
- The number of slaughtered hogs increased 4.3% y/y to 699.95 million
- Pork production climbed 4.6% y/y to 55.41 million tons
- Total meat output expanded 3.8% y/y to 92.27 million tons, with chicken meat production up 2.6% to 24.43 million tons
Fertilizer Prices Drop as Buying Stalls Before Spring
Nitrogen, phosphate and potash prices remain tempered in the US, as buyers review producers’ recently released winter and spring pricing programs. Falling fertilizer prices — down 34% year over year — could lead to some relief in consumer food-price inflation. Urea and potash fell significantly.
Urea Falls, Potash Prices Drop With Launch of Fill Programs
US prices were down sharply for potash, following the launch on Jan. 11 of producer fill programs, at $475-$480 a short ton (st) in the Midwest, well below the prior week’s $520-$545 range for prompt tons. The program has a week-long order period for product shipped by March 31, with lower fill prices also announced in the Northeast, Southern Plains, Western US and Canada. Delays to an expected Indian tender pushed urea prices lower at New Orleans (NOLA) and inland, with NOLA falling to $375-$408/st vs. the prior week’s $416-$455 and Corn Belt prices dropping to $455-$500/st vs. $510-$540 last week. Phosphate prices were mixed at NOLA but down $10-$15/st at most Corn Belt warehouses, while sulfate of potash (SOP) and SOP Magnesia prices saw significant declines in the Southern US following lower postings from producers.
Brazil Fertilizer Prices Mixed; Potash Up, Urea Down
Potash prices are up $10 a metric ton (mt) as the soybean season approaches, with expectations of higher phosphate prices as well. Urea fell again amid quiet demand. Imports in 2022 were down 3.4 million mt from 2021, but purchases are accelerating after usage cutbacks in 2022.
Brazil Annual Fertilizer Imports Drop 8% as Consumption Slows
Brazil’s fertilizer imports fell 20% in December and 8.1% in 2022 after strong physical inventories were built during the first half of the year. Year-end 2022 inventories are at record levels vs. the last four years, possibly up to 8-10 million metric tons (mt) from 7.27 million in 2021, stemming from scaled-back applications and a 6.2% increase in national production from January-October vs. the same period in 2021. Total 2022 fertilizer consumption is expected to be down 10%, with around 41 million mt delivered to end customers, a drop from 2021 record levels of 45.8 million mt.
Due to price hikes for all raw materials, phosphate imports declined 20.6%, potash dropped 7.6% and urea fell 7.8% in 2022. By contrast, ammonium sulfate imports were 41% above 2021 as the product became a price-attractive alternative to urea.
La Niña Anticipated to Ease Over Summer: BoM
La Niña continues in the tropical Pacific, but has weakened from its peak in spring 2022, Australia’s Bureau of Meteorology said in a statement.
Though ocean temperatures have warmed in recent weeks, atmospheric indicators are largely unchanged and remain at La Niña levels
Long-range forecasts suggest that tropical Pacific Ocean temperatures will continue to warm and be at ENSO-neutral levels (neither La Niña nor El Niño) during Feb., with a change in atmospheric patterns towards neutral levels likely to follow
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.
© 2021 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.