Global Ag News For July 19.22

Wheat prices overnight are down 4 1/2 in SRW, down 4 3/4 in HRW, down 4 in HRS; Corn is down 13 1/2; Soybeans down 17 1/4; Soymeal down $0.34; Soyoil down 1.04.

For the week so far wheat prices are up 31 1/2 in SRW, up 31 3/4 in HRW, up 28 1/4 in HRS; Corn is down 6 3/4; Soybeans up 20 3/4; Soymeal up $0.09; Soyoil up 1.61. For the month to date wheat prices are down 75 3/4 in SRW, down 82 1/2 in HRW, down 55 in HRS; Corn is down 22 1/2; Soybeans down 95; Soymeal down $14.20; Soyoil down 4.62.

Year-To-Date nearby futures are up 5% in SRW, up 8% in HRW, down -5% in HRS; Corn is up 1%; Soybeans up 11%; Soymeal up 5%; Soyoil up 11%.

Chinese Ag futures (SEP 22) Soybeans down 60 yuan; Soymeal up 21; Soyoil up 158; Palm oil up 264; Corn down 17 — Malaysian palm oil prices overnight were down 77 ringgit (-1.95%) at 3868.

There were changes in registrations (-22 Corn, -16 Soymeal). Registration total: 2,653 SRW Wheat contracts; 0 Oats; 6 Corn; 61 Soybeans; 219 Soyoil; 0 Soymeal; 79 HRW Wheat.

Preliminary changes in futures Open Interest as of July 18 were: SRW Wheat down 718 contracts, HRW Wheat down 162, Corn down 7,435, Soybeans down 1,046, Soymeal down 225, Soyoil down 2,084.

Northern Plains Forecast: Scattered showers Tuesday. Mostly dry Wednesday-Thursday. Isolated showers Friday. Temperatures near to above normal Tuesday-Friday. Outlook: Isolated showers Saturday. Mostly dry Sunday-Wednesday. Temperatures near to above normal Saturday-Wednesday.

Central/Southern Plains Forecast: Mostly dry through Wednesday. Isolated showers Thursday-Friday. Temperatures above normal through Friday. Outlook: Isolated showers Saturday-Wednesday, mostly north. Temperatures above normal Saturday-Wednesday.

Western Midwest Forecast: Isolated showers north Tuesday. Mostly dry Wednesday-Thursday. Isolated showers Friday. Temperatures near to above normal through Friday.

Eastern Midwest Forecast: Scattered showers north Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures near to above normal Tuesday-Friday. Outlook: Isolated showers Saturday-Sunday. Mostly dry Monday-Tuesday. Isolated showers Wednesday. Temperatures near to above normal Saturday-Wednesday.

The player sheet for 7/18 had funds: net buyers of 12,000 contracts of  SRW wheat, buyers of 6,500 corn, buyers of 17,000 soybeans, buyers of 1,500 soymeal, and  buyers of 8,000 soyoil.

TENDERS

  • WHEAT TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), is seeking an unspecified amount of wheat in an international purchasing tender.
  • BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
  • OFFERS IN WHEAT TENDER: The lowest price offered in a Pakistan tender to purchase 300,000 tonnes of wheat was believed to be $404.86 a tonne c&f
  • WHEAT PURCHASE: An importer group in the Philippines is believed to have bought an estimated 42,000 tonnes of Australian-origin animal feed wheat in a tender
  • NO PURCHASE IN SOYMEAL TENDER: Leading South Korean animal feed maker Nonghyup Feed Inc (NOFI) is believed to have rejected all offers and made no purchase in a tender to purchase up to 60,000 tonnes of soymeal, European traders said.
  • SOYMEAL PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased about 60,000 tonnes of soymeal in a private deal on Monday without an international tenders being issued

PENDING TENDERS

  • WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat, traders said. Only one trading house is believed to be participating
  • VEGETABLE OIL TENDER: Egypt’s state grains buyer said it was seeking at least 3,000 tonnes of soyoil and 1,000 tonnes of sunflower oil in a local production tender for arrival Aug. 10-30. Deadline for offers was on July 6.
  • 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

USDA CROP PROGRESS: Corn Conditions 64% G/E, Soybeans 61%

Highlights from the report:

  • Corn 64% G/E vs 64% last week, and 65% a year ago
  • Corn dough 6% vs 2% last week, and 7% a year ago
  • Corn silking 37% vs 15% last week, and 52% a year ago
  • Soybeans 61% G/E vs 62% last week, and 60% a year ago
  • Soybeans blooming 48% G/E vs 32% last week, and 61% a year ago
  • Spring wheat 71% G/E vs 70% last week, and 11% a year ago
  • Winter wheat harvest 70% vs 63% last week, and 71% a year ago
  • Cotton 38% G/E vs 39% last week, and 60% a year ago
  • Sorghum 35% G/E vs 40% last week, and 68% a year ago

China’s June Agriculture Trade Summary

General Administration of Customs in Beijing released agriculture final trade figures for June.

  • Soybean imports -23.1% y/y to 8.25M tons
  • Corn imports -38.2% y/y to 2.21M tons
  • Wheat imports -31.3% y/y to 0.52M tons
  • Rice imports +120% y/y to 0.66M tons

US Inspected 1.074m Tons of Corn for Export, 363k of Soybean

In week ending July 14, according to the USDA’s weekly inspections report.

  • Wheat: 186k tons vs 310k the previous wk, 533k a yr ago
  • Corn: 1,074k tons vs 935k the previous wk, 1,077k a yr ago
  • Soybeans: 363k tons vs 359k the previous wk, 144k a yr ago

Malaysia Keeps Crude Palm Oil Export Tax at 8% in August

Gazetted price for crude palm oil at 5,257.91 ringgit a ton, which incurs the maximum export tax of 8%, according to a statement from the customs department posted on the Malaysian Palm Oil Board’s website.

  • NOTE: Tax has been kept at 8% since Jan. 2021, following government exemption in July-December 2020
  • NOTE: Export duty structure starts at 3% when FOB prices for CPO are in the 2,250-2,400 ringgit per ton range
  • Maximum tax rate is 8% when prices are above 3,450 ringgit per ton

Indonesia May Delay B35 Biodiesel Mandate as More Tests Needed

Indonesia may hold off imposing a higher B35 biodiesel mandate amid technical issues, according to Dadan Kusdiana, Director General of New and Renewable Energy at the Energy and Mineral Resources Ministry.

  • More tests are needed on using the B35 mix, Kusdiana says without giving a new target date, adding that discussion with related ministries are ongoing
  • Automakers are supportive of the plan to add palm-biodiesel mix from 30% to 35% in local gasoil, he says

Oilseed Meal Exports From India Surge 69% M/m in June: Group

Shipments climbed to 431,840 tons in June from 255,453 tons a month earlier, the Solvent Extractors’ Association of India said in an emailed statement Tuesday.

  • NOTE: Exports totaled 203,868 tons in June last year
  • Rapeseed meal shipments 308,549 tons in June vs 169,148 tons in May
  • Soymeal exports 32,194 tons vs 18,634 tons
  • Rice bran extract sales 64,025 tons vs 35,840 tons
  • Castorseed meal exports 26,365 tons vs 31,156 tons
  • Oilseed meal exports climbed to 1.02m tons in three months ended June 30, from 735,892 tons a year earlier, helped mainly by rapeseed meal shipments
  • Currently India is the most-competitive supplier of rapeseed meal to South Korea, Vietnam, Thailand and other Far East Countries, the group said

Brazil corn exports soar 221%, driven by Ukraine’s absence

Brazilian corn exports via southern ports in Parana state have continued to exceed expectations, with shipments rising 221% in the first half of the year amid Ukraine’s absence from the market.

According to a Paranagua port authority statement on Monday, the rise in corn export volume was possible as demand picked up at a time when Brazil still had plenty of its summer corn crop to offer.

“With the conflict, Ukraine, which exports corn at this time of year, is unable to ship,” the port authority said. “Thus, countries have to look for corn in other origins, including Brazil.”

The data suggests the South American country is on track to export about 37.5 million tonnes this year, up about 80% from 2021, as the real busy corn export season normally begins in the second half.

At this time of the year, Brazilian farmers are finalizing harvesting of their winter corn, which makes up about 75% of national production in a given year.

Brazil’s abundant winter corn makes it a large exporter in the second half, competing with heavyweight suppliers like the United States in global markets.

Brazil’s short-term corn export prospects have also been bolstered by a protocol allowing sales to China, though shipments have not effectively begun.

Brazil CS 2022 Winter Corn Harvest 53% as of July 14: AgRural

Brazil Center South winter corn harvest was at 40.5% a week earlier and 30.1% a year ago, according to an emailed report from consultancy firm AgRural.

The harvest of the 2022 winter corn had another week of good progress in the Center-South of the country, thanks to the weather hot and dry, with the exception of Parana state and the south of Mato Grosso do Sul state, AgRural says

Trade Agency Rejects Import Tariffs on Fertilizer From Russia

A US trade agency declines to impose import tariffs on fertilizer from Russia and Trinidad and Tobago amid industry concern about high prices.

The US International Trade Commission, an independent agency that advises the federal government on trade, votes against the tariffs; lawmakers and the agriculture industry have urged waiving trade restrictions after prices hit a record this year amid the invasion of Ukraine by Russia, the world’s top fertilizer exporter

“We have been sounding the alarms and telling the ITC commissioners that tariffs will drive up input prices to even more unaffordable levels for farmers and cripple our supply,” National Corn Growers Association President Chris Edgington says in a statement

Agritel sees French soft wheat crop falling to 33.25 mln T this year

Consultancy Agritel expects the soft wheat crop in the European Union’s largest producer France to fall to 33.25 million tonnes this year due mainly to a lower area harvested, it said on Monday in an initial estimate.

A final estimate will be released late July based on a survey of industry players, Agritel, which is part of commodity pricing group Argus, said in its weekly newsletter.

The estimate was above the French farm ministry’s projection last week of a 2022 soft wheat crop at 32.90 million tonnes, down 7.2% compared to 35.43 million tonnes harvested in 2021

Ukrainian farmers rush to harvest grain from fields near frontline

A plume of smoke rises from a burning field in Ukraine’s Zaporizhzhia region, an increasingly common sight across swathes of farmland in the south and east of the country that borders a frontline stretching more than 1,000 km (620 miles).

In nearby fields, farmers are racing to harvest crops before they too are devoured in fires sparked by Russian shelling from the fighting in neighbouring Donetsk.

“This is our harvest, burned by Orcs (Russians), we have not managed to harvest it,” said Dmytro, a Ukrainian soldier holding out a fistful of burnt wheat stalks he picked from blackened field. “This is territory that has nearly been captured by the Russians. They are 3 kilometres away from here.”

A short ride away, a thick layer of ash covers the ground of what used to be a huge grain silo destroyed by a missile last month. Its contents — last year’s crop — were burned in the fire that followed the hit.

Since Russia’s Feb. 24 invasion of Ukraine, the world’s fourth largest grains exporter, Kyiv has repeatedly accused Russia of attacking infrastructure and agriculture to provoke a global food crisis and pressure the West.

Moscow, which calls the conflict a “special military operation”, blames Western sanctions and sea mines laid by Ukraine for the drop in food exports and rising global prices.

In the Dnipropetrovsk region, a little to the north, Andriy, a farmer whose fields have been under near-constant shelling for more than a month, braves the shellfire to save his crops from going up in smoke.

“We got used to it, weird is when they do not shoot,” said Andriy, driving his combine harvester in the field of wheat. “When they shoot, it is normal, we are used to it.”

WHEAT/CEPEA: Deals are sporadic, and prices continue firm in BR

As Brazilian agents are currently focused on ending wheat sowing in many regions and are already waiting for the new national crop to arrive at the market, deals have been sporadic in the domestic market. Also, agents are aware of the estimates pointing to lower outputs in the world and in Argentina, which is the major wheat supplier to Brazil.

Quotations have been firm, higher than BRL 2 thousand per ton and oscillating slightly, majorly in the over-the-counter market (paid to farmers). Cepea surveys show that, between July 8 and 15, the prices paid to wheat farmers remained stable in Paraná and in Santa Catarina but rose by 0.23% in Rio Grande do Sul. On the other hand, in the wholesale market (deals between processors), values decreased by 0.74% in PR and by 0.18% in RS but continued stable in SC. In São Paulo, prices increased by 0.9%. The US dollar rose by 2.7%, to 5.407 BRL on July 15.

According to Conab (Brazil’s National Company for Food Supply), 88.1% of the national area allocated to wheat crops had been sown by July 9.

ESTIMATES – Data released by the USDA last week pointed to lower world production, consumption and stocks in the 2022/23 season, compared to that in the 2021/22 season. As for ending stocks, estimates were revised up from that reported in June.

According to the USDA, the world production in the 22/23 crop is estimated at 771.6 million tons, 0.2% lower than that forecast in June and 0.9% down from that last season. This reduction is linked to lower production in Ukraine, the European Union and Argentina, since higher estimates for the United States, Canada and Russia were not enough to push up the world output.

In Argentina, the Bolsa de Comércio de Rosário estimates the area with wheat crops to shrink from 6.2 million hectares to 5.9 million hectares in the 2022/23 season, due to the water deficit in the country. The area with wheat crops in Argentina had not been smaller than 6 million hectares since the 2017/18 season (5.4 million hectares). Thus, the output has been revised down too, now forecast at 17.7 million tons.

Russia’s Wheat Exports Are Off to Flying Start Amid Bumper Crop

  • Other major producers see shrinking harvests due to drought
  • Russia has half as many customers as last year: Interfax

Russia started the season exporting wheat at almost twice the speed of last year, just as Ukraine struggles to ship its produce due to the war and other major producers are hit by drought.

Russia has shipped 1.2 million tons of wheat in the first two weeks of this agricultural year, Interfax reported, citing comments from Russian Grain Union analyst Elena Turina. The number of countries buying its wheat has halved to 12 from a year earlier, but “shipments to countries that are our traditional buyers have sharply increased,” she said.

A major grain exporter, Russia is expected to have a record crop this season. Wheat prices are still much higher than usual for this time of year, after Russia’s invasion of Ukraine cut the country’s grain shipments. Elsewhere heat, drought and storms are shrinking harvests.

Turina said that Russian wheat had become more competitive after the country’s export tax switched to rubles from dollars, causing the price to fall significantly.

The blistering pace so far is a sign that complications due to sanctions and the war aren’t yet stopping Russia exporting food, even if it’s facing problems with insurance and shipping.

Russia’s average wheat yield is also 24% higher than last year, according to the Agriculture Ministry. Still, it’s early in the season, and good weather may have helped the early export pace.

China’s Wholesale Farm Prices Inch Up Despite Lower Pork Prices

The wholesale prices of China’s farm products edged up on Monday even as the price of pork, a staple meat in the country, dropped, according to data from the Ministry of Agriculture and Rural Affairs the same day.

The agricultural product wholesale price index added 0.42 points to 124.18 index points on Monday from Friday.

The average wholesale price of pork slipped 0.5% to 30.37 yuan ($4.50) per kilogram, while the price of eggs inched up 0.6% to 9.99 yuan per kilogram.

Meanwhile, the average wholesale prices of 28 key types of vegetables climbed 0.9% from Friday to 4.71 yuan per kilogram, while the average price of six kinds of fruits edged 1.3% lower to 7.06 yuan per kilo, the ministry added.

China Has Ample Grain Stocks to Ensure Food Security: Professor

China has adequate rice and wheat supplies as well as policy tools to ensure food security, Fan Shenggen, chair professor at China Agricultural University, said at a World Economic Forum session on Tuesday.

  • China’s inventories of major grains can meet demand for more than a year, Fan said
  • Diversifying imports “a little” away from Brazil and US toward Africa, Asia and other Latin American countries will be a long-term solution for food security
  • China still faces challenges of rising food import costs

Palm Oil Set to Plunge 20% by September, Top Analyst Predicts

  • Veteran analyst Mistry in May correctly predicted earlier drop
  • Market to keep sinking because of rising Indonesian reserves

Palm oil, the world’s most consumed cooking oil, may extend its slide, tumbling more than 20% to 3,000 ringgit ($673) a ton by September, driven by surging supplies in Indonesia, said veteran analyst Dorab Mistry.

Inventories in top exporter Indonesia have swollen to 10 million tons and will continue to increase in August because of high production, before stabilizing at around 9-10 million tons in September, Mistry, director at Godrej International Ltd., said in an interview on Tuesday.

“They are chock-a-block with palm oil,” he told Bloomberg TV. “Barges, ships, everything is being used to store palm oil. Whatever is done by the government is too little and too late.” In May, Mistry correctly predicted an earlier price slide, saying that Indonesia easing its export ban was only a matter of time.

A further slump in palm may help ease global food inflation, which peaked in May-June, according to Mistry, who’s traded the oil for over four decades.

Shifting Policy

Palm oil has been whipsawed by Indonesia’s shifting export policy. The country imposed a shipment ban in late April that was meant to cool surging costs of domestic cooking oil and curb food inflation. But the halt had little impact on local prices and instead led to overflowing storage tanks.

The ban was lifted three weeks later and replaced with a policy that requires producers to sell some output domestically, as well as an option for an accelerated program that allows companies to pay a special tax to get additional export quotas.

“Indonesia will have to pay for the folly and the mistake of its government in imposing a ban on palm oil,” Mistry said, adding that the move was well-intentioned, but had unintended consequences. “When you do something catastrophic like that, you destroy demand, you destroy markets, you destroy the service industries.”

More ‘Pain’

Indonesia, which on Saturday said it will waive its export levy until the end of August, will have to extend that exemption even longer, according to Mistry. The top shipper should also abolish the Domestic Market Obligation policy and remove export taxes to successfully boost exports and cut stockpiles.

Even so, there’s another six to eight months of “pain” in Indonesia before stockpiles ease to normal levels of 5-6 million tons and prices stabilize, Mistry said. That means the outlook for palm oil remains bearish for now. Benchmark futures have already slumped 45% from a record close at end-April.

“This is just one step in the southward journey in palm oil,” Mistry said. Prices will not reach a bottom until there’s a ceasefire in Ukraine and walled-up supplies of products like sunflower oil, wheat and corn come onto the market, he said, adding prices could slump to 2,500-3,000 ringgit when the war ends.

Potash Supplies Build in Americas as Farmers Resist High Prices

Global potash prices, down 10% in 2Q, may slip further in 2H as supply grows in the Americas and some farmers curb consumption. Russian material continues to trade — with fertilizer exempted from US sanctions — but at a discount to prompt tons. Prices will still be historically elevated, supporting efforts by Mosaic, K+S and Nutrien to boost capacity.

Potash Supply Inches Higher as Farmers Resist

Western sanctions levied against Russia and Belarus remain in place, but trade options for Russian potash are rapidly increasing. Though major producers have expanded capacity, we expect shortages and relatively high prices to extend into 2023, even as farmers curb use. Potash supply appears plentiful in the Americas, but deficits are growing in some Asian countries. Brazilian imports are up 37% year-to-date, indicating plentiful supply ahead of 3Q consumption, while Chinese port inventory has fallen close to the strategic-reserve level.

Sanctions-driven potash-supply shocks are driving Canadian producers to fill the void with new capacity. We estimate the world will add an average of 1.4 million metric tons a year until 2025. At that pace, demand growth would exceed new supply, keeping the market tight and prices elevated.

Chinese Potash Supplies Suggest Buying Ahead

China’s potash availability has dropped as sanctions limit Belarusian trade, hinting at a potential need for imports. Chinese port inventory of 1.6 million metric tons is just above the strategic-reserve level (the lowest level authorities will theoretically allow) of 1.5 million. Further declines would likely send China back to the global market. China is the world’s third largest potash importer, sourcing 20% of its imports from Belarus. This year, China has enacted policies to protect domestic fertilizer supplies and ensure food security.

Year-to-date, Chinese MOP imports of 3.5 million tons are down 15% from last year, declining 14% from Russia, 33% from Canada and 9% from Belarus. The latter’s imports total 927,201 tons, peaking in March at 314,670 tons and ebbing since to about 147,000 in April and 94,000 in May.

Canadian Production, Capacity Set to Rise

Canadian potash producers in 2Q disclosed plans to add enough capacity to nearly offset the loss of sanctioned Belarusian tons. Over five years, Canada’s potash production could expand 8-9 million metric tons — about 75% of Belarus’ 2021 export volume. Potash expansion projects are measured, capital-intensive and prone to delays. Nutrien added 1 million tons of production capacity in 2021, a pace that could be sustained for the next two years as the company seeks to ramp up 5 million tons by 2025. Mosaic will boost Colonsay’s annual run rate by 300,000 tons, while K+S is evaluating expanding Bethune.

Canadian potash production through April was 8.2 million tons, equaling last year. Exports through May dropped 1% to 9.1 million tons. Shipments to the lower-priced Chinese market slid 23% to 590,394 tons.

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