Global Ag News For July 7.22

HEADLINES TODAY

Wheat prices overnight are up 36 1/4 in SRW, up 28 1/4 in HRW, up 30 1/4 in HRS; Corn is up 10 1/2; Soybeans up 40; Soymeal up $0.91; Soyoil up 2.03.

For the week so far wheat prices are down 13 3/4 in SRW, down 39 1/4 in HRW, down 36 in HRS; Corn is down 13 3/4; Soybeans down 41; Soymeal down $0.31; Soyoil down 3.98.  For the month to date wheat prices are down 43 1/4 in SRW, down 72 in HRW, down 73 1/2 in HRS; Corn is down 24 1/4; Soybeans down 95 1/4; Soymeal down $18.10; Soyoil down 5.79.

Year-To-Date nearby futures are up 3% in SRW, up 6% in HRW, down -10% in HRS; Corn is up 27%; Soybeans up 21%; Soymeal up 14%; Soyoil up 8%.

Chinese Ag futures (SEP 22) Soybeans up 57 yuan; Soymeal up 93; Soyoil down 36; Palm oil down 104; Corn up 33 — Malaysian palm oil prices overnight were up 101 ringgit (+2.49%) at 4156.

There were changes in registrations (-2 SRW Wheat & 10 Oats). Registration total: 2,666 SRW Wheat contracts; 11 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 66 HRW Wheat.

Preliminary changes in futures Open Interest as of July 6 were: SRW Wheat down 1,441 contracts, HRW Wheat up 427, Corn up 613, Soybeans down 7,087, Soymeal down 1,842, Soyoil up 2,365.

Northern Plains Forecast: Isolated to scattered showers through Sunday. Temperatures near normal through Friday, above to near normal Saturday-Sunday. Outlook: Isolated showers Monday. Mostly dry Tuesday-Wednesday. Isolated showers Thursday-Friday. Temperatures near to below normal Monday-Friday.

Central/Southern Plains Forecast: Periods of isolated to scattered showers through Friday, mostly north. Mostly dry to isolated showers Saturday-Sunday. Temperatures above normal south and near normal north through Sunday. Outlook: Mostly dry to isolated showers Monday-Friday. Temperatures above normal Monday, above normal south and near normal north Tuesday-Thursday, near normal Friday.

Western Midwest Forecast: Isolated to scattered showers Thursday. Mostly dry north and scattered showers south Friday. Mostly dry Saturday. Mostly dry south and isolated to scattered showers north Sunday. Temperatures above to near normal Wednesday-Thursday, near normal Friday-Sunday.

Eastern Midwest Forecast: Periods of isolated to scattered showers through Friday. Mostly dry north and isolated showers south Saturday. Mostly dry south and isolated to scattered showers north Sunday. Temperatures above normal Thursday, near normal Friday, near to below normal Saturday-Sunday. Outlook: Isolated to scattered showers Monday. Isolated showers Tuesday. Mostly dry Wednesday-Friday. Temperatures near normal Monday-Friday.

Canadian Prairies Forecast:  Isolated to scattered showers Thursday. Isolated showers to mostly dry Friday. Temperatures near normal Thursday, above normal Friday. Isolated to scattered showers Saturday-Sunday. Temperatures above normal Saturday-Sunday. Outlook: Isolated to scattered showers far east, otherwise mostly dry Monday. Mostly dry Tuesday. Mostly dry to isolated showers Wednesday-Friday. Temperatures near normal Monday-Tuesday, above normal Wednesday-Friday.

The player sheet for 7/6 had funds: net sellers of 2,000 contracts of  SRW wheat, buyers of 4,000 corn, sellers of 3,500 soybeans, buyers of 2,500 soymeal, and  sellers of 2,500 soyoil.

TENDERS

  • WHEAT PURCHASE: A group of South Korean flour mills on Wednesday bought around 150,000 tonnes of milling wheat – 50,000 tonnes to be sourced from the United States and 100,000 tonnes to be sourced from Australia, European traders said.
  • FEED CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased animal feed corn in an international tender, thought to be close to 140,000 tonnes
  • FEED WHEAT PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc (NOFI) purchased an estimated 65,000 tonnes of animal feed wheat in an international tender
  • FEED BARLEY PURCHASE: Jordan’s state grain buyer purchased about 60,000 tonnes of animal feed barley to be sourced from optional origins in an international tender
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of hard milling wheat
  • FEED WHEAT, FEED BARLEY TENDER: Japan is seeking 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Oct. 31 and arrive in Japan by Dec. 22 via a simultaneous buy and sell auction on July 13, the country’s agriculture minister said.
  • FEED BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
  • WHEAT TENDER NEGOTIATIONS: A government agency in Pakistan is believed to still be in negotiations about an international 500,000 tonne wheat purchase tender that closed last week.

PENDING TENDERS

  • WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat, traders said. The deadline for submission of price offers is July 14, they said. A separate tender from Bangladesh for 50,000 tonnes of wheat closes on July 5.
  • VEGETABLE OIL TENDER: Egypt’s state grains buyer said on Monday 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 is on July 6.
  • FOOD WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 122,420 tonnes of food-quality wheat from the United States and Canada in regular tenders that will close on July 7.

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending July 1 are based on seven analyst estimates compiled by Bloomberg.

  • Production seen lower than last week at 1.047m b/d
  • Stockpile avg est. 22.798m bbl vs 22.746m a week ago

Ukraine Grain Exports Fall 69% Y/y as 2022-23 Season Starts

Grain exports during the season that began this month totaled 163k tons as of July 6, versus 518k tons in a similar period a year earlier, Ukraine’s agriculture ministry says on its website.

  • Corn exports total 128k tons, versus 333k tons last year
  • Wheat exports total 24k tons, versus 178k tons last year
  • NOTE: Ukraine’s seaborne trade has been blocked amid Russia’s invasion, limiting shipments to routes via its EU neighbors

Ukraine Wheat Crop to Fall by at Least a Third Y/y: Agritel

Ukraine is expected to harvest 18.1m tons of wheat this year from the territories currently under its control, agricultural advisory Agritel said in a report.

  • In addition, up to 3.7m tons of wheat may be produced in southern and eastern areas that are temporarily under Russian control
  • That puts the country’s total potential harvest at 21.8m tons
  • Last year, Ukraine harvested a record 32.2m-ton crop
  • NOTE: Agritel couldn’t conduct its usual crop tour due to the war; estimate was made from discussions with local analysts, traders and farmers

Ukraine Grain Group Raises 2022 Corn, Wheat Harvest Forecasts

The Ukrainian Grain Association raised its corn-harvest forecast by about 4.6% to 27.3m tons, according to an emailed statement.

  • Wheat harvest forecast for 2022 is raised by 8.3% to 20.8m tons
  • Barley harvest forecast is unchanged at 6.6m tons; sunflower seed forecast is also unchanged from 9m tons from its previous outlook in May
  • Ukraine may export 31.5m tons of grain and oilseeds if export logistics capacity is improved; under current logistics conditions export will be between 25m and 30m tons
  • Wheat export may be near 10m tons in year that started in July; barley export seen near 2m tons and corn near 10m tons
  • Sunflower seed carryover stock were at 5.8m tons and export in the 2022-23 season may reach 6m tons
  • Sunflower-seed processing is seen falling to 7m tons in 2022-23 from 10m tons a year earlier
    • Export of sunflower oil is complicated by logistical problems and more sunflower seed is being exported
  • Rapeseed harvest is seen at 1.65m tons, down from 2.9m tons year earlier; exports are seen at 1.45m tons
  • Soybean harvest is seen at 2.2m tons and exports are expected at 1.8m tons

Indonesia discussing cutting palm oil export levy-senior minister

Indonesia is discussing the possibility of cutting the palm oil export levy to help stimulate more overseas shipments, senior cabinet minister Luhut Pandjaitan said on Thursday.

The Southeast Asian country has unrolled a string of policies aimed at boosting exports after a three-week ban on shipments that has now be dropped boosted domestic inventories of the edible oil. Luhut said he expected shipments to run more smoothly in the next two weeks.

Indonesia sees B40 biodiesel mix absorbing extra 2.5 mln tonnes of palm oil

Senior Indonesian minister Luhut Pandjaitan estimated on Thursday that an additional 2.5 million tonnes of palm oil could be absorbed by the domestic market if the country raised the amount of palm oil in its biodiesel mix to 40% (B40).

The world’s biggest palm oil maker currently has a mandatory 30% blend of palm oil-based fuel in biodiesel, but is considering whether to increase the mix to help reduce inventory of the vegetable oil. Luhut added that the country may also export some of the biodiesel.

Russia Grain Union Says Wheat Shipment Financing Problems Remain

Russian grain exporters are still facing problems getting financing from European banks, even as US banks are behaving “more reasonably” and payments are going through, Russian Union of Grain Exporters head Eduard Zernin says at a conference.

  • Union made repeated appeals, including to FAO and directly to the leadership of those bodies that impose sanctions, to make a case that these licenses are valid
  • Problems with ships entering Russian ports for loading grain are related to EU measures that prevent ships entering for loading

Europe’s wheat crop set to be mixed bag after torrid weather

  • EU soft wheat crop seen at 125.7 mln T – poll average
  • Yields to fall in Spain, Italy; French crop seen varied
  • Rains to boost northern EU; UK prospects also favourable

The European Union is heading towards a smaller wheat crop this year as drought and extreme heat shrink yields in some regions, offsetting more favourable prospects elsewhere after timely rain, a Reuters poll showed.

The EU crop is being watched closely as war disrupts Ukraine’s exports, making the 27-country bloc a crucial short-term supply source for importers.

With harvesting under way, the EU is expected to produce 125.7 million tonnes of common wheat – or soft wheat – in 2022, down 3.4% from last year’s crop, according to an average of 13 forecasts in the poll.

The overall volume in the EU, collectively one of the world’s biggest wheat growers and exporters, is seen as harder to call this year as torrid weather has a contrasting impact. (Full Story)

“It seems to become a real mixed bag with substantial variations between regions,” one European trader said.

Conditions in France, the EU’s largest producer, illustrate this mixed picture.

After early reports of yields 20-30% below average in the south, French volumes are expected to pick up sharply in the north where deep soils and late-spring showers tempered drought. (Full Story)

The situation appears worse in Spain and Italy.

Severe drought and prolonged hot spells have parched growing belts, with Italy declaring a state of emergency along the river Po that supports about a third of its agricultural production. (Full Story)

An eastward shift in high temperatures since last month has also raised concern about crop stress in countries like Hungary.

But Romania and Bulgaria are still expected to reap large crops, though below last year’s record levels.

Russia now occupies roughly 22 percent of Ukraine’s farmland, according to a NASA analysis.

New satellite images show that Russia now occupies roughly 22 percent of Ukraine’s arable land, according to a NASA analysis.

Using data from Planet Labs satellites and the European Space Agency’s Sentinel-2 mission, NASA scientists created a map showing the distribution of summer and winter crops in Ukraine as of mid-June. The map also shows how much of Ukraine’s farmland — once a major food source for the world — is controlled by Russia, based on data from the Institute for the Study of War and the American Enterprise Institute’s Critical Threats Project.

The territories under Russian control include the fields where 28 percent of Ukraine’s winter crops and 18 percent of its spring crops are sown, according to the map, which was released by NASA Harvest, the agency’s food security and agriculture program.

Despite the war, data indicates that Ukraine is on track for a winter wheat yield of about 4.1 metric tons per hectare, Ms. Becker-Reshef said. “That’s not quite as high as the record-breaking wheat crop in 2021, but it’s still a sizable crop given the circumstances,” she said.

But it remains unclear how these crops will be harvested and exported around the world.

Sergii Skakun, a researcher at the University of Maryland and NASA who studies the war’s effect on farmers in the Donbas region of eastern Ukraine, said that NASA Harvest could not predict exactly how the war will affect Ukraine’s upcoming harvest, but that the scientists would continue tracking the harvest season closely.

India Wheat Flour Shippers Need Government Panel Nod for Exports

Wheat flour exporters in India will now need the “recommendation” of an inter-ministerial committee before sending shipments, according to a notification by the directorate general of foreign trade dated July 6.

  • The new rule comes into effect from July 12
  • Shipments will be allowed if loading of wheat flour on ship has already commenced, or if a consignment has been presented to the customs department before the notification was issued

Brazil Corn Exports Seen Reaching 43 Million Tns In 2021/22 – Anec

BRAZIL CORN EXPORTS SEEN REACHING 43 MILLION TNS IN 2021/22 – ANEC

Romania Reopens Soviet-Era Rail Line to Aid Ukraine Grain Sales

  • Country fixed link connecting Danube port of Galati to Ukraine
  • Ukraine’s exports have slumped with Black Sea ports blocked

Romania reopened a Soviet-era rail link connecting its Danube River port of Galati to Ukraine a month earlier than expected to help boost vital grain exports from its neighbor.

Ukraine, known the breadbasket of Europe, typically exports the bulk of its grain from Black Sea ports, but they’ve been blocked by Russia’s invasion. That’s constraining sales to road, river and rail routes to European countries and shipments remain well below normal pace.

Romania has already facilitated the export of more than 1 million tons of Ukrainian grain since the war began. In a Facebook post on Thursday, Transport Minister Sorin Grindeanu said the government refitted the link connecting Galati after works by a state-owned company began in early June.

That means grains coming from Ukraine via Moldova can reach Galati directly to be transfered onto barges and then further, including to the Black Sea port of Constanta. Supplies could also be stored in a silo in Galati that has a capacity of 25,000 tons, Grindeanu said.

Romania’s largest logistics company on the Danube, Transport Trade Services SA, also said this week that it opened a new water-only route to aid Ukrainian grain exports.

Brazilian Nitrogen Prices to Bounce as Planting Draws Closer

Urea prices recently returned to their March low in Brazil, yet the latest bounce appears set to stretch amid surging natural gas prices in Europe. Increased demand is also expected, currently delayed due to lower prices for corn, a barter item. Preparation for 2H planting appears to be bringing solid demand for phosphate and potash back to the marketplace.

Nitrogen Prices May Rise on Input Costs: Wednesday Whisper

Nitrogen prices appear to be flat to rising ahead of Friday’s final assessments in Brazil. Expectations are rising for demand from farmers in July ahead of planting seasons in 2H and 1Q23, and sustained natural gas supply constraints in Europe are raising global costs and suggest more price hikes in nitrogen. Meanwhile, prices for phosphate and potash, traded for soybean planting that starts in September, seem to be dropping as suppliers negotiate discounts to release stagnant volume grounded at ports. Potash prices slipped $50 a metric ton and phosphates followed, down $20.

US Fertilizer Prices Pressured as Summer Reset Accelerates

A round of aggressive summer fill programs has nudged the US fertilizer market lower. Phosphate and ammonia fill programs showed large declines from prompt prices in the traditional summer reset. Belaruskali is still searching for potash export options in the east, as smaller Belarus volumes continue to arrive in non-western regions.

Fertilizer Prices Flat-to-Soft in Wednesday Whisper

Inland prices for ammonia, urea ammonium nitrate, ammonium sulfate and phosphoric acid continued their seasonal decline in early week trading. However, except for ammonium sulfate, most products remained quiet at the New Orleans trading hub, as the industry advances toward its largest gathering of the year: the Southwestern Fertilizer Conference, July 10-14 in Nashville. In Brazil, urea prices remained stable, while potash and phosphates slipped.

Brazil’s Biggest Port Expands Capacity, Easing Fertilizer Crunch

Brazil’s biggest port is getting a new railroad that will help the key agricultural nation expedite imports of much needed fertilizer for crops.

An internal railway at Santos Port was approved Wednesday by a federal court known as TCU after a months-long process. The decision paves the way for a complete overhaul in logistics infrastructure within the port, which will likely see its rail capacity double in the next 5 to ten years.

One of the main features will be equipment that can quickly unload fertilizer shipments.

“The productivity of a specialized terminal can be seven times higher than a general terminal, where the cargoes are unloaded directly to trucks,” said Bruno Stupello, business development and regulation director of the Santos Port Authority.

Brazil, the world’s biggest producer of soybeans, coffee and sugar, imports 85% of its fertilizers. Farmers are expanding, and fertilizer purchases rose from 26 million tons in 2017 to 40 million last year, straining current logistics.

The port has a capacity to move 50 million metric tons per year, which will expand to 115 million tons.

The next steps, according to Stupello, will be to identify the companies that want to join an association that will operate the new railway and share costs. They’ll invest close to 900 million reais ($166 million) over the next five years, starting in 2023.

India Cumulative Monsoon Rainfall Normal as of July 6

India has so far received 213 millimeters of rains during the current monsoon season, which runs from June through September, compared with a normal of 213.3 millimeters, according to data published by the India Meteorological Department on July 6.

  • The central region got 10% below normal rains
  • Rainfall in the eastern and northeastern region was at 8% above normal

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.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now