Global Ag News for June 8.22

HEADLINES TODAY

Wheat prices overnight are down 3/4 in SRW, up 1 in HRW, down 3/4 in HRS; Corn is up 7; Soybeans up 15 3/4; Soymeal down $0.01; Soyoil up 0.95.

For the week so far wheat prices are up 33 3/4 in SRW, up 32 in HRW, up 42 1/2 in HRS; Corn is up 37 1/4; Soybeans up 36 1/4; Soymeal up $0.82; Soyoil up 1.20.

For the month to date wheat prices are down 16 1/2 in SRW, down 15 1/4 in HRW, down 21 in HRS; Corn is up 10 1/2; Soybeans up 56; Soymeal down $3.60; Soyoil up 3.61.

Year-To-Date nearby futures are up 39% in SRW, up 44% in HRW, up 26% in HRS; Corn is up 29%; Soybeans up 31%; Soymeal up 2%; Soyoil up 47%.

Chinese Ag futures (SEP 22) Soybeans down 3 yuan; Soymeal up 25; Soyoil up 196; Palm oil up 104; Corn up 10 — Malaysian palm oil prices overnight were down 41 ringgit (-0.63%) at 6464.

There were no changes in registrations. Registration total: 1,010 SRW Wheat contracts; 0 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 139 HRW Wheat.

Preliminary changes in futures Open Interest as of June 7 were: SRW Wheat up 2,292 contracts, HRW Wheat down 862, Corn down 9,254, Soybeans up 45, Soymeal up 2,887, Soyoil down 771.

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

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

Western Midwest Forecast: Scattered showers through Saturday. Temperatures near to below normal through Saturday.

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

The player sheet for 6/7 had funds: net sellers of 6,000 contracts of  SRW wheat, buyers of 9,000 corn, sellers of 7,000 soybeans, buyers of 3,000 soymeal, and  buyers of 1,000 soyoil.

TENDERS

• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 169,250 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on June 9.
• CORN PURCHASE: Feedmakers in the Philippines bought around 53,000 tonnes of corn, likely to be sourced from South America, in a recent deal and are likely to buy one more cargo
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Tuesday, traders said. Only one trading house was said to have participated, CHS. A new tender is expected to be issued in coming days.

PENDING TENDERS

• RICE TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities, was seeking at least 25,000 tonnes of white rice in a tender-practice on the account of the Holding Company for Food Industries. Offers were to be submitted by May 19.
• WHEAT TENDER UPDATE: Bangladesh’s state grains buyer received the lowest price offer of $464.55 a tonne CIF liner out in an international tender to import 50,000 tonnes of wheat, officials from the country’s grain purchasing agency said on Monday. Trading house Bagadiya Brothers submitted the lowest offer in the tender, which closed on Sunday, the Directorate General of Food added. No purchase had yet been reported and the offers were still being considered, the officials said.
• VEGETABLE OIL TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Sunday it was seeking vegetable oils in an international purchasing tender for arrival Aug. 5-25. The deadline for offers is June 8.

U.S. Corn Exports Down 16% Y/y in April, Soy Up 169%: Census

CROP SURVEY: Brazil 2021-22 Soybean Output Seen at 124.3M Tons

Brazil’s official soybean crop est. seen 467,000 tons higher than the previous est., according to the avg in a Bloomberg survey of seven analysts.

• The range of estimates varied from 122.3m tons to 125.8m tons
• Corn crop seen little changed at 114.45m tons, with range of 110.7m-118.1m tons
• Conab, the Brazilian national supply company, is scheduled to release its latest estimates on June 8 at 9am local time.

EU 2021/22 soybean imports at 13.56 mln T by June 5, rapeseed 5.06 mln T

European Union soybean imports in the 2021/22 season that started last July had reached 13.56 million tonnes by June 5, compared with 14.29 million tonnes by the same week in 2020/21, data published by the European Commission on Tuesday showed.

EU rapeseed imports so far in 2021/22 had reached 5.06 million tonnes, compared with 6.03 million tonnes a year earlier.

Soymeal imports so far in 2021/22 were at 15.20 million tonnes against 16.12 million a year ago, while palm oil imports stood at 4.53 million tonnes versus 5.02 million.

EU sunflower oil imports, most of which usually come from Ukraine, were at 1.79 million tonnes, against 1.65 million a year ago, the data showed.

EU Soft-Wheat Exports Rise 1% in Season Through June 5

Soft-wheat shipments during the season that began July 1 totaled 25.3m tons as of June 5, versus 25m tons in a similar period a year earlier, the European Commission said Tuesday on its website.

• NOTE: Figures for the prior season include trade for the U.K. until Dec. 31, 2020, when the country departed the EU customs union
• Top soft-wheat destinations are Algeria (4.53m tons), Egypt (2.54m tons) and China (2.13m tons)
• EU barley exports at 6.78m tons, versus 7.18m tons a year earlier
• EU corn imports at 15.3m tons, versus 14.2m tons a year earlier

Ukraine Plays Down Grains Corridor Hope, Warns of ‘Catastrophe’

Ukraine is working with partners to establish a humanitarian corridor for grain shipments but it is early to talk about a deal, Agriculture Minister Mykola Solskyi told a Turkish newspaper, warning that failure to open up exports from his nation will lead to “catastrophic” global price increases.

The Ukrainian minister’s remarks come as Russian Foreign Minister Sergei Lavrov visits Turkey to discuss a proposal on restarting shipments of Ukraine’s agricultural products from the key Black Sea port of Odesa.

The Kremlin’s invasion has cut off shipments of grain and other farm products from Ukraine, threatening millions of people in its traditional markets with food shortages. Moscow has denied responsibility for the disruption.

“It it is too early to talk about any results regarding these efforts,” Solskyi told Turkey’s economy daily Dunya in remarks published on Wednesday, adding that Ukraine remained in contact with its trade partners and the United Nations on the possibility.

He said 20 million tons of grains and legumes as well as 5 million tons of seed oils from the 2021 harvest can’t be exported due to the blockade and that the situation will become dire when new harvest begins in July.

Ukraine is the leading exporter of sunflower oil as well as a major shipper of grains like barley, corn and wheat. Since it is not possible to fill the vacuum by another global supplier, the results will reverberate globally, Solskyi said.

Turkish President Recep Tayyip Erdogan’s government has offered military help to clear mines off the coast of Odesa and escort grain ships but Ukraine has yet to endorse the plan, worried that removing defenses could leave the vital port prone to Russian attack, according to people familiar with the discussions.

Along with Turkey, the Netherlands has expressed willingness to send warships to escort grain supplies stuck in Ukrainian ports. Dutch Foreign Minister Wopke Hoekstra is also paying a visit to Ankara on Wednesday.

Russia May Raise Wheat Export Duty by 10%: Izvestia

Agriculture Ministry is considering increasing the wheat export duty by 10% to stabilize domestic prices, Izvestia reports, citing the ministry.

• Duty will be raised after the average global price of wheat passes the $375/ton threshold
• According to the ministry’s data, average price of wheat on May 27 was $373/ton
• Ministry sees 2022 grain harvest at 128m tons

Manitoba’s Crop Progress Is One Month Behind Amid Weather Delays

65% of crops have been sown, behind the five-year average of 95%, the province’s agriculture ministry says Tuesday in a report.

• Crop progress is a month behind normal due to repeated weather delays
• Weather and soil conditions have led to shifting acreage plans

France Sees 2022 Rapeseed Crop Up 18% Y/y; Corn Acreage Cut

This year’s French harvest of winter rapeseed is estimated at 3.87m tons, up 18% y/y, as higher plantings offset lower yields, its agriculture ministry said Wednesday in its first forecast for the season.

• That remains 5.1% below the five-year average
• Winter-barley production is seen at 8.25m tons, up 0.4% y/y and in line with the five-year average
• Crop conditions are generally good, but drought is intensifying across the country and affecting yields of the coming harvests
• Outlook for corn plantings cut to 1.44m hectares, versus May estimate of 1.46m hectares, due to high fertilizer and gas costs
  • That puts the area 6.8% lower y/y
• Sunflower plantings estimate raised to 797k hectares, from 758k hectares, a record since the start of the century
  • That puts the area 14% higher y/y
• Sugar-beet area cut slightly to 397k hectares

Indonesia Lets Palm Exporters Pay Special Tax for DMO Exemption

Indonesia, the world’s top palm oil producer, will set a special export tax of $200 a ton to let companies get shipment permit without having to wait to verify their domestic sales obligation, according to Veri Anggrijono, acting director general of foreign trade at the trade ministry.

• The special export tax is on top of the current tax and levy
• Govt aims to speed up process to ensure producers with overflowing stockpiles can export and farmers can sell their fresh fruit bunches
• Regulation on the special export policy is set to be issued in 1-2 days
• Trade ministry is also proposing revision to the current export tax and levy
• Proposal is for maximum export tax for crude palm oil to be increased to $288/ton, from $200, while maximum additional levy to be lowered to $200/ton, from $375/ton, said Oke Nurwan, director general of domestic trade

Zimbabwe to Pay Farmers Fixed $ Price for Early Corn Delivery

Zimbabwe will pay farmers a fixed $90 per ton for the early delivery of corn, Jenfan Muswere, the acting information minister, tells reporters after a cabinet meeting.

• Farmer will also receive a local-currency payment of 75,000 Zimbabwean dollars per ton
• Incentive will be extended to other grains

Barchart Cuts Production and Yield Forecasts for Corn and Soybeans in Initial 2022 Estimates

• Barchart’s initial forecasts see end-of-season U.S. corn production at 14.2B bu with a yield of 174 bu/ac. This compares to the USDA’s 14.5B bu of production and 177 bu/ac yield.
• End-of-season U.S. soybean production is forecast at 4.4B bu with a yield of 49.5 bu/ac. This compares to the USDA’s 4.6B bu of production and 51.5 bu/ac yield.

Jokowi Urges Indonesians to Use Idle Land to Plant Rice, Corn

President Joko Widodo urged Indonesians to make use of idle land to plant rice, corn and other staples to build up the nation’s food supplies amid the global shortage fueled by the war in Ukraine.

“Brothers and sisters who can plant rice, please plant rice. What else do you want to plant? Corn? Go ahead. Right now the price of corn is going up,” he said on Wednesday at a gathering of farmers in Central Java.

Jokowi, as the president is known, asked his ministers to look into why there are plots left abandoned despite the owners holding land use permits issued decades ago. The government must also speed up land redistribution and improve infrastructure for farmers.

“Everything must be productive,” he said.

Rice Is Canary in Coal Mine for Food-Driven Political Unrest

Indonesians have seen supplies run short and prices soar for everyday food items such as cooking oil, soybean and wheat, stretching household budgets and stirring public discontent. Southeast Asia’s largest economy has resorted to price caps, export bans and subsidies to stave off a food crisis, as supply chain disruptions and poor weather wreak havoc in the world’s food distribution.

Brazil Mulls Using More Biodiesel to Avoid Truck Fuel Shortage

• Government would boost biodiesel blend to 15% from 10%
• Measure would happen in second half of year for a limited time

Brazil’s government is mulling an increase later this year in the amount of biodiesel blended into trucking fuel to avoid shortages.

Latin America’s largest economy may boost the biodiesel blend to 15% from 10% if stockpiles of diesel remain at low levels during the second half of the year, according to people with direct knowledge of the matter, who asked to not be named because the discussion isn’t public. The increase would be in place for a limited time, one of the people said.

Using more biodiesel would actually increase fuel prices, as biodiesel is more expensive than the petroleum-based fuel. Diesel prices are already at record levels due to tighter global supply amid sanctions on Russia following its invasion of Ukraine. The higher blend would help maintain stockpiles at a time when there’s a higher risk that supply from the US is curbed due to hurricanes in the Gulf of Mexico.

Brazilian President Jair Bolsonaro has been working on proposals to ensure fuel supplies with a minimal impact on prices as the nation struggles amid high inflation as he eyes re-election in October. Blending more biodiesel would require more soybeans to be crushed in Brazil rather than exported, tightening supply and threatening to worsen rampant food inflation.

Fewer Imports

An increase in the blend could reduce diesel imports by five vessels per month out of the typical 20 to 30 ships, according to estimates by Pedro Shinzato, an oil analyst at StoneX.

Industry group Abiove said producers can supply oil for a biodiesel blend of 12% using current stockpiles and exportable surplus. To reach 15% would require Brazilian producers to crush an additional 3 million tons of soybeans, according to a person with knowledge of the matter. That’s on top of the 48 million tons estimated for this year.

Soy-oil prices are trading near all-time-highs in Chicago on tight supply concerns. Demand for soybean oil has been increasing amid lower exports of rivals palm oil, due to protectionism measures, and sunflower oil because of the war in Ukraine.

The Energy Ministry press officer said that there’s no decision on this matter at the moment. Brazil’s oil regulator, known as ANP, said in a statement that it is monitoring the situation and proposing necessary measures to guarantee the diesel supply, without mention which measures was proposed.

Brazil’s main oil union, known as FUP, warned that diesel prices may reach 10 reais per liter ($7.77 per gallon) during the second half of the year from the current level of about 7 reais, according to a statement published on June 3. The union had also warned that the increase in demand during the agricultural harvest added to the scarcity of supply. Farmers typically use more diesel during the third and fourth quarters of the year.

Indonesia’s Palm Oil Exports Poised to Shrink This Year: Gapki

Indonesia, the top palm oil producer, this year may export less than the 34 million tons of the commodity it shipped in 2021, said Fadhil Hasan, Head of the Foreign Affairs Division of the Indonesian Palm Oil Association.

• The decline is due to changes in government policy, which included a temporary export ban and domestic market obligation measures, Hasan said at a forum Wednesday; he gave no export estimate
• Palm oil production this year may be unchanged from 2021, with no significant increase expected, he said
• Export duty and levy changes are seen as justified; they are enough to support the biofuel program and good for government revenue
• NOTE: The government plans to raise the maximum CPO export tax to $288/ton from $200, and cut the maximum additional levy to $200/ton from $375

China’s Buying of Wheat Crop Shows Resolve to Boost Output

China’s state stockpiling company is buying newly harvested wheat for national reserves this year at levels that are about 30% higher than the minimum purchase price, showing the government’s determination to bolster production at a time of global shortages.

China Grain Reserves Group, known as Sinograin, is purchasing the crop from farmers across six major growing areas including Hubei, Henan and Shandong provinces, CCTV reported, citing Bai Haifeng, deputy director of the purchase and sales planning department. Some 55% of the crop has been harvested.

Sinograin’s average purchase price ranges from 3,000 to 3,100 yuan ($450 to $465) a ton, compared with a minimum government price of 2,300 yuan set last year, Bai said, according to the report on Tuesday. Bai added that the company aims to purchase as much as 100,000 tons of wheat daily.

“The purchase price is the highest in history, as far as I know,” said Lin Guofa, head of research at consultancy Bric Agriculture Group. “With higher prices and fertilizer subsidies earlier this year, wheat farmers are about to earn the most in recent years and will have stronger incentives to boost production.”

China is one of the world’s biggest wheat importers. As the planet grapples with shortages of farm products and surging food prices, a successful harvest and collection of wheat in early summer are crucial for the country’s efforts to ensure food security and calm inflation concerns.

Prices of food staples in China, from corn to wheat, edible oils and pork will stay high because of rising crop costs and uncertainty over the war in Ukraine, boosting inflationary pressures, said Lin, who’s based in Jiangsu province.

Ukrainian wheat production prospects down amid ongoing war and lingering dryness – Refinitiv Commodities Research

2022/23 UKRAINE Wheat PRODUCTION: 22.5 [21.4-24.1] MILLION TONS, DOWN 4% FROM LAST UPDATE

Rain deficits and continued military activity in the key production wheat regions lowers yield prospects and 2022/23 Ukraine wheat production by 4% to 22.5 [21.4-24.1] million tons (mmt).

According to the Ministry of Agrarian Policy of Ukraine, spring wheat sowings were conducted at a faster pace than last year. By the end of May, 13 oblasts finished plantings and 10 of them increased area under grain. Most regions have crop protection products available for field work, however military activity continues in the major wheat producing regions potentially affecting this season harvest. Lingering dryness across Ukraine may additionally affect yield potential. Soil moisture levels across Ukraine are currently lower than few weeks back.

The past two weeks were not favorable for wheat crops. Key producing regions received little to no rainfall and temperatures were above average. Northern Ukraine saw cooler than normal temperatures and more precipitation.

Latest weather forecasts call for warmer than average and very dry conditions across most of the country. That can further affect already reduced soil moisture. Our latest satellite imagery (NDVI) analysis shows below long-term median levels of crop vegetation densities across most country. Regions where NDVI is currently higher than median are impacted by the war, hence prospects are very uncertain. Factoring all the above, we fractionally lower wheat yields. Our estimates are subject to further change depending on the war development and future weather conditions. We will monitor situation in the upcoming weeks and update our results accordingly.

Brazil 2022/23 crop “saved” thanks to Russian fertilizer -minister

Brazil’s Agriculture Minister Marcos Montes on Tuesday said the 2022/23 grain crop is “saved” as Russia is still sending fertilizers to the South American nation.

Egypt’s Local Wheat Buys Exceed Last Year’s at 3.585M Tons

Amount of the Egyptian grain bought so far during current season compares with 3.347M in 2021, according to document from National Food Safety Authority

Fertilizers Piling Up at Brazil Ports Signal Further Price Drop

• Stocks at Paranagua and Santos are full after record imports
• Delayed purchases may create inland transportation bottlenecks

A glut of fertilizers at the biggest Brazilian ports signals that the price of the nutrients may have to drop further before farmers start buying.

In Paranagua, private warehouses reached theirs maximum storage capacity of 3.5 million tons, according to Luiz Teixeira da Silva, Paranagua’s operations director. A terminal operated by VLI Logistics, one of the two at Santos port that store fertilizers, is also full, according to people with knowledge of the matter who asked not to be named as the information isn’t public.

Fertilizer prices soared to records after the war in Ukraine sparked fears of a shortage. Brazil imports nearly 85% of its fertilizer and Russia is the main origin. As supplies have normalized, prices have declined over the past weeks, but farmers still aren’t buying. They are waiting for further price cuts, according to Marina Cavalcante, an analyst at Bloomberg’s Green Markets.

“Farmers have the expectation that prices will keep falling after declines last week and in the previous one,” she said. “So they’ll wait for further decreases to buy.”

Brazil is the world’s biggest shipper of several crops, including soybeans. Farmers can delay their purchases until the eve of the soybean seeding in September. But if they all wait too long, a last-minute rush could lead to inland transportation bottlenecks that may leave some of them empty-handed.

US Farmers Have Bleakest Outlook in 2 Years Amid Soaring Costs

American farmers have the most pessimistic outlook since April 2020 because of soaring production costs, according to a Purdue University index.

The Ag Economy Barometer surveys producers about the health of the US farm economy and future expectations, and it slipped 18% in May, according to data released Tuesday.

Inflation and supply chain issues are the main culprits, with nearly half of farmers citing higher input costs as a top concern for their operations in the coming year. About three-fourths also said it was a bad time to invest in machinery and buildings.

Despite strong commodity prices, the rise in costs and uncertainty about the future of input prices “is leaving producers very concerned about their farms’ financial performance,” said James Mintert, director of Purdue University’s Center for Commercial Agriculture.

Still, farmers maintain an optimistic outlook on their farmlands, expecting values to rise over the next five years due to increasing demand from investors, according to the survey.