Global Ag News for Mar 21.24

TOP HEADLINES

Argentina downpour ‘damaging’ for soy and corn, weather analysts say

A new front of heavy rains over key grains regions of Argentina could be “very damaging” to the South American country’s current soy and corn crops and could dent production, a local grains exchange and a weather expert said on Wednesday. Argentina, one of the world’s top two exporters of soybean oil and meal, and the third largest for corn, has seen strong rains well above normal levels so far this month, initially boosting dry soils but now starting to saturate farmland.

“The rains we’re getting are totally unneeded, very damaging to the south and east of Entre Ríos (province), south of Santa Fe and the north of Buenos Aires,” said German Heinzenknecht, a meteorologist at Applied Climatology Consulting (CCA).

According to the National Meteorological Service (SMN), in the last 24 hours the agricultural core of Argentina received between 15 and 50 millimeters of rain, with more storms expected for the entire day on Wednesday.

“We are seeing excess water in these areas,” Marina Barletta, analyst at the Rosario grains exchange said in a report published on Wednesday.

“There are locations that have exceeded 300 millimeters so far in March and there we are seeing flooded lots of soybeans.”

The rainfall is hitting as Argentine producers recently began harvesting 2023/24 corn and when soybean harvesting will begin in the coming weeks.

The Rosario exchange estimates the soy harvest at 50 million tons and corn at 57 million tons. But both the CCA and the exchange have said that recent rains put those numbers at risk.

“It impacts the development of crops, especially in soybean lots,” the Rosario exchange said in its report. Delays to the soy harvest along with high humidity can cause the pods to open and the beans to be lost or to sprout inside the pod.

Added to the copious rains, some areas saw hail in different parts of Buenos Aires in the last few hours. Photos shared with Reuters showed some fields of flattened corn crops and large chunks of hail, some the size of eggs.

“The hail destroyed everything, we had about 400 hectares with phenomenal yields of soybeans and corn, which now has all been lost,” said an agricultural producer from the Buenos Aires town of 25 de Mayo, who asked not to be named. “The last storm left us in ruins.”

Meanwhile, Argentine capital Buenos Aires and its surrounds saw the largest fall of rain overnight and on Wednesday, with more than 100 millimeters in a short period of time that has generated flooding and destruction of all kinds.

On Wednesday morning, different media showed highways under water, cars floating along avenues and even a huge billboard that had collapsed on top of a building. At the peak of the storm, flights were canceled at the capital’s two airports.

 

FUTURES & WEATHER

Wheat prices overnight are up 5 1/4 in SRW, up 5 in HRW, up 6 1/4 in HRS; Corn is up 3 1/2; Soybeans up 7; Soymeal up $3.90; Soyoil down 0.03.

For the week so far wheat prices are up 21 3/4 in SRW, up 19 1/4 in HRW, up 14 3/4 in HRS; Corn is up 5 3/4; Soybeans up 18 1/4; Soymeal up $11.70; Soyoil down 0.45.

For the month to date wheat prices are down 26 in SRW, down 1 3/4 in HRW, up 2 1/4 in HRS; Corn is up 13; Soybeans up 75 3/4; Soymeal up $17.20; Soyoil up 3.76.

Year-To-Date nearby futures are down 12.4% in SRW, down 8.8% in HRW, down 8.6% in HRS; Corn is down 6.1%; Soybeans down 6.0%; Soymeal down 10.3%; Soyoil up 2.4%.

Chinese Ag futures (MAY 24) Soybeans up 15 yuan; Soymeal up 68; Soyoil up 128; Palm oil up 128; Corn down 3 — Malaysian Palm is down 14. Malaysian palm oil prices overnight were down 14 ringgit (-0.33%) at 4258.

There were no changes in registrations. Registration total: 438 SRW Wheat contracts; 0 Oats; 37 Corn; 521 Soybeans; 710 Soyoil; 26 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of March 20 were: SRW Wheat up 5,632 contracts, HRW Wheat up 1,030, Corn up 12,492, Soybeans up 9,060, Soymeal up 3,068, Soyoil up 2,362.

Brazil: Scattered showers have been and continue to fall across the country Wednesday. A strong front will move through Thursday and settle into central states on Friday, where it will enhance showers well into next week. That should leave some good rain for safrinha corn that has had very little over the last week. It will be drier behind the front across the south, which is not exactly a good thing for immature crops there, but it has been raining recently.

Argentina: A stronger front will move through on Wednesday and into early Thursday. It may have widespread heavy showers with it, but conditions will dry out behind it through the weekend. A burst of cooler temperatures will reduce stress, though. Disturbances will resume moving through the country later next week, which should keep the overall good conditions going, however.

Europe: An upper-level low will remain off the coast of Spain this week, but bring some limited showers Wednesday and Thursday. A larger system dives down through Europe this weekend with widespread showers and next week looks pretty active as well. In other words, precipitation will be pretty widespread through the end of the month, favorable for winter wheat in most areas, but still too wet in France.

Black Sea: An upper-low in Ukraine will move into the Black Sea by the end of the week, keeping some showers going across southwestern Russia into the weekend. A front should move into the region next week with potential for more showers. Wheat conditions are in good shape as the crop continues to green up early. Rainfall has been more limited lately, and more would be preferred.

Australia: A front is stalling in Queensland where showers are now forecast to last into next week, favorable for adding to soil moisture there. Cotton and sorghum are maturing and seeing some early harvest activity. Soil moisture is not favorable ahead of winter wheat and canola planting, which usually starts up in mid-April. The demise of El Nino and eventual turn to La Nina should favor the winter crops later this year, however.

Northern Plains: Another round of cold air that is moving into the region will likely last through most of next week. In the colder air, several systems will move through with scattered showers, mostly as snow. Some of these bursts could be heavier, especially with a storm system this weekend that could bring blizzard conditions.

Central/Southern Plains: An upper-level low will bring scattered showers through on Wednesday and Thursday as it finally moves east. The pattern gets very active afterward, with a double-barreled system moving through this weekend and early next week that at least has a chance for meaningful precipitation across the southwestern wheat areas. A burst of arctic air will likely flow down through the region next week behind that system, which could be damaging for some wheat. A couple of disturbances could follow behind the main system next week, keeping up the chances for meaningful precipitation.

Midwest: Lake-effect snow will continue on Wednesday as colder air settles into the region. The cold sets up another clipper to move through Thursday and Friday with a burst of snow across the north and rain for the south. But the big story will be a major spring storm system that will have multiple effects this weekend through the middle of next week including heavy snow, freezing rain, strong winds, and severe storm potential as it comes through in two pieces. Smaller systems may follow behind the main system later next week.

Delta: Recent precipitation has helped to maintain overall good soil moisture in much of the region. Several additional storm systems will move through the region this week and next, which should do the same. If not for some colder temperatures that follow a system next week and some wetter soils, early planting may be starting up.

The player sheet for 3/20 had funds: net sellers of 3,000 contracts of SRW wheat, buyers of 1,000 corn, sellers of 8,000 soybeans, buyers of 4,000 soymeal, and buyers of 2,500 soyoil.

TENDERS

• WHEAT PURCHASE: Egypt’s state grains buyer, the General Authority for Supply Commodities, bought 110,000 metric tons of wheat in an international tender, GASC and traders said.
• SOYBEAN SALE: Exporters sold 120,000 metric tons of U.S. soybeans to unknown destinations for 2024/25 delivery, the U.S. Department of Agriculture said.
• FOOD WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 119,345 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
• RICE TENDER: An international tender from Indonesian state purchasing agency Bulog to buy 300,000 metric tons of rice seeks arrival of the grain in Indonesia by May 31.
• DURUM WHEAT PURCHASE UPDATE: Algeria’s state grains agency OAIC is believed to have purchased durum wheat in an international tender which closed on Tuesday

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat, European traders said. The deadline for submission of price offers was Feb. 22, they said.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 100,800 metric tonnes of rice mainly to be sourced from the United States and China
• RAW CANE SUGAR TENDER: Egypt’s General Authority for Supply Commodities (GASC) said it was seeking 50,000 metric tons of raw cane sugar from any origin in a tender on behalf of the Egyptian Sugar & Integrated Industries Company. The deadline for offers is March 23.
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.
• FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.

 

 

TODAY

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

Estimate ranges are based on a Bloomberg survey of five analysts; the USDA is scheduled to release its export sales report on Thursday for week ending March 14.

• Corn est. range 900k – 1,200k tons, with avg of 1,063k
• Soybean est. range 270k – 700k tons, with avg of 480k

 

DOE: US Ethanol Stocks Rise 0.9% to 26.009M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 25.86 mln bbl
• Plant production at 1.046m b/d, compared to survey avg of 1.03m

 

China 2024 grain imports seen near record high despite cancellations

• China’s 2024 soybean imports seen near last year’s record
• Shortfall of higher quality grains to drive wheat purchases
• Crop output, quality to determine volume of wheat imports

Cereal and oilseed imports to China, the world’s biggest buyer of farm goods, will remain near record highs this year despite a recent spate of cancellations as lower global prices and a domestic output shortfall prompt purchases.

China’s wheat imports from Australia in January and February this year have nearly quadrupled from the same time last year, the latest customs data show. That trend should continue even after Beijing cancelled or postponed 1 million metric tons of Australian wheat last week. The cancellations, along with those for about 500,000 tons of U.S. wheat, had raised concerns of flagging Chinese demand, which because of its outsized role in global agriculture markets could have led to lower prices. But traders and analysts say the cancellations will not impact overall demand as lower wheat prices will spur buying, along with more government funds allocated to boost grain and oil seed stockpiles.

“China’s imports of wheat and barley from Australia are running at break-neck speed,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.

“And they are buying large volumes of soybeans, corn and wheat from other origins as well, such as the United States, France and Ukraine. The reality is that grain imports are going to be similar to last year’s record pace.”

China spent $234 billion on agriculture imports last year and is the world’s biggest soybean buyer, taking more than 60% of the oilseed shipped worldwide, mostly from Brazil and the United States. It has also become the top wheat buyer in recent years, particularly for higher quality grain, mostly from Australia, Canada and the U.S. China was the second-largest corn importer last year, mainly for animal feed, with buying driven by higher local prices.

Crush margins turning positive this month have driven soybean imports, with processors in the hub of Rizhao making 114.29 yuan ($15.88) per ton after incurring losses since October.

“Crush margins in China have improved as Brazilian prices have declined due to a big crop entering the market,” said an international grain trader in Singapore. “We expect buying to pick up from April and overall China’s imports this year will be similar to last year.”

China bought 99.4 million tons of soybeans in 2023, up 10.3 million tons from a year earlier. The U.S. Department of Agriculture forecasts China’s soybean imports at 103 million tons in the marketing year ending Aug. 31, 2025.

“Increased soybean meal inclusion rates due to competitive prices, stable demand in the poultry sector, and growing demand in aquaculture is expected to offset weaker demand in the swine sector,” it said in Wednesday’s report.

China has been stockpiling more food in the aftermath of supply chain disruptions from the coronavirus pandemic and the Ukraine war. A slowing economy has moderated import growth, traders and analysts said, but demand continues to rise with a growing middle class in the nation of 1.4 billion people.

 

Brazil soybean production unchanged with harvest season in full swing – LSEG Commodities Research & Forecast

2023/24 BRAZIL SOYBEAN PRODUCTION: 150.6 [147.1–154.0] MILLION TONS, UNCHANGED FROM LAST UPDATE

2023/24 Brazil soybean production is unchanged at 150.6 [147.1–154.0] million tons, as recent warmth and dryness bode well for harvest and late season crop dry-down. Our current median estimate is 4.4 million tons below the USDA’s World Agricultural Outlook Board (WAOB)’s 155 million tons, which assumes soybean sowings at 45.9 million hectares and national level yield of 3.38 tons per hectare (tph) (vs. LSEG Ag Research’s 46 million hectares and 3.27 tph, respectively). Brazil’s agriculture state agency (CONAB) has recently pegged soy production and area at 146.9 million tons and 45.2 million hectares, respectively. Both USDA and CONAB have revised downward their Brazil production estimates compared to last month, directionally in line with what we have been calling for since the beginning of the season. As of 17 March, Brazil’s soybeans were 61.9% combined nationally according to the latest CONAB crop progress report (18 March), on par with last year’s pace of 62.5%. Into the second half of March weather conditions should remain similar to those experienced over the past few weeks, through slightly wetter conditions may prevail through next week, warranting attention.

USDA attaché sees China 2024/25 soybean imports at 103 mln T –

Following are selected highlights from a report issued by the U.S. Department of Agriculture’s Foreign Agricultural Service post in Beijing:

“Soybean imports for marketing year (MY) 24/25 are forecast to reach 103 million metric tons (MMT). Increased soybean meal (SBM) inclusion rates due to competitive prices, stable demand in the poultry sector, and growing demand in aquaculture is expected to offset weaker demand in the swine sector due to forecast declining production in MY 23/24 and MY 24/25. Lower domestic prices, high carry-in from MY 23/24 production, and comparatively better margins for corn are expected to lower soybean planted area and production in MY 24/25. Post has revised imports and crush data for MY 22/23 to reflect historical adjustments made in the March 2024 World Agricultural Supply and Demand Estimates (WASDE) report. MY 23/24 and MY 24/25 imports and crush are revised based on evaluation of major exporters’ shipments to China versus General Administration of Customs of the People’s Republic of China (GACC) reported imports and in-country data sources.”

Acreage shifts from corn may boost 2024/25 U.S. soybean production – LSEG Commodities Research & Forecast

2024/25 U.S. SOYBEAN PRODUCTION: 122 [115–129] MILLION TONS

Current economic data, estimated acreage of competing crops, and baseline yield projections set initial 2024/25 U.S. corn and soybean production outlooks at 15.17 [14.53–15.65] billion bushels (down 1% from last season) and 4.48 [4.23–4.76] billion bushels (up 7% from last season), respectively. While preliminary, soybean planted area is estimated to increase by 4.1% to 87 million acres, benefiting mostly from corn area shrinkage and growing domestic crush sector, despite stagnant Chinese demand and low crop insurance guarantees. Such acreage shift will take place as U.S. farmers cut back on their corn area (which is provisionally set at 91.3 million acres, down 1.1% year-on-year) after a record harvest last season, amid unfavorable price/cost dynamics, abundant global supplies and demand complexities. Our current estimates place soybean area and production slightly below 87.5 million acres and 4.50 billion bushels, respectively, from the projections released in USDA’s Grain and Oilseeds Outlook presented during the Agricultural Outlook Forum (15-16 February 2024). The USDA will release its Prospective Plantings report on 28 March, with acreage estimates derived from farmer surveys.

Both corn and soybean prices have been dropping sharply since last January, aside from an uptick in June-July, while being fueled by ample global supplies and weakening overall demand. Despite a recent small recovery, average early March prices are down 35% (for corn) and 21% (for soy) year-on-year, which belong among the lowest over the past 20 years when adjusted for inflation. To add insult to injury, rising production costs are adding more financial pressure on farmers, as indicated by high inflation-adjusted operating costs and low fertilizer affordability index values. While neither corn nor soybeans promise greater return on investment compared to last season, soybean economics is deemed to hold an advantage over corn, as the current soy-to-corn price ratio (as a measure of revenue potential) 2.76 is notably higher than the same time last year (2.28). Also, an increase in real-value fertilizer costs overall tends to decrease the profitability of corn more severely than soybeans, as they represent near half of corn’s variable costs, much higher than their share in soybeans’ cost structure. With the U.S. net farm income expected to decline for reasons above, and adding to the fact that this year’s crop insurance guarantees (which functions as a floor price for insurance payments from the government) are among the lowest over the past 5 years, U.S. farmers will likely remain very keen on assessing potential profitability of each crop, where soy should have a clear advantage over corn. Demand outlooks are less than favorable for both crops with Chinese imports from the U.S. expected to decrease over time, but an increasing share of corn/soy demand is coming from domestic use, warranting attention (with rising ethanol production for U.S. corn use and a record setting soybean crush/expanding crush capacities).

One important variable for acreage estimation is planting progress. Early corn planting normally begins during early April and ends in May, while soybean planting windows tend to be from late April through mid-June, offering U.S. farmers more time/room for acreage decisions. Current dryness across the Upper Midwest and northeastern Plains should be monitored closely ahead of the planting season. The latest ENSO outlook by the LSEG Weather Research team suggests that key forecast indicators point towards a neutral/weak La Niña state during June-August, much of the prime growth period for both crops. Warm and wet conditions may be prevalent throughout key producing areas of the central Corn/Soy Belt as a result, which could potentially have mixed impacts on yield. Soybean yield and percent harvested can still vary greatly in response to forward weather, but under normal conditions should reach 52.4 bushels per acre (bpa) and 98.4% harvested, respectively. Anomalous dryness coupled with hot temperatures might lower yield and production to 49.3 bpa and 115 million tons. On the other hand, yield and production could rise to 55.6 bpa and 129 million tons, assuming ideal growing conditions without extreme weather occurrences.

Coceral Cuts Europe Crop Forecast by 1M Tons on Planting Delays

This year’s grain harvest in the European Union and the UK is now seen at 295.5m tons, Coceral says in an emailed report.

• The outlook is down from a December forecasts of 296.5m tons, with wet weather delaying winter sowing
  • It would still be a larger harvest than the 292.4m tons in 2023
• Affected areas include France, Germany, the UK, Baltic states, and Poland

Canada Area Seeded to Crops Set to Dip in 2024-25 While Supply Rises

The area seeded to field crops in Canada for the 2024-25 season is projected to decrease slightly but be marginally above the 2019-2023 average, government analysis shows. According to Agriculture and Agri-Food Canada, production and supply for most crops is expected to rise and return to more normal levels based on a return to trend yields, which would mean exports rise and allows for an increase in year-end inventories, provided weather conditions are normal. The total wheat area is estimated to increase a bit, with an expansion in durum area offsetting reductions in spring and winter wheat. It estimates the area seeded to coarse grains will rise slightly, while the oilseeds area is estimated to decrease as the canola area falls and the soybeans area dips slightly.

Fertilizer Prices Climb as Early Spring Drains Inventories

US nitrogen and phosphate prices climbed as warm weather prompted pre-planting applications, testing available supplies at many inland terminals. An early start to spring gives farmers more time to consume inputs, supporting sales for producers like CF Industries, Nutrien and Mosaic. Potash pricing has yet to feel the bump as Chinese supplies swell.

 

 

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