Global Ag News for Mar 28.24

TOP HEADLINES

China’s Shrinking Hog Herd to Curb Demand for Soybeans and Corn

China’s shrinking hog herd is likely to curb feed demand this year, affecting imports of staples like soybeans and corn used as animal fodder. Chinese pig farmers have regularly seen their margins drop below zero in recent years. That’s forcing them to cut production to stem losses.

“We can’t be too optimistic about China’s demand,” Li Qiang, chief analyst at Shanghai JC Intelligence Co., an agricultural consultancy, told an online conference on Thursday. With production capacity for hogs, and also broiler poultry, falling, there’s unlikely to be any increase in feed consumption, he said.

China’s hog herd is the world’s largest, but sow numbers are dropping. They were 6.9% lower at the end of February compared to a year earlier, and the agriculture ministry has cut its target to 39 million head from 41 million, the first drop since the goal was introduced in 2021. Feed output, meanwhile, fell 3.6% in the first two months of the year.

That has implications for farmers as far afield as the Americas, who supply most of China’s feed. China’s grain imports actually climbed in 2023, despite the country’s economic slowdown, which risks creating a glut if conditions don’t improve. Much depends on whether Beijing’s efforts to stimulate growth will crack the deflationary pressures embedded in the economy and allow demand to recover.

In the meantime, fewer animals will mean less demand for soybean imports, particularly as China’s own crop of the oilseed expands, Darin Friedrichs, co-founder of Sitonia Consulting Co., told the conference.

According to JCI’s forecasts, soybean imports in the marketing year that begins in October could drop 1.3% to 99.5 million tons, while China’s total animal feed consumption may fall as much as 1.5% in 2024.

“It will be hard for China’s imports to maintain the previous year’s level,” said JCI’s Li, although some relief may come if state-owned traders use weaker prices as an opportunity to step up purchases for the nation’s reserves, he said.

FUTURES & WEATHER

Wheat prices overnight are up 1/2 in SRW, up 1/2 in HRW, unchanged in HRS; Corn is up 1/2; Soybeans down 4 1/4; Soymeal down $2.10; Soyoil up 0.15.

For the week so far wheat prices are down 6 3/4 in SRW, down 11 3/4 in HRW, down 10 in HRS; Corn is down 12; Soybeans down 4 1/4; Soymeal down $2.20; Soyoil up 0.18.

For the month to date wheat prices are down 28 1/4 in SRW, down 8 1/2 in HRW, down 8 in HRS; Corn is down 2 1/4; Soybeans up 47 1/2; Soymeal up $7.70; Soyoil up 2.61.

Year-To-Date nearby futures are down 12.7% in SRW, down 9.9% in HRW, down 10.0% in HRS; Corn is down 9.3%; Soybeans down 8.1%; Soymeal down 12.7%; Soyoil down 0.0%.

Chinese Ag futures (MAY 24) Soybeans up 21 yuan; Soymeal down 25; Soyoil down 62; Palm oil down 102; Corn up 13. Malaysian markets are closed for holiday.

There were no changes in registrations. Registration total: 438 SRW Wheat contracts; 0 Oats; 37 Corn; 499 Soybeans; 710 Soyoil; 26 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of March 27 were: SRW Wheat up 2,175 contracts, HRW Wheat up 2,077, Corn down 828, Soybeans down 1,355, Soymeal down 2,161, Soyoil down 1,635.

Brazil: A front that has settled into central Brazil since the weekend continues to produce good showers for safrinha corn. That probably shifts into northern Brazil this weekend. The heavier and more widespread rain is promising to build in some decent subsoil moisture where reserves have been more limited. At the same time, areas to the south has been much drier and may have to rely on that built up soil moisture earlier than normal, which may be harmful if levels get too low too quickly. A little system moving through early next week may provide at least some showers.

Argentina: Outside of a small disturbance with a few showers for southern areas Tuesday and Wednesday, it should be dry this week, which is not ideal for filling corn and soybeans but will allow for some of the wetter areas to dry out a bit. A system should bring showers through this weekend, which looks to start up a more active week of weather.

Europe: A big storm will stay close to the UK this week, sending several waves of showers through Europe throughout this week and probably next week as well. Precipitation will be heavier in the west, which favors Spain but not the UK or France, which continue to be too wet.

Black Sea: A system that moved through Tuesday brought some areas of showers, but missed some areas of eastern Ukraine and southwestern Russia, which have been too dry over the last few weeks. Other systems going through Europe will likely escape around the region, which brings in warm air instead. That favors developing winter wheat, but also dries out soils which are going to hope for a slightly more active period next week.

Australia: A front brought showers to Queensland recently, which may help some areas build in some soil moisture. Drier weather elsewhere is fine for harvesting cotton and sorghum, but not for building in soil moisture ahead of winter wheat planting, which begins in mid-April. However, the ending El Nino and eventual turn to La Nina should favor the winter crops later this year.

Northern Plains: Showers will move across the region Thursday through the weekend. Some heavy snow may fall across South Dakota on Monday, but models are not consistent with any of the details to the systems moving through. Though they will waffle around, temperatures should remain on the colder side of normal through at least Monday, but probably moderate closer to normal next week.

Central/Southern Plains: Cold air will be in the region for one more day, which is bringing some very cold air through much of HRW territory that could cause damage. Temperatures rise during the day Thursday with more showers being possible into the weekend before another system goes through early next week. Models are inconsistent about precipitation production for southwestern areas with this last storm, but potential is there for some help for drier soils.

Midwest: A big system is exiting the region and brought widespread heavy amounts to Iowa, Minnesota, and Wisconsin, which should help with the drought situation and building of soil moisture. Cold air is filling in behind the storm with the coldest air over the deeper snow pack across Minnesota. The rest of the region will warm up ahead of the next disturbance on Thursday or Friday. That small disturbance will bring some showers through this weekend. Another system will bring scattered showers and a renewed shot of colder temperatures for early April. The precipitation from the more active pattern should benefit soil moisture ahead of spring planting in most areas.

Delta: A cold front brought a line of showers and thunderstorms through the region on Monday with heavy rain. Another storm will move through early next week with more rainfall. Soils are in good shape across most of the region and big enough breaks between storms could lead to some early planting where it is not too wet. Cooler and wetter conditions may limit planting in most places, though.

The player sheet for 3/27 had funds: net buyers of 1,500 contracts of SRW wheat, sellers of 4,000 corn, buyers of 2,000 soybeans, sellers of 2,000 soymeal, and sellers of 2,500 soyoil.

TENDERS

• CORN SALE: South Korea’s Feed Leaders Committee (FLC) purchased around 65,000 metric tons of animal feed corn in a private deal on Tuesday without issuing an international tender.
• CORN PURCHASE: The Korea Feed Association (KFA) in South Korea purchased about 66,000 metric tons of animal feed corn expected to be sourced from South America or South Africa in a private deal on Wednesday without issuing an international tender
• RICE SALE: Indonesian state purchasing agency Bulog is believed to have purchased about 300,000 metric tons of rice an international tender this week.
• CORN TENDER: South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 metric tons of animal feed corn to be sourced from South America or South Africa only

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• VEGETABLE OIL TENDER: Egyptian state grains buyer the General Authority for Supply Commodities (GASC) said on Monday it was seeking vegetable oils in an international tender for arrival May 1-15 and/or May 16-30. The deadline for offers is March 28.
• RAW CANE SUGAR TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC,) on Monday extended the deadline for offers in its latest sugar tender for 50,000 metric tons of raw cane sugar to March 30, from a previous deadline of March 23. GASC said it is seeking offers that will remain valid until April 1 and added shipment periods in June and/or July and/or August.
• MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.

 

 

TODAY

DOE: US Ethanol Stocks Rise 0.3% to 26.092M Bbl

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

• Analysts were expecting 26.053 mln bbl
• Plant production at 1.054m b/d, compared to survey avg of 1.045m

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

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending March 21.

• Corn est. range 900k – 1,500k tons, with avg of 1,239k
• Soybean est. range 300k – 700k tons, with avg of 535k

Brazil 2023/24 Soy Estimate Raised to 156.5m Tons: Agroconsult

Brazil should harvest 156.5 million tons of soybeans in the current 2023/24 season, consultancy Agroconsult told journalists on Wednesday.

• In February, consultancy expected 152.2m million tons of soybeans
  • Estimate for the current season is still lower versus the 162.4m tons reported for the 2022/23 crop year
• Improvement in estimates reflects a more detailed investigation on planted area, according to Agroconsult President André Pessôa
  • Total planted area seen at 46.4m hectares (114.6m acres), above the 45.7m hectare estimate from February
  • Forecast is also above the current estimate from Brazil’s crop agency Conab
• Dry, hot weather as of late 2023 had negative impact to early planted crops in top grower state of Mato Grosso
• Other regions that postponed planting benefited from more regular rainfall in 2024

Dry weather to favor Argentina’s soy, corn harvests

Dry weather in Argentina’s main agricultural regions over the next week will benefit the start of soy and corn harvests after recent heavy rains, the Buenos Aires Grains Exchange said on Wednesday.

Argentina is one of the world’s top exporters of soybean oil, soybean meal and corn.

Abundant rainfall in the first half of March left fields muddy, keeping farmers out of the fields.

But “a large part of the Pampas (agricultural) region will receive scarce (rains), with some pockets seeing moderate amounts,” the exchange said in its weekly weather report.

With dry conditions seen in the past few days and little rain expected this week, soy and corn harvesting has kicked off, the exchange said.

As of Wednesday, farmers had harvested 4.4% of the soy crop and 5.7% of the corn crop, according to the exchange, which estimates a 52.5 million metric ton soybean harvest and 54 million ton corn harvest.

The exchange also warned that the corn harvest in the north of the country would be lower than expected due to the bacteria Spiroplasma kunkelii, which causes stunt disease. Last week, it cut its estimate for the harvest by 2 million tons due to the disease’s expected impact.

Corn stunt disease hinders growth and can result in ears of corn with loose or missing kernels.

EU Sees 2024-25 Wheat Crop Falling About 4% Y/y, Exports Steady

The EU’s soft-wheat harvest is seen at 120.8 million tons in 2024-25, down from 125.6 million tons in the previous season, the European Commission said in a report dated Wednesday.

• NOTE: Wet autumn weather curbed plantings in the bloc and crop conditions in major producer France have held below last year
• Exports forecast at about 31m tons, little changed versus prior season
  • Stockpiles may fall to 12.1m tons from 19.9m tons
• Barley crop seen at 53.7m tons this year, up from 47.5m tons
• Corn crop seen at 69m tons, up from 62.3m tons
• Total grains production seen at 278.8m tons, up from 269.8m tons

EU Envoys Agree to Extend Trade Measures for Ukraine

EU Ambassadors agreed on a new compromise to extend trade measures (ATM) for Ukraine, securing a balanced approach between support for Ukraine and protection of EU agricultural markets, according to an X post sent by the Belgian Presidency.

Compromise will now be presented to the European Parliament

Indonesia Jan. Palm Oil Exports Rise to 2.80m Tons: Gapki

Indonesia’s palm oil exports rose to 2.80m tons in January from 2.45m tons in December, according to Indonesian Palm Oil Association (Gapki).

• Palm oil output rose to 4.63m tons from 4.376m tons in December
• Palm oil stockpiles fall to 3.04m tons from revised 3.146m tons in December
• Palm oil domestic consumption fell to 1.942m tons from 1.995m tons in December

Indonesia Replants 327,000 Hectares of Oil Palm Plantations

Indonesia, the world’s top palm oil producer, replanted about 327,000 hectares of oil palm plantations through early 2024, said Dida Gardera, deputy for food and agribusiness at the coordinating ministry of economic affairs, on Thursday.

• As many as 883 companies and 52 cooperatives of palm oil smallholders hold the local sustainable certificate ISPO
• NOTE: About 2.8m hectares of smallholders’ oil palm plantation need to be replanted; Farmers hold 6.8m hectares of the nation’s 16.4m total
• About 9.25t rupiah of funds generated by exports levy has been used for replanting, said Airlangga Hartarto, the coordinating minister for economic affairs
• Govt to double replanting aid for smallholders to 60m rupiah/hectare starting in May to boost replanting
• Govt. seek to resolve issues involving 3.37m hectares of oil palm plantation in forest areas by end of Sept.

Brazil Fertilizer Market Takes a Pause on Soybean Preparation

Fertilizer price negotiations were stalled in Brazil as nitrogen demand remains at a seasonal lull and sellers switch to potash and phosphates for soybeans. Though nitrogen prices continue to fall, phosphates were steady after rising 3% last week amid tight supply. Potash was also stable after a recent increase brought levels up from a three-year low in early March.

AccuWeather forecasts near-record storms this Atlantic hurricane season

U.S. private forecaster AccuWeather expects an above-average 2024 Atlantic hurricane season with a near-record number of storms and a greater than usual risk of direct impacts in parts of Florida, Texas and the Carolinas, it said on Wednesday.

This year’s hurricane season, potentially one of the most active in history, begins on June 1, but there are signs that the first named system could swirl even before that, AccuWeather noted in its forecast. It projects 20-25 named storms across the Atlantic basin this year, including 8-12 hurricanes, of which four to seven are forecast to be major, and four to six direct U.S. impacts — figures that are all above the 30-year historical averages.

The Texas coast, Florida Panhandle, South Florida and the Carolinas are at a higher-than-average risk of direct impacts this season, according to AccuWeather lead hurricane forecaster Alex DaSilva.

“All residents and interests along the U.S. coast, including Puerto Rico and the Virgin Islands, should have a hurricane plan in place and always be fully prepared for a direct impact,” he said.

The 2023 hurricane season produced 19 named tropical storms but there were only four direct U.S. impacts. Hurricane Idalia, a Category 3 hurricane, hit Florida with howling winds, torrential rains and pounding surf in late August.

The National Weather Service’s Climate Prediction Center (CPC) in a monthly forecast issued earlier in March said that there is a 62% chance of La Nina developing during June-August, up from 55% estimated last month. El Nino, characterized by unusually warm sea surface waters in the equatorial Pacific Ocean, remains in place but has an 83% chance of fading between April and June. The faster the transition to La Nina, a sister phenomenon which cools the Pacific Ocean, the more active the hurricane season is likely to be, AccuWeather said.

 

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