Global Ag News for Mar 6.23
Prolonged Rain May Cut Palm Oil Output in Top Growers: Ganling
Heavy rainfall and flooding may result in lower-than-forecast palm oil production this year in Indonesia and Malaysia, the world’s biggest growers, according to Ling Ah Hong, a director at Ganling Sdn.
- The plantation consultancy currently forecasts Indonesian output +6.9% y/y to 51.6m tons, and Malaysia production +3% y/y to 19.1m tons, Ling said at the UOB Kay Hian palm oil seminar on Monday
- Prolonged flooding in southern Peninsular Malaysia, as well as East Kalimantan and other parts of Indonesia may reduce production
- If rainfall continues into 2Q, impact on supplies may be greater
- High rainfall or flooding causes short-term disruption to harvesting operations and logistics, and leads to poorer fruit sets
- Damaged bridges, destroyed roads at plantations will affect transport of crops and impact oil quality
- If El Nino climate pattern emerges in 2H, it’s unlikely to impact palm oil supplies until 2H 2024
- Malaysian palm oil stocks may stay below 2.2m tons in coming months, but this could change in 2H due to higher production and subdued demand
- Possible El Nino in 2H may bring more rain to Western Hemisphere, which will boost soybean yields in 2023-24 and weaken soyoil prices
FUTURES & WEATHER
Wheat prices overnight are down 9 3/4 in SRW, down 12 in HRW, down 9 in HRS; Corn is down 3 3/4; Soybeans down 6 3/4; Soymeal down $0.07; Soyoil down 0.61.
Markets finished last week with wheat prices down 10 3/4 in SRW, down 12 3/4 in HRW, down 4 3/4 in HRS; Corn is down 7 1/2; Soybeans down 3/4; Soymeal down $0.12; Soyoil up 0.24.
For the month to date wheat prices are down 6 1/2 in SRW, down 8 1/2 in HRW, down 3 in HRS; Corn is up 5 3/4; Soybeans up 33; Soymeal up $13.50; Soyoil up 0.54.
Year-To-Date nearby futures are down 12.6% in SRW, down 7.4% in HRW, down 7.5% in HRS; Corn is down 4.9%; Soybeans up 0.4%; Soymeal up 3.8%; Soyoil down 5.3%.
Chinese Ag futures (MAY 23) Soybeans down 13 yuan; Soymeal up 21; Soyoil up 20; Palm oil down 76; Corn down 3 — Malaysian palm oil prices overnight were down 69 ringgit (-1.59%) at 4283.
There were changes in registrations (-178 Soybeans, -100 Soyoil). Registration total: 2,587 SRW Wheat contracts; 43 Oats; 172 Corn; 234 Soybeans; 717 Soyoil; 0 Soymeal; 352 HRW Wheat.
Preliminary changes in futures Open Interest as of March 3 were: SRW Wheat up 5,042 contracts, HRW Wheat up 1,921, Corn up 1,461, Soybeans up 8,501, Soymeal up 7,099, Soyoil down 2,118.
Brazil Grains & Oilseeds Forecast: Scattered showers continue for much of Brazil’s growing regions for the next week outside of Minas Gerais and Rio Grande do Sul, where showers will be more limited. Despite recent rains, many areas have made significant progress with regard to soybean harvest and corn planting. However, some areas are behind, somewhat significantly, and will expose more of the corn crop to the dry season which is forecast start up in April. Corn already in the ground will benefit from good soil moisture.
Argentina Grains & Oilseeds Forecast: Dry conditions continue to be a concern for immature corn and soybeans moving forward. Any showers will be limited for at least the next week, though isolated showers may move through at times. Heat that developed last week continues for the next week. The heat and dryness is keeping stresses high for both crops in various stages of growth.
Northern Plains Forecast: A system moved into the region over the weekend and continues on Monday with areas of snow. Additional waves of snow will press through the region throughout the week, adding up to some hefty amounts for a lot of the region.
Central/Southern Plains Forecast: A front will slide south through the region over the next couple of days, with some scattered showers and falling temperatures. Below-normal temperatures should be in place going into next week as well. Precipitation continues to be limited for southwestern areas where drought remains in control.
Midwest Forecast: A system is bringing precipitation across the region into Monday but will be followed by additional waves of precipitation throughout the rest of the week, especially across the west. Cooler temperatures will replace the recent warmth but will not be extremely cold.
Delta: Water levels on the Mississippi River remain high for the foreseeable future due to a very active weather pattern across the watershed for at least the next week or so.
The player sheet for 3/3 had funds: net sellers of 1,000 contracts of SRW wheat, buyers of 3,500 corn, sellers of 5,000 soybeans, buyers of 4,500 soymeal, and sellers of 2,500 soyoil.
- CORN TENDER: Taiwan’s MFIG purchasing group issued an international tender to buy up to 65,000 tonnes of animal feed corn, which can be sourced from the United States, Brazil, Argentina or South Africa, European traders said. The deadline for submission of price offers in the tender is March 8, they said. Demand for corn from Asian buyers has been strong in the past week following a drop in Chicago Board of Trade corn Cv1 futures.
- BARLEY TENDER UPDATE: The lowest price offered in an international tender from Tunisia’s state grains agency to purchase about 25,000 tonnes of animal feed barley was believed to be $299.95 a tonne c&f, according to initial assessments from European traders. Participation was thin, with some traders saying two trading houses were taking part and others saying three. Offers were still being considered on Friday and no purchase had yet been reported.
- WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by June 30 and arrive in Japan by Aug. 31, via a simultaneous buy and sell (SBS) auction that will be held on March 8.
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 tonnes of animal feed barley.
Brazil Says Over 90 Companies Allowed to Ship Corn to China
Brazil enabled 90 companies to export corn to China in the first two months of the year, the agriculture ministry said in a note.
- Total number of companies that have clearance was raised to 446
- Outlook for a record corn crop could allow Brazil to surpass the US as world’s top corn shipper, Secretary of Agricultural Defense, Carlos Goulart, said in the note
- NOTE: According to an agreement signed in 2022, the agriculture ministry registers Brazilian companies that meet the requirements determined by China for the export of corn
Brazil farmers harvest 43% of soybean-planted area, AgRural says
Brazilian farmers have harvested 43% of the soybean area planted for 2022/23 as of this week, agribusiness consultancy AgRural said on Saturday, up 10 percentage points from the previous week but with rains still slowing work in the fields.
AgRural said in a statement that persistent rainfall in the states of Parana and Mato Grosso do Sul avoided a steeper progress, keeping the overall pace of harvest delayed.
In Sao Paulo and Minas Gerais states showers took a break this week but cumulative soil moisture slowed fieldwork, also resulting in a delay when compared with the same period last year, the consultancy added.
AgRural also said Brazil’s second corn planting, which represents about 75% of the country’s overall corn output in a given year and is cultivated in the same areas as soybeans, had “good progress” in the week.
According to the consultancy, 70% of the expected second corn area has been planted in the center-south region, up from 55% a week earlier but still below the 80% of a year ago as sowing in Mato Grosso do Sul remains delayed.
SOYBEAN/CEPEA: Prices drop, but dollar and higher liquidity limit devaluations
Soybean prices are still dropping in the Brazilian market, influenced by low demand from abroad, majorly from China. Besides, expectations for a record harvest in Brazil in the 2022/23 season and for a larger area with soybean crops in the United States in 2023/24 added to the devaluations of prices abroad and export premiums helped to press down domestic quotations. On the other hand, the US dollar appreciation and the increase in the domestic liquidity this week limited steeper price drops in Brazil.
Thus, on Thursday (2), the CEPEA/ESALQ Paraná Index for soybean closed at BRL 161.98 (USD 31.13) per 60-kilo bag, 1% down from that on the previous Thursday (23). The monthly average of this Index in February, of BRL 165.56/bag, was the lowest since July 2020, in real terms (values were deflated by the IGP-DI), 3.1% lower than that in January and 14.9% below that in Feb/22, in real terms.
The ESALQ/BM&FBovespa Paranaguá (PR) Index dropped 0.9% between February 23 and March 2, to BRL 169.23 (SD 32.52)/bag. The monthly average of this Index closed at BRL 172.61/bag in February, 2.5% down in the monthly comparison and 12.8% down in the annual comparison, besides being the lowest since July/20, in real terms.
On the average of the regions surveyed by Cepea, soybean prices dropped 2% in the over-the-counter market (paid to farmers) and 2.2% in the wholesale market (deals between processors). The monthly averages decreased 2.2% and 3.1%.
The US dollar depreciated 1.4% in the last seven days, to BRL 5.204 on March 2. In February, the dollar averaged BRL 5.1792, 0.3% lower than that in January and 0.2% down from that in Feb/22, besides being the lowest since August/22.
In the national spot market, soybean liquidity has increased. According to Secex, Brazil exported 5.19 million tons of soybean in February. Although this volume is six-fold that shipped in January, it is still 17% lower than that exported in Feb/22.
CROPS – High rainfall is still hampering the harvesting of the 2022/23 crop. Still, activities are expected to step up in the coming days, since rains forecasts are lower. According to Conab, 34% of the Brazilian crop of soybean had been harvested by Feb.25th, less than the 42.1% from a year ago.
India Will Import More Edible Oils as Consumption Jumps: Group
India’s total edible oil imports will likely climb in the year ending September due to stronger consumer demand, according to Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association.
“Consumption is back,” Desai said at the UOB Kay Hian palm oil seminar in Kuala Lumpur Monday. India’s per-capita consumption is likely to accelerate, jumping 5% to 24.35 million tons in 2022-23, versus a 1.1% rise a year earlier.
More forecasts from Desai:
- India’s 2022-23 total edible oil imports seen climbing to 14.38 million tons from 14.07 million tons the previous year
- Palm oil imports may rise to 9.17 million tons from 7.99 million tons
- Imports in Jan.-Feb. seen at 1.97 million tons, before easing to 1.80 million in April-June, then rebounding to 2.22 million tons in July-Sept
- Soybean oil imports may drop to 3.16 million tons in 2022-23 from 4.05 million tons a year earlier
- Sunflower oil imports forecast to rise to 2 million tons this year from 1.93 million tons
- Global production of vegetable oils in the 2022-23 oil year seen rising 4.6% from a year ago to 189.21 million tons. Consumption in the same period is seen climbing 5.7% to 191 million tons
- Palm oil futures may trade at 4,200-4,700 ringgit a ton from April to June, then ease to 4,300-4,500 ringgit in the second half of the year
Ukraine’s Black Sea Crop Exports About Double in Week to March 5
The volume of crops departing Ukrainian ports under the Black Sea Grain Initiative totaled about 1.02m tons in the week to March 5, according to data posted by the Joint Coordination Centre.
- That compares with about 525,688 tons in the prior week
- Corn bound for China accounted for more than 350k tons of the volume
- TOTAL TONNAGE: More than 23m tons of crops have been shipped since the initiative was agreed on in late July
Ukraine’s Grain Exports Fall 27% Y/y in Season Through March 6
Ukraine’s grain exports during the season that began July 1 totaled 32.9m tons as of Monday, down 27% from a year earlier, the country’s agriculture ministry says on its website.
- 19.1m tons of corn, down 6.1% y/y
- 11.4m tons of wheat, down 38% y/y
- More than 2m tons of barley, down 63% y/y
- NOTE: Deal that allows Ukraine to export its crops through the Black Sea amid war against Russia expires on March 20. Ukraine’s authorities expect it to be extended after talks that are set to start in coming weeks
About 9% of Ukraine winter crops weak and need to be re-seeded – forecasters
Around 400,000 hectares of Ukrainian winter crops, or about 9% of the sown area, are in a weak condition and need to be re-seeded this spring, state weather forecasters said on Monday.
The Ukrainian academy of agricultural science had said earlier on Monday that most of the country’s winter grain crops were in good condition and that a good harvest could be expected.
Most of Ukraine’s winter grain crops in good condition – scientists
Most of Ukraine’s winter grain crops – winter wheat and barley – are in good condition and could produce a good harvest, Ukraine’s academy of agricultural science was quoted as saying on Monday.
“The analysis of the viability of winter wheat … showed that the vast majority of plants – 92% to 97%, depending on the predecessor and sowing date – were in relatively good condition,” the APK-Inform consultancy quoted a report by the academy as saying, despite Russia’s invasion of Ukraine.
Ukraine is a traditional grower of winter wheat which accounts for around 95% of the country’s overall wheat output, and key for both local consumption and exports.
“There are good reasons to make preliminary forecasts for the formation of yields that will be close to the average long-term average,” the report said.
The scientists say the reserves of productive moisture in the soil under winter crops remained “quite significant and did not cause concern”.
The winter wheat area sown for the 2023 harvest decreased to around 4.1 million hectares from more than 6 million sown a year earlier because of Russia’s full-scale invasion of Ukraine on Feb. 24 last year.
Of the winter wheat sown last year, only 4.9 million hectares were harvested in Ukrainian-controlled territory, as Russian forces occupied some areas.
Ukraine’s wheat harvest declined to 20.2 million tonnes in 2022 from 32.2 million tonnes in 2021. Overall grain output fell to around 54 million tonnes from a record 86 million in 2021.
A top agriculture ministry official told Reuters on Thursday that the 2023 wheat crop could total 16 to 18 million tonnes but Ukraine saw no need to limit wheat exports for the upcoming 2023/24 July-June season.
Ukraine, Poland Agree on Transit Rules for Ukrainian Grain
Ukraine and Poland reach agreement to improve custom controls for Ukrainian grain bound for export via Poland, Ukrainian Agriculture Ministry says on website.
- New procedures, in effect from March 8, will help speed up checks of Ukrainian grain and oilseeds transported for export through Poland to other countries, including via Polish ports
- Increased veterinary border controls by Poland caused queues and delays in recent weeks
- NOTE: Ukraine redirected part of its grain export from Black Sea ports to its western borders and Danube ports after the Russian invasion
Turkey says it is working to renew Black Sea grain deal
Turkish Foreign Minister Mevlut Cavusoglu said on Sunday that Ankara is working hard to extend a U.N.-backed initiative that has enabled Ukraine to export grain from ports blockaded by Russia following its invasion.
The Black Sea Grain Initiative brokered by the United Nations and Turkey last July allowed grain to be exported from three Ukrainian ports. The agreement was extended in November and will expire on March 18 unless an extension is agreed.
Russia has signalled it is unhappy with aspects of the deal.
“We are working hard for the smooth implementation and further extension of the Black Sea grain deal,” Cavusoglu said in a speech at the United Nations Conference on Least Developed Countries being held in Doha, Qatar.
Russia has said it would only agree to extend the Black Sea grain deal if the interests of its own agricultural producers are taken into account.
On Sunday, Maria Zakharova, a spokeswoman for the Russian foreign ministry, reiterated this position.
“If this agreement is equal, then we have always fulfilled our part and are going to fulfil it in all the agreements,” she said according to TASS news wire, adding that Russia would be against “goading and machinations”.
Russia’s agricultural exports have not been explicitly targeted by Western sanctions, but Moscow says restrictions on its payments, logistics and insurance industries are a “barrier” to it being able to export its own grains and fertilisers.
Cavusoglu said he also discussed efforts to discuss the extension of the deal with U.N. Secretary General Antonio Guterres. Almost 23 million tonnes of grain and other foodstuffs have been exported via the Black Sea Grain Initiative as of March 3, according to the Joint coordination Centre in Turkey which oversees implementation of the deal.
China Aims to Boost Grain Capacity Under New Food Security Push
- Authorities will target capacity expansion of 50 million tons
- Output above 650 millions tons is vital to stable prices: NDRC
China will push to increase grain production capacity by 50 million tons under the nation’s drive to bolster food security and meet rising demand.
Keeping grain output above 650 million tons is crucial to ensure adequate supply and maintain stable prices, the National Development and Reform Commission — the top economic planner — said in a report to the annual parliamentary gathering in Beijing on Sunday.
“We should keep total grain acreage at a stable level, promote the production of oilseed crops, and launch a new drive to increase grain production capacity,” Premier Li Keqiang said in his final government work report to the National People’s Congress.
That will include development of high quality farming land, support for the agricultural technology sector and more innovation in the seed industry, according to Li.
Authorities in Beijing have refocused on food security since the Covid-19 pandemic disrupted global agricultural supplies and as Russia’s war in Ukraine severely restricts trade in essential fertilizers. While China is the world’s biggest grain producer, the country has grown more dependent in recent decades on imports from suppliers like the US and Brazil.
“We are experiencing uncertainties in ensuring stable production of grain, and there is a tight balance between supply and demand for some agricultural products and supplies,” the NDRC said in its report. “Prices of grains on the international market remain high, which could cause ripple effects in the domestic market.”
Li set no clear timeline to achieve the increase in grain production capacity, though the plan was included among priorities for 2023 in his separate work report. China’s grain harvest was 686.55 million tons in 2022, the NDRC said in its report, and has been stable at over 650 million tons since 2015, according to state media.
China will also build more grain storage and logistics facilities, and ensure good planning for sales of grain stockpiles, the NDRC said. It will also seek progress in building national centers for soybean seeds.
Black Sea Nitrogen Fertilizer Price Rises 6.03%
Nitrogen fertilizer, represented by Black Sea urea, rose 6.03% to $308 per metric ton in the week ended March 3, according to Green Markets data compiled by Bloomberg Intelligence.
- Black Sea urea dropped 11.5% during the last month and was down 40.6% during the last 3 months
- Major UAN, Ammonia and Urea nitrogen benchmark prices were mixed
- Shares of Acron PJSC and Yara International ASA were up in the latest week
- Natural gas, which drives producer costs, has increased 14% during the last week and was up 17% during the last month
- The price of corn, a driver of fertilizer purchases, decreased 1.1% during the last week and was down 4.9% during the last month
Brazil Urea Prices Slip; Phosphates, Potash Remain Weak
After a brief spike during Carnival week, urea prices fell $5 a metric ton in Brazil amid continued slow demand. The prices and volumes offered in India’s atest tender will likely push urea lower in Brazil, with potash and phosphates remaining bearish as well. (
Fertilizer Slumps Amid India Tender, Delayed Demand
Urea prices fell slightly in Brazil, with additional declines expected in the wake of India’s latest tender results on March 3. More than 3 million metric tons (mt) were offered at $244/mt below India’s last tender. Urea trading stopped in Brazil as the tender sparked market uncertainty, but prices will likely be pressured further during the off season. Potash prices were stable, while phosphates fell $5/mt.
Interest from farmers in Brazil remains low as commodity prices drop ahead of the 2023-24 soybean crop negotiations. Though some Brazilian regions have already booked more than half of their soybean fertilizer volumes, overall consumption is lagging behind for 2023-24. Bearish markets for phosphates and potash could persist until the end of the winter corn-planting season
Farmers Defer Spring Purchases as Fertilizer Prices Fall
Most nitrogen prices remain weak in the US as buyers delay spring purchases, though application is already underway in the southern US. Producers lowered Midwest ammonia by as much as $260 a short ton in February to spur sales, while the global market slumped 25% to $590 a metric ton (cost and freight). Despite the price slide, European ammonia production remains profitable.
Ammonia, Urea, Potash Remain Soft; UAN Rebounds
Fueled by falling prices at Tampa and in the Midwest, California ammonia plunged $270 a short ton (st), to $980/st delivered for new sales, with sharp drops also reported in the Pacific Northwest and Western Canada. Urea was under pressure too, with prices falling in the Western US and Canada even as New Orleans (NOLA) prices were flat from last week. More than 3 million metric tons (mt) of urea was offered in India’s latest tender at $244/mt below the last tender, which is expected to push down prices in China, the Arab Gulf and Brazil.
Though lower in the Western US and Canada, urea ammonium nitrate (UAN) prices were up at NOLA. UAN was also steady to higher in the Midwest as spring sales accelerated. NOLA phosphates and potash were down $5-$10/st, with similar drops seen in the Midwest.
Indian Urea Tender Closes With Prices Down: Green Markets
Indian Potash Ltd.’s urea tender closed on Friday with prices down significantly from a prior tender in November, Bloomberg Intelligence analyst Alexis Maxwell says.
- Among offers from 19 companies, the lowest came from OQ Trading with 225k MT at $330/MT CFR, according to a Green Markets note
- The lowest offered price was down $246/MT from November’s $576/MT: Maxwell
- India Urea CFR is trading at $332.5/MT, the lowest price since March 2021
- This week likely marked India’s last tender through 2Q: Maxwell
- NOTE: India is the world’s largest urea importer and tenders infrequently
US Pork Production Up 6% This Week, Beef Rises: USDA
US federally inspected pork production rises to 545m pounds for the week ending March 4 from 515m in the previous week, according to USDA estimates published on the agency’s website.
- Hog slaughter up 6.1% from a week ago to 2.52m head
- Beef production up 1.7% from a week ago, cattle slaughter rises 1.8%
- For the year, beef production is 4.5% below last year’s level at this time, and pork is 0.9% above
Argentine firms warn of $20 bln hit as drought, frost hits crops
A consortium of Argentine agricultural companies on Friday said they had slashed their forecasts for this season’s soybean and corn harvests due to a historic drought and mid-summer frosts, which they warned could cost the country more than $20 billion.
Argentina, the world’s top exporter of soybean oil and soymeal and the third-biggest corn exporter, has been hit by a severe drought described by the Rosario grains exchange in Santa Fe province as the worst in 60 years.
“Argentina is on track to lose more than $20 billion this year due to agricultural losses caused by a climate disaster that affected most of the productive regions with drought and frost,” the CREA consortium said in a report.
CREA expects a soybean harvest of 31.2 million tonnes for the 2022/23 season, down from an initial forecast of 50 million tonnes, it said in a statement. Corn farmers are forecast to produce 38.6 million tonnes for the season, compared to the 55.2 million tonnes estimated six months ago.
The latest estimates mean Argentina would produce 38% less soy and 30% less corn than initially forecast. CREA said the forecasts could be revised further downwards in coming weeks.
On Thursday, the Buenos Aires grains exchange said it would in the coming weeks further cut its current soybean harvest forecast of 33.5 million tonnes, without saying by how much.
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