Global Ag News for May 8.23
Brazil’s Rising Soybean Discount Spurs China, US Demand: Anec
The discount for Brazilian soybeans to US prices is encouraging China demand, Brazil’s grain exporting group Anec says in a report.
- The big differential has also encouraged US imports, which have totaled four soybean vessels so far
- China’s demand is still slower-than-expected due to China’s sluggish pace of crushing: Anec
- Brazil’s low corn premiums are likely the reason for recent China’s cancelations of imports from the US
- A recent plunge at Brazilian ports stem from a lack of grain storage capacity: Anec
- Brazil may export 12.1m tons of soybeans this month, up 17% y/y, Anec estimates based on shipping schedule
- That’s below 13.9m tons in April and 14.4m tons in March
FUTURES & WEATHER
Wheat prices overnight are up 4 3/4 in SRW, up 12 1/4 in HRW, up 13 1/2 in HRS; Corn is up 3 1/4; Soybeans up 7 1/2; Soymeal up $2.10; Soyoil up 0.42.
For the week so far wheat prices are up 4 3/4 in SRW, up 12 1/4 in HRW, up 13 1/2 in HRS; Corn is up 3 1/4; Soybeans up 7 1/2; Soymeal up $2.10; Soyoil up 0.42.
For the month to date wheat prices are up 31 1/4 in SRW, up 69 in HRW, up 45 3/4 in HRS; Corn is up 14 3/4; Soybeans up 24 3/4; Soymeal down $4.20; Soyoil up 3.08.
Year-To-Date nearby futures are down 18.3% in SRW, down 0.9% in HRW, down 12.5% in HRS; Corn is down 3.9%; Soybeans down 3.3%; Soymeal down 10.4%; Soyoil down 15.2%.
Chinese Ag futures (JUL 23) Soybeans up 170 yuan; Soymeal up 53; Soyoil up 96; Palm oil up 168; Corn up 12 — Malaysian palm oil prices overnight were up 157 ringgit (+4.36%) at 3758.
There were changes in registrations (-19 Oats, 100 Soymeal, 36 HRW Wheat). Registra
tion total: 2,389 SRW Wheat contracts; 31 Oats; 11 Corn; 0 Soybeans; 848 Soyoil; 130 Soymeal; 81 HRW Wheat.
Preliminary changes in futures Open Interest as of May 5 were: SRW Wheat down 814 contracts, HRW Wheat down 753, Corn up 2,333, Soybeans up 3,063, Soymeal up 6,327, Soyoil up 3,248.
Northern Plains: Temperatures continue to be near or above normal for at least the next week, favoring planting. Scattered showers that fell over the weekend will continue in waves through the week, offering some increase in soil moisture for some of the dry areas.
Central/Southern Plains: Scattered showers went through some of the driest areas of Nebraska over the weekend, as well as parts of Texas. Drought areas in the southwest saw very little with high temperatures. Waves of showers will develop this week, but be largely disorganized, which may leave some areas missed by the activity. However, the continued period of rainfall is favorable to some of the driest areas in the country, including those areas in the southwest.
Midwest: Scattered showers went through some of the driest areas of the region over the weekend, favorable for emergent corn and soybeans. Showers continue Monday, though may have a couple drier days midweek before another system in the Plains brings showers in for late week and weekend. Most areas yet to plant will have a window of opportunity to get into the fields, while some of these showers will be beneficial. Showers will be disorganized, however, which will leave some areas dry.
Delta: Wetter soils in the region are mostly favorable for developing crops. Disorganized areas of showers and thunderstorms will be possible through the weekend, which may or may not hit most areas. Either way, conditions continue to be mostly favorable for seeds in the ground.
Argentina Grains & Oilseeds: It remains dry in Argentina, unfavorable for winter wheat planting and establishment. More rain is needed. However, it should remain drier for at least the next week.
The player sheet for 5/5 had funds: net buyers of 4,250 contracts of SRW wheat, buyers of 7,500 corn, buyers of 7,750 soybeans, buyers of 1,500 soymeal, and buyers of 8,500 soyoil.
- DURUM WHEAT AND BARLEY PURCHASE: Tunisia’s state grains agency is believed to have purchased about 100,000 tonnes of durum wheat and around 75,000 tonnes of animal feed barley in an international tender on Friday.
- WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 52,225 tonnes of milling wheat to be sourced from the United States in a tender on Friday.
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 43,500 tonnes of rice
- CORN TENDER: Algerian state agency ONAB issued an international tender to purchase about 140,000 tonnes of corn to be sourced from Argentina or Brazil
- SOYMEAL TENDER: Algerian state agency ONAB issued an international tender to purchase up to 70,000 tonnes of soymeal.
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 tonnes of animal feed barley.
Brazil soy exports seen reaching 12.08 mln tns in May – Anec
- BRAZIL SOY EXPORTS SEEN REACHING 12.08 MILLION TNS IN MAY VERSUS 10.27 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
- BRAZIL CORN EXPORTS SEEN REACHING 324,070 TNS IN MAY VERSUS 1.09 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
- BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.2 MILLION TNS IN MAY VERSUS 1.89 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
- BRAZIL GRAIN STORAGE DEFICIT HITTING LOCAL SOYBEAN PRICES, PORTS WORKING ‘NEAR MAXIMUM CAPACITY’ – ANEC
- BRAZIL’S ANEC DOES NOT EXPECT SOYBEAN, CORN PRICES RISING IN SHORT TERM
Brazil 2023/24 Soybean Crop Sales Reach 6% as of May 5: Safras
Compares with 12% a year before and 5-year average of 17.1%, according to an emailed report from consulting firm Safras & Mercado.
- Sales from the 2022/23 crop are equivalent to 51% of the estimated output, compared with 61% last year and a five-year average of 67.1%
No new ships authorized on Friday for Ukraine grain Black Sea exports – UN
Ukraine, Russia, Turkey and the United Nations failed to reach agreement on Friday to authorize any new vessels to carry out Black Sea grain exports, deputy U.N. spokesperson Farhan Haq said.
Haq said daily inspections of previously authorized ships continued.
Russia still not happy with progress on farm exports after U.N. talks – TASS
Russia is still not satisfied with how the issue of Russian agricultural exports as part of the Black Sea grain deal is being resolved, TASS news agency quoted Deputy Foreign Minister Sergei Vershinin as saying on Saturday after the latest talks with a top U.N. official.
“We are still not satisfied with the progress. This is very important for us,” Vershinin said.
He was speaking after talks in Moscow with the United Nations’ top trade official Rebeca Grynspan, TASS said.
On Saturday, Kremlin said that President Vladimir Putin had not yet responded to proposals from United Nations Secretary-General Antonio Guterres on how to extend and improve the deal, which allows the safe Black Sea export of Ukrainian grain.
SOYBEAN/CEPEA: Firm demand and international valuations interrupt downward trend of prices in BR
After dropping to the lowest levels in the last three years, soybean prices have reacted in Brazil this week. The downward trend was interrupted by firm demand and the disinterest of sellers in trading the product. Brazilian agents are aware of the higher world demand in the current season and the low productivity in Argentina, which may harvest the lowest output in 24 seasons.
The boost to prices in Brazil came also from soybean valuations abroad. At CME Group (Chicago Mercantile Exchange), the May/23 contract closed at USD 14.4850/bushel (USD 31.93/60-kg bag) on Thursday, 4, 1.5% higher than that on the previous Thursday, April 27th.
Abroad, quotations were influenced by the 10th consecutive increase in the interest rates in the United States, by 0.25 percentage point, with a gap from 5% to 5.25%, according to FED (Federal Reserve, the Central Bank of the United States). This scenario tends to lead players to close more future deals in the US, which may also raise the currency exchange rate.
Thus, Brazilian soybean farmers have reduced the volume supplied in the spot market, expecting values to rise in the coming months. The export parity, at the port of Paranaguá (PR) and based on the future dollar traded at B3 on May 4th, points to prices at BRL 145.73/bag for shipment from June/23; BRL 149.32/bag for July/23; and BRL 151.83/bag for August/23.
In the spot market, the ESALQ/BM&FBovespa Paranaguá (PR) Index for soybean rose 1.7% between April 27 and May 4, to BRL 138.49 (USD 27.74) per 60-kg bag on Thursday, 4. The CEPEA/ESALQ Paraná Index increased 1%, to BRL 132.18 (USD 26.47) per 60-kg bag on Thursday. On the average of the regions surveyed by Cepea, soybean prices remained stable in the over-the-counter market (paid to farmers) but dropped a slight 0.4% in the wholesale market (deals between processors).
The lower number of deals in the national spot market is also linked to the lack of room at the major Brazilian ports. In April, Brazil exported 14.34 million tons of soybean, 8.3% more than that shipped in March and 25% above that exported in April/22, according to Secex. Between January and April, Brazil exported 33.44 million tons of soybean, a record for the period.
CROPS – The harvesting of the 2022/23 soybean crop is ending in Brazil. According to Conab (Brazil’s National Company for Food Supply), 93.7% of the soybean crops had been harvested by April 29th.
CORN/CEPEA: Favorable weather raises expectations in BR and in the USA
The weather has been favoring the development of corn crops in Brazil since April. In the United States, it is corn sowing that is being favored, and activities are ahead of that in the same period last season. Thus, production estimates have been positive for both the crop in Brazil and in the US.
This context is keeping pressure on corn prices in most of the regions surveyed by Cepea in Brazil – in Campinas (SP), values have been dropping every day since late March. Usually, this time of the year is marked by firmer prices, due to the typical low inventories in the first semester and logistic issues – since soybean deliveries are prioritized.
However, this year, Brazilian sellers have been willing to trade the batches from the summer crop and close contracts for the second semester. Purchasers still expect values to drop more steeply and, thus, have been postponing acquisitions.
Abroad, the favorable weather in Brazil and the progress of corn sowing in the US pressed down quotations in the last days, however, concerns about exports from the Black Sea limited devaluations and underpinned prices.
Agents from eastern Europe are supposed to get together for a meeting later this afternoon to discuss a new export agreement, which will last until May 18th. Besides, the decrease in the stocks of ethanol in the US raised corn prices too – on April 28th, 23.4 million barrels were in stock, 3.7% less than the number from the previous week and the lowest since early December 2022, according to the Administration of Power Information from the US.
PRICES – The ESALQ/BM&FBovespa Index for corn (Campinas, SP) has been fading for 26 consecutive working days, being currently at the lowest nominal level since September 2020. On Thursday, 4, the Index closed at BRL 62.85 (USD 12.59) per 60-kg bag, 17, a steep 7.2% down from that on the previous Thursday, April 27th. In a year’s time, values have decreased 28%.
In the remaining regions surveyed by Cepea, devaluations were steep too, majorly in Mato Grosso and Mato Grosso do Sul, where values dropped by more than 10% in seven days. On the average of the regions surveyed by Cepea, quotations decreased 5.7% in the wholesale market (deals between processors) and 5.4% in the over-the-counter market (paid to farmers).
PORTS – With expectations for high supply in the second semester, agents have been monitoring the opportunities for export deals. However, prices are fading. In April, Brazil exported 470 thousand tons of corn, less than the 1.3 million tons shipped in March 2023 and 31% below that from Apr/22, according to Secex.
CROPS – Crops have been developing well, according to agents consulted by Cepea, raising production estimates. The harvesting of the second crop has not begun yet. For the summer crop, according to Conab, 63.6% of the national production had been harvested by April 29th.
China ags ministry launches law enforcement campaign to stabilise grain supply in 2023
China’s agriculture ministry has launched a law enforcement campaign to stabilise grain supply in 2023, according to a post on its official WeChat account on Monday.
The ministry will investigate the illegal occupation of farmland, fake farm inputs, and illegal sales of GMO seeds, it said, referring to a document that was published in March.
China Nitrogen Fertilizer Price Drops 4.54%
Nitrogen fertilizer, represented by China granular urea, fell 4.54% to $337 per metric ton in the week ended May 5, according to Green Markets data compiled by Bloomberg Intelligence.
- China granular urea dropped 10.3% during the last month and was down 29.2% during the last 3 months
- Major Urea nitrogen benchmark prices were mixed
- Shares of Shandong Hualu Hengsheng Chemical Co., Holitech Technology Co. and Luxi Chemical Group Co. were down in the latest week
- Major UAN nitrogen benchmark prices were mixed
- Major Ammonia nitrogen benchmark prices were unchanged
- Natural gas, which drives producer costs, has decreased 11% during the last week and was down 9.6% during the last month
- The price of corn, a driver of fertilizer purchases, increased 2.3% during the last week and was down 4.6% during the last month
USDA attaché sees India 2023/24 wheat crop at 110 million T
Following are selected highlights from a report issued by the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) post in New Delhi:
“FAS New Delhi’s (Post) market year (MY) 2023/2024 wheat production forecast is raised to a record 110 million metric tons (MMT) on reported higher-than-earlier expected yields despite some weather incidences. Notwithstanding the record harvest, the Indian government is unlikely to remove its existing wheat and wheat products export bans. The MY 2023/2024 consumption and ending stocks figures are raised to account for higher forecasted production. Based on India’s latest official stock estimates, the MY 2022/2023 ending stock estimate is revised to 9.5 MMT. Post continues to estimate MY 2022/2023 rice production unchanged at 128 MMT based on the Indian market situation. No significant changes to report for the corn production-supply distribution (PSD) table.”
El Nino Risks Are Climbing
An El Nino weather event looks increasingly likely, a potentially significant development for many commodity markets. If one kicks in, food costs may climb as some harvests are disrupted, along with power prices as searing heat across Asia stokes energy demand. That in turn will have knock-on implications for inflationary trends and monetary-policy deliberations.
The event is triggered by a warming of the equatorial Pacific and, while its reach is global, it brings hotter, drier conditions to much of Asia. Concerns surfaced in March, then strengthened in April. Now they’ve ratcheted higher again. The UN’s World Meteorological Organization sees a 60% chance for a transition to El Nino conditions in May to July, 70% odds for a shift in June to August, and 80% between July and September. Critically, forecasters warned the impact of a new El Nino may be magnified by global warming.
Fresh perspective comes from Down Under this week, with Australia’s Bureau of Meteorology set to update its outlook on Tuesday. Increased odds of an event could support the case for higher sugar, palm oil, rice and coffee prices, among others, although it’s important to note that no two El Ninos are alike, and much hinges on the duration, intensity, and timing.
US Pork Production Up 2.5% This Week, Beef Down: USDA
US federally inspected pork production rises to 531m pounds for the week ending May 6 from 518m in the previous week, according to USDA estimates published on the agency’s website.
- Hog slaughter up 2.5% from a week ago to 2.447m head
- Beef production down 0.5% from a week ago, cattle slaughter falls 0.2%
- For the year, beef production is 4.9% below last year’s level at this time, and pork is 1% above
US Fertilizer Price Hikes Likely to Revert as Demand Ebbs
Though a surge in spring fieldwork and near-term demand have caused fertilizer supplies to tighten at New Orleans and inland, the recent price surges for urea, phosphates and potash aren’t expected to last as demand wanes and suppliers strive for empty bins by summer. China’s expected potash-supply contract looks like it will be later, and lower priced, as domestic inventory rises during the spring season.
NOLA Urea, Phosphates Fall; Inland Markets Strong
The recent surge in New Orleans (NOLA) urea and phosphate prices was starting to shift, with lower prices reported as buyers sought to avoid a supply overhang at the end of spring. While prompt NOLA urea continued to garner a premium at $440-$450 a short ton (st), trades for full May dropped to a low of $320 vs. last week’s $340 floor. NOLA phosphate price drops were much sharper, with diammonium phosphate (DAP) plunging to $520/st vs. last week’s $646-$650, and monoammonium phosphate falling to $485-$500/st vs. $499-$630 last week. Inland prices for urea, phosphates and potash remained strong, however, as brisk spring demand continued to stretch supplies.
While ammonia prices in Europe were stronger on limited deals, Corn Belt ammonia prices fell as preplant demand wound down.
Brazil Fertilizer Prices Stay Weak Amid Offseason Lull
Slow offseason fertilizer orders in Brazil will likely pressure suppliers for discounts before corn demand improves in 3Q. As the next buying season approaches, a wave of pent-up demand might spur a turnaround in fertilizer prices in June. Strong inventories, supply competition and falling commodity prices could mitigate any upward pressure, however.
Price Declines Continue for Nitrogen, Phosphates, Potash
Urea prices softened in Brazil amid slow off-season demand, while phosphates and potash continue to be pressured by competition among suppliers. Urea fell $5 a metric ton (mt) cost-and-freight, to $340-$345. Inland urea continued to strengthen but might reflect softer import prices in the coming weeks as farmers delay purchases. Monoammonium phosphate (MAP) fell to $555-$575/mt vs. last week’s $560-$600, with aggressive Chinese offers likely to push prices to a low of $540 in the near term. Potash continued to weaken in all Brazilian regions, with future prices driven by Belarus, Russian and Canadian tons fighting for market share.
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