Global Ag News for Oct 10.23

TOP HEADLINES

UN Officials Visit Moscow for Grain Talks First Time Since July

Russian Deputy Foreign Minister Sergey Vershinin had a detailed discussion with UN officials on removing obstacles to Russian fertilizer and cereal exports on Oct. 9, Russia’s foreign ministry said in a statement.

• NOTE: This was the first time Rebeca Grynspan, secretary-general of the UN Conference on Trade and Development, was in Moscow for talks since Russia’s exit from the Black Sea Grain Initiative
• NOTE: Russia exited the UN-brokered Black Sea Grain Initiative in July; The Memorandum of Understanding, which was agreed upon at the same time as the initiative, aims to promote Russian food and fertilizer exports

FUTURES & WEATHER

Wheat prices overnight are down 8 1/2 in SRW, down 8 1/2 in HRW, down 3 1/4 in HRS; Corn is down 2 3/4; Soybeans down 5 1/2; Soymeal down $1.10; Soyoil down 0.63.

For the week so far wheat prices are down 4 in SRW, up 3 3/4 in HRW, up 7 1/4 in HRS; Corn is down 6 1/2; Soybeans down 7 1/4; Soymeal up $1.40; Soyoil down 2.05.

For the month to date wheat prices are up 22 3/4 in SRW, up 13 3/4 in HRW, up 18 1/2 in HRS; Corn is up 8 3/4; Soybeans down 16 1/4; Soymeal down $8.30; Soyoil down 2.53.

Year-To-Date nearby futures are down 28.8% in SRW, down 23.7% in HRW, down 22.5% in HRS; Corn is down 28.4%; Soybeans down 17.1%; Soymeal down 22.5%; Soyoil down 12.0%.

Chinese Ag futures (NOV 23) Soybeans up 61 yuan; Soymeal down 59; Soyoil down 130; Palm oil down 112; Corn up 1 — Malaysian Palm is down 38. Malaysian palm oil prices overnight were down 38 ringgit (-1.05%) at 3567.

There were no changes in registrations. Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 473 Soymeal; 402 HRW Wheat.

Preliminary changes in futures Open Interest as of October 9 were: SRW Wheat up 391 contracts, HRW Wheat up 384, Corn down 3,128, Soybeans down 6,142, Soymeal up 1,203, Soyoil down 3,409.

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

Central/Southern Plains: Isolated showers Tuesday-Wednesday. Scattered showers Thursday-Friday, mostly north. Temperatures near to above normal Tuesday-Thursday, near to below normal Friday. Outlook: Mostly dry Saturday-Tuesday. Isolated showers Wednesday. Temperatures below normal Saturday-Monday, near normal Tuesday-Wednesday.

Western Midwest: Mostly dry Tuesday. Scattered showers Wednesday-Friday. Temperatures near to below normal Tuesday, near to above normal Wednesday-Friday.

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

Brazil: Rio Grande do Sul and Parana:  Mostly dry Tuesday. Scattered showers Wednesday-Thursday. Mostly dry Friday. Temperatures near to above normal Tuesday-Wednesday, below normal south and above normal north Thursday, below normal Friday. Mato Grosso, MGDS and southern Goias:  Isolated to scattered showers through Friday. Temperatures near to above normal through Friday.

Argentina: Cordoba, Santa Fe, Northern Buenos Aires:  Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Tuesday, below normal Wednesday-Friday. La Pampa, Southern Buenos Aires:  Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Tuesday, below normal Wednesday-Friday.

The player sheet for Oct. 9 had funds: net buyers of 2,500 contracts of SRW wheat, sellers of 2,500 corn, buyers of 1,000 soybeans, buyers of 1,500 soymeal, and  sellers of 5,000 soyoil.

PENDING TENDERS

• CORN TENDER: Leading South Korean feedmaker Nonghyup Feed Inc (NOFI) has issued an international tender to purchase up to 138,000 metric tons of animal feed corn to be sourced from optional origins, apart from Russia.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 90,640 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Thursday.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 50,100 metric tons of rice largely from the United States.

TODAY

Brazil Summer Corn 2023/24 Planting 51,2% Done: Safras

Compares with 44.5% a year before and a five year average of 40.1%, according to an emailed report from consulting firm Safras & Mercado.

• Estimated summer corn 2023/2024 planting area of 3.998m ha, against 4.188m ha a year before

Brazil Soybean Planting 10.1% Complete as of Oct. 5: Agrural

Soybean planting is 10.1% complete as of Oct. 5, equal to that seen in the same week a year earlier, according to an emailed report from AgRural consulting firm.

• Even with intense rain during the week, Paraná continued to lead, followed by Mato Grosso, where the volumes and distribution of rains remained irregular, AgRural said
• 2023/24 summer corn planting in Brazil’s Center-South region is 37% complete, versus 32% a week earlier and 39% a year before

Brazil Soybean Planting Advances Amid Fungal Infections

Brazilian farmers advanced in their soybean planting work, despite heavy rains in the state of Parana, and amid some fungal infections in the state of Mato Grosso, analysts at agricultural consultancy AgRural say in a research note. As of Oct. 5, planting on 10.1% of the forecast area to be sown with the oilseeds was finished, up from 5.2% a week earlier and in line with the pace set a year ago, AgRural says. The irregular volume and distribution of precipitation in Mato Grosso, Brazil’s biggest soybean producer, has delayed some planting there, the consultancy says.

WHEAT/CEPEA: Despite agents’ concerns about the weather, prices continue to fade in BR

The weather issues in southern Brazil over the past weeks are expected to have negative effects on both the volume and quality of the crops harvested this season. Besides the reductions already expected for Paraná State, decreases even steeper are estimated for Rio Grande do Sul and Santa Catarina. However, in the last days, rainfall was lower in RS, which favored the progress of the wheat harvest and the development of crops. Thus, liquidity continues low in the domestic market, since agents are waiting for higher volumes to arrive and for the assessment of crops’ conditions.

According to Conab (Brazil’s National Company for Food Supply), by October 1st, the wheat harvest had ended in Mato Grosso do Sul; In Minas Gerais, 98.5% had been harvested; in Bahia, 90%; in Goiás, 85%; in Paraná, 60%; in São Paulo, 50%; in Santa Catarina, 3%; and in Rio Grande do Sul, 1%.

In Paraná, only one third of the total harvested in the state has been traded, due to the current low levels of wheat prices. This volume is lower than that traded in the same period last year, which surpassed 50%.

Cepea surveys show that, between September 29 and October 6, the prices paid to wheat farmers dropped 2.25% in Rio Grande do Sul and 0.23% in Paraná but rose 1.48% in Santa Catarina. In the wholesale market (deals between processors), values decreased 3.88% in RS, 3.37% in PR and 1.58% in São Paulo, but increased 0.9% in SC. In the same period, the US dollar rose 2.6% against the Real, closing at BRL 5.16 on Friday, 6th, favoring the parity of the Brazilian wheat.

Malaysia Sept. Palm Oil Stocks Rises to 2.31m Tons: MPOB

Malaysia’s palm oil stocks rose to 2.31m tons in September from revised 2.11m tons in August, according to Malaysian Palm Oil Board.

• Palm oil production rose to 1.83m tons from 1.75m tons in August
• Palm oil exports fell to 1.20m tons from 1.22m tons in August

Indonesia to Import 250,000 Tons of Corn for Animal Feed

The government expects the imports to address rising prices of animal feed corn, Trade Minister Zulkifli Hasan said in a statement late Monday.

• Minister did not specify a time frame for the imports
• Indonesia is preparing to procure rice from several countries if needed, to anticipate the peak of El Nino, which is expected to last until the end of October

France Increases Corn Crop Outlook, Keeps Wheat Steady: Ministry

This year’s corn harvest is now seen at 12.1 million tons, above a September estimate of 11.5m tons, the French agriculture ministry said in a report.

• Cites good growing conditions observed since mid-July
• Production remains 9% below the prior five year average; crop last year was 10.9m tons
• Soft-wheat crop estimate kept steady at 35.1m tons; compares with 33.7m last year
• Barley raised to 12.3m tons from 12.2m tons
• Rapeseed seen steady at 4.3m tons

Amazon drought chokes river traffic, threatens northern corn exports

A severe drought choking major rivers in the Amazon rainforest has disrupted ship traffic near the region’s biggest city and pushed up costs for northern shipping routes, raising risks for corn exports in coming months.

The unusual heat and dryness, linked to the mass deaths of fish and river dolphins, has already limited local communities’ access to food and drinking water, leading the federal government to set up a humanitarian task force. Officials are now warning the thinning rivers could disrupt grains exports in the region.

“There is concern about shipping part of the corn harvest, which will still take another two to three months,” the Agriculture Ministry said in a written statement.

The worst effects of the drought have been focused west of Manaus, the capital of Amazonas state, the ministry said, adding that the lower Amazon and Tapajos River remain in good shape.

But navigation along the Amazon’s upper tributaries, often tricky in the dry season, has become especially difficult.

Some of those rivers are key to the logistical breakthroughs whereby Brazil has consolidated northern export routes, boosting competitiveness of the South American grains powerhouse.

On the Madeira River, the government said barge routes between Porto Velho and Itacoatiara, where firms such as Cargill, Bunge and Amaggi operate, “are functional but barge loads are being reduced as a precautionary measure.”

Low river levels have also affected docking of transoceanic ships around Manaus and pushed up pilotage costs, said Thiago Pera, a logistics research coordinator at ESALQ-LOG. He said Brazil’s bumper soy crop is already out the door, but conditions could prove tricky for shipping this year’s second corn harvest.

The chief executive of barge operator Hidrovias do Brasil said there was no impact yet on its routes along the Tapajos, where barges typically run at two-thirds capacity in the dry season.

CEO Fabio Schettino said climactic conditions may postpone the rainy season, which often starts in November, by “weeks or a month,” adding that he saw the unusual weather as part of annual variation rather than a “structural change.”

Meteorologist Gilvan Sampaio, from Brazilian space agency INPE, said this year’s drought in the Amazon could prove to be the worst on record. He said the dryness might last through 2024 if El Niño intensifies in the Pacific Ocean and there is no cooling of tropical waters in the North Atlantic.

An association of major grains exporters in Brazil, who also rely on southern and southeastern ports to export soybeans and corn, said they had not changed their outlook for strong exports this year. ANEC head Sergio Mendes said in a statement that the climate could still put crops at risk.

The agriculture ministry said there was a risk of shipping costs rising in Brazil without a corresponding boost in global prices, which could squeeze local farmers and traders, adding that “so far we do not see this impact.”

Kazakhstan Wheat Quality Significantly Hurt by Heavy Rain: MARS

• Kazakhstan’s spring-grain areas were hit by abundant rainfall in August and early September, following a summer drought, the EU’s Monitoring Agricultural Resources unit said in a note.
• “This caused delays to the harvest, resulting in yield losses and considerable deterioration in grain quality, primarily due to sprouting in the ear”
• Wheat harvest forecast at 12.3m tons, 25% below last year
• NOTE: Spring varieties account for the bulk of Kazakhstan’s wheat crop; the country is a major wheat exporter

U.N. held talks in Russia on Monday on grain, fertilizer exports – Reuters

Top United Nations trade official Rebeca Grynspan met with Russian officials in Moscow on Monday for talks aimed at enabling the “unimpeded access” to global markets for grain and fertilizer from Russia and Ukraine, a U.N. spokesperson said.

U.N. aid chief Martin Griffiths also attended the meetings virtually, U.N. spokesperson Stephane Dujarric said.

U.N. Secretary-General Antonio Guterres “continues in his determination to facilitate the unimpeded access to global markets for food products and fertilizers from both Ukraine and the Russian Federation,” Dujarric said.

He added that Grynspan and Griffiths’ consultations with Russia “are taking place with this goal in mind.”

The United Nations has blamed Russia’s war in Ukraine for worsening a global food crisis. Ukraine and Russia are both major grain exporters and Moscow is also a big supplier of fertilizer to the world.

U.N. officials are working to try and revive a deal that had allowed the safe Black Sea export of Ukraine grain.

Russia quit the pact in July – a year after it was brokered by the United Nations and Turkey – complaining that its own food and fertilizer exports faced obstacles and that not enough Ukrainian grain was going to countries in need.

While Russian exports of food and fertilizer are not subject to Western sanctions imposed after Russia’s February 2022 invasion of Ukraine, Moscow has said restrictions on payments, logistics and insurance have hindered shipments.

To convince Russia to agree to the Black Sea deal last year, U.N. officials said they would help facilitate Russian exports.

Guterres sent Russia’s Foreign Minister Sergei Lavrov a letter in August outlining measures that the United Nations could help to improve Russia’s grain and fertilizer exports in a bid to convince Moscow to return to a deal.

Lavrov said late last month that Russia has not rejected the U.N. proposals, but described them as “simply not realistic.”

Iran Bans Sunflower, Soybean Oil Imports From Oct. 23: Fars

Iran is banning imports of sunflower and soybean oil from Oct. 23 until further notice, semi-official Fars news agency reports, citing a letter to the Iran Customs Administration from the agriculture ministry’s deputy for commercial development.

• Agriculture ministry announced a 15% drop in the market price of the oils: Fars
  • Measure is needed to adjust and regulate the edible oil market
• 90% of Iran’s needs are met through imports, according to the report
• NOTE: Iran is expected to import 840k tons of sunflower oil and 275k tons of soybean oil in 2023-24 season, according to USDA data
  • That means it’s in the top-five importers of sunflower oil globally, and among the top-10 importers of soybean oil: USDA data

Garuda Indonesia Completes Flight Test With Palm-Based Jet Fuel

The flight test using B737-800 NG plane from Soekarno Hatta airport to Pelabuhan Ratu Airspace showed machine responding well and in control, according to Garuda Indonesia’s statement on Tuesday.

• Co. ready to explore the use of sustainable aviation fuel (SAF) in commercial flights
• NOTE: Trial uses Pertamina’s jet fuel known as J2.4, which contains 2.4% of Refined Bleached Deodorized Palm Kernel Oil

US Fall Fertilizer Season Could Get a Break as Rain Resumes

The global urea market was unsettled in advance of another tender from India, with the last one securing fewer tons at lower prices than anticipated. Low water levels in the Mississippi River have hindered barge traffic, but Midwest rain this week should bring relief. Canadian potash shipments rose 43% in August after a strike disrupted July exports.

Firming Fertilizer Prices Point to Sticky Food Inflation Ahead

Fertilizer prices firmed in 3Q ahead of the US autumn use period, setting a floor for farmers’ 2024 production costs. Changes in food prices trail fertilizer’s by a year, suggesting the former will remain sticky amid still-elevated agricultural-production expenses. CF Industries, Mosaic and Nutrien are the largest North American fertilizer producers.

Ammonia Advance Fueled by Farmer Budgets, Low Cost

US farmers should drive a robust 4Q fertilizer season, fueling ammonia sales for domestic producers CF and Nutrien. Seasonal anhydrous use is a key indicator for the global market’s direction. Ammonia is trading at its average spread to urea, a signal to farmers that it’s fairly priced. Farmer demand will be driven by crop prices, harvest and weather in 4Q, as well as spare cash. A 17% drop in 2024 corn-fertilizer expenses, based on our forecast, provides room to manage inflation or spend on fertilizers they skipped — like phosphate and potash — when costs peaked in 2022.

US growers’ demand can fluctuate by 2-4 million short tons a year, depending on weather and crop-price ratios. The globally traded ammonia market totals about 17 million metric tons; a switch in US consumption patterns can shift market size by 15-20%.

Fertilizer Cost Deflation Slows Amid 4Q Planning

Fertilizer prices came off a floor in July, stalling deflation in the largest cash expense for most farmers. Despite a 26% gain in our fertilizer price index in 3Q, we believe the US market is set for a 4Q consumption surge as farmers step in for fall applications. Fertilizer-to-crop ratios are below average as crop prices stay firm. Autumn US fertilizer prices set a floor for agricultural-production costs (the lowest level a farmer will sell to return a profit). Food-price changes trail those for fertilizer by a year, suggesting food inflation will remain in play the coming year.

Our forecast for a 17% decline in 2024 corn-fertilizer costs gives farmers room to manage inflation or spend on fertilizers they skipped — like phosphate and potash — when expenses peaked in 2022.

 

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