Global Ag News for Oct 20.23

TOP HEADLINES

El Nino to continue into mid-2024, threatening agriculture

The El Nino weather phenomenon will last at least through the first half of 2024, according to the latest United Nations forecasts, with abnormal rainfall due across Latin America raising fears for the agricultural sector.

Pacific sea surface temperatures soared in recent months, “with stronger warming along the South American coast,” said the report from the Food and Agriculture Organization of the United Nations (FAO) accessed by Reuters on Thursday.

Forecasts for the first quarter of 2024 show more rain than usual in southern cone countries such as Peru and Ecuador, as well as Mexico, alongside ongoing dry conditions in Brazil, Guyana and Suriname.

The current dry spell in Central America however is set to last only until the end of this year.

The report also stresses that agriculture, which includes crops, livestock, forests and fishing, is particularly vulnerable given the sector can absorb 26% of economic losses during extreme weather conditions and up to 82% during drought.

Key fish species like anchovies and tuna on the northern coast of Peru and southern Ecuador are particularly at risk, it said.

Ecuadorian fishermen reported a 30% decrease in tuna catching since February, it said.

The El Nino and its opposing La Nina weather patterns have impacted the production of key crops such as wheat, rice and corn in Latin America, which are highly dependent on raw materials.

Extreme conditions brought by El Nino is hitting the region but it is also simultaneously facing climate change effects such as heat waves, said the report.

The FAO said it has launched a plan to mobilize financial resources for vulnerable communities in several countries affected by the extreme weather.

FUTURES & WEATHER

Wheat prices overnight are up 4 3/4 in SRW, up 6 3/4 in HRW, up 3 1/4 in HRS; Corn is up 2 1/4; Soybeans down 1 3/4; Soymeal up $0.60; Soyoil up 0.47.

For the week so far wheat prices are up 19 in SRW, up 13 3/4 in HRW, up 20 1/4 in HRS; Corn is up 14; Soybeans up 33 1/2; Soymeal up $33.60; Soyoil down 0.80.

For the month to date wheat prices are up 58 1/4 in SRW, up 19 1/4 in HRW, up 33 in HRS; Corn is up 30 1/2; Soybeans up 38 3/4; Soymeal up $41.80; Soyoil down 2.27.

Year-To-Date nearby futures are down 24.4% in SRW, down 23.1% in HRW, down 20.9% in HRS; Corn is down 25.2%; Soybeans down 13.5%; Soymeal down 11.5%; Soyoil down 16.0%.

Chinese Ag futures (JAN 24) Soybeans up 20 yuan; Soymeal up 23; Soyoil down 84; Palm oil down 110; Corn up 6 — Malaysian Palm is up 9. Malaysian palm oil prices overnight were up 9 ringgit (+0.24%) at 3767.

There were changes in registrations (-53 Soymeal). Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 302 Soymeal; 400 HRW Wheat.

Preliminary changes in futures Open Interest as of October 19 were: SRW Wheat up 2,913 contracts, HRW Wheat up 619, Corn up 47,246, Soybeans down 14,853, Soymeal up 1,567, Soyoil up 9,153.

Northern Plains: Pockets of light rainfall over the past few days likely caused fieldwork to pause for some producers, but drier and milder conditions are forecast for the weekend. Active weather returns next week with rainfall and wintry precipitation possible. Due to recent and forecast rain, it may become more difficult to get fall fieldwork done in a timely manner in such an active pattern.

Central/Southern Plains: Southwestern areas continue to miss the isolated rain showers moving through the area and soil moisture is drying up for wheat establishment. Mostly dry conditions are expected into this weekend for northern areas, benefiting those producers wrapping up fieldwork. The weather pattern turns active next week with growing confidence that widespread rainfall will develop across the Plains as a series of low pressure systems move through the region.

Midwest: Isolated rainfall on Wednesday may have caused fieldwork progress to pause for some producers while others remained mostly dry. A quick system will move through Saturday, providing light rainfall for northern and eastern locations. A series of systems will move through next week as well, making it more difficult to complete fieldwork in some areas. Even some wintry precipitation cannot be ruled out for the second half of next week. Winter wheat will benefit from increased soil moisture in some areas.

Brazil: et season showers through the rest of this week are forecast to be pretty light in central Brazil. In contrast, a slow-moving front will continue to bring moderate to heavy rain for southern Brazil Thursday, which has dealt with flooding and wetness issues for filling and harvest of winter wheat, as well as corn and soybean planting, though the latter issues have not been as severe as expected due to the wetness. Producers are finding a way. They’ll need to find more ways going into early next week as a system from northern Argentina will bring more rainfall.

Argentina: The recent dry pattern has been unfavorable for filling winter wheat and corn planting for the last couple of months. Northern areas saw some rainfall on Wednesday with a front coming through, but the main growing area in the central did not see much. Forecasts for a system later this weekend into early next week are much more favorable, which are suggesting more widespread, heavier rain.

The player sheet for Oct. 19 had funds: net buyers of 1,500 contracts of SRW wheat, buyers of 6,000 corn, buyers of 500 soybeans, buyers of 2,500 soymeal, and  sellers of 6,500 soyoil.

TENDERS

• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 89,873 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
• FEED WHEAT PURCHASE: Japan will import 10,146 metric tons of feed-quality wheat for livestock use via a simultaneous buy and sell (SBS) auction, the Ministry of Agriculture, Forestry and Fisheries (MAFF) said. The ministry had sought 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by January 31, 2024 and arrive in Japan by March 14.

PENDING TENDERS

• 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.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.

TODAY 

US Export Sales of Soybeans, Corn and Wheat by Country

The following shows US export sales of soybeans, corn and wheat by biggest net buyers for week ending Oct. 12, according to data on the USDA’s website.

• Top buyer of soybeans: China with 947k tons
• Top buyer of corn: Mexico with 270k tons
• Top buyer of wheat: China with 182k tons
• Biggest cancellation: 86k tons of soybeans from Unknown Buyers

US Export Sales of Pork and Beef by Country

The following shows US export sales of pork and beef product by biggest net buyers for week ending Oct. 12, according to data on the USDA’s website.

• Mexico bought 9.1k tons of the 31.6k tons of pork sold in the week
• South Korea led in beef purchases
• Figures are in thousands of metric tons:

Brazil 2023/24 wheat crop seen at 10.5 mln tns – StoneX – Reuters

• BRAZIL 2023/24 WHEAT CROP SEEN AT 10.5 MILLION TNS, DOWN 5.9% FROM PREVIOUS FORECAST
• BRAZIL 2023/24 WHEAT IMPORTS SEEN AT 4.89 MILLION TNS VERSUS 4.74 MILLION TNS IN PREVIOUS ESTIMATE
• BRAZIL 2023/24 WHEAT EXPORTS SEEN AT 1.86 MLN TNS VERSUS 2.06 MLN TNS IN PREVIOUS FORECAST

Argentina Wheat Condition Worsens as Drought Drags Out: Bourse

A total of 47% of wheat plants are now in poor-to-very-poor condition, an increase of 5 percentage points from last week, because of continued dryness, the Buenos Aires Grain Exchange said in a report.

Many farmers are ditching plans to sow early corn, swapping to a late-planted crop as they wait for rains

Argentine Corn Planted Estimate Oct. 19: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2023-24 corn planted area est. held at 7.3m ha
• 2023-24 corn planted at 19.9% complete

Turkey’s TMO Unlikely to Buy More Wheat This Season: USDA FAS

The Turkish Grain Board, known as TMO, is not expected to buy more foreign wheat for the rest of the 2023-24 marketing year, the USDA’s Foreign Agricultural Service says in a report.

• NOTE: The agency often holds crop tenders for grain
• The board is Turkey’s top wheat importer, USDA says
• “There’s an unexpected oversupply of grain on the market due to a better-than-expected harvest and record imports. Grain silos are at or near capacity”

World Grain Stockpiles Estimate Is Cut on Lower Production: IGC

World grain stockpiles at the end of the 2023-24 season are now seen at 582m tons vs a September estimate of 588m tons, the International Grains Council said in a report.

• That’s partly due to a smaller production forecast
• Corn stockpile estimate reduced to 283m tons from 289m tons
• Wheat and soybean stockpiles kept steady
• Rice stockpile forecast raised to 171m tons from 168m tons amid lower demand

Ukraine’s Grain Exports Fall 30% Y/y in Period Through Oct. 20

Ukraine exported 8m tons of grain from the start of the season on July 1 through Oct. 20, versus 11.5m tons a year earlier, the Agriculture Ministry said on its website.

Total includes:

• Wheat exports of 4.1m tons, down 6.7% y/y
• Barley exports of 656k tons, down 31%
• Corn exports of 3.2m tons, down 49%

China’s Sept soybean imports from Brazil rise 23% from a year ago

China’s soybean imports from Brazil rose in September by 23% from a year earlier, data showed on Friday, after a huge crop produced by the South American nation this year continued to reach the world’s top buyer.

China imported 6.88 million metric tons of the oilseed from Brazil last month, according to the General Administration of Customs, the highest for September in three years.

Brazil ships most of their soybean crop from March through June when it harvests its crop, with exports dwindling after then, but this year summer month shipments have been higher than before.

September arrivals from the United States, China’s second-largest supplier, shrank to 133,692 tons from 1.15 million tons a year ago.

Total imports by China last month were 7.15 million tons.

So far this year, China has imported 54.87 million tons of Brazilian soybeans, up 18% compared with the same period last year.

Total arrivals from the U.S. in the first nine months of 2023 are up 8% at 20.08 million metric tons, the data also showed.

Brazil also supplied 1.25 million tons of corn to China last month, 76% of the total arrivals.

El Nino worries Brazil soy farmers as planting progresses, grain lobby says

Soybean farmers in top growing state Mato Grosso worry that scarce rains and high temperatures will lead to replanting of some areas while lowering yields in others, said local grain farmer lobby Aprosoja-MT on Thursday.

The unusual heat and dryness has been linked to the El Nino weather pattern, which is also causing a severe drought that is draining Amazonian rivers and disrupting grains shipments in the North of Brazil.

In the South of the country, El Nino has slowed soy planting as excess rains make farmers in third biggest producer Rio Grande do Sul afraid to start sowing, crop agency Emater-RS said.

Aprosoja-MT said extreme weather conditions could increase costs for farmers who have to replant their soy and could cause sowing of Brazil’s second corn and cotton to miss the ideal climate window in the Center-West.

So far, however, the government and analysts still believe Brazil will reap a record soy crop between 162 and 164 million tons in 2023/24.

According to Aproclima, Aprosoja-MT’s climate monitoring project, some regions in the south of Mato Grosso have recorded temperatures above 44 degrees Celsius (111.2 degrees Fahrenheit). Accumulated precipitation over the last seven days was below average in Mato Grosso, adding up to less than 20 millimeters (0.8 inch) of rain over areas where it rained the most, LSEG data shows.

Mato Grosso accounts for nearly 30% of soybean production in Brazil, the largest global producer and exporter of this commodity.

In recent days, dry weather has pushed back soy planting there. Further delays are likely as the prospect of rain for next week are not ideal.

“We have many places in need of replanting, but the assessment will be done after it rains and when it rains,” Fernando Cadore, president of Aprosoja-MT, said in a statement sent to Reuters. “With high temperatures … the situation is very worrying, extremely adverse,” he added.

Historic Amazon drought halts some grain barge navigation

Some grain shipments on rivers in Northern Brazil have been halted due to a drought that has sent Amazon river tributaries to the lowest level in over a century, according to a note sent to clients on Thursday by shipping services provider Serveporto.

Some barge companies “halted navigation on the Tapajos and Madeira rivers, affecting grain terminals, the primary logistics transportation method in the region,” Serveporto said.

Some areas of the Amazon have seen the least rain from July to September since 1980, and water levels at the port of Manaus, the region’s most populous city, have hit their lowest level since records began in 1902.

“The dry season has hit Amazon ports hard, particularly for barges with lower drafts,” Serveporto said. “Many convoys are struggling to continue their operations, leading to reduced load capacities,” it added.

Hidrovias do Brasil, a barge company that operates on the Tapajos, said in a statement to Reuters that barges continue to run between Itaituba and Barcarena, where they carry fertilizers and grains.

The company noted it introduced “specific operational flexibility” measures due to drafts being lower than historical averages, including use of maneuvering pushers to navigate barges at the shallowest points.

Brazilian grain exporters were diverting a small number of export cargos to southern port terminals instead of northern ports, grain exporters group Anec said on Wednesday.

Northern routes, which have been disrupted by difficulties navigating shallow Amazonian rivers this spring, have been instrumental to helping the country boost corn and soybeans exports over the past few years.

On Wednesday, the government said the Itacoatiara grain terminal owned by Hermasa, an arm of Brazilian grain company Amaggi, and two large container terminals close to Manaus, were operating with reduced capacity.

Amaggi said that on the stretches of the Amazon and Madeira rivers where it operates, navigation has been as expected for the dry season, adding that it adapts its operations every year as a result of the drought.

The government said it would release 100 million reais ($19.88 million) for emergency dredging services in the area “to prevent impacts on the value of freight and delays in the availability of products that are transported through Northern waterways.”

Serveporto also said the low water levels are affecting incoming vessels at Santarem port, in Para state, mainly because of draft restrictions there.

“For discharge vessels, we suggest considering anchorage for draft reduction before berthing due to the uncertainty of exact depths upon arrival.”

Rainfall lifts Australia’s wheat harvest by several million tons, analysts say

Recent rains across key Australian wheat growing areas are likely to increase yields, adding several million tons to a crop that had been hit by dry weather and boosting the global supply outlook, analysts said.

A larger harvest in Australia, one of the world’s biggest exporters, will help to offset crop losses caused by dry conditions in Argentina and Canada, exerting downward pressure on wheat prices Wv1.

Rain across many southern regions lifted the wheat harvest outlook to 26 million metric tons from 23 million tons a few weeks ago during Australia’s driest September on record, said Stefan Meyer, a grains broker at StoneX in Sydney.

“If last month’s heat was like taking a blowtorch to Australian crops, the recent cool weather and rain has had the effect of dousing the flames,” he said.

Ole Houe at agriculture brokerage IKON Commodities said Australia was around 3% through its harvest and forecast wheat production of 28 million tons, up from a prediction of less than 25 million tons a month ago.

Analysts at Rabobank said they expected Australia to harvest 26.9 million tons of wheat.

The higher estimates are far below last season’s wheat production of 39.7 million tons, a record high for Australia, but above the 10-year average of 26.4 million tons.

In 2019, a drought year, Australia produced just 14.5 million tons of wheat.

Dry weather through much of the growing season means the quality of Australia’s crop this year is excellent, said Meyer at StoneX.

However, better yields in the wetter south will be partly offset by lower production in northern areas that remain dry, said Rod Baker at Australian Crop Forecasters, predicting a wheat harvest of around 25 million tons.

“Some of the areas that received rain have also had unseasonably late frosts,” he said. “Hard to quantify until harvest, but some crops were still in flowering stage and damage has been reported. This all takes a bit off top end yield.”

For barley, Baker said Australia’s harvest could come in around 10.1 million tons. Rabobank forecast barley production of 11.9 million tons.

Western Australia Wheat Crop Seen Even Lower on Hot, Dry Weather

• Industry group cuts output estimate again to 8.13 million tons
• Heat and absence of further rain reduces yields in all regions

Western Australia’s wheat output is expected to be even lower this season as hot weather and a lack of rain parch the crop before harvesting ramps up, according to a monthly report from the state’s grain association.

Persistent hot temperatures combined with windy conditions and an absence of further spring rain have led to lower yields in all regions, the Grain Industry Association of Western Australia said. The state is the nation’s biggest wheat exporter.

“The worst-case scenario has eventuated right across all grain growing regions” since the last report, the group said. “Most growers are reporting actual yields to be less than they looked when standing in the paddock.”

Australia posted its driest September on record, sapping soil moisture, and the onset of El Niño is expected to bring more warm weather, according to the Bureau of Meteorology. Harvesting is underway in the central and northern districts of the grain growing regions of Western Australia and is just starting further south on early sown barley and canola crops, GIWA said.

Western Australia crop estimate for the 2023 season:

• Wheat: 8.13m tons
• Barley: 3.84m tons
• Canola: 2.22m tons

Crop estimates from September report:

• Wheat: 8.5m tons
• Barley: 3.95m tons
• Canola: 2.26m tons

Low water on Mississippi River to persist despite improved southern US drought outlook- NOAA

Low water levels on the lower Mississippi River are likely to persist through at least January despite expected above-normal precipitation across the southern United States this winter, forecasters with the National Oceanic Atmospheric Administration (NOAA) said on Thursday.

The severe to exceptional drought choking the lower Mississippi River valley is expected to improve this winter as the El Nino weather pattern brings better rains to the region, NOAA said in its U.S. winter weather outlook.

But lingering drought in the upper Midwest and forecasts for normal to below-normal precipitation across basins that supply tributaries like the Illinois and Ohio rivers could slow the Mississippi River’s recovery.

Low water has slowed export-bound barge shipments of grain from the Midwest farm belt for a second straight year during the busy fall harvest season, making U.S. exports of corn and soybeans less competitive in the world market.

“We are expecting improving drought conditions for the lower to middle Mississippi Valley during the next few months. But for the hydrological impacts such as low river levels and low ground water levels, that will be a little slower to recover,” said Brad Pugh, operational drought lead with NOAA’s Climate Prediction Center.

“The hydrological impacts could linger beyond the end of January,” he said.

The Mississippi River fell to an all-time low on Monday at the Memphis, Tennessee, river gauge, eclipsing the previous low water record set nearly a year ago, according to National Weather Service data.

Shallow river conditions prompted barge shippers to restrict the amount of grain they haul to avoid getting stuck in the drought-parched waterway.

Still, areas of the lower Mississippi River have been closed to navigation at times over the past several weeks following vessel groundings or as U.S. Army Corps of Engineers crews dredged low spots to deepen the channel.

Kazakhstan says grain harvest “sufficient” to meet domestic demand

Kazakhstan’s Agriculture Minister, Azat Sultanov, has stated that the country’s grain harvest this year is sufficient to meet domestic demand.

Due to a smaller harvest compared to previous year, it is expected that Kazakh grain exports will be reduced, although it is not anticipated that the situation will affect the domestic market.

This year, Kazakhstan plans to export around 5mn tonnes of grain, a decrease from previous years’ 7mn to 8mn tonnes.

Kazakhstan is facing a significant drop in its wheat production due to harsh weather conditions, with an estimated harvest of 12.3mn metric tonnes this year, down 25% y/y, the EU’s crop monitoring service MARS forecast on October 9.

The outcome would be 8% lower than average wheat production recorded over the past five years, according to MARS.

Top Palm Oil Producer Starts Local Trade to Set Price Reference

Indonesia, the world’s largest palm oil grower, started trading spot crude palm oil contracts domestically as part of efforts to set its own pricing benchmark for the tropical oil.

The Indonesia Commodity & Derivatives Exchange, known as ICDX, saw 100 tons of local CPO contracts being traded at 11,305 rupiah ($0.71) per kilogram on Friday. The transactions have all been for commodities that carry Indonesian Sustainable Palm Oil certification.

The transactions bode well for the government’s plan to seek price discovery in three months’ time so it doesn’t have to resort to making onshore trading mandatory. Indonesia wants to have its own palm oil reference price to calculate taxes and export levies, as well as to ensure sufficient supply for the domestic market.

The Commodity Futures Trading Regulatory Agency, known as Bappebti, expects a price reference to be set in the first quarter, said the agency’s head Didid Noordiatmoko.

Trading on Friday was kicked off by a transaction for 25 kilograms CPO to be delivered to storage tanks in Dumai region in Indonesia’s western Riau province. The exchange will host three one-hour trading sessions, starting at 10 a.m., 4 p.m. and 8 p.m. each day. The exchange offers six kinds of contracts, include those that are ISPO certified, Roundtable on Sustainable Palm Oil (RSPO) standard certified or non-certified.

LIVESTOCK: US Red Meat Production Fell 6.8% Y/y in September

Commercial beef and pork production fell to 4.35b pounds in Sept., according to the USDA’s monthly livestock slaughter report.

• Beef production down 10.1% y/y to 2.15b pounds
• Sept. cattle slaughter totaled 2.61m head, a 9.9% decline from a year ago
  • Avg live weight dropped by 2 pounds from last year to 1,362 pounds
• Pork production down 3.2% y/y to 2.19b pounds
• Hog slaughter fell 1.6% y/y to 10,487m head
  • Avg live weight was 281 pounds vs 285 pounds a year ago

US Crops in Drought Area for Week Ending Oct. 17: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending Oct. 17, according to the USDA’s weekly drought report.

• Corn crops experiencing moderate to intense drought dropped to 50%
• Drought exposure at this time last year was 62%
• Soybean crops in drought down to 53%

US Miss. River Grain Shipments Rise, Barge Rates Decline: USDA

Barge shipments down the Mississippi river increased to 496k tons in the week ending Oct. 14 from 386k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 11% from the previous week
• Soybean shipments up 59% w/w
• St. Louis barge rates were $23.06 per short ton, a decline of $2.55 from the previous week

 

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