TOP HEADLINES
River level at Amazon rainforest port hits 122-year low amid drought
- Drought affects grain exports and essential supplies in Manaus
- Sixty-two municipalities in Amazonas state under emergency, over half a million affected
- Hydropower plants sapped, daylight savings time may return to conserve electricity
The river port in the Amazon rainforest’s largest city of Manaus on Friday hit its lowest level since 1902, as a drought drains waterways and snarls transport of grain exports and essential supplies that are the region’s lifeline.
Below-average rainfall – even through the rainy season – has plagued the Amazon and much of South America since last year, also feeding the worst wildfires in more than a decade in Brazil and Bolivia. Researchers say climate change is the main culprit.
Scientists predict the Amazon region may not fully recover moisture levels until 2026.
Last year, the drought became a humanitarian crisis, as people reliant on rivers were stranded without food, water or medicine.
This year authorities are already on alert. In hard-hit Amazonas state, at least 62 municipalities are under states of emergency with more than half a million people affected, according to the state’s civil defense corps.
“This is now the most severe drought in over 120 years of measurement at the Port of Manaus,” said Valmir Mendonca, the port’s head of operations, who said the river level is likely to keep falling for another week or two.
With the region never fully recovering due to weaker-than-usual seasonal rains, many of the impacts of the drought last year look set to repeat or reach new extremes.
The Port of Manaus measured the Rio Negro river at 12.66 meters on Friday, according to its website, surpassing the previous all-time low recorded last year and still falling rapidly.
The Rio Negro is a major tributary of the Amazon River, the world’s largest river by volume. The port sits near the “meeting of the waters” where the black water of the Negro meets the sandy-colored Solimoes, which also hit a record low this week.
Grain shipments have been halted on the Madeira River, another tributary of the Amazon, because of low water levels, a port association said last month.
Researchers are once again finding the carcasses of Amazon freshwater river dolphins, which they blame on thinning waters driving the threatened species into closer contact with humans.
National disaster monitoring agency Cemaden has already called the drought Brazil’s worst such event since at least the 1950s.
The drought has also sapped hydropower plants, Brazil’s main source of electricity. Energy authorities have approved bringing back daylight savings time to conserve electricity, although the measure still requires presidential approval.
The extreme weather and dryness is affecting much of South America, with the Paraguay River also at an all-time low. That river starts in Brazil and flows through Paraguay and Argentina to the Atlantic. The same extreme heat and dryness is helping drive surging fires in the Amazon and neighboring Pantanal, the world’s largest wetlands. Bolivia is also on track to break a record for most fires ever recorded, according to data from Brazil’s space research agency.
FUTURES & WEATHER
Wheat prices overnight are down 2 3/4 in SRW, down 4 1/4 in HRW, down 5 1/4 in HRS; Corn is down 1 1/4; Soybeans down 7 1/2; Soymeal down $2.90; Soyoil down 0.19.
Markets finished last week with wheat prices up 6 1/2 in SRW, up 14 1/2 in HRW, up 17 in HRS; Corn is down 1/4; Soybeans down 26 1/4; Soymeal down $13.60; Soyoil up 0.38.
For the month to date wheat prices are up 3 in SRW, up 10 in HRW, up 11 1/2 in HRS; Corn is down 1 1/4; Soybeans down 26 3/4; Soymeal down $14.00; Soyoil up 0.47.
Year-To-Date nearby futures are down 6.0% in SRW, down 6.8% in HRW, down 11.7% in HRS; Corn is down 9.9%; Soybeans down 20.3%; Soymeal down 15.3%; Soyoil down 7.9%.
Malaysian palm oil prices overnight were up 39 ringgit (+0.91%) at 4339.
China markets reopen tomorrow.
There were no changes in registrations. Registration total: 220 SRW Wheat contracts; 0 Oats; 126 Corn; 232 Soybeans; 352 Soyoil; 126 Soymeal; 5 HRW Wheat.
Preliminary changes in futures Open Interest as of October 4 were: SRW Wheat up 2,394 contracts, HRW Wheat down 2,912, Corn down 18,299, Soybeans up 13,195, Soymeal up 1,831, Soyoil up 807.
Northern Plains: Continuous warm and dry weather is forecast through next week, favorable for maturing corn and soybeans and harvest.
Central/Southern Plains: Warm and dry conditions continue through next week, being hot on occasion. That is favorable for corn and soybean harvest, but poor for winter wheat establishment. Rainfall two weeks ago has since dried up and the potential for precipitation is very low for the next couple of weeks, leading to poor wheat root establishment.
Midwest: Largely warm and dry weather over the weekend continues this week as well. A front that moved through brought some briefly mild air, but above-normal temperatures are favored this week. A front or two may move through later this week and next week, but the potential for precipitation is very low, favorable for harvest, but not for winter wheat establishment in some areas that missed out on Helene’s rainfall.
Delta: Dry weather continues in the region for the next couple of weeks, favorable for harvest, but not for water levels on the Mississippi River, which had a very good boost due to Helene, but are forecast to drop low again next week, with a potential return to restrictive conditions for transportation.
Southeast: A mostly dry forecast remains in place this week, with rainfall potential near the Gulf Coast but that is about it. Heavy rain will move through Florida Monday and Tuesday, with eventual Hurricane Milton likely to move through on Wednesday, possibly as a major hurricane that could cause devastation there.
Brazil: Wet season showers continue to be spotty in central Brazil. The late start to significant rain has caused a slow start to soybean planting. Southern Brazil has had more opportunities to pick up good rainfall over recent weeks. A front will move up from Argentina into southern Brazil early this week with good rainfall, but this front will make it north into central Brazil with good rainfall that should finally have producers planting in earnest with the true start to the wet season coming. That will be about two weeks late, however, and puts a crunch on the safrinha corn and cotton crops when they get planted in early 2025.
Argentina: Dryness continues to be a major issue for producers throughout most of Argentina. A system did move in on Sunday and start to produce showers across the far north. Scattered showers will over most of the northern half of the country early this week, but southern areas, and the state of Cordoba in particular, continue to miss out on the rainfall, with poor conditions for reproductive wheat and corn planting. Another front may move through southern areas late this week with extended showers into next week. Models are only producing streaks of rainfall for this area though, which needs heavy soaking rain instead. Soybean planting doesn’t begin until November, but there could be issues with that as well if rains don’t start picking up in the next couple of weeks.
Europe: A system brought rain through eastern areas over the weekend, favorable for moistening soils for winter wheat planting. And another system has moved into the west on Sunday, poised to bring rounds of showers to the continent over the course of the week. Rainfall in the northwest has been a hindrance to corn harvest and wheat planting, which continues there this week.
Black Sea: A system brought meaningful rain to western and central Ukraine over the weekend, but the system responsible will only produce isolated to scattered lighter showers for eastern Ukraine and western Russia as it passes through early this week. Eastern areas have had a terrible go with hot and dry conditions for months. Systems from Europe have not been able to penetrate farther eastward with the rainfall just yet. There is some indication that rainfall will increase next week, but that is starting to get awfully late for winter establishment. Though temperatures have been and continue to be quite warm, the risk of frost will increase throughout the rest of the month, with a cooler shot moving into Russia this weekend. The window for planting with potential for good growing conditions is quickly shutting down.
Australia: Some isolated showers moved through eastern areas over the weekend, but most areas saw only light rainfall or none at all. Dryness has been an issue in parts of the growing regions this spring. Some pockets of rain will move through this week, but the prospect for moderate soaking rains is very low.
The player sheet for Oct. 4 had funds: net sellers of 5,000 contracts of SRW wheat, sellers of 2,500 corn, sellers of 3,000 soybeans, sellers of 2,000 soymeal, and sellers of 2,500 soyoil.
TENDERS
- SOY, CORN SALES: Exporters sold 116,000 metric tons of U.S. soybeans to China and 198,000 metric tons of U.S. corn to unknown buyers, the U.S. Department of Agriculture said in a daily reporting system.
- WHEAT PURCHASE: Saudi Arabia has purchased 307,000 metric tons of wheat in a tender for arrival between December and January, the GFSA state buying agency said on Monday.
- SOYMEAL PURCHASE: The Korea Feed Association (KFA) purchased around 60,000 metric tons of soymeal on Friday
- BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
- CORN & BARLEY TENDER: Iranian state-owned animal feed importer SLAL has issued international tenders to purchase up to 120,000 metric tons of animal feed corn and 120,000 tons of feed barley
PENDING TENDERS
- CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 320,000 metric tons of animal feed corn sourced from Argentina or Brazil.
- WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat that can be sourced from optional origins.
TODAY
Soy Planting 2.1% Complete in Brazil’s Mato Grosso: Imea
That compares with 0.5% last week and 14% a year earlier, Imea, Mato Grosso’s institute of agriculture economy, says on website.
- NOTE: Brazil is the world’s top soybean supplier, and Mato Grosso is its largest producing state
Brazil 2024/25 Soy Planting 4.1% Done as of Oct. 4: Safras
Compares with 7.8% last year and a five-year average of 5.5%, according to an emailed statement from consulting firm Safras & Mercado.
- Planting is 24% complete in Parana, 4% in Mato Grosso do Sul and 2% in Mato Grosso
- In Goias, planting is 1% done and in Sao Paulo, 3%
SovEcon Cuts 2024 Ukraine Corn Crop Estimate to 23.5m Tons
Consultant SovEcon reduced its 2024 Ukraine corn crop forecast to 23.5m tons from 24.6m tons due to dry weather, it said in an email.
- The corn export forecast was also cut by 1.1m tons due to lower production
- “Dry weather in September, with below-normal precipitation in key corn-growing regions, has significantly impacted yields”: Managing Director Andrey Sizov
- The wheat crop forecast was revised higher to 21.8m tons, with exports also raised due to a larger crop and strong EU demand
SOYBEAN/CEPEA: International rises and firm demand boost soy oil prices in Brazil
Cepea, 4 – Increases of futures contracts for soy oil in the international market and the firm demand from biodiesel and food industry in Brazil have boosted prices of the byproduct in the domestic market. Moreover, the significant rise of export premiums reinforced increases.
Soy oil quotations moved up 1.5% between Sept. 26 and Oct. 3, at BRL 6,564.83 per ton (in São Paulo city with 12% ICMS) on Oct. 3. From August to September, the increase was 1.5%, averaging BRL 6,413.71/ton, the highest since February/23, in real terms (IGP-DI August/24).
SOY MEAL – Export premiums and prices of soybean meal also increased, influenced by the firm demand from chicken and swine farmers. The animal feeding industry is also willing to replenish inventories.
On the average of regions surveyed by Cepea, soybean meal prices upped 0.6% between Sept. 26 and Oct. 3. Comparing the averages in August and in September, the increase is 2.7%.
SOYBEANS – Due to the firm demand for byproducts, the crushing industry continues willing to purchase soybeans, sustaining quotations in Brazil. Moreover, the port strike in the US kept some ports closed, influencing domestic prices – it is worth noting that the strike ended on Oct. 3.
The CEPEA/ESALQ Index (Paraná) rose 0.7% from September 26 to October 3, to close at BRL 139.79 per 60-kg bag on Oct. 3. The ESALQ/BM&FBovespa Index (Paranaguá) increased 1.2% in the same comparison, closing at BRL 142.27 per 60-kg bag.
On the average of the regions by Cepea, soybean prices upped 0.8% from Sept. 26 to Oct. 3 in the over-the-counter market (paid to farmers) and in the wholesale market (deals between processors). The dollar increased 0.5% against Real in the same period, at BRL 5.473 on October 3.
CROPS – The forecast of rainfall in major soy producing areas next week encouraged producers. Conab indicates that planting activities reached 2.4% in Brazil up to Sept. 29, below the 4.1% verified one year ago.
CORN/CEPEA: Index continues to move up and returns to January/24 levels
Corn prices continue to increase in this early October in many areas surveyed by Cepea. The ESALQ/BM&FBovespa Index (Campinas, SP) rose 3.4% between September 26 and October 3, closing at BRL 65.71 per 60-kilo bag on Oct. 3, back to levels verified in January this year.
In January, quotations were high, influenced by concerns with planting activities and possible impacts of the weather on the summer crop. The domestic demand was firm and the pace of exports was good. However, values dropped in the following months, due to the weather improvement and the consequent good production.
Currently, corn prices have been sustained by the fact that sellers are refrained from closing deals, limiting the supply in the spot market. They expect prices to continue to increase, based on possible impacts of the warm and dry weather, especially in the Central-West, which is planting the summer crop. Some purchasers, in turn, are trying to replenish inventories, but they end up facing high values.
On the average of the regions surveyed by Cepea, corn values moved up 2.8% in the over-the-counter market (paid to farmers) and 2.1% in the wholesale market (deals between processors) between Sept. 26 and Oct. 3.
PORTS – In September, price averages at the ports of Paranaguá (PR) and Santos (SP) were BRL 64.61/bag and BRL 65.16/bag, respectively, moving up 5% and 4% compared to August/24 and 5% and 1% in relation to one year ago.
CROPS – Summer crop planting activities had reached 21.6% of the area in Brazil up to September 29 – data from Conab.
US Pork Production Up 1.7% This Week, Beef Rises: USDA
US federally inspected pork production rises to 549m pounds for the week ending Oct. 5 from 540m in the previous week, according to USDA estimates published on the agency’s website.
- Hog slaughter up 1.3% from a week ago to 2.586m head
- Beef production up 0.2% from a week ago, cattle slaughter falls 0.2%
- For the year, beef production is 0.7% below last year’s level at this time, and pork is 1.6% above
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
Latest News & Market Commentary
ADM & Industry News
The Ghost in the Machine Q3 2024
October 8, 2024
ADM and Farmers Business Network® Launch Gradable JV
August 20, 2024