Global Ag News for Sept 13.23

TOP HEADLINES

Hungary signals national ban on Ukrainian grains imports beyond Sept 15

Hungary has agreed with Romania, Slovakia and Bulgaria that the four countries would impose national bans on Ukrainian grain imports to protect their markets if the EU does not extend a ban that expires on Sept. 15, Hungary’s farm minister said on Wednesday.

Ukraine has become entirely dependent on alternative European Union routes, called Solidarity Lanes, for its grain exports after Russia abandoned in July a deal that had allowed Ukrainian grains to be shipped safely via its Black Sea ports.

As a result, farmers in neighbouring states – Poland, Hungary, Romania, Bulgaria and Slovakia – have faced increased competition and bottlenecks in their own markets.

Minister of Agriculture Istvan Nagy said in a Facebook post that this new national ban would apply to a wider range of Ukrainian products than the current measures.

“We have agreed with my Romanian, Slovak and Bulgarian colleagues that if there is no decision on the extension of the existing moratorium by Brussels, then we will take national measures individually,” Nagy said in a video message.

The five countries have been pushing for an extension of the current EU ban past its Friday expiry and Poland and Hungary have said they would unilaterally continue with the ban if the Commission does not extend it.

The European Commission announced “temporary preventive measures” in May that would ban sales into these five states while allowing transit to non-EU markets, mainly Africa. These measures are due to expire on Friday.

FUTURES & WEATHER

Wheat prices overnight are up 9 1/2 in SRW, up 8 3/4 in HRW, up 6 3/4 in HRS; Corn is up 3 3/4; Soybeans down 3/4; Soymeal down $1.70; Soyoil up 0.66.

For the week so far wheat prices are down 1/4 in SRW, up 5 1/2 in HRW, up 12 1/2 in HRS; Corn is down 4 1/4; Soybeans down 13 1/2; Soymeal down $3.90; Soyoil up 0.36.

For the month to date wheat prices are down 4 1/4 in SRW, up 12 1/4 in HRW, up 19 in HRS; Corn is up 2; Soybeans down 23; Soymeal down $7.70; Soyoil down 1.78.

Year-To-Date nearby futures are down 29.3% in SRW, down 17.7% in HRW, down 20.8% in HRS; Corn is down 31.7%; Soybeans down 12.3%; Soymeal down 15.3%; Soyoil down 1.7%.

Chinese Ag futures (NOV 23) Soybeans down 8 yuan; Soymeal down 80; Soyoil down 16; Palm oil down 20; Corn down 10 — Malaysian Palm is up 44. Malaysian palm oil prices overnight were up 44 ringgit (+1.19%) at 3727.

There were no changes in registrations. Registration total: 3,005 SRW Wheat contracts; 741 Oats; 0 Corn; 0 Soybeans; 67 Soyoil; 85 Soymeal; 402 HRW Wheat.

Preliminary changes in futures Open Interest as of September 12 were: SRW Wheat up 4,272 contracts, HRW Wheat down 961, Corn up 7,061, Soybeans up 1,984, Soymeal up 1,664, Soyoil up 6,630.

Northern Plains: Light showers will move through with a system Wednesday-Thursday, but should not impact harvest too much. Temperatures will waffle a bit but end up mostly above normal going into next week.

Central/Southern Plains: A front continues across the south with scattered showers and thunderstorms through Wednesday. Another system promptly moves into the region on Thursday and continues through Saturday, making for a week’s worth of showers for the region. Moderate to heavy amounts will continue to be possible, which will slow down the maturing process for corn and soybeans, but perk up soil moisture for winter wheat planting and establishment.

Western Midwest: A front continues to bring light showers through the region Tuesday along with another burst of mild air. Another system moves through Friday through the weekend but with limited showers. Temperatures will rise next week. Early harvest conditions continue to be favorable, but more rain would be welcome for immature crops and winter wheat planting and establishment.

Delta: A front will move through Tuesday and Wednesday with isolated showers. Another system will move through this weekend and may bring some showers as well. Any rain could cause delays in the soybean harvest, but would help immature cotton.

Brazil: A front brought heavy rain to southern Brazil over the weekend. Another will bring more heavy rain potential through Thursday. Rain is favorable for wheat, except where flooding occurs. Heavy rain could cause issues with the remaining safrinha corn harvest and early planting, but is setting up most of Brazil with good conditions as planting increases throughout the month.

Argentina: Rainfall has been increasing lately and another front moving through early this week should produce more showers, easing the country out of last season’s historic drought. Quieter conditions follow for the next week, but the country is in good shape for developing wheat and any early corn planting.

The player sheet for Sept. 12 had funds: net buyers of 3,500 contracts of SRW wheat, sellers of 7,500 corn, buyers of 11,500 soybeans, sellers of 5,000 soymeal, and  sellers of 3,000 soyoil.

cargo ships on waterways

TODAY

TENDERS

  • WHEAT PURCHASE: A group of South Korean flour mills bought an estimated 40,000 tonnes of milling wheat to be sourced from Canada. The purchase was believed to all involve Canadian western red spring wheat of 13.5% protein content bought in the low $320s a ton FOB.
  • WHEAT PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc. purchased about 55,000 metric tons of animal feed wheat to be sourced from optional origins for arrival around Feb. 20, 2024.
  • WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries is seeking to buy a total of 118,490 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Sept. 14.

PENDING TENDERS

  • WHEAT TENDER: A Syrian state grains agency issued an international tender to purchase and import 200,000 metric tons of soft milling wheat.
  • RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 21,700 metric tonnes of rice all to be sourced from China.
  • 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
  • FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by Dec. 31, and arrive in Japan by Feb. 29, via an auction to be held on Sept. 13.
  • SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued a tender to purchase up to 120,000 metric tons of soymeal from Brazil, Argentina or India. The deadline for submission of price offers is Sept. 13

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Sept. 8 are based on six analyst estimates compiled by Bloomberg.

  • Production seen slightly higher than last week at 1.015m b/d
  • Stockpile avg est. 21.485m bbl vs 21.621m a week ago

Brazil’s soy exports to reach nearly 100 million tons in 2023 -Abiove

Brazil’s soybean exports should reach 99 million metric tons in 2023, up by 500,000 from a month ago, oilseed group Abiove said on Tuesday, as the country counts on solid demand from China and a record harvest this year.

Abiove’s estimate for soybean output from the world’s largest producer and exporter of the oilseed was raised by 300,000 tons to a record 157.3 million tons.

Forecasts point to a sharp increase compared to 2022, when Brazil exported 78.7 million tons and produced 129.9 million tons, according to the association that brings together the sector’s main traders and processors.

“Brazil continues to gain ground in the international market due to the quality of its soybeans and increased demand for food in China,” said Abiove’s Economics Director, Daniel Amaral.

Abiove also maintained Brazil’s soybean processing forecast at 53.5 million tons, from 50.9 million tons in 2022.

With the adjustments, revenue from exports of soybeans, soybean meal and soybean oil from Brazil was estimated at a record $66.8 billion in 2023, compared to $66.58 billion in the previous forecast and $60.9 billion in 2022.

Brazil Soymeal Exports Seen Reaching 2.16 Million Tns In September Versus 2.07 Million Tns Forecast In Previous Week – Anec

BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.16 MILLION TNS IN SEPTEMBER VERSUS 2.07 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC

 

EU Soft-Wheat Exports Fall 27% in Season Through Sept. 8

The European Union’s soft-wheat exports in the season that began July 1 reached 5.84m tons as of Sept. 8, compared with 8.02m tons in a similar period a year earlier, the European Commission said on its website.

  • NOTE: Due to technical issues, the data in the report is until Sept. 8, rather than Sept 10
  • Leading destinations include Morocco (1.15m tons), Nigeria (547k tons), and Algeria (464k tons)
  • Barley exports are at 1.81m tons, down 11% y/y
  • Corn imports are at 2.95m tons, down 43% y/y

Ukraine’s Grain Exports Fall 7.5% for Period Through Sept. 13

Ukraine’s grain exports from start of season on July 1 through Sept. 13 were down 7.5% to 5.4 m tons, from a year earlier, Agriculture Ministry says on website.

  • Total includes:
    • Wheat exports of 2.5m tons, up 36.5% y/y
    • Barley exports of 542,000, up 3.2% y/y
    • Corn exports of 2.3m tons, down 32.5% y/y

FranceAgriMer Cuts Soft-Wheat Export Estimate; Stockpiles Raised

Soft-wheat exports from France are seen at 17.2m tons in the 2023-24 season, below a July outlook for 17.5m tons, crops office FranceAgriMer said in a report.

  • Outlook trimmed for both EU and non-EU sales
  • Stockpiles estimate raised to 2.91m tons, from 2.69m tons
  • BARLEY
    • Export estimate raised to 6.52m tons, from 6.27m tons
    • Stockpiles forecast cut to 1.23m tons, from 1.53m tons
  • CORN
    • Stockpiles are seen at 1.65m tons, little changed from the prior year, FranceAgriMer said in its initial 2023-24 outlook for the crop

Ethanol Industry Faces ‘Make-or-Break’ Moment, USDA Chief Says

  • Slashing emissions is critical for corn fuel, Vilsack says
  • Industry should fight to win in jet-fuel demand, he says

America’s producers of corn ethanol, beleaguered by policy feuds with Big Oil and the threat of electric vehicles, now face an opportunity that could help to spark a demand boom.

That’s according to Tom Vilsack, the US agriculture secretary. He’s urging ethanol makers to clean up their greenhouse gas emissions and fight to dominate a growing market for low-polluting jet fuel. The industry’s future is tied to sustainable aviation fuel, or SAF, a 36-billion gallon industry in the making, he said Tuesday at an event hosted by the ethanol lobby group Growth Energy.

“This is a critical moment — a make-or-break moment,” Vilsack said.

Ethanol producers, long accused by some environmentalists of making a fuel dirtier than traditional gasoline, are trying to shrink their carbon footprint to become a coveted, high-premium ingredient for making SAF.

The Treasury Department is developing guidance that will shape the industry and help decide what fuels qualify for expanded tax incentives under the Inflation Reduction Act. Vilsack said he’d spoken with other top Biden administration officials and encouraged the use of an Energy Department model for estimating greenhouse gas emissions from SAF production that is favored by the industry.

Michael Berube, a deputy assistant secretary at the Energy Department, emphasized the industry’s shrinking environmental footprint. “You can get substantial greenhouse gas reductions within current ethanol production if you’re doing a number of things right,” he told the summit.

Ukraine Says Russian Drones Attacked Area Near Izmail Port

Several groups of Russian drones attacked areas in the south of Odesa region near Izmail port on the Danube river overnight, Odesa regional governor Oleh Kiper says on Telegram.

  • Port infrastructure facilities and other infrastructure were damaged, truck parking area caught fire
  • Seven people were injured including three people in grave condition
  • Ukrainian defense shot down 32 drones in the area during the attack

Russia Says Ukraine Hit Crimean Shipyard in Missile Strike

  • Ukraine’s Izmail port was hit by Russian drones overnight
  • Izmail is a key grain port after Russia ended Black Sea deal

Ukraine hit the Sevastopol Shipyard in Crimea in a missile attack overnight, causing a fire and wounding at least 24 people, while Russia damaged Ukraine’s Izmail port on the Danube river.

The attack sparked a fire at a “non-civilian facility” in the South Bay area of the Sevastopol Shipyard early Wednesday, Russia-installed Governor Mikhail Razvozhaev said on his VK social network page. Four of the people injured are in moderate condition, he said. The fire service is working on the site.

Seven of 10 cruise missiles were shot down, Russia’s Defense Ministry said on its Telegram channel. Two ships that were under repair were damaged, it said.

Crimea, which Russia annexed from Ukraine in 2014, regularly comes under attack by drones or missiles. The Crimea bridge linking mainland Russia and the peninsula was partially damaged in July.

Ukraine’s Izmail port in the Odesa region was hit in a series of Russian drone strikes, Governor Oleh Kiper said on his Telegram channel. Rescue workers are putting out the fire.

Six people were injured, with three in serious condition, Kiper said.

The port, along with others on the Danube River, has become increasingly vital to Ukraine’s crop shipments since Russia’s withdrawal from a deal to allow grain exports via larger Black Sea ports.

Japan’s Wheat Price Cut Is Positive for Food Makers, Citi Says

Japan’s plan to cut imported wheat prices by 11% from October is positive for food manufacturers that use the ingredient, writes Citi analyst Shuhei Oba in a note.

  • The surprise cut may reduce flour prices about 2 to 3 months later
  • It may boost profits for Kikkoman’s Japan business by 500m yen/year from Oct.; Nisshin Seifun’s domestic food business may see profit increase of 1b yen/year from 2024
  • Need to monitor risk that lower flour costs may increase pressure to cut food prices
  • Topix Foods Index is up 22% so far this year vs 26% gain in Topix

Panama Canal Says Traffic Woes Will Last Into Next Year

  • Delays threaten to impact Christmas, Chinese New Year shipping
  • Number of ships moving through canal daily has slipped to 32

The operator of the Panama Canal said there’s no immediate prospect of relief from the drought that’s reduced water levels and snarled shipping and global supply chains.

Panama Canal Administrator Ricaurte Vásquez Morales said Tuesday that abnormally high ocean temperatures, an unpredictable rainy season and the persistence of the El Niño weather phenomenon mean officials will have to continue restricting vessel traffic into 2024.

It means the long waits bedeviling the canal are likely to continue through the months leading up to both Christmas and Chinese New Year, when it’s normally busiest.

Cargo ships wait to cross the Panama Canal in Panama on September 1.

The number of ships moving each day through the canal has slipped to 32 from 36 because of declining reservoir levels. The backlog of ships waiting to enter the canal has spurred fierce bidding for open slots.

Read More: Panama Canal Queue-Jumper Pays $2.4 Million for Ship Transit

“This is not the most severe drought Panama has faced, but given the operation of the canal, this is the most severe drought that we are facing even with the level of operations we currently have,” Vásquez Morales said during the virtual press briefing.

The canal will need to maintain draft levels — the distance between the canal floor and the bottom of a ship’s hull— at 44 feet (13 meters). That’s enough for about 70% of the canal’s traffic. Officials may need to reduce the number of ships moving through the system to maintain those levels, Vásquez Morales said.

The canal’s board of directors is reviewing a plan to create an additional reservoir to support future water demand for the waterway and Panama itself. It will require congressional approval, Vásquez Morales said.

Alexei Oduber, managing director at GAC Panama, which provides services for canal users, said in an interview that the number of times a slot is auctioned off varies. But slots are often awarded at the minimum bid, which can be as low as $110,000, he said.

Ports including Mexico’s Lazaro Cardenas and Buenaventura in Colombia have expanded activity for containers seeking alternatives, Oduber said.

“There are several options and many ways to get through,” he said.

 

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

Explore the latest edition of The Ghost in the Machine

Explore Now