Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
TOP HEADLINES
Easing Labor Shortages to Boost Malaysia’s Palm Oil Output: MPOB
Production in the world’s second-biggest palm oil grower may climb in 2024 from a year earlier, helped by an improvement in the labor situation and as new trees start yielding fruits, according to the Malaysian Palm Oil Board.
- Crude palm oil output may rise from an estimated 19 million tons in 2023, Ahmad Parveez Ghulam Kadir, director general of the MPOB, said in Mumbai on the sidelines of a vegetable oil conference late Wednesday. He didn’t provide an estimate
- “We hope this year’s El Niño will not be as severe as the one in 2016,” said Kadir. “We are still getting a lot of rain”
- Exports of CPO and processed palm products may increase to 16.3 million tons this year from 15.7 million in 2022
- Stockpiles won’t exceed 2.2 million tons at the end of 2023 as demand is good due to upcoming Diwali festival; reserves in Malaysia were 2.19 million last year
FUTURES & WEATHER
Wheat prices overnight are up 1 1/2 in SRW, down 2 in HRW, down 1 in HRS; Corn is unchanged; Soybeans down 5 3/4; Soymeal down $0.70; Soyoil down 0.29.
For the week so far wheat prices are up 1 3/4 in SRW, down 18 3/4 in HRW, down 20 3/4 in HRS; Corn is up 5 3/4; Soybeans up 1 1/2; Soymeal up $2.60; Soyoil down 1.65.
For the month to date wheat prices are down 21 in SRW, down 34 3/4 in HRW, down 17 in HRS; Corn is up 5; Soybeans down 71 1/4; Soymeal down $15.60; Soyoil down 4.56.
Year-To-Date nearby futures are down 26.6% in SRW, down 22.0% in HRW, down 20.1% in HRS; Corn is down 28.8%; Soybeans down 14.6%; Soymeal down 18.7%; Soyoil down 7.1%.
Chinese Ag futures (NOV 23) Soybeans up 2 yuan; Soymeal up 21; Soyoil up 112; Palm oil up 134; Corn up 14 — Malaysian Palm is up 79.
Malaysia markets are closed for holiday.
There were no changes in registrations. Registration total: 3,005 SRW Wheat contracts; 741 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 24 Soymeal; 402 HRW Wheat.
Preliminary changes in futures Open Interest as of September 27 were: SRW Wheat up 1,133 contracts, HRW Wheat up 2,483, Corn up 6,689, Soybeans down 650, Soymeal up 801, Soyoil down 4,081.
Northern Plains: A front will move in on Thursday and stall, producing scattered showers through the weekend and into next week. Recent and forecast rainfall may help the remaining areas of immature corn and soybeans, but is hampering the early harvest progress.
Central/Southern Plains: Drier weather continues for the next couple of days, offering better conditions for harvest and winter wheat planting. Isolated showers may start developing Friday and continue into next week with a trough digging into the West. Showers would benefit winter wheat establishment where they occur, but soil moisture is still good and showers are not critically important just yet. If it remains dry for too long, dryness concerns would arise again.
Midwest: A cutoff low-pressure system will continue to slowly move east through the region with scattered showers through Thursday. Recent rainfall was heavy in spots, but with how dry soils have been, delays to harvest and winter wheat planting will likely be short. Drier weather should develop by the end of the week and temperatures will continue to be above normal through next week, helping crops to mature.
Delta: Isolated showers moved through over the last few days, but most areas stayed dry. Drier weather will continue for the next week, forcing crops to maturity and favoring harvest.
Brazil: A front in the south is moving into central Brazil where it will stall, producing areas of showers that should be the start of the wet season. Planting conditions are very good outside of the state of Rio Grande do Sul, which has had issues with flooding. Another front moving in later next week could add to the heavy rain totals there.
Argentina: An overall drier pattern continues through the weekend which should promote planting, but soils are still in need of moisture coming off of last year’s historic drought. El Nino favors the country with better rainfall during the season, however, and another front will move through early-mid next week with the promise of more showers.
The player sheet for Sept. 27 had funds: net sellers of 5,000 contracts of SRW wheat, buyers of 3,000 corn, sellers of 1,000 soybeans, sellers of 3,000 soymeal, and buyers of 2,500 soyoil.
TODAY
TENDERS
- WHEAT PURCHASE: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said it bought 170,000 metric tons of wheat in an international tender. The purchase comprised 60,000 tons of Romanian wheat for Nov. 10-20 shipment and 110,000 tons of Romanian and Bulgarian wheat for Nov. 21-30 shipment.
- 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.
PENDING TENDERS
- CORN AND SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 180,000 tons of animal feed corn and 120,000 tons of soymeal
- CORN AND BARLEY TENDER: Algerian state agency ONAB issued international tenders to purchase around 90,000 metric tons of animal feed corn and 30,000 metric tons of feed barley.
- WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report
Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Sept. 21.
- Corn est. range 475k – 1,200k tons, with avg of 655k
- Soybean est. range 500k – 1,200k tons, with avg of 680k
Grain Deal Discussions With Russia Ongoing, UN’s Grynspan Says
The United Nations continues to engage with Moscow on the Black Sea Grain Initiative and the implementation of a memorandum of understanding on Russian food and fertilizer exports, Rebeca Grynspan, secretary-general of the UN Conference on Trade and Development, told Bloomberg Wednesday.
- However, there are no set dates for meetings on either
- NOTE: Russia exited the UN-brokered Black Sea Grain Initiative in July; The MoU, which was agreed upon at the same time as the initiative, aims to promote Russian food and fertilizer exports
- Despite record Russian wheat exports, “even if international prices have gone down, transactional costs have gone up,” Grynspan said
- “The routes and the clients have changed, so maybe in the aggregate we’re talking about record exports, but in the distribution we see changes, and small and medium sized countries are suffering”
- UN thinks it has a solution for Russia’s demands to reconnect Rosselkhozbank to the SWIFT international payments, Moscow is not in agreement, Grynspan said without giving any further details
- On Russia’s demand to reopen ammonia pipeline, says damage needs to be assessed, but access is a problem because it’s located in the area of conflict
Ukraine’s agriculture ministry keeps 2023 grain crop forecast unchanged at 57 mln T
Ukraine’s agriculture ministry is keeping the 2023 grain crop forecast unchanged at 57 million tons, First Deputy Agriculture Minister Taras Vysotskiy said on Wednesday.
“We keep our forecast at 57 mln tons for the grain harvest and we see the oilseed output at 22 mln tons,” Vysotskiy told Reuters.
Ukraine’s grain harvest this year is exceeding initial forecasts thanks to favourable weather, officials have said.
Malaysia 2024 palm oil output to rise despite El Nino – govt
Malaysia’s palm oil production is likely to rise next year as more plentiful labour and the maturation of plantations for harvesting offset the impact of the El Nino weather pattern, the Malaysian Palm Oil Board (MPOB) said on Thursday.
Production in the world’s largest palm oil producer after Indonesia plunged 20% during a 2016 El Nino event, but the impact this year has so far not been severe, said the regulator’s director-general, Ahmad Parveez Ghulam Kadir.
The forecast reverses the MPOB’s May prediction that 2024 production could drop between 1 and 3 million metric tons.
“We don’t really see a very strong or serious negative effect of El Nino so far,” Ahmad Parveez told reporters on the sidelines of an industry conference in Mumbai.
El Nino is a warming of Pacific waters that typically produces drier conditions over Asia, curbing the output of some crops.
“We are anticipating higher production in 2024 than this year because of better labour availability, and some of the new areas would start yielding,” he said.
Palm oil planters were forced to let thousands of tons of fruit rot for a third straight year in 2022 as a worker shortage prevented companies from increasing harvesting during the peak production season.
Malaysia’s crude palm oil production in 2023 was expected to rise to 19 million tons from last year’s 18.45 million tons, Ahmad Parveez said.
But year-end stocks would remain near last year’s 2.2 million tons due to rising exports, he said. Exports were forecast to rise to 16.3 million tons in 2023 from 15.7 million tons last year.
Palm Oil Seen Rising as El Niño May Hit Indonesian Output: GAPKI
Palm oil prices quoted in Rotterdam are expected to climb on concerns El Niño-induced prolonged dry weather may hurt output in top grower Indonesia in 2024, according to Fadhil Hasan, head of foreign affairs at the Indonesian Palm Oil Association, known as Gapki.
- Production may fall in the first or second quarter of next year, said Hasan, adding that the real impact of El Niño will be felt in 2024
- Average crude palm oil price is seen at 1,000/ton C&F Rotterdam in 2024 vs $930-$950 during the October-December period, and $900 in 2023, Hasan said in Mumbai on the sidelines of a vegetable oil conference late Wednesday
- Crude palm oil production may rise by as much as 1 million tons this year from 46.7 million in 2022
India’s edible oil imports likely to fall 6% in 2023-24 – industry
MUMBAI, Sept 26 (Reuters) – India’s vegetable oil imports are likely to drop 6% in the new marketing year beginning November, due to higher carryover stocks of oilseeds from the current year, a leading industry figure said on Wednesday.
India, the world’s biggest importer of vegetable oils, is likely to buy 15.6 million metric tons of cooking oils in the 2023-24 oil year, down from 16.6 million in the current year to Oct. 31, 2023, said Sandeep Bajoria, chief executive of Sunvin Group, a Mumbai-based vegetable oil brokerage and consultancy firm.
The country is likely to import 9.5 million metric tons of palm oil next year against 10 million in 2022-23, he told a global conference on vegetable oils in Mumbai.
Palm oil constitutes the bulk of India’s vegetable imports.
Earlier this month, Reuters reported that Indian refiners imported more than 1 million metric tons of palm oil in August – the second consecutive month of higher purchases to build stocks for the festival season that kicks in next month.
India buys palm oil mainly from Indonesia, Malaysia and Thailand. It imports soybean and sunflower oil from Argentina, Brazil, Russia and Ukraine.
India is likely to buy 3.2 million metric tons of soyoil in 2023-22 against 3.5 million in 2022-23, Bajoria told the conference.
Purchases of sunflower oil are expected at 2.9 million metric tons in 2023-22, down from 3.1 million this year, he said.
Bajoria said carryover stocks of between 1.2 and 1.5 million metric tons of soybeans, and 1.2 to 1.4 million metric tons of rapeseed, would help reduce vegetable imports next year.
Imported stocks still stuck at ports would also boost local supplies, lowering next year’s imports, he said.
China sets minimum purchase price for wheat produced in 2024
The minimum purchase price for third-grade wheat produced in 2024 is set at 2,360 yuan per metric ton, China’s state planner said on Wednesday.
China: Updated Soybean Standard To Take Effect December 2023
The People’s Republic of China (PRC), State Administration for Market Regulation (SAMR) and Standardization Administration have published the final version of National Standard for Soybeans (GB1352-2023), which will take effect on December 1, 2023. This standard was previously notified to the World Trade Organization (WTO) in February 2021 and will replace the current National Standard for Soybeans, GB 1352-2009 of September 1, 2009.
Brazil’s ethanol sales at the pump up in August, continue recovery trend
Brazil’s sales of hydrous ethanol at gas stations increased by nearly 11% in August, year on year, as drivers turn to a more stable, domestic fuel, Argus reported on September 26.
In August, output of hydrated ethanol at petrol pumps stood at 1.41mn cubic metres, up from 1.27mn cubic metres in August 2022, according to figures by ANP, the country’s oil, gas, and biofuels regulator.
Biofuel consumption recovered in all of Brazil’s five main regions, with the Northeast posting the highest rate of growth with 56% higher use than in August 2022.
All regions posted double-digit growth but one. The North posted a 34% increase in the use of ethanol, the South recorded a 31% rise, and the Central-West posted 20% higher use of the biofuel.
The Southeast – which includes the industrial heartlands of Sao Paulo and Rio de Janeiro – posted an increase in ethanol output at the pump of 3.7%.
Since July, Brazilian motorists have increasingly chosen ethanol to fill up their tanks on the back of international volatility in oil prices, adjustments in gasoline prices by the country’s state-owned energy major, Petrobras, as well as reduced nominal prices for the biofuel.
Ethanol producers, meanwhile, are looking at future months with more optimism as motorists – who on many cars have the option to fill the tank with either ethanol or gasoline – are increasingly choosing Brazil’s most characteristic biofuel.
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