Global Ag News for Apr 14.23

TOP HEADLINES

Soybean Squeeze Prompts First US Import From Brazil Since 2021

The US, the world’s second-largest producer and exporter of soybeans, is buying a cargo of the oilseed from Brazil for the first time in almost two years as tight US inventories and record-large Brazilian supplies open the window for imports.

The Agia Marina, a 30,000 metric ton vessel, is scheduled to leave from the Brazilian port of Santarem in the last week of April and is headed for North Carolina with a cargo of soybeans, according to sources familiar with the shipping fixture who aren’t authorized to speak publicly. The cargo’s final buyer is Perdue Farms Inc., a source said.

While US soybean buyers sometimes purchase supplies from Brazil during the period before the North American harvest in the fall, the arbitrage opportunity has emerged much earlier than usual. That’s thanks to massive crops in Brazil, the No. 1 producer of the oilseed. Supplies have grown so large that prices for the commodity in the South American country are trading at the biggest discount relative to US soy in nearly a decade, making the Brazilian beans much cheaper even when accounting for shipping costs.

Meanwhile in the US, soybean processors are still making good margins for crushing the beans, keeping demand hot. And scant US stockpiles have made it harder to source the oilseed domestically.

Perdue Farms didn’t immediately respond to an email for comment.

FUTURES & WEATHER

Wheat prices overnight are down 3/4 in SRW, up 1/2 in HRW, up 3/4 in HRS; Corn is down 1/4; Soybeans down 6 1/2; Soymeal down $0.25; Soyoil down 0.39.

For the week so far wheat prices are down 16 1/4 in SRW, down 18 1/4 in HRW, down 25 1/2 in HRS; Corn is up 3 1/2; Soybeans up 5 3/4; Soymeal up $1.10; Soyoil down 1.49.

For the month to date wheat prices are down 29 1/4 in SRW, down 30 in HRW, down 48 in HRS; Corn is down 10 3/4; Soybeans down 8 3/4; Soymeal down $2.90; Soyoil down 2.18.

Year-To-Date nearby futures are down 16.4% in SRW, down 5.2% in HRW, down 9.7% in HRS; Corn is down 4.0%; Soybeans down 1.5%; Soymeal down 3.1%; Soyoil down 16.7%.

Chinese Ag futures (JUL 23) Soybeans down 19 yuan; Soymeal up 3; Soyoil up 20; Palm oil down 10; Corn down 4 — Malaysian palm oil prices overnight were down 8 ringgit (-0.22%) at 3705.

There were no changes in registrations. Registration total: 2,463 SRW Wheat contracts; 23 Oats; 22 Corn; 26 Soybeans; 613 Soyoil; 1 Soymeal; 1 HRW Wheat.

Preliminary changes in futures Open Interest as of April 13 were: SRW Wheat up 2,819 contracts, HRW Wheat down 5,691, Corn up 2,869, Soybeans down 15,400, Soymeal up 7,924, Soyoil up 1,512.

Northern Plains Forecast: Recent above-normal temperatures have been melting the snowpack, starting the flooding process. Though cooler temperatures will move through over the next few days, and should remain near to below normal through next week, the melting should continue. Cooler temperatures come with chances for showers through Saturday, including a burst of snow in Montana and potential for a couple of spots elsewhere to pick up a brief little bit of snow as well.

Central/Southern Plains Forecast: Some spotty showers may develop across the area Thursday as a system moves approaches from the West. Though spotty, they could be significant in some areas. More widespread showers are forecast to move through northern areas Friday into Saturday. Otherwise, dry conditions remain a concern for winter wheat. The system this week is also bringing strong winds, which is unfavorable for all locations.

Midwest Forecast: Dryness and above-normal temperatures over the last several days have been favorable for spring fieldwork. Snowpack in the north is essentially gone. A system will bring a few waves of showers through the region Friday through Monday, which may be cold enough for some areas of snow as well. A burst of colder air will move through behind the system, stalling progress on fieldwork and planting. Temperatures will be more on a see-saw, rising again next week, but likely falling again behind the next system later next week that is also likely to bring more rain.

Delta Forecast: Showers are increasing with a system coming out of the Gulf of Mexico for Thursday. Another front moves through on Saturday with more widespread rain. Many areas are fairly wet from recent rainfall, limiting fieldwork and planting. Precipitation is becoming less frequent, but still steady through the rest of April, which may cause some areas that are too wet, while others will find the proper conditions to get out into the field.

Argentina Grains & Oilseeds Forecast: A system brought some isolated showers to the main growing region. Another should go through early next week. Soil moisture has improved recently, but crop conditions are still poor due to heat and drought over the summer. Systems had been coming at a more frequent pace, but will likely slow down after next week. Soil moisture is still relatively low despite recent rains and more will be needed by the end of the month for winter wheat planting.

The player sheet for 4/13 had funds: net sellers of 5,000 contracts of SRW wheat, sellers of 3,500 corn, sellers of 1,000 soybeans, buyers of 1,500 soymeal, and  sellers of 1,000 soyoil.

TENDERS

• CORN PURCHASES: The U.S. Department of Agriculture confirmed private sales of 191,000 tonnes of U.S. corn to China for shipment in the 2022/23 marketing year and 136,000 tonnes for shipment in 2023/24.
• MILLING WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 52,850 tonnes of milling wheat to be sourced from the United States in a tender on Thursday
• MILLING WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 78,548 tonnes of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
• DURUM PURCHASE: Algeria’s state grains agency OAIC is believed to have purchased about 400,000 to 450,000 tonnes of durum wheat in an international tender
• BARLEY PURCHASE: An importer in Thailand is believed to have purchased about 55,000 tonnes of animal feed wheat expected to be sourced from the Black Sea region in a deal on Wednesday
• FEED WHEAT TENDER: An importer group in the Philippines has issued a tender to purchase around 150,000 tonnes of animal feed wheat.
• BARLEY TENDER: Jordan’s state grains buyer has issued an international tender to purchase up to 120,000 tonnes of animal feed barley.

PENDING TENDERS

• MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.

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 April 6, according to data on the USDA’s website.

• Netherlands bought 150k tons of the 431k tons of soybeans sold in the week
• Mexico was the top buyer of corn and Philippines led in wheat

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 April 6, according to data on the USDA’s website.

• Japan bought 5.4k tons of the 27.1k tons of pork sold in the week
• South Korea led in beef purchases

Brazil soy sales lag but downward price pressure spurs some deals – Datagro

Brazilian farmers had hastened the pace of soybean sales by early April compared to the previous month as downward price pressure spurred some deals but sales remained below a historical average for the period in the world’s biggest exporter of the oilseed.

According to agribusiness consultancy Datagro on Thursday, soy sales for the 2022/23 soybean crop, which farmers have nearly finished harvesting, reached 43% of expected production through April 7, representing around 66 million tonnes, Datagro said.

Last season, some 72 million tonnes of soybeans had been sold, or 55%, at this point. The five-year average for this time is 59.8% of estimated output, according to Datagro data.

“Farmers’ defensive stance in the season was linked to unattractive prices, combined with a sharp increase in production costs, weather insecurity, and political and economic uncertainties with the new government,” Flavio França Junior, a Datagro analyst, said in the Datagro report.

Despite lagging other years, Brazilian farmer soy sales between early March and early April grew faster than in the preceding monthly period, Datagro said.

“Farmers opted to sell to fulfill near-term commitments, fearing the market could retreat even further in the short term as the end of the harvest approaches,” França Junior said.

According to Datagro, soy sales volumes increased by 9.2% between March 3 and April 7.

This is a higher rate of increase than the 8.8% five-year average for the period. It is also above the 7.2% growth in sales recorded between early February and early March, Datagro data showed.

Brazil 2022-23 Soybean Crop Seen at 153.6M Tons: Conab

Output est. raised from 151.4m tons, Brazil’s national supply co. says in its monthly report.

• Analysts in a Bloomberg survey were expecting 153.9m tons
• Yield seen higher at 3,527 kg/ha vs 3,479 kg/ha last month
• Area planted raised to 43.562m ha vs 43.53m ha last month
• Corn production est. raised to 124.9m tons vs 124.7m tons

Argentina Soy Forecast Axed Another 15% to 23m Tons: Rosario

Rosario Board of Trade chops its monthly forecast for the harvest to 23m metric tons in April from 27m last month, it says in report.

• Heat waves in March, before this quarter’s harvest, compounded a severe drought throughout the growing season
• Soy yields are expected to be the worst since Rosario began recording them 15 years ago, with fields yielding less than half of their early-season potential
  • 3.6m hectares (~8.8m acres), or 22% of total acreage, won’t be harvested at all
• Rosario cuts its corn estimate by 8.6% m/m to 32m tons
  • With plants suffering in Buenos Aires, Cordoba and Santa Fe provinces, average nationwide yields are also expected to be the worst in 15 years

Argentine Soybean, Corn Estimates April 13: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2022-23 corn and soybean production estimates unchanged from the previous week
• Corn harvest is 12.7% complete, soybeans 4.3% complete

NOPA March U.S. soybean crush seen at 183.411 million bushels

The U.S. soybean crush likely jumped to a five-month high in March as the processing pace rebounded further after weather- and maintenance-related downtime over the winter, analysts said ahead of a monthly National Oilseed Processors Association (NOPA) report due on Monday.

NOPA members, which handle about 95% of all soybeans processed in the United States, were estimated to have crushed 183.411 million bushels last month, according to the average of estimates from 10 analysts.

That compares with 165.414 million bushels processed by NOPA members in February and a March 2022 crush of 182.465 million bushels, currently the largest on record for the third month of the year.

If the estimate is realized, it would be the biggest crush for any month since October.

Estimates for the March 2023 crush ranged from 180.700 million to 188.500 million bushels, with a median of 182.938 million bushels.

The monthly NOPA report is scheduled for release at 11 a.m. CDT (1600 GMT) on Monday. NOPA issues crush data on the 15th of each month, or the next business day.

Soyoil supplies held by NOPA members as of March 31 were forecast at 1.867 billion pounds, according to the average of estimates gathered from seven analysts.

If realized, the soyoil stocks would be up 3.2% from the 1.809 billion pounds at the end of February, but down 2.2% from the 1.908 billion pounds at the end of March 2022.

Soyoil stocks estimates ranged from 1.800 billion to 1.950 billion pounds, with a median of 1.868 billion pounds.

Vast tracts of drought-hit Argentine soy fields to go unharvested -exchange

Argentina’s Buenos Aires grains exchange on Thursday said farmers would likely leave large tracts of soy fields unharvested due to damage from a historic drought, which could lead to more cuts to its 25 million tonne production forecast.

Argentina is the world’s top exporter of soybean oil and meal, but its 2022/23 campaign has faced what the government has called the worst drought on record. The exchange’s forecasts would signal the worst soy harvest in 23 years.

“Significant losses of harvestable area are expected, which will impact current production estimates” for Argentina’s core agricultural area, the exchange said in a weekly report.

The exchange said farmers have so far harvested just 4.3% of the 16.2 million hectares sown this season.

It forecast corn output to reach 36 million tonnes, with yields below potential, though it said that recent cool, dry weather could benefit the harvesting process.

On Wednesday, the Rosario grain exchange cut its own soy and corn harvest forecasts to 23 million tonnes and 32 million tonnes, respectively.

China Launches 3-Year Campaign to Further Cut Soybean Use

China has launched a three-year campaign to further cut the use of soybeans in animal feed as it seeks to reduce its reliance on imports and bolster food security.

The government aims to cut the amount of soymeal used in feed to below 13% by 2025, from 14.5% in 2022, the agriculture ministry said in a statement on Friday.

China buys more than 80% of its soybeans from overseas, chiefly from farmers in Brazil and the US. The beans are crushed into meal as the main source of protein in livestock rations, and into oil for cooking and condiments.

The alternatives to meal are wide ranging, from lab-developed micro-proteins and amino acids, to kitchen waste and even dead animals and their blood. Pilot programs on turning discarded food into animal feed will be launched in 10 cities next year, the ministry said. Another effort will trial using carcasses as a source of protein for livestock.

Swapping in grass is another avenue being explored. Beijing will continue to push farmers to switch from growing grain on some land, with a goal to produce 98 million tons of high-quality feed grass by 2025.

China struggles with limited arable land to feed its huge population, and has also vowed to significantly boost production of grain and oilseeds.

Bunge port deal in southern Brazil ends, opening door to rivals

The end of a contract between a Bunge BG.N agent and a state-run port company in southern Brazil could make room for rivals interested in the public grains terminal, documents and court filings showed.

The contract between Bunge port agent Litoral and the Sao Francisco do Sul port authority ended on April 11 and does not foresee an extension.

Bunge declined to comment. Litoral did not reply to a request for comment.

The port authority did not answer questions about whether it is preparing new rules to attract operators to the public grain terminal.

Sao Francisco do Sul’s public and private terminals shipped an average of 5.7 million tonnes of soybeans and corn annually in the six years until 2022, according to shipping data, making it Brazil’s sixth most active port for corn and eighth for soy exports in 2022.

The port’s public terminal sits next to two private facilities, including one owned by Bunge and another by a local unit of Japan’s Marubeni 8002.T called Terlogs.

In 2020, the port authority proposed a model under which agents could take turns operating the public terminal based on their ability to ship grain volumes and pay fees for the port.

Bunge’s rivals have challenged the fairness of that arrangement in court, with mixed results.

Last week, a lower court sided with six port agents claiming irregularities in the rules that awarded the contracts, which are now expiring. Judge Joao Franco ruled on April 5 the bidding process had flaws and should be “annulled,” according to the decision seen by Reuters.

Franco’s decision is the latest in the long-running dispute over the port’s public area, which sparked a series of legal, administrative and regulatory challenges.

The port authority did not comment on Franco’s ruling.

Ukraine Starts Sowing Corn in About 700 Hectares, Ministry Says

Ukraine has started sowing corn in about 700 hectares in the eastern Sumy region, the Agrarian Ministry said on its website.

• Grain has already been planted in 722,400 hectares in total, including 142,800 hectares of spring wheat and 436,000 hectares of spring barley
• Sugar beets have been sown on 32,700 hectares in six regions, according to ministry’s statement.
• Sunflower has been planted on 37,200 hectares in nine regions, including southern Odesa and Mykolayiv regions

Russia says Black Sea grain deal may be nearly over

• Russia: no point talking about any extension
• Russia accuses UN Secretariat of distorting details
• Russia says Ukraine and UN to blame for backlog of ships
• Russia says 28 vessels awaiting inspection

Russia on Thursday said there would be no extension of the UN-brokered Black Sea grain deal beyond May 18 unless the West removed a series of obstacles to the export of Russian grain and fertiliser.

The Ukraine grain Black Sea export deal was brokered by the United Nations and Turkey in July last year to help alleviate a global food crisis worsened by conflict disrupting exports from two of the world’s leading grain suppliers.

“Without progress on solving five systemic problems … there is no need to talk about the further extension of the Black Sea initiative after May 18,” the Russian foreign ministry said in a statement.

“We note that, despite all the high-sounding statements about global food security and assistance to countries in need, the Black Sea Initiative both served and continues to serve exclusively commercial exports of Kyiv in the interests of Western countries,” the ministry said.

To help persuade Russia to allow Ukraine to resume its Black Sea grain exports last year, a separate three-year agreement was also struck in July in which the United Nations agreed to help Russia with its food and fertilizer exports.

Russia said the two agreements were “interconnected parts of one ‘package'”, and scolded the UN Secretariat for what it said was a distortion of the facts.

U.N. spokesman Stephane Dujarric said “discussions, communications are still going on with the parties” and that U.N. officials were determined to ensure the implementation of both deals.

He said in relation to Russia’s exports “there’s still a lot of critical issues that need to be resolved over payments and other technical issues” that U.N. officials were trying to fix.

But he noted that “there’s been some concrete results that contribute to larger grain trade volumes, lower freight rates and an increased number of ships that have called at Russian ports for fertilizer and lowering in insurance.”

“So we’ve made some progress, but we continue to push to make more,” Dujarric said.

US Crops in Drought Area for Week Ending April 11: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending April 11, according to the USDA’s weekly drought report.

• Corn area experiencing moderate to intense drought dropped a percentage point to 28%, compares with 30% at this time last year
• Spring wheat area in drought fell 6 percentage points from last week, while durum wheat fell 10 points

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

Barge shipments down the Mississippi river declined to 684k tons in the week ending April 8 from 715k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 5% from the previous week
• Soybean shipments down 6% w/w
• St. Louis barge rates were $15.19 per short ton, a decline of $0.94 from the previous week

 

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