Global Ag News for Aug 28.23

TOP HEADLINES

Vietnam Lifts Restriction on Imports of Canadian Cereals

Vietnam has removed a restriction on Canadian cereal grains, allowing shipments for the first time since 2018.

The change will take effect on Sept. 29, industry association Cereals Canada said Friday.

The Southeast Asian nation had restricted the shipments due to concerns about creeping thistle, a weed that can be found in countries across the Northern Hemisphere, including Canada.

“With creeping thistle on the quarantine pest list, Canadian grain cargoes faced the risk of commercial penalty,” Cereals Canada Chief Executive Dean Dias said.

Canada looks forward to the resumption of regular cereals trade with Vietnam now that the non-tariff trade barrier has been removed, Dias said.

Before the restriction, Canada had shipped more than 200,000 metric tons of wheat to Vietnam annually. In 2021, Canadian wheat exports to Vietnam totaled just over 20,000 tons, Cereals Canada said.

FUTURES & WEATHER

Wheat prices overnight are down 4 3/4 in SRW, down 11 3/4 in HRW, down 1 in HRS; Corn is up 3 3/4; Soybeans up 9 3/4; Soymeal up $2.80; Soyoil down 0.15.

Markets finished last week with wheat prices down 6 1/2 in SRW, up 6 3/4 in HRW, up 2 1/2 in HRS; Corn is up 8 3/4; Soybeans up 36 1/2; Soymeal up $22.10; Soyoil down 0.67.

For the month to date wheat prices are down 74 3/4 in SRW, down 76 3/4 in HRW, down 68 1/2 in HRS; Corn is down 21 1/4; Soybeans up 65 3/4; Soymeal up $21.90; Soyoil up 3.22.

Year-To-Date nearby futures are down 25.5% in SRW, down 16.0% in HRW, down 17.3% in HRS; Corn is down 30.2%; Soybeans down 8.7%; Soymeal down 10.8%; Soyoil up 4.3%.

Chinese Ag futures (NOV 23) Soybeans up 21 yuan; Soymeal up 88; Soyoil up 114; Palm oil up 106; Corn down 4 — Malaysian palm oil prices overnight were down 42 ringgit (-1.06%) at 3920.

There were no changes in registrations. Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 0 Soybeans; 67 Soyoil; 0 Soymeal; 147 HRW Wheat.

Preliminary changes in futures Open Interest as of August 25 were: SRW Wheat down 16,387 contracts, HRW Wheat down 2,078, Corn down 25,300, Soybeans up 8,185, Soymeal down 1,337, Soyoil down 3,402.

Northern Plains: A little front is moving through Sunday and Monday that will keep temperatures a touch lower, but above-normal temperatures will be filling into the region by late in the week, perhaps well above normal next week. Some disturbances will be moving from the Pacific Northwest into the Canadian Prairies which may produce some isolated showers, but most of the region will be dry. That will favor the remaining wheat harvest, but not filling corn and soybeans.

Central/Southern Plains: A front moved through over the weekend with scattered showers and some areas of heavy rain this weekend, along with cooler temperatures. The cooler readings will be brief with heat returning by the weekend and significant heat possible again in early September and any rainfall will be limited or non-existent, not a good way to end the season for filling corn and soybeans

Midwest: A front pushed south through the region this weekend and brought some areas of heavier rain to parts of Missouri and southern Illinois. A front passing through early this week may bring a few showers, and another burst of milder air before temperatures start to rise again this weekend. Significant heat could be possible again for early September with little precipitation, a poor way to end this year’s corn and soybean crops. Early harvest should find some good conditions, however.

Delta: A front slowly pushed south through the region this weekend, and gradually pushed the heat out. Southern areas still have another day or the extreme heat, but hotter temperatures will return this weekend into next week, which could be extremely hot again. The front has been producing limited showers, which continue through Monday before the region goes drier again. Early harvest will find good conditions.

Canadian Prairies: Though dry over the weekend and early this week, disturbances will be more likely to run through the region from the middle of this week and forward through early September, which may disrupt the wheat and canola harvests. It would be more favorable for forages, however.

Brazil: A front has stalled in central areas over the past weekend is forecast to produce showers throughout the week. The projected rain is well in advance of the start to the normal wet season, which typically sets in late September or early October. Rains ahead of planting are useful for conditioning soils after a long dry season, but planting is restricted until mid-September for most areas outside of Mato Grosso, which received a waiver to begin Sept. 1. Planting may start early due to the better soil conditions, a favorable situation for both the coming soybean and coming safrinha corn crops. Filling wheat in the south also has favorable conditions, though the remaining safrinha corn harvest will see more rainfall at times, which will continue to produce delays.

Argentina: Colder temperatures that spilled into the south produced frosts over the weekend, which may have damaged more-advanced wheat. A couple of fronts will move through this week. Early fronts will be largely dry, but one late this week and weekend is forecast to bring heavier rain to a lot of the country, which is in need of rain after last season’s drought. El Nino is a favorable background feature for the country and the continued active weather pattern suggests that is starting to pick up prior to spring planting, which begins in about a month, but more likely in October.

The player sheet for Aug. 25 had funds: net sellers of 2,500 contracts of SRW wheat, sellers of 500 corn, sellers of 3,500 soybeans, buyers of 1,500 soymeal, and  buyers of 2,500 soyoil.

TENDERS

• SOYBEAN SALES: The U.S. Department of Agriculture confirmed private sales of 120,000 metric tons of U.S. soybeans for delivery to China in the 2023/24 marketing year that begins Sept. 1.
• CORN AND SOYMEAL PURCHASE: Iran’s state-owned animal feed importer SLAL is believed to have purchased about 210,000 metric tons of animal feed corn and 195,000 metric tons of soymeal in international tenders which closed on Wednesday
• WHEAT PURCHASE: The Taiwan Flour Millers’ Association bought an estimated 104,000 metric tons of milling wheat to be sourced from the United States in a tender.
• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 91,462 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
• WHEAT PURCHASE: Leading South Korean animal feed group Nonghyup Feed Inc. (NOFI) purchased around 55,000 metric tons of animal feed wheat in a private deal on Friday without issuing an international tender
• FAILED WHEAT PURCHASE TALKS: Egypt’s state grains buyer is believed to have held direct talks with trading houses on Friday about buying wheat without issuing an international tender but no purchase was reported, traders said..

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 130,200 metric tons of rice all to be sourced from China
• WHEAT TENDER: A Syrian state grains agency issued an international tender to purchase and import 200,000 metric tons of soft milling wheat.
• FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.

 TODAY

Brazil Farmers Harvest 82.77% Of Second Corn Area Versus 89.22% At This Time Last Year – Patria Agronegocios

BRAZIL FARMERS HARVEST 82.77% OF SECOND CORN AREA VERSUS 89.22% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS

Ukraine Says Second Ship to Sail From Odesa Reaches Romania

A Liberian-flagged bulk carrier that was the second ship to sail from Odesa since Russia quit the Black Sea safe-transit deal has reached Romanian waters, said President Volodymyr Zelenskiy.

• The Singapore-operated Primus successfully navigated the temporary Black Sea corridor set up by Ukraine, Zelenskiy said on the X platform, formerly known as Twitter.
• Kyiv created the shipping lane after the grain export deal with Russia, brokered in 2022 by the UN and Turkey as a way for Ukraine to resume its shipments of grains, collapsed in July.

SOYBEAN/CEPEA: Cost of logistics and restrictions at ports limit deals in the spot market

The Brazilian exports of grains have been high, and the higher flow of soybean and corn is raising freight prices and lowering the quotas available at national ports. Thus, according to agents consulted by Cepea, the loads of soybean delivered to the port of Santos (SP) are being limited, due to stocking capacity. Deals have been more frequent at the ports of Paranaguá (PR) and São Francisco (SC), however, for deliveries from Oct/23 onwards.

On Thursday, 24, the FOB price for soybean at the port of Paranaguá, for delivery in Oct/23, closed at USD 31.80/60-kg bag (BRL 151.87/bag).

According to data from Secex, by the third week of August, Brazil had exported 5.4 million tons of soybean, 48.6% more than that shipped in Aug/22, on average. Of corn, 5.2 million tons have been shipped this month, 15.3% up from the average of Aug/22.

Cepea surveys show that the cost of road freight for soybean from Cascavel (PR) to Paranaguá rose 16.3% between July and August, averaging BRL 185.00/ton this month. Last week, freight prices hit BRL 200/ton, the highest since March/21.

This context is driving sellers away from the Brazilian spot market and reducing liquidity in the interior of the country. Thus, soybean prices have been fluctuating slightly on a daily basis. Between August 17-24, Between August 10-17, on the average of the regions surveyed by Cepea, soybean prices rose 0.3% in the over-the-counter market (paid to farmers) and 1% in the wholesale market (deals between processors).

In the same period, the ESALQ/BM&FBovespa Paranaguá (PR) Index increased a slight 0.4%, to BRL 149.09/bag (USD 30.59) per 60-kg bag on Thursday, 24th. On the other hand, the CEPEA/ESALQ Index Paraná dropped a slight 0.3%, to BRL 139.48 (USD 28.62) per 60-kg bag on August 24th. The US dollar decreased a steep 2.2% in that period, to BRL 4.873 on Thursday, 24th.

CORN/CEPEA: Harvest advances in BR, but exports underpin domestic prices

The Brazilian exports of corn increased over the past weeks. As the harvest of a record output is advancing in the country, shipments to the international market have been underpinning domestic prices – the ESALQ/BM&FBovespa Index (Campinas, SP) has been ranging between BRL 52 and BRL 53 per 60-kg bag this month.

Aware of this scenario, some growers left the spot market, expecting prices to rise. It is important to highlight that, in the regions where the volume already harvested is high and that have difficulties in warehousing the cereal, growers have been more willing to lower asks, putting pressure on the average prices in these regions. Purchasers seem to have built inventories or are receiving the product previously purchased. Thus, liquidity is low.

PRICES – Between August 17-24, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) rose 0.6%, closing at BRL 53.56 (USD 10.99)/bag on Thursday, 24. On the average of the regions surveyed by Cepea, corn prices dropped 0.6% in the over-the-counter market (paid to farmers), influenced by the progress of the harvest. On the other hand, in the wholesale market (deals between processors), values rose 0.2% over the past seven days, due to the absence of some sellers from the market.

EXPORTS – Amid higher corn supply, Brazilian agents are monitoring exports and the gap between domestic prices and export values. So far, prices at ports have been higher than in the national spot market – on the average of August, the ESALQ/BM&FBovespa Index is 6 Reais/bag lower than the average prices at the port of Santos (SP) and 5 Reais/bag lower than the average prices at the port of Paranaguá (PR). This context added to the current high supply tend to keep the volumes exported at high levels.

Since February/23, Brazil has exported 14.94 million tons of corn, similar to the volume shipped in the same period last year (15 million tons).

CROPS – While the harvest of the second crop is advancing in most corn-producing regions, sowing of the 2023/24 crop has begun in some areas. By August 19th, 78.8% of the national crop had been harvested, on average, according to Conab.

Idle Capacity at Argentine Soy-Crush Plants to Hit ~70%: Bourse

Idle capacity at Argentina’s soy-crush plants will rise to ~70% by Dec. and stay at that level until a new harvest starts to roll in at the end of March, the Rosario Board of Trade said in a weekly newsletter.

• Idle capacity in July was ~55%
• Imports of beans by crushers to compensate for meager local production after a drought reached a record 7.2m metric tons in the first 7 months of the year

El Nino boost could mean Brazil, Argentina and Paraguay dominating soybean, forecasts show

If favorable weather conditions driven by the El Nino weather phenomenon are confirmed for throughout the season, Brazil, Argentina and Paraguay will dominate global soybean export markets, according to the United States Department of Agriculture (USDA).

It has estimated that the trio may export nearly a third of global supplies in 2023/24, estimated at 169mn tonnes.

It is anticipated that El Nino, which lifts surface water temperatures in the Pacific Ocean, will be of mild to moderate intensity. That would be a plus, for instance, for farmers’ prospects in Brazil’s southernmost state of Rio Grande do Sul and in neighbouring Argentina, Reuters reported on August 25, citing the USDA data.

Brazil could then set a new soybean production record of around 160mn tonnes in the 2023/24 cycle. Argentina could almost double its output.

‘It is a very classic El Nino, with above-average rainfall in Southern Brazil and below average in the North and Northeast,’ Safras & Mercado analyst Luiz Roque was cited as saying by the news agency, anticipating Argentina could see soy output of 45-48mn tonnes, compared with 25mn tonnes in 2023, as calculated by the USDA.

India’s Tight Grip on Rice Exports Puts Wheat and Sugar in Focus

• Nation now has restrictions on all rice varieties it exports
• Key sugar growing regions have seen less than normal rain

India ramped up its restrictions on rice exports over the past few days as the nation tackles rising food costs before an election next year, prompting the market to speculate what commodity might be next.

The curbs on rice now cover all varieties that the South Asian nation ships to overseas markets, further tightening global supply. Poor rainfall in some of the country’s key sugar growing areas may lead to restrictions on shipments of the sweetener, although there is still more than a month before the monsoon ends and the outlook could change quickly. A wheat tariff may also be scrapped.

The government of Prime Minister Narendra Modi has stepped up measures to shield consumers from rising food prices as the re-election drive eclipses a pledge made last year to feed the world. India’s importance to agricultural markets means changes can reverberate far and wide — the country is the world’s top rice shipper, and second largest sugar and wheat producer.

Late Friday, the government confirmed a Bloomberg News report that the nation would implement a 20% export tax on parboiled rice, following up on Sunday with a minimum shipment price on basmati. That measure is designed to prevent other grains being sold as the expensive variety to dodge export curbs. The nation is responsible for almost 40% of global rice trade.

Rainfall in the key rice growing states of West Bengal, Uttar Pradesh, Bihar, Jharkhand, Chhattisgarh and Andhra Pradesh has been at least 12% lower than normal so far this season, according to the weather bureau. That’s raised concerns about production following a poor 2022-23 winter harvest.

Rice prices in Asia soared to the highest level in almost 15 years earlier this month after India banned some exports. A price update from the Thai Rice Exporters Association is expected on Wednesday.

Some of India’s biggest sugar producing regions are also in desperate need of rain to help replenish reservoirs and ground water used to irrigate crops. Any shortfall in output could lead to export restrictions, which would likely boost benchmark prices traded in New York and London.

The government says any decision on sugar shipments for 2023-24 will be made when final production estimates are available.

Modi declared last year that India was ready to feed the world after Russia’s invasion of Ukraine disrupted Black Sea shipments, but the Asian nation is now considering abolishing an import tax on wheat. That would likely lead to lower domestic prices and allow millers near the coast to buy cheaper overseas grain. The last time the country imported significant volumes was 2017-18.

As of Thursday, water storage in the country’s 146 main reservoirs was 21% less than a year earlier, according to the state-run Central Water Commission. This may mean less available water for wheat, India’s biggest winter-sown food grain crop. Planting typically begins in October.

Russia Weighs Unified Fertilizer Trader to Boost Pricing Power

• Government has discussed idea first proposed by UralChem
• Russian fertilizers account for some 15% of global consumption

Russia is considering setting up a unified trading company to export fertilizers in a bid to increase its pricing influence on global markets.

The idea was proposed in July by UralChem PJSC’s founder Dmitry Mazepin, two people familiar with the situation said, declining to be identified because the information isn’t public. It has since been discussed by Industry Minister Denis Manturov and Prime Minister Mikhail Mishustin, the people and another person close to the government said. No decision has been taken and it’s not clear when the proposal will be discussed again, all three people said.

Spokespeople for the government didn’t respond to requests to comment. Uralchem’s press service said it’s unaware of the proposal.

Russia is the world’s largest fertilizer maker, with produce accounting for about 15% of global annual consumption. While fertilizer companies haven’t been included in international sanctions over Russia’s war in Ukraine due to their importance for global food security, Baltic ports have stopped handling most products, contributing to a decline in shipments. An exodus of global shipping companies, some international banks and insurers from Russia has also made it harder to send goods abroad.

Some large fertilizer makers don’t support the idea out of concern it will hurt business, two of the people said. Exports of most types of fertilizers have already recovered to their pre-war levels, so producers don’t see how the proposal will benefit them, the people said.

A unified trading company could give the government more control over export revenues and allow it to exert much greater influence over global pricing. Russia has been demanding smoother export conditions for its fertilizer producers in talks to restore a grain export deal that allowed Ukraine to ship through the Black Sea and that Moscow abandoned last month.

Companies currently trade their goods through Switzerland and other third countries. Russia previously had a potash trading alliance with Belarus that allowed it to control 40% of the nutrient’s global sales and prices via output caps. Potash prices slumped when the deal collapsed in 2013.

Modi Weighs Continuing Free Grains Program Into Election Season

• Move could aid the prime minister’s reelection bid next year
• Proposal entails extending the program for another six months

Indian officials are proposing to extend a free grains program well into next year’s national election season, according to people familiar with the matter, a move likely to support Prime Minister Narendra Modi’s reelection bid for a third term.

The proposal involves continuing a $24 billion program by another six months to June 2024, said the people who asked not to be identified as the discussions are private. A final decision will be taken by Modi’s office in the coming months, they added.

The extra cost is expected to be nominal and can be met through this year’s budget allocation, the people said. The initiative was launched in December last year to provide free grains to about 800 million people until end-2023.

Extending the program until June next year coincides with the national vote that must be held by summer. Modi has polled above 60% in opinion surveys and is likely to lead his party to victory though there’s some voter discontent over rising unemployment and higher living costs.

US Pork Production Up 3.3% This Week, Beef Rises: USDA

US federally inspected pork production rises to 518m pounds for the week ending Aug. 26 from 502m in the previous week, according to USDA estimates published on the agency’s website.

• Hog slaughter up 3.6% from a week ago to 2.5m head
• Beef production up 1.9% from a week ago, cattle slaughter rises 1.6%
• For the year, beef production is 5% below last year’s level at this time, and pork is 0.4% above

Brazilian Nitrogen Prices Are Being Pressured by Corn Plunge

Nitrogen prices continue to drop in Brazil as falling grain prices shrink farmer margins, halting 2024 corn season negotiations. As demand slows, potash prices have slipped, while phosphates continue to strengthen amid thin supply for soybean 2023/24 preparations.

Brazil Urea, Potash Prices Slip, Phosphates Improve

Urea prices in Brazil have fallen 16% since the Aug. 4 peak and will likely drop more as corn safrinha demand weakens amid declining grain prices. Demand isn’t expected to rebound until barter ratios of corn for urea improve in Mato Grosso, Brazil’s main producing region. Phosphate prices strengthened and should remain firm amid preparations for the 2023-24 soybean planting season and scarce supplies of some phosphate products. Falling demand pushed potash prices lower, and the market may face more pressure as suppliers compete for 4Q business.

 

Interested in more futures markets?  Explore our Market Dashboards here.