Global Ag News for Aug 4.23
Russian Black Sea Port Resumes Work After Attack
Russia’s state-run oil pipeline operator said the Black Sea port of Novorossiysk had resumed operations after an overnight attack by naval drones led to a halt in traffic for several hours.
Transneft PJSC said the hub suffered no damage and ships were moving again, according to the Tass news service. The Russian Defense Ministry earlier reported it had destroyed two drones in the attempted assault, while 10 unmanned aerial vehicles had been shot down and three more jammed in an attack on occupied Crimea.
Ukraine started talks with the US on bilateral security commitments, President Volodymyr Zelenskiy’s office said in a statement. Kyiv said it expects these commitments to accelerate Ukraine’s progress in its efforts to join NATO and the European Union.
FUTURES & WEATHER
Wheat prices overnight are up 17 3/4 in SRW, up 10 in HRW, up 8 1/2 in HRS; Corn is up 9 3/4; Soybeans up 12 3/4; Soymeal up $0.60; Soyoil up 1.05.
For the week so far wheat prices are down 59 1/2 in SRW, down 78 3/4 in HRW, down 54 in HRS; Corn is down 27; Soybeans down 44 1/2; Soymeal down $6.70; Soyoil down 1.30.
For the month to date wheat prices are down 21 in SRW, down 35 1/4 in HRW, down 13 3/4 in HRS; Corn is down 9 3/4; Soybeans up 6 1/4; Soymeal up $3.20; Soyoil up 1.10.
Year-To-Date nearby futures are down 18.6% in SRW, down 12.4% in HRW, down 10.3% in HRS; Corn is down 27.7%; Soybeans down 4.8%; Soymeal down 6.0%; Soyoil up 5.0%.
Chinese Ag futures (SEP 23) Soybeans up 63 yuan; Soymeal up 24; Soyoil down 8; Palm oil down 48; Corn up 14 — Malaysian palm oil prices overnight were up 41 ringgit (+1.07%) at 3865.
There were changes in registrations (-193 Soyoil). Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 11 Soybeans; 71 Soyoil; 0 Soymeal; 147 HRW Wheat.
Preliminary changes in futures Open Interest as of August 3 were: SRW Wheat up 9,748 contracts, HRW Wheat up 1,884, Corn up 2,176, Soybeans down 2,142, Soymeal up 2,994, Soyoil up 4,162.
Northern Plains: Scattered showers and thunderstorms have been moving through the Northern Plains with areas of good rainfall and severe weather, but not all areas have been hit. A system will slowly move across the region through Saturday with areas of heavy rain being forecast, especially south. Another system is forecast for the middle of next week with periods of showers. All rain may help corn and soybeans, but it is getting too late to be of much help for wheat. Temperatures will be mostly mild, limiting stress for areas that have been missed.
Central/Southern Plains: A front continues to be stalled across the Central Plains, bringing areas of showers and thunderstorms, severe weather, and milder temperatures. The Southern Plains continues to bake in the heat. A system moving through this weekend will reinforce that front but will push it farther south into Oklahoma. Showers will continue along and north of the front next week, and cooler temperatures will move in as well.
Midwest: A front in the southwest has been bringing areas of thunderstorms and heavy rain to southern Iowa and Missouri for the last few days and southern Illinois Wednesday night into Thursday, favoring drought reduction that did not show up on this week’s Drought Monitor update. Thursday’s update brought more easement than degradation. A system moving through this weekend will bring more widespread rainfall and another system is forecast to bring precipitation through mid- to late-next week. Temperatures will remain mostly mild, favorable for filling corn and pod-setting soybeans for areas that get rain.
Delta: Heat continues in the Delta with high temperatures approaching the 100-degree mark and overnight lows in the 70s, stressful for filling soybeans and cotton. The forecast remains hot with the cold front essentially stalled over northern areas the next couple of days. The front will be pushed farther south early next week, with rain following it and becoming more likely through all of next week. Conditions are unfavorable due to the heat but will find some relief with the front stalling in the area and the expected showers.
Canadian Prairies: Isolated showers are possible in the Canadian Prairies Thursday and Friday with more around the middle of next week as well. Precipitation will not be widespread or overly helpful. Crops are starting to reach maturity and rainfall will be less beneficial from now on.
Europe: Rainfall has been fairly widespread and frequent across much of Europe as of late, which continues into early next week. Models finally pull that trough northward by the middle of next week, giving the continent a chance to dry out. Temperatures continue to be mild to cool, favorable for developing corn and other summer crops, but unfavorable for the continued winter grain harvest. Temperatures will rise next week with the trough moving out of the region.
The player sheet for Aug. 3 had funds: net sellers of 6,500 contracts of SRW wheat, sellers of 6,000 corn, sellers of 2,000 soybeans, buyers of 5,000 soymeal, and sellers of 2,000 soyoil.
- SOYBEAN SALE: Exporters sold 134,000 tonnes of U.S. soybeans to China, the top importer of the oilseed, for 2023/2024 delivery, the U.S. Department of Agriculture said.
- WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 86,290 metric tons of food-quality wheat from the United States and Canada in a regular tender.
- CORN PURCHASE: Algerian state agency ONAB is believed to have bought one consignments of about 40,000 metric tons of animal feed corn expected to be sourced from Argentina or Brazil in an international tender for up to 120,000 metric tons on Thursday
- WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling 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 July 27, according to data on the USDA’s website.
- Mexico bought 7.3k tons of the 17.8k tons of pork sold in the week
- South Korea led in beef purchases
Brazil 2023/2024 Soybean Crop seen at 165.9 mln T vs 157.3 mln T in Previous Year – Celeres
- BRAZIL 2023/2024 SOYBEAN CROP SEEN AT 165.9 MILLION TNS VERSUS 157.3 MILLION TNS IN PREVIOUS YEAR – CELERES CONSULTANCY
- BRAZIL 2023/2024 TOTAL CORN CROP SEEN AT 139.1 MILLION TNS VERSUS 135.4 MILLION TNS IN PREVIOUS YEAR – CELERES
Dryness and Heat Fuel Uncertainty for Argentina’s Next Corn Crop
“After a week without rain and higher-than-normal temperatures, uncertainty is growing ahead of the 2023-24 corn season,” the Buenos Aires Grain Exchange said in a report.
- NOTE: Planting of the early corn crop starts at the end of the month
- NOTE: The USDA currently predicts Argentina to be the 3rd biggest exporter in 2023-24
Argentine Corn, Wheat Crop Estimates Aug. 3: Exchange
The Buenos Aires Grain Exchange releases weekly report on website.
- 2022-23 corn production est. maintained at 34m tons, with 73% of the crop harvested
- 2023-24 wheat planting area est. unchanged at 6m ha
EU Grain Harvest Seen 10M Tons Below Official Outlook: USDA FAS
The EU total-grain harvest in the 2023-24 season is now seen at 270.9m tons, below the latest official USDA outlook for 281.3m tons, the agency’s Foreign Agricultural Service says in a report.
- That remains slightly above the prior year
- Weather extremes — from excessive heat to drought and heavy rain — have curbed crop prospects
- Wheat harvest seen at 134.6m tons, versus 138m tons
- Corn harvest seen at 60m tons, versus 63.4m tons
France Sees Rebound in 2023 Corn Crop, But Below 5-Year Average
This year’s corn harvest is seen at 11.2m tons, up from 10.9m tons last year, the French agriculture ministry said in an initial outlook for the season.
- Better yields versus the 2022 drought-damaged crop are offsetting some of the decline in plantings
- Still, the amount remains 16% below the prior five-year average
- Soft-wheat crop estimate raised to 35.6m tons, versus a July estimate of 35m tons
- Barley crop raised to 12.2m tons, from 11.9m tons
- Rapeseed crop cut to 4.34m tons, from 4.64m tons, as lack of sunshine during the flowering period affected yields
Russia Signals Cheaper Grain Shipments to Friendly Countries
Russia may offer cheaper grain exports to countries that have not imposed sanctions, the latest sign that Moscow is using the nation’s food superpower status as a political tool.
The government could get the power to lower duties on commodities exports including grain and fertilizers to “friendly” countries, Prime Minister Mikhail Mishustin said in a televised speech on Thursday.
Russia is the world’s top wheat exporter and is shipping record volumes again this season, while its fertilizer deliveries are recovering to pre-war levels. It already adjusted the way its wheat-export tax is calculated in May, lowering the levy. The tax is currently at about $30 a ton, while traders sold Russian wheat to Egypt at $264 a ton — including freight — in the latest tender.
President Vladimir Putin last week promised to send free grain to six African countries that have strong ties with Moscow.
Russia’s State Duma is currently on holiday, so the measure is unlikely to be brought in until at least Sept 5.
Palm Oil Stockpiles in Malaysia Seen Surging to Five-Month High
- Production in July seen climbing to strongest in seven months
- Exports probably increased to the highest level since March
Palm oil inventories in Malaysia probably expanded to the largest in five months at the end of July as production in the world’s second-biggest grower rebounded, countering the impact of stronger exports.
Stockpiles rose about 4.1% from a month earlier to 1.79 million tons, according to the median of 13 estimates in a Bloomberg survey of analysts, traders and plantation executives. That would be the third straight monthly increase.
Crude palm oil production jumped about 7.6% to a seven-month high of 1.56 million tons, after dropping 4.6% in June, the survey showed. Exports climbed about 9.4% to 1.28 million tons, the biggest since March.
“The growth in stocks will be the most important thing to watch from here onwards,” said Nagaraj Meda, managing director of Hyderabad-based TransGraph Consulting. “Faster growth in production and stocks can imply prices face weakness in the coming weeks.”
Investors are keeping watch on the pace of output in Malaysia, which is seen peaking in coming months during the seasonally high production cycle.
Benchmark futures in Kuala Lumpur rallied above 4,000 ringgit a ton last month on worries that the worsening conflict in the Black Sea region will hurt exports of sunflower oil and channel demand to palm, but they have since retreated as attention shifts to rising supplies. Prices were at 3,828 ringgit late Thursday.
Ukraine’s 2023-24 Grain Exports Up 29% as of Aug. 4: Ministry
Ukraine’s grain exports totaled almost 2.4 million tons as of Aug. 4, up 29% from last year, data on the Agriculture Ministry’s website shows.
- More than 1.2m tons of corn, down 3.7% from last year
- 880,000 tons of wheat, almost twofold increase from last year
- 311,000 tons of barley, up 88% from last year
- NOTE: Ukraine’s grain exports may reach about 48 million tons, including about 22 million tons of corn and 15 million tons of wheat, in 2023/2024 marketing year that started in July, according to local Grain Association
Floods hit China’s grain belt as storms following Doksuri head northeast
Rain pelted swathes of China’s biggest grain producing province on Friday, submerging farms and worsening floods that have already swamped cities around the country as rescue workers scramble to contain the havoc caused by Typhoon Doksuri.
Northeastern Heilongjiang, known as China’s “great northern granary”, is the latest area to suffer the aftermath of Doksuri, which has killed at least 20 people, displaced thousands and flooded Beijing and several other cities since it made landfall in the south a week ago.
In Heilongjiang, authorities warned residents to expect more severe weather, including tornadoes, and raised the flood alert twice since Thursday night. Some areas could see more than 100mm (3.9 inches) of rain in a few hours, they added.
China’s oldest and biggest oilfield in Daqing is also located in Heilongjiang.
In the waterlogged provincial capital Harbin, two vehicles plunged into a sinkhole that appeared on an expressway near a swollen river, local media reported. Paddy fields have also been inundated, and villagers in low-lying areas told to evacuate, local media reported.
A widely shared video on social media showed a goat stranded on top of a rooftop and a pig trying to swim against the flood torrents.
The storms and floods also triggered power cuts in nearby Shangzhi city, where supermarkets were running low on provisions, according to media reports. “I only managed to get a few bottles of mineral water and two boxes of instant noodles,” a Shangzhi resident told local media after rushing to the supermarket after the storm alerts.
Further south, in the corn-growing region of Jilin, authorities have set up camps for the 12,550 people evacuated from Shulan city, where as much as 484.7 mm (19 inches) of rain have fallen over the past three days, state media reported.
Mexico Says US Refuses Cooperation on Corn Studies
The US has denied a request by Mexico to jointly conduct scientific research on the health impact of genetically-modified corn, Reuters reports, citing an interview with Mexico’s Deputy Agriculture Minister Victor Suarez.
- Mexico has repeatedly called on the US to work together on scientific studies but the US has denied them
- The US Department of Agriculture referred Reuters to previous remarks by Secretary Tom Vilsack stating that he “fundamentally disagrees” with Mexico’s position on biotechnology
China Scraps Australian Barley Tariffs as Trade Relations Thaw
- Beijing cites changes in local barley market for the move
- Treasury Wine jumps on hopes China will lift wine tariffs
China will scrap import tariffs on Australian barley from Aug. 5 in the latest sign of improving ties between the two countries.
The commerce ministry said it’s no longer necessary to continue imposing anti-dumping and anti-subsidy tariffs on Australian barley following changes in the Chinese market, according to a statement Friday.
Beijing imposed tariffs of more than 80% on Australian barley in May 2020, accusing its exporters of dumping on the Chinese market. The move came as bilateral ties were spiraling downward after then-Prime Minister Scott Morrison called for an international investigation into the origins of Covid-19. Beijing also restricted imports of other Australian goods including wine and lobsters.
But since the election of the center-left Labor government in May 2022, communications between Canberra and Beijing have resumed and relations improved markedly.
The Australian government said Friday it expects to follow a similar process to remove Chinese duties on the country’s wine. “In the meantime, we are continuing to pursue our wine dispute at the WTO and remain confident in a positive outcome,” according to the statement, referring to the World Trade Organization by its initials.
Shares of Australia’s Treasury Wine Estates Ltd. rose as much as 3.9%, the most since April 11. Barley exporters including United Malt Group Ltd. and GrainCorp Ltd. also edged higher before paring gains.
In April, Beijing announced it would hold a three-month review into the barley tariffs, in return for which Canberra agreed to suspend its case against China in the WTO. Beijing sought a one-month extension of the barley review in July, meaning a decision was due by late next week.
The value of Australian barley exports to China averaged around A$1.2 billion ($790 million) a year between 2014–15 and 2018–19, according to estimates from the Canberra government.
Even with the tariffs lifting, Australian barley exporters will remain cautious of rushing back to China. Many have found new markets, boosting shipments to Saudi Arabia, Japan, Vietnam, Kuwait and Mexico.
“It’s important to note that Australia found alternative buyers of barley while the Chinese anti-dumping tariffs were in place,” Rabobank agricultural analyst Dennis Voznesenski said. “A risk premium will likely be required, at least initially, for exporters to redirect trade flows into China.”
Drought Exposure Eases in US Corn and Soybean Areas: Aug. 1
The following shows the percent of US agricultural production within an area that experienced drought for the week ending Aug. 1, according to the USDA’s weekly drought report.
- Corn crops experiencing moderate to intense drought dropped by 2 percentage points from the previous week to 57%
- This compares to 28% of corn crops at this time last year
- Soybean crops in drought also declined by 2 points, falling to 51%
- Spring wheat in drought rose a point to 44%
US Miss. River Grain Shipments Rise, Barge Rates Increase: USDA
Barge shipments down the Mississippi river increased to 451k tons in the week ending July 29 from 403k tons the previous week, according to the USDA’s weekly grain transportation report.
- Barge shipments of corn rose 6% from the previous week
- Soybean shipments up 21% w/w
- St. Louis barge rates were $14.11 per short ton, an increase of $0.55 from the previous week
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.
© 2021 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.