Global Ag News for Dec 14.23

TOP HEADLINES

Poland Should Keep Ban on Ukrainian Imports: New Minister

“I will do everything to keep current embargo” on Ukrainian products, Forsal.pl cites new Polish Agriculture Minister Czeslaw Siekierski.

  • NOTE: Poland Repeats Will Keep Ban on Ukraine Grain After Sept. 15
  • Says Prime Minister Donald Tusk will probably want to present the plan during the EU summit this week
  • NOTE: Under current embargo Ukraine isn’t allowed to sell some of its grains to Poland and other eastern EU members, but the countries allow for transit of the goods

FUTURES & WEATHER

Wheat prices overnight are up 5 1/4 in SRW, up 2 1/4 in HRW, up 7 1/2 in HRS; Corn is up 2; Soybeans down 2 3/4; Soymeal down $0.50; Soyoil up 0.30.

For the week so far wheat prices are down 20 1/4 in SRW, down 25 in HRW, down 9 in HRS; Corn is down 3 1/2; Soybeans up 4 3/4; Soymeal down $1.70; Soyoil down 0.06.

For the month to date wheat prices are up 12 1/2 in SRW, down 8 3/4 in HRW, down 8 1/2 in HRS; Corn is down 1 1/4; Soybeans down 38; Soymeal down $22.30; Soyoil down 1.90.

Year-To-Date nearby futures are down 26.1% in SRW, down 29.4% in HRW, down 25.4% in HRS; Corn is down 32.7%; Soybeans down 13.9%; Soymeal down 12.0%; Soyoil down 21.9%.

Chinese Ag futures (JAN 24) Soybeans down 50 yuan; Soymeal down 28; Soyoil down 58; Palm oil down 32; Corn down 8 — Malaysian Palm is up 21. Malaysian palm oil prices overnight were up 21 ringgit (+0.57%) at 3691.

There were changes in registrations (-132 SRW Wheat, -227 Corn). Registration total: 2,435 SRW Wheat contracts; 218 Oats; 433 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 318 HRW Wheat.

Preliminary changes in futures Open Interest as of December 13 were: SRW Wheat up 7,229 contracts, HRW Wheat down 1,215, Corn down 2,897, Soybeans down 5,561, Soymeal down 5,233, Soyoil up 7,101.

Brazil: Wet season showers in Brazil have become very isolated and are forecast to be that way through early next week. That means that temperatures will also be very high, creating another round of stressful conditions for soybeans that are moving toward setting pods. Heavier rain is forecast to come back in during the middle of next week and continue through January, a more favorable set of conditions if the damage over the next week can be limited. Southern Brazil is seeing somewhat of a break from the heavy rain of the last few months with limited showers through the weekend. Another front will bring showers back early next week, but the amounts are not forecast to be all that heavy. If true, this would be a more favorable outlook for developing corn and soybeans.

Argentina: Several systems are bringing widespread moderate to heavy showers through the country through early next week. The weather for next week looks drier, but conditions continue to be very favorable for the remaining planting and early development of corn and soybeans.

Australia: A storm system developed brought limited showers to eastern areas over the last few days and continues for another day or two as well, somewhat favorable for developing cotton and sorghum. Western areas continue to have dryness and drought concerns.

Northern Plains: Above-normal temperatures will continue for the next couple of weeks, sometimes being well above normal. It will also be largely dry.

Central/Southern Plains: A system is developing in the region with scattered showers. The system will be a slow-mover, not getting east of the region until early Saturday. Precipitation may be heavy in some areas and just cold enough for some snow in the southwest. That should help with remaining areas of drought across Texas and Oklahoma, with potential for reduction in Kansas as well.

Midwest: There could be some showers with a branch of a system moving through Friday and Saturday, otherwise, warm and dry conditions are expected through the end of next week. That will not help with the drought situation in the region, or with boosting water levels in local rivers.

Delta: A system will likely bring showers through on Saturday. Rainfall in the Tennessee Valley this past weekend is forecast to improve water levels on the Mississippi River throughout the week. But the lack of moisture over the next couple of weeks will not be helpful in that regard.

The player sheet for Dec. 13 had funds: net sellers of 7,500 contracts of SRW wheat, sellers of 5,500 corn, sellers of 7,000 soybeans, sellers of 3,500 soymeal, and  sellers of 2,000 soyoil.

TENDERS

  • SOYBEAN SALES: The U.S. Department of Agriculture reported that exporters sold 125,000 metric tons of U.S. soybeans to “unknown destinations” for delivery in the 2024/25 marketing year that will begin Sept. 1, 2024.
  • FOOD WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 102,493 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
  • MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat that can be sourced from optional origins
  • FEED BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase up to 120,000 metric tons of animal feed barley
  • FEED WHEAT PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased about 60,000 metric tons of animal feed wheat in a private deal on Tuesday without issuing an international tender.
  • NO OFFERS FOR FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it received no offers for feed-quality wheat or barley in a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
  • WHEAT PURCHASE UPDATE: Algeria’s state grains agency OAIC is believed to have purchased between 910,000 to 930,000 metric tons of milling wheat in an international tender on Tuesday.

PENDING TENDERS

  • WHEAT TENDER: Saudi Arabia’s state wheat buying agency GFSA on Thursday said it has issued an international tender to purchase 715,000 metric tons of milling wheat, confirming earlier reports
  • NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 20,000 metric tons of food-quality soybeans free of genetically modified organisms (GMOs)
  • CORN, SOYMEAL TENDERS: Algerian state agency ONAB issued new international tenders to purchase up to 200,000 metric tons of animal feed corn and 70,000 tons of soymeal
  • SUGAR TENDER: Egypt’s General Authority for Supply Commodities (GASC) announced on Tuesday a tender to import 50,000 metric tons of raw sugar from any origin on behalf of the Egyptian Sugar & Integrated Industries Company (ESIIC). Deadline for offers is Dec. 16.
  • WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
  • MILLING WHEAT TENDER: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 metric tons of milling wheat.
  • WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 110,000 metric tons of wheat.

TODAY

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 Dec. 7.

  • Corn est. range 800k – 1,600k tons, with avg of 1,245k
  • Soybean est. range 900k – 1,800k tons, with avg of 1,385k

DOE: US Ethanol Stocks Rise 3.1% to 22.1M Bbl

According to the US Department of Energy’s weekly petroleum report.

  • Analysts were expecting 21.569 mln bbl
  • Plant production at 1.074m b/d, compared to survey avg of 1.062m

Brazil 2023/24 Wheat Crop Seen at 8.59 Million Tns – StoneX

  • BRAZIL 2023/24 WHEAT CROP SEEN AT 8.59 MILLION TNS VERSUS 9.28 MILLION TNS IN PREVIOUS FORECAST
  • BRAZIL 2023/24 WHEAT YIELDS SEEN DROPPING 28.4% FROM PREVIOUS HARVEST
  • BRAZIL 2023/24 WHEAT IMPORTS SEEN AT 6.37 MILLION TNS VERSUS 6.15 MILLION TNS IN PREVIOUS FORECAST

NOPA November US soybean crush seen at 185.98 million bushels

The U.S. soybean crush likely set a November record but slowed from an all-time high in October, while soyoil stocks were estimated to have risen for the first time in seven months, analysts said ahead of a monthly National Oilseed Processors Association (NOPA) report due on Friday.

NOPA members, who handle about 95% of all soybeans processed in the United States, were estimated to have crushed 185.980 million bushels last month, according to the average of estimates from 10 analysts.

If realized, the November crush would be down 2% from October’s crush of 189.774 million bushels, but up 3.8% from the November 2022 crush of 179.184 million bushels. It would also be the third-largest crush on record for any month.

Crushing activity typically picks up in the autumn and winter months following the U.S. soybean harvest.

Estimates for the November 2023 crush ranged from 183.5 million to 190.4 million bushels, with a median of 185.360 million bushels.

The NOPA report is scheduled for release at 11 a.m. CST (1700 GMT) on Friday. NOPA issues crush data on the 15th of each month, or the next business day.

Soyoil supplies held by NOPA members as of Nov. 30 were forecast at 1.138 billion lbs, based on estimates from seven analysts. If realized, it would be up 3.5% from the 1.099 billion lbs held by NOPA members at the end of October, which was the smallest stockpile since December 2014.

Soyoil stocks estimates ranged from 1.080 billion to 1.200 billion lbs, with a median of 1.125 billion lbs.

Argentina Hikes Export Taxes on Grains With Soy Unchanged

Argentina set the tariff on exports of nearly all goods at 15%, according to two people familiar with the matter.

  • NOTE: That means an increase of three percentage points for wheat and corn
  • The government didn’t change the rate for soybeans (33%) or soy meal/soy oil (31%), the people said
  • Under the new measures, exporters will also get a better exchange rate than the official rate of 800 pesos/dollar, since 20% of revenues will be exchanged on parallel financial markets that trade higher than 1,000 pesos per dollar
  • NOTE: Economy Minister Luis Caputo said that export taxes would be used during an emergency period before being scrapped altogether at some point in the future

Argentine Measures Will Need Time to Prove Their Value

The package of measures announced by Argentina’s Economy Minister Luis Caputo are widely seen as positive. Spending cuts, and an end to subsidies and money printing certainly sounds like music to investors’ ears. The question now is whether the government will really be able to implement cuts, how macroeconomic variables will respond to the shock and if Argentine people will have the patience to wait for the benefits.

The political pressure will be immense and bullish investors will need to remain vigilant. Most of these measures are not fully detailed and, because the speech was recorded, there were no follow up questions. President Javier Milei does not have a majority in Congress and even though some of the measures can be done by decree, others will need to be approved by lawmakers — and even judges.

The proposals will also create divergent pressure on inflation. Peso depreciation and an end of subsidies for energy and public transport are clearly inflationary. Reducing government spending and turning off the money printers will have the opposite effect. It is unclear how they will balance each other out. The government seeks to bring in more dollars from exports by devaluing the peso, but the fact that it kept the currency pegged, shows fear that there will still be depreciation pressure, which may prevent exporters from converting the dollars to pesos short-term.

Finally, measures meet the basic criteria for to helping solving Argentina’s long-lasting economic issues, but recipe has never been a secret. The difficult of sticking to the plan is what has prevented previous attempts from succeeding. As Milei said, the situation of Argentine people will get worse before getting better.

Argentina Wheat Forecast Jumps 7.4% After Rains: Rosario

The wheat crop is now seen at 14.5m metric tons, up from 13.5m, after rains and cooler temperatures helped plants when they were grain-filling, the Rosario Board of Trade said in a monthly report.

  • Wheat harvest progress is 57%
  • Soy acreage and production forecasts unchanged at 17.4m hectares (43m acres) at 50m tons respectively
    • Soy planting progress 65%
  • Corn production forecast unchanged at 56m tons, planting progress 60%

Indonesia calls in army to help farmers plant rice as drought curbs output

  • Indonesia to deploy village military officers to plant rice
  • Rice planting for early 2024 harvest at half of last year’s area
  • Indonesia seeking more than 500,000 tons of rice in tender

Indonesia has ordered the military to help farmers plant rice as severe drought has reduced output of the staple in Southeast Asia’s most populous country, lifting prices, requiring increased imports and threatening food security.

With planting behind schedule due to dryness fuelled by the El Nino weather phenomenon, President Joko Widodo asked military supervisory officers in villages known as Babinsa to help take advantage of recent rains.

“Since rainfall has occurred on some provinces, we want to encourage farmers to start planting rice,” Widodo, known as Jokowi, said on Wednesday during a visit to Pekalongan regency in central Java, according to video posted on the presidential YouTube channel.

“It has been delayed due to El Nino, but we want to immediately plant, plant, plant,” he said, standing next to newly-planted rice fields.

Rain affects Brazil wheat production and quality

Brazil anticipated a record wheat harvest this year, initiating its journey towards self-sufficiency. However, this aspiration clashed with reality. The initial forecast of a 10.5-million-tonne harvest has already suffered a 30% loss. This figure may increase if the rains persist in southern Brazil.

Since August, excessive rainfall has flooded fields, dislodged grains from stalks, and fostered the spread of gibberella and wheat blast—fungal diseases. That not only reduces production but also affects the wheat’s quality. “The initial samples we’ve received are in very poor condition, exhibiting diseases and significant quality degradation. However, it’s still early in the harvest,” states Gerson Pretto, a partner at Moinho Estrela in Grande do Sul.

Last year, the state achieved a record production of 5.7 million tonnes. This year, despite a 3.2% increase in the planted area and an expected yield of about 6 million tonnes, the incessant rains have diminished projections to under 2.8 million tonnes. “Last year’s excellence contrasts starkly with this year’s disappointment,” remarked Mr. Pretto. He suggests that the focus now shifts to monitoring international market prices and the exchange rate to import wheat from Argentina and Paraguay.

In Paraná, initial estimates projected a 4.7-million-tonne harvest, but the Department of Rural Economy (Deral), under the Department of Agriculture and Supply, has already downgraded it to 3.6 million tonnes, with potential for further reductions. The hot, humid climate has created an unfavorable crop environment in the state’s southern region, where wheat blast predominates. “We foresee only 2.8 million tonnes being suitable for milling. A significant portion is of inferior quality, and about 300,000 tonnes will be reserved for seeds,” explained Daniel Kummel, president of the Paraná Wheat Union (Sinditrigo-PR) and CEO of Moinho Arapongas.

Despite these challenges in the two states, which together contribute 85% of the national production, wheat prices are declining nationwide. The Center of Advanced Studies in Applied Economics (CEPEA) reported an average price of R$1,289 per tonne in Paraná on Tuesday, a 2.02% decrease over the month. In Rio Grande do Sul, the price for a tonne of soft wheat stands at R$1,227, down 1.28%.

Brazil’s grain cooperative Coamo to invest about $710 mln through 2026

Brazil’s biggest grain farmer cooperative Coamo announced on Wednesday plans to invest 3.5 billion reais ($710 million) between 2024 and 2026, as it looks to build a corn-based ethanol plant and expand grains storage capacity.

Some 1.67 billion reais will be used to build the plant, Coamo said, which should produce as much as 258 million liters of ethanol per year and start operations early 2026.

The cooperative, based in the southern state of Parana, had announced plans for the factory last week.

Coamo, which counts more than 31,000 members, also plans to invest some 600 million reais to expand grains warehouses and upgrade facilities, its president Airton Galinari told Reuters.

Galinari said the resources should allow Coamo’s static grain storage capacity to grow by almost 10% to 6 million metric tons, as it looks to boost storage funding after a record harvest last season challenged its operations.

Some 400 million reais would be invested to renew and expand truck fleets, he added.

Brazil biodiesel outlier Binatural set to grow on bright industry outlook, says CEO

Brazilian privately owned biodiesel producer Binatural aims to boost output by 20% annually until reaching 650 million liters in 2026, CEO Andre Lavor said in an interview on Wednesday, adding the firm will be required to expand capacity to meet demand.

Hoping the government will continue to raise the mandatory biodiesel mix, Lavor said the sector will need investment, potentially from foreign players also, to cater to demand for cleaner energy sources.

He said given the industry’s robust growth projects, it should attract attention “and investments from all fronts.”

Brazil could raise the biodiesel mix into diesel to 15% from 12% effective in 2024, depending on a meeting next week of the National Energy Council.

Lavor said he is “optimistic,” noting the 15% threshold should have been implemented in 2023.

“A 1% addition in the biodiesel mix corresponds to about 1 billion liters more of consumption,” he said.

A combination of higher sales volumes and better prices next year should boost Binatural’s revenues by some 30% to 3 billion reais ($605 million), Lavor said.

Brazil, a farm powerhouse, produces about 70% of its biodiesel from soybeans, as the oilseed is abundant in the country.

Binatural’s business model, however, dictates the firm’s product is mainly produced from alternative sources, including animal fat and recycled cooking oil.

Brazil’s biodiesel industry operates with average idle capacity of 50%.

Binatural, on the other hand, plans to outperform the industry and projects utilizing about 73% of its own next year, making a projected 440 million liters.

For now, Brazil’s oilseed crusher lobby Abiove predicts roughly 7 billion liters of biodiesel production in 2023.

But if policy makers increase the mandatory mix to 25% by 2036, more investment would be needed as it would require Brazil to crush 50 million tons more of soy, he said.

Brazil’s biodiesel industry could spur mergers or acquisitions too.

U.S.-based Cargill, for example, recently acquired Granol, a large soy crusher and biodiesel firm. Bunge and China’s Cofco also make biodiesel in Brazil.

Binatural itself was courted by suitors for potential “partnerships,” Lavor said declining to elaborate. He dismissed any “short-term plans” to close any deals.

Indonesia, Malaysia’s 2024 palm oil output seen at 70 mln metric tons – CPOPC

The Council of Palm Oil Producing Countries (CPOPC) estimated that output of crude palm oil from the two biggest producers, Indonesia and Malaysia, will be at 70 million metric tons next year, a senior official said on Thursday.

Dry weather pattern El Nino this year will affect output next year, CPOPC’ deputy secretary general Datuk Nageeb Wahab told reporters.

Heavy rains bring relief to parts of Argentina’s farmland

Heavy rains have brought relief to the northern part of Argentina’s main agricultural area, benefiting the 2023/24 corn and soybean campaigns, but more water is needed in the south, the Rosario Grains Exchange (BCR) said on Wednesday.

Argentina, one of the world’s leading food exporters, has received increased rainfall in recent weeks and days due to the arrival of the El Nino weather phenomenon.

Between 45 and 90 millimeters (1.8-3.5 inches) of rain fell in the center and north of the country’s core agricultural area in the last 24 hours, with peaks of 120 millimeters in some areas, according to a report from the exchange.

However, the south of the Santa Fe province and the north of the Buenos Aires province, which are located in the southern part of the core agricultural area, only received between 5 and 15 millimeters of water. BCR chief Cristian Russo said some areas urgently need more water to improve soil moisture.

Argentine farmers are planting soybeans and corn for the 2023/24 agricultural season. Harvests are set to begin between April and May.

Estimates show the 2023/24 soybeans harvest standing at 50 million metric tons and corn output is forecast to reach 56 million tons, according to the BCR, which will publish data for the season later on Wednesday.

Fertilizer Prices Under Pressure Despite Rising Corn Demand

Fertilizer application has increased in Brazil’s inland markets amid drought relief and improved affordability, but import prices were under pressure as plentiful supply continues to outpace demand, particularly for nitrogen and potash.

All Major Fertilizer Prices Fall in Brazil

Urea prices in Brazil fell to $340-$345 a metric ton (mt) cost-and-freight (CFR), down from last week’s $350-$355 as import purchasing interest slows amid plentiful supply for prompt demand. Ammonium sulfate slipped to $160-$175/mt vs. last week’s $165-$175, while monoammonium phosphate (MAP) dropped to $550-$565/mt from $560-$570, with forward transactions for 3Q24 reported around $540. Potash prices in Brazil fell to $305-$315/mt from last week’s $320-$330 CFR, with tons from sanctioned origins at the low end of the range. Potash demand has been active but supply is outpacing demand, pressuring prices lower.

Fertilizer Shipments Signal Strong 4Q North American Use

Global nitrogen-buying eased after India’s latest urea tender, which should sate its appetite until early 2024. Brazil urea prices rose and then fell as farmer interest remains steady for safrinha corn. Strong September Canadian potash shipments suggest North American stock levels are pressured on 2H post-grain harvest use.

US Nitrogen Prices Soften, Phosphates Move Up

Ammonia in the Corn Belt and Southern Plains fell to $600-$650 a short ton (st) on Dec. 13 for fill and prepay offers, down from the last prompt autumn business at $625-$675 in the Southern Plains and $725-$750 in the Corn Belt. The reset was expected and follows CF’s decision last week to drop urea ammonium nitrate (UAN) prices by $20/st in both regions. Urea prices were also lower at New Orleans (NOLA) and inland, with NOLA business falling to $302-$310/st vs. last week’s $315-$330 for December-January shipments. NOLA phosphates were up $5-$15/st from last week on thin supply, while potash prices slipped at some inland terminals as fall demand ends.

 

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