Global Ag News for Jan 10.23

TOP HEADLINES

Ukraine 2023 Wheat and Corn Harvests Seen Declining Further: UAC

For the upcoming season, Ukrainian farmers are facing war-related risks, a shortage of working capital, uncertainties around seed and fertilizer availability and high logistic costs, UkrAgroConsult said in an emailed report that includes its first production estimates for next season.

  • Winter-wheat plantings totaled 3.76m hectares as of November, down more than 40% y/y
    • 2023 wheat production estimated at 15.8m tons, down from 18.9m tons in 2022
    • Compares with 32.2m tons in 2021, before the war
    • “Ukraine’s role in the world wheat market will become far less in the next season”
  • Corn plantings are also likely to decline as it is an expensive crop to grow and a sluggish 2022 harvest is preventing farmers from properly preparing fields for spring sowing
    • Production seen at 21.4m tons, versus 26.5m tons in 2022
    • Compares to 42.1m tons in 2021, before the war
  • Outlook for sunflowers and soybeans is more optimistic, as spring oilseed plantings are likely to expand y/y

FUTURES & WEATHER

Wheat prices overnight are down 10 1/2 in SRW, down 13 3/4 in HRW, down 3 in HRS; Corn is down 2 1/4; Soybeans down 11 3/4; Soymeal down $0.39; Soyoil down 0.27.

For the week so far wheat prices are down 12 1/2 in SRW, down 17 1/4 in HRW, down 2 3/4 in HRS; Corn is down 3 1/4; Soybeans down 15 3/4; Soymeal down $1.12; Soyoil down 0.10.

For the month to date wheat prices are down 61 in SRW, down 73 1/4 in HRW, down 39 3/4 in HRS; Corn is down 28; Soybeans down 47 1/4; Soymeal down $4.60; Soyoil down 0.99.

Year-To-Date nearby futures are down 7.7% in SRW, down 8.2% in HRW, down 4.2% in HRS; Corn is down 4.1%; Soybeans down 1.2%; Soymeal up 3.5%; Soyoil up 0.2%.

Chinese Ag futures (MAR 23) Soybeans up 34 yuan; Soymeal down 26; Soyoil down 126; Palm oil down 136; Corn down 16 — Malaysian palm oil prices overnight were down 134 ringgit (-3.25%) at 3984.

There were no changes in registrations. Registration total: 2,788 SRW Wheat contracts; 0 Oats; 154 Corn; 830 Soybeans; 479 Soyoil; 0 Soymeal; 280 HRW Wheat.

Preliminary changes in futures Open Interest as of January 9 were: SRW Wheat down 802 contracts, HRW Wheat up 2,882, Corn up 320, Soybeans up 3,504, Soymeal down 3,297, Soyoil down 1,644.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana:  Isolated showers through Wednesday. Scattered showers Thursday-Friday. Temperatures near normal through Friday. Mato Grosso, MGDS and southern Goias:  Scattered showers through Friday. Temperatures near normal through Friday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires:  Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Tuesday, near normal Wednesday-Friday. La Pampa, Southern Buenos Aires:  Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Tuesday, near normal Wednesday-Friday.

Northern Plains Forecast: Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures above normal through Wednesday, near to above normal Thursday-Friday. Outlook: Mostly dry Saturday-Sunday. Isolated showers Monday-Tuesday. Mostly dry Wednesday. Temperatures above normal Saturday-Wednesday.

Central/Southern Plains Forecast: Mostly dry Tuesday. Isolated showers Wednesday. Mostly dry Thursday-Friday. Temperatures above normal Tuesday, near to above normal Wednesday-Friday. Outlook: Mostly dry Saturday-Sunday. Isolated showers Monday-Tuesday. Mostly dry Wednesday. Temperatures above normal Saturday-Wednesday.

Western Midwest Forecast: Isolated showers north Tuesday-Wednesday. Scattered showers south Wednesday night-Thursday. Mostly dry Friday. Temperatures above normal through Thursday, near to below normal Friday.

Eastern Midwest Forecast: Isolated showers Tuesday-Wednesday. Scattered showers Thursday-Friday. Temperatures above normal through Friday. Outlook: Mostly dry Saturday-Sunday. Scattered showers Monday-Wednesday. Temperatures above normal Saturday-Wednesday.

The player sheet for Jan. 9 had funds: net sellers of 1,000 contracts of SRW wheat, sellers of 1,000 corn, sellers of 500 soybeans, sellers of 2,500 soymeal, and  buyers of 1,500 soyoil.

TENDERS

  • CORN TENDER: Taiwan’s MFIG purchasing group issued an international tender to buy up to 65,000 tonnes of animal feed corn, which can be sourced from the United States, Brazil, Argentina or South Africa.
  • WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 89,735 tonnes of food-quality wheat from the United States and Canada in a regular tender that will close on Thursday.
  • SUNFLOWER OIL TENDER: Turkey’s state grain board TMO issued an international tender to purchase about 24,000 tonnes of crude sunflower oil.
  • CORN TENDER: South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 tonnes of animal feed corn.

PENDING TENDERS

  • RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 113,460 tonnes of rice to be sourced from the United States. The deadline for submissions of price offers was Dec. 29.
  • WHEAT TENDER: Egypt’s General Authority for Supply Commodities announced a tender note for the purchase of wheat within the framework of the Food Security and Resilience Support Program funded by the World Bank. The deadline for offers is Jan. 10.
  • WHEAT TENDER: Turkey’s state grain board TMO issued an international tender to purchase an estimated 565,000 tonnes of milling wheat.
  • WHEAT TENDER: The Taiwan Flour Millers’ Association issued an international tender to purchase 45,200 tonnes of grade 1 milling wheat to be sourced from the United States.

Planet Earth

TODAY

Brazil 2022/23 Soy Crop Sales at 28.5% as of Jan. 6: Safras

Compares with 36.5% a year earlier, average of 40.7% and 23.6% a month ago, consultancy firm Safras & Mercado says in emailed report.

  • Taking into account an estimated harvest of 153.4m tons, early sales are seen at 43.7m tons
  • 2021/22 soy sales were at 96% as of Jan. 6, compared with 92.6% as of Dec. 8

USDA attaché sees Brazil 2022/23 soybean crop at 153 million tonnes

Jan 9 (Reuters) – Following are selected highlights from a report issued by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Brasilia:

“Post increased the 2022/23 forecast for soybean planted area expansion to 43.3 million hectares (ha) and soybean production to 153 million metric tons (MMT). This season sowing began optimistically, with most soybeans planted on time compared to last year. However, in the southern part of the country including Rio Grande do Sul and Parana, rains will be needed in January because if (it) continues to be dry, the crop will be negatively impacted. Post revised up its soybean export estimate for 2022/23 to 97 MMT, a new record. Post maintains the 2021/22 harvested area estimate at 40.9 million ha and the production estimate at 126.6 MMT. Post revised up the 2022/23 crush forecast to 51.5 MMT based on available supplies and increased demand for soybean products. Crush demand will ultimately be impacted by the new administration’s biofuel mandate policy, which is expected to be decided by March 2023.”

China Soy Imports Seen Past Peak If Meal Drop Realized: Rabobank

China soybean imports are seen easing and eventually dropping through 2030, Rabobank analysts Lief Chiang and Chenjun Pan say in report Monday.

  • That’s based on slowing livestock output growth, better farming practices and lower soybean meal inclusion in feed rations
  • Inclusion rate could fall to 12% in 2030, from 15.3% currently, amid government push to curb foreign soy dependence
  • “In the low-soymeal inclusion scenario – stock buying notwithstanding – China’s soybean imports already peaked in 2020”
  • May drop to 87m tons in 2025, 84m tons in 2030
  • NOTE: Compares with USDA estimate for 98m tons this season
  • However, if inclusion rate holds unchanged, soybean imports would total 98m tons in 2025 and 105m tons in 2030
  • “A slowdown and eventual reduction in China’s soybean imports will reshape global trade flows”

Brazil 2022/23 Soybean Harvest Off to a Slow Start: AgRural

Harverst is off to a low start in Mato Grosso and Rondonia state dye to moisture, a commom occurance in the region this time of the year, consulting firm AgRural says in emailed report.

  • Harvest was 0.04% done as of Jan. 5, compared to 0.2% last year, when harvest had already started in Parana state
    • AgRural to revise its crop estimate in mid-January
  • Summer corn harvest is 2.3% done, compared to 3.1% a year earlier

Malaysia Dec. Palm Stockpiles -4.1% M/m to 2.19M Tons: MPOB

Palm oil stockpiles in Malaysia, the world’s second-largest producer, fell 4.1% to 2.19 million tons in December from a month earlier, Malaysian Palm Oil Board says in statement today.

  • Palm oil exports -3.5% m/m to 1.47m tons
  • Imports +0.1% m/m to 47,114 tons
  • Crude palm oil production -3.7% m/m to 1.62m tons

WHEAT/CEPEA: Quotations drop at the beginning of the year; dollar fades too

Wheat prices have been fading in Brazil, due to the current high supply after the harvesting of a record crop, which ended in December. Besides, the significant devaluations last week and the dollar depreciation – which reduces the export parity and favors imports – pressed down domestic prices too.

Emater/RS has released its third estimates for the 2022 winter crop, indicating the output in Rio Grande do Sul at 5.17 million tons, a staggering 45.8% up from that in 2021. This is the result of higher productivity (+21.6%), which hit 3.5 tons/hectare, and the 20% increase in the area harvested, which totaled 1.4 million hectares.

According to Cepea surveys, between December 29 and January 6, the price paid to wheat farmers dropped a steep 4.45% in Rio Grande do Sul; in Santa Catarina, values decreased 1.36%, and in Paraná, 0.32%. In the wholesale market (deals between processors), quotations dropped 1.6% in Santa Catarina, 1.33% in Rio Grande do Sul and 0.35% in Paraná, but rose 0.87% in São Paulo. In the same period, the US dollar decreased 0.7%, to BRL 5.243 on Friday, 6.

EXPORTS AND IMPORTS – According to data from Secex, Brazil imported 498.5 thousand tons of wheat in December, 57.7% more than that from Nov/22 and 12.4% up from that in Dec/21. The average import value closed at BRL 1,794.17/ton, 11.1% lower in the monthly comparison but 11.3% higher in the annual comparison. In the last 12 months, imports totaled 5.72 million tons.

As for exports, Brazil exported 534.1 thousand tons of wheat in December. In 12 months (Jan.-Dec/22), Brazil shipped 3.2 million tons

Brazil Roads Traffic Cleared After Blockages by Rioters

Road blockades reported late Sunday were cleared this morning in the states of Mato Grosso, Sao Paulo and Para, Federal highway police says on Twitter.

  • Earlier on Monday, there were reports of blockages near Novo Progresso municipality, Para, in a stretch of BR 163 road in direction to northern ports
  • In top grain producer state Mato Grosso, roads are also cleared after reports of blockages near Matupa municipality
  • Mato Grosso reported slow traffic at BR 163 highway after potential damage was caused to a bridge that was set on fire during protests, according to the administrator Rota do Oeste
  • Brazil’s most important ports, Santos and Paranagua are operating normally, according to authorities
  • Sao Paulo roads also cleared after riots affected one highway early Monday morning, federal highway police says

Fertilizer Prices Under Pressure as Buying Stalls Before Spring

Nitrogen, phosphate and potash prices remain under pressure in the US as buyers review producers’ recently released winter and spring pricing programs. Falling fertilizer prices — down 34% year-over-year– could lead to some relief in consumer food-price inflation.

Pressure Continues on Urea, UAN, Potash Prices

Prices dropped again for urea and potash at New Orleans (NOLA) and at inland terminals. NOLA urea fell to as low as $416-$420 a short ton (st) after starting the week at $455, while prices in the Corn Belt dropped $10-$15. NOLA potash plunged $40-$45/st, to $440-$445 vs. the prior $480-$490. Inland potash prices were down $10-$30/st, depending on location, with urea ammonium nitrate (UAN) prices dropping $5-$35 at most inland terminals. Phosphate prices were up slightly at NOLA, but unchanged or lower at most inland locations amid light demand and minimal new business.

Small U.S. meatpackers get $12 mln in grants from Biden administration

The Biden administration said on Monday it was awarding another $12 million in grants to upgrade and expand three meat and poultry processing facilities in the U.S. Midwest, as part of a broader $1 billion effort to encourage competition in a highly consolidated industry.

The three projects, funded by the U. S. Department of Agriculture, include a grant of nearly $9.6 million to expand poultry storage and processing capacity at International Food Solutions Inc in Ohio; a $1.5 million grant to upgrade and boost turkey processing at the grower-owned cooperative Michigan Turkey Producers; and a $962,954 grant to Benson & Turner Foods Inc, to build a cattle and hog processing plant on the White Earth Reservation in Minnesota.

The new grants are in addition to USDA awarding other allotments and loans in recent months, including $74 million to 22 companies through the agency’s Meat and Poultry Processing Expansion Program, funded through the 2021 American Rescue Plan Act.

The Biden administration’s efforts to boost meat processing capacity comes after COVID-19 infections among workers in large meat processing facilities snarled production during much of 2020, contributing to higher food prices.

Each of these projects “will provide additional competition for Farm Bureau members, additional value-added opportunity for producers and again more jobs in rural communities,” said Agriculture Secretary Tom Vilsack, speaking at the American Farm Bureau Federation convention in Puerto Rico.

Market concentration in meat processing has been a concern of Biden’s agriculture department. Four companies slaughtered around 85% of U.S. grain-fattened cattle in 2018, according to the USDA’s most recent data.

In a recorded message played at the convention, President Joe Biden said his administration is “here to continue to promote competition” in the sector, including “a $1 billion increase in meat processing capacity.”

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