Global Ag News for Jan 19.23
China Will Grow Even More Soybeans in 2023 to Reduce Imports
China, the world’s biggest buyer of soybeans, will further boost production of the oilseed to trim its dependence on imports from countries such as Brazil and the US.
The government plans to increase the planting area by about 6% to 10 million mu (667,000 hectares) in 2023 from a year earlier, according to the agriculture ministry. Acreage expanded almost 22% last year. Production is estimated to jump almost 24% to 20.3 million tons in the year to September.
Food security is a critical priority for Beijing as the nation’s imports of corn, soybeans and wheat have soared to record levels in recent years, increasing its vulnerability to trade tensions and supply shocks.
While China continues to rely on soybean imports for 80% of its demand, the move to shore up domestic production highlights the country’s determination to fill a bottle of edible oil with “as much Chinese oil as possible.”
The plan may come at the expense of corn, which generally competes with soybeans for planting area as they have the same growing season. China doesn’t rely that much on corn imports — it produced 277 million tons last year, while inbound shipments were just 21 million tons.
FUTURES & WEATHER
Wheat prices overnight are down 2 1/4 in SRW, down 5 in HRW, up 1 1/4 in HRS; Corn is down 2 1/4; Soybeans down 1 1/4; Soymeal up $0.03; Soyoil up 0.03.
For the week so far wheat prices are down 1/4 in SRW, down 4 3/4 in HRW, down 9 3/4 in HRS; Corn is up 4 1/2; Soybeans down 5 1/4; Soymeal up $0.27; Soyoil up 0.83.
For the month to date wheat prices are down 51 3/4 in SRW, down 51 1/2 in HRW, down 36 1/2 in HRS; Corn is up 1/2; Soybeans down 3/4; Soymeal up $7.40; Soyoil up 0.08.
Year-To-Date nearby futures are down 6.1% in SRW, down 5.5% in HRW, down 3.9% in HRS; Corn is up 0.1%; Soybeans up 0.2%; Soymeal up 0.1%; Soyoil up 0.1%.
Chinese Ag futures (MAR 23) Soybeans up 11 yuan; Soymeal down 28; Soyoil up 74; Palm oil up 32; Corn down 6 — Malaysian palm oil prices overnight were up 22 ringgit (+0.57%) at 3889.
There were changes in registrations (-35 Soymeal). Registration total: 2,787 SRW Wheat contracts; 0 Oats; 154 Corn; 1,182 Soybeans; 479 Soyoil; 77 Soymeal; 280 HRW Wheat.
Preliminary changes in futures Open Interest as of January 18 were: SRW Wheat up 339 contracts, HRW Wheat up 1,301, Corn up 9,557, Soybeans down 3,015, Soymeal up 3,331, Soyoil up 2,433.
Brazil Grains & Oilseeds Forecast: A stalled front in southern Brazil continues precipitation from Parana northward this week. The state of Rio Grande do Sul is staying drier. Another front will move through this weekend, but clear out southern areas. Filling soybeans are getting a boost, as well as soil moisture in preparation for safrinha corn planting that will occur in the next two weeks.
Argentina Grains & Oilseeds Forecast: Temperatures have increased back up to the triple-digit mark in Argentina and will continue to be hot until a front moves through Friday and Saturday. This front is forecast to bring through some decent rain, as well as some isolated showers ahead of it. Until the rains are determined, stress continues to be very high for developing soybeans and developing to reproductive corn across the country.
Northern Plains Forecast: Relative warmth will continue across the Northern Plains and Canadian Prairies for the next week or so, reducing stress and feed requirements for livestock. However, colder temperatures will move into the region next week as the pattern changes.
Central/Southern Plains Forecast: A strong system is moving through the Central and Southern Plains with widespread precipitation, including a band of heavy snow across the north. Scattered showers and thunderstorms are occurring farther south, and hit some of the drought areas. Another system will develop farther south for this weekend with more showers for southern areas, and there is potential for a similar system early next week. The drought will not be reduced in a significant way, but at least some precipitation will occur after months of dryness. Temperatures above normal will fall below normal, especially next week as the pattern changes.
Midwest Forecast: Another system will move through the Midwest over the next couple of days with widespread precipitation and heavy snow in the northwest. Even behind this system, temperatures remain above normal for this time of year. But another system moving through this weekend across southern areas will start a pattern change that will bring colder air through the region next week.
The player sheet for Jan. 18 had funds: net sellers of 5,500 contracts of SRW wheat, sellers of 3,500 corn, sellers of 5,000 soybeans, sellers of 2,500 soymeal, and buyers of 2,000 soyoil.
- FEED WHEAT PURCHASE: An importer group in Thailand is believed to have purchased about 117,000 tonnes of animal feed wheat to be sourced from various optional origins in an international tender.
- MILLING WHEAT PURCHASE: Algeria’s state grains agency OAIC is believed to have bought around 570,000 to 600,000 tonnes of milling wheat in an international tender which closed on Tuesday.
- FOOD WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 77,763 tonnes of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
- DURUM WHEAT TENDER: Tunisia’s state grains agency has issued an international tender to purchase about 125,000 tonnes of durum wheat.
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 15 and arrive in Japan by March 16, via a simultaneous buy and sell (SBS) auction that will be held on Jan. 25.
- 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.
- SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 19,000 tonnes of food-quality soybeans free of genetically-modified organisms (GMOs)
- FEED WHEAT AND SOYMEAL TENDERS: A group of importers in the Philippines has issued an international tender to purchase up to 165,000 tonnes of feed wheat and up to 45,000 tonnes of soymeal to be sourced from optional origins
- CORN TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities, announced on Sunday and Monday an international tender to supply yellow corn on a cost and freight basis (C&F) or cost, insurance, and freight (CIF) basis for shipment between Feb. 10-25, 2023. Suppliers should submit bids on Jan. 19.
Ukraine Grain Exports Down 30% Y/y in Season Through Jan. 16
Ukraine’s grain exports during the season that began July 1 totaled 24.5m tons as of Jan. 16, versus 35.1m tons a year earlier, the country’s agriculture ministry says on its website.
- Total includes:
- 8.9m tons of wheat, down 46% y/y
- 1.7m tons of barley, down 68% y/y
- 13.8m tons of corn, up 6.1% y/y
- NOTE: Data may include grain that is aimed for exports, but hasn’t left the country yet
Ukraine Crop-Deal Sales Near 18m Tons; Over 100 Ships Backlogged
Ukraine has shipped 17.8m tons of crops under the Black Sea Grain Initiative since it began in August, including 3.7m tons last month, the UN said in an emailed statement.
- China is the top recipient, followed by Spain and Turkey
- About 44% of wheat has been sent to low- and lower-middle income countries
- More than 100 vessels connected to the initiative are waiting in Turkish waters
- 32 are waiting for inspection and the rest have applied to participate
- Since November, the Joint Coordination Centre has deployed three inspections teams daily to check ships
- Inspections have averaged just over five per day this month
- “The United Nations urges all parties to work to remove obstacles for the reduction of the backlog and improve operational efficiencies within the JCC”
Ukraine Says Russia Is Purposely Delaying Seaport Grain Exports
Russia’s deliberate actions to delay inspections of vessels for shipping Ukrainian grain from Black Sea ports has led to a persistent backlog of more than 100 ships in Bosphorus, Ukraine’s Infrastructure Ministry said on its Facebook page.
- Ship inspections have been intentionally delayed since October, when Russia cut number of its inspection teams involved to three from five, it said
- Ukraine wants the number of inspectors and inspections per day to be increased
- Delays have contributed to a decline in grain exports from seaports, with volumes falling by 47% month-on-month in November
- NOTE: More than 120 ships were awaiting inspection in the Bosphorus as of Jan. 18, according to Ukraine’s Infrastructure Ministry
French Wheat-Export Outlook Raised, Barley Estimate Cut: AgriMer
French soft-wheat exports outside the EU are now seen at 10.6m tons in the 2022-23 season, crops office FranceAgriMer said in a report Wednesday.
- That’s up from a December outlook for 10.3m tons
- Total exports seen at 17.36m tons, versus 17.15m tons
- Stockpiles estimate cut to 2.33m tons, from 2.55m tons
- That would be 16% below the prior season
- Non-EU exports seen at 2.45m tons, versus 2.5m tons
- Total exports seen at 5.51m tons, versus 5.57m tons
- Stockpiles estimate raised to 1.97m tons, from 1.85m tons
- Stockpiles for 2022-23 season seen at 2.3m tons, versus 2.23m tons
Cold Snap Aids French Crops; N. Africa Wheat Sales Up: AgriMer
At the mid-point of the 2022-23 season, French wheat exports to both Morocco and Algeria are higher y/y, Paul Le Bideau, FranceAgriMer’s deputy head of grains and sugar, said at a press briefing Wednesday.
- Sales to Morocco totaled 1.74m tons, up sixfold, and exports to Algeria rose 30% to 1.5m tons
- NOTE: France’s wheat marketing year runs from July to June
- Colder weather the next few weeks is “good news” for winter crops, says Benoit Pietrement, chair of the grains council
- It should slow plant growth, after very warm weather in late December
- NOTE: Winter-grain crops are typically dormant this time of year
- Recent downturn in Euronext milling-wheat futures is due to the strengthening euro and heightened competition with Black Sea suppliers, says Clemence Lenoir, head of field-crop economic studies
- NOTE: Prices touched an 11-month low on Tuesday
MGEX Spring Wheat Stocks Down 23.8% From Year Ago: Jan. 16
Stocks of hard spring wheat stored in Minnesota and Wisconsin warehouses fell to 16.301m bushels in the week ending Jan. 16, according to the Minneapolis Grain Exchange’s weekly report.
- Stockpiles fell by 1.74m bu from the previous week
- Stockpiles in Duluth/Superior warehouses down 1.66m bu
Jordan Gets $200m Funding for Grains Storage and New Tenders
Jordan received $200 million in financing from the Islamic Development Bank to help expand the country’s grain reserves, the Ministry of Industry, Trade and Supply said in a statement.
The financing will also be used to soon issue tenders to buy 420k tons of wheat and 120k tons of barley
Jordan will also use the funding to build 50 storage facilities to increase the capacity for wheat and barley storage
U.S. rolls out rule to stop fraud in organic food sales
The U.S. government plans to impose new regulations on food producers and handlers aimed at reducing fraudulent schemes in which non-organic products are sold as organic, one of the biggest changes to oversight of the industry in decades.
A final rule from the U.S. Department of Agriculture (UDSA), published online on Wednesday, seeks to increase confidence among consumers and ensure proper behavior by businesses that sell food marketed as organic for premium prices. It is set to be implemented in 2024.
Federal investigations show selling non-organic grains and oilseeds as organic can lead to tens of millions of dollars in fraudulent sales within a few months, the USDA said. The crops are often used as livestock feed to produce organic meat or eggs.
The rule requires certified organic operations to improve recordkeeping and mandates the use of import certificates for all organic products entering the United States. U.S. imports of organic crops from India and the Black Sea region declined in recent years after the USDA toughened oversight.
The government will also establish training requirements for agents who certify products as organic and require agents to conduct unannounced inspections of at least 5% of operations annually, according to the rule.
“This rule will help prevent loss of organic integrity, which can occur both through unintentional mishandling of organic products and intentional fraud meant to deceive,” the USDA said.
The rule represents the biggest changes to organic regulations since the creation of USDA’s National Organic Program more than 20 years ago, said the Organic Trade Association, an industry group. Total U.S. sales of organic products reached more than $63 billion in 2021, association data show.
“For more than a decade, operations have been undercut by fraudulent products that have no business carrying the organic seal,” said Abby Youngblood, executive director of the National Organic Coalition, another industry group.
Last week, two Minnesota farmers were charged in a superseding indictment with conspiring to defraud grain purchasers out of $46 million by selling grains falsely labeled as organic. In 2019, a Midwestern grain dealer and three farmers were sentenced to prison for falsely marketing more than $120 million in crops as organic.
Indonesia aims to launch palm oil benchmark price by June – trade minister
Indonesia plans to launch a crude palm oil benchmark price by June, the country’s trade minister said on Thursday.
“If possible, before June we will have the palm oil (benchmark price), and no longer have to rely on Kuala Lumpur. We have more palm oil than them, why are we following Malaysia?” Trade Minister Zulkifli Hasan said at a meeting held by the Commodity Futures Trading Authority, a unit under the Trade Ministry.
Most Indonesian palm oil exporters currently conduct sales directly with buyers without going through an exchange, while auctions held by state trading company KPB Nusantara only offer physical palm oil and not futures contracts.
Zulkifli did not elaborate on how the government plans to get traders to use the new price as a benchmark. But he pointed out that Indonesia has been successful in setting reference prices for tin, which it also mandates to be traded on the country’s tin bourses.
Indonesia has two commodity exchanges, the Indonesia Commodity and Derivatives Exchange and Jakarta Futures Exchange.
Zulkifli also hopes Indonesia can launch a crypto asset bourse this year.
Fertilizer Prices Pressured as Buying Stalls Ahead of Spring
Nitrogen, phosphate and potash prices remain under pressure in the US as buyers review producers’ recently released winter and spring pricing programs. Terminal prices for urea, urea ammonium nitrate and potash fell significantly, while phosphates were mixed. Sharply higher urea inventory in China suggests the country’s export ban could end in 2Q.
Inland Urea, UAN, Potash Continue to Drop
Although New Orleans (NOLA) urea and phosphate prices appeared to be firming after several weeks of decline, inland terminal prices remained under pressure for both products. Some of the biggest urea drops were seen in the Northern Plains and Western Canada, where prices were down as much as $100 a ton. Urea ammonium nitrate (UAN) was also falling, with terminal prices in the Corn Belt and Southern Plains tumbling $80 a short ton (st) and Western Canada falling $50 a metric ton. NOLA and inland potash prices were also sliding after the release of fill programs from producers the week before, with NOLA potash declining to $395/st vs. last week’s $410-$430.
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