Global Ag News for Jan 22.24

TOP HEADLINES

European Wheat Shipments Bypassing Suez Canal Surge Amid Crisis

• Shippers using alternative routes to Asia, Africa rise 42%
• Number of cargoes transiting via the Suez Canal are down 40%

European wheat vessels increasingly are being rerouted to avoid the Suez Canal amid rising security risks in the key trade lane.

The share of shipments from the European Union, Ukraine and Russia using alternative routes on their way to Asia and Africa surged to 42% by mid-January from 8% last month, the World Trade Organization said in its wheat dashboard. The number of cargoes transiting via the Suez Canal is down by 40% from a year ago.

Commodity carriers have been forced to bypass the Suez Canal, taking longer and more expensive routes to their destinations, because of Houthi militant attacks on merchant ships in the Red Sea.

Grain markets have been upended by a number of shipping disruptions over the past couple of years including those caused by the war in Ukraine and low water levels at the Panama Canal. It’s a reminder of how fragile food supply chains can be. If disruptions worsen, they could stall the slump in food-commodity costs that had started to filter through to cheaper grocery bills.

Recent dashboard data indicate a slowdown in world seaborne wheat imports, with volumes through mid-January marginally lower than a year ago. Still, wheat trade has proved to be resilient, “with no major disruption noted in seaborne bulk shipments.”

FUTURES & WEATHER

Wheat prices overnight are down 3 1/4 in SRW, down 5 1/4 in HRW, up 2 1/4 in HRS; Corn is up 1/4; Soybeans up 1/2; Soymeal down $3.00; Soyoil up 0.22.

Markets finished last week with wheat prices down 6 in SRW, down 12 1/2 in HRW, down 1 3/4 in HRS; Corn is down 1 1/2; Soybeans down 10 1/2; Soymeal down $8.60; Soyoil down 1.13.

For the month to date wheat prices are down 38 in SRW, down 39 1/4 in HRW, down 25 3/4 in HRS; Corn is down 25 1/2; Soybeans down 84 1/4; Soymeal down $32.50; Soyoil down 1.06.

Year-To-Date nearby futures are down 6.1% in SRW, down 6.1% in HRW, down 3.6% in HRS; Corn is down 5.5%; Soybeans down 6.2%; Soymeal down 8.4%; Soyoil down 1.5%.

Chinese Ag futures (MAY 24) Soybeans down 8 yuan; Soymeal up 13; Soyoil up 70; Palm oil up 32; Corn down 24 — Malaysian Palm is down 30. Malaysian palm oil prices overnight were down 30 ringgit (-0.76%) at 3909.

There were no changes in registrations. Registration total: 849 SRW Wheat contracts; 0 Oats; 6 Corn; 617 Soybeans; 125 Soyoil; 1 Soymeal; 214 HRW Wheat.

Preliminary changes in futures Open Interest as of January 19 were: SRW Wheat down 724 contracts, HRW Wheat down 1,675, Corn up 23,517, Soybeans up 8,717, Soymeal down 3,723, Soyoil up 16,094.

Brazil: Brazil weekend rainfall was greatest from Mato Grosso to southern Minas Gerais, Sao Paulo and Parana where enough rain fell in many areas to maintain favorable crop development. Western and southern Rio Grande do Sul was dry and drying also occurred in portions of Bahia, northern Minas Gerais and in many areas of Mato Grosso and western Mato Grosso do Sul. Brazil rainfall in the next two weeks will be most concentrated on center west, northern center south and northeastern parts of the nation where sufficient rain will fall to support normal crop development.

Argentina: Argentina continued drying during the weekend and the trend will continue for at least one more week. Concern will rise over drying in central and southern Buenos Aires and central and southern La Pampa where topsoil moisture is already short to very short. Argentina rainfall may increase early next week as scattered showers evolve, but the greatest rain may be 10 days away and it is a single event that occurs late in the week and into the following weekend.

Australia: Australia weekend precipitation was limited, and drying likely occurred. Eastern Australia rainfall will be limited through mid-week this week; however, a tropical cyclone evolving northeast of Australia may move inland along the central Queensland Pacific Coast resulting in widespread rain in summer crop areas this weekend into next week.

Northern Plains: Northern U.S. Plains and Canada’s Prairies will see restricted precipitation over the next two weeks.

Central/Southern Plains, Midwest, Delta: Weather in this coming week will be active from the southern Plains through the Delta to the lower, central and eastern Midwest and into the southeastern states.

The player sheet for Jan. 19 had funds: net buyers of 3,500 contracts of SRW wheat, buyers of 1,500 corn, sellers of 500 soymeal, and sellers of 1,000 soyoil.

TENDERS

• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 297,000 metric tons of U.S. soybeans for shipment to China in the 2023/24 marketing year.
• CORN SALE: South Korea’s Major Feedmill Group (MFG) has purchased an estimated 66,000 metric ton of animal feed corn to be sourced from optional origins in an international tender on Friday.

PENDING TENDERS

• CORN, BARLEY TENDERS: Algerian state agency ONAB issued international tenders to purchase around 160,000 metric tons of animal feed corn and 30,000 metric tons of feed barley
• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins
• RICE TENDER: Indonesian state purchasing agency BULOG has issued an international tender to buy 500,000 metric tons of rice.
• WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 metric tons of milling wheat.

TODAY

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 Jan. 11, according to data on the USDA’s website.

• Mexico bought 10k tons of the 33.4k tons of pork sold in the week
• South Korea led in beef purchases

US Cattle on Feed Rose to 11.93M Head on Jan. 1

The feedlot herd rose 2.1% from a year ago, according to the USDA’s monthly report. Analysts were expecting a rise of 2.2%

• Placements onto feedlots down 4.5% y/y to 1.704m head
• Cattle marketed from feedlots declined 0.9% to 1.725m head

China 2023 soybean imports from Brazil rise 29%, US share shrinks

China’s soybean imports from Brazil in 2023 jumped 29% from the prior year, customs data showed on Saturday, expanding the South American grower’s dominance in the world’s largest soybean market and eating into the U.S. market share.

Total shipments from Brazil to China were 69.95 million metric tons last year, data from China’s General Administration of Customs showed.

Imports from the U.S. fell 13% to 24.17 million tons.

China’s total soybean imports jumped to 99.41 million tons, after Chinese buyers took advantage of cheaper supplies from Brazil’s bumper crop to feed its large pig herds.

Brazil’s market share grew to 70%, while the U.S. share shrank to 24%, according to Reuters calculations based on the data.

In December, soybean arrivals from Brazil were 94% higher than a year earlier at 4.98 million tons while arrivals from the United States were 31% lower at 3.85 million tons. CNC-SOY-IMP

China’s soybean imports in the first quarter are forecast to slow by about 20% from a year earlier to 18.5 millions tons, according to a Reuters survey, after a record slaughter shrank pig herds.

Exports from Argentina, the third-largest grower, are expected to surge in 2024 amid forecasts for a rebound in its soybean crop from drought, which could bring further competition to U.S. soybeans.

Brazil 2023/24 Soybean Harvest 5.1% Done as of Jan. 19: Safras

Compares to 2.1% done in the previous week, consulting firm Safras&Mercado says in an emailed report.

• Works are more advanced than in the same period of last year, at 1.7%, and also compared the five-year average of 2.5%

Brazil Farmers Harvest 5.1% Of 2023/2024 Soybean Area Versus 1.7% At This Time Last Year – Safras & Mercado

BRAZIL FARMERS HARVEST 5.1% OF 2023/2024 SOYBEAN AREA VERSUS 1.7% AT THIS TIME LAST YEAR – SAFRAS & MERCADO

CORN/CEPEA: Downward trend intensifies in Brazil and in the US

Prices have been moving down in both the domestic and international markets this week. In Brazil, the lower demand and the flexibility of sellers are pressing down quotations. In the international scenario, the projection of high supply in the United States, the improvement of production in Argentina and forecasts indicating rains in Brazilian producing areas influenced price drops.

Trades continue to move at a slow pace in Brazil. Consumers are expecting new price drops in the short-term, based on advances of the summer crop, which is likely to increase the availability, especially in the South. Moreover, the soy harvest is advancing, which tends to boost the need to open room in warehouses.

The ESALQ/BM&FBovespa Index (Campinas, SP) has been decreasing for seven days in a row, returning to levels verified in December. It closed at BRL 64.09 per 60-kilo bag on Jan. 18, for a decrease of 5.8% compared to Jan. 11. In the partial of January, the Index has dropped 7.4%.

Over the last seven days, prices moved down 4.3% in Chapecó (Santa Catarina), 6.8% in Ijuí (Rio Grande do Sul) and 6.4% in the north of Paraná state. In Dourados (Mato Grosso do Sul), Rio Verde (Goiás) and Sorriso (Mato Grosso), values downed 7.8%, 7.2% and 4.1%, respectively.

On the average of the regions surveyed by Cepea, corn values decreased 5.4% in the wholesale market (deals between processors) 6.5% in the over-the-counter market (paid to farmers) in the same comparison.

The USDA released estimates on January 12 indicating significant production in the US, recovery in Argentina and still high numbers for Brazil. The US and Argentina may produce 389.69 million and 55 million tons, respectively, moving up 12% and 62% compared to the 2022/23 season. In Brazil, the production is likely to amount 127 million tons, downing 7%.

In the first nine working days of January, corn exports totaled 2.7 million tons, which represents 44% of the amount shipped in January/23, according to data from Secex.

The current good pace of exports is a result of anticipated trades, since some purchasers show interest to close deals only in the second semester.

CROPS – At the same time that the summer crop harvest advances, the planting of the second season has begun in some locations of Paraná and Mato Grosso. Concerning the summer crop, the national average of the harvest is at 6.8% up to Jan. 13, for an advance of 3.5 percentage points compared to the 2022/23 season – data from Conab.

SOYBEAN/CEPEA: Liquidity is limited in Brazil; prices are the lowest since August/20

The gap between prices from purchasers and sellers has increased this week, resulting in low liquidity. Buyers in Brazil are unwilling to purchase big volumes, since they are focused on the high supply and on the low volume of the 2023/24 season traded by producers through term contracts. Sellers, in turn, have not been closing deals due to the lower productivity so far.

Players are also focused on the possibility that the supply reduction in Brazil is counterbalanced by the increase of productions in Argentina and Paraguay, which could limit price rises in Brazil. Increases of logistics costs are an aspect that influence the revenue.

Soybean prices in Brazil are at the lowest nominal levels since August 2020. From January 11-18, the ESALQ/BM&FBovespa Index (Paranaguá) moved down 6.4%, closing at BRL 121.55 per 60-kg bag on Jan. 18, the lowest since August 5, 2020.

The CEPEA/ESALQ Index (Paraná) decreased 4.8% in the same comparison, to close at BRL 116.29 per 60-kg bag on Jan. 18, the lowest since August 5, 2020. On the average of the regions surveyed by Cepea, soybean prices dropped 5.7% in the over-the-counter market (paid to farmers) and 6.1% in the wholesale market (deals between processors).

The US dollar valuation limited price drops in Brazil – dollar quotes rose 1.1% from January 11-18, at BRL 4.934 on Jan. 18.

CROPS – In Mato Grosso, the soybean harvest reached 6.46% of the area up to Jan. 12. The production is forecast at 39 million tons, below the 43.78 million tons estimated in September/23. This scenario is a result of the low productivity, calculated at 53.59 bags per hectare, on average.

In Paraná, expectations were positive at the beginning of the harvest; however, the high percentage of damaged grains concerns agents. According to Seab/Deral, the harvest in Paraná reached 7%.

Harvesting activities have also started in São Paulo, Mato Grosso do Sul and Goiás. Producers in these areas say that the productivity is below-expected. Thus, players expect adjustments in USDA estimates, which indicate production of 157 million tons in Brazil so far.

The USDA estimates increases of 4.2% and 3% for the production in Argentina and Paraguay, respectively, at 50 and 10.3 million tons of soybean. Therefore, the supply in most important soybean producers in South America (Brazil, Argentina and Paraguay) is more than half of the global availability (54.5%).

Viterra workers in Saskatchewan agree to new contract – union

More than 400 Saskatchewan workers at grain handler Viterra have agreed the company’s contract offer, their union said on Friday, averting a potential strike.

The Grain and General Services Union (GSU) announced the results of the vote in a statement.

US Beef Production Up 13.2% This Week, Pork Rises: USDA

US federally inspected beef production rises to 524m pounds for the week ending Jan. 20 from 463m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter up 13% from a week ago to 617m head
• Pork production up 22.4% from a week ago, hog slaughter rises 22%
• For the year, beef production is 6.3% below last year’s level at this time, and pork is 5.6% below

 

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