Global Ag News for Jan 23.24

TOP HEADLINES

US Becomes Fertilizer Price Setter as Premium to World Rises

Global ammonia remains at a crossroads after an Indian buyer secured contractual supplies at $350 a metric ton, while the Corn Belt price rose $15 a short ton to $550 due to domestic outages related to cold weather. Brazilian potash prices continued to soften, with China’s long-term contract set to test a sub-$300-a-metric-ton floor.

FUTURES & WEATHER

Wheat prices overnight are up 2 1/2 in SRW, up 2 3/4 in HRW, down 1/4 in HRS; Corn is up 1 1/2; Soybeans up 2 3/4; Soymeal up $1.50; Soyoil down 0.10.

For the week so far wheat prices are up 5 3/4 in SRW, up 1 3/4 in HRW, up 4 3/4 in HRS; Corn is up 1 3/4; Soybeans up 13 3/4; Soymeal up $0.80; Soyoil up 1.16.

For the month to date wheat prices are down 29 in SRW, down 32 1/4 in HRW, down 23 1/4 in HRS; Corn is down 24; Soybeans down 71; Soymeal down $28.70; Soyoil down 0.12.

Year-To-Date nearby futures are down 4.6% in SRW, down 5.0% in HRW, down 3.2% in HRS; Corn is down 5.1%; Soybeans down 5.1%; Soymeal down 7.4%; Soyoil up 0.5%.

Chinese Ag futures (MAY 24) Soybeans up 3 yuan; Soymeal down 2; Soyoil down 14; Palm oil down 28; Corn up 1 — Malaysian Palm is up 45. Malaysian palm oil prices overnight were up 45 ringgit (+1.15%) at 3949.

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 22 were: SRW Wheat up 913 contracts, HRW Wheat up 2,361, Corn up 7,257, Soybeans up 15,070, Soymeal up 2,545, Soyoil down 2,575.

Brazil: Showers in central Brazil had low coverage last week but that will change this week as showers will become more widespread and consistent. This week’s showers have potential to improve conditions for soybeans that are still maturing, but with harvest already underway for early planted beans, the rainfall could be a setback to harvest progress. More consistent showers will also benefit safrinha corn planting which should start up shortly. Far southern areas will be drier through this week, if not longer, which will be a concern for some areas that have missed out on the beneficial rains from previous weeks.

Argentina: Conditions started to trend drier last week and there will not be much of a relief in dry conditions this week, as any notable precipitation will stay off to the west and south of the main growing areas. Corn and soybean conditions are likely to fall toward the end of the month as soil moisture may begin to deplete this week.

Europe: A large storm across the Mediterranean provided more showers for wheat in southern areas early this past weekend. Good precipitation over the south has been favorable for vegetative wheat in Spain and Italy, but the storm track shifts north this week and southern areas will turn drier. Temperatures will also continue to be above normal for much of the main growing areas this week.

Australia: Recent rains in the east have been favorable for developing cotton and sorghum. The northeast will be watching the development of a tropical cyclone that may make landfall in eastern Queensland by the middle of this week. Meanwhile, southern parts of Australia will see scattered showers for the mid-week before turning dry again by the end of the week.

Northern Plains: Mostly dry conditions resided across the area this weekend, but Arctic air remained in place through Saturday. Milder air returned Sunday and will stick around through the end of the month. While some light, wintry precipitation is possible early this week, mostly dry conditions will return during the second half of the week. More mild temperatures this week will help lessen the harsh conditions for livestock.

Central/Southern Plains: Arctic cold was locked in place across much of the region this past weekend. Much of the winter wheat crop is covered by recent snow, but Oklahoma and Texas have been uncovered and are more susceptible to winterkill. Warmer air will start to move in on Monday and produce areas of showers throughout the week, primarily in the southeast. Freezing rain will tag Oklahoma and Kansas on Monday, but then rain will return later Monday and continue into the middle of the week. The early-week precipitation chances will provide more moisture for dormant wheat.

Midwest: Some snow showers tagged the region on Friday, but dry and cold conditions returned for the weekend as Arctic air lingered. While some areas with limited snowpack have been exposed to the arctic cold, they have been more susceptible to winterkill on winter wheat. Warmer air returns on Monday and will also bring in several rounds of precipitation this week. The front end of it should be cold enough for some areas of freezing rain and snow Monday into Tuesday. Parts of Illinois could see at least 0.10-0.25 inch of ice.

Delta: There was a risk for winterkill on winter wheat that was left exposed to the Arctic air this past weekend. Warmer temperatures move back into the area this week and will bring several rounds of rain, melting the snow. Heavy rain is likely in southern areas this week which may continue to boost water levels on the Mississippi River and increase transportation for at least a little while.

The player sheet for Jan. 22 had funds: net buyers of 2,000 contracts of SRW wheat, buyers of 500 corn, buyers of 3,000 soybeans, sellers of 1,500 soymeal, and buyers of 2,000 soyoil.

TENDERS

• DIVERTED GRAIN CARGOES: Attacks on shipping in the Red Sea region have led to a sharp rise in the number of grain cargoes being diverted around the Cape of Good Hope, rather than using the Suez Canal, grain traders and analysts said.
• CHINA’S SOYBEAN IMPORTS: China’s soybean imports from Brazil in 2023 jumped 29% from the prior year, customs data showed, expanding the South American grower’s dominance in the world’s largest soybean market and eating into the U.S. market share.
• WEEKLY US GRAIN EXPORT INSPECTIONS: The U.S. Department of Agriculture (USDA) reported export inspections of U.S. soybeans in the latest week at 1,161,100 metric tons, in line with trade expectations for 750,000 to 1,450,000 tons. Weekly corn export inspections were also in line with trade expectations.

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 Inspected 713k Tons of Corn for Export, 1.161m of Soybeans

In week ending Jan. 18, according to the USDA’s weekly inspections report.

• Corn: 713k tons vs 946k the previous wk, 729k a yr ago
• Wheat: 315k tons vs 242k the previous wk, 349k a yr ago
• Soybeans: 1,161k tons vs 1,278k the previous wk, 1,839k a yr ago

Brazil 2023/24 Soy Harvest 6% Done as of Jan. 18: AgRural

Compares with 2.3% a week earlier and 1.8% last year, according to a report from AgRural consulting firm.

• Pace picked up last week due to a shortening of crop cycles and lower yields stemming from drier, warmer conditions
• Winter corn seeding is 4.9% done, which compares to 0.4% the week before and 1% last year
• Summer corn harvest is 7.9% completed, vs 5.1% a week earlier and 5.9% in the prior season

Brazil Summer Corn Harvest 8.4% Done as of Jan. 19: Safras

Compares with 1.5% a year earlier and 5-year average of 5.8%, consulting firm Safras & Mercado says in report.

• Harvest is 19.9% done in Rio Grande do Sul state, 10.2% in Santa Catarina, 4.7% in Parana, 0.9% in Sao Paulo and 0.2% in Minas Gerais
• Work has not started in Mato Grosso do Sul, Goias, Distrito Federal and Mato Grosso
• Safras sees Brazil 2023/24 summer corn planted area at 3.972m hectares

Output from Brazil’s second corn crop expected to decline

Forecasters expect lower production from Brazil’s second corn crop because of smaller planted area, lower investment by farmers and the intense El Niño weather pattern, which brought drought to central Brazil and excess rains to the south.

According to a report by agribusiness consultancy Cogo on Monday, Brazil will reap 118.5 million metric tons of corn in the 2023/2024 crop year, down from an initial expectation of 129.6 million tons.

The projection reflects an 11% reduction in the estimated area for first corn, planted in the Brazilian spring. For second corn, which represents 75% of annual production and is ideally sowed by mid-February, farmers are expected to cut the planted area by 5%, Cogo said.

Brazilian crop agency Conab forecast corn output would fall by almost 11% to 117.6 million tons.

Analysts and the government have thought a drop in planted area and production for corn were possible because delays with soy pushed back second corn cultivation. Brazilian farmers are accelerating the harvest of soybeans, which is planted before second corn in the same areas.

Lower production could knock Brazil from its position as the global top corn exporter. Brazilian exports in 2023/2024 may drop to 35 million tons from 56 million tons the prior year, according to Conab.

Because Brazilian soybean growers were forced to replant an unprecedentedly large areawith the oilseed, farmers still face the risk of missing the ideal second corn planting window, boosting climate risks for that crop too.

As of last Thursday, 4.9% of the expected second-corn area had been planted in Brazil’s center-south, up from 0.4% in the previous week.

Noting potential weather impact, Cogo said the average yield of Brazil’s second corn fell to 63.7 bags per hectare in the Central-West region in 2015/2016, when the El Niño was intense, compared to the normal average of 110 bags per hectare.

European Crops Hit by Cold, Rain Deficit at Start of 2024: MARS

Unfavorable weather conditions have impacted European crop conditions at the start of 2024, the European Union’s Monitoring Agricultural Resources unit said in a report.

• Several nations, including Germany, Austria, the Czech Republic, and Poland, saw strong rains that led to “waterlogged fields and local floods” in late December
• Some northern European nations’ winter crops are expected to be damaged by a cold snap early into 2024
  • The Russian winter crops is not expected to have been damaged as it was protected by a “thick insulating” snow layer
• A rain deficit was observed along the Mediterranean coast
  • This is expected to have impacted barley in Cyprus and fruit trees in Greece

WHEAT/CEPEA: Liquidity remains low in the domestic market

Producers continue focused on crop activities – summer crop harvest and planting of the second crop, especially corn. These agents close deals only when they need to make cash flow and/or to open room in warehouses. As for the demand, only purchasers who need to replenish inventories are willing to trade. Therefore, trades have been moving at a slow pace.

Most part of the wheat harvested in Brazil last year presented low quality, which may result in a necessity to import more of the high-quality product.

Prices continue to move down in most states. According to data from Cepea, between January 12 and 19, the prices paid to wheat farmers (over-the-counter market) dropped 0.8% in Santa Catarina, 0.29% in Paraná and 1.05% in Rio Grande do Sul. In the wholesale market (deals between processors), values downed 3.08% in Paraná and 0.9% in Santa Catarina, but rose 0.5% in São Paulo and 1.37% in Rio Grande do Sul. In the same period, dollar increased 1.55% against Real, closing at BRL 4.929 on Jan. 19.

Based on data from Conab (Brazil’s National Company for Food Supply), between January 8 and 12, the import parity price for the wheat from Argentina delivered to Paraná state was at USD 251.60/ton. Considering the average of the US dollar in that period, at BRL 4.8799, the wheat imported was sold at BRL 1,227.81/ton, while for the Brazilian wheat traded in Paraná, the average was higher, at BRL 1,250.44/ton, according to data from Cepea. In Rio Grande do Sul, the price of the product from Argentina closed at USD 235.26/ton, which accounts for BRL 1,148.03/ton – against BRL 1,247.66/ton on the average of the state calculated by Cepea.

According to data from Secex, Brazil had imported 193.23 thousand tons of wheat up to the second week of January, against 439.98 thousand tons in the entire month of January/23. Exports, in turn, had amounted 318.9 thousand tons in the same period, against 561.52 thousand tons in January last year.

Canada 2024-25 Wheat Crop Seen at 33.3M Tons: AAFC

In its preliminary est. for 2024-25, Agriculture and Agri-Food Canada sees wheat production increasing by 4.2% from the previous season, according to data released Monday in an emailed report.

• 2024-25 area seeded seen at 10.73m ha vs 10.94m ha in 2023-24
• 2024-25 yields seen at 3.23 tons/ha vs 2.99 the previous season
• 2024-25 canola production seen at 18.37m tons vs 18.33m

S&P Global Sees 2024 Us All-Cotton Plantings At 10.675 Million Acres

• S&P GLOBAL SEES US 2024 CORN PLANTINGS AT 93 MILLION ACRES, SOYBEANS AT 85.5 MILLION ACRES – DOCUMENT SEEN BY REUTERS
• S&P GLOBAL SEES US 2024 ALL-WHEAT PLANTINGS AT 47.225 MILLION ACRES – DOCUMENT
• S&P GLOBAL SEES 2024 US WINTER WHEAT PLANTINGS AT 34.425 MILLION ACRES, DURUM AT 1.7 MILLION, OTHER SPRING WHEAT AT 11.1 MILLION -DOCUMENT
• S&P GLOBAL SEES 2024 US ALL-COTTON PLANTINGS AT 10.675 MILLION ACRES – DOCUMENT

China to encourage hog farmers to reduce capacity after price slump

China will “guide” farmers to reduce hog production capacity as it steps up regulation of the industry, the agriculture ministry said on Tuesday, after an aggressive expansion drive led to an oversupply of pigs and heavy losses.

Big agribusinesses in the world’s top pork producer have modernized farms and expanded pig herds so rapidly in recent years that a downturn in demand led to plummeting hog prices, mounting losses, and rising debt last year.

Farmers lost an average of 76 yuan ($10.60) per hog in 2023, Lei Liugong, director of market and information technology at the ministry, said in a press briefing.

As a result, struggling producers sped up slaughter of pigs late last year to cut their losses, raising the country’s pork production to a nine-year high of 57.94 million metric tons.

Lei said the sow herd at end-December was down 2.5 million heads from a year ago to 41.42 million heads.

But herd numbers are still high and thus destocking will continue in the next one to two months, continuing to depress prices, he said.

But the fall in the number of breeding sows will help the market recover in the second quarter of the year, he added.

To accelerate the return of supply and demand to equilibrium, the ministry will guide farms and households to reduce production capacity and fatten pigs at the right time, Lei said.

At the same briefing, Chen Bangxun, the ministry’s director of the development planning department, said there is room for China to continue reducing the amount of high-protein soybeans used in livestock feed.

The current proportion of soybean meal in feed formula fell to 13%, down 1.5 percentage points from 2022, which is equivalent to a reduction of about 9 million metric tons of soybean consumption, Chen said.

Soybean demand in the world’s largest importer is largely driven by the livestock industry as the beans are crushed into meal for animal feed.

China, aiming to reduce its soybean imports, has promoted low-protein feed diets, and the use of oilseeds, leftover food and animal carcasses for feed.

China to Further Expand Oilseed Production to Reduce Imports

• Country planting genetically modified soybeans and corn
• Soybean imports rebounded almost to a record last year

China will grow rapeseed on more land and stabilize soybean acreage this coming year, extending a policy drive to boost oilseed harvests and cut reliance on overseas supplies in the top consumer.

The country has sought to increase output of oilseeds such as soybeans and rapeseed and cut the ratio of meal used in animal feed, as food security becomes an increasingly important priority post-Covid and trade tensions deteriorate with the US, a top supplier of farm products.

In the new year, China will “stabilize soybeans” and look to focus on boosting yields, with plans to expand planting of genetically modified soybean and corn varieties, agriculture ministry officials said at a media briefing Tuesday.

Production of soybeans, the most consumed oilseed in the country, rose significantly in the past few years, thanks to increasing acreage. But farmers have suffered as the beans struggle to find a market, while the larger acreage has cut planting of other main crops like corn.

China has reduced the soybean meal ratio in animal feed to 13%, down 1.5 percentage points from 2022, and equal to the consumption of about 9 million tons of soybeans, an official from the agriculture ministry said at the media briefing organized by the State Council.

Imports Near Record

Soybean shipments to China climbed 11% last year to 99.41 million tons, almost matching the all-time high in 2020, customs data showed this month. Any big jump in the local crop that finds its way into commercial crushing could significantly cut the country’s buying on the global market.

Apart from boosting yield and stabilizing acreage, the ministry will also focus on reducing losses from agricultural disasters.

Meteorological conditions for farming in China this year will be generally poor, and the challenges of fighting disasters and securing bumper harvests remain severe, said Pan Wenbo, head of the ministry’s plantation-management division.

The ministry will draw up contingency plans for disaster prevention in different regions and crops and establish regional centers to respond to catastrophes and secure grain production.

China to Expand GM Corn, Soybean Planting in Food Security Push

China plans to increase planting of genetically modified corn and soybean crops in a push to boost grain output and bolster food security, according to an official from the agriculture ministry.

• GM corn and soybeans have already been planted in 20 counties across five provinces and regions in China under a pilot program launched in 2021, Pan Wenbo, head of the plantation management division under the agriculture ministry, said at a press briefing organized by the state council
  • Program has led to higher output and lower costs
• Beijing issued permits to 26 companies to produce and sell GM corn and soybeans late last year in a major step toward commercialization
• Actual planting areas of these varieties must be in line with government arrangements, Pan said

China 2023 pork output jumps to 57.94 million tons, highest since 2014

China produced 57.94 million metric tons of pork in 2023, the most since 2014, official data showed on Wednesday, after farmers ramped up slaughter in the last quarter to cut losses amid an oversupply of pigs and an outbreak of African swine fever.

Annual pork output expanded 4.6% from a year ago.

Production in the fourth quarter was at 14.93 million tons, according to Reuters calculations of data from the National Bureau of Statistics, up 7% from the same quarter of 2022. The surge in production came as pig enterprises, struggling with a downturn in demand after an aggressive expansion in recent years, faced pressure to cut back on breeding herds and sell farms.

Farmers are also attempting to reduce the impact of a recurring outbreak of African swine fever that has plagued China for years. An initial wave killed millions of pigs in 2018 and 2019.

“Long-term sustained losses have led to tight cash flow in the industry,” Huachuang Securities said in a note.

“Against the backdrop of continuous low hog prices, reduction in production capacity is expected to accelerate and sustain with strength,” it said.

The national pig herd dropped 4.1% during 2023 to 434.22 million heads, according to the NBS data.

Expectations for higher pork demand during the winter sausage-making season and ahead of the Lunar New Year did not materialise, analysts said, adding to further pressure on hog prices.

China’s beef output rose last year by 4.8% to 7.53 million tons, the data also showed, and poultry output rose 4.9% to 25.63 million tons. Lamb and mutton increased 1.3% to 5.31 million tons.

Australia set to harvest bigger crops after rains defy El Nino

Up to 6 million tons more wheat could be harvested. Barley, canola, sorghum, cotton production also seen higher. Some farmers feel misled by forecasters.

Australia is poised to produce much more wheat and other crops this year than previously thought after rainfall confounded expectations that an El Nino weather pattern would maintain dry and hot conditions, analysts and industry associations said.

The scale of the weather turnaround has been striking, with the driest three-month period on record between August and October giving way to what some landowners say is their greenest summer in memory.

While rain has caused some flooding and crop destruction, higher overall production should lift the value of Australian farm output.

Some in the farm sector, especially in livestock, are angry at the country’s weather bureau, saying they made decisions based on predictions for a dry El Nino period that turned out to be wrong.

“They really cocked it up,” said livestock agent Mat Larkings, adding that he had sold cattle in a collapsing market for a farmer who worried his animals would not have enough grass, only to see rain turn pastures green and prices rebound.

“A lot of people rely on what they are reading from these weather forecasts,” he said.

The Australian Bureau of Meteorology said its forecasts include many factors and carry an inherent uncertainty, and there was no evidence that they had had a significant effect on livestock prices.

Malaysia keeps February crude palm oil export duty at 8%

Malaysia has maintained its February export tax for crude palm oil at 8% and lowered its reference price, a circular on the Malaysian Palm Oil Board website showed on Tuesday.

The world’s second largest palm exporter calculated a reference price of 3,571.39 ringgit ($754.57) per metric ton for February. The January reference price was 3,679.50 ringgit a ton.

The export tax structure starts at 3% for crude palm oil in a range of 2,250 ringgit to 2,400 ringgit a ton. The maximum tax rate is set at 8% when prices exceed 3,450 ringgit a ton.

Global Ammonia Prices Diverge on Indian Purchase: Weekly Wrap

Global ammonia prices diverged last week, which we believe portends further corrections in 1Q. An Indian deal was done on a formula basis at $350 a metric ton cost and freight, down $150 from the previous week. Tampa ammonia, the industry bellwether, normally trades at a $33 premium to the Indian price; the current spread is at $175. European demand remains soft, with few transactions, leaving the price unchanged. Middle East producers indicate they’re sold out through March, yet their spot availability matters less given the addition of Gulf Coast ammonia exports in 1Q.

Ammonia is the most traded nitrogen fertilizer and a bellwether for the economics of nitrogen producers globally. Yara and CF Industries are the largest publicly listed dedicated producers.

US Egg Production Rose 3.3% in December From Year Ago: USDA

The US produced 9.45b eggs in December vs 9.15b in the same period a year ago, according to a report from the USDA.

• Output of table eggs rose 3.6% y/y to 8.14b
• Hatching eggs up 1.6% to 1.31b

 

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