Global Ag News for June 8.23

TOP HEADLINES

Plunging Biofuel Credits Mean Cheaper US Summer Gasoline Imports

Renewable-fuel credits, knowns as RINs, are falling to their lowest in more than a year, making it cheaper to import gasoline to supply the New York region during what’s expected to be a strong summer driving season.

• Credits are plunging as an excess of renewable diesel weighs on the market amid expectations that the EPA is unlikely to raise blending requirements scheduled to be finalized next week
• Gasoline importers need to acquire RINs for fuel consumed in the US; cheaper credits enhance arbitrage economics
• Biomass-based D4 RINs down to $1.38/bbl, lowest since March 2022: Starfuels
  • Ethanol D6 RINs down to $1.365/bbl, lowest since April 2022
• US risks an oversupply of renewable diesel
  • Federal mandates support about 20% of annual growth through 2025 vs 50% planned capacity growth: BI report
  • Large soybean crop to add to feedstock supply for renewable diesel

FUTURES & WEATHER

Wheat prices overnight are down 1 in SRW, up 1 in HRW, up 5 1/2 in HRS; Corn is down 4 3/4; Soybeans down 2; Soymeal unchanged; Soyoil up 0.04.

For the week so far wheat prices are down 3 1/4 in SRW, down 23 1/4 in HRW, down 8 1/4 in HRS; Corn is down 9 1/2; Soybeans up 6 1/4; Soymeal up $7.40; Soyoil up 1.01.

For the month to date wheat prices are up 21 1/2 in SRW, down 1 1/2 in HRW, up 19 1/2 in HRS; Corn is up 5 1/2; Soybeans up 59; Soymeal up $11.80; Soyoil up 4.31.

Year-To-Date nearby futures are down 22.3% in SRW, down 11.1% in HRW, down 14.8% in HRS; Corn is down 11.6%; Soybeans down 10.6%; Soymeal down 15.3%; Soyoil down 20.8%.

Chinese Ag futures (JUL 23) Soybeans down 23 yuan; Soymeal down 14; Soyoil down 28; Palm oil down 22; Corn up 10 — Malaysian palm oil prices overnight were down 49 ringgit (-1.48%) at 3271.

There were changes in registrations (-26 Soyoil). Registration total: 2,389 SRW Wheat contracts; 2 Oats; 0 Corn; 0 Soybeans; 1,088 Soyoil; 11 Soymeal; 97 HRW Wheat.

Preliminary changes in futures Open Interest as of June 7 were: SRW Wheat down 7,480 contracts, HRW Wheat down 4,773, Corn down 14,805, Soybeans up 9,149, Soymeal up 10,212, Soyoil down 8,558.

Northern Plains: Periods of showers should continue through Saturday, though the coverage may not be very widespread most days. A front will move through Friday into Saturday with scattered showers but clear the region out a bit and bring some briefly cooler temperatures through. Most areas should get a drink, however, favorable for developing crops. The pattern favors a system or two moving through next week.

Central/Southern Plains: Periods of showers will continue to develop across the region through the weekend, favoring additional drought reduction, though coverage is not expected to be overly widespread. A front will move through over the weekend and tend to shut down the daily shower and thunderstorm chances. But systems will continue to move through with systems, which will still provide chances for additional rain.

Midwest: A front is dropping south through the region, which will bring in lower temperatures and some isolated showers for western areas where the front gets hung up the next couple of days. Another front will move through this weekend with more scattered showers across the region, though not all areas will be hit. Still, it should be the best chances for widespread precipitation eastern areas have had in weeks. The pattern will favor more systems moving through afterward, which may be more favorable for the drier areas of the region.

Canadian Prairies: Scattered showers will remain in the region for the next two weeks, as fronts move through with more regularity. Showers may or may not be widespread with each system, however. Even though fronts and showers will be moving through, temperatures will remain above normal for at least the next week, which is starting to be a concern for areas that are drier. There is a better chance at a cooldown later next week.

Delta: Isolated showers have developed in the region and will continue through most of the week, which will help to stave off the drop in soil moisture that has been occurring. A front will move through this weekend with better chances for rain, but the pattern will not be favorable for soil moisture improvements afterward though systems may move through more frequently. There is growing concern for dryness in the area.

The player sheet for 6/7 had funds: net sellers of 6,000 contracts of SRW wheat, sellers of 7,500 corn, sellers of 2,000 soybeans, buyers of 4,000 soymeal, and  sellers of 2,500 soyoil.

TENDERS

• CORN PURCHASE: An importer group in the Philippines is believed to have bought around 50,000 metric tons of animal feed corn on Wednesday likely to come from South America, European traders said.
• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 86,922 tonnes of food-quality wheat from Canada and Australia in a regular tender that closed on Thursday.
• WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 56,000 metric tons of grade 1 milling wheat to be sourced from the United States.
• CORN TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 140,000 metric tons of animal feed corn to be sourced from optional origins,.
• SOYMEAL TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 35,000 metric tons of soymeal animal feed sourced from optional origins.

PENDING TENDERS

• SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase about 120,000 metric tons of soymeal to be sourced from Brazil.
• CORN TENDER: Leading South Korean feedmaker Nonghyup Feed Inc (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 62,200 metric tons of rice

TODAY

CROP SURVEY: Brazil 2022-23 Corn Output Seen at 130.2M Tons

Brazil corn production seen 4.7m tons higher than the national forecast agency’s previous est., according to the avg in a Bloomberg survey of eight analysts.

• The range of estimates varied from 126m tons to 137m tons
• Brazil’s soybean crop seen 0.7m tons higher at 155.6m tons
• Last month, the agency raised its soybean output est. by 1.2m tons while increasing corn output by 0.7m tons
• Conab, the Brazilian national supply company, is scheduled to release its latest estimates on June 13 at 9am local time

Brazil May Corn and Soybean Exports by Country: MDIC

Brazil’s Trade Ministry updates its website with exports by country of destination for May.

• Soybean shipments to China rose 60% in May vs the same period last year
• Soybean shipments to Argentina were 979,000 tons, a record high for that destination

China’s Soy Imports Hit Record as Delayed Cargoes Arrive

China’s soybean imports soared to a record in May, up 66% from a month earlier. The world’s biggest buyer unloaded 12 million tons, 24% more than in the same month last year. China started to tighten inspections of soybean cargoes in April, causing congestion, and the backlog eased in May as more shipments finally cleared customs.

“Cargoes were delayed in April, leading to peak arrivals in May,” said Zhu Rongping, analyst with Mysteel, a China-based commodity consultancy. “Domestic crushers were also quite active making purchases of Brazilian beans when prices fell because of a bumper harvest.” Brazil, the world’s largest producer, is shipping its highest crop ever this year.

Brazil corn, sugar and coffee areas seen escaping frosts – expert

A polar mass advancing over Brazil is not expected to hit crops like sugarcane, corn and coffee even though temperatures will drop sharply over the coming days, weather consultancy Rural Clima said on Wednesday.

Agrometeorologist Marco Antonio dos Santos said some areas will have temperatures close to zero, but crops should be spared from frosts as a cold front system in southern Brazil blocks the polar mass’ advance to the main producing regions.

Monitoring and updating of climate models is required to confirm this scenario.

“It will be very cold in mountainous regions of Santa Catarina, where there may be freezing rain and snow,” Santos said.

Rainy weather usually prevents frost, he noted.

The lowest temperatures in Parana, Brazil’s second largest corn producing state, will be recorded from June 17-19, with lows close to 2 degrees Celsius, according to Refinitiv data.

In the south of Minas Gerais, Brazil’s main coffee region,

lows close to 5 degrees Celsius are expected from June 19-20, the data show. Similar temperatures will hit the south of Mato Grosso do Sul, a big producer of sugarcane and corn.

Brazil remains on track to reap a record corn crop. It is also expected to see a strong recovery in cane output and an increase in coffee production. Potential frosts in coffee areas would have a greater impact next season because this year beans are already formed, experts say.

One thing to monitor is whether high a pressure center moves toward crop areas, which could result in frosts, Santos noted.

In 2021, such a pattern damaged corn, coffee and sugarcane crops.

India gets 57% below-average rains in first week of June

India received 57% lower rainfall than average in the first week of June, weather office data showed on Wednesday, after the monsoon’s onset over its southern coast was delayed by the formation of a cyclone.

In the week to June 7, India received 9.9 mm rainfall against the normal 23.1 mm, according to the state-run India Meteorological Department (IMD).

The monsoon, the lifeblood of the country’s $3 trillion economy, delivers nearly 70% of the rain India needs to water farms and recharge reservoirs and aquifers.

Rains usually lash the southern state of Kerala around June 1 and cover the whole country by mid-July. This year, the IMD was expecting the arrival of monsoon rains over the state’s coast on June 4, but it hasn’t reached yet.

The formation of a very severe cyclonic storm Biparjoy in the Arabian Sea has been affecting the onset of monsoon, said a senior IMD official, who declined to be named as he is not authorised to talk to media.

“Conditions are becoming favourable for monsoon onset over Kerala in the next two days,” he said.

Nearly half of India’s farmland, without any irrigation cover, depends on the annual June-September rains to grow several crops. The monsoon’s late start could delay the planting of rice, cotton, corn, soybean and sugar cane, traders said.

India’s weather office has forecast below average rains for June, with the monsoon expected to pick up later.

However, for the entire four-month season, the IMD has forecast an average amount of rain despite the formation of a possible El Nino weather phenomenon.

Weather Disasters Lifting Property Insurance for Farms

US farms are getting throttled by higher property insurance premiums tied to increasingly strong weather disasters, says agricultural lender CoBank in a note. CoBank says that US grain and farms paid 40% to 60% more when renewing this year, and that rates for customers afflicted with property losses in the past 3 years have doubled. “Cooperatives and their property-casualty insurers have faced a perfect storm of excessive property losses due to floods, tornados and a host of severe weather events,” says Kenneth Scott Zuckerberg, an economist for CoBank. Zuckerberg cites inflation as a driver for higher costs for labor and building repairs. The firm forecasts elevated insurance costs for the next year to 18 months.

Bayer’s Genetically Modified Corn Plant Safe, US Agriculture

The US Department of Agriculture on Wednesday said Bayer’s corn plant genetically modified to be shorter to lower the risk of stem buckling during extreme weather conditions is safe for growing and breeding.

Following a review, the government agency concluded that the new type of corn will not be regulated since it does not elevate the risk of plant pests compared with other cultivated corn.

The German company’s short-stature corn remains subject to approval from the US Environmental Protection Agency. If approved, Bayer plans to launch the corn plant in the US in the middle to the later part of this decade.

 

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