Global Ag News for Mar 5.24

TOP HEADLINES

Australia says wetter weather should boost its upcoming winter crop

Wetter weather should boost Australia’s winter wheat production to 28.4 million metric tons in the 2024/25 season from 26 million tons in the harvest that has just finished, the country’s agriculture ministry said on Tuesday. Barley and canola production will also increase, the ministry said.

Australia is one of the world’s largest exporters of wheat and other farm products and greater output next year will increase global supply. The recently harvested 2023/24 winter crops were hit early in the growing season by an El Nino weather event that brought with it dry conditions. But summer rains in recent months and a fading El Nino have improved the outlook.

“Good soil moisture bodes well,” Emily Dahl, an economist in the agriculture ministry’s forecasting division, told the ABARES Outlook 2024 conference in Canberra.

The area planted to winter crops should increase in 2024/25, particularly in Queensland and New South Wales, which were dry for much of 2023, she said, adding that exports in the 2024/25 season would also be above the long term average. The ministry said it expected barley production to rise to 11.6 million tons in the 2024/25 season from 10.8 million in 2023/24 and for canola output to grow to 6.1 million tons from 5.7 million tons. Total winter crop production should rise by 9% to 51 million metric tons in 2024/25, the ministry estimates.

Winter crops in Australia are planted from around April and harvested from around October. Some weather models are predicting that El Nino will not only fade but shift later this year back to a La Nina phenomenon, which typically brings wetter conditions to Australia.

Dahl said this could lift Australian yields further. “There’s certainly a lot of upside potential,” she said.

The agriculture ministry said on Tuesday that Australia’s 2023/24 winter crop was in line with the 10-year average but down 32% from 2022/23, a La Nina year that saw plentiful rain.

FUTURES & WEATHER

Wheat prices overnight are down 1 1/2 in SRW, down 1/2 in HRW, up 2 1/2 in HRS; Corn is down 1; Soybeans down 4 1/2; Soymeal down $1.20; Soyoil down 0.23.

For the week so far wheat prices are up 5 in SRW, up 15 1/4 in HRW, up 18 1/4 in HRS; Corn is up 4 1/4; Soybeans down 1; Soymeal unchanged; Soyoil down 0.22.

For the month to date wheat prices are down 13 3/4 in SRW, down 7 1/2 in HRW, up 3 in HRS; Corn is down 1/2; Soybeans up 9 3/4; Soymeal up $3.10; Soyoil down 0.27.

Year-To-Date nearby futures are down 10.3% in SRW, down 6.2% in HRW, down 10.4% in HRS; Corn is down 11.5%; Soybeans down 11.5%; Soymeal down 13.1%; Soyoil down 6.7%.

Chinese Ag futures (MAY 24) Soybeans up 2 yuan; Soymeal up 20; Soyoil up 2; Palm oil down 20; Corn down 2 — Malaysian Palm is up 51.  Malaysian palm oil prices overnight were up 51 ringgit (+1.30%) at 3989.

There were changes in registrations (42 SRW Wheat, -10 Oats, -33 Soybeans, -10 HRW Wheat). Registration total: 640 SRW Wheat contracts; 0 Oats; 116 Corn; 787 Soybeans; 646 Soyoil; 1 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of March 4 were: SRW Wheat up 3,689 contracts, HRW Wheat up 3,648, Corn up 2,204, Soybeans down 1,479, Soymeal down 2,121, Soyoil up 5,167.

Brazil: Wet season showers in central Brazil were widely scattered over the weekend and are forecast to continue that way through this week. A front moving into southern Brazil will be active for that region for much of this week as well as it bends around the region, favoring an increase in soil moisture for immature long-season crops and for the newly planted safrinha corn. A small area around Mato Grosso do Sul is in between the favorable areas of rainfall and could be too dry for the new crop.

Argentina: A front brought some heavy rain to northern areas over the weekend, while it was much more manageable over southern areas. Northern areas will continue to see showers with the front stuck in the area through Thursday. Another front will move in southern areas on Wednesday with more waves of showers moving northward through the weekend. The rainfall should be favorable for most areas, but is also scattered enough to miss some key areas across the south that could use some more rain. The overall pattern is a favorable for reproductive to filling corn and soybeans, however.

Europe: A system brought widespread rainfall to the western half of the continent over the weekend with another low escaping into the Mediterranean on Sunday that will continue showers in that region early this week. The main low continues to reload and bring more systems into western Europe this week. A stronger cold front will plow south across eastern areas later this week with a significant threat of cold air if a system moving eastward through the continent phases up with it. That could pose a threat to some winter wheat that has awakened early, but likely wouldn’t last long.

Black Sea: The winter wheat areas of the region were dry and cooler over the weekend, though not dangerously cold to produce a risk of frost damage. Drier conditions are likely most of this week but a front coming down from the north and a system moving through the Mediterranean may produce some needed precipitation, including snowfall in the region Sunday into Tuesday. That may be followed by colder air as well. Still, the cold should not have a dramatic effect on wheat that is still awakening from dormancy for the most part.

Australia: Many areas saw some needed rainfall over the weekend, but this weekend will be drier with more of the rain falling over the Outback this week. We will be watching a system over western areas with some shower potential late this week, though. Above-normal temperatures will be reducing soil moisture in most places this week, which is a concern for the coming winter wheat crop that begins to be planted in about six weeks. The reduction of El Nino and eventual turn to La Nina should favor the winter wheat crop later this year, however.

Northern Plains: A larger storm moved into the region over the weekend and spread showers through most areas, including some heavy snow across the north. Some cooler air will remain around the next couple of days before rising again by this weekend. In the cooler air, more showers will be possible this week, mostly as some light snow.

Central/Southern Plains: Strong winds kicked up over the weekend as a system moved across the north and dragged a cold front into the region. Wildfire risks remain elevated for Monday. Luckily, a system is expected to move through Wednesday night through Friday with widespread scattered showers. That may include some pockets of snow, mostly in the High Plains, but will help add to soil moisture for helping to fight any outstanding wildfires. It will also help to replace soil moisture losses due to higher winds and temperatures that have sapped it from the topsoil recently.

Midwest: Very warm temperatures moved in over the weekend along with stronger winds, breaking records in some areas. That also came with a storm system that brought a cold front into western areas on Sunday that will slowly move across the region through Tuesday. Though temperatures will decrease, they will still be above normal. Scattered showers and thunderstorms will fill in across the region, helping to increase soil moisture a bit for much of the Ohio Valley. Another storm system will move through late this week and weekend with more widespread precipitation and chances for snow in some areas. Temperatures still remain warm going into mid-March and may coax some early planting across the south in the next couple of weeks.

Delta: It was dry over the weekend with increasing temperatures. Above-normal temperatures continue through mid-March while a couple of systems bring more rainfall through the region this week. The combination of good soil moisture and warm temperatures may coax some early planting in the region over the next couple of weeks.

The player sheet for Mar. 4 had funds: net buyers of 3,000 contracts of SRW wheat, buyers of 4,000 corn, buyers of 2,000 soybeans, and buyers of 1,000 soymeal.

TENDERS

• CORN SALES: The U.S. Department of Agriculture (USDA) confirmed private sales of 110,000 metric tons of U.S. corn to Taiwan for delivery in the 2023/24 marketing year that began Sept. 1, 2023.
• SOYMEAL SALES: The USDA also confirmed sales of 126,000 tons of U.S. soymeal to undisclosed destinations, including 30,000 tons for delivery in the 2023/24 marketing year that began Oct. 1, 2023, and 96,000 tons for 2024/25 delivery.
• WHEAT TENDER: Algeria’s state grains agency OAIC issued an international tender to buy soft milling wheat to be sourced from optional origins
• SUGAR TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), is seeking 50,000 tonnes of raw cane sugar of any origin in an international tender, it said in a statement.
• CORN, BARLEY AND SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 180,000 tonnes of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 88,800 metric tons of rice to be sourced from the United States and China
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 78,974 metric tons of food-quality wheat from the U.S. and Canada in a regular tender that closed on March 1.
• MILLING WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat sourced from optional origins.

 

 

TODAY

 

US Inspected 1.084m Tons of Corn for Export, 1.021m of Soybeans

In week ending Feb. 29, according to the USDA’s weekly inspections report.

• Wheat: 353k tons vs 482k the previous wk, 341k a yr ago
• Corn: 1,084k tons vs 1,289k the previous wk, 945k a yr ago
• Soybeans: 1,021k tons vs 1,059k the previous wk, 551k a yr ago

US Corn, Soybean, Wheat Inspections by Country: Feb. 29

Following is a summary of USDA inspections for week ending Feb. 29 of corn, soybeans and wheat for export, from the Grain Inspection, Packers and Stockyards Administration, known as GIPSA.

• Soybeans for China-bound shipments made up 835k tons of the 1.02m total inspected
• Japan was the top destination for corn inspections, Mexico led in wheat

USDA Downgrades Kansas, Oklahoma, Texas Winter Wheat Conditions

The USDA posts winter wheat conditions data on website for week ending March 3.

• Kansas good/excellent rating cut to 53% from 57%
• Oklahoma rating lowered to 65% from 70%
• Texas lowered to 43% from 46%

Brazil Soy Harvest 48% Done, Corn Planting 86% Done: Agrural

The 2023/24 soy harvest is 48% done as of Feb. 29, compares with 40% a week earlier and 43% a year before, according to an emailed report from consulting firm AgRural.

• Winter corn planting is 86% done, compares with 73% a week earlier and 70% a year before
• 2023/24 summer corn harvest is 49% done at center-south, it was 37% a year before

Brazil Summer Corn Harvest 42.2% Done as of March 1: Safras

Compares with 32.5% a year earlier and 5-year average of 38.5%, according to report from consulting firm Safras & Mercado.

• Harvest is 76.8% done in Rio Grande do Sul state, 55.9% in Santa Catarina, 42.3% in Parana, 26.8% in Sao Paulo, 2% in Mato Grosso do Sul, 4.9% in Goias/Federal District, 7.3% in Minas Gerais and 7% in Mato Grosso
• Safras estimates 2023/24 summer corn planted area at 3.972m hectares

Brazil’s top soybean city seeks to lure investments in crushing industry

The mayor of Brazil’s center-western town of Sorriso, the world’s largest soybean producer and the country’s biggest corn supplier, said on Monday that he has held meetings aimed at attracting investments to boost the local grain crushing industry.

Mayor Ari Lafin, who hosted a presentation for potential investors in Sao Paulo to showcase his town’s economic potential , has engaged in talks with U.S.-based Cargill and China’s COFCO to lure investments to Sorriso, located in the country’s top farm state of Mato Grosso. The mayor said he was scheduled to meet Bunge BG.N representatives on Tuesday, as his administration aims to attract companies to build four new grain crushers in the town. On the sidelines of the meeting with investors, Lafin told Reuters a delegation that included the mayor had visited China and spoke with COFCO in 2018.

“Our objective, as public managers… is to work so that these companies not only store but can transform the products here in Brazil.”

He noted that COFCO has a crushing plant in Mato Grosso’s Rondonopolis. While the Chinese were receptive to his delegation’s proposals, Lafin said, he noted that the company tends to prefer processing soybeans in China. Sorriso already has a soy crushing facility operated by Caramuru, a Brazilian firm, and a separate plant, owned by FS Bioenergia, to make corn-ethanol and other byproducts.

Regarding the possibility of Cargill investing in Sorriso, Lafin said the plan “is under study.” “Cargill has a crushing plant in Primavera do Leste and welcomed us very well.”

As for Bunge, Lafin said the idea is to convince them to set up a soy crushing unit in Sorriso too, where they store grains in a large area. “Bunge’s storage facility in Sorriso was meant to be a crushing unit,” the mayor said. “But they changed the plan and took it to (the town of) Nova Mutum.”

WHEAT/CEPEA: Pace of imports continues firm; prices move down in Brazil

Purchasers continue to look for high-quality wheat; however, the supply from the last season is low in Brazil, leading players to import. Still, the pace of acquisitions has been limited, since the demand for byproducts is low. Producers, in turn, are focused on planning the next crop in Brazil and on the harvest of the current summer season.

Data from Secex indicate that, up to the fourth week of February, Brazilian wheat imports totaled 439.02 thousand tons, more than the 291.63 thousand tons verified in February last year. Exports, in turn, totaled 131.10 thousand tons, against 533.42 thousand tons in the same month of 2023.

According to data from Cepea, between February 23 and March 1st, the prices paid to wheat farmers (over-the-counter market) downed 1.31% in Santa Catarina, 1.92% in Paraná and 1.5% in Rio Grande do Sul. In the wholesale market (deals between processors), values dropped 3.87% in Rio Grande do Sul and 1.71% in São Paulo, but remained stable in Santa Catarina and rose 0.43% in Paraná. Dollar quotations decreased 0.7% against Real, at BRL 4.953 on March 1st.

Based on data from Conab (Brazil’s National Company for Food Supply), between February 19 and 23, the import parity price for the wheat from Argentina delivered to Paraná state was at USD 244.01/ton. Considering the average of the US dollar in that period, at BRL 4.9507, the wheat imported was sold at BRL 1,208.02/ton, while for the Brazilian wheat traded in Paraná, the average was at BRL 1,254.45/ton, according to data from Cepea. In Rio Grande do Sul, the price of the product from Argentina closed at USD 228.11/ton, which accounts for BRL 1,129.33/ton – against BRL 1,195.99/ton on the average of the state calculated by Cepea.

The monthly price average of wheat traded in Rio Grande do Sul was BRL 1,189.13 per ton in February, 3.2% down compared to January and 18.8% less in relation to February/23, in nominal terms.

BYPRODUCTS – Prices decreased in February because of the high supply and the low demand. Specifically for wheat bran, the rainfall has also influenced the market.

China’s grain output hits record high in 2023: minister – Xinhua News Agency

China’s grain output hit a record high of 695.4 million tonnes last year, with per capita grain possession standing at 493 kg, higher than the internationally recognized grain security line of 400 kg, Minister of Agriculture and Rural Affairs Tang Renjian said Tuesday.

This is the ninth consecutive year for China to register a grain harvest of over 650 million tonnes, Tang told journalists on the sidelines of the ongoing “two sessions.”

Apart from safeguarding national food security, the country also keeps working to consolidate and expand its achievements in poverty alleviation, and prevent people from falling back into poverty and ensuring that no large-scale return to poverty occurs, according to Tang.

Last year, all farmers in 832 former national-level poverty-stricken counties saw the per capita disposable income reach 16,396 yuan (about 2,308 U.S. dollars), with an average annual increase of around 1,200 yuan over the past three years. Their income growth rate is higher than the national average growth rate for farmers.

Approximately two to three or more industries have been developed in each of the 832 poverty-alleviated counties, Tang said, adding that over 90 percent of the households that escaped poverty have engaged in these industries.

China Pledges Strictest Possible Controls to Protect Farmland

China will protect farmland with the strictest possible controls in order to achieve the country’s goal of food security, the state planner said in a report released at the annual National People’s Congress on Tuesday.

The government will also devote more efforts to develop high-quality cropland and restore degraded, saline or alkaline land, according to the report by the National Development and Reform Commission. It will also carry out initiatives to increase the organic richness of soil and upgrade irrigation.

The country is the biggest importer of corn, soybeans and wheat. While food consumption has risen in recent years, the supply of arable land is limited. The government had made a priority of protecting cropland and increasing yields as a way of closing the gap between supply and demand. Geopolitical tensions and extreme weather have made this priority even more urgent.

China vowed to make progress on increasing grain output by 50 million tons within seven years and set a target of producing more than 650 million tons in 2024. The government imposed restrictions on how much arable land a province can assign to non-agricultural purposes in order to keep total arable area above the redline of 120 million hectares, according to the report.

China’s grain output numbers are accurate, reliable, agriculture minister says

China’s agriculture minister said on Tuesday that the country’s grain output numbers are accurate and reliable.

Tang Renjian was responding to a question on the sidelines of China’s annual meeting of parliament about doubts over the government’s data releases that showed grain production remained steady last year despite natural disasters.

India’s Feb palm oil imports plunge to 9-month low; sunoil rises

India’s palm oil imports in February plunged to their lowest levels in nine months, as higher prices prompted buyers to reduce purchases of the tropical oil and increase buying of sunflower oil, five dealers told Reuters on Tuesday.

Lower purchases by India, the world’s biggest importer of vegetable oils, could weigh on benchmark Malaysian palm oil futures, but will help to reduce sunflower oil inventories in the Black Sea region. February palm oil imports fell 35.6% month-on-month to 504,000 metric tons, the lowest since May 2023, according to estimates from dealers.

“Palm oil imports have declined significantly due to persistently negative margins and competitive pricing of soybean and sunflower oil,” said Rajesh Patel, managing partner at edible oil trader and broker GGN Research. Palm oil usually trades at a discount to rival soyoil and sunflower oil, but falling stocks have lifted its prices above rival oils, whose supplies are abundant.

Crude palm oil (CPO) imports are being offered at about $965 a metric ton, including cost, insurance and freight (CIF), in India for April delivery, while soyoil and sunflower oil are offered around $950 and $928 a ton, respectively, dealers said.

Sunflower oil imports surged 34% last month to 295,000 tons on lower prices, and as shipments originally expected in January arrived in February due to delays caused by Houthi attacks on Red Sea shipping lanes, they said.

Soyoil imports in February fell 7.9% to 174,000 tons from a month earlier, and were far below the monthly average imports of 306,000 tons seen in the last marketing year ended Oct. 31, dealers estimated. Industry body Solvent Extractors’ Association of India (SEA) is likely to publish its data on February imports by mid-March.

The lower palm oil and soyoil imports pulled down India’s total edible oil imports in February to the lowest level in nearly two years at 973,000 tons, down 18.4% from a month earlier, dealers said. India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.

Sime Darby Plantation sees higher 2024 output as labour situation eases

Malaysia’s Sime Darby Plantation Bhd SIPL.KL, the world’s largest palm oil producer, expects 2024 production growth to rise at least 5% from last year, as the country’s labour situation improves, a top executive said on Tuesday.

Sime Darby Plantation’s Group Managing Director Mohamad Helmy Othman Basha said the firm’s higher production this year will be driven by reducing its reliance on foreign labour through a shift to automation and local worker recruitment.

“We believe there will be a growth in our production (for 2024)… We think it’s above 5%,” Helmy said in an interview on the sidelines of the Palm and Laurics Oil Price Outlook Conference 2024.

Sime Darby Plantation’s fresh fruit bunches (FFB) production was 8.71 million metric tons in 2023, a 6% increase from 2022, the company said last month. The firm’s oil extraction rate last year was at 21.18%, slighlty up from 2022. Helmy said the company had sufficient workers and would not need to bring in new harvesters until 2026.

Malaysia’s palm oil industry, which relies on foreign workers for 70% of its plantation workforce, has suffered a labour crunch in recent years, in part because of the COVID-19 pandemic. The labour shortage eased last year with the return of foreign workers to the country.

In a speech at the conference on Tuesday, Malaysian Plantation and Commodity Minister Johari Abdul Ghani said improved labour market conditions in the world’s second-biggest producer of palm oil would increase its 2024 crude palm oil production marginally by about 1% compared to last year. The Malaysian Palm Oil Board expects production at 18.75 million tons in 2024, compared to the 18.55 million tons in 2023, driven by the improving labour situation.

Malaysia Wants to Group Small Palm Oil Producers to Boost Yields

Malaysia is looking to consolidate the nation’s smaller palm oil farmers into groups that will be managed like larger estates to help increase productivity, according to the Plantation and Commodities Minister.

• The government envisions a business model that could consolidate almost 215k smallholders that represent ~822k hectares into groups of ~8k-10k hectares, Johari Abdul Ghani said at the Palm & Lauric Oils Price Outlook conference in Kuala Lumpur on Tuesday
• Groups of smallholders would then be managed like medium or large estates by dedicated teams
• If 30% of smallholders could be consolidated into groups, an additional 250k hectares of land could be managed more efficiently
  • If all smallholders adopted the management practices of larger plantations, yields of fresh fruit bunches could gain by 2 tons/ha
• That would boost Malaysia’s palm oil output by an additional 600k tons/year, valued at ~2.4B ringgit at current market prices
• Malaysia’s replanting rate of oil palm trees has been at 1.8% annually, compared with industry best practice of 4%-5%
  • Over 560k hectares of oil palm trees will be over 25 years old by 2027 if replanting isn’t address, leading to lower output

Palm Oil Supply Woes to Bolster Prices This Year, Mistry Says

Stagnating production and dwindling stockpiles will underpin palm oil prices relative to other edible oils in the near term, according to veteran trader Dorab Mistry.

Production in top grower Indonesia may fall by at least a million tons in 2024, while Malaysian output could remain flat, said Mistry, a director at Godrej International Ltd. The trend is likely to last at least five years, as the industry contends with aging trees, erratic weather and little improvement in farming practices, he said in an interview.

“I think you have to be reasonably bullish on all oils, but particularly palm,” due to output constraints, he said on the sidelines of the Palm & Lauric Oils Price Outlook Conference in Kuala Lumpur. While production of other oilseeds is set to climb this year, “palm is unfortunately the laggard,” he said.

These supply problems are upsetting the hefty discount palm typically has to alternative oils. The tropical oil is trading at a premium to soybean oil and sunflower oil in some markets, an unusual phenomenon that’s set to continue until around October when palm production seasonally peaks, said Mistry, who has traded vegetable oils for decades.

Benchmark palm oil futures have risen about 6% this year and traded at 3,942 ringgit ($834) a ton on Tuesday in Kuala Lumpur. Unpredictable weather is also a major wildcard for crop markets. Benign conditions have generally favored recent harvests and helped send a gauge of grain and oilseed prices to the lowest level in more than three years. But that may not last.

“We dodged bullets in several parts of the world” last year, Mistry said. “We have got to be on our guard.”

El Niño Has Minimal Impact on Malaysia’s Palm Oil Output: MPOB

Malaysia’s palm oil production will only see a minimal impact from El Niño, as there wasn’t a prolonged spell of dry weather last year, Mohamad Helmy Othman Basha, Chairman of the Malaysian Palm Oil Board, said on the sidelines of a conference in Kuala Lumpur.

• Output may increase slightly to around 18.7-18.8m tons this year from about 18.6m tons in 2023, said Mohamad Helmy, who is also Group Managing Director of Sime Darby Plantation Bhd., the world’s biggest palm oil planter by area
• Still, parts of Indonesia suffered a severe impact, including Kalimantan and Sumatra, which could weigh on this year’s output
• Replanting of aging trees and addressing labor shortages via automation and specialization are needed to improve stagnating yields
  • Automation in non-harvesting operations could start to be implemented within three years, although it will take longer for harvesting
• Malaysian yields are averaging at about 3.3 tons of crude palm oil per hectare
  • It is “not impossible” to get an additional 1 ton/ha; doing so within 7-10 years would be “quite an achievement”
• Palm oil that complies with the new EU deforestation regulations can “easily be satisfied” by major plantation companies, but the rules are problematic for smallholders

Malaysia Sees Asia, Africa Taking Palm Oil Europe Doesn’t Want

• EU deforestation rules set to hit imports from top growers
• Malaysia says smallholders will find it difficult to adapt

Malaysia, the second-biggest palm oil producer, expects Asia and Africa to soak up any supply that becomes available from export disruptions to Europe after the bloc’s new deforestation laws come into effect.

The European Union has put in place rules that stop products causing forest destruction from being sold in shops and supermarkets. Most companies have until the end of the year to comply with the EU Deforestation Regulation, which covers commodities from palm oil to cocoa and coffee. Critics say the rules especially punish smaller farmers.

EU imports of palm, used in everything from ice cream to shampoo and fuel, already dropped about 5% last year, with shipments from Indonesia, Malaysia and Thailand, the largest growers, particularly hit. But that loss will be offset by increasing demand in Asia and Africa, where the population is rising, said Carl Bek-Nielsen, chairman of the Malaysian Palm Oil Council.

Prices of palm oil will hold in a range of 3,800 ringgit ($803) to 4,250 ringgit a ton this year, underpinned by supply shortages and strong demand for the tropical oil, Bek-Nielsen said in an interview in Kuala Lumpur on Monday. Benchmark futures closed at 3,938 ringgit. He is also chief executive director of United Plantations Bhd.

The EU regulations may “amputate” millions of smallholders from the supply chain, Bek-Nielsen said, as they don’t have the necessary tracking systems and are struggling with issues from aging trees to declining yields. The regulations should be delayed until they are made more inclusive for smallholders, which make up about 35% to 45% of production in Indonesia and Malaysia, and up to 90% in Thailand.

“This vehicle may have had good intentions, but it has severe blind spots and it is heading straight toward a huge brick wall,” Bek-Nielsen said. “We have not fully appreciated the complexity of the supply chain involving smallholders.”

Morocco Will Need More Wheat Imports as Another Drought Looms

• Kingdom has no choice but to boost wheat imports, group says
• Grains harvest to be below 7.5 million tons budgeted for 2024

Morocco will need to increase wheat imports to make up for a smaller crop as the country faces yet another drought, according to farm-lobby group Comader.

The North African country — often cited among the most vulnerable to climate change in the Mediterranean basin — suffered from a lack of rain during autumn, according to Comader Chairman Rachid Benali. The wheat crop will be “a lot less” than last year’s 4 million tons, and the grains harvest will be much below the 7.5 million tons budgeted by the government, he said.

Morocco is a major wheat importer and depends heavily on agriculture, with the sector contributing to around 12% of the country’s economy. But it has faced a series of droughts in recent years, hurting local supplies and leading to farm-job losses that raised the nation’s unemployment rate to 13% in 2023.

“There will be more imports. We don’t have a choice,” Benali said in an interview, adding that wheat prices are relatively low right now. “Agriculture is a whole cycle and this year we did not have a proper start for that cycle.”  Benali said planting issues also apply to crops like other grains and sugar.

The amount of water provided by rain and snow each year has dropped in recent decades, while the population has almost doubled. With many dams near empty, authorities have restricted the irrigation of farms, stepped up desalination plans and ordered thousands of public baths to close three days a week, prompting protests.

Indonesia’s 2024 wheat imports seen rising by 5%, industry official says

Indonesia is likely to import larger volumes of wheat in 2024 compared to 10.87 million metric tons shipped last year, driven by higher demand for flour and animal feed, a senior industry official said on Tuesday.

“There will be growth in consumption for flour and feed with assumption of normal conditions,” Franciscus Welirang, Chairman of Indonesian Flour Producers Association, told Reuters on the sidelines of an industry conference in Jakarta.

Indonesia is the world’s third-largest wheat importer, buying largely from Australia, Canada, U.S. and the Black Sea region. Welirang said the country’s flour consumption this year is expected to rise by 5% from 2023.

Meanwhile, Indonesian grain buyers are boosting imports of lower quality wheat, as a decline in corn output last year following a severe drought linked to an El Nino weather pattern tightened the country’s animal feed supplies.

Imports from the Black Sea region will largely depend on the cost, he said, amid higher risk of shipping commodities from the Red Sea. Ships carrying grains and other commodities are being diverted from the Suez Canal to sailings around the Cape of Good Hope on concerns about attacks on vessels in the Red Sea.

“There is high risk in transporting through Red Sea,” he said. “It will have to go down south, so it will take longer time, and higher freight.”

Indonesia’s corn use in animal feed dropped to around 38% in 2023, industry official says

Indonesia, one of Asia’s top poultry consumers, used less corn in feed rations as dryness brought by El Nino reduced production of the yellow grain, an industry official said on Tuesday.

“Corn for feed was so expensive, so we replaced it with wheat that we get mostly from the Black Sea and some from Australia,” said Desianto Budi Utomo, chairman of the Indonesian Feedmills Association.

“There was large shortage of corn stocks at feed mills in 2023. This is because stocks of corn are not are not sufficient for the feed industry.”

Indonesian grain buyers are boosting imports of lower quality wheat, as a decline in corn output last year following a severe drought tightened the country’s animal feed supplies. The proportion of corn used in feed formulation fell to 38.3% in 2023 from 45.7% a year earlier, he said. Additionally, corn prices are more than 70% above government reference levels, which is likely to push up egg and chicken prices.

Last month, Indonesia assigned procurement company Bulog to import 500,000 tons of corn to supply feed millers in an effort to cool prices, although traders said that was unlikely to reduce wheat purchases given the high feed prices. Poultry accounts for 65% of animal protein source in Indonesia, Desianto said.

“We need 16 million tons of corn for feed, where do we get it from? We need better seedlings and mechanisation of farming.”

El Nino Drought in Philippines Seen Hurting Coconut Oil Supply

El Nino-induced drought in the Philippines through March will impair coconut oil exports from the major supplier in the second half, according to Julian McGill, managing director of consultancy Glenauk Economics.

• Rainfall data from the main export regions show that the first half is generally more prone to drought, he said at an industry conference in Kuala Lumpur; country received below average rainfall so far this year
• Coconut oil prices in Rotterdam seen trading above $1,400/ton by 3Q, McGill said; palm kernel oil may climb above $1,300/ton by 3Q, partly because of limited supply growth
• Coconut oil in Rotterdam quoted at $1,220/ton on Monday; crude palm kernel oil quoted at $1,042.50/ton
• Pricing in Rotterdam could be disrupted by the upcoming EU Deforestation Regulation because of lack of clarity over how the rules will work

Bunge Chevron Ag Renewables to Build Oilseed Processing Plant

Bunge, Chevron approve final investment decision for their JV to build an oilseed processing plant.

• Will be built adjacent to existing processing facility on the Gulf Coast in Destrehan, Louisiana
• Expected to start operations in 2026, will create more than 150 construction jobs and 30 new jobs when the plant is operational

 US Farmers Start Fieldwork Early as Mild Weather Warms Midwest

US ammonia, urea and phosphate prices strengthened as warm weather prompted the onset of preplanting applications. An early spring start gives farmers more time to consume inputs, supporting sales for producers like CF, Nutrien and Mosaic. China’s declining energy prices are increasing nitrogen profitability, sending urea-production rates soaring.

US Fertilizer at Premium as Spring Commands Tons

The Green Markets North American fertilizer index is up 18% this year, boosted by early spring support and global logistics snarls. An early start to spring has farmers clamoring for tons to begin spring fieldwork. Strength in the US market should last into 2Q, abating as spring plantings ebb. US fertilizers are trading at a premium to the rest of the world as buyers source material. Even though the import-dependent US market is entering spring with more imports than last year across all major fertilizers, the rapid start is emptying channel inventories and tying up the supply chain. The Mississippi River, the main conduit for trade, has speed and towing restrictions due to low water levels, further stressing the system.

Nutrien, Mosaic and CF Industries are the largest publicly listed dedicated producers in North America.

Bursa Malaysia to Launch Soybean Oil Futures Contract March 18

Bursa Malaysia Bhd will launch its soybean oil futures contract on March 18, according to the exchange’s chairman Abdul Wahid Omar.

• Under the agreement with the Dalian Commodity Exchange, Bursa Malaysia Derivatives is authorized to use the settlement price of DCE soybean oil futures as the basis for calculating the settlement price of the US dollar-denominated soy oil futures contract
  • NOTE: The licensing agreement was announced in November 2023
• The Bursa Malaysia DCE soybean oil futures is the first product collaboration between a Chinese derivatives exchange and an Asian exchange based outside of China, Abdul Wahid said at a palm oil industry conference in Kuala Lumpur on Tuesday
• Contract will also be the first non-palm based edible oils futures contract to be listed on BMD
  • It will enable market participants to “seamlessly arbitrage between soybean oil and palm oil prices on the same platform,” he said
  • NOTE: The two vegetable oils are common substitutes

Cargill’s Brazil CEO says farmer bankruptcies are a concern

A recent wave of farmer bankruptcy filings in Brazil is a concern for the South American farming powerhouse, the chief executive officer of U.S. grain trader Cargill’s CARG.UL Brazilian unit said on Monday.

Paulo Sousa was speaking at an event in Sao Paulo hosted by a financial services firm to discuss the challenges and opportunities for agribusiness firms in Brazil, the largest exporter of soybeans, sugar and other food commodities.

“There is a wave of bankruptcy filings, a legal novelty that brings a lot of concern to the sector,” Sousa said.

Brazilian traders have become increasingly vocal about the problem. The rise in farmer bankruptcy cases, which affects delivery of committed grains, may also hamper traders’ ability to complete export programs, grain exporters lobby Anec said last month.

Bayer Provision for Glyphosate Litigation Was $6.3B at Dec. 31

Bayer’s provision for the glyphosate litigation totaled $6.3 billion as at Dec. 31, company says in quarterly report.

• As of Jan. 31, 2024, Monsanto had reached settlements and/or was close to settling in a substantial number of claims
  • Of the ~167,000 claims in total, ~113,000 have been settled or are not eligible for various reasons
• As of Jan. 31, 2024, there have been 19 Roundup trials concluded before both federal and state courts in California, Missouri, Oregon and Pennsylvania
  • In 10 of those trials, the juries reached verdicts in favor of Monsanto
  • In the other nine trials, the plaintiffs were awarded compensatory damages and a multiple thereof in punitive damages
• Bayer believes it has meritorious defenses and intends to defend the safety of glyphosate and glyphosate-based formulations vigorously

 

 

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