Global Ag News for May 5.23

TOP HEADLINES

China buys first cargo of South African corn

China imported its first cargo of corn from South Africa this week, official news agency Xinhua reported late on Thursday, as the world’s top buyer of the grain seeks to diversify its grain purchasing markets.

The 53,000-tonne cargo bought by state-owned trader COFCO Group arrived into Machong port in southern Guangdong province on Thursday, said the report, and will be sold to animal feed makers.

South Africa, the African continent’s top corn producer, is expecting a bumper crop this year, with exports in the 2023/24 crop year estimated in a recent United States agriculture attache report at 2.3 million tonnes.

Though Beijing had approved corn imports from the country years ago, the Cofco purchase is the first significant volume to reach the country.

It comes as China seeks to add new suppliers of grain, after war in top exporter Ukraine disrupted shipments, leaving it more reliant on the U.S.

COFCO is working to expand purchases and “normalize” bulk imports of corn from South Africa, the Xinhua report said, citing Fan Zhenyu, head of COFCO International’s corn business.

FUTURES & WEATHER

Cinco de Mayo. Wheat prices overnight are up 3/4 in SRW, up 5 1/2 in HRW, up 7 1/4 in HRS; Corn is up 2 3/4; Soybeans up 8 3/4; Soymeal up $2.60; Soyoil up 0.78.

For the week so far wheat prices are up 12 in SRW, up 27 1/2 in HRW, up 15 1/2 in HRS; Corn is up 6 3/4; Soybeans up 7 1/4; Soymeal down $5.20; Soyoil up 1.59.

For the month to date wheat prices are up 12 in SRW, up 27 1/2 in HRW, up 15 1/2 in HRS; Corn is up 6 3/4; Soybeans up 7 1/4; Soymeal down $5.20; Soyoil up 1.64.

Year-To-Date nearby futures are down 20.3% in SRW, down 4.8% in HRW, down 15.0% in HRS; Corn is down 4.5%; Soybeans down 4.4%; Soymeal down 10.7%; Soyoil down 18.1%.

Chinese Ag futures (JUL 23) Soybeans up 44 yuan; Soymeal up 8; Soyoil up 52; Palm oil up 144; Corn down 14 — Malaysian palm oil prices overnight were up 165 ringgit (+4.82%) at 3590.

There were changes in registrations (-2 Oats). Registration total: 2,389 SRW Wheat contracts; 50 Oats; 11 Corn; 0 Soybeans; 848 Soyoil; 30 Soymeal; 45 HRW Wheat.

Preliminary changes in futures Open Interest as of May 4 were: SRW Wheat down 3,075 contracts, HRW Wheat up 1,598, Corn up 20,979, Soybeans up 6,165, Soymeal up 4,898, Soyoil up 2,196.

Northern Plains Forecast: Scattered showers Friday-Sunday. Temperatures near to above normal through Sunday. Outlook: Isolated to scattered showers Monday-Friday. Temperatures near to above normal Monday-Friday.

Central/Southern Plains Forecast: Isolated to scattered showers through Monday. Temperatures above normal Friday-Monday. Outlook: Isolated to scattered showers Tuesday-Saturday. Temperatures above normal Tuesday-Thursday, near to above normal Friday-Saturday.

Western Midwest Forecast: Isolated to scattered showers through Monday. Temperatures near to above normal through Monday.

Eastern Midwest Forecast: Scattered showers Friday. Mostly dry Saturday. Scattered showers Sunday-Monday. Temperatures near to below normal Friday, near to above normal Saturday-Monday. Outlook: Isolated to scattered showers Tuesday-Saturday. Temperatures above normal Tuesday-Saturday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires:  Mostly dry through Saturday. Temperatures below normal Tuesday-Wednesday, near to below normal Thursday, near to above normal Friday-Saturday. La Pampa, Southern Buenos Aires:  Mostly dry through Saturday. Temperatures below normal Tuesday-Wednesday, near to below normal Thursday, near to above normal Friday-Saturday.

The player sheet for 5/4 had funds: net buyers of 1,875 contracts of SRW wheat, sellers of 7,500 corn, buyers of 250 soybeans, sellers of 3,000 soymeal, and  sellers of 500 soyoil.

TENDERS

• WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 52,225 tonnes of milling wheat to be sourced from the United States in a tender on Friday
• CORN TENDER: Algerian state agency ONAB issued an international tender to purchase about 140,000 tonnes of corn to be sourced from Argentina or Brazil
• SOYMEAL TENDER: Algerian state agency ONAB issued an international tender to purchase up to 70,000 tonnes of soymeal
• FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 tonnes of animal feed barley.
• DURUM WHEAT AND FEED BARLEY TENDER: Tunisia’s state grains agency issued an international tender to purchase about 100,000 tonnes of durum wheat and 75,000 tonnes of animal feed barley.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 43,500 tonnes of rice.

TODAY

Argentine Soybean, Corn Estimates May 4: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2022-23 soybean and corn production estimates both maintained
• Soybean harvest advanced to 36% complete from 28% complete
• Corn harvest 20% complete

US Corn Export Sales Drop to Lowest Since 2017: USDA

• Cancellations from China leave net corn sales below zero
• Old crop sales fall to -316k tons, combined new and old crop sales at -195k tons

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 April 27, according to data on the USDA’s website.

• Mexico bought 14.6k tons of the 49k tons of pork sold in the week
• Japan led in beef purchases

US Corn Exports Down 34% Y/y in March, Soybeans Down 2%: Census

Brazil storage deficit pressures soy premiums, may cause steep losses – Cogo

Brazil’s historical storage deficit has been aggravated by a bumper grain crop, pressuring soy and corn premiums in one of the world’s largest food suppliers, according to Cogo, an agribusiness consultancy.

Speaking to reporters on Thursday, Carlos Cogo, Cogo’s partner and director, said Brazil’s negative corn premiums may result in losses of 11.5 billion reais ($2.30 billion) this year for the sector while losses for the soybean industry are estimated at 19 billion reais ($3.80 billion).

Global Corn Stockpiles Raised on EU, India Supplies: FAO-AMIS

Global corn stockpiles at the close of the 2022-23 season are now seen at 288.2m tons, up from an April estimate for 285.4m tons, the Agricultural Market Information System says in a note.

• Outlook raised partly on a bigger India harvest and higher EU imports
• Wheat stockpiles seen at 309.7m tons, versus 309.5m tons
  • Production raised on a bigger Kazakhstan harvest, but usage is also growing
• Soy stockpiles seen at 44m tons, versus 43.9m tons

FAO Raises EU 2023 Wheat Crop Outlook; Cuts Turkey and Pakistan

World wheat production in 2023 is seen at 785m tons, the UN’s Food and Agriculture Organization said in a report.

• Harvest prospects are rising in the EU due to substantial April rain in most nations
  • That raised the wheat crop outlook to 139.5m tons
  • Still, drought in Spain and Portugal is curbing crops there
• Meanwhile, Turkey’s wheat crop outlook was cut “moderately” because of earthquake damage to infrastructure, equipment
  • Drought is also curbing yields in Morocco, Algeria and Tunisia and below-average harvests are expected
  • Pakistan’s wheat crop downgraded “marginally” on constrained access to farm inputs

Palm Oil Inventories in Malaysia Seen Shrinking to 11-Month Low

• Stockpiles tumble 8.5% to 1.53 million tons in April: survey
• Reserves may expand from May onward, TransGraph says

Palm oil stockpiles in Malaysia probably contracted to the smallest in 11 months in April as production in the world’s second-biggest grower declined because of a shortage of workers during the festival period.

Inventories fell about 8.5% from March to 1.53 million tons, according to the median of 12 estimates in a Bloomberg survey of analysts, traders and plantation executives. That would be a third straight month of declines, and may bolster palm oil futures that have lost about 20% since early March.

Crude palm oil production fell 1.5% to 1.27 million tons in April, and is down 30% from a two-year high reached in October. Many foreign workers returned home to celebrate Ramadan and the Eid al-Fitr festivals. Exports dropped 19% to 1.2 million tons, paring a 32% surge in March.

Expectations of a strong production recovery from May onward and slower export demand imply that stockpiles will expand in coming months, said Nagaraj Meda, managing director of Hyderabad-based TransGraph Consulting.

Malaysian exports are likely to be only around 1 million tons this month because Indonesian palm olein is trading at a deep discount after changes in export rules, and the spread with soft oils is unfavorable, Meda said.

Top palm oil shipper Indonesia revised its export policy last week to ensure supplies for the local market, while maintaining the flow of exports. The government cut the basic ratio for regulating exports, while pledging to release three million tons of frozen export quotas in the next nine months.

US Crops in Drought Area for Week Ending May 2: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending May 2, according to the USDA’s weekly drought report.

• Winter wheat experiencing moderate to intense drought dropped 2 percentage points from the previous week to 49%
• Corn area remained at 27%, while soybean area rose a point to 20%

US Miss. River Grain Shipments Fall, Barge Rates Decline: USDA

Barge shipments down the Mississippi river declined to 595k tons in the week ending April 29 from 657k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 20% from the previous week
• Soybean shipments up 9% w/w
• St. Louis barge rates were $10.59 per short ton, a decline of $1.70 from the previous week

Fertilizer Maker Mosaic Says El Nino Threatens Key Global Crops

Mosaic Co., one of the world’s biggest phosphate producers, warned the market on Thursday that grain supplies could remain tight as El Nino threatens to wipe out production later this year in key regions.

Chief Executive Officer Joc O’Rourke told analysts that El Nino, a weather event that raises the chance of heavy rains and searing heat in top farming areas across the globe, brings “real risk” to agricultural markets in 2023. The Tampa, Florida-based company’s top executive said weather events always add uncertainty, but extreme weather events impacting crop production have become more “commonplace” in the world.

Fertilizer producers like Mosaic are counting on robust crop prices to motivate farmers to invest more in their plantings and boost fertilizer demand. Falling crop nutrient costs have lured more farmers back to the market after last year’s surge caused many to delay purchases.

Mosaic shares plunged as much as 11% on Thursday, the most in six months, as the company reported worse-than-expected earnings due to lower fertilizer sales. The stock touched the lowest in more than a year.

 

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