Global Ag News for Nov 2.23

TOP HEADLINES

Palm Oil Seen Bullish in 2024 as El Niño Hits Production: Gapki

The palm oil market is likely to be bullish in 2024 as the El Niño weather event hurts production of the world’s most-consumed cooking oil, according to the Indonesian Palm Oil Association known as Gapki.

• Indonesia, the world’s biggest grower, has seen output stagnate over the past few years due to the slow progress of replanting activity by smallholders, Chairman Eddy Martono said at a conference in Bali Thursday
• The country’s palm oil stockpiles will also be “undoubtedly low” due to implementation of the B35 biodiesel mandate as well as rising domestic consumption in the food and industrial sectors
• There’s increased uncertainty in the market due to the threat of food and energy crises, as well as trade barriers from importing countries, such as the EU’s deforestation regulations
• Gapki seeks support from the Indonesian government to strengthen sustainable palm oil production, instead of “issuing counterproductive regulations,” as well as to fight for free and fair trade, Martono said

FUTURES & WEATHER

Wheat prices overnight are down 1 1/2 in SRW, up 1 1/4 in HRW, up 1/4 in HRS; Corn is up 1; Soybeans up 10 1/4; Soymeal up $3.30; Soyoil up 0.48.

For the week so far wheat prices are down 13 1/4 in SRW, down 3/4 in HRW, down 9 3/4 in HRS; Corn is down 5; Soybeans up 4 1/2; Soymeal down $8.50; Soyoil down 1.96.

Year-To-Date nearby futures are down 29.0% in SRW, down 27.7% in HRW, down 24.4% in HRS; Corn is down 29.9%; Soybeans down 14.4%; Soymeal down 9.3%; Soyoil down 21.2%.

Chinese Ag futures (JAN 24) Soybeans down 19 yuan; Soymeal up 42; Soyoil up 82; Palm oil up 98; Corn up 3 — Malaysian Palm is up 92.  Malaysian palm oil prices overnight were up 92 ringgit (+2.49%) at 3780.

There were no changes in registrations. Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 598 Soybeans; 62 Soyoil; 52 Soymeal; 400 HRW Wheat.

Preliminary changes in futures Open Interest as of November 1 were: SRW Wheat up 175 contracts, HRW Wheat up 3,006, Corn up 13,124, Soybeans up 2,949, Soymeal up 3,775, Soyoil up 6,545.

Brazil: Several systems moving through southern areas this week continue to produce heavy precipitation, which creates problems with flooding and limit developing corn and soybeans as well as damaging remaining wheat. Southern areas will catch a dry spell this weekend into early next week, but it will be short with more showers moving through mid-late next week. Central areas will see improved precipitation which will help with soybean planting and establishment in most areas, as well as keeping temperatures from getting too hot.

Argentina: Scattered showers continue through Thursday, favoring remaining filling winter wheat and developing corn as well as producing better soil moisture for early soybean planting. However, colder temperatures are also moving in with the rain, which may produce some limited frosts over southern areas throughout the rest of the week. After a break this weekend, showers should move through with another system next week.

Northern Plains: Heavy snow that fell across northern areas last week will take some time to melt and keep temperatures low. The pattern will stay fairly active with occasional light showers, including some snow, through next week. The colder and wetter conditions will continue to make remaining fieldwork difficult to accomplish, especially north.

Central/Southern Plains: Cold temperatures have been in place the last several mornings, making for widespread frosts and freezes which continue across the region through Thursday morning, slowing growth for winter wheat. In the north, frosts will be more common going forward. Some rain may go through northern areas Friday and Saturday, and again early next week, but most of the region will be dry until the middle of next week, when a better chance for widespread showers moves through with a potential storm system.

Midwest: Rounds of showers went through this weekend and early this week, including some snow. Recent good rainfall should help to ease drought on a widespread basis, but is delaying the remaining fieldwork. Cold temperatures will moderate for the end of the week and above-normal temperatures are likely for the weekend into early next week. But the pattern will stay active with additional showers possible this weekend and next week at times.

The player sheet for Nov. 1 had funds: net sellers of 3,000 contracts of SRW wheat, sellers of 2,000 corn, and sellers of 4,000 soyoil.

TENDERS

• FOOD WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 113,506 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
• 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
• OFFERS RECEIVED ON WHEAT TENDER: The lowest offer in an international tender from Bangladesh’s state grains buyer to purchase and import 50,000 metric tons of wheat which closed on Monday was assessed at $294.95 a metric ton liner out
• SUGAR TENDER: Egypt’s General Authority for Supply Commodities (GASC) is seeking 50,000 or 60,000 metric tons of refined white sugar in a tender, GASC said on Wednesday.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has issued an international tender to purchase an estimated 177,000 metric tons of rice, largely from the United States
• CORN PURCHASE: The Korea Feed Association (KFA) purchased an estimated 125,000 metric tons of animal feed corn in an international tender on Wednesday
• OFFERS REJECTED IN CORN TENDER: Iranian state-owned animal feed importer SLAL is believed to have rejected all offers and made no purchase in an international tender to buy up to 180,000 metric tons of animal feed corn on Oct. 24
• WHEAT TENDER OFFERS: The lowest offer in an international tender from Bangladesh’s state grains buyer to purchase and import 50,000 metric tons of wheat which closed on Oct 30 was assessed at $294.95 a metric ton liner out

PENDING TENDERS

• CORN TENDER: South Korean feedmaker Nonghyup Feed Inc (NOFI) has issued an international tender to purchase up to 138,000 metric tons of animal feed corn to be sourced from optional origins
• VEGOILS TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Tuesday it was seeking vegetable oils in an international purchasing tender for arrival Jan. 1-20, 2024 and/or Jan. 21 to Feb 10, 2024. GASC said traders should submit bids for payment at sight. The deadline for offers is Nov. 2.

TODAY

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of five analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Oct. 26.

• Corn est. range 600k – 1,200k tons, with avg of 920k
• Soybean est. range 900k – 1,500k tons, with avg of 1,190k

DOE: US Ethanol Stocks Fall 1.8% to 21.012M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 21.402 mln bbl
• Plant production at 1.052m b/d, compared to survey avg of 1.047m

US Soybean Crushings at 175M Bushels in September: USDA

USDA releases monthly oilseed report on website.

• Crushing 4.3% higher than same period last year
• Crude oil production 4.2% higher than same period last year
• Crude and once-refined oil stocks down 19.5% y/y

Brazil October Agriculture Exports by Volume: MDIC

Following is a summary of key Brazilian agriculture and mining exports by volume, from the Brazilian Trade Ministry.

• Soybean exports rose 46% in Oct. from a year ago
• Coffee exports rose 25% y/y

US Corn Used for Ethanol at 430.1M Bu in September

The following a summary of US corn consumption for fuel and other products, according to the USDA.

• Corn for ethanol was 12.2% higher than in September 2022
• DDGS production rose to 1.7m tons

China’s 2023 soybean imports seen at record 105 mln metric tons on strong Q4 arrivals

• Soybean imports in 2023 seen climbing 15% to 105 mln tons
• Brazilian beans purchases to pressure U.S. prices
• China’s Q4 soybean imports likely to rise to 26 mln tons
• Hog losses seen reducing purchases in early 2024

China’s soybean imports are likely to stay high through the fourth quarter, taking 2023 purchases to an all-time record, but lacklustre demand from loss-making hog farms is seen reducing purchases in early 2024, traders and analysts said.

Record Brazilian soybean supplies are expected to dominate China’s imports in the last three months of the year, they said, citing better oil and meal quality, reducing demand for U.S. cargoes in the world’s biggest market for the oilseed.

The larger share of Brazilian soybeans in China’s import basket is likely to add pressure on benchmark Chicago futures Sv1 which have slumped nearly 15% this year, snapping a four-year rally.

“The sustained and rapid development of China’s feed industry is keeping our soybean imports at a high level,” Zhang Liwei, chief engineer of China National Grain and Oil Information Center, said at a industry conference in Dalian.

China is by far the world’s top importer of soybeans, buying more than 60% of the oilseed shipped worldwide to crush into meal for animal feed and oil for cooking.

Typically, freshly harvested U.S soybeans dominate the global export market from September as the Brazilian export season winds down. But this year China’s purchases from the U.S. are well below normal.

China will import around 26 million during the last three months of the year, with around 45% of the volumes arriving from Brazil, based on the forecasts of four trading sources.

October arrivals are seen at 6.5 million metric tons, November at 10 million metric tons, with December pegged at 9.5 million metric tons, according to a Shanghai-based trader with a global trading house.

That would bring China’s total imports in 2023 to a record high of around 105 million metric tons, up 15% from 91.1 million metric tons last year.

China’s soybean imports in January-September 2023 jumped 14.4% year-on-year to 77.8 million tons, according to customs data.

“The price spread between Brazilian and U.S soybeans has narrowed as it is the U.S harvest season,” a Singapore-based trader said. But crushers still prefer Brazilian beans due to better oil and meal quality in the beans, he said.

COFCO market research department manager Xu Qiaoping said fourth quarter demand is supported by stable soymeal consumption to feed the country’s large pig herd, even though procurement for early 2024 is expected to be lower as loss making livestock farmers cut back on purchases.

Argentina Soy Planting to Get Rainy Start as Drought Tails Off

Rains are becoming more consistent on the Argentine Pampas after almost four years of drought as El Nino finally makes itself felt, the Rosario Board of Trade said in a report.

• NOTE: The bulk of Argentine soy planting takes place in November/December
• New rains are expected from Thursday after showers last weekend, helping to kick off the soy planting season
• El Nino will be weaker than first thought but should last longer, until the start of the Southern Hemisphere autumn, which will especially help later-planted soy/corn

SovEcon Trims Russia Wheat Export Estimate as Forward Sales Slow

Russian wheat exports in the 2023-24 season are now seen at 48.8m tons, versus a prior estimate of 49.2m tons, research firm SovEcon says in an emailed note.

• “In recent weeks, wheat export sales have dropped substantially,” with outstanding sales seen at 1.7m tons, versus 6.1m tons in August
  • That’s partly as the government tries to limit exports at current prices, report says
• Downturn also influenced by Russia’s announcement on procuring grain for state fund

Indonesia’s Jan.-Sept. Biodiesel Consumption Totals 8.9M KL

The consumption of 8.9 million kilo liters as of Sept. compares with Indonesia’s target of 13.15m kilo liters during the full calendar year, according to the energy and mineral resources ministry.

• Exports of biodiesel were 121,000 KL, Yudo Dwinanda Priaadi, director general of new and renewable energy at the ministry, said at an industry event in Bali Thursday
• Indonesia has an annual capacity to produce 19.95m KL of biodiesel
• B35 biodiesel mandate expected to result in foreign exchange savings of $10.75 billion this year, vs $8.34 billion for B30 in 2022
• Emission reduction seen at 34.9 million tons of CO2 vs 27.8 million in 2022

Russian Ministry Proposes Six-Month Durum Wheat Export Ban: IFX

Russian Agriculture Ministry proposes imposing ban on export of durum wheat from Dec. 1 to May 31, Interfax reports, citing a draft government order.

Measure won’t affect deliveries to Belarus

Ukraine exported 3 mln T food via seaports and Danube in October – brokers

Ukraine exported 3 million metric tons of food in October from its Black Sea ports and ports of the Danube River, Spike Brokers, which regularly tracks and publishes export statistics in Ukraine, said on Wednesday.

It gave no comparative figures. Agriculture ministry data showed that 2.3 million tons of agricultural goods left Ukrainian ports in September.

Ukraine is trying to build up a new shipping lane along the north-western coast of the Black Sea to Romanian territorial waters to revive its vital seaborne exports after Russia quit a U.N.-brokered deal in July that allowed Ukraine to export grain from its Black Sea ports, despite the war.

Russia has said it would consider any vessel a potential military target after it quit the deal.

Brokers did not explain the increase in export volumes but said that the use of the alternative Black Sea corridor was limited by a daily restriction on the number of vessels entering and leaving.

“These restrictions are set by the Ukrainian Navy to ensure the safety of the convoy,” the company said in a report.

The Ukrainian farm ministry said a total of 9.2 million tons of grain were exported from the country so far in the 2023/24 (July-June) season as of Nov. 1.

Ukraine is expected to harvest 79 million tons of grain and oilseed in 2023, with the 2023/24 exportable surplus seen at about 50 million tons.

Indonesia Keeping DMO Palm Oil Policy, Export Ratio for Now

Indonesia will maintain its policies on the domestic market obligation (DMO) for cooking oil, as well as the current export ratio, said Isy Karim, director general for domestic trade at the trade ministry.

• Basic ratio for regulating the volume of palm oil shipments will be maintained at four times the amount companies are required to sell in the domestic market, in order to prevent a sudden surge in export permits, he said at a conference in Bali Thursday
  • Ratio will continue to be reviewed regularly, he said
• Indonesian exporters had 6.7m tons of export rights as of October excluding previously frozen quota, Karim said; trade ministry wants to keep export rights between 4m and 10m tons
• Ministry is considering options to attract companies to trade at the CPO exchange including fiscal incentives, Didid Noordiatmoko, the head of Commodity Futures Trading Regulatory Agency, said at the same event
  • Better export tax and company income tax among options to be proposed to finance ministry; incentives will not reduce govt revenues

Argentina farm export revenue down 25% in October, chamber says

Argentine farm exports brought in some $743.5 million in October, a 25% fall from the same month last year, an industry group said on Wednesday, confirming the impact of drought and election-related market conditions.

The combined oilseed industry and grains export chambers CIARA-CEC said that exports in the first ten months of the year were down 50%, or about $17.5 billion, from the same period in 2022.

Argentina is the top global exporter of processed soy oil and meal, the No. 3 for corn and a major producer of wheat. A historic drought hammered crops over the last year, and dry conditions are still affecting crops in parts of the country’s farming heartland.

“October’s foreign currency inflow is the result of the drought, which has generated losses of available grain stock, as well as an electoral process that always conditions the grain market,” explained CIARA-CEC.

The chamber estimates that the remaining coarse grain harvest will restrict port terminal operations and the soybean crushing industry in the upcoming months.

With central bank reserves dwindling, Argentina’s government has repeatedly pushed for a special exchange rate for exporters to speed up their grains sales, the main source of the South American country’s foreign currency income.

Last year, grain and oilseed exports, including biodiesel, constituted 48% of Argentina’s total exports, according to data from the national statistics agency.

Bunge to Restart Terminal at Fire-Hit Port in Brazil This Week

• Operations halted Saturday after fire hit neighboring terminal
• Trading company said its facilities were spared from damage

Bunge Global SA plans by the end of the week to resume operations at its terminal located at one of Brazil’s key ports, after a nearby fire had hampered work.

The company expects activities will restart as of Nov. 4, according to a statement. On Oct. 28, a fire erupted on a conveyor belt belonging to CAP Terminal at Paranaguá, Brazil’s second-largest port. Bunge had temporarily suspended operations at its facility located next to the engulfed area, while saying that its unit was spared in the fire.

It’s still unclear when CAP Terminal will resume operations. At least two ships that were expected to load in a berth in the area have been relocated to other parts of the port, Paranaguá port authority said Tuesday.

Bursa, Dalian Commodity Exchange Sign Soybean Oil Futures Deal

Bursa Malaysia Derivatives and Dalian Commodity Exchange signed a deal for the licensing of soybean oil futures settlement price, according to a statement Thursday.

Bursa will use the settlement price of DCE Soybean Oil Futures as the basis to calculate cash settlement prices for the upcoming Bursa Malaysia DCE Soybean Oil Futures Contract

Bursa plans to launch the product in the first quarter of 2024

NZ Institute Says 80% Chance EL Nino Continues Through Autumn

NZ’s National Institute for Water and Atmospheric Research comments in seasonal outlook.

• El Niño continued during October and will likely intensify over the next three months
• “It has around a 100% chance of persisting during this time. There’s an 80% chance of El Niño continuing through autumn.”
• Models suggest peak El Niño strength in December-January
• Weather patterns include frequent westerly wind flows and drier than normal conditions in the north and east, especially in the North Island
• The expectation for stronger winds, in association with a fully developed El Niño, means that the risk for the development of widespread marine heat wave conditions in New Zealand’s coastal waters is low

Fertilizer Prices Linked to Mississippi River Levels

Fertilizer prices could head higher if the Mississippi River doesn’t get enough precipitation this winter, Mark Milam of ICS says. Low water levels limiting fertilizer-carrying barges this past marketing year could be repeated. Rainfall would be better than snow to replenish the river, Milam says. Other factors that could contribute to higher fertilizer prices include US farmers opting to plant more soybeans and less corn in the upcoming season, which would decrease the need for nitrogen-based fertilizers.

Delayed Fertilizer Purchases Cause Supply Concern in Brazil

After India awarded 1.7 million metric tons of urea in its latest tender, Brazil urea prices fell slightly after increasing 1.9% in late October. Farmers have delayed purchases amid compromised affordability, pressuring the local market but risking availability for the corn safrinha season.

Brazil Prices Fall for Nitrogen, Potash

Urea in Brazil dropped to $385-$400 a metric ton (mt) cost-and-freight, down from last week’s $395-$410 amid low interest from buyers and slow demand for the corn winter season due to drought and weak commodity prices. Fueled by softening urea, ammonium sulfate fell to $205-$215/mt vs. last week’s $210-$220, with buyers trying to purchase below these levels. Monoammonium phosphate (MAP) in Brazil narrowed to $555-$560/mt from last week’s $550-$565, with reports of availability limited to the end of 2023 or the first two months of 2024, depending on location. Potash slipped to $320-$350/mt from last week’s $330-$350, with the bottom of the range reported for Belarusian tons.

Nitrogen Market Steady as US Autumn Season Kicks Off

The global nitrogen market was steady amid another urea tender from India and rising European natural gas prices. The US autumn fertilizer season is set to kick off as harvest nears completion and soil temperatures drop. Input scarcity is keeping nitrogen production rates low in Europe, while falling energy prices in China are sending the pace of output to new highs.

NOLA Urea Firms on Natural Gas Volatility

New Orleans (NOLA) urea moved up slightly from last week, with early-week trades reported at $355-$365 a short ton (st). The uptick was attributed in part to news of Egyptian natural gas curtailments and strengthening gas prices in Europe. The NOLA increase didn’t affect inland urea terminals, however, which continued to see pricing declines and low demand. The reopening of the Arkansas River to barges after a shutdown since mid-October due to low water and dredging also pressured river terminal prices for urea and phosphates, with both falling from late October highs. Potash terminal prices continued to creep up, fueled by Nutrien’s $20/st Midwest price hike in late October.

 

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