Global Ag News for Nov 27.23
Russia Woos Africa With Free Grain, Fertilizer Research Funding
- Somalia, Burkina Faso set to receive first grain shipments
- Billionaire Melnichenko backs study for ex-South Africa leader
Russian shipments of donated grain are due to begin landing in Africa within days, giving fresh impetus to its bid to bolster its influence in the continent.
President Vladimir Putin promised to send free grain to six African countries that have strong ties with Moscow at a Russia-Africa summit in St. Petersburg in July. The move followed criticism that Russia’s war in Ukraine and its withdrawal from a deal that facilitated the export of Ukrainian grain through the Black Sea were pushing up global food and fertilizer prices.
The shipments will total 200,000 tons by year-end, the Russian Agriculture Ministry was cited by the Interfax news agency as saying Nov. 17, with Somalia and Burkina Faso set to be the first recipients. Zimbabwe, Mali, Eritrea and the Central African Republic are also due to get between 25,000 and 50,000 tons of grain each, Putin said in July. That’s a tiny fraction of what they consume.
Russia’s push to strengthen ties with African nations by increasing trade and deploying Wagner mercenaries to prop up unstable governments follows efforts by the US and its allies to isolate it in response to the invasion of Ukraine. It remains a minor player however — its two-way trade with the continent was only $18 billion in 2022, a fraction of China’s $282 billion.
Research presented at a conference in Cape Town on Sunday organized by a foundation set up by former South African President Thabo Mbeki sought to dispel the notion that Moscow bore primary responsibility for rising food costs. Direct or indirect sanctions imposed on Russia and its ally Belarus cut global fertilizer and ammonia supplies by 40.8 million tons through April 2023, according to the study, which was backed by a fund founded by Russian fertilizer billionaire Andrey Melnichenko.
Ukraine and Russia are two of the world’s leading exporters of grain and vegetable oil. The war has impacted on global supplies of both commodities, with Russia bombing Ukrainian stores and ports.
While Russian fertilizer hasn’t been subjected to international sanctions, penalties imposed on owners of companies that produce it and restrictions by the banking and logistics industries, saw exports fall last year. They have since recovered, spurring a decline in prices.
The study’s analysis of the impact of the Black Sea grain deal showed that it helped to feed about 95 million people but fell short in ensuring that fertilizer originating from Russia could flow freely to global markets. Had that happened, food could have been produced that fed about 199 million people, it said.
Billionaire Melnichenko, who holds dual citizenship from Russia and the United Arab Emirates, was sanctioned by the European Union and the US following the invasion of Ukraine. He traveled to South Africa late last year to lobby politicians to support his pleas for the EU to resolve fertilizer supply issues.
Pretoria has adopted a non-aligned stance toward the war in Ukraine that has drawn criticism from the US and some of its other largest trading partners. Mbeki spent time in exile in Russia during apartheid rule and served as South Africa’s president from 1999 until 2008.
FUTURES & WEATHER
Wheat prices overnight are up 1/2 in SRW, up 2 3/4 in HRW, up 1 3/4 in HRS; Corn is unchanged; Soybeans up 4 3/4; Soymeal up $2.90; Soyoil up 0.56.
Markets finished last week with wheat prices up 2 in SRW, down 13 1/4 in HRW, down 15 1/2 in HRS; Corn is down 2 3/4; Soybeans down 4 3/4; Soymeal up $0.50; Soyoil down 0.36.
For the month to date wheat prices are down 7 1/2 in SRW, down 27 in HRW, down 12 1/4 in HRS; Corn is down 10 1/2; Soybeans up 25; Soymeal up $19.00; Soyoil up 0.02.
Year-To-Date nearby futures are down 30.7% in SRW, down 31.8% in HRW, down 25.5% in HRS; Corn is down 31.7%; Soybeans down 12.1%; Soymeal down 3.3%; Soyoil down 18.8%.
Chinese Ag futures (JAN 24) Soybeans up 10 yuan; Soymeal down 38; Soyoil down 46; Palm oil down 54; Corn down 21 — Malaysian Palm is down 2. Malaysian palm oil prices overnight were down 2 ringgit (-0.05%) at 3888.
There were no changes in registrations. Registration total: 2,950 SRW Wheat contracts; 522 Oats; 4 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.
Preliminary changes in futures Open Interest as of November 24 were: SRW Wheat down 10,504 contracts, HRW Wheat up 532, Corn down 23,825, Soybeans down 5,207, Soymeal down 12,986, Soyoil down 4,667.
Brazil: Scattered showers continue in central Brazil, typical of the wet season, but at a reduced coverage and intensity thanks to El Nino. Forecasts have these showers picking up again this weekend as a front moves into the region. Southern Brazil continues to see too much rain for developing corn and soybeans, especially in Parana, but the southern state of Rio Grande do Sul did see a break over the weekend and precipitation this week looks more limited here for the week, even with the front moving through late week.
Argentina: A drier stretch continued over the weekend with little or no rainfall for the last several days in the country. however, a front will go through with scattered showers Tuesday and Wednesday and another follows closely behind it for Thursday and Friday, bringing good rainfall to much of the country’s growing regions. Additional showers may continue in some areas over the weekend and next week as well. Overall, conditions are mostly favorable for corn and soybean planting and development.
Australia: Scattered showers continue over eastern areas this week, helping to ease extremely dry conditions in a lot of this part of the country. It is too late for wheat and canola, which is delaying harvest and could cause quality issues instead, but will help developing cotton and sorghum. Western areas continue to be too dry with little precipitation forecast for the next week.
Northern Plains: Some light snow moved through over the weekend. It will largely be dry this week as clippers pass off to the north and any stronger storms will pass by to the south. Temperatures will be warmer compared to normal for the next couple of weeks.
Central/Southern Plains: Moderate to heavy snow fell in the region over the weekend. Temperatures became cold over the snow but some of it already started to melt away on Sunday. With temperatures moderating this week and going above normal this coming weekend, the snow will not last long and should build at least a little soil moisture for wheat as it starts to go dormant. Additional storm systems will pass through the region late this week, weekend, and next week, favoring the elimination of drought and building of soil moisture.
Western Midwest: A system passed through the region this weekend and brought widespread precipitation, moderate in some areas. Snowfall was light and will not last long in most areas. Colder air pressed into the region and will create lake-effect snow through midweek, but temperatures will then moderate and go above normal this coming weekend. Scattered showers will move through with a system late this week and with another this weekend into early next week, but mostly as rain, though some snow may mix in for a few areas. The precipitation will help to build soil moisture and ease drought that remains.
The player sheet for Nov. 24 had funds: net sellers of 3,000 contracts of SRW wheat, sellers of 1,500 corn, sellers of 7,500 soybeans, sellers of 4,000 soymeal, and sellers of 7,500 soyoil.
- SOYBEAN SALES: The U.S. Department of Agriculture confirmed private sales of 129,000 metric tons of U.S. soybeans to China and another 323,400 tons to unknown destinations, all for delivery in the 2023/24 marketing year that began Sept. 1.
- CORN PURCHASE: South Korea’s Feed Leaders Committee (FLC) purchased around 52,000 metric tons of animal feed corn in a private deal this week without issuing an international tender
- CORN PURCHASE: Chinese importers are believed to have bought about 66,000 metric tons of animal feed corn from Ukraine this week
- CORN PURCHASE: Iranian state-owned animal feed importer SLAL is believed to have purchased about 120,000 metric tons of animal feed corn in an international tender that closed on Tuesday.
- NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 20,000 metric tons of food-quality soybeans free of genetically-modified organisms (GMOs).
- SUGAR TENDER: Egypt’s General Authority for Supply Commodities announced a tender to import 50,000 tonnes of raw sugar and/or 50,000 tonnes of refined white sugar, all from any origin, on behalf of the Egyptian Sugar & Integrated Industries Company. The deadline for offers is Nov. 25.
- NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 50,000 metric tons of food-quality soybeans free of genetically-modified organisms (GMOs).
- WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.
- FEED BARLEY TENDER: Jordan’s state grain buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.
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 Nov. 16, according to data on the USDA’s website.
- Mexico bought 13.3k tons of the 26.9k tons of pork sold in the week
- Japan led in beef purchases
US CROP EXPORTS: Soybeans to China and Unknown Buyers
The US Department of Agriculture on Friday announces the following export sales activity on its website:
- 129,000 tons of soybeans to China for 2023-24 marketing year
- 323,400 tons of soybeans to Unknown Buyers for 2023-24
- This brings total announced sales of soybeans for this week to 452,400 tons
Safras Cuts Brazil’s 2023/2024 Soy Output Forecast to 161.4M T
Brazil 2023/2024 soybean output estimate was reduced to 161.4m tons from 163.2m tons in July, according to Safras & Mercado consulting firm.
- Brazilian soy production in 2023/2024 crop season to hit a record; 2.2% up to 2022/2023 crop
- Soy planted area in 2023/2024 expected to be 2.1% bigger than in previous crop season, with 45.62m hectares; productivity also expected to increase: Safras
- Average yields estimates reduced for Mato Grosso and Goias states, following high temperatures in October
- Safras warns of excess of humidity in the south region of Brazil, with planting delay
- “Although, we can’t say yet there will be loss of productive potential”, firm’s analyst Luiz Fernando Gutierrez Roque said in emailed report
Safras, hEDGEpoint cut forecasts for Brazil soy crop on bad weather
Agribusiness consultancies Safras & Mercado and hEDGEpoint on Friday reduced their estimates for Brazil’s 2023/24 soybean crop, as consensus grows that bad weather will hamper output in the world’s largest producer and exporter.
Safras said it now forecasts production this season to total 161.38 million metric tons, down from the 163.25 million it estimated before, while hEDGEpoint cut its projection to 160.1 million tons from 162.3 million.
Both consultancies mentioned adverse weather as the main reason behind their decisions, as center-northern Brazil grapples with low humidity and high temperatures while southern Brazil faces excessive rains.
“If the weather doesn’t get better, fresh cuts may happen,” Safras analyst Luiz Fernando Roque said, “but if there is an improvement, most of the fields may recover, resulting in still-relevant yields.”
Safras noted the projection was still for a record crop even after the cut.
HEDGEpoint analyst Pedro Schicchi said the bad weather was concerning and challenges would remain even as forecasts point to some improvement going ahead, as the El Nino climate pattern was expected to remain in place until early 2024.
“So far, not only has rain been scarce, but temperatures are also exceptionally high,” Schicchi said. “In the short term, forecasts are a bit better than before but still not encouraging.”
“There is certainly room for more cuts if weather conditions remain bad, but there is still a lot to happen so it is quite difficult to make definitive statements before the crop reaches its reproductive stage in December-January.”
Consultancy AgRural reduced its forecast for Brazil’s soybean crop this month and did not rule out fresh cuts, while Agroconsult said bad weather would keep production below the Brazil’s potential. AgResource also revised its forecast down.
Brazil Farmers Plant 74.69% Of 2023/2024 Soybean Area Versus 88.28% At This Time Last Year – Patria Agronegocios
BRAZIL FARMERS PLANT 74.69% OF 2023/2024 SOYBEAN AREA VERSUS 88.28% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS
CORN/CEPEA: Prices are firm; players are focused on crop activities
Corn trades continue to move at a slow pace in the Brazilian market. Although the demand is firm, sellers are focused on crop activities, limiting the volume offered in the spot market. Besides, there is a price gap between producers who are active and purchasers, reinforcing the scenario of low liquidity.
Despite the fact that rains are back in some areas in the Central-West, many farmers are concerned with the delay of the soybean planting, which may lead the corn sowing to take place after the ideal period. In the South, the high volume of rainfall has already reduced the productive potential of the crops.
The ESALQ/BM&FBovespa Index (Campinas, SP) closed at BRL 61.18 (USD 12.47)/bag on November 23, moving up 0.1% compared to that on Nov. 16. Between Nov. 16 and 23, on the average of the regions surveyed by Cepea, corn prices increased 1.6% in the wholesale market (deals between processors) and 1.8% in the over-the-counter market (paid to farmers).
Recent price drops in the international market and, consequently, at ports in Brazil, have led players to be away from trades. This scenario, the nearness of the end-of-the-year period and the harvest in the United States may limit the demand for the national product.
According to data from Secex, Brazil shipped 4.18 million tons in 11 working days of November, against 5.88 million tons in November/22. In case the current daily pace (380.61 thousand tons) continues, exports may total 8 million tons, higher than what Anec estimated (7.96 million tons).
From November 16-23, corn prices in the ports of Santos (SP) and Paranaguá (PR) dropped 0.4% and 0.5%, respectively, but the current levels are higher than those in the domestic market.
CROPS – According to Conab, 49% of the summer crop area had been planted until November 18, a delay of 13.6 percentage points compared to the crop before
SOYBEAN/CEPEA: Weather improves in Central-West and Southeast, but concerns in the South
Recent rains in both the Central-Western and the Southeastern areas in Brazil have brought a relief to players. 2023/24 sowing activities have gained pace over the last days – they were progressing a little due to the lack of humidity and high temperatures. In the South, on the other hand, the excess of rainfall has increased the soil moist, limiting planting activities. Moreover, the low amount of light also concerns producers, since it can affect the development of crops.
In general, crop activities are delayed in relation to previous years. Conab says that 65.4% of the national area had been planted up to November 18, below the 75.9% registered in the same period of the last season.
The firm global demand for soybean oil and soybean meal continues to sustain domestic prices of these byproducts. Moreover, the demand increase for soy oil in Brazil, especially from the industry, has boosted values. From Nov. 16-23, quotations upped 1%, at BRL 5,641.04 per ton (in São Paulo city with 12% ICMS) on Nov. 23.
As for soybean meal, domestic consumers are willing to trade in the spot market, which increased prices. On the average of the regions surveyed by Cepea, soy meal values rose 0.9% between Nov. 16 and 23.
Price rises for byproducts and the fact that producers are unwilling to trade what is left from the 2022/23 crop sustained soybean prices in Brazil. Between Nov. 16-23, the ESALQ/BM&FBovespa soybean Index (Paranaguá) and the CEPEA/ESALQ Index (Paraná) moved up 0.4% and 0.3%, respectively, to BRL 145.16 per 60-kg bag and BRL 139.16/bag on Nov. 23. On the average of the regions surveyed by Cepea, prices increased 0.3% in the over-the-counter market (paid to farmers) and remained stable in the wholesale market (deals between processors).
Brazil To Increase Biodiesel Use Next Year
Brazilian agricultural areas have received some rain recently, but more is needed for the remainder of the growing season, AgResource say in a report. It says the forecast for Northern Brazil for the next 10 days calls for less rain than normal. AgResource adds that Brazil approved a mandate to raise the domestic blending rate of biodiesel to 14% in 2024, from 12% now. “This is bullish to world vegoil prices on reduced Brazilian soyoil exports,” the firm says. On the CBOT, soybeans fall 1.7%.
Argentina’s Soybean Exports Could Be Delayed By Policy Concerns
Argentina’s new crop soybean sales could be on hold as producers wait for clarity on how a new administration will handle foreign exchange policy, Marex’ Terry Reilly says in a report. Javier Milei was elected president, promising to adopt the US dollar as currency, but there is speculation that, before that, the administration could substantially devalue the peso. “Producers are holding out for a policy change,” Reilly says. He adds that Argentina’s October soybean crush was 1.9 million metric tons, lower than 2.92 million tons for October 2022. On the CBOT, soybeans for January decline 1.5%.
Ukraine grain exports seen down to 12.7 mln T so far 2023/24 – ministry
Ukraine’s grain exports have fallen to around 12.7 million metric tons so far in the 2023/24 July-June marketing season, agriculture ministry data showed on Monday.
The ministry said that by Nov. 30 last year, Ukraine had exported 17.6 million tons of grain.
The volume exported this season includes 5.8 million tons of wheat, 5.9 million tons of corn and 870,000 tons of barley. In the previous season to this point Ukraine had exported 6.7 million tons of wheat, 9.3 million tons of corn and 1.45 million tons of barley.
The ministry said traders had exported 3.45 million tons of grain so far in November compared with 4.35 million tons by Nov. 30, 2022.
The ministry gave no explanation for the drop but traders and farmers’ unions have said blocked Ukrainian Black Sea ports and Russian attacks on the country’s Danube River ports are the main reasons.
Ukraine has traditionally shipped most of its exports through its deep water Black Sea ports.
Ukraine’s government expects a harvest of 79 million tons of grain and oilseeds in 2023, with its 2023/24 exportable surplus totalling about 50 million tons.
Ukraine Plans to Convoy Vessels to Protect Black Sea Corridor
- President Zelenskiy says allies will provide sea boats
- Ukrainians to defend vessels to ensure safety in the Black Sea
President Volodymyr Zelenskiy said that special convoys will accompany vessels carrying key exports from Ukraine, including foodstuffs, via the Black Sea to ensure safe passage.
Kyiv recently opened a unilateral corridor from the region to allow ships to transport commodities like grains and metals from its deep-sea ports in so-called Greater Odesa, after Moscow in July pulled out of a United Nations-backed Black Sea grain deal that had guaranteed safe movement of crop vessels.
“I have agreements with several countries regarding powerful convoys operated by Ukrainians but equipped with foreign gear,” Zelenskiy said on Saturday at a press conference in the capital Kyiv, where he hosted the international conference Grain from Ukraine. “We will receive and are already being provided with sea boats,” he added.
Russia stepped up missile and drone attacks on Ukrainian port infrastructure and hit a commercial ship at one of Greater Odesa ports earlier this month, adding to risks for Ukraine’s commodity exports just as farmers in the war-battered nation are close to complete this year’s harvest. A ship chartered by agricultural giant Cargill Inc. was damaged by an explosion while sailing from a Ukrainian port in the Black Sea last week. Still, vessels continued to transport commodities.
The Ukrainian government has struck deals with partners to supply the country with air defense systems to protect the Odesa region, Zelenskiy said. “There are positive signals, the corridor is functioning. I hope we will increase its operation and ensure safety,” he added.
US Beef Production Falls 15.4% This Week, Pork Down: USDA
US federally inspected beef production falls to 448m pounds for the week ending Nov. 25 from 529m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter down 15.4% from a week ago to 538m head
- Pork production down 15.8% from a week ago, hog slaughter falls 16%
- For the year, beef production is 5.4% below last year’s level at this time, and pork is 0.4% above
Nitrogen Lull Persists, Yet China Export Curbs Help Balance
Global nitrogen buying eased after India’s latest urea tender, which should sate its appetite for at least a month. Our scenario suggests soybeans could prevail in farmers’ plans for 2024, pushing nitrogen up the agenda for our December webinar. Yet exports from China, the nitrogen and phosphate swing supplier, look likely to be curbed through 2Q.
US Urea Prices Plummet Amid Global Market Pressure
Urea prices plunged at New Orleans (NOLA) and inland as the global market remains under pressure from low demand and softening prices. NOLA urea fell to $292-$305 a short ton (st) vs. last week’s $323-$335, with inland prices dropping as much as $40/st at some terminals. Declines of $30-$40 a metric ton (mt) were also seen in Brazil, Egypt and Indonesia, with smaller decreases reported in China. US phosphate prices were mixed, with declines for monoammonium phosphate (MAP) and a slight increase for diammonium phosphate (DAP) at NOLA and inland. Potash was also mixed as NOLA barge prices fell to $330-$335/st vs. last week’s $330-$345, while inland warehouses rose $5-$10/st in the Corn Belt.
Brazilian Farmers’ Slow Demand Pressures Urea, Potash Prices
Nitrogen prices plunged 10% during the week and potash lost 1.5% as sellers tried to spur demand for corn safrinha. Farmers remain focused on delayed soybean planting after adverse weather conditions affected several Brazilian regions, while sellers are eager to find new buyers for large volumes blocked at ports.
Nitrogen Prices Plunge on Effort to Spur Corn Demand
Slow demand continues to pressure prices in Brazil amid soybean planting delays caused by weather issues. Urea and ammonium sulfate import prices dropped over 10% this week as suppliers tried to accelerate demand for unsold cargoes about to land in Brazil. Inland urea at Rondonópolis fell 5.3% and is approaching affordable levels for winter corn preparation. Potash declined 1.5% both inland and for imports as sellers become more aggressive on cheaper offers from Russia and Belarus. Monoammonium phosphate (MAP) was stable and will likely stay strong amid low availability until year-end.
Over 1 million metric tons of urea is expected to berth in Brazil by year-end. About 40% is slated for October-November but has been tied up in Brazilian ports for 20-40 days.
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