Global Ag News for Nov 28.22

TOP HEADLINES

China’s Covid Restrictions Are Forcing Farmers to Destroy Crops

China’s strict Covid controls are leaving farmers with no option other than to destroy crops they can no longer sell, triggering concerns about food shortages and stirring outrage on social media.

Videos circulating online show farmers dumping healthy crops because they’re struggling to sell their harvest. Local and state media also reported that fields of vegetables are being destroyed in major producing regions such as Shandong and Henan provinces to make way for the sowing of the next crop.

The destruction of fresh food is happening at a time when many Chinese are under lockdown and bracing for food shortages and other supply disruptions. It threatens to drive up food costs which are already elevated, and undercut Beijing’s push to safeguard food supply and eliminate waste. Protests against Covid curbs erupted over the weekend in cities including Beijing and Shanghai.

Vegetables like Chinese cabbages, radishes and spinach are being harvested across China right now but they’re getting stuck in rural areas. Trucks and merchants are either unwilling or cannot enter the villages to collect agricultural produce because of movement controls and quarantine orders.

Farmers’ Daily reported the difficulties in getting vegetables to market because of Covid restrictions. It cited Beijing’s Xinfadi market as saying that while farm prices of vegetables have slumped, retail costs have surged.

“Citizens want food, farmers want income, and farming seasons don’t wait for anyone,” the state-backed publication said. It urged authorities to reduce obstruction for vehicles transporting food products, “so that fresh vegetables from the fields can be served hot on the tables of thousands of households.”

Map of China

FUTURES & WEATHER

Wheat prices overnight are down 8 1/4 in SRW, down 3/4 in HRW, up 7 3/4 in HRS; Corn is down 4 1/4; Soybeans down 7 1/2; Soymeal down $0.10; Soyoil down 1.02.

Markets finished last week with wheat prices down 33 1/4 in SRW, down 12 1/2 in HRW, down 1 1/2 in HRS; Corn is down 3; Soybeans up 1/2; Soymeal down $0.08; Soyoil up 0.08.

For the month to date wheat prices are down 110 1/2 in SRW, down 63 in HRW, down 32 1/2 in HRS; Corn is down 29 3/4; Soybeans up 9 1/4; Soymeal down $13.80; Soyoil up 0.08.

Year-To-Date nearby futures are down -1% in SRW, up 15% in HRW, down -2% in HRS; Corn is up 12%; Soybeans up 8%; Soymeal down -1%; Soyoil up 30%.

Chinese Ag futures (JAN 23) Soybeans down 19 yuan; Soymeal down 25; Soyoil down 130; Palm oil down 70; Corn up 15 — Malaysian palm oil prices overnight were up 100 ringgit (+2.48%) at 4140.

There were no changes in registrations. Registration total: 3,056 SRW Wheat contracts; 0 Oats; 0 Corn; 126 Soybeans; 39 Soyoil; 278 Soymeal; 5 HRW Wheat.

Preliminary changes in futures Open Interest as of November 25 were: SRW Wheat down 12,380 contracts, HRW Wheat down 831, Corn down 50,468, Soybeans up 3,135, Soymeal down 5,094, Soyoil down 3,807.

Brazil Grains & Oilseeds Forecast: Scattered showers will continue in central and northern Brazil as is typical for this time of year. Southern Brazil will see isolated showers fill back in this week, but will be spotty. A front will come into southern Brazil on Friday and stall, allowing for more precipitation to accumulate, which would reverse the recent trend of below-normal rainfall at a crucial time for full-season corn that is nearing pollination.

Argentina Grains & Oilseeds Forecast: It was mostly dry over the weekend with some isolated showers far south. Isolated showers will briefly fill back in across the country, but will be pushed out by a cold front on Thursday. Drier conditions follow going into next week. Dryness and drought continue to be concerns until showers become more consistent.

Northern Plains Forecast: It was mostly dry and warm over the weekend. A system moving through southern Canada is pushing a cold front through the region though and colder air will be more likely to move through than warmer air for the next few weeks, as bursts come down from Canada on occasion. A system will likely bring a round of snow through the region Friday into Saturday, which may be moderate.

Central/Southern Plains Forecast: An upper-level low brought widespread moderate rainfall to much of the region Friday into Saturday, but missed most of western Kansas, Colorado, and Nebraska, where drought remains very concerning. A cold front will move through the region Monday and Tuesday, but should largely be dry outside of a band of moderate snow in Nebraska. Temperatures will fluctuate wildly throughout the week as cold air behind the front will be replaced with very warm air going into the weekend. Another cold front or two moving through this weekend and next week will bring a return to cold air.

Midwest Forecast: An upper-level low brought widespread precipitation to the region over the weekend, except in the northwest that stayed dry. Temperatures were mild despite the rain. Another front will move through Tuesday and Wednesday with widespread precipitation. This time, a band of moderate snow is expected to fall in the northwest and be followed by colder air and breezy winds. Temperatures rebound for the weekend only to be put back down next week as another system moves through.

The player sheet for Nov. 25 had funds: net sellers of 7,000 contracts of SRW wheat, buyers of 2,000 corn, sellers of 1,000 soybeans, sellers of 500 soymeal, and  sellers of 1,000 soyoil.

TENDERS

  • BARLEY TENDER: Turkey’s state grain board TMO issued an international tender to purchase an estimated 495,000 tonnes of animal feed barley
  • DELAYED WHEAT TENDER: A government agency in Pakistan postponed the deadline for submission of price offers in an international tender to purchase and import 500,000 tonnes of wheat to Nov. 30 from Nov. 28 previously
  • WHEAT PURCHASE: Egypt’s state grains buyer GASC bought an estimated total of 175,000 tonnes of wheat in private deals with trading houses

PENDING TENDERS

  • RICE TENDER: Turkey’s state grain board TMO has issued an international tender to purchase a total 40,000 tonnes of rice
  • WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins.
  • WHEAT TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 455,000 tonnes of milling wheat.
  • CORN TENDER: Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins

TODAY

US Export Sales of Soybeans, Corn and Wheat by Country

The following shows US export sales of soybeans, corn and wheat by biggest net buyers for week ending Nov. 17, according to data on the USDA’s website.

  • China bought 715k tons of the 700k tons of soybeans sold in the week
  • Mexico was the top buyer of corn and Iraq led in wheat

Analyst APK-Inform cuts Ukraine 2022 grain crop forecast to 51.8-53.7 mln T

  • ANALYST APK-INFORM CUTS ITS UKRAINE 2022 GRAIN CROP FORECAST TO 51.8-53.7 MILLION T FROM PREVIOUS OUTLOOK OF 53.2-53.6 MILLION T
  • UKRAINE’S 2022 HARVEST COULD INCLUDE 19 MILLION T WHEAT, UP TO 27.9 MILLION T CORN, 5.5 MILLION T BARLEY -APK-INFORM
  • UKRAINE 2022/23 JULY-JUNE GRAIN EXPORTS COULD TOTAL 24.3 MILLION T TO 40.3 MILLION T, DEPENDING ON LOGISTICS SITUATION -APK-INFORM
  • APK-INFORM INCREASES ITS UKRAINE 2022/23 WHEAT EXPORT FORECAST TO 8.1-13.8 MILLION T FROM PREVIOUS 7.8-13.4 MILLION T

Argentina to Implement New Exchange Rate for Soy Farmers Monday

The Argentine government will introduce another temporary exchange rate for soy exporters on Monday, according to an Economy Ministry official who spoke on background since the announcement isn’t public yet.

  • Rate will have a floor and be adjusted for inflation compared to the previous soy exchange rate in September
    • Official didn’t provide floor for new rate
  • Rate will take effect Monday and last until Dec. 31, according to the official
  • Soy companies have committed to exporting at least $3 billion while the rate is in place
  • Government estimates that soy rate will allow it to surpass by 15% the year-end target for net foreign reserves in Argentina’s $44 billion IMF program

Farmers in India Boost Acreage of Winter-Sown Wheat and Oilseeds

Farmers in the world’s second-biggest wheat grower have planted the crop on 15.29 million hectares (37.8 million acres) of land as of Nov. 25, an increase of 10.5% from a year earlier, according to the farm ministry.

The area allocated to winter-sown pulses was little changed at 9.43 million hectares, while the planting of oilseeds has increased to 7.58 million hectares from 6.67 million, the ministry said on Friday. Sowing operations are continuing across the country.

Top Argentine Wheat Region to See 31% Plunge in Production

Argentina’s breadbasket region of southern Buenos Aires and La Pampa provinces will see the wheat harvest shrink year-on-year after drought and frosts, according to a Nov. 23-24 crop tour organized by the Bahia Blanca Grain Exchange.

  • The harvest, which starts in the region next month, is forecast at 3.7m metric tons vs. 5.3m last season
  • NOTE: The region accounts for about a quarter of national wheat plantings
    • Hopes that the region may put a floor under falling national forecasts are fading
  • Barley production in the region is forecast to drop 20% y/y to 2.3m metric tons
    • NOTE: The national barley crop is seen at 4m tons, 23% less than the previous season, according to the Buenos Aires Grain Exchange

 China sells 39,995 tonnes of wheat at reserve auction – trade center

China sold 39,995 tonnes of wheat, or 100% of the total offer, at an auction of state reserves on Nov. 23, said the National Grain Trade Center on Monday.

The wheat was sold at an average price of 2,815 yuan ($389.59) per tonne.

Ukraine’s Grain Export Down 32% Y/y Since July 1: Ministry

Ukraine’s grain export during the season that started on July 1 has so far fallen 32% annually to 17.2m tons compared to the same period last year, the Agriculture Ministry says on its website.

  • This includes:
    • 6.6m tons of wheat, down 54% y/y
    • 1.4m tons of barley, down 73% y/y
    • 9.1m tons of corn, up 66% y/y

Ukraine sees less than 3 mln tonnes of grain leaving in November – minister

Exports of Ukraine’s grain will not reach 3 million tonnes in November as Russia tries to limit ship inspections at ports, Ukraine’s Infrastructure Minister Oleksandr Kubrakov said late on Sunday.

In October, some 4.2 million tonnes of grain left Ukrainian ports, Kubrakov said on his Facebook page.

“It was the custom to conduct 40 inspections a day, now, due to Russia’s position, there are five times fewer checks,” he said.

A deal aimed at easing global food shortages by helping Ukraine export its agricultural products and protecting the transit corridor from three Black Sea ports that was originally reached in July was extended for four months in mid-November.

Ukraine and Russia are major global grain exporters. They agreed that teams would check the vessels to ensure no barred people or goods were arriving at or departing from Ukrainian ports.

But Ukraine’s exports have gotten off to a slower start with Kyiv putting the blame on Russia’s reluctance to speed up ship inspections.

Kubrakov said 77 ships were queuing to pass the inspection in Turkey while the three Black Sea ports use up to only 50% of their capacity.

Russia’s President Vladimir Putin said in September that Russia and the developing world had been “cheated” by the UN-brokered Ukrainian grain export deal, delivering the grain to its own states.

On Saturday, Ukrainian President Volodymyr Zelenskiy hosted a summit in Kyiv with allied nations to launch a plan to export $150 million worth of grain to countries most vulnerable to famine and drought.

EU Lowers 2022 Corn Crop Estimate and Cuts Wheat Export Outlook

The EU’s 2022 corn harvest is now seen at 53.3m tons, down from an October estimate for 54.9m tons, according to a European Commission report.

  • That’s 27% below last year, following a summer drought
  • Soft-wheat crop trimmed to 127m tons, versus 127.2m tons
  • Barley crop estimate kept steady at 51.6m tons

TRADE:

  • Corn import outlook for the 2022-23 season raised to 23m tons, from 22m tons
  • Soft-wheat export outlook cut to 34m tons, from 36m tons
  • Adjustments based on “the evolution of production forecast and the current pace of trade”

Indonesia Keeps Palm Oil Exports Ratio As Supply Seen Sufficient

Govt. sets export ratio at eight times companies’ domestic supply volume starting Nov. 1, according to an emailed statement from the trade ministry late Sunday.

Govt has no plans to revise export ratio in near future as domestic cooking oil supply seen adequate at affordable and stable price

SOYBEAN/CEPEA: Irregular rains in South America concern agents

Rains below the expected in southern and central-western Brazil are concerning soybean farmers. In Rio Grande do Sul and in Santa Catarina, farmers have slowed down sowing activities, waiting for higher soil moisture.

In Argentina, rainfall has been even lower than in Brazil, hampering crop activities and concerning farmers. According to Bolsa de Cereales, only 19.4% of the area (16.7 million hectares) had been sown in Argentina by November 24, a delay of 20 percentage points compared to that in the same period last year.

In Brazil, according to Conab, 75.9% of the total (43.24 million hectares) had been sown by Nov. 19th, less than the 85.7% sown in the same period last season.

SALES – Liquidity has decreased in the Brazilian market this week, due to the dollar depreciation against the Real and lower demand for the national soybean. Besides, blockades on the highway to the port of Paranaguá (PR) on Monday, 21, hampered transportations, resulting and queues of ships at ports.

Thus, between November 17 and 24, both the ESALQ/BM&FBovespa Paranaguá (PR) Index and the CEPEA/ESALQ Paraná Index decreased by 1.7%, closing at BRL 184.21 (USD 34.68) per 60-kilo bag and at BRL 180.85 (USD 34.05)/bag on Thursday, 24. On the average of the regions surveyed by Cepea, prices dropped by 0.7% in both the over-the-counter market (paid to farmers) and the wholesale market (deals between processors). The dollar decreased by 2.2% in the last seven days, to BRL 5.312 on Thursday.

CORN/CEPEA: Amid high demand from abroad, sellers prioritize deals at ports

While corn sales have been high at Brazilian ports since early November, boosted by higher demand from abroad, in the interior of Brazil, liquidity has been low. Farmers are opting to sell corn to the international market because of the recent valuations at ports, limiting supply to the national spot market. This scenario added to a higher number of purchasers in the market have been raising corn prices.

The higher demand from abroad for the Brazilian corn is being influenced by the current low world supply, although crops are being harvested in the United States. Low world supply is linked to both weather issues in the Northern Hemisphere and the Russia-Ukraine war, which limits logistics through the Black Sea.

High stocks in Brazil and the expectation for a high output in the summer crop are encouraging farmers to sell corn for exports. By the end of Jan/23, stocks are forecast by Conab to be at 9.76 million tons. As for the summer crop, plants are developing well in most regions – some agents believe higher rainfall in southern and southeastern Brazil is necessary for the maintenance of the ideal crops’ development.

PRICES – Domestic valuations have been higher than that at ports, narrowing the price spread between exports and domestic prices. This week, the average prices at the ports of Paranaguá (PR) and Santos (SP) have been nearly 4 Reais/bag higher than that for the ESALQ/BM&FBovespa Index (Campinas, SP) – against 5 Reais/bag last week.

On Thursday, 25, prices averaged BRL 90.11/bag in Paranaguá and BRL 91.08/bag in Santos, 0.2% and 1.4% up from that between Nov. 17-24. For delivery in December and in January, the averages hit BRL 94/bag. It is important to highlight that the dollar depreciation (-2.2%) helps to constrain valuations at ports.

In Campinas, a typical corn-consuming region in Brazil, the ESALQ/BM&FBovespa Index rose by 2.2% in the last seven days, closing at BRL 85.87 (USD 16.16) per 60-kilo bag on Thursday, 24. On the average of the regions surveyed by Cepea, quotations increased by 0.3% in the over-the-counter market (paid to farmers) and by 0.6% in the wholesale market (deals between processors).

CROPS – The current high temperatures added to low rainfall in most Brazilian regions allowed corn sowing to advance. According to data from Conab, by Nov. 19, nearly 63% of the national corn crop had been sown.

Brazil’s Bolsonaro vetoes biodiesel decision

Brazilian President Jair Bolsonaro on Friday vetoed a National Energy Policy Council (CNPE) decision that would allow biodiesel produced by “any technological route of production” to be included in biodiesel that is blended into diesel fuel.

The decision last week would have allowed Petrobras’ PETR4.SA R5 diesel, a fuel co-processed with vegetable oil in a 95%-5% ratio, to be used in diesel fuel.

The decision sparked protests in the biodiesel sector, which appealed to President-elect Luiz Inacio Lula da Silva’s transition team and to the Parliamentary Mixed Front for Biodiesel, asking for the annulment of the CNPE’s decision.

Bolsonaro, on the other hand, has confirmed another CNPE decision that would make it mandatory for biodiesel to be 10% of diesel blends in the first quarter of 2023.

Russian fertilizer exports may drop 10% in 2022 – TASS

Russian fertilizer exports may drop 10% in 2022, TASS news agency reported on Friday, citing the deputy minister of industry and trade

Russia Raises Nitrogen Fertilizer Export Quota by 750k Tons

Export quota for Russian nitrogen fertilizers is increased by 750k tons to over 9m tons, according to government’s statement.

Quota is valid until end-2022

Decision was made to support Russian fertilizer producers, so that they are able to export additional volumes when the domestic market is sufficiently saturated

Fertilizer Prices Weaken in Brazil on Oversupply, Logistics

In another week of declining fertilizer prices in Brazil, deliveries of corn fertilizer continued to be delayed due to supporters of President Jair Bolsonaro blocking key roads. Uncertainties escalated over urea pricing as India appears likely to call another tender in mid-December. Potash prices dropped 7% amid high inventories, while phosphate stabilized.

Brazil Urea, Potash Drop as Delivery Concerns Mount

Fertilizer prices in Brazil dropped for another week as sellers reacted to low demand from farmers. To spur movement on stagnant inventories, potash prices fell 7% from last week, and phosphates narrowed slightly. Speculation that India will be back with another tender in mid-December created uncertainties for urea, with farmers continuing to delay orders even as expectations build for stronger demand before the safrinha season.

Additionally, election protests by truckers resulted in key roads being blocked in Mato Grosso state, raising concerns about shipping bottlenecks in January and February for safrinha deliveries.

US Beef Production Falls 13.7% This Week, Pork Down: USDA

US federally inspected beef production falls to 485m pounds for the week ending Nov. 26 from 561m in the previous week, according to USDA estimates published on the agency’s website.

  • Cattle slaughter down 13.8% from a week ago to 581m head
  • Pork production down 14.4% from a week ago, hog slaughter falls 14.5%
  • For the year, beef production is 1.4% above last year’s level at this time, and pork is 2.4% below

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