Global Ag News for Nov 29.22

TOP HEADLINES

US, Mexico Make ‘Some Progress’ in Corn Trade Talks

US and Mexico made “some progress” in corn trade talks, including Mexican President Andres Manuel Lopez Obrador’s reaffirmation of yellow corn imports importance for the country’s food security, US Agriculture Secretary Tom Vilsack said in a statement.

• The sides discussed AMLO’s 2020 decree to phase out the use and importation of biotech corn and other biotechnology products by Jan. 2024 at their meeting
  • “Decree has the potential to substantially disrupt trade, harm farmers on both sides of the border and significantly increase costs for Mexican consumers”: Vilsack
• “US Government would be forced to consider all options, including taking formal steps to enforce our legal rights under” the US-Mexico-Canada Agreement, absent acceptable resolution of the issue: Vilsack
• AMLO also discussed a potential process in which two countries can exchange information and engage in dialog assuring the safety of biotechnology products
  • A proposal from the president’s team is expected soon; US will evaluate closely
• Mexico will continue to produce the white corn it needs for human consumption, the issue is with yellow corn for animal feed, AMLO, as the president is known, said Monday before the talks started

FUTURES & WEATHER

Wheat prices overnight are up 2 1/2 in SRW, down 1 in HRW, up 4 in HRS; Corn is down 1; Soybeans up 3 1/2; Soymeal down $0.20; Soyoil up 0.13.

For the week so far wheat prices are down 13 3/4 in SRW, down 18 in HRW, down 5 3/4 in HRS; Corn is down 1; Soybeans up 24 1/2; Soymeal up $0.34; Soyoil up 1.54.

For the month to date wheat prices are down 116 in SRW, down 80 1/4 in HRW, down 46 in HRS; Corn is down 26 1/2; Soybeans up 41 1/4; Soymeal down $9.40; Soyoil up 2.64.

Year-To-Date nearby futures are down -2% in SRW, up 13% in HRW, down -2% in HRS; Corn is up 13%; Soybeans up 10%; Soymeal down 0%; Soyoil up 35%.

Chinese Ag futures (JAN 23) Soybeans down 17 yuan; Soymeal down 4; Soyoil up 192; Palm oil up 222; Corn down 8 — Malaysian palm oil prices overnight were up 79 ringgit (+1.91%) at 4219.

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 28 were: SRW Wheat down 16,482 contracts, HRW Wheat down 2,515, Corn down 39,130, Soybeans up 8,403, Soymeal down 8,351, Soyoil up 2,257.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers north Tuesday. Scattered showers Wednesday-Friday. Temperatures near to above normal through Friday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Friday. Temperatures near normal through Friday.

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

Northern Plains Forecast: Isolated showers through Wednesday. Mostly dry Thursday. Scattered snow Friday. Temperatures below to well below normal Tuesday-Wednesday, near normal Thursday, near to well below normal Friday. Outlook: Isolated snow Saturday. Mostly dry Sunday. Scattered snow Monday-Wednesday. Temperatures near to well below normal Saturday-Sunday, below to well below normal Monday-Wednesday.

Central/Southern Plains Forecast: Snow north Tuesday. Mostly dry Wednesday-Friday. Temperatures below normal northwest and above normal southeast Tuesday, below normal Wednesday, near to below normal Thursday, above normal Friday. Outlook: Isolated to scattered showers Saturday-Monday. Mostly dry Tuesday-Wednesday. Temperatures above normal Saturday-Monday, below normal north and above normal south Tuesday, near to below normal Wednesday.

Western Midwest Forecast: Scattered showers Tuesday. Mostly dry Wednesday-Friday. Temperatures above normal Tuesday, below normal Wednesday-Thursday, above normal Friday.

Eastern Midwest Forecast: Scattered showers Tuesday-Wednesday. Lake-effect snows Thursday. Mostly dry Friday. Temperatures above normal through Tuesday, near to above normal Wednesday, below normal Thursday, near to above normal Friday. Outlook: Scattered showers Saturday-Tuesday. Mostly dry Wednesday. Temperatures above normal Saturday-Monday, near to below normal Tuesday-Wednesday.

The player sheet for Nov. 28 had funds: net sellers of 9,500 contracts of SRW wheat, sellers of 8,500 soybeans, buyers of 3,500 soymeal, and  buyers of 5,000 soyoil.

TENDERS

• CORN SALE: South Korean animal feed maker Nonghyup Feed Inc bought an estimated 138,000 tonnes of animal feed corn to be sourced from optional origins in an international tender on Monday
• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 110,000 tonnes of U.S. soybeans for shipment to unknown destinations in the 2022/23 marketing year.
• WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins.
• WHEAT TENDER: South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 140,000 tonnes of animal feed corn

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: 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 TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 455,000 tonnes of milling wheat.
• BARLEY TENDER: Turkey’s state grain board TMO issued an international tender to purchase an estimated 495,000 tonnes of animal feed barley.

TODAY

US Inspected 302k Tons of Corn for Export, 2.022m of Soybean

In week ending Nov. 24, according to the USDA’s weekly inspections report.

• Corn: 302k tons vs 499k the previous wk, 806k a yr ago
• Wheat: 199k tons vs 291k the previous wk, 391k a yr ago
• Soybeans: 2,022k tons vs 2,425k the previous wk, 2,259k a yr ago

US Corn, Soybean, Wheat Inspections by Country: Nov. 24

Following is a summary of USDA inspections for week ending Nov. 24 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 1.5m tons of the 2.02m total inspected
• Mexico was the top destination for corn inspections, and also led in wheat

CARGILL Buys OWENSBORO GRAIN COMPANY

CARGILL Buys OWENSBORO GRAIN COMPANY, according to a press release.

Key excerpts:

• Cargill and Owensboro Grain Company, a fifth-generation family-owned soybean processing facility and refinery located in Owensboro, Ky., today announced that they have entered into a definitive agreement where Cargill will add Owensboro Grain Company to its North American agricultural supply chain business.
• Terms of the deal were not disclosed.
• The transaction, which has been approved by the Boards of Directors of Cargill and Owensboro Grain Company, is subject to regulatory approvals and other customary closing conditions and is expected to close in early 2023.

Ukraine Grain Storage Gets Funding Increase to Ease Shortages

• Farmers in Ukraine struggle to store their harvests safely
• Russian war wiped out 14% of grain storage by September

Countries, charities — and Ukrainian farmers themselves — will fund roughly 15 million metric tons of additional grain storage in Ukraine to fix deficits caused by Russia’s invasion, the US Agency for International Development said Monday.

The extra capacity to hold grain comes amid rising anxieties about potential food shortages caused by Russia’s war on one of the world’s top wheat-producing countries, which has exacerbated existing supply chain constraints linked to the pandemic. Researchers have warned grain storage shortages affect not only a country’s immediate food output, but also future harvests, as farmers are discouraged from planting if they don’t have space to store grain.

A September report drawing on satellite images showed Russia had knocked out 14% of Ukraine’s grain storage since invading, with overall storage capacity falling to 49.8 million metric tons. The extra 15 million metric tons of storage, funded by a range of countries and international organizations, would boost Ukraine’s capacity above its pre-war levels.

Earlier: Russian Invasion Knocked Out 14% of Ukraine’s Grain Storage

“These unified efforts are a testament to what can be accomplished when donors and the people of Ukraine unite to address surging food needs around the world,” USAID said in a press release provided to Bloomberg Government.

The storage equipment in action.

Funds for the extra storage come in part from the United Nations Food and Agriculture Organization, with financial donations from Canada, Japan, and the Australian Minderoo Foundation. USAID and the U.S.-based Howard G. Buffett Foundation are also donors, and Ukrainian farmers will cover the costs for over 6 million metric tons. The donation through USAID is worth roughly $8 million, a spokesperson said.

Ukraine’s Ministry of Agrarian Policy and Food requested the supplemental storage amount, citing farmers inability to safely store their harvests this year. Ukraine’s grain exports were almost halved year-over-year, the country reported in August, even after an agreement opened multiple Black Sea ports that Russia had blockaded.

Farmers in Ukraine will be able to store more agricultural products until they’re sold for export, processing, or domestic use, USAID said in the release. These crops include corn, wheat, and sunflower seed, three of the country’s top agricultural exports. Ukraine is also the top exporter of sunflower oil in the world.

The project will fund storage bags, structures, and filling equipment, USAID said, with many able to be reused in future harvests. “As Putin continues to manipulate the global food supply, allies and partners have united to support Ukrainian farmers as they continue to feed the world,” the independent agency said.

USDA attache sees Brazil 2022/23 corn crop at 126 million tonnes

Following are selected highlights from a report issued by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Brasilia:

“Post forecasts 2022/2023 corn production at a record 126 million metric tons (MMT) based on the growing demand and price for corn both in domestic and international market. This is up 8.6 percent on the 2021/2022 production estimated at 116 MMT. Post increases the forecast for corn exports for MY 2022/2023 to 47 MMT, up 2.5 MMT on the current season. Post reduces the forecast for rice planted area in MY 2022/2023 to a historical low of 1.58 million hectares (ha), as rice loses space to more profitable crops that require less maintenance, such as soybean or corn. Post forecasts a record wheat production for MY 2022/2023 with production at 9.4 MMT, up 21 percent on the 2021/2022 harvest. This forecast is based on continued interest by Brazilian growers in the strong demand for wheat and rising global commodity prices.”

Washed-Out Roads Are Next Hurdle For Australia’s Wheat Farmers

• Flooding has disrupted rural transport in eastern Australia
• Heavy rain has also spurred fears of massive downgrades

Wheat farmers in eastern Australia are already battling floods, water-logged fields and crop disease as they prepare for harvest. But now they’re facing another challenge: washed-out roads and shuttered rail links.

Australia is normally one of the world’s largest exporters of wheat used for making bread and noodles, and buyers were looking forward to a bumper crop to ease tight global supplies. However, heavy rains and flooding in the east mean a large chunk of the harvest may only be suitable for livestock feed.

Freight corridors in parts of eastern Australia are in a state of disrepair following months of rain, with an estimated 10,000 kilometers of road impacted in New South Wales state alone. In Victoria, the situation is “absolutely dire,” according to Emma Germano, president of the Victorian Farmers Federation.

“Some of those roads out in regional Victoria are at a point where you can’t get heavy machinery across them — so even if we’ve got crops that we can harvest, we might not be able to reach them given the state of the road,” she said. “It’s literally farmers trying to access their paddocks, or once they get their grain harvested, getting trucks to grain depots.”

Farmers group GrainGrowers on Tuesday called on the government to provide urgent road funding on freight access routes to avoid significant delays and logistical issues as the harvest nears.

Rail options aren’t looking much better. Major lines connecting storage sites to eastern ports have been shuttered for weeks because of the impact of flooding, which earlier this month led to the derailing of a freight train and cut a key Adelaide-to-Melbourne route for about a week until it was repaired.

The gridlock is piling more stress on fragile supply chains ahead of what is supposed to be the busiest period of the year. But with the rain and mud, the pace of harvesting has slowed to a trickle compared with a year earlier. Data from GrainCorp Ltd. show cumulative deliveries to its network are down 56% and 54% in the week to Nov. 28 for New South Wales and Victoria respectively.

Wheat Supply for Bread and Ramen Threatened by Australia Floods

“It’s just going to be so slow,” said Andrew Whitelaw, founding director of Episode 3, an Australia-based consulting firm. With farmers in the east unable to head out into fields to assess the damage, many are reluctant to sell until they have a clearer picture of the crop. “They’re just holding back,” he added. “At some point there’ll be a lot of grain getting sold at the same time.”

This season could be worse than 2010-11 when severe floods caused massive downgrades to the crop in New South Wales, Whitelaw said. “When we look at the discounting that’s already occurring for the lower grades, it’s already a much larger discount than it was back then.”

Still, strong export flows from the state of Western Australia should offer some relief to markets desperate for wheat. While rains have slowed the harvest in parts of the state, a large producer, the local industry association predicts another bumper crop. For the country as whole, wheat exports could still reach 26 million tons this season, almost three times the amount in 2019-20, when supplies were cut by drought, according to the US Department of Agriculture.

Brazil farmers plant 87% of soy area amid dryness in center-western farms – AgRural

Brazilian soybean planting reached 87% of the estimated area in the 2022/2023 cycle amid dryness in some center-western farms that has growers concerned, according to agribusiness consultancy AgRural on Monday.

Although sowing is slightly behind last season’s pace, Brazil is poised to harvest a bumper crop based on historical yield trends and the estimated size of the planted area, AgRural said.

The data shows Brazil, the world’s biggest soybean supplier, will likely remain a competitive exporter serving countries like China.

In only four states – Santa Catarina, Rio Grande do Sul, Piaui and Para – soy planting remains below 70% of the area. But this owes more to differences in those region’s sowing calendars than any delays in the work, according to AgRural.

“In the Center West, where planting is virtually complete, last week’s rains were still erratic,” AgRural said in a statement. “This is raising concern in areas that have been dry for longer, especially as temperatures are on the rise.”

In the south of the country, growers of the oilseeds are also hoping rainfall levels will improve.

Based on historical yield trends and a 4% expansion of the planted area – to above 43 million hectares (106.2 million acres)- AgRural projects Brazilian soy output at 150.5 million tonnes in 2022/2023.

Starting next month, AgRural plans to visit farms countrywide to better examine crop conditions and potentially update projections.

Summer corn is 88% sown in the center-south states of Brazil, AgRural said, referring to the country’s first corn that represents about 25% of production in a given year.

Last year at this time, first corn planting had reached 93% of the area.

In general, Brazil’s first corn planting occurred without major issues, but low rains in certain areas has some farmers “on alert,” AgRural noted.

Brazil’s second corn growers delay fertilizer purchases, says analyst

Growers of Brazil’s second corn crop, which will be sown after soybeans are harvested early next year, are in no rush to buy fertilizers like urea and the NPK mixture, according to data released by Agrinvest analyst Jeferson Souza on Monday.

He estimated that 75% of everything second corn growers are going to need has been purchased by farmers nationwide, below a five-year average of 83%.

“Growers have noticed a sharp drop in farm input prices and delayed purchases to try and raise production margins,” Souza said in a report.

Fertilizers are used to improve crop yields, and Brazil depends on imports for about 85% of its demand.

In Mato Grosso, Brazil’s top grain-producing state, farmers had purchased 89% of estimated fertilizer demand for this year’s second corn crop, four percentage points below the historical average, data compiled by Souza showed.

Fertilizer purchases, according to the data, are 13 percentage points below last year’s figure in Parana, which is the second-biggest state in terms of demand.

Brazil’s second corn crop equates to about three-fourths of national output in a given season, and allows the South American nation to be a competitive exporter in global markets after the harvest.

Farmers in Brazil normally sow their second corn crop after soybeans are reaped, and any issues affecting development or harvesting of the oilseed can potentially delay second corn planting.

Dryness in center-west states like Mato Grosso is worrying soy growers, but weather problems in some regions have not yet significantly affected expectations for large corn and soybean crops in 2022/2023.

WHEAT/CEPEA: Harvesting advances in BR; in AR, activities have just begun

The harvesting of wheat crops is in progress in Brazil, having totaled 70% of the total expected. In Paraná, one of the top wheat-producing states in the country, activities are ending already, while in Argentina, the harvesting has just begun.

According to Deral, in Paraná, 94% of wheat crops had been harvested by November 21. Of the crops to be harvested, 76% are in good conditions; 23%, in average conditions; and 1%, in bad conditions. In Rio Grande do Sul, 78% had been harvested by Nov. 24th, according to Emater. In Santa Catarina, 38.2% had been harvested by Nov. 19th, according to Conab, and considering all wheat crops in Brazil, 72.7% have been harvested, still according to Conab.

In Argentina, according to the Bolsa de Cereales, 12.5% had been harvested by Nov. 23rd. Of the crops not harvested yet, 52% are in bad/regular conditions; 40%, in average conditions; and a slight 8% are in good/excellent conditions.

BRAZILIAN MARKET – The different conditions of quality observed between the products from southern Brazil – and supplied to the spot market – has been pressing down the quotations paid to farmers but raising prices in the wholesale market. In general, liquidity has been higher in Rio Grande do Sul, which has been supplying higher-quality wheat this season.

Cepea surveys show that, between November 18 and 25, the prices paid to the wheat farmers in Paraná dropped by 1.63%; in Rio Grande do Sul, by 0.57%; and in Santa Catarina, by 0.52%. In the wholesale market, quotations increased by 1.32% in RS, 0.31% in São Paulo and 0.16% in SC, however, in PR, values decreased by 0.73%.

Ukraine Mulls Push for Bigger Ships to Bolster Crop Exports

• Government, industry groups held talks about vessel sizes
• Ukraine crop-export pace has been slowed by inspection delays

Ukraine is considering a push for larger ships to use its crop-export corridor, in an effort to bolster volumes as inspection lags slow trade.

Ships transiting the country’s ports have often been delayed near Istanbul, where cargoes must be checked by teams from Ukraine, Russia, Turkey and the United Nations — the parties involved in the Black Sea Grain Initiative.

The deal has revived Ukraine’s seaborne trade despite the war, although congestion has held up sales. A queue of 105 ships was waiting in Turkish waters as of Monday, with some stalled for more than a month, according to the initiative’s Joint Coordination Centre.

Given the bottlenecks, Ukrainian officials recently held talks with agriculture industry representatives about prioritizing bigger ships, according to Roman Slaston, head of the Ukrainian Agribusiness Council. A proposal was discussed to restrict the corridor to larger vessels: at least 15,000 tons for those carrying bulk grain or oilseeds, and 6,000 tons or more for vegetable-oil tankers.

Ukrainian Deputy Agriculture Minister Taras Vysotskyi confirmed the discussions, which were held at a meeting of the Coordination Center on Logistics Issues in Agriculture. The center, formed in April, acts as an advisory body to the industry, although it can’t pass formal rules.

A UN spokesperson for the Black Sea Grain Initiative said the deal has no restrictions on vessel size and ship movements are authorized based on applications from the Ukrainian seaport authority.

More than 500 ships have departed Ukraine’s Black Sea ports since the deal was inked in July, carrying 12 million tons of crops abroad. Of the total, about half were smaller than 15,000 tons, JCC data show.

Delegations at the JCC are considering ways to accelerate inspections, it said Monday.

Coceral, a European grain-industry lobby, on Tuesday also called for more transparency around the inspections. It said delays — coupled with strikes on Ukrainian infrastructure — are forcing local farmers to sell at discounted prices and adding pressure on world food security.

New exchange offers Egypt another way to import wheat

Egypt’s state grains buyer will be able to make international wheat purchases through a newly-launched exchange that is also aimed at eliminating local price distortions, its chairman said.

With grain markets disrupted this year by fluctuating prices and the war in Ukraine, Egypt’s General Authority for Supply Commodities (GASC) has been diversifying its purchasing methods.

State-run GASC recently opted to buy directly from global suppliers, instead of through its traditional tender system, as it looks for more competitive offers.

GASC can also procure local wheat from farmers via the exchange, Ibrahim Ashmawy, deputy supply minister and chairman of the exchange, told Reuters on Sunday.

“If today GASC is a seller (on the exchange), tomorrow it can be a buyer,” Ashmawy said. “It’ll have different channels.”

GASC had asked global suppliers to register at the bourse by November, but traders said there was confusion over whether the suppliers or their local agents were required to do so.

Egypt, typically the world’s largest importer of wheat, launched the new commodities exchange on Sunday, the supply ministry said in a statement, with GASC offering 12,000 tonnes of Russian wheat from its reserves to private sector mills.

The new exchange is designed to operate as a spot market with prices determined by supply and demand. For now, it is operating on a “closed bidding” system, where bidders submit offers in a sealed envelope and GASC selects the best one.

The move follows complaints by private importers and mills in Egypt struggling to pay for hundreds of thousands tonnes of wheat stuck at ports because of a dollar shortage that has curtailed imports, causing a spike in bread and flour prices.

“We are in dire need for the exchange in order to regulate the market. The market is not in its best shape and there’s a lot of price distortions,” Ashmawy said.

On the first day of trading on Sunday, wheat was sold at 9,750 Egyptian pounds ($397) per tonne in 18 transactions, the supply ministry said on Monday.

Two hundred companies, including 36 mills, have so far registered on the exchange in Cairo, where the Egyptian government is studying the possibility of trading 10 more commodities, including rice, gold and steel.