Global Ag News for Nov 3.23
World vegetable oil deficit likely in 2024, demand remaining high – analyst Mielke
A global vegetable oil supply deficit next year is still very likely due to the impact of the El Nino weather pattern, while demand growth is still very high, leading analyst Thomas Mielke said on Friday.
Mielke, head of Hamburg-based analyst firm Oil World, said global demand was seen growing by 5.6 million metric tons in the 2023/24 season, but world production growth of palm oil, which make up a big chunk of global edible oil, would be the smallest in four years at 0.2 million to 0.3 million tonnes.
He told conference participants in Bali that palm oil output from Indonesia, the world’s biggest palm oil exporter, would stagnate in 2024, while second-largest producer Malaysia’s output would be close to 18.4 million tonnes.
Mielke said Indonesia’s declining trend of palm oil yields was “alarming” and had so far not been reversed. He anticipated a further year-on-year decline in palm oil exports from the three biggest producers in the January-June period.
Indonesia is likely to ship 30.5 million tons of oils and fats this year and Malaysia would export 17 million tons, he said.
FUTURES & WEATHER
Wheat prices overnight are up 1/4 in SRW, down 2 in HRW, down 2 in HRS; Corn is down 1/2; Soybeans up 3; Soymeal down $1.10; Soyoil up 0.48.
For the week so far wheat prices are down 9 3/4 in SRW, down 3 1/2 in HRW, down 11 in HRS; Corn is down 11 1/4; Soybeans up 11 3/4; Soymeal down $17.20; Soyoil down 1.46.
For the month to date wheat prices are up 7 3/4 in SRW, up 10 1/4 in HRW, down 1/2 in HRS; Corn is down 9 1/2; Soybeans up 20 3/4; Soymeal down $6.30; Soyoil down 0.73.
Year-To-Date nearby futures are down 28.6% in SRW, down 28.0% in HRW, down 24.5% in HRS; Corn is down 30.8%; Soybeans down 14.0%; Soymeal down 11.1%; Soyoil down 20.4%.
Chinese Ag futures (JAN 24) Soybeans up 53 yuan; Soymeal up 33; Soyoil up 108; Palm oil up 120; Corn up 3 — Malaysian Palm is down 3. Malaysian palm oil prices overnight were down 3 ringgit (-0.08%) at 3781.
There were changes in registrations (-52 Soymeal). Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 598 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.
Preliminary changes in futures Open Interest as of November 2 were: SRW Wheat down 4,444 contracts, HRW Wheat down 1,260, Corn down 8,192, Soybeans up 3,523, Soymeal up 7,880, Soyoil up 5,007.
Brazil: Several systems moving through southern areas this week have been producing heavy precipitation, which creates problems with flooding and 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 for the next week which will help with soybean planting and establishment in most areas, as well as keeping temperatures from getting too hot.
Argentina: Scattered showers continue Thursday, which have been very favorable for remaining filling winter wheat and developing corn as well as producing better soil moisture for early soybean planting. However, colder temperatures have also been a factor, which produced some limited frosts over southern areas throughout the rest of the week and slowed growth. After a break this weekend, showers should move through with another system next week.
Australia: Some showers will develop over eastern areas Friday through next week as the pattern gives these areas potential for some scattered showers, but precipitation deficits remain large. Dryness elsewhere is unfavorable for immature wheat and canola as well as cotton and sorghum planting and establishment.
Northern Plains: Heavy snow that fell across northern areas last week continue to be slow to melt and keep temperatures low. The pattern will stay fairly active with occasional periods of showers, including some snow, through next week. The colder and wetter conditions will continue to make remaining fieldwork difficult to accomplish.
Central/Southern Plains: Cold temperatures have been in place the last several mornings, making for widespread frosts and freezes, slowing growth for winter wheat. Temperatures will continue to moderate, but frosts will be more common across the north 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: 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, followed by some cooler air.
The player sheet for Nov. 2 had funds: net buyers of 1,000 contracts of SRW wheat, sellers of 3,000 corn, buyers of 5,000 soybeans, sellers of 3,000 soymeal, and buyers of 1,000 soyoil.
- VEGOILS PURCHASE: Egypt’s state grains buyer GASC said on Thursday it bought 50,500 metric tons of vegetable oils in a international purchasing tender. The purchase comprised 23,000 tons of soyoil and 27,500 of sunflower oil.
- CORN PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought up to 133,000 metric tons of animal feed corn in an international tender for up to 138,000 tons on Thursday.
- 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.
- 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 Oct. 30 were assessed at $294.95 a metric ton liner out
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. issued an international tender to purchase an estimated 177,000 metric tons of rice, largely from the United States
- WHEAT TENDER: A group of South Korean flour mills bought an estimated 50,000 metric tons of milling wheat to be sourced from the United States in an international tender held on Thursday
- 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. It is seeking it on behalf of the Egyptian Sugar & Integrated Industries Company (ESIIC), it said. Deadline for offers is Nov. 5.
- 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.
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 Oct. 26, according to data on the USDA’s website.
- Top buyer of soybeans: China with 977k tons
- Top buyer of corn: Mexico with 447k tons
- Top buyer of wheat: Thailand with 57k 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 Oct. 26, according to data on the USDA’s website.
- Mexico bought 9.8k tons of the 31.6k tons of pork sold in the week
- China led in beef purchases
Argentina Wheat Forecast Chopped 4.9%, May Fall Further: Bourse
Recent rains haven’t been enough to compensate a drought this season and damage by frosts, the Buenos Aires Grain Exchange said in a weekly report.
- Bourse analysts cut production estimate to 15.4m metric tons from 16.2m and say they may reduce further, especially if a forecast for more frosts is accurate
- NOTE: The Rosario Board of Trade estimates the crop at 14.3m
Argentine Corn, Wheat Crop Estimates Nov. 2: Exchange
The Buenos Aires Grain Exchange releases weekly report on website.
- 2023-24 wheat production est. reduced to 15.4m tons from 16.2m tons
- 2023-24 corn planted area est. held at 7.3m ha
FAO-AMIS Cuts World Wheat Stockpile Estimates; Raises Corn, Rice
World wheat stockpiles in the 2023-24 season are now seen at 315.1m tons, down from an October estimate for 319.3m tons, according to a report published Thursday.
- Production estimates were slightly raised
- Corn stockpiles seen at 307.2m tons, up from 305.7m tons
- Production estimates still pointing to a y/y increase
- Rice stockpiles seen at 198.9m tons, up from 198.6m tons
- Soybean stockpiles seen at 53.0m tons, up from 52.6m tons
Winter Wheat Area Growth Expected To Be Limited: FAO
Growth in winter wheat areas in the northern hemisphere for the 2024 harvest is expected to be limited, reflecting softer crop prices this year, according to a report from the UN Food and Agriculture Organization on Friday.
- Southern hemisphere indicators suggest a 5% pull back in corn plantings in Brazil as farmers favor soybeans
- Also cut back in area used for corn in Argentina
- South Africa expected to see marginal increase in plantings
- The forecast for world cereal stocks by the end of 2024 seasons was lowered to 881 million tons, but still points to a 2.6% increase above opening levels
Indonesia’s Palm Oil Output Seen at 55.8M Tons in 2024: Gapki
Palm oil production in the world’s biggest grower may rise 4.9% to 55.8 million tons in 2024 from a year earlier, according to the Indonesian Palm Oil Association.
- Shipments are seen dropping 4.1% y/y to 29m tons next year, Joko Supriyono, advisor to the association commonly known as Gapki, said at an industry conference in Bali on Friday
- Consumption is likely to jump 9.1% y/y to 25.4m tons; stockpiles to surge 39% to 4.7m tons
- Crude palm oil output may only “slightly increase” in 2024 from 48.5m tons this year
- Key factors limiting palm oil output are El Niño, slow replanting, reduced use of fertilizers due to high costs, and lack of any significant increase in productivity
- Indonesia may continue to lose its market share in global palm oil exports; the decrease in shipments may impact collection of its palm oil levy
- “The levy is everything for Indonesia” as the fund is used to support its biodiesel programs, and promote replanting, research and other parts of the industry, he said
- “Indonesian plantations are entering an aging stage,” with more than 46% of mature oil palm plantations in the “declining stage”
- Indonesian govt should re-evaluate its moratorium on new plantation expansion and allow state-owned companies to do limited expansion on degraded forests
Indonesia’s palm oil consumption for biodiesel to exceed food for first time in 2023 – GAPKI
Indonesia’s domestic palm oil consumption for biodiesel will exceed its consumption for food for the first time in 2023, the Indonesia Palm Oil Association (GAPKI) said at an industry conference on Friday.
Malaysia’s end-October palm oil stocks seen highest in over four years
- October stocks seen up 10.82% at 2.56 mln MT – survey
- Output seen 2.76% higher at 1.88 mln MT
- Exports seen 8.00% higher at 1.29 mln MT
- Malaysian Palm Oil Board data due on Nov. 10
Malaysia’s palm oil stocks at the end of October were at their highest since May 2019, as higher production overshadowed growing exports and boosted inventories during the month, a Reuters survey showed on Friday.
Inventories were seen rising for a sixth consecutive month to 2.56 million metric tons, an increase of 10.82% from September, according to the median estimate of 11 traders and analysts polled by Reuters.
The world’s second-largest palm oil producer was estimated to have produced 1.88 million tons of crude palm oil (CPO) in October, a 2.76% increase from the previous month and the highest since September 2020.
“The end stocks are risking to go up to 2.55 million MT on the back of production surpassing exports, while domestic consumption will probably show a deep cut from September numbers,” Anilkumar Bagani, Research Head of Sunvin Group India told Reuters.
Exports likely rose by 8% to 1.29 million tons, according to the survey.
Bursa Malaysia Derivative’s benchmark palm oil contract fell in October, the first monthly drop in three months.
“This market behaviour is attributed to the convergence of Malaysian and Indonesian production forecasts, as well as the ongoing comparative value relative to other edible oils,” Marcello Cultrera of the Singapore-based Apricus said.
The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on Nov. 10.
India’s Palm Oil Imports Surged 25% in Year Through October
Purchases by the world’s biggest palm oil importer jumped to 9.9 million tons in the year that ended in October from 7.91 million tons a year earlier, according to the Solvent Extractors’ Association of India.
- Higher imports were mainly due to palm’s “price parity” with competing commodities and a sharp drop in edible oil prices, B.V. Mehta, executive director of the group, said at an industry meeting in Bali on Friday
- India is estimated to have imported 16.5m tons of cooking oils in 2022-23
- Edible oil stockpiles probably rose to 3.63m tons on Oct. 1 from 2.58m a year earlier
- Demand is expected to grow annually by 3% to 4% in the next 5-7 years; may climb to 30m-32m tons by 2029-30 from about 25m now
- India aims to increase domestic palm oil output to 1m tons by 2025-26 from 300,000 tons presently; production may jump to 2.8m tons by 2029-30; plantation area could total 1.8m hectares that year
- Indonesia should cut its export duty by 2% or $20-$30 a ton on certified palm oil to attract buyers for sustainable products, Mehta said
Pakistan’s Edible Oil Reserves Are at Unprecedented Level: Group
Cooking oil stockpiles in the South Asian nation have risen to an “unprecedented” level of about 500,000 tons, and traders are now facing storage constrains, according to the Pakistan Edible Oil Refiners Association.
- That has resulted in a huge disparity between local prices and landed costs of imported edible oils, Abdul Rasheed Jan Mohammed, chairman of the group, said at an industry conference in Bali on Friday
- Global prices need to rise, or supplies must be reduced, to bring back the parity, he said
- There is potential for demand for soft oils to improve during the winter, as palm oil is less preferred during colder months
- NOTE: The tropical oil tends to solidify when temperatures fall
- Malaysian palm oil prices are seen trading between 3,600 ringgit and 3,900 ringgit a ton until January; they may climb higher until March
- Benchmark palm oil futures traded at around 3,787 ringgit in Kuala Lumpur on Friday
Ukraine’s Grain Exports Drop 32% Y/y in Season to Nov. 3
Ukraine’s grain exports in the marketing year that started July 1 stand at 9.48m tons, versus 13.9m tons at a similar time a year earlier, the Agriculture Ministry said on its website.
The total includes:
- 4.7m tons of wheat, down 9.3% y/y
- 690k tons of barley, down 41% y/y
- 3.94m tons of corn, down 47% y/y
Ukraine food exports rose 15% in Oct thanks to new sea corridor – association
Ukrainian grain agricultural export rose by 15% to 4.8 million metric tons in October versus September thanks to a new Black Sea export corridor, the UCAB agricultural business association said on Thursday.
The association said in a statement grain exports rose by 20% to 2.5 million tons, while vegetable oils shipments added 6% and totalled 508,700 tons.
UCAB said wheat and sunflower oil dominated the export volumes last month.
Ukraine exported 2.1 million tons of grain and 479,900 tons of vegetable oils in September, the association said.
“In particular, the addition of another export channel – ports of Odesa region, which are now operating within the temporary sea corridor – helped to partially increase exports,” UCAB said.
However, exports through this channel are far from pre-war levels, it added.
Before the Russian invasion in February 2022, Ukraine exported over 6 million tons of grain alone per month.
“Although there has been an increase in export volumes, they remain insufficient to export the harvest that Ukraine has produced this year,” UCAB said.
The association noted that for the agricultural market to function well, Ukraine needs to export about 6 million tons of food per month “preferably by sea, where logistics are less expensive”.
Kyiv launched what it calls a temporary export corridor in August to allow agricultural exports as an alternative arrangement after Russia blocked the U.N.-backed Black Sea grain deal that had been in place for a year.
Ukraine’s government is expected to harvest 79 million tons of grain and oilseed in 2023, with an exportable surplus of about 50 million tons in 2023/24.
Top Fertilizer Maker Warns Against ‘Artificial’ Market Curbs
The world’s largest maker of crop nutrients is cautioning against any meddling in the economics of fertilizer markets.
“The artificial injection of artificial constraints into supply-and-demand fundamentals never really works very well,” Nutrien Ltd. Chief Executive Officer Ken Seitz said during an interview Thursday.
The warning followed an Iowa Corn Growers Association call for US scrutiny of fertilizer pricing and the impact higher costs have on farmers and consumers. The group said it’s seeking increased transparency so growers can better understand “reoccurring” price increases.
While Seitz didn’t comment directly on the Iowa organization’s push, he stressed the competitiveness of the global fertilizer industry.
“No one in this market by any measure controls prices,” he said. “There’s no such thing.”
Separately, Canada-based Nutrien on Wednesday posted disappointing third-quarter profit amid weaker-than-expected fertilizer volumes and pricing. Seitz said the outlook for the October-December period in North America is strong, barring any weather issues.
French Wheat-Sowing Trails Usual Pace as Rain Slows Fieldwork
Some 62% of France’s soft-wheat crop was planted as of Oct. 30, gaining from a week earlier but trailing last year’s pace and the five-year average, according to weekly data from FranceAgriMer.
Fieldwork in France “has been halted for some time now, raising fears among farmers,” Paris-based adviser Agritel said in a note Friday
“Short-term forecasts are far from reassuring, which could have an impact on acreage”
Bunge Expects to Keep ‘About All’ of Assets in Viterra Takeover
- Crop merchant’s CEO anticipates few antitrust issues from deal
- Bunge’s $8.2 billion takeover would boost its ranking by salesBy Gerson Freitas Jr.
Bunge Global SA doesn’t anticipate issues from antitrust regulators reviewing its $8.2 billion takeover of Viterra Inc. that would require the US crop merchant to offload any businesses.
The assets being acquired from the Glencore Plc-backed grain company are in “very different places” and, even when in the same country, have “different strengths” than those operated by Bunge, Chief Executive Officer Greg Heckman said in a Thursday interview on the sidelines of a food conference in Minneapolis.
“We believe we should have very little breakage anywhere,” Heckman said, adding that Bunge expects to be able to keep “about all of our assets.”
The combined entity would become the world’s second-largest agricultural trading company by revenue, dominating the soybean and wheat markets. Globally, it will end up with more than 125 crushing and refining facilities, a processing capacity of more than 75 million tons per year, 55 port terminals and more than 230 million tons of commodities marketed annually.
Heckman said global trading firms such as Bunge still face fierce competition from local and regional companies including co-operatives and sometimes even customers in the crop origination business.
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