Global Ag News for Oct 3.22

HEADLINES TODAY

Russia Discusses Agri Exports In Local FX With Main Buyers: RBC

Russia is in talks with all major partners, including Egypt, Turkey and Iran on payments in local currencies for agricultural exports, Russian Agricultural Minister Dmitry Patrushev says in interview to RBC.

  • Russia already has contracts with payments in rubles, Turkish lira, Egyptian pound and UAE’s dirham, the volume of these transactions increases every month
  • Russia is working with Roseximbank and Russian Agency for Export Credit and Investment Insurance on financing purchases of Russian agricultural products by foreign companies
  • Russia doesn’t plan to cancel export duty on wheat
  • Russia sees agricultural exports increasing to about $40b this year compared to $37.1b last year
  • Russia faces hidden restrictions on the export of its agricultural products, especially with regard to the transportation of products

FUTURES & WEATHER

Wheat prices overnight are up 12 3/4 in SRW, up 11 1/4 in HRW, up 13 in HRS; Corn is up 6; Soybeans up 2; Soymeal down $0.12; Soyoil up 0.39.

Markets finished last week with wheat prices up 76 1/4 in SRW, up 73 1/4 in HRW, up 63 3/4 in HRS; Corn is up 17 1/4; Soybeans down 44 1/2; Soymeal down $1.57; Soyoil down 0.51.

For the month to date wheat prices are up 12 3/4 in SRW, up 11 1/4 in HRW, up 13 in HRS; Corn is up 6; Soybeans up 2; Soymeal down $1.20; Soyoil up 0.39.

Year-To-Date nearby futures are up 21% in SRW, up 25% in HRW, up 1% in HRS; Corn is up 15%; Soybeans up 3%; Soymeal down -2%; Soyoil up 16%. Malaysian palm oil prices overnight were up 23 ringgit (+0.67%) at 3439.

China’s markets are closed this week for holiday.

There were changes in registrations (25 Soymeal). Registration total: 3,084 SRW Wheat contracts; 0 Oats; 0 Corn; 5 Soybeans; 46 Soyoil; 222 Soymeal; 40 HRW Wheat.

Preliminary changes in futures Open Interest as of September 30 were: SRW Wheat up 2,303 contracts, HRW Wheat up 1,385, Corn up 2,048, Soybeans up 4,753, Soymeal up 411, Soyoil down 230.

Northern Plains Forecast: Isolated to scattered showers developed over the weekend as a system remained parked in the northern Rockies. The system will finally push east on Tuesday ahead of a cold front that will sweep through the country. A shot of cold air will come with the front but will be brief. Some disruptions in limited areas are possible because of the recent showers, but conditions continue to be mostly favorable for harvest.

Central/Southern Plains Forecast: A weak system in the northern Rockies produced a few isolated showers in northern Colorado and Nebraska, but most areas stayed dry over the weekend. The system will finally push eastward Tuesday but a cold front will come in behind it, bringing temperatures down significantly. Some showers may develop both with the system and behind the front this week in the southwestern portions of the region. A few more showers may develop ahead of the next system early next week. While the showers will be welcome, they will not put much of a dent into the ongoing drought, which continues to be limiting for winter wheat planting and establishment.

Western Midwest Forecast: Some light to moderate showers in Ohio due to Ian’s remnants and a few showers in Minnesota over the weekend likely produced little to no delays in the ongoing harvest. A system out in the northern Rockies will move eastward through the region Tuesday and Wednesday and will be followed by a strong cold front that could mean more widespread frosts and freezes for more of the region for a couple of mornings late this week and weekend. Neither the system or front is expected to produce much rain, however.

Brazil Grains & Oilseeds Forecast: Recent showers have continued to provide good soil moisture for Brazil as planting increases. The daily wet season showers in central Brazil have started up, and another front is forecast to bring showers through the region later this week. Both bode well for continued corn and soybean planting and establishment.

Argentina Grains & Oilseeds Forecast: Dryness continues to create unfavorable conditions for developing wheat and corn planting. Scattered showers will move through with a cold front Tuesday and Wednesday, but amounts are expected to be scattered and mostly light. The country is in desperate need for rain but heavier amounts are not on the horizon.

The player sheet for Sept. 30 had funds: net buyers of 10,500 contracts of SRW wheat, buyers of 4,500 corn, buyers of 15,000 soybeans, sellers of 2,500 soymeal, and  sellers of 5,500 soyoil.

TENDERS

  • FEED BARLEY SALE: An importer group in the Philippines is believed to have bought around 50,000 tonnes of animal feed barley expected to be sourced from Australia in an international tender which closed on Thursday, European traders said in assessments on Friday.
  • WHEAT FLOUR TENDER: The state purchasing agency in Mauritius has issued an international tender to buy 25,800 tonnes of wheat flour to be sourced from optional origins, European traders said on Friday. The deadline for submission of price offers in the tender is Oct. 28.
  • CORN SALE CANCELED: The Korea Feed Association (KFA) has canceled a purchase of about 65,000 tonnes of animal feed corn made on Thursday, European traders said on Friday. A new tender is expected to be issued when prices are more favorable, traders said.
  • CORN SALE: The Korea Feed Association (KFA) purchased about 60,000 tonnes of animal feed corn in a private deal on Friday after previously cancelling an earlier purchase in an international tender, European traders said.
  • WHEAT SALE: Algeria’s state grains agency OAIC is believed to have bought about 300,000 tonnes of milling wheat in an international tender which closed on Thursday, European traders said on Friday. The purchase was expected to be largely sourced from Russia, although technically supplies are optional origin, they said.
  • NO PURCHASE IN WHEAT TENDER: A government agency in Pakistan is believed to have rejected offers and made no purchase in an international tender for 300,000 tonnes of wheat which closed this week, European traders said on Friday.

PENDING TENDERS

  • VEGETABLE OIL TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said on Saturday it was seeking vegetable oils in an international purchasing tender for arrival Nov. 25-Dec. 10.
  • WHEAT TENDER: Jordan’s trade ministry is seeking 120,000 tonnes of wheat shipped in March and April in an international tender closing Sept. 27, a government source said. Jordan’s state grains buyer opened the new tender after making no purchase in a Tuesday tender.
  • WHEAT TENDER: The World Food Programme, a United Nations agency, has issued an international tender to purchase about 100,000 tonnes of milling wheat, European traders said on Monday. The deadline for submission of price offers in the tender is Sept. 28 with an award expected on Sept. 30.
  • WHEAT TENDER: Jordan is seeking 120,000 tonnes of wheat in an international purchasing tender with a deadline for offers on Oct. 4, a government source told Reuters on Tuesday.
  • BARLEY TENDER: Jordan is seeking 120,000 tonnes of barley in an international purchasing tender with a deadline for offers on Oct. 5, a government source told Reuters on Wednesday.
  • WHEAT TENDER: Iraq’s state grains buyer has issued tenders to buy a nominal 50,000 tonnes of milling wheat, European traders said on Wednesday. The deadline for submission of price offers in the tenders is Oct. 10. The wheat can be sourced from optional origins but Russian wheat cannot be offered, they said.

Earth

CROP SURVEY: US Soybean Crush and Corn for Ethanol

The following is from a Bloomberg survey of five anlaysts.

  • Soybean crush seen at 175.6m bu in Aug., a 4.3% rise from a year ago
  • Crude and once-refined soybean-oil reserves at end of August seen at 2.122b lbs, down from 2.183b
  • Corn used in ethanol production seen up 3.8% y/y to 432.8m bu

EU Further Cuts Outlook for Drought-Hit Corn Crop to 55.5M Tons

The EU’s 2022 corn harvest is now seen at 55.5m tons, down from an August outlook for 59.3m tons, according to a European Commission report on Friday.

  • That’s nearly a quarter below the prior season
  • Imports are seen at 21m tons
  • Soft-wheat crop outlook raised to 127m tons, versus August estimate of 126m tons
    • Exports seen at at 36m tons
  • Barley crop outlook raised to 51.5m tons, from 50.4m tons

Argentina’s USD Sales From Soy Exporters at $8.1b in Sept: Massa

Argentina Economy Minister Sergio Massa, speaking at an event in Buenos Aires, said that dollar accumulation from soy exporters was “more than satisfactory.”

  • Argentina reached IMF goal for accumulation of international reserves in Sept. and should have hit the fiscal deficit target by this month as well: Massa
    • Govt to continue efforts to consolidate reserves
  • Massa says an FX devaluation is not a solution for the reduction of poverty
  • Central bank’s strength comes not from the transfer of notes from Treasury, but from its capacity to accumulate reserves: Massa
  • Loan program for small producers to purchase fertilizers starts Oct. 3: Massa
    • Program will provide financing for 50% of fertilizer purchases, as well as helping some small exporters
  • Measures for exports and the control of imports will be announced next week: Massa
    • More than 44,000 producers participated in the program to promote exports
  • Remarks by Central Bank President Miguel Pesce:
    • A change in the benchmark rate will be studied when official inflation data is known
    • Accumulated debt from the soy exporters FX program is not a concern
    • Govt has not decided on FX access for tourism sector, will evaluate the matter: Pesce

Argentina Issued ARS1t Following Soy Exporter Sales: Quantum

Argentina’s central bank issued more than 1 trillion pesos, equivalent to 25% of the monetary base, following dollar sales by soy exporters, according to a report by consulting firm Quantum Finanzas in Buenos Aires.

  • The central bank then sold debt notes to absorb the extra liquidity, leading the monetary base to fall 313 billion pesos
  • The monetary aggregate known as “M2” rose 3.4% and “M3” increased 7.2% in this period

Ukraine’s Sept grain exports fall 23.6% y/y to 4.3 mln T -ministry

Ukraine’s grain exports fell by 23.6% year on year in September to 4.278 million tonnes, but reached the highest level since the Russian invasion, agriculture ministry data showed.

The country’s grain exports have slumped since February as the invasion closed off Ukraine’s Black Sea ports, driving up global food prices and prompting fears of shortages in Africa and the Middle East.

Three Black Sea ports were unblocked at the end of July under a deal between Moscow and Kyiv, brokered by the United Nations and Turkey. (Full Story)

September’s exports included 2.08 million tonnes of corn, 1.75 million tonnes of wheat and 432,000 tonnes of barley.

In August, Ukraine exported around 3 million tonnes of grain, including 1.85 million tonnes of corn and 900,000 tonnes of wheat.

The ministry’s data also showed that Ukraine’s grain exports are down 40.3% year on year so far in the 2022/23 season, at almost 8.6 million tonnes, but the pace of shipments is increasing gradually.

Exports so far in the current July to June season have included 4.8 million tonnes of corn, 3 million tonnes of wheat and 762,000 tonnes of barley, according to the data.

SOYBEAN/CEPEA: Opposite to soybean and oil, soybean meal price rises in BR

Cepea, September 30th – Soybean meal prices are rising in Brazil, despite the devaluation of the product in the United States and of soybean in the domestic market. The boost comes from both the current firm demand in the Brazilian market and expectations of shipments to Asia from October onwards. In July, China opened its market to the Brazilian soybean meal, since the country aims to replenish and expend its swine herd. Thus, trading comings are signaling the possibility of exports to China next month.

Besides, the supply of soybean meal from Argentina may decrease from October onwards, since the application of a special currency exchange rate to encourage exports (from early September) ends today in the country, and this context may discourage international sales.

Data from Cepea show that the regional prices for soybean meal have been higher than the export parity. At the port of Paranaguá (PR), the FOB prices for soybean meal were calculated at BRL 2,563.63/ton for shipment in Oct/22, while the deals closed in the national spot market have been higher than BRL 2,600.00/ton in São Paulo State and BRL 2,700.00/ton in Paraná.

On the average of the regions surveyed by Cepea, meal prices rose by 2.6% between Sept. 22-29. From August to September 29th, the monthly average increased by 1.4%. It is important to highlight that the monthly averages have been setting nominal records in Campinas (SP), Mogiana (SP), Northern Paraná and Chapecó (SC) since April. In Western and Southwestern PR, Ponta Grossa (PR), Rio Verde (GO), Rondonópolis (MT) and the Triângulo Mineiro (MG), the averages in September are the highest since March. It is important to consider that, by the end of the first quarter of 2022, the soybean crop failure in South America was being confirmed, and the exports from Argentina had been halted.

Considering the prices for soybean, meal and oil in SP, the share of meal in the industries’ profit margin surpassed 65% in the last days, the highest since March 2021. Still, the “crush margin” decreased by 18.79% between Sept. 22-29, influenced by the steep devaluation of soy oil.

SOY OIL – Currently with the lowest share in the industries’ profit margin in the last 18 months, liquidity has been low in the Brazilian market of soy oil. Some processors have even anticipated maintenance, aiming to reduce supply and limit price drops, which have been influenced by lower demand from abroad and in Brazil (majorly for biodiesel).

SOYBEAN – The harvesting of soybean crops is advancing in the USA, and rains in South America are making agents optimistic about the 2022/23 season. This scenario is driving purchasers away from the market. As for sellers, many of them are trying not to sell large amounts, which, linked to the dollar appreciation against the Real (by 5.6% in seven days), limited devaluations in Brazil.

Between September 22 and 29, the ESALQ/BM&FBovespa Index Paranaguá (PR) increased by 0.5%, to BRL 186.77 (USD 34.60) per 60-kilo bag on Thursday, 29. The CEPEA/ESALQ Index Paraná dropped by a slight 0.1%, closing at BRL 181.64 (USD 33.65)/60-kilo bag on Thursday. On the average of the regions surveyed by Cepea, prices dropped by a slight 0.2% in the over-the-counter market (paid to farmers) and by 0.1% in the wholesale market (deals between processors).

CORN/CEPEA: Sowing pace is satisfactory; prices stabilize

While purchasers seem to have stocks, farmers are focused on sowing the summer crop. In that scenario, liquidity has been low in the Brazilian market of corn, and prices, stable.

In general, sowing has been satisfactory in most southern Brazil – in many regions, activities have been faster than that last year, despite the recent rains. On the other hand, in Argentina, sowing is late.

PRICES – Between October 22 and 29, on the average of the regions surveyed by Cepea, values increased by 0.9% in the over-the-counter market (paid to farmers) and remained stable in the wholesale market (deals between processors). Between August 31st and September 29th, values increased by 0.6% and 0.7%, respectively. The ESALQ/BM&FBovespa Index for corn closed at BRL 84.24 (USD 15.61) per 60-kilo bag on Thursday, 29, a slight 0.4% down in seven days, but 0.4% up in the month.

At Brazilian ports, quotations have been higher than the prices in the interior of the country, underpinned by the dollar appreciation (by 5.6% in the last seven days, at BRL 5.398 on Sept. 29). In Paranaguá (PR) and in Santos (SP), the averages closed at BRL 89.24/bag and at BRL 88.72/bag, 0.3% down and 0.5% up, respectively.

EXPORTS – Brazilian corn shipments have been fast. According to Secex, this season (Feb/22 – Sept/22), Brazil has exported 20.3 million tons. Imports have totaled 1.4 million tons so far and are expected to reach 1.9 million tons by the end of the season.

CROPS – Rains have hampered sowing in some regions, however, they have been favoring the areas already sown, majorly in PR. Considering the national corn area, 19.3% have been sown, according to Conab.

Iraq to increase wheat planting to about 1 million hectares for 2022-2023

Iraq plans to plant one million hectares with wheat and “a very small amount” of barley in its 2022-2023 winter crop planting season, the ministry of water resources said in a Sunday statement.

The Iraqi cabinet directed the trade ministry to import wheat to store for the future, the statement said.

Iraq, a major Middle East grain importer, has faced water shortages for several years. The ministry of water resources said on Friday that 2022 was the driest year Iraq has witnessed since 1930.

Iraq harvested 625,000 hectares in the 2021-2022 season, according to the agriculture ministry.

Rain in South India Seen Normal in Three Months to December: IMD

India’s northeast monsoon is expected to be normal in three months to December over the southern peninsular region, including parts of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka, Mrutyunjay Mohapatra, director general of the India Meteorological Department, said Friday.

  • Showers will likely be 88% to 112% of long-term average of 33.4 centimeters in the three-month period, he said at an online briefing
  • Normal to above-normal rain seen over most parts of India, except some areas in the northwest and northeast regions where below normal rain is expected
  • Rain across the country is forecast to be above-normal during October
    • Normal to above-normal rain likely over most parts of the country, expect some areas in southern and northern regions
  • La Nina conditions are expected to continue over the Pacific Ocean until the end of the year: IMD
  • Rain in September at 8% above normal

IMF says Ukraine war prompts worst global food crisis since at least 2008

The Ukraine war’s disruptions to grain and fertilizer flows have prompted the worst food security crisis since at least the one following the 2007-2008 global financial meltdown, with some 345 million people now facing life-threatening shortages, the International Monetary Fund said on Friday.

A new IMF research paper estimates that the 48 countries most exposed to food shortages face a combined increase in their import bills of $9 billion in 2022 and 2023 due to the sudden jump in food and fertilizer prices caused by Russia’s invasion. This will erode reserves for many fragile and conflict-affected states that already face balance-of-payments problems after a grinding pandemic and rising energy costs, the IMF said.

“For this year alone, we estimate that highly exposed countries need as much as $7 billion to help the poorest households cope,” IMF Managing Director Kristalina Georgieva and other IMF officials said in a blog posting.

The war has worsened a food crisis that has been growing since 2018, due partly to the increasing frequency and severity of climate shocks and regional conflicts, they said.

The Fund called for a rapid increase in humanitarian assistance through the World Food Programme and other organizations, as well as targeted fiscal measures in affected countries to aid the poor. But it said governments needed to prioritize fighting inflation.

“Near-term social assistance should focus on providing emergency food relief or cash transfers to the poor, such as those recently announced by Djibouti, Honduras, and Sierra Leone,” Georgieva said.

The Fund also called for eliminating food export bans and other protectionist measures, citing World Bank research that these account for as much as 9% of the world wheat price increase.

Improved crop production and distribution, including through increased trade finance, is also vital to addressing the current food price shock, the Fund said. It added that investments in climate-resilient agriculture, water management and crop insurance are also needed to cope with drought and other unpredictable climate events.

The new research and recommendations come as the IMF’s Executive Board was expected to approve increased year-long emergency financing access through a new food shock window for the most vulnerable countries.

The new emergency facility could provide as much as $1.3 billion in additional IMF financing for Ukraine.

Ukraine was among the top five grain exporters before the war, accounting for some 15% of global corn exports and 12% of wheat exports, and a resumption of shipments from Black Sea ports under a deal with Russia has only partly eased shortages. But the conflict is reducing Ukraine’s future crop production.

Russia, also a top grain exporter, curtailed exports earlier this year to neighboring former Soviet republics. Both Russia and Ukraine have been major fertilizer exporters.

The Fund identified Sudan, Kyrgyzstan, Belarus, Armenia and Georgia as the most dependent on Ukrainian and Russian food imports as a percentage of their GDP. Countries most dependent on Ukrainian and Russian fertilizers include Moldova, Latvia, Estonia, Paraguay and Kyrgyzstan.

China Restricts Exports of Corn Starch, Signaling Supply Worries

  • Government wants to stabilize prices and curb inflation risks
  • Starch is shipped to the Philippines, Indonesia and Thailand

China has curbed exports of corn starch in a signal that the world’s biggest corn importer is likely worried about local supplies.

The government has asked companies to suspend shipments to stabilize corn prices and contain inflation risks, according to Ma Wenfeng, a senior analyst at the Beijing Orient Agribusiness Consultant Co. Corn starch is commonly used as an ingredient to thicken soups and sauces or for paper products and adhesives.

Despite the relatively small volume of exports, the move underscores Beijing’s concerns over grain supplies and rising prices. China imports corn mainly from the US, which may face a smaller harvest this season, and Ukraine, where shipments are choked off after Russia’s invasion. While China produces most of the corn it consumes, poor weather has threatened output.

“Corn prices are high and cheaper Ukraine supplies cannot be shipped easily,” Ma said. “Exporting corn starch would further push up domestic prices.”

Traders and processors that Bloomberg spoke to confirmed the curbs, without giving details on how the notice was communicated. The agriculture ministry didn’t respond to requests for comment. Monday is a public holiday in China.

Customs data show China’s corn starch exports fell to just 900 tons in August from more than 40,000 tons in July and 23,240 tons a year earlier. The product is shipped mainly to the Philippines, Indonesia, Thailand and Malaysia.

Global benchmark corn prices have jumped about 15% this year amid the war in Ukraine and adverse weather in major producing regions including the US and Europe. To reduce supply risks, China has tried to diversify its corn imports and is accelerating shipments from Brazil.

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