Global Ag News for Oct 9.23

TOP HEADLINES

Indonesia Sees 2023 Biodiesel Consumption at 11.5M Kiloliters

Indonesia’s palm-based biodiesel consumption may fall short of the 13.15m kiloliter target as the B35 mandate started only in Feb., according to Edi Wibowo, director for bioenergy at the energy and mineral resources ministry.

• Govt to maintain the 35% palm oil-based biodiesel blending in 2024
• Indonesia’s Jan.-Sept biodiesel consumption at 8.5m-8.6m kiloliters
• Govt still conducting some test and preparations for implementation of B40
• Govt to consider readiness of raw material, production, incentives before deciding to implement B40

FUTURES & WEATHER

Wheat prices overnight are up 10 3/4 in SRW, up 9 3/4 in HRW, up 11 1/4 in HRS; Corn is up 4 1/4; Soybeans up 8; Soymeal up $2.50; Soyoil up 0.69.

Markets finished last week with wheat prices up 14 1/4 in SRW, up 6 3/4 in HRW, up 12 1/2 in HRS; Corn is up 7 1/2; Soybeans down 3 1/4; Soymeal up $0.10; Soyoil down 1.28.

For the month to date wheat prices are up 37 1/2 in SRW, up 19 3/4 in HRW, up 22 1/2 in HRS; Corn is up 19 1/2; Soybeans down 1; Soymeal down $6.60; Soyoil up 0.21.

Year-To-Date nearby futures are down 26.9% in SRW, down 23.0% in HRW, down 22.1% in HRS; Corn is down 26.9%; Soybeans down 16.1%; Soymeal down 23.2%; Soyoil down 10.2%.

Chinese Ag futures (NOV 23) Soybeans down 22 yuan; Soymeal down 110; Soyoil down 166; Palm oil down 218; Corn down 27 — Malaysian Palm is up 6.  Malaysian palm oil prices overnight were up 6 ringgit (+0.17%) at 3606.

There were changes in registrations (-10 Soymeal). Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 473 Soymeal; 402 HRW Wheat.

Preliminary changes in futures Open Interest as of October 6 were: SRW Wheat down 4,015 contracts, HRW Wheat up 279, Corn down 3,941, Soybeans up 3,430, Soymeal down 5,410, Soyoil down 1,914.

Northern Plains: Widespread frosts and freezes occurred on Saturday, but temperatures quickly moderated on Sunday. Some frosty morning temperatures are forecast for the Dakotas early this week, however. A system will pass by to the south mid-late week but will still be close enough to produce widespread precipitation in the region, which may be heavy in South Dakota. It is not out of the question for some snow to mix in over Wyoming or maybe southwetern South Dakota as well. Strong winds may also be a concern. Colder air follows behind that system with more frosts and freezes expected.

Central/Southern Plains: Widespread frosts and freezes occurred on Saturday across northern areas and are possible for Monday and Tuesday mornings across mostly Nebraska as well. A potent system will cross the region mid-late week with widespread showers and thunderstorms and strong winds. Some accumulating snow may be possible in the northwest as well. Areas of heavy rain will be possible for Nebraska, which would delay harvest. More moderate rain elsewhere will favor winter wheat establishment, though strong winds would not be favorable.

Midwest: Minor frosts occurred over the weekend, but with cold air settling in early this week, skies clearing, and winds diminishing, frosts will be more widespread early this week. Those with late developing crops may see their season end early. Some showers may develop during the day early this week in the cold air. A system will move into the Plains on Wednesday and spread showers across the region through the weekend. Areas of heavy rain and strong winds will be possible, which will help with the ongoing drought, but could interrupt harvest.

Brazil: Wet season showers continue in central Brazil, though they may be isolated at times. A front brought heavy rain to southern areas over the weekend, though not as bad as feared last week. Another front will bring chances for heavy rain to southern areas again midweek. Heavy rain and flooding have caused issues with winter wheat quality and harvest and corn and soybean planting, though the pace for planting has been near normal. While it is drier than normal in central Brazil, showers are still passing through and southern areas have more than enough soil moisture for early establishment.

Argentina: It was dry over the weekend and soils have been thirsting for meaningful rain for a long time in the country. A front will move through Tuesday and Wednesday with showers, but it is forecast to be light and scattered, not nearly enough for filling wheat or corn establishment.

The player sheet for Oct. 6 had funds: net sellers of 3,000 contracts of SRW wheat, sellers of 4,000 corn, sellers of 4,500 soybeans, sellers of 500 soymeal, and  sellers of 250 soyoil.

TENDERS

• AUSTRALIAN DROUGHT: Australia’s weather bureau said on Friday that areas of severe rainfall deficiency had expanded after the driest September on record, putting farm production in one of the world’s largest agricultural exporters at risk.
• RUSSIAN GRAIN SHIPMENTS STARTING: Russia will start delivering its grain to African countries within a month to six weeks, the Interfax news agency cited Agriculture Minister Dmitry Patrushev as saying on Friday.

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 50,100 metric tons of rice largely from the United States.

TODAY

CROP SURVEY: Brazil 2023-24 Soybean Output Seen at 163.9M Tons

Brazil soybean production seen about 1.5m tons above the national forecast agency’s preliminary est., according to the avg in a Bloomberg survey of eight analysts.

• This would be the biggest soybean crop in Brazil’s history, over 9m tons above the previous season’s amount, which was a record high
• The range of estimates varied from 162.5m tons to 165.9m tons
• Brazil’s corn crop seen at 130m tons vs Conab’s preliminary est. of 119.8m tons
• Conab, the Brazilian national supply company, is scheduled to release its first official estimates for the 2023-24 season on Oct. 10 at 9am local time.

Wheat-Selling by Argentine Farmers Plunges to 7-Year Low

Argentine farmers are forward-selling wheat at the slowest pace since 2016 given uncertainty of the harvest in November and December due to lingering drought. Growers are also loath to lock in trades before a new government takes office on Dec. 10, which could usher in sweeping policy changes including a currency devaluation and lower export taxes, boosting revenues. That’s why 64% of the few deals made are done without fixing a price, the most in at least 14 years.

SOYBEAN/CEPEA: Record exports limit influence of international devaluations on prices in BR

Soybean prices have weakened in the Brazilian market this week, influenced by the arrival of the 2023/24 crop in the United States and the consequent international devaluation of the product. However, the firm demand from abroad for the Brazilian soybean limited the influence of international devaluations on the domestic values – it is important to highlight that Brazil has exported a record volume of soybean this year.

According to Secex (Foreign Trade Secretariat), this year, Brazil has exported 87.25 million tons of soybean, 10.8% more than the volume shipped in the 12 months of 2022 and a record for the first nine months of a year. In September, Brazil exported 6.4 million tons of the product, a record for the month and 60% more than the volume shipped a year ago.

The recent appreciation of the US dollar against the Real – which makes the Brazilian product more attractive to importers – made Brazilian agents even more optimistic about the exports in the last quarter of 2023. The American currency valued a staggering 2.7% over the past seven days, to BRL 5.174 on Thursday, 5, the highest level since March 27th. This scenario also helped to limit price drops in Brazil.

Between September 28 and October 5, the ESALQ/BM&FBovespa soybean Index (Paranaguá) dropped a slight 0.3%, to BRL 144.98 (USD 28.02) per 60-kg bag on Thursday, 5. The CEPEA/ESALQ Index (Paraná) decreased 0.8%, closing at BRL 137.56 (USD 26.59)/bag on Thursday, 5. Values had different behaviors between regions, however, on the average of the regions surveyed by Cepea, prices dropped 0.7% in both the over-the-counter market (paid to farmers) and the wholesale market (deals between processors).

It is important to mention that, despite the current high demand, ending stocks are forecast to be high in Brazil because of the record production in the 2022/23 season. As for the 2023/24 crop, 4.6% of the national area had been sown by Oct. 1st, according to Conab.

CORN/CEPEA: Valuations at ports keep prices on the rise in Brazil

Corn prices have been on the rise in most Brazilian regions surveyed by Cepea, influenced by both the recent valuations at ports and high exports in the current season.

Many sellers have been away from the national spot market, with no need for cash flow and lower concerns about warehousing. Thus, these agents are asking higher prices for corn. Purchasers have been reporting difficulties in buying the cereal, and those who need to close deals have to pay higher prices.

PRICES – In this scenario, the ESALQ/BM&FBovespa for corn (Campinas, SP) rose 3.8% over the past seven days, to BRL 59.19 (USD 11.44) per 60-kg bag on Thursday, 5.

Regionally, there were sporadic devaluations in the over-the-counter market (paid to farmers) and in regions that produce the second crop, but the fierce competition for the product raised prices. On the average of the regions surveyed by Cepea, corn prices increased 2.1% in the over-the-counter market (paid to farmers) and 0.7% in the wholesale market (deals between processors) between September 28th and October 5th.

PORTS – Deals have been closed more frequently at Brazilian ports, raising prices and leading farmers to prioritize sales to this destination. The boost comes from international corn valuations and the dollar appreciation against the Real – the America currency has surpassed BRL 5 again, which had not been observed since May.

Cepea surveys show that, in Santos (SP) and in Paranaguá (PR), corn has been traded at levels higher than that in the interior of the country, between BRL 60/bag and over BRL 65/bag. In Paranaguá, the average on Thursday closed at BRL 60.99/bag, and in Santos, at BRL 65.03/bag.

As for exports, data from Secex show that Brazil exported 8.75 million tons of corn in September, surpassing the 6.42 million shipped in Sept/22. For this month, Anec estimates the Brazilian shipments of corn to total 8.5 – 9.31 million tons.

CROPS – The harvest of the second crop is practically over in Brazil, while sowing of the summer crop is advancing. By Oct. 1st, 99.2% of the Brazilian second crop of corn had been harvested. As for the summer crop, 22.6% have been sown, according to Conab.

Soy output likely to decline by 4.3% this kharif season, says SOPA

India’s soybean production in this crop season could drop by 4.3 per cent to 11.8 million tonnes due to the fall in yields in major states such as Madhya Pradesh, Maharashtra and Rajasthan, Indore-based Soybean Processors Association of India (SOPA) said on Sunday.  The industry body said the all-India level average yield of soybean between the last season and the current season will drop by 7.5 per cent. Low soybean output could have a bearing on the prices, as it is one of the largest oilseeds grown in the kharif season.

Low Mississippi water levels spark concern for farmers, could divert grain shipments to rail and truck

With farmers and the barge industry again grappling with low Mississippi River water levels, grain shipments could be shifted to rail and truck, according to TD Cowen.

This week TD Cowen hosted a farmer sentiment webinar with Professor Michael Langemeier of Purdue University’s Department of Agricultural Economics and the director of the University’s Center for Commercial Agriculture. The top concerns for farmers were input costs, elevated interest rates affecting operating loans, machinery and land costs, and lower crop and livestock prices, with the exception of beef, according to TD Cowen.

The impact of Mississippi water levels was also cited. “One near-term concern for farmers is Mississippi water levels being low at certain points. This could divert more grain shipments to rail and truck at higher freight costs,” TD Cowen analyst Matt Elkott wrote in a note released Thursday. “The consolation for grain producers is that there is a good deal of capacity on both modes to accommodate incremental freight. Additionally, truckload rates are stuck in a malaise.”

The Gazette, based in Cedar Rapids, Iowa, reported that the Mississippi has reached near-historic lows for the second year in succession, slowing down river shipping and pushing up costs for barge companies.

The gage height of the Mississippi at St. Louis has fallen from 20.64 feet on May 16 to -1.01 feet on Thursday, according to data from the U.S. Geological Survey. Gage height, which is also known as “stage” is the height of water above a reference point.

In a note released last month, Raymond James analyst Patrick Tyler Brown wrote that low water levels along the Mississippi River could present opportunities for railroads. Last year Raymond James noted that Canadian National Railway Co. is the primary rail operator along the Mississippi.

Low Mississippi water levels have also resulted in sea water intruding into the river in Louisiana, prompting the U.S. Army Corps of Engineers to fill barges with water upstream for shipment to water treatment plants. “Denser salt water moves upriver along the bottom of the river beneath the less dense fresh water flowing downstream,” the Army Corps of Engineers explained, in a statement released Monday. “Under normal conditions, the downstream flow of the river prevents significant upriver progression of the salt water. However, in times of extremely low volume water flow, such as what has been occurring this year, unimpeded salt water can travel upriver and threaten municipal drinking water and industrial water supplies.”

An initial barge load of 500,000 gallons arrived at the Port Sulphur Water Treatment Facility in Plaquemines Parish, Louisiana, on Sunday. The Army Corps of Engineers is also working to increase the height of an underwater sill initially constructed in July at river mile 63.8.

US Beef Production Up 2.8% This Week, Pork Down: USDA

US federally inspected beef production rises to 519m pounds for the week ending Oct. 7 from 505m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter up 2.6% from a week ago to 628m head
• Pork production down 0.8% from a week ago, hog slaughter falls 1.3%
• For the year, beef production is 5.2% below last year’s level at this time, and pork is 0.1% above

US Fall Fertilizer Season Snarled as River Levels Slow Transit

The global urea market was unsettled in advance of another tender from India, with the last one securing fewer tons at lower prices than anticipated. Low water levels in the Mississippi River have reduced tow size and weight limits, hindering barge traffic in a blow to farmers upriver.

Upriver Phosphates Strengthen Amid Logistics Worry

US urea prices were in a lull ahead of India’s next tender, which closes on Oct. 20. Limited New Orleans (NOLA) urea barge trades fell within last week’s range, while Corn Belt urea pricing was unchanged. Inland ammonia prices were firm after last week’s upward surge following the new Tampa contact at $575 a metric ton (mt) for October, while urea ammonium nitrate (UAN) and ammonium sulfate were largely stable. Low water levels and concerns about a possible early closure of the Upper Mississippi River drove diammonium phosphate (DAP) prices higher at upriver warehouses, though NOLA barge levels were down slightly on limited trading. New phosphoric acid postings for October pushed prices higher in the Midwest, with NOLA potash trades also inching up on reports of limited supply.

Brazil Nitrogen Prices Rise Ahead of Latest India Tender

Urea and ammonium sulfate prices strengthened in Brazil as the industry awaits the results of India’s latest urea tender, which closes on Oct. 20. Potash pricing was flat amid robust supplies, while phosphate was stable on limited availability.

Brazil Farmers Delay Purchases, Focus on Planting

With importers expected to bring 2 million metric tons (mt) of urea and 1.5 million mt of ammonium sulfate to the Brazil market, fertilizer demand remains delayed as farmers focus on soy planting. India’s latest tender call fueled a rise in urea prices, to $420-$425/mt cost-and-freight from last week’s $390-$410. Ammonium sulfate was higher as well, to $215-$220/mt from last week’s $200-$220, with expectations of additional increases on reports of tight supply. Despite reports of shipping delays from North Africa, monoammonium phosphate (MAP) prices in Brazil were steady at $550/mt. Potash prices were also unchanged at $340-$350/mt in Brazil, with the market described as stable.

 

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