Global Ag News for Sept 26.23

TOP HEADLINES

US Makes Third-Biggest Corn Sale to Mexico After Prices Fall

• American shippers sold 1.66 million tons of corn to Mexico
• Importers are taking advantage of lower prices, Marex says

The US just made it’s third-biggest ever sales of corn to top buyer Mexico as importers snapped by cheaper supplies.

Private shippers sold about 1.66 million metric tons of the grain for delivery to Mexico in just one day, according to the US Department of Agriculture. That’s the biggest sale to the nation since more than 1.8 million tons were sold in 2021 and 2022. The corn sold is for delivery this season and the next, the USDA said.

The deal to Mexico, which vies with China for the top spot in US corn imports, came after prices slumped more than 20% from a peak in July. Even after hot and dry weather ravaged the Midwest this summer, the US is still forecast to harvest its second-largest crop on record.

“Traders were a little surprised, given the volume,” said Vinicius Ito, a director at futures and options brokerage Marex in New York. “Importers seem to have taken advantage of the extended decline in prices this year.”

Mexico has been a bright spot for US corn exporters in a year when importers in general have been delaying purchases following high prices earlier this year. Total outstanding corn sales to all nations are currently at the lowest level for this time in the season in four years.

Mexico typically purchases large volumes of corn during the American harvest. Still, the deal failed to lift prices as traders await signs of stronger demand ahead.

“The market hasn’t priced in the positive impact, possible because of the lag in the pace of US export sales this year,” Ito said.

Corn futures were unchanged at $4.7725 a bushel in Chicago by 12:04 p.m. Prices fell almost 30% this year.

FUTURES & WEATHER

Wheat prices overnight are up 4 1/2 in SRW, up 3 1/4 in HRW, up 5 1/2 in HRS; Corn is up 3/4; Soybeans up 7; Soymeal up $0.90; Soyoil up 0.16.

For the week so far wheat prices are up 14 3/4 in SRW, up 6 1/2 in HRW, up 4 in HRS; Corn is up 4 3/4; Soybeans up 8 3/4; Soymeal up $5.00; Soyoil down 1.97.

For the month to date wheat prices are down 8 1/2 in SRW, down 9 1/2 in HRW, up 7 3/4 in HRS; Corn is up 3 3/4; Soybeans down 64; Soymeal down $13.30; Soyoil down 4.84.

Year-To-Date nearby futures are down 25.0% in SRW, down 19.2% in HRW, down 17.5% in HRS; Corn is down 29.0%; Soybeans down 14.1%; Soymeal down 17.9%; Soyoil down 7.9%.

Chinese Ag futures (NOV 23) Soybeans down 20 yuan; Soymeal up 31; Soyoil up 8; Palm oil down 16; Corn down 14 — Malaysian Palm is down 25. Malaysian palm oil prices overnight were down 25 ringgit (-0.67%) at 3691.

There were no changes in registrations. Registration total: 3,005 SRW Wheat contracts; 741 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 24 Soymeal; 402 HRW Wheat.

Preliminary changes in futures Open Interest as of September 25 were: SRW Wheat down 800 contracts, HRW Wheat up 186, Corn up 8,832, Soybeans up 2,046, Soymeal down 1,526, Soyoil down 5,011.

Northern Plains: Mostly dry through Wednesday. Isolated showers Thursday-Friday. Temperatures near to above normal through Friday. Outlook: Isolated to scattered showers Saturday-Wednesday. Temperatures near to above normal Saturday-Wednesday.

Central/Southern Plains: Mostly dry through Thursday. Isolated showers Friday. Temperatures near to above normal through Wednesday, above to well above normal Thursday-Friday. Outlook: Isolated showers Saturday-Wednesday. Temperatures above to well above normal Saturday-Tuesday, above normal Wednesday.

Western Midwest: Isolated showers Tuesday. Mostly dry Wednesday-Thursday. Scattered showers far north Friday. Temperatures above normal through Thursday, above to well above normal Friday.

Eastern Midwest: Isolated showers through Thursday. Mostly dry Friday. Temperatures above normal through Friday. Outlook: Mostly dry Saturday-Monday. Isolated showers Tuesday-Wednesday. Temperatures above to well above normal Saturday-Wednesday.

Brazil: Rio Grande do Sul and Parana:  Scattered showers through Friday. Temperatures near to well above normal Tuesday, near normal Wednesday-Thursday, above normal Friday. Mato Grosso, MGDS and southern Goias:  Spotty showers Tuesday. Isolated to scattered showers Wednesday-Friday. Temperatures above normal through Wednesday, near to above normal Thursday-Friday. 

Argentina: Cordoba, Santa Fe, Northern Buenos Aires:  Isolated showers Tuesday. Mostly dry Wednesday-Thursday. Isolated showers Friday. Temperatures near to below normal through Friday. La Pampa, Southern Buenos Aires:  Isolated showers Tuesday. Mostly dry Wednesday-Thursday. Isolated showers Friday. Temperatures near to below normal through Friday.

The player sheet for Sept. 25 had funds: net buyers of 4,000 contracts of SRW wheat, buyers of 2,500 corn, buyers of 2,000 soybeans, buyers of 3,500 soymeal, and  sellers of 7,500 soyoil.

TENDERS

• CORN SALES: The U.S. Department of Agriculture (USDA) confirmed private sales of 1,661,160 metric tons of U.S. corn to Mexico, including 1,049,771 tons for delivery in the 2023/24 marketing year that began Sept. 1, and the remaining 611,389 tons for delivery in the 2024/25 marketing year.
• WHEAT AND BARLEY TENDER: Tunisia’s state grains agency issued an international tender to purchase 100,000 metric tons of soft milling wheat and 50,000 metric tons of animal feed barley.
• CORN AND SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 180,000 tons of animal feed corn and 120,000 tons of soymeal.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 21,700 metric tons of rice – all to be sourced from China.
• CORN TENDER: The Korea Feed Association (KFA) has issued an international tender to purchase up to 136,000 metric tons of animal feed corn to be sourced from optional origins

TODAY

US Inspected 661k Tons of Corn for Export, 482k of Soybeans

In week ending Sept. 21, according to the USDA’s weekly inspections report.

• Soybeans: 482k tons vs 430k the previous wk, 292k a yr ago
• Wheat: 451k tons vs 423k the previous wk, 589k a yr ago
• Corn: 661k tons vs 676k the previous wk, 550k a yr ago

US Corn, Soybean, Wheat Inspections by Country: Sept. 21

Following is a summary of USDA inspections for week ending Sept. 21 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 301k tons of the 482k total inspected
• Mexico was the top destination for corn inspections, China led in wheat

US Aug. Pork Supplies in Cold Storage Dropped to 471M Pounds

According to the USDA’s Sept. 25 cold storage report released on the agency’s website.

• Total pork fell 13.2% from Aug. of last year
• Pork belly supplies rose to 36.9m pounds from 35.7m last year
• Beef supplies fell to 421.6m pounds from 513.8m last year

Canada 2023-24 Wheat Crop Seen at 29.8M Tons: AAFC

Wheat production seen falling by 13% from the previous season, Agriculture and Agri-Food Canada says Monday in an emailed report.

• That’s a revision downward of 3.4m tons from the August report
• Canola production est. lowered by 1.4m tons to 17.4m, a 7% decline from last season
• 2023-24 wheat ending stocks seen 100,000 tons lower at 3.6m tons
• 2023-24 canola ending stocks est. lowered by 700,000 tons to 1m tons

Brazil Soybean Planting 1.9% Complete as of Sept. 21: AgRural

Soybean planting is 1.9% complete as of Sept. 21, compared with 1.5% a year earlier, according to an emailed report from AgRural consulting firm.

• With humidity inherited from the rains of the second week of September, Paraná state set a faster pace for sowing, AgRural said
• 2023/24 summer corn planting in Brazil’s Center-South region is 25% complete, versus 21% a week earlier and 28% a year before

China purchased over 5 million tons of canola in 2022/23 MY

In the season-2022/23, China imported about 5.1 mln tonnes of canola, although in January of this year, the analysts of the US Department of Agriculture (USDA) claimed that the supply of this oilseed to China would be only 2.5 mln tonnes. This was reported by The Western Producer.

According to the industry experts, such a sharp increase was caused by the recovery of the production volumes in Canada and the record harvest of the oilseed in Australia in 2022.

For instance, according to the Canadian Grain Commission, Canada shipped 4.71 mln tonnes of canola to China from August 2022 to July 2023, compared to 1.22 mln tonnes in the same months of the previous crop year.

“China’s active demand was also supported by the upward price dynamics on the global vegetable oil market,” the experts said.

At the moment, the USDA expects the reduction of rapeseed supplies to China in 2023/24 MY to 3.4 mln tonnes, amid the forecasted decrease of production in Canada and Australia in the new season – to 17.37 mln tonnes (-7% y/y) and 5.15 mln tonnes (+38% y/y), respectively.

Ukraine’s Winter Wheat, Rapeseed Sowing Is Ahead of 2022

Ukrainian farmers have so far planted winter crops — mainly wheat and rapeseed — across 2.2m hectares, compared with 1.67m hectares sown by Sept. 27 last year, according to Agriculture Ministry data.

Total winter sowing areas as of Sept. 26 include:

• 1.04m hectares of rapeseed, up 8% y/y
• 1.02m hectares of wheat, up 64% y/y
• 74,000 hectares of barley, up 14% y/y

Ukraine Halts Danube Checkpoint With Romania After Russia Attack

• Operations of Orlivka ferry border checkpoint suspended
• Ukraine’s Odesa region was attacked overnight, governor says

Ukraine said it suspended operations of the Orlivka ferry border checkpoint with Romania across the Danube River after Russia launched a drone attack on the surrounding region overnight.

Measures are being taken to stabilize the situation, the Ukrainian State Border Service said on Telegram Tuesday.

Emergency services attend the scene of a Russian drone attack near the port of Izmail, Ukraine, on Sept. 26.

Port facilities near Izmail, which like Orlivka is in Ukraine’s southern Odesa region, were damaged in the overnight attack, Governor Oleh Kiper said earlier Tuesday.

Shipping on the Danube between Ukraine and Romania, a key route for grain transit, is operating as normal, according to an official with knowledge of the matter, who asked not to be identified due to the sensitivity of the issue.

Ukraine in Talks With Insurance Firms To Decrease Shipping Costs

Ukraine is working with insurance companies and partners to lower the price of insurance for traders shipping agricultural products from the Black Sea, the country’s Infrastructure Minister Oleksandr Kubrakov said.

• “The good news is that the insurance companies are providing insurance for such vessels,” Kubrakov told reporters in Brussels on Monday. “The bad news the price is still very expensive”
  • He declined to name the companies Ukraine is in talks with
• Ukraine has begun transiting ships from the Odesa port, with two vessels loaded last week and passed the Bosphorus, and three more expected to leave Odesa soon, he said
  • First Grain Ship Since July Leaves Ukrainian Black Sea Port
• Separately, EU Transport Commissioner Adina Valean said she hopes a “a good level” will be maintained in shipping volumes via the Danube river with improvements in the Sulina channel in October to be able to reach 4 million tons

Ukraine Says Russian Drones Hit Port Facilities Near Izmail

Odesa region was attacked by Russian drones for two hours overnight, regional governor Oleh Kiper says on Telegram.

• A check-point building and storage facilities, both part of port infrastructure near Izmail were hit and damaged in the attack
• Two truck drivers were injured, around 30 trucks were damaged, of which 6 caught fire
• NOTE: Izmail is one of Ukraine’s ports on the Danube river, where most of Ukraine’s outbound grain export shipments are handled

Brazil Risks Losing Soy Sales to Europe Over Forestry Compliance

• New EU laws to require compliance with local forest codes
• Lack of data exposes soy traders to regulatory risks: Trase

The world’s top soy exporter Brazil is at risk of losing ground in key European Union markets as limited data will make it hard for traders to prove compliance with forest-protection laws.

From 2025, the EU will require traders and companies to prove that soy and other commodities don’t come from lands affected by legal or illegal deforestation. The regulations also require imports to comply with local environmental laws, in Brazil’s case the Forest Code.

Research from Trase and Instituto Centro de Vida shows traders will struggle to prove that soy from the Amazon and Cerrado complies with that code. A total 74% of the soy from the two regions was grown on farms that either didn’t comply with the regulations, or, in the absence of clear data, showed signs of potential breaches of the code.

The EU is the second-biggest buyer of Brazilian soy, after China. US agricultural traders including Archer-Daniels-Midland Co. and Bunge Ltd. have reaped a bonanza from Brazilian soy this year thanks to bumper crops.

“These results suggest that soy buyers and operators may overlook these issues and face challenges in systematically checking legal compliance within their supply chains,” researchers led by André Vasconcelos said in the report. “As a result they may face obstacles in continuing to export to the EU.”

The results indicate that Brazilian soy runs a higher risk of non-compliance with the EU Deforestation Regulation’s legality criteria, rather than the deforestation-free criteria.

Brazil needs to improve in terms of transparency and data sets, Vasconcelos, global engagement lead at Trase, said in an interview.

“Once Brazil has even more transparency and more clarity on these data sets, it can really become an example for the producing countries in how to implement the EUDR,” he said.

USDA Lowers 2024 Food Inflation Estimate to 2.2% Y/y

The following is a summary of USDA forecasts for annual 2023 and 2024 retail food prices in the US.

• 2024 est. lowered from 2.8% y/y in August
• The biggest declines were in the fats/oils category and the other meats category
• 2023 food inflation est. lowered slightly to 5.8% y/y

USDA attaché sees Canadian cattle and hog herds contracting in 2024

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

“The Canadian cattle herd is forecast to sustain the long-term trend of contraction in 2024. Drought impacts will see cow and heifer slaughter increase proportionally to herd size in 2023, limiting any growth potential. As a result of reductions in herd size, beef production will be lowered, as will beef exports. The Canadian swine herd is also forecast to contract in 2024 as sow barns are idled and processing capacity is removed in Eastern Canada. A smaller sow herd will see a smaller pig crop in 2024, and live exports will lower from 2023. Increased domestic consumption of pork will carry over into 2024. Pork export volumes will be lowered.”

 

Interested in more futures markets?  Explore our Market Dashboards here.