Global Ag News for Sept 28.22

HEADLINES TODAY

EU Soft-Wheat Exports Increase 0.6% Y/y; Corn Imports Surge 81%

EU soft-wheat exports during the season that began July 1 reached 8.8m tons as of Sept. 25, compared with 8.75m tons in a similar period a year earlier, the European Commission said on its website.

  • NOTE: The commission said the data may be incomplete, which has been the case for much of the season
  • Leading destinations are Algeria (1.26m tons), Morocco (1.13m tons) and Egypt (779k tons)
  • EU barley exports are at 2.04m tons, compared with 3.12m tons a year earlier
  • EU corn imports at 6.65m tons, against 3.67m tons a year earlier

MARKETS & WEATHER

Wheat prices overnight are up 3 1/2 in SRW, up 4 3/4 in HRW, up 3 in HRS; Corn is down 3 3/4; Soybeans down 13 1/2; Soymeal down $0.24; Soyoil down 1.36.

For the week so far wheat prices are down 5 1/2 in SRW, down 2 1/4 in HRW, down 3 in HRS; Corn is down 12 3/4; Soybeans down 31 1/4; Soymeal down $1.21; Soyoil down 2.65.

For the month to date wheat prices are up 43 1/2 in SRW, up 35 1/2 in HRW, up 16 3/4 in HRS; Corn is down 6 3/4; Soybeans down 28; Soymeal down $3.90; Soyoil down 6.45.

Year-To-Date nearby futures are up 14% in SRW, up 18% in HRW, down -4% in HRS; Corn is up 12%; Soybeans up 5%; Soymeal up 3%; Soyoil up 15%.

Chinese Ag futures (JAN 23) Soybeans down 6 yuan; Soymeal up 24; Soyoil down 10; Palm oil down 96; Corn down 16 — Malaysian palm oil prices overnight were down 294 ringgit (-8.35%) at 3229.

There were changes in registrations (-2 Soyoil). Registration total: 3,084 SRW Wheat contracts; 0 Oats; 0 Corn; 5 Soybeans; 46 Soyoil; 147 Soymeal; 40 HRW Wheat.

Preliminary changes in futures Open Interest as of September 27 were: SRW Wheat up 2,793 contracts, HRW Wheat down 1,572, Corn up 2,622, Soybeans up 11,389, Soymeal down 2,895, Soyoil down 2,212.

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

Central/Southern Plains Forecast: Mostly dry through Friday. Isolated showers Saturday. Temperatures near to above normal through Saturday. Outlook: Isolated showers Sunday-Thursday. Temperatures near to above normal Sunday-Thursday.

Western Midwest Forecast: Mostly dry through Saturday. Temperatures near to below normal through Thursday, near to above normal Friday-Saturday.

Eastern Midwest Forecast: Mostly dry Wednesday-Friday. Isolated showers far southeast Saturday. Temperatures near to below normal through Friday, near normal Saturday. Outlook: Isolated showers Sunday. Mostly dry Monday-Wednesday. Isolated showers Thursday. Temperatures near to above normal Sunday-Thursday.

The player sheet for Sept. 27 had funds: net buyers of 5,000 contracts of SRW wheat, buyers of 2,000 corn, buyers of 2,000 soybeans, sellers of 2,000 soymeal, and  sellers of 2,000 soyoil.

TENDERS

  • WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 61,800 tonnes of food-quality wheat from the United States and Canada in regular tenders that will close on Thursday, Sept. 29.
  • CORN SALE: South Korea’s Feed Leaders Committee (FLC) purchased about 68,000 tonnes of animal feed corn expected to be sourced from South America in a private deal without an international tender being issued, European traders said on Tuesday.
  • CORN SALE: South Korea’s Major Feedmill Group (MFG) has purchased an estimated 137,000 tonnes of animal feed corn expected to be sourced from South America or South Africa in an international tender which was both issued and closed on Tuesday, European traders said.
  • WHEAT TENDER UPDATE: Four trading companies were believed to be taking part in the international tender from Jordan’s state grains buyer to purchase 120,000 tonnes of wheat which closed on Tuesday, Sept. 27, traders said in initial assessments. But the country ultimately made no purchase.
  • WHEAT TENDER: Separately, 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.
  • MILLING WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins, European traders said on Tuesday. The tender sought a nominal 50,000 tonnes, but Algeria often buys considerably more in its tenders than the nominal volume sought. The deadline for submission of price offers in the tender is Thursday, Sept. 29, with offers having to remain valid until Friday, Sept. 30.

PENDING TENDERS

  • WHEAT TENDER: Pakistan’s tender to buy 300,000 tonnes of wheat closed on Monday with the lowest offer believed to be $398.92 a tonne c&f, European traders said in initial assessments. Only one trading house, Agrocorp, was believed to have submitted offers. The state agency Trading Corporation of Pakistan (TCP) is still considering the offers and no purchase has been reported, traders said.
  • 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.
  • BARLEY TENDER: Jordan’s state grain buyer is seeking 120,000 tonnes of barley for shipment in March and April in an international tender closing Sept. 28, a government source said.
  • 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.
  • MILLING WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase 51,800 tonnes of grade 1 milling wheat to be sourced from the United States, European traders said on Monday. The deadline for submission of price offers in the tender is Sept. 29.

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Sept. 23 are based on six analyst estimates compiled by Bloomberg.

  • Production seen higher than last week at 912k b/d
  • Stockpile avg est. 22.402m bbl vs 22.501m a week ago
  • Would be the lowest level since Dec. 2021

Egypt bought 3.5 million tonnes of wheat since the start of current fiscal year – minister

Egypt, the world’s biggest wheat importer, has bought 3.5 million tonnes of wheat since the start of the current fiscal year that started in July, the supply minister Aly Moselhy said on Tuesday.

Brazil Corn Exports Seen Reaching up to 7.132 Million Tns In September – Anec

  • BRAZIL SOY EXPORTS SEEN REACHING 3.818 MILLION TNS IN SEPTEMBER VERSUS 4.152 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
  • BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.013 MILLION TNS IN SEPTEMBER VERSUS 2.225 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
  • BRAZIL CORN EXPORTS SEEN REACHING UP TO 7.132 MILLION TNS IN SEPTEMBER VERSUS 7.618 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC

Russia Harvests 95% of Wheat Area; Yield Increases: IFX

Russia harvested 101.5m tons of wheat in bunker weight as of Sept. 27, compared with 73.9m tons this time last year, Interfax reports, citing the agriculture ministry.

  • NOTE: Bunker weight is before drying and cleaning
  • Yield increased to 3.33 tons/ha, from 2.62 tons/ha a year ago
  • Russia has also harvested 23.8m tons of barley, up from 18.1 tons at this time last year

Manitoba Says Frost Damage Relatively Light as Harvest Stalls

Few crops were harvested last week amid frequent rain and high humidity, the province’s agriculture ministry says Tuesday in a report.

  • Killing frosts reported in parts of the province
  • While some damage is expected in green canola and soybeans, overall crop injury “relatively light”
  • 47% of crops harvested, about 3.5 weeks behind five-year average of 79%

Goldman Says Commodities in ‘Negative Feedback Loop’ on Dollar

Commodities have been caught in a negative feedback loop driven by higher US rates relative to the rest of the world, US dollar gains, and weaker non-US economic growth, according to Goldman Sachs Group Inc.

  • At present, these dynamics are mutually self-reinforcing, bank analysts including Jeffrey Currie, Daniel Sharp and Damien Courvalin wrote in a note dated Sept. 27
  • With 12-month LIBOR at ~5%, cash is “extremely attractive relative to financial or physical commodity positions that need funding”
  • Still, the loop will be transient, not structural, ending when there’s a reconvergence in global rates

Ukraine Says Russia Is Poised to Disrupt Grain Shipment Accord

Ukraine sees a risk of disruption of an agreement that allows trade vessels to export its grain and other agriculture commodities through the Black Sea, partially blocked by Russia’s warships, President Volodymyr Zelenskiy said in his regular night address on Tuesday.

  • “It is obvious that Russia is preparing the ground for an attempt to disrupt the grain initiative”
  • NOTE: The deal was reached in July to help both Ukraine’s economy and poorer countries in order to prevent food shortages there
  • NOTE: Ukraine has exported more than 5 million tons of agricultural products from its three ports in the Black Sea since early August, basically to African countries including Algeria, Ethiopia, Egypt, Libya, Kenya, Somalia, Sudan, Tunisia

Ukraine 2023 winter wheat sowing 16% complete – ministry

Farms in regions controlled by the Ukrainian government have sown 622,000 hectares to winter wheat for the 2023 harvest, or 16% of the expected area, the agriculture ministry said on Tuesday.

The ministry did not provide a forecast, although Agriculture Minister Mykola Solsky told Reuters last month that the area could fall to 3.8 million hectares from 4.6 million a year earlier because of Russia’s invasion.

Kyiv-based Barva Invest consultancy said last week the area sown to winter wheat could total around 3.4 million hectares, 10.5% less than the agriculture minister expected. (Full Story)

Ukraine sowed more than 6 million hectares of winter wheat for the 2022 harvest, but a large area has been occupied by Russian forces since the invasion in February.

The ministry said in a statement that farmers had also sown 65,000 hectares of winter barley, or 10% of the expected area, and 27,000 hectares of rye, or 31% of the forecast.

It also said farmers had completed winter rape sowing, seeding a total of 961,000 hectares.

Ukraine harvested 19 million tonnes of wheat this year, compared with around 32.2 million tonnes in 2021. The sharp decline was the result of hostilities in many regions and the occupation of large areas by Russian forces.

First Deputy Agriculture Minister Taras Vysotskyi said last week Ukraine’s 2023 wheat harvest may decrease to 16-18 million tonnes from 19 million tonnes in 2022 because of an expected fall in the winter wheat sowing area.

U.S. needs to press Mexico on looming biotech corn ban, Vilsack says

U.S. Agriculture Secretary Tom Vilsack said on Tuesday he is continuing to talk with officials in Mexico about that country’s looming ban on genetically modified (GM) corn, adding that it will be important to get clarity on the issue in 2023.

A decree issued by Mexico’s President Andres Manuel Lopez Obrador in late 2020 would phase out GM corn and the herbicide glyphosate by 2024.

The United States could use the USMCA trade pact to challenge Mexico’s policies if needed, Vilsack said. Mexico is a top buyer of U.S. corn.

“I recognize the importance of 2023 in terms of getting clarity about exactly where we are,” he said on a livestream of a meeting with state agriculture officials in the United States.

“We do need to press the issue, and will this year and take whatever steps are necessary and appropriate to raise this issue a notch or two as we get closer to 2024.”

Some officials in Mexico’s government, including Agriculture Minister Victor Villalobos, have signaled that yellow corn imports for livestock feed will not be disrupted by the GM ban. U.S. farmers, however, remain wary since no official document states that, according to a U.S. agriculture official familiar with recent meetings with Mexican officials.

Vilsack said he told Lopez Obrador during a meeting that a disruption of U.S. corn shipments to Mexico for livestock feed would hurt Mexican consumers, particularly those who are poor. He did not say when the meeting took place.

“I’ve educated him on the importance of understanding the role of biotechnology, the role of production, and the connection to his livestock industry,” Vilsack said. He added that an inconsistent message from Mexico about biotechnology could chill innovation in the sector.

Corn for human consumption, including white corn used in food products like tortillas, accounts for between 18% and 20% of Mexico’s total U.S. corn imports. There are still questions about whether such GM imports will be eliminated by 2024.

Taliban Sign Deal With Russia to Buy Cheap Oil, Gas and Wheat

Afghanistan’s ruling Taliban have signed an agreement with Russia to import fuel and wheat at a discount as the country struggles to feed its population and seeks to boost regional trade a year after regaining power.

Items like gasoline, diesel, gas and wheat will be purchased in Russian rubles and at a “special discount,” said Abdul Salam Jawad Akhundzada, a spokesman of the Ministry of Commerce and Industry, by phone from Kabul on Wednesday. Preparations are underway to start importing the products “within days or weeks,” he said.

The deal, the largest such agreement the Taliban has signed since they returned to power, includes one million tons each of petrol and diesel, half a million tons of liquefied petroleum gas, and two million tons of wheat to be supplied annually until an unspecified date, Akhundzada said. More longer-term deals with Moscow are expected in the future, he added.

The agreement follows a visit to Russia last month by Afghanistan’s Minister of Commerce and Industry Nooruddin Azizi. In June, the Taliban struck a deal with Iran to purchase 350,000 tons of petroleum products to ease fuel prices.

No country has formally recognized the Taliban government however, Russia is one of a few to have kept its embassy in Kabul open. Moscow has also approached several Asian countries to discuss possible long-term oil contracts at steep discounts as US officials continue to try and push a plan that would cap the price of the country’s oil, a Western official told Bloomberg last month.

Afghanistan consumes 1.3 million tons of fuel annually, imported mostly from Uzbekistan, Turkmenistan, and Iran, according to the ministry.

China’s sow herd up 0.6% in August on month

China’s sow herd reached 43.2 million pigs in August, the state broadcaster reported on Wednesday, adding that it is 5.5% higher than normal levels required.

The sow herd has increased by 0.6% versus July, according to a Reuters calculation based on July data published by the agriculture ministry.

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now