Global Ag News for Sept 29.23

TOP HEADLINES

China’s craft brewers cheer return of Australian barley imports

The return of Australian barley imports to China has brought a happy buzz to at least one industry – brewers of craft beers who are hoping for a much-needed reduction in costs.

The last three years have not been good to China’s nascent craft brewing sector. First, the pandemic kept customers away from bars and then the Chinese government in 2020 imposed heavy anti-dumping tariffs on Australian barley and wine, widely seen as retaliation for calls by Canberra for an inquiry into the origins of COVID-19.

The barley tariffs were dropped last month after an easing in trade tensions. That will help lower costs for all brewers in China, but particularly craft beer brewers who use pure malt and don’t add other ingredients such as broken rice or starch, making their products more expensive.

In the three years prior to the tariffs, China bought between 86% and 91% of Australia’s malting barley exports, Australian government data shows. Those shipments sometimes accounted for more than half of Chinese malting barley demand, depending on the year.

“The return of Australian barley means everyone will be happier,” said Miller Meng, brewmaster at Shanghai craft beer bar, The Brew.

FUTURES & WEATHER

Wheat prices overnight are up 5 3/4 in SRW, up 5 in HRW, up 4 1/4 in HRS; Corn is up 1; Soybeans up 3; Soymeal up $0.30; Soyoil down 0.22.

For the week so far wheat prices are up 2 1/4 in SRW, down 26 in HRW, down 21 1/2 in HRS; Corn is up 11; Soybeans up 6 3/4; Soymeal up $5.20; Soyoil down 2.63.

For the month to date wheat prices are down 17 1/2 in SRW, down 37 1/4 in HRW, down 15 1/2 in HRS; Corn is up 10 1/4; Soybeans down 65 1/4; Soymeal down $12.30; Soyoil down 5.82.

Year-To-Date nearby futures are down 26.5% in SRW, down 22.8% in HRW, down 20.2% in HRS; Corn is down 28.0%; Soybeans down 14.2%; Soymeal down 19.1%; Soyoil down 8.2%.

Malaysian palm oil prices overnight were up 5 ringgit (+0.13%) at 3776.Malaysian palm oil prices overnight were up 46 ringgit (+1.22%) at 3817.

China markets are closed for holiday.

There were changes in registrations (275 Soymeal). Registration total: 3,005 SRW Wheat contracts; 741 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 299 Soymeal; 402 HRW Wheat.

Preliminary changes in futures Open Interest as of September 28 were: SRW Wheat up 3,727 contracts, HRW Wheat up 3,424, Corn up 3,517, Soybeans up 6,332, Soymeal up 6,929, Soyoil down 5,475.

Northern Plains: A front will move in on Thursday and stall, producing scattered showers through the weekend and into next week. Recent and forecast rainfall may help the remaining areas of immature corn and soybeans, but is hampering early harvest progress.

Central/Southern Plains: Isolated showers may start developing in the region and continue into next week with a trough digging into the West. A front should push eastward around the middle of next week and may bring some more widespread showers through the region. Showers would benefit winter wheat establishment where they occur, but may delay harvest a bit.

Midwest: A cutoff low-pressure system will continue to slowly move east through with scattered showers Thursday. Recent rainfall was heavy in spots, but with how dry soils have been, delays to harvest and winter wheat planting will likely be short unless more rain comes next week. Models are now suggesting that a cold front moves through with more widespread precipitation later next week, along with colder air.

Delta: Isolated showers moved through over the last few days, but most areas stayed dry. Drier weather will continue for the next week, forcing crops to maturity and favoring harvest.

Brazil: A front has moved into central Brazil where it has stalled and started producing scattered showers for the start of the wet season. Planting conditions are very good outside of the state of Rio Grande do Sul, which has had issues with flooding. Another front moving in later next week could add to the heavy rain totals there.

Argentina: An overall drier pattern continues through the weekend which should promote planting, but soils are still in need of moisture coming off of last year’s historic drought. El Nino favors the country with better rainfall during the season, however, and another front will move through early-mid next week with the promise of more showers.

The player sheet for Sept. 28 had funds: net sellers of 1,000 contracts of SRW wheat, buyers of 4,000 corn, sellers of 3,000 soybeans, buyers of 1,500 soymeal, and  sellers of 4,500 soyoil.

TENDERS

• CORN PURCHASE: Chinese importers are believed to have made large purchases of animal feed corn from Ukraine in the past two weeks
• CORN, SOYMEAL PURCHASE: Iranian state-owned animal feed importer SLAL is believed to have purchased animal feed corn and soymeal in international tenders. Volumes were unclear but traders spoke of a substantial purchase of several corn shipments and around 120,000 metric tons of soymeal.
• CORN PURCHASE: Algerian state agency ONAB is believed to have bought around 60,000 metric tons of animal feed corn in an international tender.

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

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 Sept. 21, according to data on the USDA’s website.

• Top buyer of soybeans: China with 581k tons
• Top buyer of corn: Mexico with 277k tons
• Top buyer of wheat: Philippines with 115k tons
• Biggest cancellation: 335k tons of soybeans from Unknown Buyers

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 Sept. 21, according to data on the USDA’s website.

• Mexico bought 11.6k tons of the 27.4k tons of pork sold in the week
• Japan led in beef purchases

India’s Oilseed Production Seen Falling 7.2% in 2023-24: GGN

Production of oilseeds in India, the world’s biggest importer of vegetable oils, is expected to fall by 7.2% from a year earlier in 2023-24 due to erratic weather conditions, according to a research firm.

• Output could drop to 27.83m tons next year from 30m tons in 2022-23, Nirav Desai, managing partner of India’s GGN Research, said at an industry event in Mumbai on Thursday
• Production is seen falling 7.5% to 15.34m tons during the monsoon-sown season and decline by 6.9% to 12.49m tons in the winter-sown season

Argentine Corn Production Estimate Sept. 28: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2023-24 corn planted area est. held at 7.3m ha
  • Planting 7% complete

Argentina Drought Extends, Hurting New Round of Crops: Bourse

A drought in Argentina that decimated the 2022-23 harvest is drawing out, despite forecasts for widespread, plentiful rains, impacting the new round of 2023-24 crops.

• Planting of the early corn crop is delayed on dry farms, the Buenos Aires Grain Exchange said in a weekly report
• Wheat plants need rain soon to avoid losses to yield potential
• 27% of wheat is in a poor-to-very-poor condition vs. 22% last week

Brazil soy exports seen reaching 99 mln tns in 2024 – Safras

• BRAZIL SOY EXPORTS SEEN REACHING 99 MILLION TNS IN 2024 VERSUS 98 MILLION TNS IN 2023
• BRAZIL SOYBEAN PROCESSING SEEN REACHING 55 MILLION TNS IN 2024 VERSUS 53 MILLION TNS IN 2023
• BRAZIL TOTAL SOYBEAN SUPPLY SEEN AT 168.87 MILLION TNS IN 2024, UP 6% FROM PREVIOUS CYCLE
• BRAZIL SOYMEAL OUTPUT SEEN REACHING 42.3 MILLION TNS IN 2024, UP 4% FROM PREVIOUS YEAR
• BRAZIL’S SOYMEAL EXPORTS SEEN REACHING 21.5 MLN TNS IN 2024, DOWN 2% FROM PREVIOUS YEAR – SAFRAS

EU Cuts 2023 Soft-Wheat, Corn and Barley Crop Estimates

This year’s soft-wheat harvest is now seen at 125.3m tons, down from an August estimate for 126.1m tons, the European Commission said in a report.

• Export estimate kept steady at 32m tons
• Corn crop estimate cut to 59.8m tons, from 61.7m tons
• Barley crop estimate cut to 48.4m tons, from 48.6m tons

Indonesia’s July palm oil exports at 3.52 mln tonnes -association

The world’s largest palm oil producer Indonesia exported 3.52 million metric tons of palm oil in July, including refined products, up 21.8% compared to the same month last year, Indonesia Palm Oil Association (GAPKI) said on Friday.

Production of palm and kernel oils in July stood at 4.77 million tons, while the end-July stock was at 3.13 million tons.

Turkey Says Durum Wheat Export Application Period to End in Oct.

“’In the beginning of October, export applications for durum wheat will be evaluated and permits will be allocated,” Cagatay Maras, Head of Trade Department, Turkish Grain Board said in an International Grains Council webinar.

• There will not be a total ban in the near future but new licenses will not be published after October
• After October, further export applications will not be evaluated
• Boost in durum production this season has met domestic demand and bolstered Turkey’s exports this season
• Says hundreds of thousands of licences remain in private sector which have not been used

Ukraine’s Grain Harvest Advances 17% from Last Year: Ministry

Grain harvest was 30.5m tons as of Sept. 29 for the season that started on July 1, Ukrainian Agriculture Ministry says in a statement on website.

• Total includes:
  • 22.2m tons of wheat, up 16% y/y
  • 5.9m tons of barley, up 7% y/y
  • 793,200 tons of corn, which is five times more compared to previous season
• Sunflower seed harvest is more than 5m tons, three times more than same period a year ago
• Soybean harvest is so far 2.2m tons vs 375,000 year ago
• Sugar beets harvest is 2.3m tons vs 1m tons year ago

Argentina Appeals Court Suspends Cramdown in Vicentin Case

An appeals court in Santa Fe province suspended a cramdown process initiated by a bankruptcy judge earlier this month, according to a court ruling seen by Bloomberg News.

• The cramdown is suspended until the appeals court decides on the broader issue of a proposal by bankrupt Vicentin to restructure its debt and proceed to a takeover by Bunge, Viterra and local cooperative ACA, according to an external PR representative for Vicentin
• NOTE: The cramdown would seek restructuring/takeover proposals from third parties

POULTRY/CEPEA: Farmers’ purchase power rises against soybean meal but decreases against corn

The purchase power of poultry farmers against the major inputs consumed in the activity (corn and soybean meal) has followed opposite directions this month in São Paulo State.

On the average of the regions in SP, the average price for live chicken is currently at BRL 4.93/kg this month, 1.4% higher than that from August. Live chicken valuations are mainly linked to the lower supply in the Brazilian market.

In the corn market, prices are following opposite directions between the regions surveyed by Cepea. While in the regions that produce second crops and in the ones that have high inventories prices are fading, in the typical corn-consuming areas and/or those that only produce summer crops, values are rising. In Campinas (SP), a typical corn-consuming region in Brazil, prices have been underpinned by the recent valuations at ports, majorly in Santos (SP).

Thus, in the wholesale market of Campinas, the average price for the 60-kg bag of corn is at BRL 54.33, 1.9% higher than that from August.

As for soybean meal, sales have been low, since domestic consumers have recently purchased volume enough for the mid-term and are not buying high amounts in the spot market. Between August and September, values faded a slight 0.4% in Campinas, to BRL 2,245.64/ton, on average, this month.

In this context, considering the live chickens sold in SP State and the corn traded in Campinas (ESALQ/BM&FBovespa Index), poultry farmers have been able to purchase 5.45 kg of corn by selling a kg of chicken, 0.4% less than that from August.

On the other hand, of soybean meal (sold in Campinas), farmers have been able to purchase 2.20 kg by selling a kg of chicken, 1.8% more than that from August.

US Crops in Drought Area for Week Ending Sept. 26: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending Sept. 26, according to the USDA’s weekly drought report.

• Corn crops experiencing moderate to intense drought unchanged from the previous week at 58%
• Drought exposure at this time last year was 40%
• Soybean crops in drought rose by 2 percentage points to 55%

New Zealand Institute Says El Nino Has Officially Arrived

NZ’s National Institute for Water and Atmospheric Research says a majority of its criteria for classifying an El Niño event were satisfied during September, according to emailed report.

• Says the Southern Oscillation Index was now firmly in El Niño territory, suggesting the atmosphere has become coupled to the ocean
• There’s around a 100% chance of El Niño continuing during October-December and over a 95% chance that it will persist through summer
• There’s a 75% chance for the continuation of El Niño conditions through autumn 2024
• Also notes India Ocean Dipole event similar to 2019
• Combined effects of the El Niño and IOD will create a pressure gradient that is expected to drive stronger than normal and frequent westerly quarter winds and occasionally intense lows and fronts into the western and lower South Island.
  • More frequent high pressure to the north of the country will also reduce, but not eliminate, the chance for atmospheric rivers
  • Seasonal wind strength is predicted to be above normal across the country
  • Warm periods will likely be followed up by sharply colder southerlies, contributing to a season that will have even more variability than a typical October-December

Brazil Nitrogen Prices Falter After India Tender Disappoints

After Brazil urea jumped $100 a metric ton at mid-month following India’s tender call, the market dropped again this week when India booked fewer tons at lower prices than expected. Potash prices also weakened amid slow demand, while phosphates increased slightly.

Prices Mixed in Slow Market

The fertilizer market in Brazil was at a standstill this week amid slow demand and challenging barter ratios for agricultural producers. Urea prices slipped to $390-$410 a metric ton (mt) cost and freight from last week’s $400-$415, with limited offers reported at $415-$420 ahead of another expected tender from India. Ammonium sulfate was down slightly to $200-$220/mt from last week’s $205-$220, while potash slipped to $340-$350/mt vs. $340-$360, with reports of multiple producers offering potash on a formula basis. Monoammonium phosphate (MAP) in Brazil increased to $550/mt from last week’s $530-$540 on reported sales of Russian product.

 

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