Global Ag News for Mar 17.22

TODAY – EXPORT SALES

Wheat prices overnight are up 11 3/4 in SRW, up 5 1/4 in HRW, up 4 3/4 in HRS; Corn is up 10 3/4; Soybeans up 12 3/4; Soymeal up $0.09; Soyoil up 0.81.

For the week so far wheat prices are down 30 1/2 in SRW, down 14 in HRW, down 29 1/4 in HRS; Corn is down 23; Soybeans down 15 1/2; Soymeal up $0.19; Soyoil down 1.74. For the month to date wheat prices are up 147 in SRW, up 124 3/4 in HRW, up 61 in HRS; Corn is up 50; Soybeans up 25 1/4; Soymeal up $32.60; Soyoil up 1.84.

Year-To-Date nearby futures are up 40% in SRW, up 34% in HRW, up 6% in HRS; Corn is up 25%; Soybeans up 25%; Soymeal up 16%; Soyoil up 32%.

Chinese Ag futures (MAY 22) Soybeans up 61 yuan; Soymeal up 62; Soyoil down 18; Palm oil down 138; Corn down 1 — Malaysian palm oil prices overnight were down 164 ringgit (-2.59%) at 6173.

There were changes in registrations (-2 Corn, -50 Soymeal). Registration total: 2,185 SRW Wheat contracts; 1 Oats; 15 Corn; 247 Soybeans; 98 Soyoil; 0 Soymeal; 154 HRW Wheat.

Preliminary changes in futures Open Interest as of March 16 were: SRW Wheat down 2,997 contracts, HRW Wheat down 737, Corn up 423, Soybeans up 47, Soymeal up 4,634, Soyoil up 1,277.

Northern Plains Forecast: Isolated showers Wednesday. Mostly dry Thursday-Saturday. Scattered showers Sunday. Temperatures above normal through Sunday. 6-to-10-day outlook: Scattered showers Monday. Mostly dry Tuesday. Scattered showers Wednesday-Thursday. Mostly dry Friday. Temperatures above normal Monday-Wednesday, near to above normal Thursday, near to below normal Friday.

Central/Southern Plains Forecast: Scattered showers Thursday-Friday. Mostly dry Saturday-Sunday. Temperatures near to above normal through Thursday, near to below normal Friday-Saturday, near to above normal Sunday. 6-to-10-day outlook: Scattered showers Monday-Tuesday. Mostly dry Wednesday-Friday. Temperatures near to above normal Monday, near to below normal Tuesday-Wednesday, near to above normal Thursday-Friday.

Western Midwest Forecast: Scattered showers south Thursday-Friday. Mostly dry Saturday-Sunday. Temperatures above normal through Sunday.

Eastern Midwest Forecast: Mostly dry Wednesday. Isolated showers Thursday. Scattered showers Friday-Saturday. Mostly dry Sunday. Temperatures above normal through Sunday.

 Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers Wednesday. Mostly dry Thursday. Scattered showers Friday, north Saturday. Mostly dry Sunday. Temperatures near normal Wednesday, near to above normal Thursday-Friday, near to below normal Saturday-Sunday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Sunday. Temperatures near normal through Sunday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry Wednesday. Isolated showers Thursday. Mostly dry Friday-Sunday. Temperatures near to above normal through Thursday, below normal Friday-Sunday. La Pampa, Southern Buenos Aires Forecast: Mostly dry Wednesday. Isolated showers Thursday. Mostly dry Friday-Sunday. Temperatures near to above normal through Thursday, below normal Friday-Sunday.

The player sheet for 3/16 had funds: net sellers of 15,000 contracts of  SRW wheat, sellers of 20,000 corn, sellers of 6,000 soybeans, sellers of 5,000 soymeal, and  sellers of 1,000 soyoil.

TENDERS

• WHEAT TENDER: Iranian state agency the Government Trading Corporation (GTC) has issued another international tender to purchase about 60,000 tonnes of milling wheat
• FEED GRAIN TENDER: Iranian state-owned animal feed importer SLAL has issued an international tender to purchase up to 60,000 tonnes of animal feed barley, 60,000 tonnes of feed corn and 60,000 tonnes of soymeal
• SOYOIL TENDER: Iran’s state purchasing agency GTC has issued an international tender to purchase about 30,000 tonnes of soyoil
• FEED WHEAT TENDER: Two importer groups in the Philippines have issued separate tenders to purchase together a total of around 270,000 tonnes of animal feed wheat
• BARLEY SALE: Japan will import 760 tonnes of feed-quality barley for livestock use via a simultaneous buy and sell (SBS) auction that closed late on Wednesday, the Ministry of Agriculture, Forestry and Fisheries (MAFF) said.
• BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
• CORN TENDER: The Korea Feed Association (KFA) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn to be sourced from optional origins
• WHEAT SALE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 104,483 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that closed on Thursday.
• FAILED WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Wednesday

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• BARLEY TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy a nominal 50,000 tonnes of animal feed barley to be sourced from optional origins
• WHEAT TENDER: Turkey’s state grain board, TMO, has issued an international tender to purchase and import about 270,000 tonnes of milling wheat
• BARLEY TENDER: A buyer in Qatar has issued a tender to buy an estimated 105,000 tonnes of animal feed barley

DOE: U.S. Ethanol Stocks Rise 2.7% to 25.945M Bbl

Russia-Driven Fertilizer Chaos Shows Innovation Need: USDA Chief

Fertilizer market chaos stemming from Russia’s attack on Ukraine is underscoring the need for a self-sufficient U.S. economy that isn’t reliant on foreign resources, USDA Secretary Tom Vilsack says.

• Unfortunately, the U.S. today is reliant “on someone who feels that they can just invade another country for something that’s critical to agriculture — fertilizer,” Vilsack says at a bioeconomy conference in Washington
  • “Fertilizer costs have gone up in part” because of dependence on Russia, Vilsack says
• Says he met earlier with agriculture ministers from Latin America and South America
  • “To a person they expressed concern about the impact of fertilizer on their ability to grow the crops and their ability to feed the world”: Vilsack

‘Sacrifices’ Are Needed, USDA Chief Says on Fertilizer Sanctions

The U.S. is pushing for ways to improve efficiency in fertilizer applications amid efforts to reduce production costs and reduce the amount of crop nutrients used, Agriculture Secretary Tom Vilsack said Wednesday during a virtual FAO meeting.

• While sympathetic to concerns on rising costs and shortages in some parts of the world, he says Russian sanctions on fertilizers are necessary as an action against the Ukraine invasion
• “Maybe sacrifices are necessary to address the unjustified war that Russia has chosen to start,” Vilsack said
• Export bans must be avoided as an attempt to control prices
• Northern Hemisphere is doing what it can to stimulate larger plantings and contribute to food security
• Brazil Agriculture Minister Tereza Cristina proposed to FAO and IICA (Inter-American Institute for Cooperation in Agriculture) that fertilizers be exempted from Russian sanctions to ensure food security
  • Lower fertilizer use means lower yields, which may boost food inflation further and threats food security, she says
  • Brazil’s suggestion got support from other South American nations such as Uruguay and Paraguay

USDA Chief Says More Biofuel Blending Means Lower Gasoline Price

“As we deal with the current situation in Ukraine and Russia, what we know is that we’ve seen higher gas prices and we know — we know — that when you have more biofuel you’ve got lower gas prices,” U.S. Agriculture Secretary Tom Vilsack says.

• As “we expand availability” of fuel with higher blends of ethanol and biodiesel, known as E15 and B20, there is opportunity to “increase capacity, increase supply and decrease cost to consumers,” Vilsack says at opening of Advanced Bioeconomy Leadership Conference in Washington
• NOTE: While USDA is investing to expand access to higher biofuel blends, producers are lobbying EPA and lawmakers to allow year-round sales of the fuels
  • Refiners have long been resistant to using more biofuels at the expense of selling less gasoline, and argue that higher blends don’t lower prices at the pump
• The Biden administration supports the biofuel industry and “despite the conversation about electric vehicles, the reality is we are still going to need biofuel, and a lot of it, for a long time”: Vilsack

Germany Likely to Reap Average Grains Harvest in 2022: DRV

Germany’s 2022 wheat harvest is estimated at 22.6m tons, up 5.8% from last year, agricultural cooperatives group DRV says in its first outlook for the year.

• Barley crop seen rising 1.6% y/y to 10.6m tons
• Corn crop seen falling 7% y/y to 4.1m tons
• Rapeseed crop seen rising 12% y/y to 3.9m tons
• Total grains harvest seen rising 2.5% to 43.2m tons
  • This would be an average amount, DRV says in its press release
  • Historical peaks of up to 50m tons are unlikely even with optimal weather
• Fertilizer exports to Europe can no longer be processed due to the financial sanctions imposed on Russia, DRV says
• In some cases, fertilizer costs four times as much today versus a year ago, says Guido Seedler, a grain-market analyst for the group
• Supply bottlenecks may occur, hampering harvest volumes or quality

Ukraine Farmers Seen Facing Diesel Shortage Amid War Fallout

• Fuel supply is critical factor for grain crop: UkrAgroConsult
• War is undermining food-export potential, says ministerBy Irina Anghel

Ukraine’s fuel supply is the most critical factor facing the country’s grain farmers as they deal with the fallout from war, UkrAgroConsult reported, citing a government official.

There is a shortage of diesel — supplied across the western border — which is a top priority for sowing, the consulting agency said, summarizing an online meeting with Taras Vysotsky, first deputy minister of Agrarian Policy and Food.

Russia’s invasion of Ukraine last month has roiled commodity prices, upending markets from agriculture to fuel. The countries are two of the world’s largest wheat exporters.

Vysotsky said Ukraine has enough grain stocks for 2-3 years of domestic consumption, according to UkrAgroConsult. Corn and sunflower areas will likely decline as farmers prioritize crops like barley, oats and peas, which are easier and cheaper to grow.

In a separate statement, Ukraine’s food and agriculture ministry said the country is doing everything possible to prevent food shortages and maintain food security.

“Despite the difficulties in having to conduct field work, Ukraine will have bread,” said deputy minister Taras Dzioba. “Of course, the export potential is significantly undermined by this war, which will lead to higher prices.”

The conflict is destroying infrastructure and supply chains, which is leading to longer shipping times and driving up costs, he added.

Argentina analyzing soy oil, meal tax hikes amid inflation battle – gov’t source

Argentina, the world’s top exporter of processed soy products, is weighing raising taxes on soybean oil and meal exports as part of a plan to tamp down sky-high inflation, a government source told Reuters on Wednesday.

The government halted registration of new export sales of soy oil and meal on Sunday, drawing swift condemnation from the industry and triggering speculation the tax rate for soy oil and meal exports could be hiked. (Full Story)

The government has yet to comment publicly on its plans.

Soybean oil and meal exports are taxed at 31%, while raw soybeans are taxed at 33%. A hike could eliminate a tax benefit President Alberto Fernandez previously granted the agro-industrial complex, leveling the rate at 33%.

“Regarding the possibility of removing benefits from the agro-export industry, it is part of the measures that are being analyzed,” said a government source, asking not to be named.

Argentina, the world’s No. 1 processed soy exporter and No. 2 for corn, has benefited from soaring grains prices on its exports, though it has struggled to tamp down domestic prices.

Center-left President Fernandez pledged a “war” against inflation this week after the latest official data showed annual inflation running at above 52% and spiking due to the Russian invasion of Ukraine. (Full Story)

State coffers would see an additional $425 million in tax collection if two-point tax hike on soy meal and oil went ahead, the Buenos Aires grains exchange estimated in a report, funds which could potentially help subsidize local food costs.

A source in the agro-export sector said the government was likely looking to hike export taxes.

“That’s the way to rake in dollars,” the source said.

Last year, Argentina’s soybean oil and meal exports totaled $34.9 billion, making it the country’s main source of foreign currency income, key to replenishing depleted reserves.

Indonesia Hikes CPO Export Levy to Secure Domestic Supply: Lutfi

Indonesia will increase its maximum levy on palm oil exports in line with higher global prices as the top grower looks to secure domestic supplies of cooking oil, according to Trade Minister Muhammad Lutfi.

• Crude palm oil export duties will be increased to $675/ton, from $375/ton currently, Lutfi said at a parliamentary hearing on Thursday
  • For every $50 increase in CPO, levy will be raised by $20/ton until it reaches the new maximum rate
• Government also adds a new bracket for CPO prices of between $1,000 and $1,500 a ton
• Higher export duties will make it more profitable for companies to sell palm oil to the domestic market, he said
• Indonesia plans to revoke its domestic market obligation policy on palm oil exports

Indonesia Issues Export Permit for 3.51 Million Tons of Palm Oil

Indonesia issued 3.51 million tons of palm oil export permit between Feb. 14 and March 16, Trade Minister Muhammad Lutfi said at a parliamentary hearing on Thursday.

Permits include 129,843 tons of crude palm oil, 1.46m tons of RBD palm olein and 716,091 tons of RBD palm oil

Soy Tax Hike Would Spell Trouble for Argentine Crushers: Bourse

If Argentina hikes export taxes of soy meal and soy oil to match the rate for unprocessed soybeans, it would make crushers less competitive, the Buenos Aires Grain Exchange says in a joint paper with farm institute Inai.

• NOTE March 14: Argentina’s agriculture industry is bracing for meal/oil taxes to jump to 33%, the same rate as beans, from 31% currently
• Eliminating the 2 ppt tax differential would mean more sales to China, which buys only unprocessed soy from Argentina, and lower prices as competing trades fade from crushers who ship to several countries
• Argentine crushers have been losing global market share over the last decade, growing at an annual rate of just 1.2%, below the average among rivals of 3.9%, and operating with high idle capacity
• With the 2 ppt increase, Argentina’s government would boost tax revenues from the upcoming soy crop by $425m
  • Revenues from meal/oil would rise to $7.03b from $6.61b
  • 5m metric tons of meal/oil that traders have already registered for export can’t be impacted by tax changes. The remaining volume that can be impacted is forecast at 28.3m (23.6m meal and 4.7m oil)

EU Has to Reduce Corn Imports on ‘Colossal’ Ukraine Fall

The European Union, which relied on Ukraine for over half of its supply of corn, will find it difficult to find alternative sources of supply especially after Serbia announced a ban on several agricultural exports, Hemeline Macret, grain market analyst at Strategie Grains, said at a webinar on Wednesday.

• The country could reduce its corn exports by 13 million tons by the end of September if the war continues into the summer
• Strategie Grains expected Ukraine to export over 30 million tons of corn before the war
• “This is a colossal fall and it happens in an already tight global market”: Macret

Rapeseed Supplies to See ‘Severe’ Impact from Ukraine Loss: UFOP

The war in Ukraine will significantly crimp the global supply of rapeseed since the country is one of the biggest exporters, German oilseed group UFOP says Wednesday in an emailed note.

• Rapeseed supply already is characterized by scarce availability, UFOP says
• If Ukraine’s exports continue to be curbed because of blocked ports, that supply likely will become significantly tighter
• Canada and Australia also are major exporters
• NOTE: EU is the world’s top rapeseed importer, USDA data shows
• NOTE: Paris rapeseed futures reached an all-time high earlier this month

Nitrogen Supply Curtailed by Surging Gas, Russian Sanctions

Nitrogen’s global supply squeeze is set to worsen in 2Q after war and sanctions on Russia removed the low-cost, high-volume exporter from the market. Chinese exports are banned through May. Europe’s ammonia production demands significantly higher prices to resume, while India’s planned expansion could change trade flows — if it can source natural gas.

CF Industries boosts U.S. fertilizer shipments as war cuts Russian exports

CF Industries Holdings is increasing fertilizer shipments to both U.S. coasts from the world’s largest nitrogen complex in Louisiana to help offset a decline in exports from Russia after it invaded Ukraine, Chief Executive Tony Will said.

Global fertilizer supplies have tightened and prices have increased from already high levels as sanctions bite Russia and its ally Belarus. Nitrogen fertilizer is one of the most commonly used fertilizers to boost production of corn, canola and other crops.

Illinois-based CF Industries leased several vessels to transport more fertilizer, mostly liquid nitrogen, from its complex in Donaldsonville, Louisiana, Will told Reuters. The company can ship products up the Mississippi River to the Midwest and load vessels to sail downriver through the Gulf of Mexico to tanks on either coast.

Russia has previously accounted for 15% of U.S. nitrogen imports, said the Fertilizer Institute, an industry group. Russia is also a major exporter of natural gas, a key input in producing nitrogen fertilizer.

To boost supplies, CF Industries delayed maintenance work at one of its six plants in Donaldsonville until the second half of the year to avoid taking the facility offline, Will said.

CF Industries has five U.S. nitrogen manufacturing complexes, along with plants in Canada and the United Kingdom. The company’s ability to increase production is limited because it tries to operate plants at their maximum rate all year, Will said.

Ukraine’s Corn Harvest in 2022 Seen Falling by a Third: SovEcon

Ukraine’s 2022 corn output could fall to 27.7m tons from 41.9m tons last year, consultant SovEcon said in a note.

• Yields and plantings will be substantially impacted by lack of fuel, labor and fertilizer, and fieldwork difficulties
  • Wheat areas also lacking precipitation
• Estimate for Ukraine wheat harvest this year cut to 26m tons from earlier outlook of 28.3m tons
  • Compares with 32.1m tons last year
• Regions directly affected by the war account for 40% of the nation’s corn and wheat production
• Forecasts assume that Russia will reach a ceasefire within next several weeks and that the majority of farmers can still conduct fieldwork in April

Satellite imagery indicates less favorable conditions for China wheat – Refinitiv Commodities Research

2022/23 CHINA WHEAT PRODUCTION: 136.8 [132.4–141.0] MILLION TONS, down <1% from last udpate

Winter wheat crops in the southern portions of the North China Plains broke dormancy, but suppressed satellite imagery indicated less favorable conditions for the crop. Warm temperatures dominated over the past three weeks with little or no precipitation across the southern half of the key winter wheat producing areas. Weather forecasts call for widespread heavy rainfall (up to 95 mm) in the south and temperatures will drop rapidly to near freezing over the next 10 days. The expected rain will alleviate recent dryness, but the cool temperatures may cause some cold damage to the crop out of dormancy.

Brazil corn production slightly down despite rapid planting/harvest progress – Refinitiv Commodities Research

2021/22 BRAZIL CORN PRODUCTION: 109.3 [99.7–116.2] MILLION TONS, DOWN <1% FROM LAST UPDATE

Continued near record low vegetation density levels in the South/Southeast and Central-West fractionally decrease 2021/22 Brazil total corn production to 109.3 [99.7–116.2] million tons, despite rapid second corn sowing progress. Our current median estimate is 4.7 million tons below the USDA World Agricultural Outlook Board (WAOB)’s 114 million tons, which assumes total corn sowings at 20.8 million hectares and national level yield of 5.48 tons per hectare (tph) (vs. Refinitiv Ag Research’s 20.7 million hectares and 5.29 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 112.3 million tons and 21.1 million hectares, respectively. As of 12 March, Brazil’s first corn is 33.7% harvested according to the latest CONAB crop progress report (14 March), largely in line with last year’s pace. The second corn is 87.4% planted nationally, well ahead of last year’s 71.5%, mainly thanks to rapid soybean harvest pace (+14.5% compared to last year). Into the second half of March weather conditions should remain similar to those experienced over the past week, with near normal precipitation not much hindering planting/harvest activities.

U.S. winter wheat production unchanged as warmth returns but drought continues – Refinitiv Commodities Research

2022/23 U.S. WINTER WHEAT PRODUCTION: 37.9 [34.6–41.2] MILLION TONS, UNCHANGED FROM LAST UPDATE

Outlooks for 2022/23 U.S. winter wheat planted area and production are unchanged at 35.1 million acres and 37.9 [34.6–41.2] million tons, respectively. In Winter Wheat and Canola Seedings (12 January), USDA set its initial estimate of 2022/23 plantings at 34.4 million acres, up 2% from last season.

As the winter wheat crop begins to green up and moves into booting/heading stages in coming weeks, potential cold weather outbreaks may lower yield potential and will thus need to be monitored closely. Forecasted temperature anomalies for the second half of March (from the Refinitiv’s Weather Research team) are expected to be generally warmer than normal across much of the HRW regions through the eastern SRW belt. Both EC/GFS model guidance indicates a major warm-up during the second half of March, relieving spring freeze concerns at the moment. While short-term outlooks appear to be optimistic, uncertainty remains for the long term. If a warm early March was followed by sudden cold temperatures, spring freeze risk on the winter wheat crop could be elevated due to crops being pulled out of dormancy earlier than expected. Any wheat at this time of the year reaching the jointing stage could be at risk if overnight temperatures were to drop below 24 °F for two hours or more. The result could be moderate to severe freeze damage as the growing point of the crop emerges from the soil exposing it to cold temperatures.

USDA’s latest monthly crop progress (22 February) and many local reports continue to discuss the risks of low soil moisture in the Southern Plains and Southwest U.S. Kansas’ topsoil moisture supplies are reported to be 79% short or very short, and nearly 90% of the whole Oklahoma region is currently in the severe/extreme drought category. The similar goes for the key crop areas of northern Texas (where over 70% of the state’s total wheat is grown), which has barely received any rain since the beginning of the planting season. Most eastern U.S. regions are expected to pick up some degree of rainfall later this week and next week, but the western portion of the Southern Plains and Southwest U.S. will likely continue to miss out on precipitation, warranting close attention.

French foie gras output to fall for third year as bird flu hits

French foie gras output will fall for the third consecutive year in 2022 after a severe wave of bird flu led to the culling of millions of animals in southwestern France and a second wave is spreading fast in the west, producers said on Wednesday.

France is trying to contain outbreaks of avian influenza which has spread rapidly since last month in the Pays de la Loire region, a major poultry zone further up France’s Atlantic coast.

Bird flu is often carried by migrating wild birds. The extremely aggressive and highly contagious H5N1 strain has been spreading quickly in Europe in recent months, prompting massive culls in several countries.

In France, producers of duck and geese delicatessen traditionally have been severely hit by bird flu crises due to their flock density and their birds usually being kept outside.

A complete shutdown of farms in the southwest, which represents 40% of French foie gras output, had limited outbreaks and a production restart was due on March 29 in the region.

But the sudden wave of outbreaks since the end of February in the Pays de Loire, relatively spared so far, further darkened the outlook, as the region provides 72% of the chicks needed to restart output, they said.

Producers also called for a rise in prices to make up for soaring energy and grain costs, as ducks mostly eat maize.