Global Ag News for Apr 17.23

TOP HEADLINES

Egypt begins offering corn on commodities exchange

Egypt’s state grains buyer started offering yellow corn on the country’s newly-launched commodities exchange on Thursday, exchange head Ibrahim Ashmawy said in a statement on Saturday.

Egypt’s state buyer, the General Authority for Supply Commodities (GASC), started issuing rare tenders for corn earlier this year in an effort to address a feed crisis that hurt small producers and even led some farmers to cull chicks.

Supply Minister Ali Moselhy had said the corn would be offered to local producers on the exchange.

Egypt, a major buyer of basic commodities, has been suffering from a foreign currency crunch that sent the pound tumbling by nearly 50% against the dollar, suppressed imports, and pushed official headline inflation to 31.9% in February, its highest for five and a half years.

Egypt’s annual urban consumer inflation rate in March climbed to 32.7% year-on-year, just shy of an all-time record.

GASC has similarly offered wheat to struggling mills via the exchange, selling nearly 570,000 tonnes since the launch of the exchange in November, the statement added.

FUTURES & WEATHER

Wheat prices overnight are up 1/4 in SRW, down 7 3/4 in HRW, down 3 1/2 in HRS; Corn is down 1 1/4; Soybeans up 7 1/2; Soymeal up $0.14; Soyoil up 0.43.

Markets finished last week with wheat prices up 2 in SRW, down 2 3/4 in HRW, down 5 in HRS; Corn is up 4; Soybeans up 13; Soymeal up $1.01; Soyoil down 0.53.

For the month to date wheat prices are down 11 3/4 in SRW, down 6 1/4 in HRW, down 27 1/2 in HRS; Corn is down 1 1/2; Soybeans down 3/4; Soymeal down $3.10; Soyoil down 1.42.

Year-To-Date nearby futures are down 13.8% in SRW, down 2.1% in HRW, down 7.4% in HRS; Corn is down 1.9%; Soybeans down 0.8%; Soymeal down 3.6%; Soyoil down 15.2%.

Chinese Ag futures (JUL 23) Soybeans down 20 yuan; Soymeal down 53; Soyoil down 128; Palm oil down 44; Corn down 10 Malaysian palm oil prices overnight were up 83 ringgit (+2.24%) at 3785.

There were no changes in registrations. Registration total: 2,463 SRW Wheat contracts; 23 Oats; 22 Corn; 26 Soybeans; 613 Soyoil; 1 Soymeal; 1 HRW Wheat.

Preliminary changes in futures Open Interest as of April 14 were: SRW Wheat up 7,336 contracts, HRW Wheat up 5,498, Corn up 11,679, Soybeans down 1,997, Soymeal up 6,036, Soyoil up 2,620.

Northern Plains Forecast: A return of below normal temperatures will be warm enough to continue melting the remaining snowpack, but be slow enough to reduce the impact of flooding, which is becoming a major issue in the Red River Valley. Another system will move through this week with a few bursts of showers, including snow. Temperatures will fall back below normal and likely remain there for the rest of the month, which is unfavorable for fieldwork and planting.

Central/Southern Plains Forecast: Scattered showers went through mostly northern areas of the region over the weekend and were followed by colder temperatures, which made for some frosts across the west all the way down into the Texas Panhandle. Another system moves through this week with a few bursts of showers, but unlikely for the southwestern drought areas. Snow is not out of the question as colder air fills in behind it throughout the week. Additional frosts will be possibly more widespread over the coming weekend and maybe next week as well. Colder temperatures will be unfavorable for corn and soybean planting.

Midwest Forecast: A system brought scattered showers through the region over the weekend, including some accumulating snow across the north. That continues through Monday night before tapering off on Tuesday. Colder temperatures and localized frosty mornings will be possible, but impacts to winter wheat are not expected. Another system will move through with several rounds of showers later this week, including more potential for snow. Another burst of cold air will move through as well, which is more likely lead to widespread frosts and freezes that could be troublesome for winter wheat.

Delta Forecast: A system brought heavier precipitation through on Saturday. After a couple dry days, another system is likely to produce widespread precipitation in a few rounds. Many areas of the region are wet, limiting spring planting. Some areas that have been able to plant will find good conditions for germination and early growth, though temperatures will be on the cooler end of normal.

Europe Forecast: Scattered showers went through over the weekend, but left Spain dry which is having poor crop conditions for winter wheat and corn planting. A system over Mediterranean will keep showers going in the southeast this week. Another system will travel westward with spotty showers for northern areas. The weather pattern looks to get more active starting this weekend, which may include more showers across the south, including Spain. Overall though, conditions for winter and spring crops are mostly favorable.

Black Sea Forecast: Scattered showers fell over Ukraine over the weekend, mostly across western and central areas. A system in the Mediterranean will drift through the region later this week with more widespread precipitation. Overall, conditions continue to be mostly favorable for winter wheat development and corn planting.

Brazil Grains & Oilseeds Forecast: A cold front is sitting across south-central areas of the country with scattered showers. A system from Argentina will push this front north later this week. After some good rainfall in many areas, drier conditions look like they will be more likely afterward. The region is more dependent on systems moving through with wet season showers diminishing. But those are going to be in short supply for the rest of April. The later-planted crop may not be able to afford much dryness.

Argentina Grains & Oilseeds Forecast: It was mostly dry over the weekend. A small system will bring some isolated showers through early this week before drier conditions settle in for the following week. Overall, conditions are good for harvesting a damaged crop. Soil moisture is still sub-optimal for winter wheat planting and a drier stretch will not be helpful once planting starts at the end of the month. More rainfall is needed.

The player sheet for 4/14 had funds: net buyers of 7,750 contracts of SRW wheat, buyers of 12,500 corn, buyers of 3,250 soybeans, sellers of 1,500 soymeal, and  sellers of 750 soyoil.

TENDERS

• CORN PURCHASES: The U.S. Department of Agriculture confirmed private sales of 246,000 tonnes of U.S. corn to China for shipment in the 2022/23 marketing year and 136,000 tonnes for shipment in 2023/24.
• CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 68,000 tonnes of animal feed corn expected to be sourced from South America in a private deal on Friday without an international tender being issued.
• FEED WHEAT PURCHASE: An importer in Thailand is believed to have purchased about 55,000 tonnes of animal feed wheat expected to be sourced from the Black Sea region in a deal on Wednesday.

PENDING TENDERS

• FEED WHEAT TENDER: An importer group in the Philippines has issued a tender to purchase around 150,000 tonnes of animal feed wheat
• MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.
• BARLEY TENDER: Jordan’s state grains buyer has issued an international tender to purchase up to 120,000 tonnes of animal feed barley.

TODAY

BRIEF-Brazil’s 2022/23 soybean harvest hits 86.29% of planted area – Patria

BRAZIL’S 2022/23 SOYBEAN HARVEST HITS 86.29% OF PLANTED AREA VERSUS 89.12% A YEAR EARLIER – PATRIA AGRONEGOCIOS

US Pork Production Up 2.9% This Week, Beef Rises: USDA

US federally inspected pork production rises to 529m pounds for the week ending April 15 from 514m in the previous week, according to USDA estimates published on the agency’s website.

• Hog slaughter up 2.9% from a week ago to 2.438m head
• Beef production up 1.6% from a week ago, cattle slaughter rises 1.7%
• For the year, beef production is 4.6% below last year’s level at this time, and pork is 0.9% above

Brazil 2023 Soybean Export Estimate at 94M Mt: Safras

Brazil soybean export estimate is seen at 94m tons in 2023, +19% compares with last year, according to consulting firm Safras & Mercado.

Safras sees soybean import at 100.000 tons for 2023

SOYBEAN/CEPEA: Exports continue high, but domestic supply puts pressure on quotations

Although Brazil has been exporting record volumes of soybean and its by-products, domestic supply is still higher than demand. The 2022/23 has been surprising farmers, due to record productivity in most Brazilian regions, mainly in the Matopiba (Maranhão, Tocantins, Piauí and Bahia States) and Mato Grosso – according to Conab (Brazil’s National Company for Food Supply), production in these States is offsetting the losses in Rio Grande do Sul.

With the high volume produced in the current crop, agents from national cooperatives and cereal companies are reporting little room in warehouses. Thus, they are encouraging farmers to set higher volumes to sell. This scenario raised liquidity in the Brazilian spot market, despite the recent devaluations.

Both Conab and the USDA have revised up the production estimates for Brazil, to 153.63 million tons and 154 million tons, respectively. By April 8th, 78.2% had been harvested.

On the other hand, in Argentina, estimates have been revised down again by the USDA, to 27 million tons. Bolsa de Cereales forecasts an even lower volume: 25 million tons. Low supply in Argentina is expected to lead the country to import record volumes of soybean, forecast at 8.3 million tons, in order to keep processing going. This may raise Brazilian shipments even more, which are already estimated to set a record, at 92.7 million tons. The exports from Paraguay are also expected to increase, estimated at 6.4 million tons, according to the USDA. Thus, in the 2022/23 season, the country would be the third major soybean exporter in the world.

It is important to highlight that China, the top importer of soybean, is expected to purchase 96 million tons this season, 4.8% more than that from last season. In March/23, Brazil exported to China a record volume of soybean for the month, totaling 10 million tons, according to Secex.

As for prices, between April 5-13, the ESALQ/BM&FBovespa Paranaguá (PR) Index for soybean dropped a steep 5.7%, to BRL 145.80 (USD 29.59) per 60-kg bag on Thursday (13), the lowest nominal level since September 21st, 2020. The CEPEA/ESALQ Paraná Index decreased a steep 5.7%, to BRL 140.00 (USD 28.42) per 60-kg bag on Thursday, the lowest since September 18, 2020.

On the average of the regions surveyed by Cepea, soybean prices dropped 5.3% in the over-the-counter market (paid to farmers) and 5.5% in the wholesale market (deals between processors). The US dollar dropped 2.5% in the last seven days, to BRL 4.927 on Thursday, the lowest since June 9th, 2022. The dollar depreciation helped to lower quotations in Brazil.

CORN/CEPEA: With lower demand, Index drops 7% in April

Since late March, corn prices have been dropping steeply in the Brazilian market, pressed down by expectations for a record harvest in Brazil. While domestic purchasers are buying small amounts in the spot market, sellers have been more willing to lower asking prices, and exporters are prioritizing soybean trades.

In this context, this month, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) has decreased a steep 7%, to BRL 76.88 (USD 15.60) per 60-kg bag on Thursday, 13 – in seven days, this Index dropped 4.2%. The monthly average of the corn Index, which is currently at BRL 79.60/bag, is the lowest since Sept/20 (BRL 79.42/bag), in real terms (deflated by the IGP-DI from Ma/23).

Between April 6-13, on the average of the regions surveyed by Cepea, quotations decreased 3.9% in the wholesale market (deals between processors) and 5.1% in the over-the-counter market (paid to farmers). On the average of the month, prices dropped 5.2% and 5.7%, respectively.

Agents’ expectations and the recent estimates point to a high output in Brazil, despite the low ending stocks, concerns about the sowing delay for the second crop and the possibility of bad weather conditions, such as droughts and/or frosts in the coming weeks.

Conab estimates the initial stocks of corn at 8 million tons, the lowest since 2016/17, when the season began with a slight 5.3 million tons of corn. Besides, exports have been high – between January and April (four working days), Brazil exported 10 million tons of corn, against 4.2 million between Jan/22 and Apr/22.

ESTIMATES – In a report released this week, Conab raised production estimates for the Brazilian 2022/23 harvest, by 200 thousand tons compared to that forecast in March, due to the higher production of the summer crop. The 22/23 crop is now forecast to total 124.87 million tons, 10.4% up from that in 2021/22.

Domestic demand is forecast at 79.31 million tons this season, and exports (between Feb/23 and Jan/24), at 48 million tons. Ending stocks are estimated at 7.53 million tons, lower than the current levels, which may limit steeper devaluations in some periods.

CROPS – The second crop of corn is developing well in most Brazilian regions, with sporadic reports of lack of rains in Paraná. According to data from Conab released on April 8th, sowing is ending in São Paulo, Maranhão, Mato Grosso do Sul and Paraná, with the national average currently at 98.9%. On the other hand, data from Seab/Deral show that, by April 10th, sowing was over.

Ukraine’s Black Sea Crop Exports Rise 7% W/w in Week to April 16

The volume of crops departing Ukrainian ports under the Black Sea Grain Initiative totaled about 702,279 tons in the week to April 16, according to data posted by the Joint Coordination Centre.

• That compares with about 655,948 tons in the prior week
• TOTAL TONNAGE: More than 27.8m tons of crops have been shipped since the initiative was established in late July
• NOTE: The deal was renewed in mid-March; Russia said the extension is for 60 days, while Ukraine said it is for 120 days

Russia may set 18 mln T export quota on fertilisers from June

Russia may cap its export of nitrogen and compound fertilisers at about 18 million tonnes from June 1 to Nov. 30, draft legislation seen by Reuters on Friday showed.

Moscow introduced temporary quotas on some of its fertiliser exports in late 2021 to ensure domestic supplies but has extended them continuously since. The current restrictions were due to expire at the end of May.

China to Spend 10 Billion Yuan to Bolster Spring Grain Planting

China is spending 10 billion yuan ($1.5 billion) in farmer subsidies to support spring grain planting, the agriculture ministry said.

• Grain growers, including individuals, family farms and cooperatives, will be eligible for the funds
• Individuals and organizations that provide services for planting, growing and harvesting, will also qualify
• Local governments will decide on subsidy criteria and ensure timely distribution of the money

EU Says Poland, Hungary Halts on Ukraine Grain ‘Unacceptable’

• Decision from two eastern EU members follows weeks of protests
• Poland, Hungary say ban will stay in place until June 30

The European Union slammed moves over the weekend by Poland and Hungary to ban imports of grain from Ukraine, saying “unilateral actions” were unacceptable and a potential breach of the bloc’s trade policy.

Ukraine’s neighbors said Saturday they would halt the imports of grain and certain other foods – in Poland’s case, some meat and dairy products, as well as eggs – because the ample supplies had depressed domestic prices and is threating the livelihood of local farmers.

The moves followed weeks of farmer protests in Poland, an important constituency for the government in Warsaw months before a parliamentary election. The ban will add to existing tensions between Brussels and the two eastern members, whom the EU accuses separately of democratic backsliding.

“It’s important to underline that trade policy is of EU exclusive competence and, therefore, unilateral actions are not acceptable,” Miriam Garcia Ferrer, commission spokeswoman for trade and agriculture, said on Sunday. “In such challenging times, it is crucial to coordinate and align all decisions within the EU.”

The governments of Hungary and Poland have blamed the EU for allegedly being slow to address the plight of farmers there. Poland halted imports to avert a “crisis of agriculture,” Jaroslaw Kaczynski, leader of the governing Law and Justice party, said on Saturday. The bans are temporary and will stay in place until June 30, the two governments said.

Kyiv’s eastern neighbors had agreed that grain from the war-torn country could be transshipped through their territory after Russia blockaded Ukraine’s Black Sea ports for months following the February 2022 invasion. Exports from Ukraine’s Odesa-region ports resumed in August but remain below usual levels.

Although the grain was supposed to be shipped on from Europe to Africa and the Middle East, logistical bottlenecks meant some supplies started to pile up in eastern Europe.

In a letter to European Commission President Ursula von der Leyen this month, Bulgaria and four EU states adjacent to Ukraine pushed for the bloc to increase financial support to farmers, consider buying the surplus grain for humanitarian aid or even restrict imports from Ukraine.

“If current market trends continued, that would cause serious damage to Hungarian agriculture,” Hungarian Agriculture Minister Istvan Nagy said on Saturday. Ukraine’s lower-cost agriculture is undercutting Hungarian producers of poultry, eggs, honey, grain and oilseeds, he said.

Farmers protest against the duty-free import of grain coming from Ukraine in Rousse, Bulgaria, on March 29.

Hungary called on the European Union to reconsider “the full duty-free treatment of Ukrainian goods and the functioning of the solidarity corridors.”

The spat threatens to fray an alliance that turned the government in Warsaw into one of Ukraine’s staunchest supporters since the start of the Russian invasion, supplying weapons, humanitarian aid and accepting more than a million of refugees.

Poland “will keep on supporting Ukraine,” Kaczynski said at a rally on Saturday. “However, we have a duty to protect our citizens, farmers and avoid a crisis of our agriculture.”

Ukraine said Poland’s move violated an agreement in response to the protests, which stipulated that wheat, corn, sunflower seed and rapeseed could be shipped to Poland as long as it was sent on to other countries by July.

Urea Firms in Brazil as North America Competes for Supply

Brazil urea prices jumped this week as US demand ramped up and pushed prices higher in North America. The spike may be temporary, though, as limited off-season buying interest may pressure Brazil’s prices again before demand improves in 3Q.

Urea Prices Rebound in Brazil; Phosphates, Potash Remain Weak

Fertilizer price increases at New Orleans pushed Brazil urea prices higher and will likely pressure phosphates, as global supplies are diverted to meet heavy seasonal demand in North America. Imported urea jumped to $330 a metric ton (mt) vs. last week’s $295-$300, though inland markets were largely unchanged and will probably reflect the uptrend next week when suppliers adjust price lists. MAP and potash prices remained weak, with both down $10/mt vs. last week, but firming US prices may impact Brazil as producers adjust prices to reflect global markets.

Any price increase will likely be tempered by Brazil’s supply/demand balance, however, as potash and phosphate inventories in the country are reportedly at record levels and nitrogen demand is expected to be low until Q3.

Urea, Phosphate, Potash Prices Strengthen on Tight Supply

Strong spring demand and tightening supply pushed New Orleans (NOLA) and inland prices higher for urea, phosphates and potash. NOLA urea jumped to $350-$387 a short ton (st) from last week’s $318-$355, with the high confirmed late in the week for prompt, loaded barges. Diammonium phosphate (DAP) barges at NOLA rose to $620-$660/st vs. $610-$620 last week, with NOLA monoammonium phosphate (MAP) climbing $15-$20. Potash barges were impossible to find, leaving the price unchanged at NOLA but up $10-$30/st at inland warehouses. Corn Belt urea jumped $30-$35/st vs. last week, with DAP up $10-$30.

Ammonia prices were unchanged in the US, but strong demand and limited truck availability contributed to spotty supply outages in the Corn Belt. International ammonia prices were up slightly in Europe but down in the Middle East.

Canada’s Olymel to close Quebec hog plant, lay off 994 people

Canada’s Olymel, one of the country’s biggest pork processors, said on Friday that it would close a hog plant in Vallee-Jonction, Quebec by late this year, laying off 994 people.

North American pork processing plants are facing high costs from inflation and elevated grain prices.

Losses in the fresh pork sector are jeopardizing the entire company’s profitability, Olymel, which also processes poultry, said in a statement. Sollio Cooperative Group owns Olymel L.P.

The company announced plans in the past year to cut its slaughter capacity by 1.5 million hogs annually, making it necessary to close plants, said Olymel CEO Yanick Gervais.

“The pandemic, labor shortages, increased costs due to inflation, not to mention closure of the Chinese market, all this has had a major impact on the fresh pork market,” Gervais said.

China ceased imports from some slaughter plants due to COVID-19 outbreaks in 2020, and has not lifted those restrictions for some facilities.

A labor shortage in the region and the plant’s need for upgrades were also factors in closing it, Gervais said.

Quebec is Canada’s biggest hog-producing province. Olymel’s pork export markets include Japan and South Korea.

The Vallee-Jonction plant is one of four owned by Olymel that slaughters, cuts and debones hogs in Quebec.

Its closure will occur in stages to allow for processing of its remaining hogs and those in the region, with final closure set for Dec. 22.

In February, Olymel said it would close Quebec pork-processing plants in Blainville and Laval, resulting in 170 lost jobs there.

Rival Canadian packer HyLife Foods is poised to shut down a Minnesota hog plant if it can’t find a new owner, local media reported, citing a HyLife memo to the state government.

 

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