Global Ag News for Apr 18.24

TOP HEADLINES

Bug Plagues Argentina Crops in Setback for Milei’s Recovery Plan

• Corn growers suffer yield losses on ‘unprecedented’ outbreak
• Infestation comes as farmers recover from last year’s drought

Argentina corn farmers had high hopes for this season’s harvest after near-perfect weather conditions ended years of drought. A record crop would also bode well for President Javier Milei’s plan to turn around the nation’s embattled economy.  Now a bug is getting in the way.

Corn farmers are seeing their fields ravaged by a plague of leafhopper insects. The infestation is slashing production potential for the world’s third-largest exporter of corn just as harvesting gathers speed. Swarms of the tiny insects — spreading a disease on plants called spiroplasma — have grown so vast across the Pampas crop belt that analysts at the Rosario Board of Trade will likely continue to trim their output estimate.

“There’s a concern that the damage will keep increasing as the crop cycle progresses,” they wrote in a report, after calling the widespread impact of the pest “unprecedented.”

It’s a severe setback for a country still recovering from the worst drought in living memory. Farming is a huge component of Argentina’s economic activity, and its central bank desperately needs crop export dollars in the second quarter to boost its reserves of hard currency in order to scrap money controls.

The controls were designed to protect the peso, but they’re counterproductive for the broader economy. Milei, who’s served as president since December, has vowed to ditch them as he moves to free up business and lure investment.

FUTURES & WEATHER

Wheat prices overnight are up 3 1/4 in SRW, up 4 3/4 in HRW, up 7 1/2 in HRS; Corn is down 3/4; Soybeans down 4 1/2; Soymeal down $1.40; Soyoil down 0.18.

For the week so far wheat prices are down 15 in SRW, down 13 3/4 in HRW, down 3 1/4 in HRS; Corn is down 7 1/2; Soybeans down 27; Soymeal down $6.10; Soyoil down 1.02.

For the month to date wheat prices are down 20 1/4 in SRW, down 6 in HRW, down 4 1/4 in HRS; Corn is down 14 1/4; Soybeans down 45 1/2; Soymeal down $2.60; Soyoil down 3.10.

Year-To-Date nearby futures are down 14.0% in SRW, down 10.0% in HRW, down 11.5% in HRS; Corn is down 8.8%; Soybeans down 11.5%; Soymeal down 12.5%; Soyoil down 6.2%.

Chinese Ag futures (MAY 24) Soybeans down 7 yuan; Soymeal down 19; Soyoil down 28; Palm oil down 68; Corn up 5 — Malaysian Palm is down 27. Malaysian palm oil prices overnight were down 27 ringgit (-0.67%) at 3985.

There were no changes in registrations. Registration total: 438 SRW Wheat contracts; 0 Oats; 37 Corn; 499 Soybeans; 710 Soyoil; 26 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of April 17 were: SRW Wheat up 1,530 contracts, HRW Wheat down 3,370, Corn up 1,016, Soybeans down 5,398, Soymeal up 2,144, Soyoil down 2,477.

Northern Plains: A storm is exiting the region Wednesday, which includes some breezy winds in some areas. The storm brought widespread heavy rain to the Dakotas that will help to build some soil moisture in dry areas. Cold air is filling in behind the system through the weekend before temperatures rise back up above normal again next week. Despite some areas of heavier rain, large-scale delays to early planting are not expected.

Central/Southern Plains: A strong storm system brought widespread showers and thunderstorms through the region early this week, though the driest areas in the southwest did not get much out of this storm. Instead, strong winds will likely dry out soils more than they already are and severe storms have been rolling through the region as well. Later this week, the actual cold front to the system will move through with scattered showers and temperatures will drop significantly into the weekend and could produce frost damage for winter wheat.

Midwest: A storm system has already brought heavy rain to western areas, though that also came with some severe weather. As it rolls eastward, it is losing the widespread heavy rainfall, but will still produce rain in areas that do not necessarily need it right now. The main cold front will go sweeping through the region on Thursday and cold air will fill in behind it going into next week. A small system may move through early next week with some showers and another burst of cooler air before temperatures start to rise later next week. Despite some heavier rain, planting is likely to continue at a normal pace.

Delta: Heavy rain has led to areas of water-logged soils and flooding recently, which will slow planting down for a while. A long and drawn-out system will bring through a few rounds of showers this week that will keep soils wet, but probably won’t be enough to make it worse. The region may or may not get more of a break next week if a small storm system stays north as currently forecast.

Brazil: A front continues to move north through the country this week and showers are getting more isolated as the week wears on, though they will continue over the north. Heavier rain over the south has been helpful for safrinha corn, but not harvest of full-season crops. The consistent wet season showers will be winding down behind this front and fronts coming north from Argentina will become the main source of precipitation thereafter. That does not bode well for safrinha corn in central Brazil that still has below-normal subsoil moisture and will run out quickly in May as more of the crop goes through pollination and fill. The chances for southern areas to get some needed rain in the future is higher and a front is forecast to move in early next week.

Argentina: A system pulled south through the region over the last few days and brought widespread heavy rain. Behind this system though, it will be drier for the next few days. It does look like a system will go through with showers this weekend, however. With more of the corn and soybean crop maturing and awaiting harvest, the wet conditions are not favorable, especially if the weekend system starts up some more active weather again. Soil moisture for the coming winter wheat crop is very favorable, however.

The player sheet for 4/17 had funds: net sellers of 3,500 contracts of SRW wheat, sellers of 500 corn, sellers of 1,500 soybeans, buyers of 2,000 soymeal, and buyers of 1,000 soyoil.

TENDERS

• DURUM WHEAT TENDER: Tunisia’s state grains agency issued an international tender to purchase about 25,000 metric tons of durum wheat
• MILLING WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat that can be sourced from optional origins
• BARLEY PURCHASE: Jordan’s state grain buyer purchased about 110,000 metric tons of animal feed barley in an international tender.
• WHEAT PURCHASE: A group of South Korean flour mills on Thursday bought an estimated 50,000 metric tons of milling wheat to be sourced from the United States
• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 94,612 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
• CORN PURCHASE: The Korea Feed Association (KFA) in South Korea purchased about 70,000 metric tons of animal feed corn expected to be sourced from the United States or South America in a private deal on Tuesday without issuing an international tender.

PENDING TENDERS

• SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase up to 120,000 metric tonnes of soymeal.
• CORN TENDER: South Korea’s Korea Feed Association (KFA) has issued an international tender to purchase up to 69,000 metric tons of animal feed corn to be sourced from South America or South Africa only
• RICE TENDER DELAYED: The deadline for price submissions in the international tender from Indonesian state purchasing agency Bulog to buy 300,000 metric tons of rice has been delayed to April 17.

 

 

TODAY

DOE: US Ethanol Stocks Fall 0.5% to 26.08M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 26.146 mln bbl
• Plant production at 0.983m b/d, compared to survey avg of 1.035m

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending April 11.

• Corn est. range 325k – 1,100k tons, with avg of 620k
• Soybean est. range 300k – 1,100k tons, with avg of 738k

France’s Planted Area Under Grains Drops 6% on Heavy Rains

Heavy rainfall since mid-October cut by 6% areas planted with grains in France this year, despite a rebound in spring sowing, according to Perrine Charrière, an economic forecaster at the statistics department of the agriculture ministry.

• Total areas planted with grains dropped to 6.81 million hectares from 7.25 million in 2023; areas along the the Atlantic ocean were most affected
  • Soft wheat areas down 8% to 4.4 million hectares
  • Durum wheat areas down about 3% to 230,000 hectares
  • Winter barley areas down 6% to 1.3 million hectares
  • Spring barley areas increased 11% to about 500,000 hectares, though still below five-year average

Ukraine Sees 2024 Grain Harvest Decline 13% to 52.4M Tons

The Ukrainian agriculture ministry sees the 2024 grain harvest declining 12.7% to 52.4m tons y/y, according to a preliminary forecast shared by e-mail.

• Total preliminary grain harvest forecast includes:
  • 19.2m tons of wheat, down 13.5% y/y
  • 4.9m tons of barley, down 14% y/y
  • 26.7m tons of corn, down 12.5% y/y
• Oilseed harvest is expected to fall 1.4% to 21.7m tons, the total includes:
  • 5.2m tons of soybean, up 10.6% y/y
  • 12.4m tons of sunflower, down 3.9% y/y
  • 4.1m tons of rapeseed, down 12.7% y/y
• Total area planted with grains for 2024 harvest is expected to be 10.6m hectare or 395k hectare less than last year. Total grain area forecast includes:
  • 4.3m hectares of winter wheat, down 6.5% y/y
  • 200,000 hectares of spring wheat, almost on par with last year
  • 470,000 hectares of winter barley
  • 940,000 hectares of spring barley
  • 3.9m hectares of corn, 1.6% down y/y
• Area under soybean seen rising to 2.2m hectares, almost 400,000 hectares more than last year
• Sunflower areas expected almost same as last year at 5.3m hectares
• Rapeseed planting seen falling by 100,000 hectares to 1.5m hectares

La Niña Threatens Argentina Wheat as Farmers Ready for Planting

Argentine farmers are expected to plant 5.9m hectares (14.6m acres) of wheat in the 2024-25 season, the same as in 2023-24, the Buenos Aires Grain Exchange said in a report.

• NOTE: The bulk of Argentine wheat planting is done in June and July, with the harvest mainly in November and December
• While weather will be good for planting, thanks to recent rains, “the positive outlook will be clouded by the potential impact of La Niña that’s expected to arrive mid-year,” grain exchange analysts led by Cecilia Conde wrote
  • NOTE: La Niña usually brings dryness or drought to Argentina
• The planting estimate is subject to farmers’ evolving forecasts for profit margins, especially given the higher prices of fertilizers and herbicides compared to last season

Dry weather to prevail over main Argentina farmland over next week -grains exchange

Argentina’s main agricultural land will likely experience dry weather over the next seven days, according to a forecast from the Buenos Aires Grains Exchange (BdeC) released on Wednesday, in a boost to farmers facing excessive humidity due to recent rains.

Heavy rainfall in recent days came on top of heavy precipitation last month over the South American country’s most productive farmland, which left behind soaked soils that had impeded the ability of combine harvesters to enter many areas, which could crimp expected yields.

Argentina is a top global supplier of processed soybeans and other grains, including corn and wheat, with export income representing a major source of hard currency for the cash-strapped government.

“Most of the Southern Cone’s agricultural area will see scarce to no precipitation (less than 10 millimeters)” from Wednesday through next Tuesday, according to the exchange’s weekly farm weather report.

BdeC added that following recent rains, polar air will continue to cause a cooling effect on most of the agricultural area.

Last week, the exchange cut its soybean crop estimate for the current 2023/24 harvesting season to 51 million metric tons, or down about 3% from its previous estimate, due largely to a heat wave that hit planted areas in January and February.

U.S. corn production slightly down on lingering dryness across Upper Midwest – LSEG Commodities Research & Forecast

2024/25 U.S. CORN PRODUCTION: 379 [362–395] MILLION TONS, DOWN 1% FROM LAST UPDATE

2024/25 U.S. corn production is lowered by 1% to 379 [362–395] million tons, given the current abnormal dryness across the main Corn Belt and its potential adverse impact on early season crops, though a dramatic soil moisture recovery is expected soon in the upcoming months amid favorable precipitation patterns. Our current estimate puts planted area at 90.9 million acres, down 3.8% from last season, which is 0.9 million acres above the USDA’s March estimate of 90 million acres in its Prospective Plantings report (28 March). A recently released Reuters Poll of Analysts (22 March) placed U.S. corn crop area at 91.8 [90.0–93.5] million acres. The next USDA survey-based estimate of acreage will be released in the 30 June Acreage report.

Early corn planting normally begins during early April and ends in May, while soybean planting windows tend to be from May through June, offering U.S. farmers more time/room for acreage decisions. Maintaining our initial position on corn and soy acreage set in March we expect soybean planted area to increase from last season, benefiting mostly from corn area shrinkage and growing domestic crush sector despite stagnant Chinese demand. Such acreage shift will likely take place as U.S. farmers cut back on their corn area after a record harvest last season, amid unfavorable price/cost dynamics (e.g. high soy-to-corn price ratios as a measure of revenue potential) and abundant global supplies.

USDA’s latest Crop Progress report (15 April) put total national-level corn planting pace at 6%, on par with last year’s 7% and the five-year average of 5%. The past two weeks brought mostly favorable weather for corn sowings to begin. Essentially all major grain and oilseed producing areas of the country saw above-average temperatures, with areas in the northwestern Plains seeing the highest deviations of up to 6°F. Rainfall patterns were more mixed, with above-average totals seen in the Mississippi Delta, and in scattered portions of southern Plains and central/eastern Upper Midwest. Overall, weather allowed sowings to begin in earnest, albeit with some minor, rain-induced delays in the east coast. Most crop areas of the northern/central Plains and Upper Midwest should see rather cooler conditions starting next week, amid continued dry weather.

At the moment the biggest risk factor lies in the status of soil moisture throughout the main Corn Belt, which has been hovering around 7-year lows since February. In Iowa and Illinois, the top two corn producing states in particular, the overall soil moisture levels are alarmingly low, warranting close attention despite seemingly decent sowing pace so far. It may be too early to elevate the concern, however, as our summer weather outlook during the crop’s prime growth period from June to August calls for very positive conditions. Mild and wet conditions are expected to dominate the Corn Belt starting in late May, which should lead to a dramatic soil moisture recovery. The timing of the overall precipitation pattern change will be critical in determining yield potential.

Moderate weather compared to recent weeks bodes well for Brazil safrinha corn yield – LSEG Commodities Research & Forecast

2023/24 BRAZIL CORN PRODUCTION: 120.2  [113.4–125.9] MILLION TONS, UP <1% FROM LAST UPDATE

2023/24 Brazil total corn production is slightly (<1%) increased to 120.2 [113.4–125.9] million tons, mostly thanks to healthy second crop conditions in the South and steady vegetation density recoveries in the Central-West, despite continued lack of moisture across the rest of the producing regions. Our current median estimate is now 4.5 million tons below the USDA’s World Agricultural Outlook Board (WAOB)’s 124 million tons, which assumes total corn sowings at 21.9 million hectares and national level yield of 5.66 tons per hectare (tph) (vs. LSEG Ag Research’s 21.6 million hectares and 5.57 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 111 million tons and 20.4 million hectares, respectively. The growing discrepancy between the USDA and CONAB’s estimates warrants attention.

Recent weather has had mixed impacts on the core second crop corn areas of Brazil. Temperatures throughout Brazil were up to 1-4°C above average over the past two weeks, except for portions of Rio Grande do Sul that experienced temperatures slightly below average. In terms of precipitation, Mato Grosso, Mato Grosso do Sul and Paraná were largely favored, with near to above normal rainfall. However, the core safrinha crop areas of the Southeast continued to experience dryness, with little if any precipitation since early March. Dryness can negatively impact yields at this stage despite the region entering April with decent soil moisture and a crop still not in full vegetative development. As of 14 April, Brazil’s first corn was 52.9% combined nationally according to the latest CONAB crop progress report (15 April), only slightly behind last year’s 54.8%. Safrinha corn sowing is essentially complete in virtually all regions on schedule. Vegetation density derived from satellite imagery remains near or above historical median levels in most major producing states, indicating overall healthy crop conditions despite less than favorable early season weather that took place in February and March. As the second corn enters its prime growth period, temperature and precipitation patterns in core producing areas of the Central-West and South should be monitored closely.

Reduced area and high yield set 2024/25 China corn production slightly above last season – LSEG Commodities Research & Forecast

2024/25 CHINA CORN PRODUCTION: 290 [280–297] MILLION TONS

Falling prices and reduced profitability, as well as crop rotation of corn and soybeans, indicate that 2024/25 China corn sown area will decline from last year’s high level, particularly in the Northeast. On the other hand, the expansion of Genetically Modified (GM) corn plantings and improvement of field management and seedling technologies increase corn yield potential. Assuming normal growing season weather, 2024/25 China corn production is estimated at 290 million tons, slightly above last year’s record high.

Domestic corn prices in China have plummeted by 12-16% to 4-year lows since last September. The slashed prices largely reduced expected return of corn production. Also, crop rotation of corn and soybean indicates that some corn fields in the Northeast may rotate to soybeans given government policies of expanding oil crops area and promoting crop rotation. In addition, soybean producer subsidies remain much higher than corn in 2024. Soybean subsidies in Jilin are estimated 280-400 yuan per mu above corn, compared to last year’s 220-320 yuan per mu above corn. In Heilongjiang, corn-soy rotation subsidy is 150 yuan per mu. As a result, we estimated 2024/25 China corn sown area at 43.76 million hectares, a decrease of 1.04% from last season.

On the other hand, Chinese government aims to boost corn and soybean yields via lifting restrictions on the industrial application of GM corn and soybeans, The Ministry of Agricultural and Rural Affair (MARA) announced on 19 March 2024 that additional 27 GM corn seed varieties and 3 GM soybean seed varieties were preliminarily approved after they approved 37 GM corn seed varieties, 10 GM soybean seed varieties and 2 GM cotton seed varieties on 25 December 2024. The approvals of GM corn seed varieties indicate that the commercialization of GM corn is progressing rapidly in the country and GM corn sown area may expand over the coming years although the expansion pace may heavily rely on government’s intentions. Application of GM seed varieties may increase corn yield potential and reduce production costs in China.

Spring corn planting will begin shortly in the Northeast while summer corn planting will commence after winter wheat harvest in June in the North China Plain. Soil moisture in the spring corn region is currently at 3- or 5-year lows, but recent and expected average precipitation in most of the Northeast region supports corn planting and establishment, except for Jilin where some rain is needed to replenish low soil moisture. Favorably  normal-warm temperatures will likely remain over the next two weeks, facilitating rapid planting. There is no immediate risk to corn production. Potential variations in corn yield will depend primarily on weather during June through September. Taken with normal yield of 6.62 tons per hectare, current area estimate places 2024/25 China corn production at 290 million tons.

Kernel Says Russian Attack Disrupts Railway to Port Chornomorsk

Ukraine’s grain and sunflower oil producer Kernel sees “significant deterioration” in the operating environment including deliveries to Chornomorsk port on the Black Sea due to the recent missile attacks by Russia, according to a regulatory filing.

Missile assault on the transport infrastructure near the port of Chornomorsk has halted railway deliveries to the port “entirely”

Kernel says shipment of grain and sunflower oil relied heavily on railway transport, and disruption causes reduction in throughput volumes and increases cost of logistics

Timeline to restore railway transportation is “currently uncertain”

Attacks on electricity generation and distribution infrastructure caused shutdowns at several key facilities including oilseed processing plants, co-generation heat and power plants, silos and export terminals

The power supply “remains unstable,” continuing to disrupt the operations of Kernel subsidiaries in Ukraine

 

 

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