Global Ag News for Dec 19.23
Sowing at Risk in France, Germany and Benelux Due to Rain: MARS
Planned sowings are unlikely to be completed in northern France, the Benelux countries and western Germany due to wet weather, the European Union’s Monitoring Agricultural Resources unit said in a report.
- “Overly wet conditions, partly accompanied by snow, disturbed the end of sowing, particularly for soft wheat,” report says
- This is expected to lead to an increase in the area of spring cereals
- About 10% of planned soft wheat areas remained unsown in France: MARS
FUTURES & WEATHER
Wheat prices overnight are up 2 1/4 in SRW, up 3 in HRW, up 2 1/2 in HRS; Corn is down 1/4; Soybeans down 10; Soymeal down $2.70; Soyoil down 0.37.
For the week so far wheat prices are down 10 in SRW, down 12 in HRW, down 6 3/4 in HRS; Corn is down 6 1/4; Soybeans down 1 1/2; Soymeal up $2.10; Soyoil up 0.22.
For the month to date wheat prices are up 21 1/4 in SRW, down 12 1/4 in HRW, down 5 1/2 in HRS; Corn is down 6; Soybeans down 32 1/4; Soymeal down $15.50; Soyoil down 1.68.
Year-To-Date nearby futures are down 21.8% in SRW, down 29.0% in HRW, down 22.9% in HRS; Corn is down 29.7%; Soybeans down 13.2%; Soymeal down 14.2%; Soyoil down 21.2%.
Chinese Ag futures (MAY 24) Soybeans down 25 yuan; Soymeal up 7; Soyoil up 60; Palm oil up 94; Corn down 26 — Malaysian Palm is up 13. Malaysian palm oil prices overnight were up 13 ringgit (+0.35%) at 3740.
There were changes in registrations (-49 SRW Wheat, -5 Corn, -17 HRW Wheat). Registration total: 2,100 SRW Wheat contracts; 159 Oats; 6 Corn; 596 Soybeans; 147 Soyoil; 0 Soymeal; 301 HRW Wheat.
Preliminary changes in futures Open Interest as of December 18 were: SRW Wheat up 1,585 contracts, HRW Wheat up 1,211, Corn down 1,352, Soybeans down 5,857, Soymeal up 2,088, Soyoil up 3,209.
Brazil: Showers were essentially absent in central Brazil over the weekend while it was very hot, as forecast. Widespread heavier rainfall is forecast to begin Tuesday and last through the end of the year, helping to turn around conditions for pod-setting soybeans. Southern areas will also see frequent scattered showers, which could be heavier in some areas as well. These southern areas had some drier periods the last couple of weeks, allowing this stretch of heavier rain to not be as negative of a factor for developing corn and soybeans.
Argentina: Scattered showers went through over the weekend and were heavy in southern growing areas, which should help with the overall soil moisture there. Northern areas were drier but will see more precipitation early this week to help fill soils there as well. Another storm system will move through this weekend with widespread showers and frequent bursts of rain are forecast going into January as well. Overall conditions are very favorable for developing corn and soybeans, though some areas are a little too wet and the remaining planting has slowed some.
Australia: Isolated showers went through southwestern and northeastern growing areas over the weekend. A system scraping across the south will build more showers for northeastern areas this week while other areas will be drier. Dryness across the west in concerning for cotton and sorghum, but not so much in the southeast. Northwestern areas will find the increasing rain favorable for developing crops.
Northern Plains: Some light snow fell in North Dakota over the weekend but most areas were warm and dry. Above-normal temperatures continue to be forecast through the end of the year, but scattered showers are likely to move through this weekend, which may include snow.
Central/Southern Plains: It was warm and dry over the weekend, which continues through midweek. A small disturbance will send rain through the region Thursday and Friday and a stronger system may develop in the region over the weekend. That one has potential to bring some accumulating snow to some areas along with some more moderate temperatures going into Christmas Day.
Midwest: A system moved through over the weekend with scattered showers. Though the system left Sunday, a brief burst of cooler temperatures will bring some limited lake-effect snows to eastern areas on Monday. Any cool temperatures will be gone quickly and replaced with warmth through the coming weekend. Scattered showers may move through Friday and Saturday with a potentially stronger storm going into Christmas that may include some snow. Even so, temperatures are forecast to be above normal through the end of the year.
Delta: Scattered showers went through with a system this weekend, helping to ease drought. Rainfall farther north should help to maintain water levels around the low-water mark on the Mississippi River throughout the week. A disturbance should bring more showers through late this week with another coming through this weekend into early next week. The forecast rainfall is good for both reducing drought and increasing water levels on the Mississippi River.
The player sheet for Dec. 18 had funds: net sellers of 4,500 contracts of SRW wheat, sellers of 4,500 corn, sellers of 3,500 soybeans, buyers of 3,000 soymeal, and buyers of 1,500 soyoil.
- WHEAT SALES: Saudi Arabia bought 1,353,000 metric tons of wheat in a tender, the General Food Security Authority (GFSA) said on Monday. The shipments are due for arrival in Saudi Arabia between February and May 2024, GFSA said.
- CORN, SOYMEAL TENDER: Algerian state agency ONAB has issued international tenders to purchase up to 200,000 metric tons of animal feed corn and 70,000 tons of soymeal.
- WHEAT TENDER: Egypt’s state grains buyer the General Authority for Supply Commodities is seeking wheat in an international purchasing tender. The deadline for offers is Dec. 19.
- NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 20,000 metric tons of food-quality soybeans free of genetically modified organisms (GMOs), European traders said. The deadline for submissions of price offers was Dec. 5. The agency has a separate international tender for 50,000 metric tons of soybeans in shipping containers that also closed on Dec. 5.
- WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
- 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
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
- RICE TENDER: Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) set a tender to import natural white wholly milled short-grain Indian rice, it said in a statement. GASC, on behalf of Egypt’s Holding Company For Food Industries, sought arrival of the rice from Feb. 1-19 and/or Feb. 20-March 10. The deadline for offers is Dec. 21 and they should be accompanied by three samples, of two kilograms each, GASC said.
- WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 110,000 metric tons of wheat.
- RICE TENDER: Indonesia is seeking to buy 2 million metric tons of Thai rice next year, Thailand’s government said on Tuesday, a volume that would fulfil the archipelago nation’s planned import quota after drought impacted its 2023 production.
US Inspected 947k Tons of Corn for Export, 1.412m of Soybeans
In week ending Dec. 14, according to the USDA’s weekly inspections report.
- Soybeans: 1,412k tons vs 1,000k the previous wk, 1,967k a yr ago
- Corn: 947k tons vs 725k the previous wk, 827k a yr ago
- Wheat: 285k tons vs 317k the previous wk, 304k a yr ago
US Corn, Soybean, Wheat Inspections by Country: Dec. 14
Following is a summary of USDA inspections for week ending Dec. 14 of corn, soybeans and wheat for export, from the Grain Inspection, Packers and Stockyards Administration, known as GIPSA.
- Soybeans for China-bound shipments made up 564k tons of the 1.41m total inspected
- Mexico was the top destination for corn inspections, and also led in wheat
Argentina Proposes Tax Hike on Soy Meal, Soy Oil to 33% From 31%
The government will propose a hike in taxes on exports of soy meal and soy oil, Agriculture Secretary Fernando Vilella said in a video posted on social media.
- The hike, which needs to be approved by Congress, is designed to compensate in the government’s budget for a proposed tax cut to other farm exports like dairy produce, olives, rice, fruit and vegetables
- Proposal for tax on corn, wheat and sunflowers to stay at 15%, the Argentine Agribusiness Council, whose representatives met with Vilella on Monday, said in a statement
- NOTE: Hiking taxes on soy meal/oil would put them on a par with unprocessed soybeans, which are already taxed 33%
Brazil’s yearly soybean exports top 100 million tons for the first time
Brazil, the world’s largest soybean exporter, has for the first time ever exported over 100 million metric tons of the oilseed within a year, boosted by a record harvest and lower international prices, which buyers used to build up stocks.
So far in December, Brazil has exported about 1.99 million metric tons of soy, according to weekly data released by the foreign trade secretariat on Monday, bringing the total for 2023 to around 100.02 million metric tons.
The figure had already topped Brazil’s previous record for most soybeans exported in one year of 86.1 million metric tons, which it reached in 2021.
The new record was driven by an unprecedented harvest of around 155 million metric tons and importers such as China taking advantage of lower prices to build stocks.
“A historic level,” AgRural analyst Daniele Siqueira said. “But it’s also worth remembering that this record was set at the expense of much lower prices received by Brazilian farmers.”
Siqueira said the larger-than-expected 2022/23 harvest, sluggish forward sales and a national storage deficit had allowed importers to push export premiums to “very low levels” in the first half of 2023.
This resulted in less income for farmers, she added.
“With prices much lower than last year’s, importers took advantage of the moment more to replenish stocks than to make a big leap in consumption, which is slowing down,” Siqueira said.
Brazilian shipments also benefited from a devastating drought in neighboring Argentina, which slashed harvests, she added, pushing Argentina to sharply increase its own imports from Brazil.
Brazil 2023/24 Soy Planting 94% Done as of Dec. 14: Agrural
Compares with 91% a week earlier, according to an emailed report from consulting firm AgRural.
- In previous years, weekly planting surveys had already been completed on this date, AgRural said
- Summer corn seeding is done in Brazil’s Center South region
- AgRural said it will resume weekly releases on January 8, with the first harvest figures for the 2023/24 crop
Brazil Summer Corn Planting 96.8% Done as of Dec. 15: Safras
This compares with 94.4% last year and with 97.6% in a five-year average, according to a report from a consulting firm Safras&Mercado.
- Planting is 100% complete in Rio Grande do Sul, Santa Catarina, Parana, Sao Paulo, Mato Grosso do Sul states
WHEAT/CEPEA: Liquidity is low in this end-of-the-year period
Liquidity is low in the Brazilian wheat market. Producers who still have PH 78 cereal are firm regarding prices. As for the demand, wheat mills have been reducing activities, keeping the pace of new purchases low – these players are also focused on the possibility of the intensification of imports from Argentina at competitive prices in early 2024.
As a result, prices oscillated slightly. According to data from Cepea, between December 8 and 15, the prices paid to wheat farmers (over-the-counter market) decreased 0.16% in Paraná, 0.44% in Santa Catarina and 0.07% in Rio Grande do Sul. In the wholesale market (deals between processors), values moved down 1.85% in Paraná and 0.23% in Santa Catarina. On the other hand, prices upped 0.42% in São Paulo and 1.12% in Rio Grande do Sul.
Based on data from Conab (Brazil’s National Company for Food Supply), between December 4 and 8, the import parity price for the wheat from Argentina delivered to Paraná state was at USD 245.53/ton. Considering the average of the US dollar in that period, at BRL 4.9144, the wheat imported was sold at BRL 1,206.64/ton, while for the Brazilian wheat traded in Paraná, the average was higher, at BRL 1,309.34/ton, according to data from Cepea. In Rio Grande do Sul, the price of the product from Argentina closed at USD 229.53/ton, which accounts for BRL 1,128.03/ton – against BRL 1,223.34/ton on the average of the state calculated by Cepea.
In Brazil, the harvest reached 99.9% of the area until Dec. 9, according to Conab. In Rio Grande do Sul, productivity is now forecast at 2.16 tons per hectare – it was previously projected at 3.02 tons per hectare.
Secex data indicate that Brazil imported 57.82 thousand tons up to the second week of December, against 498.63 thousand tons in the entire month of December 2022. Exports, in turn, totaled 118.51 thousand tons in the same period – 530.09 thousand tons were shipped in December last year.
Indonesia Oct. Palm Oil Exports 3.001m Tons: Gapki
Indonesia’s palm oil exports were 3.001m tons in October, according to Indonesian Palm Oil Association (Gapki).
- Palm oil output was 4.953m tons
- Palm oil stockpiles was 2.874m tons
- Palm oil domestic consumption was 2.181m tons
- Palm oil for biodiesel domestic consumption was 1.160m tons
Malaysia’s Nov exports fall 5.9% y/y, more than forecast
Malaysia’s exports fell 5.9% in November, more than expected, government data showed on Tuesday.
November’s exports had been expected to decline 5.2%, according to 14 economists surveyed by Reuters. Imports in November grew 1.7% from a year earlier, data from the trade ministry showed, versus a 0.8% decline expected in the Reuters poll.
Malaysia recorded a trade surplus of 12.41 billion ringgit ($2.65 billion) in November.
Argentina Reels From Power Outages, Damaged Silos After Storm
More than half a million homes have no power after a storm lashed central-eastern Argentina on the weekend, the Energy Secretariat said in a statement.
- A total of 475,000 homes lost power in the Buenos Aires metro area, with another 112,000 suffering outages in the coastal city of Bahia Blanca.
- Mega, a natural gas processor in Bahia owned by YPF, Petrobras and Dow, is struggling with the outages, according to a spokesman
- Several grain silos in the area have also been heavily damaged, according to Federico Spoturno, a spokesman for port group CPPC
- NOTE: Bahia Blanca is home to Argentina’s main petrochemical hub as well as several crop ports
Deadly Argentina storm a blessing and curse for beleaguered grains sector
A deadly summer storm over the weekend in Argentina has helped quench crops still reeling from a historic drought, a meteorologist said on Monday, although the storm paused operations at a key grains port.
The intense storm, which began on Saturday in the south of Buenos Aires province, left at least 13 people dead in the port town of Bahia Blanca before moving north and bringing much-needed rains to the country’s core agriculture zone in northern Buenos Aires and in the south and center of Santa Fe province.
Argentina’s farming core has received 60-90 millimeters (2.4-3.5 inches) of rain since the weekend began, according to the Rosario Grains Exchange, which forecast more rains over the next two days.
Recent months in Argentina, a top global exporter of soybean oil and meal and a major corn and wheat exporter, have been wetter than normal, after a drought last year pummeled crop outputs.
The soil in key farming areas “needed a lot of water, and it now has it,” German Heinzenknecht, a meteorologist at Applied Climatology Consulting (CCA), told Reuters.
“Looking forward you have soil that’s saturated,” he said.
Ongoing soy and corn planting will face some delays because of the storm, said Heinzenknecht, who added that strong wind gusts could cause losses to some crops in southern Buenos Aires province that are ready for harvest, particularly wheat.
Operations at the Bahia Blanca port were “practically stopped” on Monday due to the storm, which packed 150-kilometer-per-hour (93-mile-per-hour) winds, said Carolina Volonte, a representative for Bahia Blanca’s grains exchange.
“Damages are being evaluated and we will have to see how it can get up and running in the coming days,” Volonte said.
Reuters did not receive comment from the Bahia Blanca port about the port’s operations.
Ukraine Sees Waning Demand for Grain Exports Via Danube: UAC
Demand for grain exports sent via the Danube is gradually decreasing as Ukraine’s Black Sea corridor gets up and running, UkrAgroConsult analysts wrote in a note.
- Logistics costs via the Danube can be twice as high as for exports via Odesa: UAC
- Queues of barges in the Danube and trucks carrying grain have fallen significantly
- “Confidence in the maritime corridor is growing; shipments to distant destinations are resuming,” including to Indonesia, the Philippines and Vietnam in December
- The share of large vessels in ship traffic is expected to increase
- Still, “a return to 2021, when 95% of agricultural products were exported through the ports of Greater Odesa, is not expected”
Russia’s wheat exports to total 3.8-3.9 mln tonnes in December – analysts
MOSCOW. Dec 18 (Interfax) – Russia’s wheat exports should total 3.8-3.9 million tonnes in December, accounting for supplies to the Eurasian Economic Union (EAEU) countries, JSC Rusagrotrans analytical center forecasts.
As the company told Interfax, the forecast has been reduced from 4.5 million tonnes “owing to variable weather in the southern ports and, accordingly, lower-than-expected shipping rates, which currently lag last year by 15%.”
As was the case in November 2023, the December figure will be lower than the previous year, when exports totaled 4.56 million tonnes.
The company has also reported that the top 10 exporters currently account for 73% of wheat supplies and 67% of grain supplies. The top five exporters account for 60% of wheat exports and 55% of grain exports.
“Export demand prices for Russian wheat with protein of 12.5% for delivery in December-January continued to grow and reached $242-$244 per tonne free on board (FOB). This is $3 more than the previous week,” Rusagrotrans reported, noting that the price indicator is at the level of three months ago.
Algeria immediately purchased 910,000 tonnes at the wheat tenders last week. Tunisia bought 100,000 tonnes of soft wheat and 75,000 tonnes of durum wheat, and Bangladesh purchased 50,000 tonnes. Saudi Arabia is holding a tender to purchase 715,000 tonnes of wheat.
Brazilian farmers slow fertilizer buys as drought dampens corn-planting plans
Brazil’s drought is causing farmers there to delay fertilizer purchases for their upcoming corn-planting season, denting sales for global fertilizer suppliers in the world’s top corn-exporting country, executives told Reuters.
Brazil’s soybean harvest is already delayed and that hold-up may push back planting for the main corn season that follows it early next year, which is likely to affect fertilizer companies like Nutrien, Mosaic and Yara. Corn is one of the most fertilizer-intensive crops.
The drought, related to the El Nino climate phenomenon, illustrates the volatility facing global agriculture as climate change accelerates. Fertilizer companies are already coping with lower profits, as crop and fertilizer prices sag after peaking at the start of the Russia-Ukraine war.
Brazilian farmers usually sow less corn when they miss the ideal planting window in January or February, decreasing fertilizer demand.
U.S.-based fertilizer producer Mosaic expects “safrinha,” production, a Portuguese word referring to Brazil’s second corn harvest, to drop by 12% or 12.7 million metric tons, exceeding the Brazil government’s view of an 11.1 million ton drop from last year.
“I would call it a very plausible downside scenario because of how late the crop’s going to go in, how dry it currently is and how it’s likely that rains will shut down before that safrinha corn matures,” said Mosaic vice-president of market and strategic analysis Andy Jung.
Mosaic’s estimated crop decline would cut Brazilian demand for potash fertilizer by about 4% or 500,000 tons, Jung said. That volume of potash is worth about $160 million at current prices.
A loss of sales on that scale would not be financially material as Mosaic could sell to other countries, Jung said. A worst-case scenario, however, would see safrinha corn harvest fall by 25 million tons or about one-quarter, he added.
As of early December, farmers had purchased only 60% of their estimated fertilizer needs in the corn-producing states of Parana and Mato Grosso do Sul, compared with 80% usually at this time of year, said Guilherme Schmitz, market development director at Oslo-based Yara’s Brazil unit.
Safrinha corn represents about 75% of Brazil’s national corn output depending on the year.
“The combination of low crop prices and the uncertainty about the weather has growers really buying on a just-in-time basis their inputs for the safrinha crop,” said Jason Newton, chief economist at Canadian fertilizer company Nutrien.
Brazilian potash prices have fallen to around $325 per metric ton, down 36% year over year, according to RBC, illustrating the weak demand.
Brazilian full-year potash imports are expected to be record-high, however, based on robust shipments earlier, though some of those imports may sit in retailers’ warehouses if farmers buy less.
The drought has also forced crop chemical producers FMC and Corteva to sell Brazilian stock at a discount because of lower-than-expected demand, said Morningstar analyst Seth Goldstein.
Both companies may need to reduce production as rising global chemical demand may not fully offset lost Brazilian sales, he said.
“No doubt (the drought) could bring a reduction in the use of technology, including fertilizers, and a reduction in costs to make the harvest viable,” said Fernando Cadore, chief of farmer group Aprosoja in Mato Grosso.
FMC and Corteva did not respond to requests for comment.
Reduced Brazilian production could revive global corn prices and spur U.S. farmers next year to buy more fertilizer to maximize their corn production, offsetting lost Brazilian sales Mosaic’s Jung said.
Early forecasts suggest U.S. farmers will prioritize planting of soybeans, however, a crop that needs relatively little fertilizer.
Mosaic Co Reroutes Some Shipments Of U.S.-Bound Fertilizer Around The Cape Of Good Hope Rather Than Through The Red Sea
MOSAIC CO – MOSAIC HAS REROUTED A COUPLE SHIPMENTS OF U.S.-BOUND FERTILIZER AROUND THE CAPE OF GOOD HOPE RATHER THAN THROUGH THE RED SEA
Fertilizer Flows From Persian Gulf as Nearby Shipping Risk Rises
Nitrogen is the most exposed among fertilizers to shipping risks in the Middle East, though export trade primarily flows from the Persian Gulf. Nearly 50% of global urea exports are sourced from privately held producers in the Persian Gulf and Egypt. Israel’s ICL and Jordan’s JPMC are publicly traded, exporting 14% of global potash trade with minimal disruption.
Urea Trade Most at Risk From Middle East Conflicts
Urea, a form of nitrogen, is the fertilizer most exposed to growing shipping risk in the Middle East. Nearly 50% of global urea trade is sourced from producers with manufacturing sites on the Persian Gulf, shipped to major import regions including India, the US, Europe and Brazil. Flow could divert away from the Suez Canal, raising transportation costs for Northern Hemisphere buyers. Ammonia and potash exports from the Middle are at lower risk, with 25% and 14%, respectively. The Green Markets North American fertilizer price index slumped 24% in 2023 as demand softened and supply shocks eased.
Middle East nitrogen production is privately held. Egypt’s Abu Qir and KIMA are publicly traded nitrogen producers. Israel’s ICL and Jordan’s JPMC are publicly traded potash producers that mine from Dead Sea potash deposits.
Interested in more futures markets? Explore our Market Dashboards here.
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.