Global Ag News for Dec 2nd

TODAY – EXPORT SALES

Wheat prices overnight are up 15 1/4 in SRW, up 13 3/4 in HRW, up 10 in HRS; Corn is up 6 1/2; Soybeans up 4 1/4; Soymeal up $0.18; Soyoil up 0.43.

For the week so far wheat prices are down 34 1/2 in SRW, down 36 in HRW, down 18 3/4 in HRS; Corn is down 13 3/4; Soybeans down 20 1/4; Soymeal up $0.15; Soyoil down 3.27.

Chinese Ag futures (JAN 22) Soybeans up 29 yuan; Soymeal up 1; Soyoil down 32; Palm oil up 4; Corn up 25 — Malasyian Palm is down 34.

Markets finished last week with wheat prices down 44 1/2 in SRW, down 44 in HRW, down 15 1/4 in HRS; Corn is down 7 1/2; Soybeans down 34; Soymeal unchanged; Soyoil down 5.09. Malaysian palm oil prices overnight were down 34 ringgit (-0.73%) at 4650 on concerns that demand for the most-consumed edible oil could fall as the new Omicron virus variant may prompt authorities worldwide to shutter cities and borders once again..

There were changes in registrations (172 SRW Wheat, -65 Soybeans). Registration total: 1,790 SRW Wheat contracts; 144 Oats; 2 Corn; 277 Soybeans; 233 Soyoil; 1 Soymeal; 108 HRW Wheat.

Preliminary changes in futures Open Interest as of December 1 were: SRW Wheat down 5,217 contracts, HRW Wheat down 3,813, Corn down 739, Soybeans up 2,070, Soymeal down 3,095, Soyoil down 4,423.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Mostly dry through Saturday. Isolated showers Sunday. Temperatures near normal through Friday, near to above 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: Isolated showers Wednesday. Mostly dry Thursday. Scattered showers Friday-Saturday. Mostly dry Sunday. Temperatures near to below normal through Sunday. La Pampa, Southern Buenos Aires Forecast: Isolated showers Wednesday. Scattered showers Thursday-Saturday. Mostly dry Sunday. Temperatures near to below normal through Sunday.

The player sheet for Dec. 1 had funds: net buyers of 2,000 contracts of  SRW wheat, buyers of 3,500 corn, buyers of 5,000 soybeans, buyers of 5,000 soymeal, and  sellers of 2,000 soyoil.

TENDERS

• SOYBEAN PURCHASE: Chinese importers bought a small number of bulk soybean cargoes on Wednesday for shipment in December and January from the U.S. Gulf Coast and Brazilian ports, analysts and an export trader said.
• CORN SALE: The U.S. Department of Agriculture confirmed private sales of 150,000 tonnes of U.S. corn to Colombia for delivery in the 2021/22 marketing year that began Sept. 1.
• BARLEY PURCHASE: Jordan’s state grain buyer purchased about 60,000 tonnes of optional-origin animal feed barley in an international tender which closed on Wednesday
• WHEAT TENDER: Tunisia’s state grains agency issued international tenders to purchase soft wheat and durum wheat
• BARLEY TENDER: Tunisia’s state grains agency issued an international tender to purchase animal feed barley, in addition to earlier announced tenders for wheat,

PENDING TENDERS

• WHEAT TENDER: An Ethiopian government agency issued an international tender to buy about 400,000 tonnes of milling wheat
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 51,773 tonnes of food-quality wheat from the United States in regular tenders that will close on Dec. 2 and Dec. 3.
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins,
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat

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 Nov. 25.

• Corn est. range 600k – 1,300k tons, with avg of 1,015k
• Soybean est. range 700k – 1,800k tons, with avg of 1,265k

DOE: U.S. Ethanol Stocks Rise 0.7% to 20.301M Bbl

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

• Analysts were expecting 20.265 mln bbl
• Plant production at 1.035m b/d, compared to survey avg of 1.075m

U.S. Soybean Crushings at 197M Bushels in October: USDA

USDA releases monthly oilseed report on website.

• Crushing 0.2% higher than same period last year
• Crude oil production 2.9% higher than same period last year
• Crude and once-refined oil stocks up 21.3% y/y

U.S. Corn Used for Ethanol at 469.3M Bu in October

• Corn for ethanol was 8.1% higher than in October 2020
• DDGS production rose to 1.949m tons

China buys U.S., Brazilian soybeans after price drop

Chinese importers bought a small number of bulk soybean cargoes on Wednesday for shipment in December and January from the U.S. Gulf Coast and Brazilian ports, analysts and an export trader said.

The purchases of around 3 to 4 cargoes, or up to about 240,000 tonnes, came after a sharp drop in prices on Tuesday as benchmark Chicago Board of Trade soybean futures fell nearly 2%.

Importers in China, the world’s top soy buyer, have booked more Brazilian soybean shipments than normal this year during the traditional fall U.S. soy export season amid high U.S. prices and a stronger dollar.

Confirmed U.S. soybean purchases by China from this year’s harvest totaled about 19.7 million tonnes as of Nov. 18, according to the latest U.S. Department of Agriculture data, compared with almost 29.2 million tonnes at the same point last year.

China has around 85% of its estimated December soybean purchases booked, along with about half of its January needs, one U.S. export trader said.

Canada 2021 Crop Production Survey Ahead of StatsCan Report

The following table shows results of a Bloomberg survey of as many as seven analysts about 2021 crop production in Canada. Statistics Canada in Ottawa is scheduled to release its estimates on Dec. 3 at 8:30am ET.

• Analysts see 1.2% less wheat production in 2021 than StatsCan’s previous est., according to the avg in the survey
  • Estimates range from 20.19m tons to 22.8m tons
• Canola seen mostly unchanged from the previous est.

Argentina Crop Exporters’ Nov. Sales on FX Market Were $2b

Argentina’s crop exporters sold $2 billion on the foreign exchange market in November, Ciara-Cec, Argentina’s crop export and crushing chamber, said in an emailed statement.

• Amount is a 15.4% decline from the previous month, but a 17.7% increase from Oct. 2020
• Sales in the first ten months of the year reached $30.1 billion, a 62.1% increase from last year and a record high for that time period
• Exports occurred amid an increase in international prices, which allowed a positive result despite unexpected union strikes and the ongoing drought on the Parana River

Food Prices Climb Closer to Record, Boosting Inflation Angst

• UN’s gauge of global food prices increased 1.2% in November
• Higher prices stretch consumer budgets, raise hunger worry

Food prices climbed closer to a record high, giving consumers and governments around the world an even bigger inflation headache.

A United Nations gauge of global food prices rose 1.2% last month, threatening to make it more expensive for households to put a meal on the table. It’s more evidence of inflation soaring in the world’s largest economies and may make it even harder for the poorest nations to import food, worsening a hunger crisis.

Prices have jumped for multiple reasons: bad weather hurt harvests, higher shipping rates, worker shortages and an energy crunch hit supply chains, and fertilizer costs have surged too. While it typically takes a while for commodity costs to trickle down to supermarkets, the rally is evoking memories of spikes in 2008 and 2011 that contributed to global food crises.

November’s push higher was mainly driven by grains and dairy, while prices of vegetable oils and meat declined, the UN’s Food and Agriculture Organization said in a report Thursday.

Higher food prices are pressuring consumer budgets that have already been strained by the Covid-19 crisis and high energy costs. It’s looking likely that shoppers will feel the effects of inflation for months to come as economies re-open in the wake of the pandemic.

That’s creating a policy dilemma for central banks over how fast to dial back stimulus measures. This week, Federal Reserve Chair Jerome Powell said its next meeting should discuss whether to wrap up bond purchases a few months sooner, and retired the word “transitory” to describe high inflation.

Food Bill

The UN’s Food and Agriculture Organization last month said the world’s food-import bill should climb even more than expected to a record this year because of high staple and freight costs. A particular worry is that import costs in poor countries are rising faster than those in developed economies, something that’s becoming a growing problem in regions that rely on shipping in supplies.

Officials in areas like North Africa — one of the world’s top grain importers — and Turkey are already facing difficulties shielding citizens from costly food. Elsewhere, Serbia is capping the price of some staples including milk and flour to curb price increases.

FAO Raises Wheat Stocks Est.; High Prices Encourage U.S. Sowing

World wheat stockpiles in the 2021-22 season are now seen at 284.7m tons, down about 1.7% y/y but above last month’s estimate for 282m tons, the UN’s Food and Agriculture Organization said Thursday in a report.

• Cites bigger inventories in EU and Turkey
• Production estimate was cut to 769.6m tons, down 1.4m tons from November
• World wheat trade seen rising to fresh record 193.3m tons due to increased demand from Near East countries
• Outlook for total grain stockpiles seen at 822.1m tons, up from a November estimate

WHEAT PLANTING:

• Good weather conditions benefit crops in the European Union
• U.S. planting pace of 2022 winter wheat is close to average, with early indications pointing to a 5% increase in total wheat plantings, encouraged by higher prices
• Dryness has impaired production outlooks for several countries in Near East
• Sowing area in Russia and Ukraine expected to be above respective five-year averages, but dry soil expected to affect crop

Indonesia’s Palm Oil Output Set to Climb 3% Next Year: Gapki

Indonesia, the world’s biggest palm oil grower, is likely to produce 48 million tons of crude palm oil in 2022, an increase of 3% from this year, according to Togar Sitanggang, vice chairman of the Indonesian Palm Oil Association, also known as Gapki.

• Output has declined since 2020 because of a dry season in 2019 and low use of fertilizer when prices were depressed in 2018-2019
  • Production growth in Indonesia will probably not be as strong as in previous years due to lack of new planting area and output is likely to plateau in 2025
  • Gapki sees no peak month in production of palm oil in Indonesia and Malaysia this year
• Demand for palm oil may return to near 2019 levels as the global economy is recovering and will continue to improve next year
  • Country’s exports of palm oil seen rising to 34.44m tons in 2022 from 33.38m tons this year
  • Shipments of crude palm oil seen at 3m tons in 2022, refined products at 25.8m tons
• Indonesia to start 2022 with low inventories and 1Q will be lowest production period; stockpiles seen at 3.84m tons at end-2021 and dropping to 1.98m tons at end-2022
• Palm oil use for biodiesel seen increasing to 8.34m tons in 2022 from 7.32m tons in 2021
  • The country may consume used cooking oil for biodiesel feedstock as early as second half of 2022, and this would ease pressure from slow growth of production
  • Industry hopes to get more incentives from govt on using recycled cooking oil for biodiesel
• Prices predicted to stay above $1,000 a ton at least in first half of 2022 or even during the whole of next year, Sitanggang said.
  • Gapki sees CPO price to be in range of $1,000-$1,250 per ton FOB Indonesia

Palm Oil Likely Peaked, May Ease in Coming Months, Mielke Says

Palm oil prices may have peaked and will likely trade lower in the coming months, according to Thomas Mielke, executive director of Hamburg-based Oil World.

• “The current high prices in vegetable oils are not sustainable,” Mielke said at an Indonesian virtual palm oil conference on Thursday. “The world stage is set for setback in prices.”
• Malaysian palm oil production is poised to recover next year if labor shortages ease and the government allows migrant workers to enter plantations
• Malaysian palm oil output may rise by 1-1.1 million tons in 2021-22, and by 1.7-1.9 million tons in Indonesia
  • Global palm oil production seen rising by 3.7 million tons in 2021-22; exports seen rising by 1.5 million tons

Palm Oil May Jump to 5,400 Ringgit on Tight Supply, Mistry Says

Palm oil futures may skyrocket to a record 5,400 ringgit ($1,279) a ton early next year, boosted by large export levies in top grower Indonesia and as supply tightness reaches a peak between January-February, according to veteran trader Dorab Mistry.

The world’s most-consumed edible oil is forecast to trade from 5,000 ringgit to 5,400 ringgit through February before easing in March, Mistry, director at Godrej International Ltd., said in remarks prepared for delivery at a virtual conference. That’s a more bullish forecast compared with his September prediction for prices to trade between 4,000-4,400 ringgit during the October-February period. The tropical oil was trading around 4,648 ringgit on Thursday.

Palm oil’s outlook for the next five months remains bullish, Mistry said, adding that there will be increased volatility at the current high price levels. However, he said critical swing factors to watch are palm oil output, as well as soybean production in South America.

Production is Key

Production in No. 2 grower Malaysia, which has been curbed by chronic worker shortages, will “at best” be 18 million tons this year and rise to 19 million tons in 2022, Mistry said. Any impact from the arrival of migrant workers in plantations will only be seen from late May onward. In Indonesia, production will increase by at least 1 million tons in 2022.

“The most important factor for 2022 is palm production,” Mistry said. If production fails to expand by 2.5 million tons, palm stocks will go from “extremely tight” in the first half of the year to “tight” in the later half.

Palm Oil Production ‘Stuck’ Amid Malaysian Labor Woes, Fry Says

Palm oil production may be constrained through to next year as second-biggest grower Malaysia wrestles with deep-seated labor problems, according to James Fry, a veteran analyst and chairman of LMC International.

“Palm oil output is stuck in a period of no growth, due to Malaysia,” Fry said at a virtual conference Thursday, adding that supplies are “struggling to make up the ground lost” since 2019. “Remarkably, there will be minimal growth in Southeast Asian crude palm oil output in the three years from 2019 to 2022.”

Malaysian planters are grappling with a historic labor shortage worsened by a protracted lockdown and a spike in Covid cases this year, setting the country’s palm oil production on course for its weakest showing in five years. Industry players are now worried that the new omicron variant could delay the arrival of much-needed plantation workers next year.

Canada’s Catastrophe

Fry said other edible oils have failed to fill the gap left by palm oil, while steady biodiesel demand, especially from Indonesia’s mandates that were applied more strictly, further tightened inventories. “Canada’s catastrophe hit canola, while soyoil is held back by China’s weak meal demand on top of a surprising lack of growth in the U.S. crush, with Argentina reeling from the impact of its drought, and sun oil is only back to 2019 output.”

With tight supplies of palm oil and rapeseed, slow growth in meal use and soyoil output, as well as few signs that high prices have hit food demand, there are only two factors moderating crude palm oil prices until the middle of next year, Fry said. “One is rising interest rates taking the froth from commodity markets, the other is hesitancy by a major biodiesel user, with the U.S. now the prime candidate,” he said.

Palm Oil Prices Must Drop to Attract Demand, Pakistan Group Says

Benchmark palm oil futures must drop to between 4,300 ringgit to 4,500 ringgit by March in order to lure demand, according to Abdul Rasheed Janmohammed, Chairman of the Pakistan Edible Oil Refiners Association.

• Malaysian futures have “already gone up too much” and that is rationing demand, he said at an Indonesian virtual palm oil conference on Thursday
• Palm oil may see some price correction in the coming months as there are signs that supply is improving while demand is not catching up, he said
• “We may see stocks of palm oil slowly regaining due to the recovery in production, hence prices may ease off soon from current levels,” Janmohammed said
• Indonesia took up about 89% of Pakistan’s palm oil market share between Jan.-Oct. this year, compared with Malaysia’s 11%, as the top producer has more attractive prices and availability of supply

India’s 2021-22 Palm Oil Imports Seen Around 8M Tons, SEA Says

India’s palm oil imports are forecast at 7.8 million to 8 million tons in 2021-22, from about 8.32 million tons a year earlier, according to B.V. Mehta, executive director of the Solvent Extractors’ Association of India.

• Palm oil demand has recovered, and is rising as the hotel, restaurant and cafe segment has returned to normal, Mehta said at an Indonesian virtual palm oil conference on Thursday. Demand for food items and edible oils is picking up after the pandemic disrupted consumption in 2019-20, he said
• However, the high prices of edible oils have hurt domestic consumption, resulting in “demand destruction and slowdown in growth of consumption”
• In addition, the omicron variant is causing a “lot of concern,” Mehta said, as any spread in India could hit food services and hurt imports
• Imports of crude palm oil and crude palm kernel oil may rise to 7.7 million tons in 2021-22, from 7.63 million tons a year earlier, while refined palmolein purchases seen at 0.1 million tons vs 0.69 million
• India’s port stockpiles are at 565,000 tons as of Nov. 1, from 845,000 tons in Oct. and compared with 558,000 tons in Nov. 2020
• India’s total vegetable oil imports seen at 13 million tons in 2021-22, from 13.13 million a year ago
• Degummed soybean oil imports seen easing to 2.8 million tons, from 2.87 million tons in 2020-21
• Top producer Indonesia is losing market share to Malaysia due to its high export duty and levy

USDA Raises Estimate of 2021 Farm Income to $117 Billion

The USDA expects farmer profits to rise by 23% this year vs 2020, according to the Farm Income and Financial Forecasts report released Wednesday on the agency’s website. Report is an update of September estimates.

• USDA’s previous est. for 2021 was for $113b
• Income from crops raised by $2.9b, and from livestock raised by $2.8b