Global Ag News for Dec 4.24

TOP HEADLINES

EU Reaches Deal to Delay Contentious Deforestation Law by a Year

• Agreement needs final sign-off before the end of 2024
• EU has faced stiff opposition over far-reaching green law

The European Union reached a tentative deal to postpone its landmark law to tackle deforestation until the end of next year, giving global supply chains of commodities from coffee to beef more time to adapt.

An agreement reached with lawmakers on Tuesday brings a turbulent few months for one of the EU’s most far-reaching environmental plans close to an end. The law was met with widespread pushback from agricultural giants like Brazil and Indonesia, as well as EU countries such as Austria and Finland.

Aimed at curbing forest clearance in nations that export to the bloc, the legislation became a symbol of Europe’s environmental ambitions clashing with reality. Businesses such as chocolate makers said they needed time and money to prepare, as did nations that supply them with cocoa and other products.

A box of handmade chocolates beside a cocoa bean pod at a chocolate factory in Paris.

In early October, the European Commission had already moved to delay the rules. But demands from the European Parliament for further changes complicated the plans and risked causing the new system to take effect at the end of this year if no deal was reached.

Following an agreement with the bloc’s lawmakers to drop those requests, the elaborate system to trace commodities coming into the EU back to their origin will now only kick in at the end of next year. The rest of the law remains intact, including a commitment by the commission to classify countries according to their level of deforestation risk by June 30 next year.

Member states and parliament will still need to officially sign off on the deal before the end of the month, a step that is usually seen as a formality.

The commission’s move to appease objectors by proposing a 12-month delay in October was roundly welcomed by the bloc’s 27 member states. Yet center-right lawmakers were able to find sufficient backing for more concessions, such as a provision to exempt countries without deforestation.

In the end, however, they were faced with the choice of accepting a one-year postponement of the law as is, or see it take effect as initially planned on Dec. 30. As a result, parliament backed down.

 

FUTURES & WEATHER

Wheat prices overnight are down 3 1/4 in SRW, down 3 3/4 in HRW, down 1 3/4 in HRS; Corn is down 1 3/4; Soybeans down 8 3/4; Soymeal down $0.90; Soyoil down 0.52.

For the week so far wheat prices are down 3 3/4 in SRW, down 2 3/4 in HRW, down 3 1/2 in HRS; Corn is down 2 1/2; Soybeans down 6 1/2; Soymeal down $2.40; Soyoil down 0.12.

Year-To-Date nearby futures are down 13.9% in SRW, down 18.3% in HRW, down 21.4% in HRS; Corn is down 10.5%; Soybeans down 24.0%; Soymeal down 25.9%; Soyoil down 13.6%.

Chinese Ag futures (JAN 25) Soybeans down 28 yuan; Soymeal down 34; Soyoil up 52; Palm oil up 136; Corn down 24 — Malaysian Palm is down 43.

Malaysian palm oil prices overnight were down 43 ringgit (-0.85%) at 5032.

There were no changes in registrations. Registration total: 0 SRW Wheat contracts; 74 Oats; 114 Corn; 400 Soybeans; 369 Soyoil; 891 Soymeal; 105 HRW Wheat.

Preliminary changes in futures Open Interest as of December 3 were: SRW Wheat up 1,608 contracts, HRW Wheat up 3,097, Corn up 9,501, Soybeans up 8,673, Soymeal up 10,132, Soyoil up 5,361.

 

Brazil: Scattered showers continue in central Brazil. Another front is moving through southern areas with heavier rainfall with another will develop over the weekend. Overall, conditions are still largely favorable for developing corn and soybeans.

Argentina: A front moves through Thursday through Saturday with more scattered showers. Most areas have good growing conditions, but there are some areas in the south that are too dry. If the late-week front disappoints, it could be more concerning as the pattern will tend to be drier afterward.

Northern Plains: Temperatures will waffle around quite a bit this week and next as multiple systems go through with lighter showers. The showers will not be heavy enough to significantly improve drought conditions in the region.

Central/Southern Plains: A burst of showers will go through eastern Texas on Wednesday, but dry conditions are likely most of this week. Temperatures will waffle around as clippers go by to the north and a larger system may go through Sunday into Tuesday that may or may not have widespread precipitation with it.

Midwest: Lake-effect snow was very heavy over the weekend and a pair of small clippers brought a concentrated area of moderate snow to the south on Saturday and Monday. A larger clipper will move across the Canadian border tonight through Wednesday and another burst of colder air will drop through behind it for the end of the week. Temperatures will bounce around more frequently as clippers move through the region this weekend and next week. One of those may be a bigger storm with more widespread precipitation early next week, though.

 

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

 

TENDERS

• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 111,405 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Dec. 5.
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 metric tons of milling wheat.
• NO SALE IN WHEAT TENDER: Turkish state grain board TMO is believed to have made no sale in an international tender on Tuesday to sell and export 100,000 metric tons of durum wheat
• RICE PURCHASE UPDATE: South Korea’s state-backed Agro-Fisheries & Food Trade Corp purchased 35,000 metric tons of rice to be sourced from the United States with the lowest price estimated at $990.68 a ton cost and freight (c&f) included in an international tender in November.

 PENDING TENDERS

• RICE TENDERS: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 metric tons of rice, traders said. The deadline for submission of price offers is Dec. 10. A previously issued tender from Bangladesh also seeking 50,000 tons of rice closed on Dec. 2.
• FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
• NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase a total of 70,000 metric tons of food-quality soybeans free of genetically modified organisms, European traders said. Some 20,000 tons are sought in five consignments of 4,000 metric tons each, with a deadline for submissions of price offers on Dec. 10. Another 50,000 tons is sought in two 25,000-ton consignments, with a deadline for submissions of price offers on Dec. 5.

 

 

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Nov. 29 are based on seven analyst estimates compiled by Bloomberg.

• Production seen lower than last week at 1.104m b/d
• Stockpile avg est. 23.102m bbl vs 22.869m a week ago

 

Ukraine July-November Wheat Exports Rose 55% Y/y: UkrAgroConsult

Ukraine shipped a total of 8.96m tons of wheat in July-November according to preliminary figures, compared to 5.8m tons in the same period last year, UkrAgroConsult analysts write in a weekly note.

• Still, exports have not yet reached the level of pre-war export volumes
• 55% of the maximum wheat export volume has been shipped in the first five months of the 2024-25 season
• “The share of Asian destinations significantly increased due to the sea corridor stable operation”
  • Top 5 importers include Indonesia, Vietnam and Thailand, but Spain remains the main destination
• “Due to the expansion of Russian and even Ukrainian wheat flows, EU wheat exports focus more on the West African market. France and Germany partially adjusted to the growing competition in Algeria by selling more to Morocco and Nigeria”

 

Prices move down at the end of the harvest

Cepea, December 3, 2024 – While the wheat harvesting was close to the end (there were only 3% left to be harvested in Rio Grande do Sul and 25% in Santa Catarina) in late November, purchasers were willing to trade the raw material to produce flour. As the supply and the quality of the product are lower this season in Brazil, the need to import is likely to increase.

In this harvesting scenario, wheat prices were low in Brazil; however, record dollar quotations against Real tend to boost import costs, sustaining domestic prices. In general, liquidity was low in Brazil by the end of November.

According to data from Cepea, between November 22 and 29, the prices paid to wheat farmers (over-the-counter market) decreased 0.2% in Rio Grande do Sul, 0.23% in Santa Catarina and 1% in Paraná. In the wholesale market (deals between processors), quotations dropped 1.33% São Paulo, 0.64% in Santa Catarina and 1.18% in Paraná, but rose 0.7% in Rio Grande do Sul. Dollar quotations increased 3.37% against Real in the same comparison, at BRL 6.006 on November 29.

In November, the monthly average of wheat prices in Paraná was BRL 1,429.98 per ton, stable against October/24, but increasing 7.4% in relation to that in November/23, in real terms (IGP-DI). In Rio Grande do Sul, the average was BRL 1,265.61/ton, 1.1% down in one month and -0.3% in one year. In São Paulo, prices averaged BRL 1.584.73/ton, +3.2% and +23.6% in the same comparisons. As for Santa Catarina, the average was BRL 1,426.82/ton in November, moving down 1.5% compared to October/24, but increasing 2.6% against that in the same month last year.

 

MGEX Spring Wheat Stocks Down 23.5% From Year Ago: Dec. 1

Stocks of hard spring wheat stored in Minnesota and Wisconsin warehouses fell y/y to 14.549m bushels in the week ending Dec. 1, according to the Minneapolis Grain Exchange’s weekly report.

• Compared to the previous week, stockpiles rose by 761k bu
• Stockpiles in Duluth/Superior warehouses up 795k bu from the previous week

 

EU Soft-Wheat Exports Fall 31% Y/y in Season to Dec. 1

EU soft-wheat exports in the season that started July 1 totaled 9.48m tons as of Dec. 1, compared with 13.8m tons a year earlier, the European Commission said on its website.

• Leading destinations included Nigeria with about 1.61m tons, the UK with 808k tons and Morocco with 714k tons
• Barley exports were 1.89m tons, down 38% y/y
• Corn imports totaled 8.51m tons, up 10% y/y
• NOTE: Click here for figures on oilseed trade
• NOTE: Export data for Italy are not complete for the last four weeks. Export data for France are not complete since the beginning of calendar year 2024. Export data for Bulgaria and Ireland are not complete since the beginning of marketing year 2023/24

 

Canada 2024 Crop Production Survey Ahead of StatsCan Report

The following table shows results of a Bloomberg survey of as many as nine analysts about 2024 crop production in Canada.

• Analysts see wheat production increasing by 4.1% from the previous season to 34.3m metric tons
• Analyst estimates varied from 33m to 35.3m tons
• This would be unchanged from Statistics Canada’s Aug. est.
• Canola production seen at 18.5m tons, 3.5% lower than last year
• Statistics Canada in Ottawa is scheduled to release its estimates on Dec. 5 at 8:30am ET

 

Malaysian Palm Oil Reserves Seen Falling Further on Weak Output

• November inventory fell 4.3% to 1.8 million tons, survey shows
• Crude palm oil production declined 5.6% to 1.7 million tons

Palm oil stockpiles in Malaysia dropped to the lowest level since July as output fell due to heavy rains that disrupted harvesting and transportation of fruits in the second-largest grower, according to a survey.

Inventories contracted 4.3% from a month earlier to 1.80 million tons in November, according to the median of 10 estimates in a Bloomberg survey of plantation executives, traders and analysts. That would be a second monthly drop, and about 25% lower than a year earlier.

Palm oil prices, which have surged almost 38% so far this year on production woes, could get further support, an analyst said.

Signs of a decline in November reserves could result in Malaysia’s year-end palm oil stocks staying below 2 million tons, against 2.3 million tons a year earlier, said Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. That could be a bullish signal for palm oil prices in 2025, he said.

The month-long Ramadan festival in the first quarter of the next year, and expectations of tighter supplies from top producer Indonesia following the nation’s plan to mix more palm-based biofuels in diesel would also be positive for prices, he added.

The Southeast Asian country aims to begin a program to increase its biodiesel blending mandate to 40% in January from 35% now.

The survey also showed that crude palm oil production in Malaysia probably fell 5.6% to 1.70 million tons in November, a third month of declines. Exports slumped 11% to 1.54 million tons, after jumping 11% in October.  Benchmark palm oil futures rose as much as 1.7% to 5,160 ringgit ($1,158) a ton in Kuala Lumpur on Wednesday.

 

Ukraine Grain Exports Increase 39% Y/y So Far This Season

Ukraine’s grain exports have reached 18.6m tons in the season that started July 1, compared with almost 13.4m tons in the same period a year ago, the Agriculture Ministry says on its website.

• Total exports include:
  • Almost 9m tons of wheat, up 50% from the same period a year ago, with the share of Asian destinations increasing significantly
  • 1.9m tons of barley
  • 7.4m tons of corn, up 14% compared to last year
• Grain exports in the first few days of December were at 209,000 tons, trailing the 305,000 tons shipped in the same period in 2023
• By the end of November, Ukraine’s grain and legumes harvest totaled 73.6m tons, slightly below last year

 

Argentina Increases Bioethanol, Biodiesel Prices: Gazette

Argentina raised the minimum prices for bioethanol and biodiesel blended with traditional fossil fuels effective December 3, according to resolutions 392/2024 and 393/2024 published in the official gazette.

• The price of bioethanol made from sugarcane was set at 703.804 pesos ($0.99) per liter
  • The price of bioethanol made from corn was set at 645.061 pesos per liter
• The price of biodiesel was set at 1,064.595 pesos per metric ton

 

China’s Pig Slaughter May Rise as Cheaper Feed Lifts Margins

China pig-farming margins may narrow as cheaper feed prices lift the slaughter rate. A growing supply of pork, made possible by large hog inventory, could lift sales by WH Group’s packaged-meat business in China. Strong soybean supply may have led to cheaper soybean meal, which could dent earnings at soybean crusher Wilmar.

 

US Agriculture Sentiment Rises to Highest Since 2021

The Purdue University/CME Group’s agricultural sentiment index increased to 145 points in Nov. from 115 in Oct., according to a survey of 400 agricultural producers.

• This is the highest level since May 2021
• Current conditions component improved by 18 points from Oct.
• Future expectations up by 37 points

 

US Farm Income to Decline by 4.1% in 2024: USDA

Following is a detailing of the USDA’s projections of US farm sector financial indicators.

• Net farm income est. for 2024 revised up from the Sept. est. by $0.7b to $140.7b
• Income from crops is revised down by $2.8b from the Sept. est.
• Income from livestock revised up by $3.2b

 

 

 

 

Interested in more futures markets?  Explore our Market Dashboards here.