Global Ag News for Dec 5.23

TOP HEADLINES

France puts country on ‘high’ alert for bird flu

France raised the risk level of bird flu to ‘high’ from ‘moderate’ on Tuesday after the detection of new cases of the disease, forcing poultry farms to keep birds indoors to stem the spread of the highly contagious virus.

The decision, taken by the agriculture ministry, was published in the Official Journal on Tuesday.

Avian influenza, commonly known as bird flu, has led to the culling of hundreds of millions birds worldwide in recent years. It usually strikes during autumn and winter and has been spreading in many European countries in the past weeks, including Germany, the Netherlands and Belgium.

France said last week that it had detected a first bird flu outbreak on a farm this season in Brittany, in the northwest of the country.

The “high” risk level implies that all poultry should be kept inside on farms and additional security measures taken to avoid a spread of the disease.

Although the bird flu is harmless in food, its spread is a concern for governments and the poultry industry due to the devastation it can cause to flocks, the possibility of trade restrictions and a risk of human transmission.

To counter the disease, France launched a vaccination campaign in early October, initially limited to ducks, which can easily transmit the virus without showing symptoms.

FUTURES & WEATHER

Wheat prices overnight are up 1 3/4 in SRW, unchanged in HRW, down 3/4 in HRS; Corn is up 2; Soybeans up 4; Soymeal up $1.70; Soyoil down 0.06.

For the week so far wheat prices are up 19 1/2 in SRW, up 11 in HRW, up 5 1/4 in HRS; Corn is up 2 3/4; Soybeans down 14 3/4; Soymeal down $2.70; Soyoil down 0.27.

For the month to date wheat prices are up 24 1/4 in SRW, up 14 3/4 in HRW, up 6 in HRS; Corn is up 4 3/4; Soybeans down 32 1/2; Soymeal down $14.00; Soyoil down 1.08.

Year-To-Date nearby futures are down 24.5% in SRW, down 26.1% in HRW, down 24.0% in HRS; Corn is down 32.1%; Soybeans down 13.8%; Soymeal down 11.5%; Soyoil down 20.0%.

Chinese Ag futures (JAN 24) Soybeans down 28 yuan; Soymeal up 24; Soyoil down 18; Palm oil down 44; Corn down 4 — Malaysian Palm is down 44. Malaysian palm oil prices overnight were down 44 ringgit (-1.15%) at 3780.

There were changes in registrations (-43 HRW Wheat). Registration total: 2,946 SRW Wheat contracts; 522 Oats; 660 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 514 HRW Wheat.

Preliminary changes in futures Open Interest as of December 4 were: SRW Wheat up 1,091 contracts, HRW Wheat down 128, Corn up 2,377, Soybeans down 14,096, Soymeal down 4,388, Soyoil up 3,215.

Brazil: Scattered showers increased over central Brazil this weekend but also across the south, where rain was more widespread and heavy. Some areas of central Brazil continue to see lower rainfall amounts by happenstance. Scattered showers will continue over the country this week, but may be a little more isolated in coverage by the second half of the week. That is not certain, however, and precipitation will still be around, favoring those areas that are indeed hit by rain. Southern states continue to deal with too much rain this week but may get a better break this weekend into next week a bit. These areas need drier weather to drain saturated soils for developing corn and soybeans.

Argentina: Scattered showers moved through over the weekend and another system will produce widespread, though perhaps lighter showers Tuesday and Wednesday. With another system moving through this coming weekend, conditions continue to be mostly favorable for planting and development of corn and soybeans

Australia: Eastern areas have been much wetter in recent weeks, which has disrupted the wheat and canola harvest, but favored the development of cotton and sorghum crops. Western areas have been drier. Some rain will move through later this week which may be more beneficial for developing cotton and sorghum but continue to disrupt the wheat and canola harvest, which may cause quality concerns as well.

Northern Plains: It was quite and warm over the weekend. A weak clipper will move through Monday with some mixed showers. Another system will move across the Canadian border Thursday with scattered showers in some areas. A cold front will move through with the system but temperatures behind the front will still be mild or warm for December.

Central/Southern Plains: Limited showers moved through over the weekend, which continue on Monday across the north. A cold front will move through on Friday and may develop a system with scattered showers, but models disagree with this development. Cooler air may fill in for a couple of days behind the front, but will still be relatively mild for December in most areas. Southwestern areas could use more soil moisture, but have the winter season to see good precipitation to potentially eliminate drought.

Midwest: A couple of systems moved through the region over the weekend, spreading scattered showers and even some thunderstorms through. A weak clipper will move through early this week with a mix of rain and snow, but with limited or no accumulation. Very warm temperatures will flood the region mid-to-late week. A cold front will move through Friday and Saturday with some slightly cooler temperatures, but with potential for increased precipitation as well. If the precipitation occurs, it would help with the remaining drought areas and increases for water levels on the Mississippi River.

Delta: Scattered showers fell over southern areas this weekend but it will be quieter this week. A front will come through with potential for widespread precipitation Friday through the weekend, which may help with the drought and increasing water levels on the Mississippi River.

The player sheet had funds net buyers of 6,500 contracts of SRW wheat; sellers of 8,000 soybeans, sellers of 2,500 soymeal, and net sellers of 1,000 lots of soyoil.

TENDERS

• WHEAT TENDER: Egyptian state grains buyer the General Authority for Supply Commodities (GASC) is seeking wheat in an international purchasing tender. The deadline for offers is Dec. 5.
• WHEAT TENDER: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 metric tons of milling wheat.
• WHEAT SALES: The U.S. Department of Agriculture reported private sales of 440,000 metric tons of U.S. soft red winter wheat to China, its largest purchase of U.S. wheat since at least 2020.
• CORN, SOYMEAL SALES: The USDA also confirmed sales of 267,044 metric tons of U.S. corn to Mexico and 183,000 metric tons of U.S. soymeal to the Philippines for 2023/2024 delivery.

PENDING TENDERS

• 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)
• CORN TENDER: The Korea Feed Association (KFA) has issued an international tender to purchase up to 68,000 metric tons of animal feed corn to be sourced from optional origins excluding Europe and the Black Sea regio
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 132,504 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Thursday.
• MILLING WHEAT TENDER: The Lebanese government issued an international tender to purchase 30,000 metric tons of milling wheat.
• MILLING WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
• WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 110,000 metric tons of wheat.

TODAY

US Corn, Soybean, Wheat Inspections by Country: Nov. 30

Following is a summary of USDA inspections for week ending Nov. 30 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 409k tons of the 1.11m total inspected
• Mexico was the top destination for corn inspections, Japan led in wheat

Canada 2023 Wheat Crop Est. 32M Tons, Canola 18.3M: StatsCan

Wheat production seen 2.119m tons higher than previously expected, according to estimates released Monday by Statistics Canada on its website.

• In a Bloomberg survey, analysts were expecting 30m tons
• Durum wheat revised down by 14,000 tons
• Canola revised up by 960,000 tons to 18.328m tons

Ukraine Exported 7M Tons of Cargo from Odesa Ports Since Aug. 8

Almost 5m tons of grain was exported via greater Odesa ports since Aug. 8 via grain corridor laid out by the Ukrainian Navy, Infrastructure Minister Oleksandr Kubrakov says on Facebook.

• 200 outbound ships exported total 7m tons of cargo since Aug. 8, including 5m tons of grain; 226 ships entered the ports
• 31 ships are currently being loaded in the Black Sea ports of Odesa, Chornomorsk and Pivdennyi, and another 30 ships are on route, inbound and outbound
• NOTE: Ukrainian President Volodymyr Zelenskiy instructed top military commanders in July to prepare steps that allow export to continue after Russia exited the Black Sea grain deal, and by Aug. 10 the new corridor was laid

Brazil 2023/24 Soy Planting 85% Done as of Nov. 30: AgRural

Soybean planting is 85% complete as of Nov. 30, compared to 74% in prior week and 91% a year earlier, according to an emailed report from AgRural consulting firm.

• Pace of work improved compared to the previous week, driven by the strong advance in Rio Grande do Sul state, where producers were able to enter the field between rains
• Production is now estimated at 159.1m tons, against 163.5m tons in the estimate released on Nov. 9 and 164.6m tons in the October projection
• The reduction was mainly due to already consolidated losses in Mato Grosso state, which persist even after the relative improvement in rainfall in the second half of November
• 2023/24 summer corn planting in Brazil’s Center-South region is 91% complete, versus 83% a week earlier and 93% a year before

Brazil Farming Giant SLC Cuts Soy, Corn Planting on Drought

SLC Agricola, Brazil’s largest publicly traded farming company, reduced its soybean planted area estimate by 4.8% from an initial forecast in October to 320,502 hectares (792,000 acres) because of excessive high temperatures and a drought in top producer Mato Grosso state, it said in a filing.

• Projected soy yields seen down 7.3% from initial forecast
• SLC’s winter corn area seen down by 7.5% from previous forecast to 95,696 hectares
• Meanwhile, SLC raised its total cotton area forecast by 1% to 189,321 hectares
• Area planted with other crops seen at 46,800 hectares
• Total crop area seen at 652.319 hectares, down 3.3% from previous forecast

WHEAT/CEPEA: Prices drop in late November, but monthly average increases

Wheat prices were fading in Brazil at the end of November, after rising expressively during the month. According to Cepea surveys, recent decreases are attributed to the supply of wheat from Argentina, which is more competitive in Brazil – new volumes are expected to January. Moreover, buyers are showing less interest in purchasing new quantities, due to the proximity of the end of year. Growers, in turn, are offering low volumes, expecting higher prices next year.

According to data from Cepea, between November 24 and December 1st, the prices paid to wheat farmers (over-the-counter market) decreased 5.33% in Paraná and 1.98% in Santa Catarina; on the other hand, values moved up 1.71% in Rio Grande do Sul. In the wholesale market (deals between processors), values moved down 0.96% in São Paulo, 1.16% in Paraná, 3.43% in Rio Grande do Sul and 0.28% in Santa Catarina.

Based on data from Conab (Brazil’s National Company for Food Supply), between November 20 and 24, the import parity price for the wheat from Argentina delivered to Paraná state was at USD 256.90/ton. Considering the average of the US dollar in that period, at BRL 4.8865, the wheat imported was sold at BRL 1,255.36/ton, while for the Brazilian wheat traded in Paraná, the average was higher, at BRL 1,333.46/ton, according to data from Cepea. In Rio Grande do Sul, the price of the product from Argentina closed at USD 240.27/ton, which accounts for BRL 1,174.06/ton – against BRL 1,241.20/ton on the average of the state calculated by Cepea.

In Rio Grande do Sul, the monthly average in November closed at BRL 1.204.65/ton, 11.5% higher than that from October, but a steep 25.2% down from that in November/22. In Paraná, the average in November closed at BRL 1,263.13/ton, 22.1% higher in the monthly comparison, but 31.1% down in the annual comparison, in nominal terms.

According to Conab, the harvest in Brazil reached 96.5% until November 25. In Rio Grande do Sul, Emater indicates that the harvest totaled 98% of the area up to Nov. 30.

In Paraná, Seab/Deral says that wheat production in Paraná totalled 3.65 million tons, down 980 thousand tons compared to the previous estimative, due to the excessive rainfall in that state this year (El Niño) – rains also affected the quality. Even thus, the production was 4% superior to that in previous crop (3.52 million tons), favored by higher area.

Australia’s Wheat Output Improves But Rain Threatens Quality

• Government slightly boosts 2023-24 grain production estimates
• Significant rainfall in November likely hurt unharvested crops

Australia’s wheat production is set to be slightly higher than expected this season but recent heavy rainfall on the nation’s east coast has probably led to a decline in the quality of unharvested crops.

The government marginally raised its estimates for wheat, barley and canola output for the 2023-24 harvest, which is still expected to be lower than the previous record season, according to a December report from the Australian Bureau of Agricultural and Resource Economics and Sciences.

Rain late last month would have delayed the harvest across central and southern New South Wales, Victoria and parts of South Australia, and likely impacted the quality of crops still in the ground, the government said. December rainfall is set to be lower, which should allow for the timely collection of grains and minimize the damage, the forecaster added.

The global wheat market is still grappling with the fallout from Russia’s war in Ukraine, despite forecasts for bountiful crop production in some regions. Key buyers of Australian grain include Indonesia and China, which may require more imports after rain damaged its crop this year.

Australia increased its wheat output estimate for 2023-24 to 25.5 million tons, up from a September forecast of 25.4 million. However, production will be 37% lower than the previous bumper harvest. Planting of the grain typically starts from April, with the harvest commencing from November.

Other crop estimates for 2023-24:

• Barley production forecast at 10.8 million tons, from 10.5 million tons estimated in September
• Canola production forecast at 5.5 million tons, from 5.2 million tons
• Overall winter crop forecast at 46.1 million tons, down 33% from the record high in 2022-23 and slightly below the 10-year average

Palm Oil Reserves in Malaysia Seen Rising to Four-Year High

• November inventories up a seventh month to 2.48m tons: survey
• Prices will likely trade below 3,900 ringgit in the short term

Palm oil stockpiles in Malaysia likely expanded for a seventh straight month to the highest level since April 2019 as production in the world’s second-biggest grower outstripped its exports of the tropical oil.

Inventories rose about 1.2% in November from a month earlier to 2.48 million tons, according to the median of 11 estimates in a Bloomberg survey of traders, analysts and plantation executives. That’s around 8% higher than a year ago.

Crude palm oil output fell about 6.2% to 1.82 million tons, the survey showed, the first monthly drop since June. Production was still bigger than November’s forecast for exports at 1.52 million tons — a 3.4% gain from October.

Futures in Kuala Lumpur extended declines for a third day, falling to 3,799 ringgit a ton at the midday break.

The outlook for higher stockpiles has added bearish sentiment to the market, said Gnanasekar Thiagarajan, the head of trading and hedging strategies at Kaleesuwari Intercontinental. The lack of demand during winter continues to weigh on futures, he said. Palm oil tends to solidify in colder weather, prompting consumers to look for alternative cooking oils.

Malaysian palm oil futures will likely trade between 3,650 ringgit and 3,900 ringgit in the short-term due to the current supply and demand situation, according to Marcello Cultrera, director at Singapore-based Apricus 8 Pte.

“Bearish factors such as adverse import profit margins in India and China, along softening European vegetable oil prices, suggest a lower boundary for prices,” he said.

Palm oil prices may be capped in 2024, with the late arrival of El Niño probably having a minimal impact on output, and supply of other oilseeds likely rising to a record despite Brazil’s weather woes, according to Bloomberg Intelligence analyst Alvin Tai. El Niño could may even benefit palm oil production from December to February by reducing monsoon rainfall, Tai said.

More from the survey:

• Stockpile estimates ranged from 2.35 million to 2.57 million tons, with five respondents predicting them to drop from a month earlier
• Production forecasts from 1.75 million to 1.88 million tons; export estimates were from 1.45 million to 1.60 million tons
• Imports are seen slightly higher at 50,000 tons compared with 47,557 tons in October
• Local consumption estimates were from 250,000 tons to 400,000 tons

China makes largest U.S. wheat purchase in years

China booked its largest purchase of U.S. wheat since at least 2020, buying 440,000 metric tons of the grain, the U.S. Department of Agriculture confirmed on Monday.

The sale comes after China’s 2023 wheat crop suffered quality issues after heavy rain hit key growing areas just ahead of the harvest, analysts said. The sales also provide a welcome shot in the arm for lagging U.S. wheat exports, which the USDA has projected will fall to a 52-year low in the 2023/24 marketing year that began June 1.

The Chicago Board of Trade March wheat contract WH24 rallied on the news and was up about 3% at midsession after touching a six-week high at $6.26-1/2 a bushel. Benchmark CBOT wheat Wv1 futures have pared losses since falling to a three-year low in September.

The sale is the latest in a series of Chinese purchases of U.S. soft red winter wheat that began Oct. 3, when the USDA confirmed sales of 220,000 tons to China, followed by 181,000 tons announced on Oct. 13 and another 110,000 tons on Nov. 22.

China, the world’s biggest wheat producer and consumer, has also been buying Australian and French wheat. Analysts believe China needs to import milling wheat to blend with its rain-damaged domestic supplies.

The sale announced on Monday would bring China’s total U.S. wheat purchases for the current season to more than 1 million metric tons, the bulk of which is for SRW wheat.

SRW wheat is a lower protein variety often used to make flat breads, pastries and crackers. It can also be used as an animal feed.

War risk insurance rates edge up after surge in Red Sea ship attacks

War risk insurance premiums edged up for Red Sea voyages after three vessels were attacked in the area on Sunday and fears grow over worsening perils for commercial shipping, maritime and insurance sources said on Monday.

The incidents are the latest in a series of attacks in Middle Eastern waters since a brutal war between Israel and the Palestinian Islamist group Hamas broke out on Oct. 7.

The three commercial vessels came under attack in international waters in the southern Red Sea, the U.S. military said on Sunday.

Yemen’s Iran-backed Houthi group claimed drone and missile attacks on what it said were two Israeli vessels in the area.

“It has now become clear the Houthis will attack anything at sea with links to Israel or Israelis, regardless of how feeble the links may be, and regardless of the potential for collateral damage to non-Israelis, for example crew members,” Jakob Larsen, head of maritime safety & security with shipping association BIMCO, told Reuters.

Israeli military spokesperson Rear Admiral Daniel Hagari said the two ships cited by the Houthis had no connection to Israel. U.S. Central Command said the three vessels were connected to 14 separate nations.

Larsen said the industry would welcome a strengthened naval presence in the area.

“Faced with a threat from military formations such as the Houthis, merchant ships rely on protection from naval units,” he said.

“There is little a merchant ship can do to protect itself against weapons of war. Re-routing away from the area is a valid consideration, especially for ships at heightened risk.”

Other Nitrogen Prices Drag on 1H Ammonia Upside

As urea price pressure cooled last week, ammonia pricing was steady in the US due to farmer demand. The Tampa ammonia bellwether contract settled unchanged on the month at $625 a metric ton cost and freight. The Corn Belt urea-ammonia spread fell to minus 3 cents a pound, 8 cents below normal. Ammonia’s regular seasonal 1Q rise is threatened by urea’s low-cost alternative and expectations for a 4% drop in US planted corn acreage. Farmers purchase inputs based on per unit nitrogen pricing and can switch among nitrogen products to decrease input costs. Yet China’s absence from the nitrogen export market — likely into 2Q — could firm urea pricing, setting a floor for ammonia’s decline.

Fertilizers Mixed as China’s Export Curbs Help Balance Market

Global nitrogen buying eased after India’s latest urea tender, which should sate its appetite for at least a month. Our scenario suggests soybeans could prevail in farmers’ 2024 plans, pushing nitrogen up the agenda for BI’s December webinar. Yet exports from China, the nitrogen and phosphate swing supplier, will be curbed through 2Q under a new policy.

US Fertilizer Prices Mixed as Fall Application Season Winds Down

New Orleans (NOLA) barge prices were up from last week for urea and phosphates, but down for potash on limited trading activity. Most US inland terminal prices were the reverse, falling slightly for urea while remaining stable for potash, as the fall application season winds down. Ammonia prices were mixed, staying unchanged in the Corn Belt but strengthening in California and falling in western Canada for limited fill program offers. As expected, the Tampa ammonia price for December remained at November’s $625 a metric ton (mt) following several months of increases. Higher reference prices for phosphoric acid and ammonium polyphosphate took effect late in the week in the Midwest and western US, while ammonium sulfate prices were unchanged at NOLA and inland.

 

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