Global Ag News for Feb 28.24

TOP HEADLINES

Strong Milk Price May Lift DDGS Demand

Strong milk prices may boost demand for dried distillers grains with solubles (DDGS), which are used to supplement cattle and dairy cow feed. DDGS may have the benefit of raising cows’ milking performance, according to research by the Japan International Research Center for Agricultural Sciences. Milk prices hovered at record highs last year, averaging $4.03 a gallon, based on prices for US fresh, whole fortified milk. US DDGS averaged $216.35 a ton in 2023 vs. a record high of $236.73 in the whole of 2022. DDGS is also used as feed for cattle as well as an alternative to corn for poultry feed.

DDGS is the solid matter remaining after corn starch is extracted for ethanol. About 17 pounds of DDGS are produced from each bushel of corn.

FUTURES & WEATHER

Wheat prices overnight are down 5 1/2 in SRW, down 7 3/4 in HRW, down 3 3/4 in HRS; Corn is down 1/2; Soybeans down 2; Soymeal up $1.50; Soyoil down 0.50.

For the week so far wheat prices are up 9 3/4 in SRW, up 12 1/2 in HRW, up 11 3/4 in HRS; Corn is up 9 1/2; Soybeans down 3; Soymeal down $1.60; Soyoil up 0.43.

For the month to date wheat prices are down 26 1/2 in SRW, down 42 1/4 in HRW, down 39 1/2 in HRS; Corn is down 35 1/2; Soybeans down 94; Soymeal down $37.70; Soyoil down 1.51.

Year-To-Date nearby futures are down 7.3% in SRW, down 9.0% in HRW, down 9.7% in HRS; Corn is down 13.6%; Soybeans down 12.6%; Soymeal down 14.2%; Soyoil down 7.0%.

Chinese Ag futures (MAY 24) Soybeans down 23 yuan; Soymeal up 17; Soyoil up 58; Palm oil up 60; Corn up 5 — Malaysian Palm is down 15.  Malaysian palm oil prices overnight were down 15 ringgit (-0.38%) at 3907.

There were no changes in registrations. Registration total: 573 SRW Wheat contracts; 0 Oats; 6 Corn; 219 Soybeans; 125 Soyoil; 1 Soymeal; 56 HRW Wheat.

Preliminary changes in futures Open Interest as of February 27 were: SRW Wheat down 5,785 contracts, HRW Wheat up 1,121, Corn down 15,856, Soybeans down 18,757, Soymeal down 11,147, Soyoil down 10,329.

Brazil: Wet season showers in central Brazil will be isolated for the rest of this week, but they will fill back in this weekend. Southern areas are seeing waves of showers through Thursday as a front waffles around the region. Showers are forecast to be more sporadic and shifting next week, but fairly widespread, which should help with the long-season crops in the south and the safrinha corn in the central.

Argentina: Scattered showers continue to fall across the north with a front waffling around through Wednesday. Smaller disturbances will move through southern Argentina this week with more muted shower potential with a better shot of widespread showers with a front passing through this weekend. Showers are not perfect, but as long as they keep coming with enough frequency, crop conditions should remain stable in the overall good ratings currently found in the country. Some spots may be missed, however.

Europe: A large low will move into the Mediterranean and continue showers there throughout the week. More systems will try to follow a similar path later this week and next week, which would be beneficial for Spain and Italy, but be too wet in France and the UK. Temperatures continue to be much warmer than normal across the eastern half of the continent, promoting early awakening from dormancy and growth.

Black Sea: Conditions over the winter have been mostly favorable with frequent enough precipitation events to leave most areas with good soil moisture as wheat begins to awaken from dormancy early due to warmer temperatures. Drier conditions are expected for the next week and there may be some colder air moving through next week as well that will need to be monitored.

Australia: Mostly dry conditions are expected for this week, but showers should pop up in variable fashion across much of the country starting Friday. Western areas may see some passes from storm systems this weekend and next week that would be beneficial for building soil moisture. Soil moisture is low in many areas well ahead of the harvest and subsequent wheat planting and will need much more rain to fall over the next couple of months.

Northern Plains: A much stronger system and cold front will push through the region Tuesday. Areas of snow are expected, along with a band of moderate to heavy snow across North Dakota. Temperatures will fall dramatically behind this front, but only last for about two days before they pop back up again above normal by Thursday. The active weather pattern continues this weekend with another big storm system moving through with a mix of rain and snow and another drop in temperatures.

Central/Southern Plains: A strong cold front will push through on Tuesday with limited showers, but strong winds and a quick burst of cold air. That won’t last long as temperatures soar back above normal again on Thursday. A secondary piece to the storm should bring some showers across the south on Thursday. Warm temperatures again could be significant going through the weekend, but another strong system will move through Sunday and Monday. That system will likely bring areas of heavier precipitation, including potential for heavy snow across the north, strong winds, and another drop in temperatures and they may settle into a more seasonable range.

Midwest: Extreme warmth continues early this week, but a very strong cold front will move through Tuesday and Wednesday and flush out all that warmth. Widespread showers, including some light snow will move through. Thunderstorms across the east could be severe on Tuesday. Winds will be strong and temperatures will drop significantly behind the front. But that will only last about a day or so before temperatures pop right back up well above normal again for Thursday or Friday. Another big storm system is forecast to move through early next week as well, and could have similar impacts.

Delta: A cold front will move through with some isolated showers on Wednesday and more showers will follow behind it on Thursday night into Friday. Another system will move through with more showers early next week. Soil moisture continues to be much improved ahead of spring planting.

The player sheet for Feb. 27 had funds: net buyers of 3,500 contracts of SRW wheat, buyers of 1,500 corn, buyers of 1,500 soybeans, sellers of 3,500 soymeal, and buyers of 1,500 soyoil.

TENDERS

• CORN SALES: Chinese importers are believed to have purchased a substantial volume of animal feed corn from Ukraine in the past week, European traders said. The precise volume was unclear. Some traders estimated at least 240,000 metric tons were bought in four 60,000 ton shipments, but with market talk that more than 10 shipments were purchased all for March/May loading.
• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 123,000 metric tons of U.S. soybeans for shipment to unknown destinations in the 2023/24 marketing year.
• WHEAT SALE: Jordan’s state grains buyer purchased about 60,000 metric tons of hard milling wheat to be sourced from optional origins in an international tender on Tuesday
• CORN TENDER: Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 metric tons of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa
• CORN, SOYMEAL TENDERS: Algerian state agency ONAB has issued international tenders to purchase up to 80,000 metric tons of animal feed corn and 35,000 tons of soymeal
• RICE TENDER: Indonesian state purchasing agency BULOG has issued an international tender to buy some 300,000 metric tons of rice.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 88,800 metric tons of rice to be sourced from the United States and China
• FEED GRAIN TENDERS: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 120,000 tonnes of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.

 

 

TODAY

 

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Feb. 23 are based on six analyst estimates compiled by Bloomberg.

• Production seen lower than last week at 1.072m b/d
• Would be the first decline in five weeks
• Stockpile avg est. 25.641m bbl vs 25.502m a week ago
• The EIA in Washington is scheduled to release the report at 10:30am Wednesday

Canada Crushed 937K Tons of Canola in January: StatsCan

Canola processing rose 7% in January from a year ago, according to Statistics Canada data released Tuesday on agency’s website.

• Oil production totaled 399k tons, and meal output at 541k tons
• Aug.-Jan. crushings up 12.7% from year ago to 5.514m tons
• NOTE: Canada is the world’s top canola grower

EU Soft-Wheat Exports Fall 3% Y/y in Season Through Feb. 22

The European Union’s soft-wheat exports in the season that began July 1 were at 20.5m tons as of Feb. 22, compared with 21.1m tons a year earlier, the European Commission said on its website.

• NOTE: Data is until Feb. 22 due to persisting technical issue
• Leading destinations include Morocco with 3m tons, Nigeria at 1.92m tons, Algeria with 1.87m tons
• Barley exports were at 3.62m tons, down 14% y/y
• Corn imports were at 11.5m tons, down 40% y/y

Brazil Soy Exports Seen Reaching 8.50 Million Tns In February – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 8.50 MILLION TNS IN FEBRUARY VERSUS 7.3 MILLION TNS IN PREVIOUS FORECAST
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 1.43 MILLION TNS IN FEBRUARY VERSUS 1.86 MILLION TNS IN PREVIOUS FORECAST
• BRAZIL CORN EXPORTS SEEN REACHING 716,718 TNS IN FEBRUARY VERSUS 716,718 TNS IN PREVIOUS FORECAST
• BRAZIL WHEAT EXPORTS SEEN REACHING 723,922 TNS IN FEBRUARY VERSUS 715,863 TNS IN PREVIOUS FORECAST

USDA January soy crush estimated at 196.6 million bushels, analysts say

The U.S. soybean crush likely fell in January to 5.897 million short tons, or 196.6 million bushels, as extreme winter weather impeded operations at some facilities, according to analysts surveyed by Reuters ahead of a monthly U.S. Department of Agriculture (USDA) report.

If the estimate, gathered from eight analysts, is realized, it would be down 3.8% from the record 204.3 million bushels crushed in December but up 2.8% from the January 2023 crush of 191.1 million bushels.

It would also be the largest January crush on record, narrowly topping the 196.5 million bushels processed in the first month of 2021, according to USDA data.

U.S. soybean processing has expanded considerably in recent years, propelled by rising demand for vegetable oils to produce biofuel.

The monthly crush had exceeded 200 million bushels for three straight months before the drop in January, as a mid-month cold snap disrupted truck and rail transportation and slowed operations at several plants, analysts said.

Crush estimates ranged from 194.2 million to 199.0 million bushels, with a median of 196.8 million bushels.

The USDA is scheduled to release its monthly fats and oils report at 2 p.m. CST (2000 GMT) on Friday.

U.S. soyoil stocks as of Jan. 31 were estimated at 1.982 billion pounds based on the average of estimates from five analysts.

If realized, the stocks would be up 8.7% from 1.824 billion pounds at the end of December but down 15.9% from stocks totaling 2.356 billion pounds at the end of January 2023.

Estimates ranged from 1.900 billion to 2.027 billion pounds, with a median of 2.000 billion pounds.

The National Oilseed Processors Association reported that its members, which account for about 95% of the U.S. soy crush, processed 185.780 million bushels in January, while end-of-month oil stocks rose to 1.507 billion pounds.

US biofuel credit prices hit 3-year low, expected to stay weak, EIA says

U.S. biomass-based diesel and ethanol compliance credit prices have slumped to three-year lows on declining feedstock costs and are set to stay low as renewable diesel output rises, the Energy Information Administration (EIA) said on Tuesday.

The slump in prices for the credits, known as Renewable Identification Numbers (RINs), could reduce incentives for investments in biofuels production, the EIA warned. This could hinder the energy transition away from fossil fuels. D4 RINs, generated from renewable diesel and biodiesel output, and D6 RINs, generated from ethanol output, are both trading at their lowest since 2020. Declining prices of soybean oil, a widely used feedstock for renewable diesel and biodiesel production, are a primary driver behind the slump in RINs, the EIA said.

Rising global production and lower demand in China have boosted soybean stockpiles, while increasing exports from Brazil have put more pressure on Bean Oil prices, the agency noted. The BOHO spread, which tracks the difference between Bean Oil and Heating Oil futures, fell by almost half from the start of the year to a three year low of 54 cents a gallon on Monday.

Increased renewable diesel production and relatively low renewable U.S. blending targets through 2025 have also put pressure on bean oil prices and RINs, said John Auers, managing director at RBN Energy. Nearly half the bean oil produced in the U.S. is expected to be used for biofuels production this year, according to government data. The EIA expects U.S. renewable diesel output to grow 30% this year to 230,000 barrels per day and another 30% next year to 290,000 barrels per day.

Renewable blending targets for 2023, 2024 and 2025 finalized by the U.S. Environmental Protection Agency in June last year are seen well below existing biofuels output. Based on EIA’s calculations, RIN generation exceeded EPA’s 2023 targets and the surplus will grow through 2025.

Analysts at TD Cowen earlier this month estimated a 1 billion RIN oversupply in 2023 and a 2 billion surplus this year. “Mostly it’s the narrowing of the BOHO spread but biofuels are very cheap at the moment,” said Tom Kloza, head of energy analysis at Oil Price Information Service (OPIS).

Golden Agri Sees Flat Palm Oil Output in 2024 on El Niño Impact

Golden Agri-Resources Ltd. sees the company’s palm oil output remaining “flat” this year due to the delayed impact of El Niño in Indonesia, according to Richard Fung, director of investor relations.

• The El Niño experienced last year has a lagged impact on yields, which will be felt this year, Fung said at a briefing Wednesday after co.’s earnings
  • The seasonal production recovery, typically seen in 2H, may be more modest than usual this year
• Erratic weather last year, with drought in certain areas and excessive rainfall in others, makes production hard to predict
  • Areas most affected by drought include Central Kalimantan, West Kalimantan, and South Kalimantan
• Production growth will also be curbed by “fairly aggressive” replanting; co. targets to replant around 15,000-20,000 ha this year
  • Almost half of co.’s planted area is 7-18 years old; co. replanted 14,200 ha last year
• Average FOB crude palm oil prices seen between $800-$900/ton in 2024, vs $901 in 2023 and $1,248 in 2022
• Prices underpinned by slowing supply growth due to aging plantations and replanting, limited expansion in other oilseeds, sustained demand growth for food and oleochemicals
  • Erratic weather and geopolitical conflicts may spur supply disruptions
  • Tensions in Red Sea impacted palm oil shipments which have had to take a longer route around Africa, lengthening delivery times and making transport costs more expensive, Fung said
  • While Ukraine has been successful in exporting its produce despite the Russia-Ukraine conflict, the situation “could change again,” he said
• Increased bioenergy demand is a strong catalyst with rising blending mandates, especially in Indonesia, US and Brazil
• Golden Agri has achieved 99% traceability for its palm oil supply chain in Indonesia and is carrying out traceability to mills for its global supply chain; this will help co. comply with upcoming EU deforestation rules

Mississippi Water Levels Low; February Heat Not Helping

Record February heat and a lack of rain are pushing river levels down at a time in the season when they’re usually rising. The US five-day precipitation forecast is dry throughout the Midwest, indicating limited potential for a short-term recharge. Yet the National Oceanic and Atmospheric Administration’s projection for March indicates precipitation near normal. Vessels transiting at St. Louis are currently subject to a 10% draft reduction. The upper Mississippi is expected to reopen March 4-16, in line with a normal spring restart date.

The Mississippi River is the main conduit for US agriculture trade. Fertilizer producers including publicly traded CF Industries, Mosaic and Nutrien rely on the waterway to ship to Midwest customers, while US farmers use it to export production.

China purchased Ukrainian corn in the past week, traders say

Chinese importers are believed to have purchased a substantial volume of animal feed corn from Ukraine in the past week, European traders said on Tuesday.

The precise volume was unclear. Some traders estimated at least 240,00 metric tons were bought in four 60,000 ton shipments, but with market talk that more than 10 shipments were purchased all for March/May loading.

“Ukrainian corn is looking the cheapest in the world and the low prices on offer are making the risk of sailings from Ukrainian ports and the Red Sea disruption worthwhile,” one trader said. “It is believed that shipment was booked in Chinese vessels via the Red Sea.”

The prices paid were estimated at between $227 to $230 a ton cost and freight (c&f) included to China, they said.

China is traditionally a large buyer of Ukrainian corn with purchasing continuing in recent months despite transport disruption caused by Russia’s exit from the U.N.-backed safe shipping corridor for Ukrainian grain exports last year.

“Ukrainian corn continues to be offered in large volumes in February with more shipments being offered for sale using Ukraine’s own shipping channel,” another trader said.

Heat Waves in Four Australian States Fueling Wildfire Threat

• Blaze in Victoria has burned about 22,000 hectares of land
• More than 30,000 people urged to leave their homes: Guardian

Heat waves are bearing down on four Australian states, as authorities battle a blaze in the nation’s populous southeast that’s burned homes and led to thousands of people being advised to leave the area.

A catastrophic fire-danger rating — the strongest warning — has been declared for the Wimmera region, which encompasses 2.3 million hectares in Victoria state’s west, the Bureau of Meteorology said. Several other districts in the state have been issued with an extreme warning, and temperatures are forecast to reach 40C (104F) or more. Total fire bans are in place across several cities, including Melbourne.

“The conditions are not favorable at all for us, they’re pretty extreme in terms of the winds and the heat,” Rick Nugent, Victoria’s Emergency Management Commissioner, said in an Australian Broadcasting Corp. radio interview Wednesday. “The risk is that with the heat and the wind, that embers are blown forward and then start spot fires and then they start running again.”

A fire northwest of the regional Victorian city of Ballarat has been controlled but authorities are warning that it could breach containment lines. The fire has so far burned about 22,000 hectares of land and destroyed five homes.

More than 600 firefighters from Victoria and neighboring New South Wales state are working to contain the spread of the fire, the ABC reported. According to the Guardian, more than 30,000 Victorians have been urged to leave their homes.

Weather Triggers Texas Wildfires Spread

Wildfires spread quickly in the High Plains early this week as high winds, hot weather, dryness and low humidity combined to create dangerous wildfire conditions. Texas Gov. Greg Abbott issued a disaster declaration for 60 counties in his state as widespread wildfires destroyed homes and structures and led to a mix of mandatory and voluntary evacuation orders for several towns on Tuesday. The wildfires also have spread into Oklahoma. Various highways have been closed in areas affected by fires, and county emergency officials worked into the night to advise of evacuation routes, emergency shelters or even telling people to shelter in place. In some communities, such as in Canadian, Texas, hospital patients as well as people from residential care facilities had to be evacuated.

The situation was expected to grow worse overnight, with the size of fires rapidly increasing in areas that were under a red flag warning with high winds, dryness and dewpoints in the teens or single digits already in place or expected overnight in parts of the High Plains. The largest of the active fires in the High Plains, the Smokehouse Creek fire in Hutchinson County in the Texas Panhandle, had consumed an estimated 250,000 acres by Tuesday evening, according to the Texas A&M Forest Service with zero contained. The fire had started in tall grass with high winds fanning the flames.

Other large fires in the Panhandle Tuesday night included the Grape Vine Creek fire, near Pampa in Gray County at 30,000 acres, about 20% contained; and the Windy Deuce fire in Moore County at 38,000 acres and also about 20% contained. As the fire spread in Texas, several towns received mandatory or voluntary evacuation notices or people were told to shelter in place in some situations.

CONDITIONS REMAIN DANGEROUS

Abbott’s posted on X, formerly known as Twitter, that, “According to the Texas A&M Forest Service, dry conditions and above-normal temperatures resulting in areas of the state facing an increased risk of wildfire. Paired with increased wind speeds, these areas are supportive of wildfire activity. The Texas A&M Forest Service reports that several large wildfires ignited yesterday (Monday) under warm, dry, and windy conditions across the Texas Panhandle.

“Strong forecasted winds will likely impact these wildfires, causing them to grow larger. There is a possibility for wildfire activity to occur where an abundant of dormant grasses are present on the landscape in areas near or around them, including the Panhandle, South Plains, Texoma, and Permian Basin regions. Portions of East Texas also face increased wildfire risk amid active burns.”

Brazil’s BRF sees healthy margins on recovering meat prices, lower grain costs

Brazilian food processor BRF BRFS3.SA will maintain healthy margins in the first quarter of 2024 thanks to an ongoing recovery in meat prices and lower grain costs, executives said on Tuesday during a call with analysts to discuss quarterly results.

BRF, which broke a 7-quarter losing streak and posted a net profit for the final quarter of 2023, reiterated export markets’ outlook is positive as multiple BRF plants have recently received permission to sell products abroad to various countries.

 

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