Global Ag News For Feb 7.22

TODAY – EXPORT INSPECTIONS

Wheat prices overnight are up 6 1/2 in SRW, up 9 1/4 in HRW, up 6 3/4 in HRS; Corn is up 7; Soybeans up 19 1/2; Soymeal up $0.61; Soyoil unchanged.

Markets finished last week with wheat prices up 6 in SRW, up 10 1/2 in HRW, up 13 1/2 in HRS; Corn is unchanged; Soybeans up 78 1/4; Soymeal up $2.96; Soyoil up 0.53. For the month to date wheat prices are up 8 1/2 in SRW, up 13 3/4 in HRW, up 13 1/4 in HRS; Corn is up 1 1/2; Soybeans up 82 1/2; Soymeal up $31.10; Soyoil up 0.45.

Chinese Ag futures (MAY 22) Soybeans up 56 yuan; Soymeal up 267; Soyoil up 504; Palm oil up 404; Corn down 6 — Malasyian Palm is down 106.

Malaysian palm oil prices overnight were down 81 ringgit (-1.44%) at 5536.

There were changes in registrations (-170 Soybeans, ). Registration total: 1,900 SRW Wheat contracts; 17 Oats; 50 Corn; 146 Soybeans; 137 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of February 4 were: SRW Wheat up 527 contracts, HRW Wheat down 1,603, Corn up 10,276, Soybeans up 11,784, Soymeal up 6,165, Soyoil up 1,802.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated to scattered showers through Saturday, north Sunday. Mostly dry Monday-Tuesday. Temperatures near to above normal Friday, near normal Saturday, near to below normal Sunday-Tuesday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Monday, north Tuesday. Temperatures near normal through Tuesday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Isolated showers through Saturday. Mostly dry Sunday-Tuesday. Temperatures near to below normal Friday, below normal Saturday-Tuesday. La Pampa, Southern Buenos Aires Forecast: Isolated showers through Saturday. Mostly dry Sunday-Tuesday. Temperatures near to below normal Friday, below normal Saturday-Tuesday.

The player sheet for Feb. 4 had funds: net buyers of 6,000 contracts of  SRW wheat, buyers of 1,500 corn, buyers of 5,000 soybeans, buyers of 3,500 soymeal, and  sellers of 1,000 soyoil.

TENDERS

• SOYBEAN SALE: Private exporters reported the sale of 295,000 tonnes of soybeans to unknown destinations, the U.S. Agriculture Department said. Of the total, 252,000 tonnes is booked for delivery in the 2021/22 marketing year, with the balance slated to be shipped in 2022/23.
• WHEAT SALE: South Korea’s Major Feedmill Group purchased about 110,000 tonnes of animal feed wheat in private deals without issuing an international tender.
• CORN SALE: The Korea Feed Association purchased up to 65,000 tonnes of animal feed corn in an international tender.
• SOYMEAL SALE: Iranian state-owned animal feed importer SLAL is believed to have purchased around 180,000 tonnes of soymeal expected to be sourced from South America. It was unclear whether 60,000 tonnes of animal feed barley also sought in the tender was purchased.

PENDING TENDERS

• CORN TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 325,000 tonnes of animal feed corn. The deadline for submission of price offers is Feb. 8.
• BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley. The deadline for submission of price offers in the tender is Feb. 8
• WHEAT, SOYMEAL TENDER: An importer group in the Philippines is tendering to purchase animal feed wheat and soymeal with total tonnage sought unclear. The deadline for submission of price offers in the tender is Feb. 11.
• WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 tonnes of milling wheat. The deadline for submission of price offers is Feb. 14.
• WHEAT TENDER: A Syrian state grains agency has issued an international tender to purchase and import 200,000 tonnes of milling wheat
• CORN AND WHEAT TENDER: South Korea’s leading feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 138,000 tonnes of animal feed corn and up to 130,000 tonnes of animal feed wheat

Brazilian Corn Harvest Forecast Cut to 113M Tons by USDA Attaché

USDA’s office in Brazil lowers its forecast for 2021-22 first-crop corn harvests in the South American nation by 4m metric tons to 113m MTs.

• That compares to the U.S. agency’s official corn production forecast of 115m MTs
• Corn export estimate is trimmed to 42m MTs, slightly below USDA’s formal outlook of 43m MTs
• For Brazil’s second corn crop, known as safrinha and in process of being planted, there’s “some risk” of lower yields “if growers are either unable to source enough fertilizer, or if they elect to use less fertilizer given its skyrocketing costs”: statement
• NOTE: Much of southern and central Brazil has been plagued by drought due to the on-going La Nina weather phenomenon

Argentina River Cargoes Lighten With Water Level at 77-Year Low

The level of Argentina’s Parana River at crop-export hub Rosario was the lowest last month compared to any month of January since 1945, the Rosario Board of Trade says in an emailed report.

• Ships loading crops, meal and vegetable oil at Rosario in January took on an average of just 29,084 metric tons, an 11% drop y/y and the lowest for any month in data going back four years
• Even though the river is expected to deepen in February, the average load could fall below 28,000 tons

CORN/CEPEA: Number of deals is low, and prices follow opposite trends in BR

Cepea, February 4 – Corn prices have been following opposite directions in the Brazilian regions surveyed by Cepea. In the typical corn-consuming regions in São Paulo, values are fading, while in southern Brazil, quotations are firm, underpinned by the damages caused by the dry weather to developing crops.

Between January 27 and February 3, on the average of the regions surveyed by Cepea, the prices paid to corn farmers (over-the-counter market) rose by 1.5%; in the wholesale market (deals between processors), values increased by 0.2%. In the same period, the ESALQ/BM&FBovespa Index (Campinas, SP) dropped by 0.6%, to BRL 96.82 per 60-kilo bag on Thursday, 3.

In general, liquidity is low in the Brazilian market. Some sellers have been willing to lower asking prices, majorly when they need cash flow. On the other hand, those who have already made cash flow have been away from the national spot market, expecting higher valuations. As for consumers, many of them are still unwilling to pay the current prices asked for corn, Thus, these purchasers have been working with the product stocked.

CROPS – As the harvesting of the summer crop advances, farmers assess the damages caused by the weather and begin sowing the second crop. In this case, farmers have been optimistic, since weather conditions are currently favorable, with rains in southern Brazil.

EXPORTS – According to data from Secex, in January/22, Brazil exported 2.82 million tons of corn, 18% less than that shipped in Dec/21, but 20% up from that in Jan/21. Last month, the 2020/21 exporting season of corn ended in Brazil – between Feb/21 and Jan/22, Brazil exported 20.9 million tons of corn, according to Secex, 14 million tons down from that in the season before and less than the 35 million tons estimated by Conab in Feb/21 (beginning of the season). Last month, these estimates were revised down by Conab to 20.1 million tons.

On the other hand, higher imports in the current season brought some relief to corn farmers in some Brazilian regions. This crop, Brazil has imported 3 million tons of corn, almost two-fold that received in the 2019/20 season (Secex).

In January/22, Brazil imported 162.58 thousand tons of corn, 64% less than the volume imported in Dec/21 and 41% down from that in Jan/21 (Secex). For the 2021/22 season, exports and imports are estimates by Conab to total 36.8 million tons and 1.3 million tons, respectively.

CROPS – While the harvesting of the summer crop is advances in southern and southeastern Brazil, sowing is beginning to step up in the central-western region of the country as well as in some areas in the South. According to data from Imea, 26.7% of the area allocated to corn in Mato Grosso had been sown by Jan/28. The progress of the soybean harvesting is favoring corn sowing, which has been fast.

In Mato Grosso do Sul, 0.8% of crops had been sown by Jan. 28, according to Famasul. So far, 1.99 million hectares are expected to be sown with corn, 13% less than that last season, which may lead to an output of 9.34 million tons.

In Paraná, the harvesting of the first crop of corn is advancing, having reached, by Jan. 31, 14% of the state area, according to Seab/Deral. Sowing of the second crop of corn is in progress too, having reached 10% of the area this week. After the drought during the development of the summer crop, recent rainfall has heartened farmers about the 2021/22 season.

In Rio Grande do Sul, the harvesting pace is faster than that last season, and by Feb. 3, activities had reached 42% of the state area, according to Emater/RS. Although rains in late January favored the recovery of the crops still developing, agents still expect low productivity.

SOYBEAN/CEPEA: High demand boosts premiums and domestic prices to record levels

Excessive rains interrupted the soybean harvesting in Brazil in the last days, hampering supply to processors. As international demand has been high, the dispute between the agents who need to accomplish contracts and domestic processors increased. This scenario boosted export premiums and domestic prices to record levels, in nominal terms.

In the national spot market, the ESALQ/BM&FBovespa Index Paranaguá hit BRL 192.71 (USD 36.46) per 60-kilo bag on Wednesday, 2, the highest nominal level in the series of Cepea, which began in March 2006. Between Jan. 27 and Feb. 3, this Index rose by 5.8%, closing at BRL 191.98 (USD 36.27)/bag on Thursday, 3.

At the port of Santos (SP), prices have set records this week too, at BRL 191.55/bag on Wednesday. In the last seven days, values rose by 6.1%.

In Rio Grande do Sul, supply is even lower, since the harvesting is supposed to begin only in March. Thus, prices in this state have been higher than at the remaining ports. On Thursday, the average soybean value at the port of RS closed at BRL 200.14/bag, a staggering 5.9% up in seven days.

Valuations at ports are linked to higher international demand for the Brazilian soybean. In January/22, Brazil exported 2.45 million tons of soybean, a record for the month, according to data from Secex. China purchased 80.16% of all the soybean Brazil exported (Secex).

And prices may continue high in the coming months. At the port of Paranaguá (PR), the premium for shipment in March/22 had bidding prices at USD 1.23/bushel and asking prices at USD 1.40/bushel on Feb. 3. Considering the contract for shipment in March, traded in the first two months of every year, this is the highest nominal level in the series of Cepea, which began in June 2004. A month ago, premiums were offered with bidding prices at 33 cents of dollar/bushel and asking prices at 38 cents of dollar/bushel.

Thus, FOB prices for shipment in March/22 have increased by a staggering 8.9% this week, to USD 617.78/ton on Thursday – the highest for this contract. This resulted in an export parity at the port of Paranaguá at BRL 197.58/bag for March. The export parity for May/22 is at BRL 199.34/bag; for June, at BRL 200.41/bag; and for July, at BRL 202.18/bag – this calculation was based on the future dollar traded at B3 on Thursday, 3.

PROCESSORS – Some soybean farmers have opted for accomplishing contracts at ports, making it difficult for processors to purchase soybean. Thus, the CEPEA/ESALQ Index Paraná for soybean rose by 5.4% between January 27 and February 3, to BRL 188.98 (USD 35.70)/60-kilo bag on Thursday, 3, the highest, in nominal terms, in the series of Cepea, which began in July/1997. On the average of the regions surveyed by Cepea, prices increased by a staggering 4.8% in the over-the-counter market (paid to farmers) and by 5.7% in the wholesale market (deals between processors).

According to agents consulted by Cepea, some processors had to interrupt activities in the last days, due to the lack of raw-material, reducing the supply of by-products in the market.

Big Win for Russian Wheat on Go Ahead to Sell More to China (1)

• China to allow wheat imports from all over Russia: watchdog
• Russia has long sought to boost agricultural exports to China

Russia has been given the green light to export wheat grown across the country to China, in a breakthrough that could increase competition for sales from Europe and North America.

China will now accept wheat and barley from all over Russia, up from a previously allowed seven regions which excluded major growing areas, Russia’s agriculture watchdog said. Until now, shipments have been limited because of China’s concerns about the dwarf bunt fungus in parts of Russia.

Russia has long sought to boost farm exports to China, and in recent years signed deals to ship poultry while also planning to start express food trains. Friday’s agreement gives the wheat giant a chance to boost sales to a country that has become one of the top buyers. It also followed the first in-person meeting between Vladimir Putin and Xi Jinping in more than two years.

“Russian grain potentially could win some market share from the west in Chinese markets, so it could look beneficial for politicians in both countries,” Andrey Sizov, head of consultant SovEcon, said by phone. China could eventually become one of the top destinations for Russian wheat, he added.

The two countries are continuing to work on potential trade opportunities, watchdog Rosselkhoznadzor said in a statement. That includes a plan to allow Russia to supply peas to China in 2022.

Russian wheat exports have jumped in the past decade, grabbing share across mainstay European and American markets. China has been one of the few remaining holdouts, and winning access there now could challenge sales from the likes of France, Australia and the U.S.

China’s wheat purchases have doubled in just a few years to make it the world’s fourth-biggest importer. The grain has been attractive for use in animal feed, and rising incomes are also boosting local demand for foodstuffs like bread, noodles and dumplings.

Malaysia Palm Oil Reserves Seen Flat in January on Output Slump

Palm oil inventories in the world’s No. 2 grower Malaysia were probably little changed in January as a continued decline in domestic production offset the worst drop in overseas shipments in a year.

Stockpiles were flat at 1.58 million tons from a month earlier, according to the median of eight estimates in a Bloomberg survey of analysts, traders and plantation executives. That would keep reserves at their smallest since July, although they’re about 20% larger than the same time last year. Four of the respondents predicted an increase in inventories for the first time since October, while four expected a decline.

“The market is split on inventory levels because of the different export expectations,” said Paramalingam Supramaniam, director at Selangor-based broker Pelindung Bestari. “But supplies are relatively low and will remain so at least until April.”

Exports tumbled more than 20% to 1.11 million tons in January from the previous month, according to the survey. That’s the biggest monthly drop since January last year, and the smallest shipments in 11 months.

While there’s been some demand destruction of palm oil in price-sensitive markets, futures will stay elevated through May as La Nina ravages soybean crops in South America, reducing supplies of the tropical oil’s main rival, according to veteran trader and analyst Dorab Mistry.

Crude palm oil production is estimated to have dropped 10% to 1.30 million tons, the survey showed, the weakest in 11 months. That’s as Malaysian farmers continue to grapple with a chronic worker shortage across plantations.

Indonesia Allows Exports of CPO, Palm Olein for Feb. Delivery

Trade Ministry has issued permits for 6 companies to export a total of 310,000 tons of crude palm oil and 18,178 tons of palm olein, Indrasari Wisnu Wardhana, director general of foreign trade at the ministry, says in text message Monday.

• Exporters can seek permits for subsequent shipments by submitting the realization of domestic market obligation and domestic price obligation
• Several other companies have also submitted their export permit applications
• Govt has no plan to reduce the percentage of domestic market obligation for CPO and olein from currently 20%

Malaysia Feb. 1-5 Palm Oil Exports +25.6% M/m: Intertek

Malaysia’s palm oil exports rose 25.6% m/m during Feb. 1-5, according to Intertek Testing Services.

China, Argentina pledge closer ties on currency, ‘Belt and Road’

BEIJING, Feb 6 (Reuters) – China and Argentina pledged on Sunday to deepen strategic cooperation on trade, currency and the infrastructure-focused Belt and Road Initiative, the government and state media said after a meeting of president’s Xi Jinping and Alberto Fernandez.

The leaders, who met on the sidelines of the Beijing 2022 Winter Olympics, agreed on a five-year plan for agricultural cooperation and identified key areas to grow and diversify trade and investment in the sector.

China is a major buyer of Argentine soybeans and beef. It also has a major currency swap deal with the country, which helps to bolster its dwindling foreign reserves. Fernandez is battling to revive the economy of Argentina, a major grains producer.

Argentina’s government said in a statement that the two sides had highlighted the importance of the currency swap between their central banks and agreed to continue “strengthening cooperation” in this regard.

The two also signed a memorandum of understanding related to China’s signature Belt and Road initiative, a platform for Chinese investment in railways, ports and highways worldwide.

“This strategic decision will allow the national government to sign different agreements that guarantee financing for investments and works for more than $23.7 billion,” Argentina’s government said. The Chinese side did not give such a figure.

In a 40-minute meeting, Xi and Fernandez agreed to cooperate and invest in areas such as green and sustainable development, as well as digital economy.

China is willing to share development opportunities with Argentina and help it expand exports and upgrade its industries, China’s foreign ministry quoted Xi as saying.

He was quoted as saying the two countries should deepen cooperation in trade, agriculture, energy and mining, infrastructure, investment and financing, anti-epidemic efforts, the digital economy, green development and other areas.

Global Nitrogen Markets Recharged After India Calls Urea Tender

India’s Jan. 29 tender call sparked a urea price recovery as traders scrambled for tons. With China out of the export market and the Middle East selling to contract customers, the large volume India demands remains hard to find. The tender is slated to close Feb. 7.

Urea, Phosphate, Ammonium Sulfate Prices Up in Friday Findings

New Orleans (NOLA) urea prices continued to strengthen in the wake of India’s latest tender, with prices firming to $575-$650 a short ton (st) vs. last week’s $485-$590. Corn Belt urea prices also strengthened after weeks of decline, moving to $655-$710/st vs. the prior week’s $620-$655. Some international markets saw a bump as well, including Egypt, where urea prices jumped to $735-$755 a metric ton (mt) vs. last week’s $690-$700. Ammonium sulfate and phosphate prices also inched higher at NOLA, with diammonium phosphate (DAP) strengthening to $675-$702/st vs. $650-$675 last week. Domestic ammonia and UAN prices were mostly steady from recent weeks, while potash prices remained under pressure. New NOLA potash business was reported at $625/st vs. last week’s $640-$645.

U.S. Pork Production Falls 3.3% This Week, Beef Down: USDA

U.S. federally inspected pork production falls to 534m pounds for the week ending Feb. 5 from 553m in the previous week, according to USDA estimates published on the agency’s website.

• Hog slaughter falls 3.6% in the week to 2.436m head
• Beef production down 0.7% from a week ago to 537m pounds
• For the year, beef production is 6.1% below last year’s level at this time, and pork is 11.6% below

Agri Blockchain Platform Covantis Opens to North American Crops

Covantis on Monday went live for North American crop markets, the company said in a statement. Includes new commodities such as wheat, canola, sorghum and barley and allows traders to execute contracts involving bulk vessels loading in the U.S. and Canada.