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Global Ag News for Jan 11.24

TOP HEADLINES

Malaysia Says Labor Shortages Remain a Challenge for Palm Oil

Malaysia is committed to ensuring efficient management of foreign labor to address the critical worker shortages at palm estates, Plantations and Commodities Minister Johari Abdul Ghani said at an industry conference in Kuala Lumpur.

  • “We find ourselves at a critical juncture, grappling with three formidable challenges confronting the oil palm industry,” he said, listing persistent labor shortages, falling productivity and EU deforestation rules
  • The government is looking to ramp up efforts to train locals to harvest oil palm in order to reduce reliance on foreign workers
  • Still optimistic about the outlook for palm oil market in 2024, underpinned by expectations of robust demand from India, China and the EU
  • Demand will be further supported by buyers replenishing stocks to ensure food security, which makes 2024 “appear very promising”
  • As of December, the Malaysian Sustainable Palm Oil certification has reached 94.22%, representing 5.35 million hectares out of a total 5.67 million hectares of planted palm oil

FUTURES & WEATHER

Wheat prices overnight are down 1/2 in SRW, down 1/2 in HRW, up 2 1/2 in HRS; Corn is up 3/4; Soybeans up 7 3/4; Soymeal up $2.70; Soyoil up 0.33.

For the week so far wheat prices are down 5 3/4 in SRW, down 4 in HRW, down 1 3/4 in HRS; Corn is down 1/2; Soybeans down 12; Soymeal down $2.40; Soyoil up 0.95.

Year-To-Date nearby futures are down 2.8% in SRW, down 2.8% in HRW, down 1.8% in HRS; Corn is down 2.3%; Soybeans down 5.0%; Soymeal down 4.9%; Soyoil up 0.0%.

Chinese Ag futures (MAY 24) Soybeans down 8 yuan; Soymeal down 27; Soyoil up 32; Palm oil up 76; Corn up 15 — Malaysian Palm is up 39. Malaysian palm oil prices overnight were up 39 ringgit (+1.04%) at 3796.

There were no changes in registrations. Registration total: 1,295 SRW Wheat contracts; 0 Oats; 6 Corn; 661 Soybeans; 147 Soyoil; 100 Soymeal; 262 HRW Wheat.

Preliminary changes in futures Open Interest as of January 10 were: SRW Wheat up 4,171 contracts, HRW Wheat down 1,153, Corn up 11,587, Soybeans up 12,542, Soymeal up 6,139, Soyoil up 7,532.

Brazil: Scattered showers will continue in central Brazil through the weekend, though the coverage and intensity are forecast to lessen later in the week and weekend from east to west. Those showers will still be in the region next week, however they should be very isolated, causing some discussion about further damage to soybeans and a lack of soil moisture for the coming safrinha corn crop. Across the south, waves of showers are expected in the region this week and most of next week, favorable for filling soybeans and developing other crops. Some of the areas like Mato Grosso do Sul and Sao Paulo that were dry last week will see much better rainfall.

Argentina: Heavier rain continues in the north through Thursday as a front slowly slides northward. The recent widespread rainfall continues to favor developing corn and soybeans. Additional waves of showers are forecast across the country through at least the middle of next week, which maintains the overall favorable conditions.

Australia: A front will linger and continue to bring showers to northeastern areas this week while the rest of the country will be drier. We may see showers perk up from a couple of nearby storms next week. Western areas continue to deal with significant drought, but eastern areas of the country have seen some improvement in recent weeks.

Northern Plains: A weak storm moving through Wednesday will bring lighter snow, but a blast of arctic air will follow it through next week, moderating next weekend. The harsh cold will necessitate additional feed for livestock and the quick snap in temperatures could be extra stressful.

Central/Southern Plains: Another major winter storm will develop on Thursday, and though the precipitation will be widespread and the track will be similar, the impacts from this storm are forecast to be less than the one that occurred earlier this week. Only some limited areas of moderate to heavy snow are forecast into Friday, but could again come with stronger winds and the storm will bring in extremely cold, arctic air for most areas. Models differ on the details of the cold and how long it will last, but is likely to stick around through next week to some degree. A third system may form Sunday into Monday with more wintry impacts for the region, mainly across the south, though models disagree with this as well.

Midwest: A storm system brought a mix of heavy rain and snow and near-blizzard conditions over the last couple of days. The storm is exiting to the east early Wednesday. A weak system will bring some light snow through Wednesday and Thursday. Another large storm will follow a similar path as the first for Thursday night through Saturday night, which could hit the same areas again with another round of heavy snow and strong winds for blizzard conditions. That system will bring a blast of arctic air into the region that should last through next week.

Delta: Another large storm will bring a round of showers and thunderstorms through on Friday, but will be followed by a burst of arctic air. That could set the stage for a major winter storm for Sunday and Monday that would bring ice and snow to at least northern areas if not most of the region. Models disagree on its development, though. The heavy precipitation with these storms is favorable for further reducing drought and building up water levels in the Mississippi River system.

 The player sheet for Jan. 10 had funds: net buyers of 500 contracts of SRW wheat, buyers of 4,500 soybeans, sellers of 2,000 soymeal, and  sellers of 1,000 soyoil.

TENDERS

  • CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 metric tons of animal feed corn expected to be sourced from Argentina in an international tender.
  • SOYMEAL PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 60,000 metric tons of soymeal expected to be sourced from optional origins.
  • WHEAT PURCHASE: Algerian state grains agency OAIC is believed to have purchased durum wheat in an international tender which closed on Wednesday, European traders said. The tonnage bought was unclear. The purchase was said to include at least three to four Handymax shipments of Canadian durum plus one Handymax shipment each of Mexican and Australian. Some traders said there could be larger Panamax shipments. The tender sought a nominal 50,000 metric tons.
  • WHEAT AND FEED BARLEY PURCHASE: Tunisia’s state grains agency is believed to have purchased about 50,000 metric tons of durum wheat and 50,000 tons of animal feed barley in international tenders
  • WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 89,260 metric tons of food-quality wheat from the United States and Canada in a regular tender that closed on Thursday.
  • FEED WHEAT PURCHASE: An importer group in Thailand is believed to have purchased about 60,000 metric tons of feed wheat in an international tender
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.
  • FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley via a simultaneous buy-and-sell (SBS) auction that will be held on Jan. 17.
  • SUGAR TENDER: Egypt’s General Authority for Supply Commodities announced a tender to import 50,000 metric tons of raw sugar and/or 50,000 metric tons of refined white sugar, all from any origin, on behalf of the Egyptian Sugar & Integrated Industries Company. The deadline for offers is Jan. 13.

PENDING TENDERS

  • CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 120,000 tons of animal feed corn
  • FEED BARLEY TENDER: Algeria’s state grains agency ONAB issued an international tender to buy 30,000 tons of animal feed barley to be sourced from optional origins.

Map of Indonesia

TODAY

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 Jan. 4.

  • Corn est. range 400k – 1,200k tons, with avg of 633k
  • Soybean est. range 335k – 1,100k tons, with avg of 566k

Brazil’s Conab cuts soy forecast, still expects record crop

Brazilian farmers will produce a record soybean output in the 2023/24 cycle even after bad weather led crop agency Conab on Wednesday to cut expected production by some 5 million metric tons. Conab said the El Niño pattern had brought excessive heat and dryness in the center of Brazil and too much rain in the south. As a result, Conab pegged soybean output at around 155.3 million tons, 4.2% lower than an initial forecast. Conab said harvesting had begun early and was underway in areas of Mato Grosso, Brazil’s leading grain state.

It said high temperatures and water shortages, mainly in the Central-West Region, had spoiled plants on some fields. Conab said average soy yields for the 2023/24 harvest will be 2.2% lower compared to last season, at 3,431 kilograms per hectare. Private forecasters also said Brazil’s soy crop outlook had worsened. At least two lowered output expectations for the crop in January, to between 151 million tons and 153 million tons.

Conab has kept a conservative view on corn as well, saying total output will fall by almost 11% to an estimated 117.6 million tons. The agency mentioned a reduction in corn’s planted area and said lower production of second corn was expected. Second corn, which is planted after soybeans are harvested in the same fields, faces increased climate risk this season. That crop represents about 75% of national production in a given year. Reduced corn production will affect Brazil’s ability to export, Conab data shows. The country is expected to ship some 35 million tons of corn this season, down from 56 million tons in the previous one, when it surpassed the United States as the world’s top corn supplier. Brazil should remain the world’s top soybean exporter, shipping an estimated 98.4 million tons in the 2023/24 cycle, Conab said. That compares with a record of 101.8 million tons from the previous one.

Argentina Corn Production Forecast Rises to 59m Tons: Rosario

Argentina’s corn production is seen rising to 59m tons for the 2023/2024 period, up from 56m tons the month before, the Rosario Board of Trade said in a monthly report Wednesday.

  • Due to the intensity of rains, the corn harvest has good moisture reserves
    • If the forecast remains in place, Argentina would produce 64% more corn than last year
  • Soy production forecast rose to 52m tons from 50m tons previously
    • Soy acreage unchanged at 17.4m hectares (43m acres)
  • Wheat crop forecast unchanged at 14.5m metric tons

Argentina Soy Region to Get Rain in Jan. as Farmers Plot Rebound

El Nino will bring rain in January to Argentina’s key soybean-growing region, according to a Buenos Aires Grain Exchange weather report.

  • “In the short- and medium-term, it’s likely that rains will continue to restore soil moisture while, at the same time, temperatures will remain moderate with a low risk of intense heat — improving production forecasts,” says the report
  • However, the forecast in February is for drier weather across a portion of the growing region covering northwestern Buenos Aires, southern Cordoba and northeastern La Pampa
    • “In February and March, the risk of precipitation becoming even more disjointed will increase,” with excessive rainfall in some parts of the country and shortages in others, including the southwestern Pampas
  • NOTE: Plants need rain over the southern-hemisphere summer to realize yield potential ahead of the 2Q harvest
  • NOTE: Farmers already received enough rain to moisten soils parched by several years of drought, allowing them to sow soy and corn
  • NOTE: In a separate report, Canada-based satellite analytics firm EarthDaily put its base-case soy forecast at 52.4m metric tons
    • The Buenos Aires Grain Exchange and Rosario Board of Trade currently estimate 50m; the USDA estimates 48m

USDA attache sees Argentina 2023/24 soy crop at 50.5 million T

Following are selected highlights from a report released on Wednesday by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service post in Buenos Aires:

“Post lowers marketing year (MY) 2022/2023 soy production to 20.5 million metric tons (MMT), still below the USDA official on lower-than-expected harvest area and yields due to drought. Post lowers MY2022/2023 crush to 26 MMT due to decreased exports and the lowest crush operation rates in decades during recent months. Post maintains MY2023/2024 (soybean production forecast) at 50.5 MMT, still above USDA official on recent favorable rains at ideal times during planting. The newly sworn in president has already implemented stark economic reforms just weeks after coming into office, which will have major implications for the oilseeds sector. These include devaluation of the currency by 50% and raising soy export taxes to 33%.”

China’s Sinograin to increase purchases of corn from northeastern China

China’s state-owned agricultural stockpiler Sinograin said on Thursday it will add to its stockpiles of corn from northeastern China’s 2023 harvest, as well as from other major corn-producing regions.

China says its state reserves, which also include soybeans and grain, are critical to ensuring food supplies for the population.

Palm Oil Prices May Climb to 4,000 Ringgit/Ton by 3Q: Glenauk

Palm oil prices could rise to 4,000 ringgit a ton by 3Q alongside a gain in vegetable oils, Julian McGill, managing director of consultancy Glenauk Economics, said at a conference in Kuala Lumpur.

  • “As we start to rely on soybeans to be crushed for oil, weaker meal prices will require higher vegetable oil prices to compensate,” he said
    • This will be noticeable by 2Q
  • Impact of El Niño will not be as strong as anticipated
  • Still, palm oil output will see little growth due to lack of area expansion
  • Dramatic slowdown in vegetable oil supply growth since 2019 is caused by limited expansion of area in the palm oil sector
    • “We have reached peak palm,” he said, referring to output
  • Soybeans stocks-to-use ratio has increased; domestic soy oil consumption in US and Brazil has ramped up due to biodiesel use

Malaysia’s 2024 Crude Palm Oil Output Seen at 18.75M Tons: MPOB

Nation’s exports this year expected to rise to 15.6m tons, Ahmad Parveez Ghulam Kadir, the director general of the Malaysian Palm Oil Board, said at a seminar in Kuala Lumpur.

  • Palm oil prices forecast at 3,900-4,200 ringgit/ton in 2024
  • Implementation of B35 biodiesel mandate in Indonesia will limit global supply for the export market
  • Unfavorable weather conditions in 2023 also expected to tighten supply
    • Soybean production expected to be tight until at least April
  • Malaysia’s palm oil stockpiles expected to drop below 2m tons, underpinning prices
  • Labor situation expected to improve, which will help lift output, but concerns about shortages remain
  • Malaysia’s palm oil export revenue expected to be 110B ringgit in 2024
  • Nation exported 15.1m tons of palm oil in 2023, accounting for 30% of global trade
    • Also represents 15.6% of global oil and fats trade
  • Total planted area shrunk to 5.65m hectares in 2023, from 5.67m in 2022
  • Fresh fruit bunch yields were at 15.79 tons/ha last year vs 15.49 tons/ha

Palm Oil Expected to Average 4,000 Ringgit/Ton in 2024: MPO

Price outlook due to shifting supply and demand dynamics in Indonesia, according to a statement from the Malaysian Palm Oil Council.

  • Indonesia is moving toward a “negative growth pattern” following the implementation of B35 in August 2023
  • Indonesian supply may see a deficit of 0.24m tons in 2024 due to an increase in domestic biodiesel and food consumption, and no expected growth in production
    • Deficit could deepen if exports climb further
  • Indonesian output seen at 48.2m tons in 2024 vs 48.43m tons in 2023; exports seen easing to 28m tons from 28.64m
  • Still, palm oil prices expected to trade lower in January — between 3,600-3,850 ringgit/ton — due to lukewarm demand from key importing countries and price competition from sunflower and rapeseed oil
  • Malaysian palm oil output seen rising 1% y/y in 2024 to 18.75m tons
  • NOTE: Indonesia, Malaysia are world’s biggest palm oil producers

China prohibits import of pigs from Bangladesh due to African Swine Fever

China customs on Thursday said it has prohibited the import of pig, pig products and wild boars from Bangladesh due to an outbreak of African Swine Fever at a farm in the country’s major port city of Chittagong.

Animal and plant waste that are unloaded from ships, aircraft and other from of transportation vehicles from Bangladesh must be disposed of under the supervision of customs, it said in a statement.

Black Sea Mine-Hunt Deal Set to Secure Ukraine Exports Path

  • Formal deal seeks to protect vital Ukrainian grain exports
  • Other NATO countries excluded to ensure calmer relations

Turkey, Romania and Bulgaria joined forces to hunt mines in the Black Sea, a move aimed at improving shipping safety and shoring up vital Ukrainian grain exports to secure funding.

The Istanbul-led initiative is designed to defuse mines drifting into specific areas of the Black Sea as a result of Russia’s near two-year invasion of Ukraine. A secondary motive is to exclude other NATO members from the security effort, including the US and UK, to avoid escalating tensions in the region.

Russia and Ukraine are both major producers of grain, and the war has increasingly threatened the safe passage of shipments. Ukraine nevertheless transported 15 million tons of cargo via its Black Sea corridor since mid-September, mainly foodstuffs, as flagging financial aid from allies makes it even more crucial for the country to ensure its commodities reach global markets. Strong shipments are also needed to clear last year’s larger-than-expected harvest.

Indonesia’s PalmCo delays IPO, plans biodiesel plant investment

Indonesia has delayed plans for an initial public offering (IPO) of palm oil producer PalmCo, an official from its parent, state agricultural group Perkebunan Nusantara (PTPN) III, said on Wednesday.

Indonesia’s ministry for state-owned enterprises, which oversees the company, said in July last year that PalmCo would launch an IPO, which would be used to expand refining capacity. Sources told Reuters the IPO could raise about $500 million.

Bambang Agustian, PTPN corporate secretary, told Reuters the IPO would be delayed, citing market uncertainty but gave no further details on the timing.

Meanwhile, PalmCo aims to start construction this year of its biodiesel plant, which is expected to have 443,000 metric tons per year capacity by 2026, PalmCo CEO Jatmiko Krisna Santosa said.

“We have chosen the technology and we are near a decision for the contractor. It’s almost ready,” Jatmiko told reporters, without providing details on how much the project will cost. Jatmiko said PalmCo also expects to commission a new cooking oil plant this year, and seeks to add two more cooking oil production facilities in the next two years.

 

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