Global Ag News For Jan 18.23
Brazil can increase grain planting by 5% a year without deforesting, says minister
The Brazilian government believes that it is possible to increase the area planted with grains by 5% each harvest for several years without deforestation, said the Minister of Agriculture, Carlos Favaro, on Tuesday.
In an interview with Reuters, Favaro said that this would occur within a new government plan to encourage the expansion of planted area using millions of hectares (acres) of degraded pastures, which can be converted into crops. For this, the government will offer credit with adequate interest rates.
The minister said that the country currently has about 150 million hectares (370.66 million acres) of pastures with low productivity, in the process of degradation or already degraded areas. The plan is to use around 40 million hectares, in regions suitable for agriculture, to be converted into crops.
This would allow an important increase in the production of grains and oilseeds in Brazil, which today plants about 77 million hectares.
“Why isn’t this converted into crops? Because of lack of investment. So we are going to create a credit line, with compatible interest rates, with a grace period, with extended terms … So that the producer can take this resource and make the conversion…”, he said.
He pointed out that the financing should be reinforced in the next harvest. Another priority will be to expand support for agricultural insurance.
With this, he believes in an increase in planted area of 5% per year. “It is something feasible, at a Chinese pace, but in a sustainable way.”
FUTURES & WEATHER
Wheat prices overnight are up 7 1/4 in SRW, up 8 3/4 in HRW, up 1 in HRS; Corn is up 2 1/4; Soybeans up 6 3/4; Soymeal up $0.27; Soyoil up 0.77.
For the week so far wheat prices are up 15 1/4 in SRW, up 20 3/4 in HRW, up 4 3/4 in HRS; Corn is up 12 1/2; Soybeans up 18 3/4; Soymeal up $0.76; Soyoil up 1.55.
For the month to date wheat prices are down 33 in SRW, down 23 1/2 in HRW, down 21 3/4 in HRS; Corn is up 9; Soybeans up 22 1/2; Soymeal up $12.90; Soyoil up 0.54.
Year-To-Date nearby futures are down 4.2% in SRW, down 2.6% in HRW, down 2.3% in HRS; Corn is up 1.3%; Soybeans up 1.8%; Soymeal up 1.1%; Soyoil up 1.3%.
Chinese Ag futures (MAR 23) Soybeans up 64 yuan; Soymeal up 46; Soyoil up 114; Palm oil up 50; Corn up 6 — Malaysian palm oil prices overnight were up 72 ringgit (+1.90%) at 3867.
There were no changes in registrations. Registration total: 2,787 SRW Wheat contracts; 0 Oats; 154 Corn; 1,182 Soybeans; 479 Soyoil; 112 Soymeal; 280 HRW Wheat.
Preliminary changes in futures Open Interest as of January 17 were: SRW Wheat down 545 contracts, HRW Wheat up 1,118, Corn up 19,069, Soybeans up 5,195, Soymeal up 4,360, Soyoil down 1,195.
Brazil Grains & Oilseeds Forecast: A front moved into southern Brazil last weekend and has stalled, with precipitation continuing from Parana northward this week. The state of Rio Grande do Sul will be drier. Another front will move through this weekend, but clear out southern areas. Filling soybeans are getting a boost, as well as soil moisture in preparation for safrinha corn planting that will occur in the next two weeks.
Argentina Grains & Oilseeds Forecast: Dry conditions occurred in Argentina over the weekend with increasing temperatures. Some isolated showers will be possible over the next couple of days with scattered showers coming with a frontal passage Friday and Saturday. Showers will not be able to reverse drought conditions that have been gripping the country over the entire season. Before the front moves through, temperatures will again be well above normal and approach the 100-degree mark, keeping stress on developing to reproductive corn and soybeans.
Northern Plains Forecast: Relative warmth will continue for the next week or so, reducing stress and feed requirements for livestock. However, colder temperatures will move into the region next week as the pattern changes.
Central/Southern Plains Forecast: A strong system will move through Tuesday night and Wednesday with widespread precipitation, including a band of heavy snow across the north. Scattered showers and thunderstorms will occur farther south, and are likely to hit some of the drought areas. The drought will not be reduced in a significant way, but at least some precipitation will occur after months of dryness. Another system may develop farther south for this weekend with more showers for southern areas. Temperatures above normal will fall below normal, especially next week as the pattern changes.
Midwest Forecast: Two storm systems move through this week with widespread precipitation. Temperatures remain above normal for this time of year but will fall this weekend and especially next week as the pattern changes.
The player sheet for Jan. 17 had funds: net buyers of 3,000 contracts of SRW wheat, buyers of 7,500 corn, buyers of 5,000 soybeans, buyers of 2,500 soymeal, and buyers of 2,500 soyoil.
- CORN SALE: The U.S. Department of Agriculture (USDA) on Tuesday confirmed private sales of 150,000 tonnes of U.S. corn to Colombia for shipment in the 2022/23 marketing year.
- SOYBEAN SALE: The USDA confirmed private sales of 119,000 tonnes of U.S. soybeans to unknown destinations for shipment in the 2022/23 marketing year.
- MILLING WHEAT PURCHASE: Algeria’s state grains agency OAIC has bought milling wheat in an international tender which closed on Tuesday, European traders said in initial assessments. Estimates of tonnage bought ranged between 510,000 tonnes to 600,000 tonnes, with a large part of the volume expected to be sourced from the Black Sea region
- FEED WHEAT AND SOYMEAL TENDERS: A group of importers in the Philippines has issued an international tender to purchase up to 165,000 tonnes of feed wheat and up to 45,000 tonnes of soymeal to be sourced from optional origins
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 70,000 tonnes of feed wheat and 40,000 tonnes of feed barley to be loaded by Feb. 15 and arrive in Japan by March 16, via a simultaneous buy and sell (SBS) auction that will be held on Jan. 25.
- FOOD WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 77,763 tonnes of food-quality wheat from the United States and Canada in a regular tender that will close on Jan. 19.
- SUNFLOWER OIL SALE: Turkey’s state grain board TMO provisionally purchased about 24,000 tonnes of crude sunflower oil in a tender for the same volume which closed on Friday.
- WHEAT SALE: Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) has sold around 300,000 tonnes of wheat via the new Egyptian Mercantile Exchange since its November launch, the exchange head Ibrahim Ashmawy said.
- CORN TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities, announced on Sunday and Monday an international tender to supply yellow corn on a cost and freight basis (C&F) or cost, insurance, and freight (CIF) basis for shipment between Feb. 10-25, 2023. Suppliers should submit bids on Jan. 19.
- FEED WHEAT TENDER: A group of importers in Thailand has issued an international tender to purchase up to 135,000 tonnes of animal feed wheat
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 113,460 tonnes of rice to be sourced from the United States. The deadline for submissions of price offers was Dec. 29.
- SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 19,000 tonnes of food-quality soybeans free of genetically-modified organisms (GMOs).
NOPA December soy crush below most estimates at 177.505 million bushels
The monthly U.S. soybean crush declined by 0.9% in December from a month earlier, falling below an average of analyst expectations, while soyoil stocks rose to an eight-month high, according to National Oilseed Processors Association (NOPA) data released on Tuesday.
NOPA members, which account for around 95% of soybeans processed in the United States, crushed 177.505 million bushels of soybeans last month, down from the 179.184 million bushels processed in November and down 4.8% from the December 2021 crush of 186.438 million bushels.
NOPA’s crush figure of 177.505 million bushels fell below the average estimate of 182.907 million bushels from 10 analysts in a Reuters survey. Analyst estimates ranged from 174.380 million to 188.0 million bushels, with a median of 184.107 million bushels.
Frigid temperatures and heavy snow across parts of the central United States late last month curbed crushing operations and disrupted transportation around several facilities, some analysts said ahead of NOPA’s report.
Soyoil supplies among NOPA members as of Dec. 31 climbed to 1.791 billion pounds, above an average of trade expectations and up from 1.630 billion pounds at the end of November, but still below the year-ago figure of 2.031 billion pounds.
Soyoil supplies at the end of December were expected to have climbed to 1.725 billion pounds, according to the average of estimates gathered from seven analysts. Estimates ranged from 1.679 billion to 1.775 billion pounds, with a median of 1.725 billion pounds.
US Inspected 774k Tons of Corn for Export, 2.075m of Soybean
In week ending Jan. 12, according to the USDA’s weekly inspections report.
- Corn: 774k tons vs 401k the previous wk, 1,238k a yr ago
- Soybeans: 2,075k tons vs 1,457k the previous wk, 1,869k a yr ago
- Wheat: 320k tons vs 210k the previous wk, 387k a yr ago
US Corn, Soybean, Wheat Inspections by Country: Jan. 12
Following is a summary of USDA inspections for week ending Jan. 12 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 1.28m tons of the 2.08m total inspected
- Mexico was the top destination for corn inspections, Philippines led in wheat
Uruguay Crops Weeks Away from Major Drought Damage: Minister
Uruguay’s farm belt is weeks away from suffering major damage to summer crops like soybeans amid a deep drought, Agriculture Minister Fernando Mattos said.
- Near term rain outlook isn’t “very auspicious” amid a prolonged drought: Mattos
- “Little rain is forecast. The next two or three weeks will be decisive for the farm sector, which has planted a little more than 1.5 million hectares,” Mattos told reporters in Montevideo. “If rains come in the next few weeks the situation can be turned around just like it was last year”
- Crops are suffering from a lack of water, but aren’t in a critical situation yet
- Mattos declined to update the Agriculture Ministry’s 2023 soy harvest forecast of approx. 2.4m metric tons
- Govt might have to authorize the importation of animal fodder if drought continues
- Ranchers could send more cows to slaughter if fodder supplies tighten
- Fruit, vegetable prices could rise due to reduced supply
- “We are in a drought situation in the better part of Argentina, Uruguay and part of Brazil,” Mattos said.
EU Soft-Wheat Exports Rise 6.3% Y/y; Corn Imports Near 16M Tons
EU’s soft-wheat exports in the season that began July 1 reached 17.7m tons as of Jan. 15, compared with 16.6m tons in a similar period a year earlier, the European Commission said on its website.
- Leading destinations include Morocco (2.52m tons), Algeria (2.22m tons), and Egypt (1.63m tons)
- NOTE: The commission says some of the export figures for Germany may be inaccurate due to its recent shift to a new declaration system
- Italian import data also only available until end-November
- EU barley exports were 3.06m tons, compared with 5.05m tons a year earlier
- Corn imports were 15.7m tons, against 8.31m tons a year earlier
Argentina 2022-23 Wheat Exports Seen at 5.9m Tons: Bourse
Exports of Argentina’s wheat crop that just finished being harvested are forecast at 5.9m metric tons, down 62% y/y, which would be the lowest in 8 seasons, according to the Buenos Aires Grain Exchange.
The shipments are estimated to be worth $2.3b, down 55% y/y
Putin Says Russia Must Control Grain Exports to Ensure Reserves
“We can’t allow everything to be taken abroad,” Russian President Vladimir Putin told a televised video conference with economic officials. “We need to have reserves because we don’t know what the results of the farm sector will be in 2023.”
- Putin said he’d directed Prime Minister Mikhail Mishustin to take control of the situation
IKAR Raises Russia 2022-23 Wheat Export Forecast to 45.5m Tons
Consultant IKAR boosts its Russian wheat export forecast to 45.5m tons from 44m tons.
Boosts export forecast for all grains to 55.5m tons from 53.5m tons
India’s soymeal exports to jump as drought curbs Argentine supply – industry officials
- Price rally makes Indian soymeal competitive
- Mills contract to export 260,000 T for Jan-Feb shipments
- Exports seen at 1.5 to 2 mln T from 644,000 T yr ago
India’s soymeal exports could more than double in the 2022/23 marketing year, as drought in top exporter Argentina lifted global prices, prompting buyers to turn to the south Asian country with cheaper rates, four industry officials told Reuters.
The revival in the exports of the animal feed has boosted soybean crushing in India and the availability of soyoil, which could reduce imports of soyoil BOc1 and palm oil FCPOc3 by the world’s biggest buyer in coming months.
Oil mills have contracted to export around 160,000 tonnes of soymeal for January shipments and another 100,000 tonnes for February shipments, mostly to Asian countries such as Vietnam, Bangladesh, Japan and Nepal, the officials said.
“Exports demand for Indian soymeal has been improving since it is cheaper than supplies from Argentina,” Hemant Bansal, vice president, oilseed crushing and refining at Patanjali Foods Ltd PAFO.NS told Reuters. “Asian buyers are saving on freight as well due to the proximity.”
Bansal estimated India’s soymeal exports in the current marketing year could rise to 1.5-2 million tonnes, from 644,000 tonnes a year ago.
Soymeal prices rose in the world market as Argentina’s soybean production was forecast to fall to 41 million tonnes in 2022/23 due to drought, from 48 million tonnes previously estimated.
India’s soymeal exports in the first three months of the 2022/23 marketing year, which started on Oct. 1, jumped 223% to 325,409 tonnes, according to trade body the Solvent Extractors’ Association of India.
Soybean crush margins have improved due to recovery in soymeal exports, but the correction in soyoil prices in the past few days is threatening to wipe out the margins, said Manoj Agrawal, an exporter.
Soyoil and palm oil imports were seen declining in the coming months with improvement in local supplies, a Mumbai-based dealer with a global trade house said.
Edible oil availability has improved because of higher imports in the December quarter and as soyoil supplies are rising from domestic soybean crushing, he added.
China soybean imports may increase in 2023 after declining for two consecutive years
Reduced supplies in Americas, high international prices and Covid-19 restrictions and weak domestic demand reduced China soybean imports in 2022. According to Refinitiv trade flows, China imported 10.1 million tons of soybeans in December, including 7.2 million tons from the U.S., 2.1 million tons from Brazil, and 0.8 million tons from Argentina. 2022 soybean imports from the top four origins (U.S., Brazil, Argentina and Uruguay) totaled 81.9 million tons, down 8% from the year before.
Specifically, 2021/22 Brazil soybean exports to China (February 2022-January 2023) are estimated at about 47.0 million tons, down 17% from prior season due to adverse weather conditions and reduced harvests in early 2022. China soybean imports data confirmed its reduced imports from Brazil. To fill in the gap between consumption and imports, China purchased massive amount of U.S. soybeans for 2022/23 delivery. U.S. soybean exports to China increased by 1.7% to 19.8 million tons during the first four months of the 2022/23 season (September-December), in spite of reduced U.S. supplies, high prices and relatively weak domestic consumptions in China. However, with expectations for a bumper soybean harvest in Brazil this January/February (152.6 million tons by Refinitiv Agriculture Research), U.S. soybean prices and sales will be pressured by competitions from Brazil over the second half of the export season (March-August). Considering current low port stocks, China may import record amount of Brazilian soybeans from late March/April to build up the inventory, depending on the harvest delays associated with recent excessive wet weather.
After China lifted the COVID-19 restrictions early December, the first wave of COVID-19 has passed. Chinese people’s social activities have been resumed to a large extent. Especially the holiday season (Spring Festival) is coming soon (on 20 January), meat/vegoil consumptions will pick up during the period. China’s economic activities should also recover gradually after the festival. As a result, soybean consumption and imports will return to a more normal level after two-year consecutive reductions.
Trial projects for commercialization of GMO corn, soybeans progressing-China Agri ministry
Trial projects for the commercialization of genetically modified corn and soybeans are progressing smoothly, China’s agriculture ministry official said on Wednesday.
China’s sow herd at the end of 2022 was slightly higher than reasonable levels, said Zeng Yande, chief agronomist and director of the development planning department at China’s agriculture ministry.
Germany Seeks to Phase Out Crop-Based Biofuels: Minister
“I would like us to increase the use of real biofuels from waste, from residual materials, from cooking oil,” German Environment Minister Steffi Lemke said in a speech on Tuesday.
- Lemke says she will propose phasing out biofuels made from food and feed crops to the cabinet “as quickly as possible,” citing concerns about land consumption and biological diversity
Rising Urea Inventory Hints at Easing Export Ban
Further nitrogen price relief is likely when the marginal producer, China, return to the export market, which we expect after 2Q. Rising production and limited exports support growing urea stockpiles in China. The country’s operating rates rose this winter, pushing inventory to a five-year high. The export-to-domestic price spread is $75 a metric ton. Chinese farmers are benefiting from urea prices in-line with seasonal norms and could expand plantings and fertilization rates in 1H. We expect China to keep limiting urea exports though 2Q to ensure spring tons.
Global nitrogen prices fall when China exports and rise in its absence. Most Chinese companies are closely held or state-owned. Yara, CF Industries and Nutrien are the largest publicly traded nitrogen producers.
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