Explore Special Offers & White Papers from ADMIS

Global Ag News for June 13.24

TOP HEADLINES

Drought to hammer Mexico’s 2024 corn harvest, government says

A prolonged drought in Mexico is set to again hammer harvests this year, according to government estimates, as adverse weather conditions could push the country to rely on more corn imports from the United States.

Mexico’s 18-month season should produce some 25.15 million metric tons of corn, according to a report presented by the agricultural ministry on Tuesday, including 21.89 million tons of white corn, used to make key staples such as tortillas.

While overall production should fall 9%, white corn is expected down 10% on last season.

Mexico mainly produces white corn, for which it is self-sufficient, but imports large quantities of yellow corn mainly to feed livestock. Local production of yellow corn, however, should rise 0.7% after a 4.5% decline last year.

Last year’s season was battered by drought, disease and pests that affected both crops and livestock, as well as volatile prices for energy and raw materials.

More than three-quarters of the country faced moderate to exceptional drought conditions, according to the national water commission Conagua, which at the severe end of the scale means risk of fires, crop losses, and water shortages across reservoirs, streams and wells.

U.S. forecaster AccuWeather’s chief agricultural meteorologist, Dale Mohler, has predicted that rain may come too late for a successful harvest for corn and other crops in Mexico, which could cause it to seek supplies from the U.S.

Mexico is a key buyer of U.S. yellow corn, purchasing nearly $6 billion-worth each year. However, the two countries are in a dispute over exports of genetically modified U.S. crops currently being settled at a panel under the North American trade agreement.

A resolution is expected by the end of this year.

Sinaloa and Jalisco states, which together grow almost two-fifths of Mexico’s corn, “have been greatly affected by the drought,” Mohler said.

Sinaloa, which borders the Pacific on the northwest coast, is Mexico’s largest white corn producer, but the agriculture ministry forecast that it will produce 31% less grain this year, while the more southern Jalisco state should produce 0.7% less.

 

FUTURES & WEATHER

Wheat prices overnight are up 5 in SRW, up 1 in HRW, up 6 1/4 in HRS; Corn is up 3; Soybeans down 2; Soymeal up $1.50; Soyoil down 0.27.

For the week so far wheat prices are down 5 1/2 in SRW, down 27 3/4 in HRW, down 19 in HRS; Corn is up 8 1/2; Soybeans down 11 3/4; Soymeal down $2.70; Soyoil down 0.10.

For the month to date wheat prices are down 56 1/2 in SRW, down 70 1/2 in HRW, down 65 1/4 in HRS; Corn is up 11; Soybeans down 29 3/4; Soymeal down $3.00; Soyoil down 2.00.

Year-To-Date nearby futures are down 1.0% in SRW, down 0.6% in HRW, down 6.8% in HRS; Corn is down 3.0%; Soybeans down 9.1%; Soymeal down 6.3%; Soyoil down 9.0%.

Chinese Ag futures (SEP 24) Soybeans down 9 yuan; Soymeal down 14; Soyoil up 22; Palm oil up 48; Corn down 4 — Malaysian Palm is down 25. Malaysian palm oil prices overnight were down 25 ringgit (-0.63%) at 3938.

There were no changes in registrations. Registration total: 1,479 SRW Wheat contracts; 39 Oats; 747 Corn; 469 Soybeans; 2,589 Soyoil; 0 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of June 12 were: SRW Wheat down 2,652 contracts, HRW Wheat down 947, Corn down 12,370, Soybeans down 3,269, Soymeal up 356, Soyoil up 57.

 

Northern Plains: A system will move through on Wednesday and Thursday with isolated showers. A larger system will move into the region on Friday and drop its front into the region that will stall out. That will bring rounds of heavy rain and severe storms through next week, which may produce some flooding in some parts of the region.

Central/Southern Plains: A system is moving well off to the north but may spread a few showers and thunderstorms across the north the next couple of days. A much larger system will push a front into the region on Friday and Saturday and stall, with widespread precipitation forecast over the weekend and through next week, especially north. Overall, the rainfall should be mostly helpful for developing corn and soybeans but could be a hindrance for maturing and harvesting wheat. The rainfall will be needed with warmer temperatures returning to the area.

Midwest: Another system will move across the region through Thursday, bringing some rainfall and potential severe weather. The pattern gets more active this weekend for western areas, with a front moving into and stalling there through much of next week. Eastern areas are less likely to see rainfall but could see some. Temperatures will waffle with the system moving through, but will be much more consistently warmer starting this weekend, which could start to stress areas that do not receive rain, particularly across the east.

Delta: Drier weather is likely for the rest of the week, but we may see moisture coming from the Gulf of Mexico start to produce showers and thunderstorms in the region this weekend. Temperatures will start to rise again by the end of the week, likely being quite warm and stressful if showers do not develop.

Canadian Prairies: Temperatures are much more seasonable, but a couple of systems rolling through continue to bring scattered showers. A larger system moves in on Friday and brings more widespread precipitation through the region through the weekend. The storm track will be near or through the region for next week, with multiple disturbances being possible to bring showers through. Despite some issues with wetness, especially in the east, seeding is almost complete and crops have plenty of soil moisture for early growth in most areas.

Brazil: Dry conditions with warm temperatures are helping safrinha corn to mature, but are not favorable for the portion of the crop that is still immature. Dryness has been allowing southern areas to recover from flooding as well. Dry conditions and above normal temperatures continue for the next few days, with a front moving into the south this weekend that will produce rain into next week. That is not favorable for the state of Rio Grande do Sul, where they still need time to dry out more, but will be for any showers that can move north for immature safrinha corn.

Argentina: Winter wheat would like to see some rain falling in the country to help with planting and establishment. A front will move through the country on Friday. The front will have limited rainfall but systems that follow behind it could offer some additional moisture going into the second half of the month. Colder air will become a possibility as well, being unfavorable for wheat establishment.

The player sheet had funds net sellers of 3,000 contracts of SRW Wheat; buyers of 3,000 corn, buyers of 2,000 soybeans, buyers of 1,000 Soymeal, and net buyers of 1,000 lots of Soyoil.

 

TENDERS

  • SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 106,000 metric tons of U.S. soybeans for delivery to China in the 2023/24 marketing year.
  • FOOD WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 109,126 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
  • CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 metric tons of animal feed corn expected to be sourced from Brazil in an international tender on Thursday
  • WHEAT PURCHASE: The Lebanese government is believed to have purchased about 63,000 metric tons of wheat in a tender all expected to be sourced from Ukraine
  • 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 BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
  • SOYMEAL TENDER: South Korea’s Major Feedmill Group (MFG) issued an international tender to purchase up to 60,000 metric tons of soymeal.
  • FEED WHEAT PURCHASE: Japan will import 1,500 tonnes of feed-quality wheat for livestock use via a simultaneous buy and sell (SBS) auction, the Ministry of Agriculture, Forestry and Fisheries (MAFF) said. The ministry had sought 65,000 metric tons of feed wheat and 25,000 tons of feed barley to be loaded by September 30 and arrive in Japan by November 28.

PENDING TENDERS

  • VEGETABLE OIL TENDER: Egyptian state grains buyer the General Authority for Supply Commodities (GASC) said it was seeking vegetable oils in an international tender for arrival July 20 to Aug. 5 and/or Aug. 15-31. GASC said traders should submit bids for payment at sight using funding from the International Islamic Trade Finance Corporation (ITFC). The deadline for offers is June 13.

 

 

TODAY

DOE: US Ethanol Stocks Rise 0.7% to 23.222M Bbl

According to the US Department of Energy’s weekly petroleum report.

  • Analysts were expecting 23.138 mln bbl
  • Plant production at 1.023m b/d, compared to survey avg of 1.067m

 

CROP SURVEY: Brazil 2023-24 Corn Output Seen at 112.6M Tons

Brazil corn production seen about a million tons higher than the national forecast agency’s previous est., according to the avg in a Bloomberg survey of six analysts.

  • The range of estimates varied from 109.4m tons to 115.1m tons
  • Brazil’s soybean crop seen 700,000 tons lower at 147m tons
  • Last month, the agency raised its corn output est. by 672,000 tons and its soybean est. by 1.16m tons

 

Dairy Herd Catches Bird Flu in Iowa County Where Egg Farm Hit

Highly pathogenic avian influenza was detected in a dairy cattle herd in Sioux County, Iowa, the Iowa Department of Agriculture and Land Stewardship says in a Wednesday statement.

  • It’s the second instance of bird flu in dairy in the county in a week
  • The incident follows a late May outbreak at an egg-laying chicken farm nearby that resulted in the death of about 4.2 million birds
  • The agency is “strongly encouraging Iowa poultry producers and dairy farmers to bolster their biosecurity practices and protocols to protect their flocks and herds”

 

Argentina 2024/25 Wheat Harvest at 21M Tons, Says Bourse: Ambito

Argentina’s 2024/25 wheat harvest is seen at 21 million tons, Ambito reported on Wednesday citing a report from the Rosario bourse.

 

Argentine oilseed workers’ union cancels strike against labor reform

Argentina’s oilseed union SOEA said on Wednesday it was canceling its plans to strike against a proposed labor reform after the government urged it to back off from protesting.

The SOEA in northern Rosario, Argentina’s main agricultural exports hub, said last week that it would begin a strike as soon as the Senate started debates on a major package of reforms pushed by libertarian President Javier Milei, which includes changes to some labor regulations.

However, the union received an order from the government on Tuesday to not go ahead with the stoppage, union secretary Martin Morales said on Wednesday.

“We have just complied with the order”, SOEA Secretary General Daniel Succi said.

Separately, a leader of maritime workers federation FESIMAF told Reuters that ship traffic would experience some delays at several terminals in the South American country, due to workers’ assemblies taking place throughout the afternoon.

SOEA carried out a strike of about 24 hours in April against Milei’s reform package while it was being debated in the lower house of Congress, where it was later approved.

The reform package faces tougher odds in the Senate.

More than 80% of Argentina’s processed soybeans, corn, wheat and other farm products are shipped to global markets from the Rosario hub.

 

Strategie Grains Cuts EU and Russian Wheat-Harvest Outlooks

EU soft-wheat production in the 2024-25 season is now seen at 121.8m tons, down from last month’s estimate of 123.5m tons, analysis firm Strategie Grains said in a report.

  • France will see the biggest y/y drop, followed by Germany, Poland and Hungary
    • Early yield results from southern Spain are good, but will probably worsen as harvesting moves further north in the country
  • Strategie expects a reduction in EU wheat stockpiles in 2024-25 and that the market “will return to a situation rather fragile”
    • While the region’s exports will decline y/y, “EU wheat looks set to be in greater demand than we previously forecast because of the declining supply outlook for Russia”
  • Russia’s total wheat production is now forecast between 78m and 80m tons, down from a previous estimate of 89.9m tons, Benoit Fayaud, head of grain and crop analysis at Strategie Grains, said by phone
    • Late frosts and droughts have impacted key growing regions
    • NOTE: The USDA on Wednesday cut its outlook for Russia’s wheat crop to 83m tons and other analysts have also been lowering estimates
  • Strategie Grains trimmed its projection for EU corn production
    • Rains hindered French planting, and warm weather in southeast Europe has spurred concerns about drought stress

 

Indonesia May Palm Oil Exports Fall 4.5% M/m: Intertek

Indonesia’s palm oil exports fell 4.5% m/m in May versus -0.008% in April, according to Intertek Testing Services.

  • Palm oil exports fell to 1.761m tons from 1.845m tons in April
  • Crude palm oil shipments fell to 82,245 tons from 116,039 tons in April
  • RBD palm olein shipments fell to 678,319 tons from 690,501 tons in April
  • RBD palm oil shipments fell to 305,650 tons from 435,940 tons in April
  • Palm oil sales to European Union fell to 424,549 tons from 466,494 tons in April
  • Palm oil sales to India fell to 417,864 tons from 476,310 tons in April
  • Palm oil sales to China rose to 295,586 tons from 209,069 tons in April

 

India May Vegetable Oil Imports Rise to 1.53m Tons: SEA

India’s vegetable oil imports rose to 1.53m tons in May from 1.32m tons in April, according to the Solvent Extractors’ Association of India.

  • Palm oil imports rose to 763,300 tons from 684,094 tons in April
  • Soybean oil imports fell to 324,016 tons from 385,514 tons in April
  • Sunflower oil imports rose to 410,727 tons from 234,801 tons in April

 

Louis Dreyfus to expand Indonesia palm oil refining business, executive says

Agricultural commodity merchant Louis Dreyfus Company (LDC) is expanding its palm oil refining business in Indonesia, which will include construction of a new glycerine plant and higher production of biodiesel, a senior company official said.

LDC, which processes agricultural goods, has been expanding its operations in Asia to tap into the growing demand for food products.

“LDC is investing significantly to expand its refining complex in Lampung with the addition of a new glycerine refining plant, edible oil packing plant and warehouse,” Rubens Marques, LDC’s chief executive for South and Southeast Asia, told Reuters this week.

“These developments support our strategy to diversify revenue through value-added products by driving operational efficiency and synergies at the site.”

The glycerine refining plant in Lampung will have an annual production capacity of 55,000 metric tons, primarily serving manufacturers of food, pharmaceutical and personal care products.

Plant construction is expected to start this month and operations are scheduled to begin within 18 months, Marques added.

“Our biodiesel capacity is also being augmented at the site, to support not only increased production of biodiesel but also as an additional source of crude glycerine, a byproduct to be used in the newly established glycerine refinery.”

 

Global Urea Prices Edge Higher Amid Production Woes in Egypt

Ammonia prices were down at Tampa and in the US Midwest as spring demand slowed, while urea strengthened at New Orleans and internationally as gas shortages idled production in Egypt. The nation ships 50% of its urea to Europe, where it maintains a tax advantage.

 

 

 

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

Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore Special Offers & White Papers from ADMIS

Get Started