Global Ag News for June 9.23

TOP HEADLINES

Extreme weather expected as El Nino climate pattern returns, US forecaster says

El Nino has officially returned and is likely to yield extreme weather later this year, from tropical cyclones spinning toward vulnerable Pacific islands to heavy rainfall in South America to drought in Australia and in some parts of Asia.

After three years of the La Nina climate pattern, which often lowers global temperatures slightly, the hotter El Nino is back in action, according to an advisory issued on Thursday by the U.S. National Oceanic and Atmospheric Administration’s Climate Prediction Center.

El Nino is born out of unusually warm waters in the Eastern Pacific (Full Story), near the coast of South America, and often accompanied by a slowing down or reversal of the easterly trade winds.

“In May, weak El Nino conditions emerged as above-average sea surface temperatures strengthened across the equatorial Pacific Ocean,” the advisory said.

The last time an El Nino was in place, in 2016, the world saw its hottest year on record. Coupled with warming from climate change, 2023 or 2024 could reach new highs.

FUTURES & WEATHER

Wheat prices overnight are down 3 in SRW, down 9 in HRW, down 8 1/4 in HRS; Corn is down 2 3/4; Soybeans up 7 1/2; Soymeal up $1.60; Soyoil up 0.30.

For the week so far wheat prices are up 2 3/4 in SRW, down 16 1/2 in HRW, up 1 1/2 in HRS; Corn is down 12; Soybeans up 15 1/4; Soymeal up $6.30; Soyoil up 1.84.

For the month to date wheat prices are up 29 in SRW, up 5 1/4 in HRW, up 27 1/2 in HRS; Corn is up 8 1/2; Soybeans up 71; Soymeal up $12.20; Soyoil up 4.39.

Year-To-Date nearby futures are down 21.5% in SRW, down 10.4% in HRW, down 13.8% in HRS; Corn is down 10.6%; Soybeans down 10.0%; Soymeal down 15.5%; Soyoil down 17.0%.

Chinese Ag futures (JUL 23) Soybeans up 13 yuan; Soymeal up 12; Soyoil up 98; Palm oil up 102; Corn up 8 — Malaysian palm oil prices overnight were up 101 ringgit (+3.09%) at 3365.

There were no changes in registrations. Registration total: 2,389 SRW Wheat contracts; 2 Oats; 0 Corn; 0 Soybeans; 1,088 Soyoil; 11 Soymeal; 97 HRW Wheat.

Preliminary changes in futures Open Interest as of June 8 were: SRW Wheat up 3,862 contracts, HRW Wheat down 3,074, Corn down 665, Soybeans down 14,365, Soymeal up 1,802, Soyoil down 5,708.

Northern Plains: A front will move through the Northern Plains on Friday and Saturday with scattered showers but clear the region out a bit and bring some briefly cooler temperatures through. Most areas should get a drink, however, favorable for developing crops. The pattern favors a system or two moving through next week.

Central/Southern Plains: Periods of showers will continue to develop across the Central and Southern Plains through the weekend, favoring additional drought reduction, though coverage isn’t expected to be overly widespread. A front will move through over the weekend and may get caught up in the region, bringing another round of heavier rainfall potential early next week. Systems will continue to move through the region going forward, which will still provide chances for additional rain going forward.

Midwest: A front brought milder temperatures and some isolated showers for parts of the Midwest this week, but drought expanded drastically in the region. Another front will move through this weekend with more scattered showers across the region, though not all areas will be hit. Still, it should be the best chances for widespread precipitation eastern areas have had in weeks. The pattern will favor more systems moving through afterward, which may be more favorable for the drier areas of the region.

Canadian Prairies: Scattered showers will remain in the Canadian Prairies for the next two weeks, as fronts move through with more regularity. Showers may or may not be widespread with each system, however. Even though fronts and showers will be moving through, temperatures will remain above normal for at least the next week, which is starting to be a concern for areas that are drier. There is a better chance at a cooldown later next week.

Delta: Isolated showers have developed in the Delta this week and will continue into next week, which will help stave off the drop in soil moisture that has been occurring. The coming pattern change may bring systems through more frequently. If showers do not come with them, though, the building dryness in the area would be a concern, especially south.

Argentina: Soil moisture is still suboptimal in Argentina, but the recent run of showers have been helping in some spots. A stronger cold front will move through Friday and Saturday, which should spread frosts and freezes to parts of the region next week, slowing growth of wheat.

The player sheet for 6/8 had funds: net buyers of 5,000 contracts of SRW wheat, buyers of 3,000 corn, buyers of 5,000 soybeans, sellers of 1,000 soymeal, and  buyers of 6,500 soyoil.

TENDERS

• CORN PURCHASE: South Korea’s Feed Leaders Committee (FLC) purchased around 65,000 metric tons of animal feed corn in a private deal on Thursday without issuing an international tender
• CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 132,000 metric tons of animal feed corn expected to be sourced from South America in a private deal on Thursday without issuing an international tender
• CORN PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) has bought an estimated 66,000 metric tons of animal feed corn in an international tender for up to 138,000 tonnes on Thursday.
• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 86,922 metric tons of food-quality wheat from Canada and Australia in a regular tender that closed on Thursday.
• WHEAT TENDER CANCELLED: Tunisia’s state grains agency has cancelled an international tender to purchase up to 100,000 tonnes of soft milling wheat which was set to take place on Friday.

PENDING TENDERS

• SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase about 120,000 metric tons of soymeal to be sourced from Brazil
• CORN TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 140,000 metric tons of animal feed corn to be sourced from optional origins
• SOYMEAL TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 35,000 metric tons of soymeal animal feed sourced from optional origins
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 62,200 metric tons of rice.
• WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 56,000 metric tons of grade 1 milling wheat to be sourced from the United States. 

TODAY

US Export Sales of Soybeans, Corn and Wheat by Country

The following shows US export sales of soybeans, corn and wheat by biggest net buyers for week ending June 1, according to data on the USDA’s website.

• China was the top buyer of soybeans in the week with 141k tons
• Japan was the top buyer of corn and Taiwan led in wheat
• Cancellations of corn purchases totaled 171k tons

US Export Sales of Pork and Beef by Country

The following shows US export sales of pork and beef product by biggest net buyers for week ending June 1, according to data on the USDA’s website.

• Mexico bought 9.1k tons of the 25.5k tons of pork sold in the week
• Japan led in beef purchases

Argentine Soy, Corn, Wheat Estimates June 8: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2022-23 soybean and corn production estimates both maintained
• 2023-24 wheat planting area est. unchanged at 6.3m ha

Argentina Corn Crop Estimate May Be Cut Again, Exchange Says

Buenos Aires Grain Exchange analysts are mulling a cut to their corn production estimate as yields in Cordoba province come in far lower than expected, according to a weekly report.

• NOTE: The current estimate of 36m metric tons is already the lowest since 2016 after a brutal drought
• Cordoba accounts for nearly a third of corn acreage
• Wheat planting is delayed because rains have made fields too soggy for fieldwork
  • Planting trails the same stage last season by 11 percentage points

Green Diesel Firms Urges Biden to Lift Mandate as Deadline Looms

In a last ditch effort, biofuel and agriculture companies tell President Joe Biden that unless proposed blending mandates for biomass-based diesel are raised the industry will be “severely” undermined.

• Further, if the US Environmental Protection Agency, which is due to issue final national quotas for 2023-25 by June 14, doesn’t increase the amounts proposed in December “it would allow no market space at all for sustainable aviation fuel,” according to a letter delivered to Biden on Thursday from Clean Fuels Alliance America
• NOTE: Nearly 80 groups and companies, including Bayer, signed onto the letter
• NOTE: The push comes amid opposition to EPA’s proposal to raise biomass-based diesel by ~65 million gallons on average for each of the next three years; the industry notes that US production of biodiesel and renewable diesel grew by 500 million gallons last year

China’s Corn Imports Unlikely to Climb Much in 2023-24: AgMin

China’s corn imports in the 2023-24 year are not expected to expand much because of a bumper domestic harvest, the country’s agriculture ministry said in its latest report.

• Demand for corn remains weak as pig farming continues to suffer from losses, while operating rates at corn processors remain low, according to the China Agricultural Supply & Demand Estimates
• China increased its forecast for edible oils output in 2022-23 from the previous month by 690,000 tons to 29.9 million tons, because rapeseed imports were higher than expected
• Estimates for output, imports and consumption for corn and soybeans in the 2023-24 year were unchanged

China Will Feed More Wheat to Animals After Rain Damages Crop

• Loss of high-quality wheat could increase demand for imports
• Chinese buyers have already booked some Canadian wheat

China will feed a lot more of its domestic wheat crop to hogs and poultry this year after heavy rains reduced the quality of the harvest in the biggest growing region, boosting prospects for imports.

The amount of wheat consumed in animal feed is likely to increase by 10 million tons to about 35 million tons in the year starting in July, with a large volume consisting of sprouted grain, according to the latest forecast from Shanghai JC Intelligence, a China-based commodity consultancy.

The loss of high-quality wheat could increase demand for imports, with JC Intelligence raising its estimate by 1 million tons to just over 9 million tons in the coming year. Chinese buyers booked some Canadian wheat last week, and are actively making inquiries for more grain, according to traders, who asked not to be identified because they’re not authorized to speak publicly.

“Companies are expected to import more because it’s profitable, though the country’s huge stockpiles mean it doesn’t need to purchase much,” said Ma Wenfeng, a senior analyst at BOABC, a Beijing-based agriculture consultancy. “If there are a lot of imports, it will weigh on prices and hurt farmers, which is not good for food security,” Ma said.

The consultancy predicts that the amount of wheat used for feed in the coming year will more than double to 27.5 million tons from 11.4 million tons a year earlier, according to its latest report. The country is expected to produce 140 million tons in the 2023-24 year, US Department of Agriculture data show.

Wheat prices in Henan, the top producing province, fell to 18-month lows in the middle of May. They have since risen as much as 6% following the rains.

India Cuts Palm Oil Imports in Favor of Soybean, Sunflower Oils

India’s palm oil imports likely shrank 10% in May from the previous month to 457,000 tons, the lowest level in 15 months, according to Rajesh Patel, managing partner of GGN Research.

• Inbound shipments were down 11% from a year ago
• May imports comprised 372,000 tons of crude palm oil and 85,000 tons of RBD palm olein
• Soybean oil imports jumped to 301,000 tons from 262,000 tons m/m
• Sunflower oil purchases rose to 295,000 tons from 249,000 tons m/m
• Total edible oil imports climbed to 1.05m tons from 1.02m tons m/m
• NOTE: The Solvent Extractors’ Association of India will release its May vegetable oil import data in the middle of June
• Palm oil imports in May fell to 487,576 tons, compared with 491,424 tons a month earlier, according to Sandeep Bajoria, chief executive officer of consultancy firm Sunvin Group
  • India bought 320,000 tons of soybean oil vs 260,955 tons
  • Sunflower oil imports rose to 290,000 tons vs 231,072 tons
  • Total edible oil imports climbed to 1.09m tons vs 983,451 tons

Heavy ‘dragon boat water’ rains hit southwest China, some cities flooded

Non-stop heavy rains lashed parts of southwest China on Friday, triggering floods in cities, engulfing roads and partially submerging buildings.

A particularly harsh first bout of summer rains known locally as “dragon boat water” saw the city of Beihai in Guangxi log 453 millimetres on Thursday. That was a regional daily record for June, according to the China Meteorological Administration.

Cars were half underwater in flooded Beihai streets and at one multi-storey building, water cascaded down a staircase as firefighters raced to rescue its residents, videos circulating on social media showed.

The nearby city of Yulin had had 35 hours of rain as of 7 a.m. local time on Friday (2300 GMT Thursday), broadcaster CCTV reported.

Rain is forecast to continue in southern China over the coming days while the northeast is also expected to be hit by sudden thunderstorms, the weather bureau reported.

China, prone to floods, is increasingly warning of more extreme weather due to climate change. Guangxi experienced a rare extreme drought in May, with rainfall plunging to 60-year lows.

The central province of Henan, the granary of China, was recently struck by heavy rainfall that caused crops to sprout or be hit by blight, triggering concerns about food security.

Rains in Western Australia Transform Crop Outlook in Key Grower

Rain across most of Western Australia’s grain belt in the past week has transformed crop prospects in Australia’s top wheat-producing state.

The rainfall has lifted the state’s production potential from below average to at least average or above average, according to the Grain Industry Association of Western Australia. A week ago, emerging crops showed signs of stress and much of the northern and southern grain belt was dusty and brown, it said.

The rains will allow dry-sown crops to germinate, while those that had already emerged will take off and have reasonable yield potential, the group said. The month of May was the driest in Western Australia since observations began.

The wheat crop area in the state is now seen at 4.63 million hectares, up from 4.39 million hectares estimated in May, association data show.

US Corn Crops in Drought Area Jump to 45%: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending June 6, according to the USDA’s weekly drought report.

• Corn crops experiencing moderate to intense drought rose by 11 percentage points from the previous week to 45%
• At this time last year, 19% of corn crops were in drought
• Soybean crops in drought also rose by 11 points, reaching 39%

US Miss. River Grain Shipments Fall, Barge Rates Decline: USDA

Barge shipments down the Mississippi river declined to 525k tons in the week ending June 3 from 804k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 37% from the previous week
• Soybean shipments down 26% w/w
• St. Louis barge rates were $8.07 per short ton, a decline of $0.04 from the previous week

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