Global Ag News For Mar 11
TODAY—WEEKLY EXPORT SALES—
Overnight trade has SRW Wheat down roughly 3 cents, HRW down 4; HRS Wheat down 2, Corn is up 3 cents; Soybeans down 2; Soymeal unchanged, and Soyoil unchanged.
Chinese Ag futures (May) settled down 43 yuan in soybeans, down 28 in Corn, down 117 in Soymeal, down 140 in Soyoil, and up 68 in Palm Oil.
Malaysian palm oil prices were up 79 ringgit at 4,035 (basis May) supported by monthly data showing low stock levels.
In Argentina, some improvement in soil moisture is expected in the next two weeks, especially after this weekend. Rain will be notably greater in the nation Monday through next Wednesday.
In Brazil, conditions in the north will still be wetter than preferred leading to some additional fieldwork delays. Net drying will continue in the south into the middle of next week and this will likely be followed by some timely rain.
A significant and important precipitation event will still occur Thursday through Sunday from the Hard Red Winter Wheat Region into the Corn Belt and northern Delta. The precipitation will be greatly important for notable soil moisture improvement in a large portion of the Hard Red Winter Wheat Region. Strong to severe thunderstorms are expected from Texas and Oklahoma into the Delta.
The player sheet had funds net sellers of 2,000 contracts of SRW Wheat; sold 17,000 Corn; sold 14,000 Soybeans; sold 7,000 lots of Soymeal, and; net sold 1,000 Soyoil.
We estimate Managed Money net long 23,000 contracts of SRW Wheat; long 336,000 Corn; net long 160,000 Soybeans; net long 54,000 lots of Soymeal, and; long 128,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures up roughly 2,800 contracts; HRW Wheat down 85; Corn up 555; Soybeans down 8,400 contracts; Soymeal up 3,000 lots, and; Soyoil up 2,200.
Deliveries were 143 Soymeal; ZERO Soyoil; 23 Rice; ZERO Corn; 18 HRW Wheat; ZERO Oat; 3 Soybeans; 9 SRW Wheat, and; ZERO HRS Wheat.
There were changes in registrations (Oats down 1)—Registrations total 49 contracts for SRW Wheat; 4 Oats; Corn ZERO; Soybeans 60; Soyoil 1,248 lots; Soymeal 175; Rice 1,010; HRW Wheat 1,291, and; HRS 710.
Tender Activity—Egypt seeks optional-origin wheat—S. Korea feed groups bought 261,000t optional-origin corn—Turkey seeks 115,000t optional-origin corn— Philippines passed on 385,000t optional-origin feed wheat—S. Korea seeks 12,000t optional-origin soymeal—
For the week ended Mar 5, ethanol production was 938,000 barrels per day, up 10.5% versus a week ago, down 10.2% versus a year ago. Stocks were 22.1 mil barrels, down 1.6% versus last week, down 9.3% versus last year. Corn used was 94.8 mil bu versus 85.8 mil last week and versus the 96.1 mil needed to meet USDA projections.
U.S. ethanol production jumped last week, showing the domestic industry has fully recovered from last month’s cold snap, according to Energy Information Administration data. Daily production rose to the highest production since mid-January. Daily production has risen since bitterly cold temperatures hit the Midwest last month, which took a sizable bite out of U.S. production. Meanwhile, ending stocks fell, the lowest they have been at since November.
The Environmental Protection Agency is considering issuing proposals for U.S. biofuel blending obligations for both 2021 and 2022 at the same time after the coronavirus pandemic delayed rulemaking. The proposals are a crucial signal to the corn and oil industries because they outline precisely how many gallons of biofuels like ethanol the refining industry must blend into their transportation fuel under the U.S. Renewable Fuel Standard.
USDA Broiler/Egg Set-Chicks Placed Report – Mar 10
—Broiler-Type Eggs Set in the United States Down 1 Percent
—Broiler-Type Chicks Placed in the United States Down 2 Percent
China’s soymeal futures slumped on Thursday amid growing concerns over demand as African swine fever outbreaks continued to hit the pig sector. China’s most actively traded soymeal futures on the Dalian Commodity Exchange for delivery in May fell 4.3% to 3,176 yuan ($488.78) per tonne in morning trade. The market expects that African swine fever would spread further to southern China.
Also, the soyoil price is strong, and crushers would want to keep up high operation rates to profit from the edible oil, leading to higher soymeal stocks.
—China’s hog futures rose 1% on Thursday to 27,990 yuan per tonne.
Wire story reports China is once again the U.S.’s chief customer for agricultural goods, three years after the start of a bruising trade war that prompted American farmers to try to wean themselves off their biggest market. Following a cease-fire between the world’s two largest economies last year, U.S. farmers are shipping record volumes of crops and meat across the Pacific. The surging agricultural exports are helping power a turnaround in the U.S. farm economy, lifting commodity prices and profits for agribusinesses, and fueling expectations that farmers will devote more land than ever for some crops. U.S. agricultural exports to China in 2020 rose to 55.5 million tons and comprised one-quarter of all farm shipments, according to U.S. Agriculture Department data. China is now buying more farm goods than it did before the trade war, and U.S. agricultural officials expect Chinese demand to grow further.
Despite strong uptick in sowings Brazil’s second corn crop still a concern – Refinitiv Commodities Research
2020/21 BRAZIL CORN PRODUCTION: 105 [95.0–111] MILLION TOns, unchanged from last update. Despite a significant improvement in second crop sowing pace, 2020/21 total Brazil corn production is tentatively kept at 105.2 [95-111] million tons. Total corn area is still seen at 18.9 million hectares, although the prospect of lower second crop corn area continues to rise as sowings remain severely delayed. The area estimate is still 0.8 million hectares below USDA’s World Agricultural Outlook Board (WAOB) figure from March, which maintained total corn sowings at 19.7 million hectares and national-level yield of 5.53 tons per hectare.
Brazil’s agriculture state agency (CONAB) in its February outlook (13 February) fractionally raised first corn area to 4.2 million hectares, but lowered yields to 5.63 tons per hectare. Second crop area was raised to 14.4 million hectares, while yields were set at 5.58 tons per hectare, bringing total corn area and production to 19.1 million hectares and 105.5 million tons, respectively. CONAB’s next outlook will be released March 11th.
The Brazilian government will introduce measures to boost production of next season’s summer corn, which will be planted in late 2021 in key growing regions, to raise domestic supplies, an Agriculture Ministry official said. Measures are not yet finalized but may be announced in May and include offering more credit, crop insurance and trade support mechanisms for corn farmers to raise production.
Brazilian exports of soybeans in February, the first month of the export season, were down 40% to 2.9 million tons from 4.8 million a year earlier, with the country struggling to replenish depleted stocks from record volumes sent to China last year. Brazil’s overall soybean exports this year are seen to be lower than 2020. This season’s crop was strong, but rain is delaying harvesting and dry weather had pushed back planting in the first place. Export volumes are expected to start recovering this month and in April.
Dry weather boosts soybean harvest pace and keeps Brazil’s soybean crop on track for record – Refinitiv Commodities Research
Scattered rains in Argentina early this year helped some of the soy and corn fields hardest hit by the dryness that afflicted the Pampas grains belt since mid-2020, but crop yields remain at risk going into the harvest, meteorologists said. The Buenos Aires Grains Exchange recently said it may cut its soy harvest forecast, currently at 46 million tonnes, if it does not rain enough in key areas over the weeks ahead. Its corn harvest forecast is 46 million tonnes as well.
Argentina corn production down again on continued dryness in the eastern Pampas – Refinitiv Commodities Research
Disappointing rainfall continues to lower Argentina soybean production as warmth surges – Refinitiv Commodities Research
In March’s WASDE (09 March), USDA placed Argentina soybean production at 47.5 million tons, down from its previous estimate of 48 million tons. Bolsa de Comercio in Rosario currently forecasts production at 49 million tons, while Bolsa de Comercio in Buenos Aires sees it at 46 million tons.
Russian exports of wheat increased to 3.1 million tonnes in January from 2.1 million tonnes a year ago, official customs data showed.
Russia is considering imposing a formula-based export tax on sunflower oil, although no decision has been made yet, comments from economy minister showed. Moscow has threatened to impose some type of export tax on sunflower oil since December, when Russia began announcing a series of measures aimed at stabilising domestic food inflation. For vegetable oil, we are working on a ‘damper’ similar to the damper we did for grain, and we may be able to regulate it that way.
Russia may ask producers of fertilisers to fix their prices for the spring grain sowing campaign, the active phase of which will start within days, the agriculture ministry said. About 80% of Russia’s winter grain sowings are currently in good condition and this share is rising
Ukraine’s grain exports have fallen by around 21.5% to 32.9 million tonnes so far this season, which runs from July 2020 to June 2021, economy ministry data showed. Traders sold 13.85 million tonnes of wheat, 14.53 million tonnes of corn and 3.97 million tonnes of barley. Exporting 13.85 million tonnes of wheat, traders have used more than 79% of the total export quota of 17.5 million tonnes imposed for the whole 2020/21 July-June season.
—Most Ukrainian winter grain crops are in good or satisfactory condition and only limited areas in central parts of the country were damaged by frost, scientists said. Weather conditions were favorable for winter cereals, no threatening phenomena were observed. A senior government official said last week winter grain crops were in excellent condition, thanks to favorable weather that could lift the 2021 harvest to a record high above 75 million tonnes.
—Ukrainian trade houses have begun signing forward deals for wheat from the 2021 harvest for future export despite relatively high domestic prices, analyst APK-Inform said, citing uncertainty over prices for 2021 Russian wheat. Russia doubled its wheat export tax to 50 euros ($60) a tonne in an attempt to curb coronavirus-driven food price inflation. The Ukrainian government says the domestic wheat harvest could jump to 29.5 million tonnes in 2021, from 25.1 million tonnes last year, with exports potentially rising as high as 22 million tonnes, up from 17.5 million tonnes in the previous season.
—APK-Inform said bid prices for 12.5% protein soft milling wheat ranged between $217 and $227 a tonne CPT (carriage paid to) Black Sea as of March 10. Feed wheat is quoted between $213 and $220 a tonne CPT. Ukrainian wheat from the 2020 harvest was traded between $267 and $275 CPT Black Sea as of end of last week.
Ukrainian sunflower oil asking export prices rose by more than $100 a tonne so far this week, following a global upward trend, analyst APK-Inform said. It said Ukrainian-origin sunoil prices rose to a range of $1,710 and $1,725 per tonne FOB Black Sea with the delivery in March-May. Sunoil traded between $1,480 to $1,500 per tonne FOB Black Sea two weeks ago.
—The consultancy earlier this year increased its forecast for Ukraine’s sunoil production and exports for the 2020/21 season to 6.219 million tonnes and 5.780 million tonnes, respectively. Ukraine produced 7 million tonnes of the commodity in the 2019/20 season and exported 6.632 million tonnes.
Ukraine exported $4.4 billion worth of vegetable oils in the first half of the 2020/21 season, accounting for 40% of all Ukrainian agricultural exports, national vegetable oil producers’ union the Ukroliyaprom said. Sunflower oil accounted for 77.73% of the exports. Oils and fat products worth $3.3 billion were exported in the same period a year earlier. The average sunoil export price rose to $1,088 from $731 a year earlier. In 2019/20, Ukraine, the world’s largest sunflower oil exporter, produced 7 million tonnes of sunoil and exported 6.632 million tonnes.
Rapeseed crops in France have suffered from cold snaps and pest attacks to the extent that a significant number of fields will be replanted with other crops, although it is too early to quantify, French farm office FranceAgriMer said. This comes as worldwide supplies of the oilseed crop are already scarce, helping to send Euronext rapeseed futures to record highs earlier this week. There had already been less (rapeseed) sown this year. Now for those fields that were sown, quite a few will be dug up or will see lower yield potential. Most would be replanted with spring barley, he said.
In its latest outlook released early February, the French farm ministry cut its estimate for the 2021 winter rapeseed area to 1.00 million hectares from the 1.13 million seen in December. The new forecast would be 9.8% below the previous year and the smallest rapeseed area since 1997.
European wheat futures fell on Wednesday after the results of Algeria’s wheat tender expected to bypass French wheat after its price rally, and pressured by a fall on U.S. markets. Benchmark May milling wheat unofficially closed 0.8% lower at to 227.50 euros a tonne. Paris-based wheat futures had risen earlier this week on news that Algeria, France’s largest wheat purchaser by far, was back on the market. But traders said French wheat was too expensive to account for much of Algeria’s purchase of about 450,000 to 510,000 tonnes of wheat.
Recent and expected hot temperatures limit India wheat yield potential – Refinitiv Commodities Research
Exports of Malaysian palm oil products for Mar. 1-10 fell 18.4 percent to 334,556 tonnes from 409,817 tonnes shipped during Feb. 1-10, cargo surveyor Societe Generale de Surveillance said.
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.