Global Ag News for Mar 13.23
Floods and Old Trees in Malaysia Set to Tighten Palm Oil Market
The global palm oil market is expected to tighten this year as floods and older trees constrain production in the world’s second-biggest supplier, according to a major Malaysian growers group.
Indonesia and Malaysia may only see a marginal increase in output this year of less than 3%, respectively, Joseph Tek, the chief executive of the Malaysian Palm Oil Association, said in a statement. Heavy rainfall and floods in parts of Malaysia will constrict production in the short term because of disruptions to harvesting and logistics, and result in poorer quality fruit, he added.
The number of trees older than 25 years has also expanded, meaning a portion of the plantation will be less productive. Replanting has been slow due to high costs, and the top-producing state in Malaysia — Sabah — now has the country’s highest area of trees above that age, Tek said.
A tightening palm oil market raises concerns over the potential for higher food costs, just as central banks boost interest rates to curb inflation. Weather risks are also climbing, with a shift from La Nina to El Nino expected this year. The change in the weather cycle could parch plantations in Southeast Asia, where nearly all of the world’s palm is grown.
“The last three years of La Nina have caused significant damage to oil palm root systems, which may take time to recover even as the application of rooting fertilizers are ongoing,” said Tek. As a result, fresh fruit bunches may be smaller in size and have lesser oil content, he added.
The tight supply outlook may keep palm oil supported near 4,000 ringgit ($885) a ton in the near term, Tek said. Prices have traded above that level since early February. Other significant events include: China’s rebound after the end of Covid Zero, the ongoing Russia-Ukraine war, as well as Indonesia’s policies to restrict exports and ramp up its biodiesel mandate, he said.
The MPOA is a growers group that represents about 40% of palm oil plantations by area in Malaysia.
FUTURES & WEATHER
Wheat prices overnight are down 4 1/4 in SRW, down 5 3/4 in HRW, down 3 1/2 in HRS; Corn is down 3; Soybeans down 1/2; Soymeal down $0.06; Soyoil down 0.20.
Markets finished last week with wheat prices down 20 1/4 in SRW, down 5 1/4 in HRW, down 41 3/4 in HRS; Corn is down 22 3/4; Soybeans down 22 1/2; Soymeal down $0.81; Soyoil down 4.04.
For the month to date wheat prices are down 30 1/2 in SRW, down 20 1/4 in HRW, down 45 3/4 in HRS; Corn is down 16; Soybeans up 27 1/2; Soymeal up $18.20; Soyoil down 3.63.
Year-To-Date nearby futures are down 15.8% in SRW, down 8.6% in HRW, down 12.6% in HRS; Corn is down 8.0%; Soybeans up 0.2%; Soymeal up 4.2%; Soyoil down 12.1%.
Chinese Ag futures (MAY 23) Soybeans down 27 yuan; Soymeal down 27; Soyoil down 106; Palm oil down 88; Corn down 14 — Malaysian palm oil prices overnight were down 53 ringgit (-1.29%) at 4040.
There were changes in registrations (50 Soybeans). Registration total: 2,587 SRW Wheat contracts; 43 Oats; 95 Corn; 256 Soybeans; 652 Soyoil; 0 Soymeal; 135 HRW Wheat.
Preliminary changes in futures Open Interest as of March 10 were: SRW Wheat up 626 contracts, HRW Wheat down 237, Corn up 8,894, Soybeans up 3,613, Soymeal down 2,608, Soyoil up 6,287.
Brazil Grains & Oilseeds Forecast: Scattered showers continue for much of Brazil’s growing regions for the next week outside of Minas Gerais and Rio Grande do Sul, where showers will be more limited. Despite recent rains, many areas have made significant progress with regard to soybean harvest and corn planting. However, some areas are behind, somewhat significantly, and will expose more of the corn crop to the dry season which is forecast start up in April and frosts that may occur in June. Corn already in the ground will benefit from good soil moisture.
Argentina Grains & Oilseeds Forecast: Dry conditions continue to be a concern for immature corn and soybeans in Argentina moving forward. Any showers will be limited for the next week, though isolated showers may move through at times. Southern areas stand the best chance at continued precipitation going into next week, but for most areas, the rain is too late to have much of an impact. Showers will spread through more of the country later next week. The heat that developed last week continues through next week with daytime highs near 100 degrees Fahrenheit when the rains do not occur. The heat and dryness are keeping stress high for both crops in various stages of growth.
Northern Plains Forecast: Waves of snow will continue across the Northern Plains and southern Canadian Prairies through the weekend, adding up to some hefty amounts for a lot of the region over the course of this week. Colder air will also be in place for a while, with higher inputs than normal required for livestock.
Central/Southern Plains Forecast: Aside from a few chances of isolated showers this weekend, mostly dry weather returns to the area, providing limited help to the ongoing drought. Temperatures will waffle around over the next 10 days, but mainly be cooler than normal.
Midwest Forecast: Another round of precipitation is expected in the Midwest this weekend with some heavier snowfall amounts across the north than the last system that went through on Thursday. Temperatures will waffle around over the next 10 days, but trend colder thereafter.
Delta: Water levels on the Mississippi River remain high for the foreseeable future due to a very active weather pattern across the watershed for at least the next week. Some areas of minor flooding are forecast instead. The heavy precipitation has left the region wet and more difficult to do some early fieldwork.
The player sheet had funds net buyers of 3,000contracts of SRW Wheat; buyers of 4,000 corn, sellers of 2,000 soybeans, sellers of 1,000 Soymeal, and; net sellers of 2,000 lots of Soyoil.
- WHEAT PURCHASE: Saudi Arabia bought 1.043 mln tonnes of wheat for July-August arrival, for its first tender in 2023, the Saudi General Food Security Authority (GFSA) said on Monday.
- FEED WHEAT PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased about 125,000 tonnes of feed wheat in private deals on Thursday without issuing an international tender
- CORN PURCHASE: South Korea’s Feed Leaders Committee (FLC) purchased about 68,000 tonnes of feed corn to be sourced optionally from the United States, South America or Black Sea region in an international tender on Friday
- VEGETABLE OILS PURCHASE: Tunisian state agency Office National de l’Huile purchased an estimated 9,000 tonnes of crude degummed soyoil in a tender on Thursday
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 tonnes of animal feed barley.
- SUNFLOWER OIL TENDER: Turkey’s state grain board TMO issued an international tender to purchase about 18,000 tonnes of crude sunflower oil.
- WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins. The tender sought a nominal 50,000 tonnes but Algeria often buys considerably more in its tenders than the nominal volume sought.
- WHEAT TENDER: Saudi Arabia’s main state wheat buying agency issued an international tender to purchase an estimated 480,000 tonnes of wheat
- WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 tonnes of milling wheat which can be sourced from optional origins.
- w orders, dealers said.
- Although the basis was mostly steady, offers fell by $2 per ton at a processor in Sioux City, Iowa.
Brazil Farmers Harvest 48.9% Of Soybean Area Versus 60.5% At This Time Last Year – Safras And Mercado
BRAZIL FARMERS HARVEST 48.9% OF SOYBEAN AREA VERSUS 60.5% AT THIS TIME LAST YEAR – SAFRAS AND MERCADO
Brazil February Corn and Soybean Exports by Country: MDIC
- Soybean shipments to China fell 17% in February vs the same period last year
- Soybean shipments to Argentina were 226,000 tons, a record high for that destination
Malaysia palm oil assoc sees near-term prices at 4,000 rgt/T as supply tightens
Malaysia’s benchmark crude palm oil prices are expected to stay supported at 4,000 ringgit ($885.15) a tonne in the near term due to tight availability of surplus, the Malaysian Palm Oil Association (MPOA) said on Saturday.
Production in the world’s second largest producer in 2023 is forecast higher at 19 million tonnes from 18.5 million tonnes last year, MPOA said.
In larger producer Indonesia, production is expected to rise to 48.3 million tonnes in 2023, from 46.8 million tonnes last year.
“The last three years of La Nina have caused significant damage to oil palm root systems, which may take time to recover even as the application of rooting fertilisers are ongoing,” Joseph Tek, MPOA chief executive, said in a statement.
“The rising number of over-aged and very tall oil palm trees in Malaysia will also continue to constrain supply as replanting has been slow due to high costs,” he said.
In Malaysia’s largest palm oil producing state Sabah, 36% or more than half a million 500,000 hectares of oil palm trees are above 19 years old, Tek said.
Old oil palms trees are tall and unproductive and are typically replanted with new seedlings that are higher-yielding, shorter and resistant to drought and disease.
Sabah accounts for nearly quarter of Malaysia’s production.
While a pandemic-induced labour shortage in Malaysia has eased and is expected to reach normalcy by mid-year, MPOA warned that the new batch of migrant workers may not be trained in time for the peak season, typically lasting from August to October.
Worsening drought and deteriorating yield potential in Argentina highlight status of soybean market – Refinitiv Commodities Research
2022/23 SOYBEAN MARKET OUTLOOK – MARCH 2023
Global soybean market remains underpinned by a combination of weather dynamics/harvest progress in South America and export/import complexities involving the competition between the U.S. and Brazil for soybean shipments to China amid great demand recovery.
The short-term direction of the market will likely be dictated by the supply side of the equation – the main theme will be focused on how much production loss in Argentina will be offset by Brazil’s record high output amid harvest delays and unfavorable late season weather conditions.
China’s great demand recovery post COVID-19/recent domestic restrictions sets the U.S. and Brazil in competition to export soybeans to China amid a strong dollar environment.
Russia says it has not taken part in grain deal renewal talks
Russia’s foreign ministry said on Sunday that Russian representatives had not yet taken part in negotiations on extending the Black Sea grain deal.
“There have been no negotiations on this subject, especially with the participation of Russian representatives,” Foreign Ministry spokeswoman Maria Zakharova said.
The next round of talks on extending the deal will be held in Geneva on March 13 between Russia’s delegation and top United Nations trade official Rebeca Grynspan, Zakharova said.
China will step up policies to support food production – Premier Li
China’s new Premier Li Qiang said that the country’s food security is guaranteed and that state policies to support food production will increase, at a news conference to mark the close of the annual sitting of parliament on Monday.
Premier Li also said that that rural areas should develop based on local conditions and that the government seeks to boost economic, cultural and ecological values in rural areas to further promote rural revitalisation.
CORN/CEPEA: Despite late sowing, a record harvest is still expected in BR
Although sowing of the second crop of corn is late in Brazil, official data still point to a record output. On the other hand, in Argentina, estimates were revised down again, pressing down the world corn supply – it is important to highlight that the estimates for the world supply of corn did not decrease more steeply because of the higher output is Brazil and maintenance in the United States.
In this context, while farmers are monitoring crops, national purchasers are buying new batches only to replenish stocks. Still, some of them have reported logistic issues, since soybean transportation has been a priority.
PRICES – In Campinas (SP), a typical corn-consuming region, the ESALQ/BM&FBovespa Index for corn dropped 1% between March 2 and 9, to BRL 85.47 (USD 16.65) per 60-kilo bag on Thursday, 9. On the average of the regions surveyed by Cepea, prices increased 0.2% in both the over-the-counter market (paid to farmers) and the wholesale market (deals between processors).
At the port of Paraaguá (PR), quotations are ranging between BRL 89 and BRL 90/bag. In the last seven days, prices rose 0.3%, to BRL 90.69/bag on March 9th. The US dollar dropped 1.3%, to BRL 5.134 on March 9th.
CROPS – In Rio Grande do Sul, rains have reduced the water stress, helping crops to develop. In Paraná, southeastern and central-western Brazil, the firm weather favored the progress of the summer crop harvesting and sowing of the second crop. Thus, so far, expectations are for an output higher than that from 2021/22.
Data from Conab (Brazil’s National Company for Food Supply) show that, by March 4th, 22.6% of the national summer crop of corn had been harvested, a progress of 6 percentage points compared to that on Feb. 25th but a delay of 3.5 p.p. compared to that in the same period of the 2021/22 season. Activities are most delayed in Paraná and in Santa Catarina.
As for the second crop, 64% of the national area allocated to the second crop of corn had been sown by March 4th, a progress of 15 p.p. in seven days, however, 11 p.p. behind that last season.
ESTIMATES – In a report released on March 8th, Conab estimated the Brazilian corn output in the 2022/23 season at 124.67 million tons, 0.8% higher than that reported in February, as a consequence of the increase in the production of the summer crop, to 26.75 million tons, 7% up from that last season.
As for the second crop, the delay in soybean sowing may hamper the development of corn crops. So far, the output is forecast to be 11% higher than that in the previous season, estimated at 95.6 million tons. For the third crop, estimates point to 2.31 million tons, 4.7% up from that in 2021/22. Consumption estimates were kept at 79.35 million tons. Imports are estimated at 1.9 million tons. Thus, in the 2022/23 season, the exportable surplus (initial stocks + production + imports – domestic consumption) would be at around 55 million tons. With exports estimated at 48 million tons, by the end of the season, ending stocks will be at 7.29 million tons, the lowest in recent years.
SOYBEAN/CEPEA: Lower supply in Argentina raises prices of by-products in BR; soybean devalues
Although soybean prices are fading in Brazil – hitting the lowest nominal levels in the series of Cepea –, the quotations for soybean meal and oil have resumed rising in the domestic market. Valuations are linked to lower supply in Argentina – the number one exporter of soybean by-products in the world – and expectations for higher demand, majorly from abroad, for the Brazilian by-products.
Thus, the price for soy oil (raw and degummed, with 12% ICMS) rose 2.9% in São Paulo (SP) between March 2-9, to BRL 6,463.47/ton on Thursday, 9. As for soybean meal, considering the average of the regions surveyed by Cepea, quotations rose 1% in the same period.
In Argentina, the soybean output is forecast at 33 million tons, according to data from the USDA released on March 8th, the lowest since the 2008/09 season. This decrease is linked to the high temperatures and water deficit in the country during the development of the 2022/23 crops.
Thus, a slight 35.2 million tons of soybean will be processed in Argentina, the lowest since 2012/13. To limit steeper decreases in the productions of soybean meal and oil, Argentina is expected to import a record volume of soybean (7.25 million tons, a staggering 88.9% up from that last season, according to the USDA).
The production of soybean meal in Argentina is estimated at 27.49 million tons, 9.2% below that last season. Of this total, 24.9 million tons are expected to be exported, 6.35% less than that last season and also the lowest volume since 2012/13. Oil production is forecast at 6.9 million tons, and 4.75 million tons will be exported, 2.5% less than that in 2021/22 and the lowest volume in the last five season, according to the USDA.
In this context, international purchasers may search for these products in Brazil. The USDA estimates the Brazilian production of soybean meal at 40.87 million tons, a record. Of the total, 21.2 million tons may be exported, and 19.85 million, consumed in Brazil.
Oil production in Brazil may hit 10.16 million tons, with 2.3 million tons exported, 3.92 million tons sent to the industry, and 3.97 million tons, to food processors, a record.
SOYBEAN – Soybean prices are dropping in Brazil, due to the progress of the harvesting of the 22/23 crop, which is forecast to set a record (153 million tons, according to the USDA), and the dollar depreciation against the Real, which makes the product from the USA more attractive to importers – the USA are Brazil’s major competitor in terms of soybean exports.
Thus, on March 9th, the CEPEA/ESALQ Paraná Index for soybean closed at BRL 159.73 (USD 31.11) per 60-kilo bag, 1.4% down from that on the previous Thursday (2), the lowest daily level since Nov. 16th, 2021. The ESALQ/BM&FBovespa Paranaguá (PR) Index dropped 1.2%, to BRL 167.24 (USD 32.57)/bag, the lowest since Dec. 14th, 2021.
On the average of the regions surveyed by Cepea, soybean prices dropped 1.5% in the over-the-counter market (paid to farmers) and 1% in the wholesale market (deals between processors). The US dollar depreciated 1.3%, to BRL 5.134 on March 9th.
Palm Oil Imports by India Seen Sinking 30% to 7-Mth Low: Sunvin
Inbound shipments in February probably dropped to their lowest level since July, according to Sandeep Bajoria, chief executive officer of consultancy firm Sunvin Group.
- Imports by the South Asian nation, the world’s biggest edible oil buyer, are estimated to have fallen to 586,767 tons from 833,667 tons in January
- Purchases in February 2022 were 454,794 tons
- NOTE: India usually cuts palm consumption during winter months because the oil becomes cloudy or gets solidified when temperatures plummet; users generally switch to oils that look transparent and don’t crystallize
- February imports likely comprised 408,777 tons of crude palm oil, 162,478 tons of RBD palm olein and 9,499 tons of palm kernel oil
- Soybean oil purchases probably fell to 295,430 tons from 366,625 tons; sunflower shipments were 137,798 tons vs 461,458 tons
- Total vegetable oil imports in February totaled 1.02m tons vs 1.66m tons in January
- NOTE: The Solvent Extractors’ Association of India will release its vegetable oil import data in the middle of March
- Palm oil imports in February totaled 586,000 tons, according to Rajesh Patel, managing partner of GGN Research
- India bought 356,000 tons of soybean oil and 157,000 tons of sunflower oil last month: Patel
- Edible oil imports in December touched 1.1m tons
Rosstat Says Russia Boosted Grain Harvest 30% in 2022: Interfax
Russia harvested 157.7m tons of grain last year — 29.9% higher than in 2021 — Interfax reported, citing state statistics agency Rosstat.
- Figure includes 104.2m tons of wheat, 37% more than in 2021
- NOTE: USDA estimates the 2022 crop at 92m tons
Cold Weather Delays Spring Fieldwork; US Fertilizer Prices Slide
Most nitrogen prices remain weak in the US as buyers delay spring purchases, with ammonia prices dropping again to spur sales. Application is underway in the South, while the Corn Belt awaits warmer weather. China is spending more on agricultural policy to get more, and fertilizer is key. Domestic stockpiles and urea production rates are rising as the world’s marginal producer pins hopes on a big crop.
US Ammonia Prices Fall Again; Urea Remains Weak
Ammonia producers slashed Midwest terminal prices once again to spur buying for the spring season. New prices in the Corn Belt dropped to $670-$750 a short ton (st) vs. the previous $725-$850, depending on location, with offers in the Southern Plains falling $15/st to $585-$610. Urea prices also softened at New Orleans (NOLA) and inland, while news that India would limit urea purchases to 1.1 million metric tons (mt) in its latest tender — at prices $243/mt below its previous tender — sparked additional declines in China, the Middle East and Brazil.
Delayed spring application continued to pressure inland phosphate and potash prices in the US, though NOLA barge prices were up slightly for potash during the week. Urea ammonium nitrate (UAN) also edged higher at NOLA, while inland UAN prices were mixed.
Brazil Potash Fertilizer Price Drops 4.17%
Brazil Granular Potash CFR spot price, a benchmark for potash fertilizer, fell 4.17% to $460 per metric ton in the week ended March 10, according to Green Markets data compiled by Bloomberg Intelligence.
- Brazil CFR dropped 8.46% during the last month and was down 13.2% during the last 3 months
- Shares of potash producers such as Nutrien Ltd., Vale SA and Sociedad Quimica & Minera de Chile SA were down in the latest week
- The price of corn, a driver of fertilizer purchases, decreased 4.2% during the last week and was down 9.6% during the last month
US Beef Production Up 0.7% This Week, Pork Down: USDA
US federally inspected beef production rises to 522m pounds for the week ending March 11 from 518m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter up 0.8% from a week ago to 634m head
- Pork production down 0.7% from a week ago, hog slaughter falls 0.6%
- For the year, beef production is 4.3% below last year’s level at this time, and pork is 0.7% above
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