Global Ag News for Mar 24.23

TOP HEADLINES

Russia to consider halting wheat, sunflower exports -Vedomosti

Russia could recommend a temporary halt in wheat and sunflower exports after a sharp drop in global prices in recent weeks, the Vedomosti business daily said on Friday, citing two unidentified sources who attended a government meeting on the move.

The paper said Russia’s agriculture ministry would meet industry representatives this week to discuss the idea of a temporary curb on exports.

An agricultural powerhouse, Russia is among the world’s largest exporters of wheat, sunflower oil and seeds.

Prices of sunflower oil have dropped by more than 20% over the last 10 days, the paper cited the government as saying during an internal meeting on Thursday.

The government had already said it would look to more than triple purchases of grain for the state reserve fund, to 10 million tonnes.

The fund is aimed at helping to smooth domestic prices, allowing the government to cool the market by offloading supplies should prices rise too fast.

FUTURES & WEATHER

Wheat prices overnight are up 7 in SRW, up 5 1/4 in HRW, up 8 1/2 in HRS; Corn is up 1; Soybeans down 12 1/2; Soymeal down $0.16; Soyoil down 0.67.

For the week so far wheat prices are down 41 1/2 in SRW, down 10 3/4 in HRW, down 11 in HRS; Corn is down 1 1/2; Soybeans down 69 1/2; Soymeal down $2.94; Soyoil down 5.97.

For the month to date wheat prices are down 36 1/2 in SRW, up 12 1/4 in HRW, down 17 in HRS; Corn is up 2 1/2; Soybeans down 72; Soymeal down $30.40; Soyoil down 8.54.

Year-To-Date nearby futures are down 15.5% in SRW, down 7.1% in HRW, down 9.5% in HRS; Corn is down 6.7%; Soybeans down 7.4%; Soymeal down 8.8%; Soyoil down 19.3%.

Chinese Ag futures (JUL 23) Soybeans down 29 yuan; Soymeal down 66; Soyoil down 136; Palm oil down 116; Corn down 17 — Malaysian palm oil prices overnight were down 48 ringgit (-1.34%) at 3521.

There were changes in registrations (-17 HRW Wheat). Registration total: 2,537 SRW Wheat contracts; 23 Oats; 73 Corn; 188 Soybeans; 613 Soyoil; 1 Soymeal; 71 HRW Wheat.

Preliminary changes in futures Open Interest as of March 23 were: SRW Wheat up 4,623 contracts, HRW Wheat up 940, Corn up 8,441, Soybeans up 11,604, Soymeal down 1,341, Soyoil up 7,073.

Brazil Grains & Oilseeds Forecast: Wet season showers are becoming much more isolated in central Brazil moving forward. The relative dryness will help increase the remaining safrinha corn planting. Soil moisture is good for the corn in the ground for now. But the coming dryness is not a good outlook if that continues into April without returning.

Argentina Grains & Oilseeds Forecast: A front continues to bring scattered showers, sometimes heavy, to northern Argentina through Saturday. Rain is likely too late for much of the damaged corn and soybean crops. However, stabilization will be likely. Temperatures will remain above normal through next week.

Northern Plains Forecast: Temperatures remain below normal in the Northern Plains and Canadian Prairies for the next couple of weeks, requiring higher inputs than normal for livestock and limiting snow melt. The main storm track will be to the south, with only isolated showers going into next week. A system may move through later next week with scattered showers.

Central/Southern Plains Forecast: A cold front continues to be slowly pushed southward through the Central and Southern Plains through Friday by one final storm system. Scattered precipitation across the region into Friday has the best chance at bringing precipitation to the southwestern drought areas, but also some severe potential to Oklahoma and Texas. There may be another system over the weekend that could bring meaningful showers to Kansas and Colorado’s winter wheat areas. Otherwise, amounts look light for most of the drought-afflicted areas. Temperatures next week will need to be monitored for possible frost damage to southwestern areas where wheat is more advanced.

Midwest Forecast: A string of systems will continue to push a cold front through the Midwest through Saturday, bringing widespread precipitation through the region yet again. Heavy rain near the Ohio River may induce flooding. Another system may come through Sunday and Monday with scattered showers as well as another later next week. A wet end to March is likely to lead to some delays for early fieldwork heading into April. Temperatures will be waffling heading into the new month as well.

Delta Forecast: A cold front will be pushed through the region by early Saturday, accompanied by precipitation that will keep area rivers high and fieldwork slow. The front will also bring a round of significant severe weather. Additional showers are possible Sunday into Monday as well as another system later next week.

The player sheet for 3/23 had funds: net sellers of 1,000 contracts of SRW wheat, sellers of 3,000 corn, sellers of 16,000 soybeans, sellers of 5,500 soymeal, and  sellers of 12,000 soyoil.

TENDERS

• CORN SALES: The U.S. Department of Agriculture confirmed private sales of 123,000 tonnes of U.S. corn to China for delivery in the 2022/23 marketing year that began Sept. 1, 2022. The announcement was the USDA’s seventh in the last eight business days, bringing the total amount of corn sales to China confirmed since mid-March to 2.548 million tonnes.
• WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 56,300 tonnes of milling wheat to be sourced from the United States in a tender on Friday

PENDING TENDERS

• CORN TENDER: Algerian state agency ONAB issued an international tender to purchase up to 70,000 tonnes of animal feed corn to be sourced from Argentina or Brazil
• RICE TENDER: South Korea’s Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 121,800 tonnes of rice
• WHEAT TENDER: Turkey’s state grain board TMO issued an international tender to purchase an estimated 695,000 tonnes of milling 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.

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 March 16, according to data on the USDA’s website.

• Corn sales rose to the highest since May 2021, as China purchased over 2.2m tons
• China also led in soybean purchases, and Mexico was the top buyer of wheat

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 March 16, according to data on the USDA’s website.

• Mexico bought 18.4k tons of the 37.9k tons of pork sold in the week
• South Korea led in beef purchases

Argentina Soy Production Est. Unchanged at 25M Tons: Exchange

The Buenos Aires Grain Exchange maintained its forecast for Argentine soy production this year at 25 million metric tons, according to its weekly report published Thursday.

Argentina exchange sees 2022/23 soy imports up 139% due to drought

Argentina’s soybean imports are expected to more than double this season due to the devastating impacts of a historic drought on the country’s 2022/23 harvest, the country’s Rosario grains exchange said in a report on Thursday.

Argentina is the world’s leading exporter of soybean oil and meal, thanks to a powerful grain processing industry that can crush up to 73 million tonnes of the oilseed per year, but serious losses from the drought are accentuating the need for imports from Paraguay and Brazil.

The exchange predicts that Argentina will import 7.9 million tonnes of soybean this season, up 139% from the previous season, on the back of a harvest of just 27 million tonnes – from a previous harvest of 42.2 million tonnes.

“Brazil has been emerging in this first part of the year as a growing supplier of soybeans for the Argentine oil industry, in addition to the high supply from Paraguay,” it said.

Argentine firms imported just over 400,000 tonnes of soybeans in the first two months of 2023, the exchange added, including about 170,000 tonnes from Brazil so far in March.

Last week, the president of Argentina’s grain processing chamber CIARA told Reuters the sector is in crisis and operating at the lowest capacity in history.

Regarding corn, the exchange said Argentina exported $9.15 billion of the crop from the 2021/22 harvest, prior to the impact of the drought, its second-highest level thanks to high prices even as volumes slipped 15% from the year before.

China agrees to resume imports of Brazilian beef, authorizes four new plants

Efforts by the Brazilian government to lift a month-long ban on beef exports to China paid off on Thursday, as Beijing agreed to resume imports while also approving four new beef-packers based in Brazil, according to authorities in both countries.

China’s General Administration of Customs approved the resumption of imports of Brazilian beef and authorized the new plants a day after Brazilian Agriculture Minister Carlos Favaro arrived in Beijing ahead of a visit by Brazilian President Luiz Inacio Lula da Silva next week.

Sales of Brazilian beef to China were voluntarily halted by Brazilian authorities on Feb. 23, following the discovery of an atypical case of mad cow disease.

More than a quarter of the business leaders travelling to China with President Lula come from Brazil’s booming meat industry, highlighting the high stakes for a sector reliant on Chinese demand for most of its exports.

Lula will visit China accompanied by a delegation of 240 business representatives, including 90 from the agriculture sector.

Datagro Pecuaria, a consultancy, said on Thursday this is the first time since 2019 that China has issued new export permits for Brazilian beef-packers, referring to the four new licenses granted to JBS SA JBSS3.SA and another three privately-owned companies.

Earlier in the day, Favaro welcomed the lifting of the month-long ban and said this was a sign that could lead to new export permissions.

Now, a total of 41 Brazilian beef plants are authorized to sell to China.

Beef producers in Brazil were losing up to $25 million per day with the embargo in place. Some 62% of Brazil’s beef exports went to China last year.

In time, Brazil aims to renegotiate a bilateral sanitary protocol under which a single mad cow case triggers an export ban for the whole country.

Shares in Brazilian beefpackers Minerva and JBS rose in morning trade, but later pared gains amid a widespread market rout.

Chinese customers authorities on Thursday also removed a ban on a poultry plant operated by BRF SA enforced in December 2021, according to Datagro Pecuaria.

The agriculture ministry confirmed the ban was lifted in Rio Grande do Sul, without referencing the company.

Palm Oil Prices May Weaken Below $700/Ton by Year-End: Fitch

Malaysian benchmark crude palm oil spot prices are likely to weaken to below $700/ton by year-end on increasing production, Fitch Ratings said in a report.

• CPO prices forecast to average at $850/ton in 2023, with further weakness seen in 2024
  • Prices have averaged around $915/ton so far in 1Q, sharply lower than $1,175/ton for all of 2022
• After a healthy start to 2023, Fitch expects “CPO prices to weaken later in the year, driven by higher supply of palm and other vegetable oils due to favorable weather conditions”
  • Crude palm oil prices have been supported since late 2022 by market expectations of significantly higher biodiesel consumption in Indonesia as well as lower exports from the top supplier; impact of heavy rainfall on output at the start of the year has also underpinned
• Latest production data from Malaysia and Indonesia indicate that yields are on an uptrend, helped by plentiful rainfall and improved fertilizer application
  • Shortage of foreign workers in Malaysia is also being addressed at a rapid pace, and is likely to be resolved by 1H
• A hit to sunflower seed oil supply due to the Russia-Ukraine war is a “key upside” to Fitch’s expectations
• If an El Nino weather pattern develops from 2H, output of soybean oil will improve and pressure global vegetable oil prices
• Fitch raised estimates for long-term CPO prices beyond 2024 to $650/ton, from $600/ton previously, to account for significant wage-cost inflation in the industry in 2022-23

Refinitiv forecasts an increase in U.S. corn area in 2023/24 as profitability improves – Refinitiv Commodities Research

2022/23 CORN MARKET OUTLOOK – March 2023

• U.S. corn area to increase in 2023/24 amid improved profitability prospects
• U.S. corn exports to peak in March
• Black Sea Grain corridor deal extended for 60 days
• South American corn crop continue to be affected by weather, but Brazil’s harvest remains at an all-time high

French Soft-Wheat Ratings Edge Lower, Hold Above 2022: AgriMer

The amount of France’s soft-wheat crop in good or very good condition declined to 94% as of March 20, one point below the prior week, FranceAgriMer data showed on Friday.

• NOTE: Rains in the near-term should continue to improve moisture in northern France, forecaster Maxar said in a note

US Miss. River Grain Shipments Rise, Barge Rates Increase: USDA

Barge shipments down the Mississippi river increased to 578k tons in the week ending March 18 from 438k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 3% from the previous week
• Soybean shipments up 100% w/w
• St. Louis barge rates were $17.41 per short ton, an increase of $1.79 from the previous week

LIVESTOCK: US Red Meat Production Fell 3.8% Y/y in February

Commercial beef and pork production fell to 4.26b pounds in Feb., according to the USDA’s monthly livestock slaughter report.

• Beef production down 7% y/y to 2.09b pounds
• Feb. cattle slaughter totaled 2.55m head, a 5.2% decline from a year ago
  • Avg live weight dropped by 21 pounds from last year to 1,374 pounds
• Pork production down 0.5% y/y to 2.16b pounds
• Hog slaughter increased 0.3% y/y to 9,974m head
  • Avg live weight was 291 pounds vs 293 pounds a year ago

 

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