Explore Special Offers & White Papers from ADMIS

Global Ag News for May 24.22

HEADLINES TODAY

Wheat prices overnight are up 12 1/4 in SRW, up 9 1/2 in HRW, up 19 1/2 in HRS; Corn is down 3/4; Soybeans up 2 1/4; Soymeal up $0.26; Soyoil up 0.70.

For the week so far wheat prices are up 33 1/2 in SRW, up 33 1/4 in HRW, up 39 in HRS; Corn is up 6 3/4; Soybeans down 16; Soymeal down $0.48; Soyoil up 0.24. For the month to date wheat prices are up 146 1/2 in SRW, up 180 1/4 in HRW, up 152 in HRS; Corn is down 28; Soybeans up 4 1/2; Soymeal down $7.20; Soyoil down 3.01.

Year-To-Date nearby futures are up 56% in SRW, up 60% in HRW, up 34% in HRS; Corn is up 32%; Soybeans up 27%; Soymeal up 3%; Soyoil up 44%.

Chinese Ag futures (SEP 22) Soybeans up 46 yuan; Soymeal down 82; Soyoil up 22; Palm oil up 118; Corn down 24 — Malaysian palm oil prices overnight were up 254 ringgit (+4.06%) at 6515.

There were no changes in registrations. Registration total: 1,010 SRW Wheat contracts; 23 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 139 HRW Wheat.

Preliminary changes in futures Open Interest as of May 23 were: SRW Wheat up 2,608 contracts, HRW Wheat up 1,166, Corn up 10,302, Soybeans up 6,700, Soymeal down 1,434, Soyoil up 2,303.

Northern Plains Forecast: Mostly dry Tuesday-Thursday. Scattered showers Friday. Temperatures below to well below normal through Wednesday, near to below normal Thursday, near to above normal Friday. Outlook: Isolated to scattered showers Saturday-Wednesday. Temperatures near to above normal Saturday, near to below normal Sunday-Wednesday.

Central/Southern Plains Forecast: Scattered showers Tuesday, south Wednesday. Mostly dry Thursday-Friday.

Temperatures below to well below normal through Wednesday, near to below normal Thursday, near to above normal Friday. Outlook: Isolated showers Saturday-Wednesday, mostly north. Temperatures near to above normal Saturday-Sunday, near to below normal north and above normal south Monday-Tuesday, near to below normal Wednesday.

Western Midwest Forecast: Scattered showers Tuesday-Wednesday. Mostly dry Thursday. Isolated showers Friday. Temperatures below normal through Thursday, near to above normal Friday.

Eastern Midwest Forecast: Scattered showers Tuesday night-Thursday. Mostly dry Friday. Temperatures near to below normal Tuesday, near to above normal Wednesday-Friday. Outlook: Isolated to scattered showers Saturday-Wednesday. Temperatures near to above normal Saturday-Tuesday, below normal west and above normal east Wednesday.

Canadian Prairies Forecast:  Isolated showers through Wednesday. Temperatures near to below normal through Wednesday. Isolated showers Thursday. Scattered showers Friday. Temperatures near to below normal Thursday-Friday. Outlook: Scattered showers Saturday-Sunday. Mostly dry Monday-Wednesday. Temperatures near to below normal Saturday, below to well below normal Sunday-Tuesday, near to above normal Wednesday.

 Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana: Mostly dry through Tuesday. Scattered showers Wednesday-Friday. Temperatures near normal Monday, near to above normal Tuesday-Friday. Mato Grosso, MGDS and southern Goias: Mostly dry through Friday. Temperatures near normal Monday, near to above normal Tuesday-Friday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires: Isolated showers through Wednesday. Mostly dry Thursday-Friday. Temperatures near to above normal Tuesday, near to below normal Wednesday, below normal Thursday-Friday. La Pampa, Southern Buenos Aires: Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Temperatures near to below normal Tuesday, below to well below normal Wednesday-Friday.

The player sheet for 5/23 had funds: net buyers of 9,000 contracts of  SRW wheat, buyers of 5,000 corn, buyers of 8,000 soybeans, sellers of 3,500 soymeal, and  sellers of 1,500 soyoil.

TENDERS

  • SOYBEAN SALE: Exporters sold 130,000 tonnes of U.S. soybeans for delivery to Egypt during the 2021/2022 marketing year, the U.S. Department of Agriculture said.
  • WHEAT OFFER: Bangladesh’s state grains buyers received one offer in an international tender to import 50,000 tonnes of wheat, officials from the country’s grain purchasing agency and European traders said. No purchase was made and the offer is still being considered.

PENDING TENDERS

  • RICE TENDER: Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) is seeking at least 25,000 tonnes of white rice in a tender-practice on the account of the Holding Company for Food Industries. Offers were to be submitted by May 19.
  • WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins
  • WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 500,000 tonnes of wheat
  • CORN TENDER: Turkey’s state grain board TMO issued an international tender to purchase and import a total of 175,000 tonnes of animal feed corn
  • BARLEY TENDER: Jordan’s state grains buyer issued a new international tender to purchase 120,000 tonnes of animal feed barley
  • WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat, traders said. The deadline for submission of price offers is May 29, they said.

US Inspected 1.699m Tons of Corn for Export, 576k of Soybean

Indonesia to replace cooking oil subsidy with price rules on its raw materials – official

Indonesia will remove its subsidy on bulk cooking oil after May 31 and replace it with a domestic price obligation on the raw materials used to produce it, an official told a parliamentary hearing on Tuesday.

Putu Juli Ardika, Director General for agriculture at the Industry Ministry, was speaking a day after the lifting of a ban on exports of crude palm oil and some of its derivative products, which was imposed to arrest soaring domestic cooking oil prices.

Indonesia to Set Palm Oil Export Quota to Ensure Supply

Indonesia will issue a monthly palm oil export quota to ensure local supply is adequate, according to the trade ministry.

  • The govt revokes its temporary export ban, enabling producers to start applying for export permits from Monday, Oke Nurwan, director general of domestic trade at the ministry says in a briefing
  • The monthly quota will help producers plan their shipments: Nurwan
  • Govt is developing an app for exporters to submit their plans
    • It targets to complete the development of the app in two weeks
  • Producers, who join the government’s cheap bulk cooking oil distribution program, can decide whether they wish to claim the subsidy or request for export permits
  • Govt is still discussing export volume, which may be three times of the size of the bulk cooking program
  • Applications for export permits could be made only for crude palm oil, RBD palm oil, RBD palm olein and used cooking oils
  • Govt to monitor prices of bulk cooking oil in 10,000 markets to ensure prices are affordable across the country
  • The ministry is still validating data on palm oil stockpiles and commitment for distributing cooking oil in the local market

Indonesia to Evaluate Local Palm Oil Sales Policy at Any Time

Indonesia can evaluate and set the volume of palm oil and price of cooking oil used in the domestic market obligation policy at any time, the Trade Ministry says in a statement late Monday.

  • Govt resumed overseas shipments of crude palm oil, RBD palm oil, RBD palm olein and used cooking oil on Monday with exporters required to obtain license that valid for 6 months
  • Exporters can get a shipping permit after submitting the following documents:
    • Proof of supplying palm oil to bulk cooking oil producers at price set by the govt
    • Proof of distributing bulk cooking oil at price set by the govt to retailers
    • Proof of cooperation with producers that supply bulk cooking oil
  • Policy meant to ensure supply of palm oil for domestic cooking oil industry

EU Soft-Wheat, Barley Yield Outlooks Cut on Dry Weather: MARS

EU soft-wheat yields for the 2022 crop are now estimated at 5.89/hectare, down from an April outlook of 5.95, the EU’s Monitoring Agricultural Resources unit says in a report.

  • That remains above the 5-year average
  • Most parts of Europe had “drier-than-usual” conditions
    • Spain impacted by “high temperatures, causing rapid depletion of soil moisture, with negative impacts on winter cereals and spring barley”; droughts in Italy mitigated by significant precipitation around the end of April
  • Barley yield outlook trimmed to 4.89 tons/hectare, from 4.97 tons/hectare
  • Rapeseed yield outlook trimmed to 3.17 tons/hectare from 3.19 tons/hectare
  • Sugar beet yield outlooks increase to 78 tons/hectare from 77.8 tons/hectare
  • Estimates for corn and sunflower little changed

Ukraine’s APK-Inform cuts 2022/23 sunoil output forecast by 7% to 5.3 mln T

APK-Inform agriculture consultancy on Tuesday revised down its forecast for Ukraine’s 2022/23 sunflower oil output by around 7% to 5.3 million tonnes despite the unchanged outlook of the 2022 sunflower harvest at 9.2 million tonnes.

Ukraine harvested 16.6 million tonnes of sunflower seeds last year. Ukraine is the world’s largest sunflower seed grower and sunflower oil exporter, but its invasion by Russia in February and the heavy fighting since have clouded the outlook for planting and exports.

APK-Inform has said the 2022 sowing area for sunflowers may fall its lowest in 13 years, to about 4.2 million hectares, down 38% versus 2021 levels.

The consultancy said Ukraine may export 4.85 million tonnes of sunoil in the 2022/23 September-August season. APK-Inform did not say how Ukraine could ship sunoil abroad with its seaports blocked due to the Russian invasion.

APK-Inform also sees the harvest of rapeseed at 2.5 million tonnes against 3.1 million tonnes in 2021. Soybean production is likely to total 2.69 million tonnes.

Turkey expects imports of Russian oil and fat products to stay high in 2022 – Agroexport – Interfax Russia & CIS Business and Financial Newswire

Representatives of Turkish companies that purchase oil and fat products in Russia expect supplies of such products to remain at a high level this year, the Russian Agriculture Ministry’s Agroexport Center said.

“Representatives of Turkish companies, most of which already work with Russia, are confident that the quantity of supplies of oil and fat products from our country will be very high this year,” Agroexport said after a roundtable held as part of a business mission of Russian exporters to Turkey.

Turkey consumes an estimated 1.5 million tonnes of sunflower oil per year, about 900,000 tonnes of which is produced in the country. Imports total about 1 million tonnes, of which about 500,000 tonnes are refined, packaged and exported to other countries, AVES sales director Abdullah Zeren was reported as saying in the press release.

“The current situation will obviously increase the trade turnover between Russia and Turkey, particularly in the sector of oil and fat products,” he said. Zeren proposed considering legal instruments for independent resolution of disputes and problems between companies in the area of pricing, delivery conditions, tonnage guarantees and so on as one measure that could help develop relations.

Russian Deputy Agriculture Minister Sergei Levin said at the event that Russia increased sunflower oil exports to Turkey by 150% year-on-year in 2021 and accounts for about 90% of Turkey’s imports of such oil. “But despite this we believe that the potential and possibilities are far from exhausted,” Levin said.

Russia nearly quadrupled production of key oil crops in the period from 2010 through 2021, and production is expected to grow by another 30-40% by 2030, the commercial director of Yug Rusi Group, Ilya Ilyushin said. He proposed to move away from spot contracts in the current environment in favor of building long-term relations with Turkish partners.

Exporters of oil and fat products also said they hope that mutual settlements with Turkey in national currencies will be introduced very soon.

Farmers Still Seen Making Money Despite Soaring Fuel, Fertilizer

  • Crop prices have risen more than enough to cover the higher costs, Kansas City Fed says

Farmers are still making money despite the higher costs for fuel and fertilizer, as crop prices have risen even more.

That’s the view of Federal Reserve Bank of Kansas City researchers, who see Russia’s invasion of Ukraine have “long-lasting” effects on the commodity markets. “Disruptions associated with the invasion have contributed to increases in commodity prices, which could support commodity-producing regions and businesses,” they said Monday in a report.

Russia and Ukraine are key producers and exporters of energy and agricultural products, such as natural gas, wheat, and fertilizer. Prices of those raw materials have surged since Russia’s invasion of Ukraine and sanctions that followed disrupted production and flows of commodities.

Even before the war, prices of raw materials soared with demand surging and supplies choked up due to pandemic-triggered supply chain woes. Now, with trade flows snarled and production crimped, inventory cushions for both crops and energy are shrinking, and futures markets indicate prices are likely to remain elevated, according to the analysts. The impact has been passed down to consumers, who are seeing spikes in prices for gasoline, cooking oil, cereal and other staple household goods.

In the near term, higher prices could cause consumers to consider lower-cost alternatives, according to the researchers. For example, consumers may switch from wheat to other grains like rice, or demand could increase for more energy-efficient modes of transportation, such as electric vehicles, they said.

In the years ahead, global trade flows may be affected as businesses and countries may seek to reduce supply risks and exposures to potentially unreliable or adversarial trade partners. The eurozone may diversify natural gas supplies away from Russia, and wheat buyers in the Middle East may find alternative sources of grain, according to the Fed analysts.

Kazakhstan to Keep Sunflower Oil Exports Limit for 3 More Months

Kazakhstan plans to introduce quota for sunflower oil exports at 48k tons for June-August, according to Agriculture Ministry order draft published on government website.

  • In December, Kazakhstan announced limits for sunflower seeds at 125k tons through June and later changed limits for sunflower oil increasing them by 4k tons to 114k tons and cutting time till June 1

Egypt in Pact With ITFC to Fund Wheat, Oil Imports: Minister

Egypt has signed an agreement with the International Islamic Trade Finance Corp., increasing funding to $6b from $3b to finance Egyptian wheat and oil imports, supply minister Aly El-Moselhy says in interview with MBC.

  • Wheat imports have yet to burden the Egyptian central bank due to the deal with ITFC, according to minister
  • Government has bought 2.7m tons of wheat from local farmers so far, with a target of more than 5m tons of local wheat purchases in the 2022 season
    • Egypt has sufficient stockpiles until mid-October
  • Egypt secured 100k tons of raw sugar cane in international tender today to secure basic commodities distributed through ration cards for more than 60m registered individuals, minister said
    • 50k tons for arrival in June and rest for August

Less Wheat, More Barley Seen in Argentine Breadbasket: Exchange

Wheat planting for the 2022-23 season will shrink by 3% y/y while barley planting will expand by 6% in Argentina’s breadbasket region of southern-central Buenos Aires and La Pampa provinces, Bahia Blanca Grain Exchange analysts led by Julian Borisov say in a presentation.

  • Planting, which is just starting, will be 1.6m hectares (3.95m acres) for wheat and 800,000 hectares for barley
  • Farmers are switching to barley because of high prices and because it requires less costly fertilizer
    • That means margins for farmers in the region who pay field rental are better for barley versus wheat
    • The threat of increased taxes for wheat exports is also a factor

Argentina Farmers Forward Sell Record Volume of Wheat Amid Quota

Argentine farmers are selling wheat in forward contracts to exporters at a record pace, according to the Rosario Board of Trade.

  • Farmers have sold 17% of the projected 2022-23 crop vs. 13% at this stage last season and a five-year average of 8%
  • Rosario currently predicts a harvest of 21.3m metric tons
  • NOTES:
    • Farmers are just starting to plant wheat, with the harvest in November-December
    • Wheat exporters are piling into the Argentine crop register known as DJVE, according to Agriculture Ministry data
    • They’ve registered 8.2m tons vs. 2.4m at this stage last season and 1.4m in 2020-21
    • The rush to sell and register wheat cargoes comes after the government announced export quotas, with farmers and traders alike worried about missing out on shipments abroad

WHEAT/CEPEA: Wheat sowing advances in BR; domestic quotations continue to rise

The agents in the Brazilian wheat sector are currently focused on sowing the new crop. Last week, with the arrival of a severe cold front, farmers were monitoring crops. However, in Paraná, the cold weather may have favored wheat crops as it helped in the control of pests and invasive plants.

According to Deral/Seab, by May 16, 43% of the area allocated to wheat crops in Paraná had been sown. In Brazil, data from Conab show that 16.2% of crops had been sown by May 14. In Goiás, activities are over, in Mato Grosso do Sul, 92% have been sown; in Bahia, 60%; in São Paulo, 33%; and in Paraná, 26%.

Prices continue on the rise and setting nominal records in the regions surveyed by Cepea, still influenced by low supply in Brazil, lower production in Argentina and in Ukraine, and concerns about the reduction in the world supply. It is important to highlight that values have increased despite the dollar depreciation against the Real – which favors imports – and perspectives for higher production in Russia.

Data from Cepea show that, this month (until May 20), the monthly averages have been at record levels in the states in southern BR and in São Paulo, considering the price series that began in 2004. On the other hand, in real terms, the current monthly average in Rio Grande do Sul, of BRL 1,959.52/ton, continues at a record level (values were deflated by the IGP-DI). In Paraná, Santa Catarina and São Paulo, the real monthly averages have been the highest since 2013.

Amid high prices and low supply, deals were sporadic last week. Cepea surveys show that, between May 13 and 20, the prices paid to wheat farmers rose by 3.99% in RS, 3.45% in Paraná and 3.43% in Santa Catarina. In the wholesale market (deals between processors), quotations increased by 3.83% in Paraná, 2.77% in SC, 2.27% in RS and 2.12% in SP. The dollar dropped by 3.7% in the last seven days, to BRL 4.869 on May 20th.

Based on data from Conab (Brazil’s National Company for Food Supply), between May 9 and 13, the import parity price for the wheat from Argentina delivered to Paraná State was USD 447.87/ton. Considering the average of the US dollar in that period, at BRL 5.1263, the wheat imported was sold at BRL 2,295.91/ton, while for the Brazilian wheat traded in Paraná, the average was at BRL 1,989.37/ton, according to data from Cepea. In Rio Grande do Sul, the import parity for the product from Argentina would be of USD 420.82/ton (BRL 2,157.25/ton), against BRL 1,954.24/ton on the average of the state surveyed by Cepea.

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