Explore Special Offers & White Papers from ADMIS

Global Ag News for Nov 4.22

TOP HEADLINES

Agricultural Groups Urge Congress Action to Duck Rail Strike

Some of America’s top agricultural commodity traders and agricultural transporters call on congressional leaders to take swift action to avert a rail strike.

  • A strike or lockout “would be catastrophic for the agricultural and broader US economies. Congress must act to prevent this from occurring if the parties cannot reach agreement,” they say in a letter to Democratic leaders Nancy Pelosi and Chuck Schumer and Republicans Kevin McCarthy and Mitch McConnell
  • Resolution of this dispute prior to Nov. 19 is necessary to ensure rail service continues uninterrupted,” letter says
  • “Adding urgency to this matter, critical inputs and agricultural products such as ammonia shipments could be embargoed starting on Nov. 14”

FUTURES & WEATHER

Wheat prices overnight are up 10 1/2 in SRW, up 13 in HRW, up 13 in HRS; Corn is up 5; Soybeans up 12; Soymeal up $0.44; Soyoil up 0.73.

For the week so far wheat prices are up 21 3/4 in SRW, up 29 1/4 in HRW, up 11 in HRS; Corn is up 3 1/2; Soybeans up 48 3/4; Soymeal down $0.67; Soyoil up 4.23.

For the month to date wheat prices are down 31 1/4 in SRW, down 24 1/2 in HRW, down 25 1/4 in HRS; Corn is down 7 1/4; Soybeans up 29 1/2; Soymeal down $9.40; Soyoil up 2.81.

Year-To-Date nearby futures are up 10% in SRW, up 19% in HRW, down -3% in HRS; Corn is up 15%; Soybeans up 8%; Soymeal up 2%; Soyoil up 35%.

Chinese Ag futures (JAN 23) Soybeans up 31 yuan; Soymeal down 7; Soyoil up 24; Palm oil down 42; Corn up 14 — Malaysian palm oil prices overnight were up 36 ringgit (+0.83%) at 4373.

There were changes in registrations (-10 Soymeal). Registration total: 3,077 SRW Wheat contracts; 0 Oats; 0 Corn; 445 Soybeans; 39 Soyoil; 278 Soymeal; 5 HRW Wheat.

Preliminary changes in futures Open Interest as of November 3 were: SRW Wheat up 2,594 contracts, HRW Wheat down 1,190, Corn up 12,040, Soybeans up 3,063, Soymeal up 5,065, Soyoil up 4,827.

Northern Plains Forecast: A cold front continues to slide through the Northern Plains early Thursday. Most of the precipitation is occurring in Canada or down in the Central Plains, but some showers may move through, which would be a mix of rain and snow. A stronger system is expected to move through the region early- to mid-next week that could bring some accumulating snow and strong winds.

Central/Southern Plains Forecast: A cold front will slide through the Central and Southern Plains Thursday and Friday with scattered showers, some of which may be severe. Wheat in the west, which is in poor condition, is going to get passed over for the most part.

Midwest Forecast: It continues to be very warm in the Midwest for the next several days. A front will slide through with scattered showers through Saturday. Another system will largely bypass the region off to the north early next week, but a secondary push will come later next week, which will bring scattered showers and cooler temperatures.

Brazil Grains & Oilseeds Forecast: Dry conditions continue for Brazil into next week. Showers will eventually work back into central Brazil in the middle of next week, but will take to the end of next week for southern states. Soil moisture in the south continues to be very favorable and can withstand a period of dryness as long as it is not too severe for too long. Overall, conditions are still mostly favorable for corn and soybean establishment in most areas for now.

Argentina Grains & Oilseeds Forecast: Dry weather continues in Argentina through early next week with isolated showers moving back into the country in the middle of next week. The long period of dryness continues to have a significant effect on filling wheat as well as corn and soybean planting and establishment.

The player sheet for Nov. 3 had funds: net sellers of 1,000 contracts of SRW wheat, sellers of 5,500 corn, sellers of 4,500 soybeans, sellers of 4,500 soymeal, and  sellers of 1,000 soyoil.

TENDERS

  • BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
  • WHEAT PURCHASE: Iraq’s state grains buyer purchased about 150,000 tonnes of wheat expected to be mainly sourced from Canada, Lithuania and possibly Australia in an international tender this week

PENDING TENDERS

  • SOYMEAL TENDER: Leading South Korean animal feed maker Nonghyup Feed Inc (NOFI) has issued an international tender to purchase up to 60,000 tonnes of soymeal
  • RICE TENDER: South Korea’s Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 50,500 tonnes of rice to be sourced from the United States
  • MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins

interconnected globe

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 Oct. 27, according to data on the USDA’s website.

  • China bought 745k tons of the 830k tons of soybeans sold in the week
  • Mexico was the top buyer of corn and South Korea led in 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 Oct. 27, according to data on the USDA’s website.

  • Mexico and China combined for 24.5k tons of the 48.4k tons of pork sold in the week
  • Japan led in beef purchases

Brazil Protesters Allow Grain Trucks to Enter Paraguana Port

Protesters allowed traffic to pass on the main road to Paranagua Port around 6:30am local time, the Port Authority says in a note.

  • Reception of trucks carrying soybeans, soy meal and corn improved Thursday morning, with 242 vehicles having access to the Port through 9am
  • On Tuesday and Wednesday, only 101 trucks entered Paranagua Port, one of the main export terminals in the nation
  • Port access was blocked by protesters backing President Jair Bolsonaro since Monday following his defeat on Brazil elections
  • Around 1,200 trucks are scheduled to arrive at the port through the end of Thursday

China Prepares to Buy Brazilian Soymeal to Diversify Supplies

  • At least 30 facilities applied, 14 have been approved
  • Decisions comes after China approved Brazil corn imports

China is preparing to import soybean meal from Brazil as part of broader efforts to diversify sources of the animal feed ingredient, ease a near-term supply shortage and curb inflation risks.

Traders are taking steps to bring in the first Brazilian soymeal shipment to China after Beijing gave the go-ahead a couple of months ago. Even though the initial volumes may be small, the move represents another step in Beijing’s efforts to find new sources of agricultural supplies to bolster its food security.

The decision, coming soon after China opened its market to Brazil corn imports, is another boost to trade between the world’s biggest agricultural exporter and the biggest buyer of soybeans. Brazil is the world’s second-biggest soymeal exporter, behind Argentina, shipping 20.25 million tons in the 2021-22 marketing year. China only imported 60,000 tons from the global market over that period.

China doesn’t usually import soymeal, instead buying massive quantities of beans from Brazil and the US to crush into meal for livestock feed and cooking oil for its food services sector. Smaller purchases earlier in the year contributed to a soymeal shortage, with prices soaring to a record in some provinces.

China has approved 14 Brazilian facilities to ship soymeal, including some that belong to Bunge Ltd., Olam Group Ltd. and Coamo, one of the world’s largest agricultural cooperatives, according to a list published recently on the Chinese customs website. This indicates that China could become a bigger buyer of soymeal when margins are profitable.

At least 30 sites applied to the Brazilian Ministry of Agriculture for a license to export soymeal to China, according to people familiar with the matter, who asked not to be identified as they’re not authorized to speak publicly. In addition to the 14 approved, five are under review, three are waiting to be reviewed, two have issues to fix and three were denied, which may soon bring the total number of authorized facilities to more than 20.

Argentina Crop Belt to See Another Week of Dryness: Exchange

Argentina’s Pampas growing belt won’t receive any rain over the week of Nov. 3-9, according to weather maps in a Buenos Aires Grain Exchange report.

Argentine Corn, Wheat Crop Estimates Latest: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

  • 2022-23 wheat production est. lowered by 1.2m tons to 14m tons
  • 2022-23 corn area maintained at 7.3m ha, with 23% of planting complete
  • The following table compares most current data to previous week and last year’s crop:

Argentina Wheat Estimate Slashed 7.9%, May Fall Further: Bourse

The Buenos Aires Grain Exchange slashed its wheat production estimate to 14m metric tons from 15.2m after a new bout of frosts encompassing Argentina’s breadbasket region that accounts for a third of acreage, it said in a weekly report.

  • The estimate has now fallen 32% from the exchange’s early-season figure in May of 20.5m
    • “Depending on the severity of the damage, our forecast could fall further”
  • In the ‘zona nucleo’, another key wheat region north of the breadbasket, the harvestable area is shrinking as drought-and-frost-fueled losses mount
  • CORN:
    • Planting just 23% complete vs. an average of 50% at this point in the season in previous years
    • In the zona nucleo, seeding of the first corn crop has finished
    • In Cordoba province, rains are needed to be able to fertilize the first crop and then seed the second crop

Corteva Sees 2023 Ag Fundamentals as Strong

Corteva released third-quarter results Thursday. The company expects record demand for grain and oilseeds in 2022, which should support commodity prices as ending stocks remain under pressure.

2023 expected to see continued macroeconomic pressures

“Look ahead to 2023, we expect the near-term operating environment to remain dynamic. While the outlook for ag fundamentals is strong, macroeconomic pressures are expected to continue, including currency and inflation headwinds,” the company said.

Farmers seen prioritizing top-tier technologies

“In this environment, we remain focused on executing our strategic plan and serving customers. We believe farmers will continue to prioritize top-tier technologies to increase productivity on the farm,” said Chuck Magro, Corteva chief executive.

Ag outlook remains robust

The outlook for agriculture remains robust despite recent commodity price volatility. The company expects record demand for grain and oilseeds in 2022, which should support commodity prices as ending stocks remain under pressure.

Grower balance sheets and income levels remain healthy despite increased input costs for fuel and fertilizer, leading farmers to prioritize technology to maximize return.

US Crops in Drought Area for Week Ending Nov. 1: USDA

The following shows the percent of US agricultural production within an area that experienced drought for the week ending Nov. 1, according to the USDA’s weekly drought report.

  • Winter wheat area experiencing moderate to intense drought remained at 74% in the week
  • Both soybean and corn areas at 71%

IHS Markit sees U.S. 2022 corn yield at 172.9 bu/acre -traders

Private analytics firm IHS Markit Agribusiness on Thursday raised its estimate of the U.S. 2022 corn yield to 172.9 bushels per acre (bpa), up from its Oct. 6 estimate of 171.2 bpa, according to traders and portions of an IHS client note seen by Reuters.

For soybeans, IHS Markit, part of S&P Global Commodity Insights, forecast the average U.S. yield at 50.3 bpa, up from 49.9 bpa last month.

Brazil Soy Exports Seen Reaching 3.566 Million Tns In October – Anec

  • BRAZIL CORN EXPORTS SEEN REACHING 6.240 MILLION T IN OCTOBER VERSUS 1.873 MILLION T IN OCTOBER 2021- ANEC
  • BRAZIL SOY EXPORTS SEEN REACHING 3.566 MILLION TNS IN OCTOBER VERSUS 2.985 MILLION TNS IN OCTOBER 2021 – ANEC
  • BRAZIL SOYMEAL EXPORTS SEEN REACHING 1.817 MILLION TNS IN OCTOBER VERSUS 1.337 MILLION TNS IN OCTOBER 2021 – ANEC

Brazil soy harvest may fall below 150 mln T due to La Nina – HedgePoint

Soybean production in Brazil could fall below 150 million tonnes in the 2022/2023 crop year due to the effects of the La Nina weather phenomenon in South America, a HedgePoint analyst warned on Thursday, saying it could slightly lower initial projections for a record harvest.

Based on models from the European Centre for Medium-Range Weather Forecasts (ECMWF), HedgePoint expects La Nina will be active between December and January, which tends to bring drought to the south of Brazil, the world’s biggest soy supplier.

Official government projections suggest that Brazil’s soybean crop will to grow by 21.3% to a record 152.35 million tonnes.

“The scenario calls for caution… We are definitely still on the way to a record crop for now, but perhaps not as high as initially thought,” Pedro Schicchi, an analyst with the firm HedgePoint, said in a note.

For the other regions of the country, the prospects are better in relation to the weather, HedgePoint said.

Soy planting is still underway, but delays in certain parts of the country could affect the cultivation of second crop corn, which is sown after the soybean harvest in the same areas.

“A cold front, which should hit the south of Brazil in particular next week, may lead some farmers to postpone planting a little longer [there],” Schicchi said.

India Edible Oil Imports to Ease in 2022-23 on Record Stockpiles

India’s edible oil imports may slip to 13m to 13.5m tons in the year that started November, compared with an estimated 14m tons in 2021-22, B.V. Mehta, executive director of the Solvent Extractors’ Association of India, said at an industry conference in Bali.

  • This is due to record stockpiles of 2.6m tons as of Nov. 1 and expectations for a normal oilseed crop this year
  • Domestic edible oil consumption is expected to grow by 2%-3% in next five years
    • Demand is estimated to be in range of 25.5m to 27m tons by 2025-26
  • India’s oilseed production may increase to 38m to 40m tons by 2025-26 from 30m tons currently
  • Vegetable oil availability may increase 3m tons to 13.5m-14m by 2025-26
  • High sunflower oil prices in global and local markets have reduced India’s demand; shortfall is partially replaced by other edible oils like palm olein and rice bran oil

Palm Oil’s Big Discount to Soybean Oil Not Sustainable: Mielke

Palm oil’s large discount to soybean oil may shrink as prices of competing vegetable oils may ease in the first half of 2023, according to Thomas Mielke, executive director of Hamburg-based Oil World.

  • NOTE: Soybean oil’s premium over palm climbed to record $757/ton this week, compared with avg of around $315 in past year
  • Palm oil prices are unlikely to fall back to recent lows during Oct.-Dec., Mielke said at an industry conference in Bali on Friday
  • Ample oilseed supplies and sharply higher crushings will reduce oilseed prices by $100-$200 a ton from current levels, soybean oil from Argentina may drop by $250
    • Palm oil’s discount will narrow in 2023, as there’s little downward potential for prices
  • Production of palm oil in Indonesia, the world’s biggest grower, seen +2.2m tons in the year through September
    • Malaysian output may rise by 300,000 tons
    • Global demand for Indonesian palm oil will increase in 2022-23 and in the coming years due to insufficient output growth in Malaysia and the rest of the world
  • Palm oil’s annual production growth is expected to slow to 2.3m-2.5m tons in the decade to 2030, compared with 2.9m in 10 years to 2020
  • Investors’ focus will continue to be on China’s economy, its policies and the Covid situation
  • Global demand for soybeans are strong, but supplies, mainly from South America, are ample
  • Sunflower seed production may fall by 4m tons to 54m in 2022-23
  • Indonesia biodiesel production seen hitting a new high of at least 8.7m tons in 2022
  • US biodiesel output seen at an all-time high, probably exceeding 10m tons in 2022 and rise further in 2023; biodiesel production in Brazil set to rise to at least 6m tons in 2023, from 5.3m in 2022

Mistry Boosts Palm Oil Forecasts as War in Ukraine Continues

  • Prices will trade at 3,500-4,500 ringgit a ton until end-March
  • War in Ukraine may last longer than expected, lifting palm oil

With peace in the Black Sea region still elusive, one of the most influential traders in the global palm oil market is turning less bearish.

The tropical oil will likely trade between 3,500 ringgit ($738) and 4,500 ringgit a ton through the end of March, according to Dorab Mistry, who has traded palm for more than four decades and accurately predicted an earlier slump in prices this year. Benchmark futures in Malaysia were at about 4,455 ringgit Friday.

Mistry, who’s director at Godrej International Ltd., boosted his forecasts from September when he predicted that palm oil would slide to 2,500 ringgit by the end of the year as production ramped up and demand was languishing. It was also based on his view that the war in Ukraine would end by Christmas.

“In recent weeks we have seen an escalation and now it looks like we may not have a cease fire by Christmas,” Mistry said in slides prepared for an industry conference in Bali. “Unless Brent crude falls to $70 per barrel and the ringgit improves, I no longer expect palm futures to go to 2,500 ringgit.”

Russia’s invasion of Ukraine, which started eight months ago, has disrupted Ukraine’s exports of sunflower oil, a substitute of palm. In the latest twist, Moscow agreed on Wednesday to resume a deal allowing safe passage of Ukrainian crop exports after announcing over the weekend that it would suspend its role in the agreement, sowing chaos through agricultural markets.

Mistry had correctly predicted that palm oil would sink to 5,000 ringgit by June. But his September forecast for a steeper slump in prices has been disrupted by the “super strong” dollar and a weak Malaysian currency, Mistry said in the presentation. He added that palm is very competitive at the moment.

Prices climbed to a four-month high this week on expectations of increased buying as the tropical oil has become much cheaper than rival vegetable oils. The spread between palm and soybean oil has ballooned to a record.

More details from Mistry’s presentation:

  • Malaysia will produce 18.2 million to 18.5 million tons of palm oil this year. Top grower Indonesia will produce 2 million to 2.5 million tons more than last year.
  • India has imported too much palm and its monthly purchases will slow in November and December. The government may raise import duties but only after Gujarat elections.
  • India’s total edible oil imports may ease to 13.87 million tons in 2022-23 from 14.23 million a year earlier.
  • Stronger biodiesel mandates from Brazil and US will be bullish for soybean oil.

Palm Oil Prices May Drop to 3,500 Ringgit a Ton: Pakistan Group

Palm oil will probably trade between 3,500 ringgit and 3,800 ringgit/ton through December before improving, Abdul Rasheed Jan Mohammed, chairman of Pakistan Edible Oil Refiners Association, said at conference in Bali.

  • Market needs to “correct” to create demand
  • NOTE: Benchmark futures at 4,392 ringgit/ton on Thursday
  • Pakistan has booked 708,000 tons of soybeans for arrival in January to May 2023; for Oct to Dec. 2022, it booked around 588,000 tons
  • Booked 172,000 tons of canola seeds for January to March 2023
  • Canola seed supply from Canada was a huge challenge
  • Pakistan bought rapeseed from Black Sea and Australia although supplies are being delayed

Indonesia targets sugar self-sufficiency in 5 yrs, eyes ethanol production

Indonesia will expand its sugar plantation area to try to become self-sufficient in the next five years and is eyeing development of renewable sugar-based ethanol afterwards, President Joko Widodo said on Friday.

While inspecting a sugarcane plantation owned by ethanol producer Energy Agro Nusantara, controlled by state plantation firm PTPN X, the president said he aims to expand Indonesia’s sugar cultivation area to 700,000 hectares (1.73 million acres).

“If we could really prepare 700,000 hectares, we will be self-sufficient in sugar in the next five years. And I will prepare the 700,000 hectares,” he said.

Indonesia currently has 180,000 hectares of sugarcane plantations, said Jokowi, as the president is popularly known.

The country of 270 million people is among the world’s biggest importers of raw sugar.

“Once this is achieved, some of the sugar can be made, whether via making molasses or directly, into ethanol, which we will begin with E5,” Jokowi said, referring to a blend of up to 5% ethanol with fossil fuel.

The programme could later be expanded to use a higher blend like E10 or E20, much like how Indonesia has increased the mix of palm oil-based biofuel into its diesel fuel, called B30, Jokowi said, without giving a timeframe.

Indonesia, the world’s biggest producer and exporter of palm oil, is currently conducting a road test for B40.

Malaysia Palm Oil Stockpiles to Extend Surge to Three-Year High

  • October inventories rise 7.5% m/m to 2.49 million tons: survey
  • Rising stockpiles may hurt sentiment in global palm oil market

By Anuradha Raghu (Bloomberg) —

Palm oil stockpiles in Malaysia likely continued to swell to a three-year high as production in the world’s second-biggest grower increased.

Inventories expanded 7.5% in October from a month earlier to 2.49 million tons, according to the median of 11 estimates in a Bloomberg survey of analysts, traders and plantation executives. That would be the highest since early 2019 and a fifth straight monthly increase.

The surge comes as Malaysia production ramped up and exports faced pressure from top producer Indonesia, which has been accelerating shipments to reduce its own stockpiles. Swelling inventories in Malaysia could hurt sentiment in the palm oil market after prices jumped almost 20% in Kuala Lumpur last month.

Malaysia’s production probably rose 2.5% in October to 1.82 million tons, a two-year high, according to the survey. Exports likely increased 4.9% to 1.49 million tons, the highest in a year, but slower than a 9% jump in September.

Benchmark futures rose 2.1% by the midday break on Friday, taking gains this week to 11% and on track for the highest close in four months. Palm oil has become much cheaper than rival vegetable oils, bolstering demand.

More details from the survey:

  • Stockpile estimates range from 2.38 million to 2.57 million tons, while production ranged from 1.77 million to 1.88 million tons
  • Export forecasts are from 1.39 million to 1.53 million tons
  • Imports may fall to 123,500 tons from 132,303 tons in September
  • Local consumption estimates range from 245,000 to 312,000 tons

U.S. EPA considering expanding Midwest E15 gasoline sales -sources

The U.S. Environmental Protection Agency plans to seek public comment on whether to allow year-round sales of higher ethanol gasoline blends in Midwest states, based on a request from state governors that they say would ease pump prices and help farmers, according to three sources familiar with the discussions.

The move to expand sales of E15 would be a win for the ethanol industry, which wants to increase sales of the corn-based fuel and which argues the product would reduce gasoline prices by expanding the volume of available supply.

However, critics of the idea – including those in the refining industry – have voiced concerns that a piecemeal approach to growing E15 sales could introduce logistical distribution challenges.

The EPA could start seeking comment as soon as this month, said the sources.

The refining industry has traditionally balked at efforts to expand the ethanol market because it competes for space in the fuel tank and can be costly to blend.

The EPA did not respond to requests for comment.

The EPA enforces a summertime ban on E15 over concerns it contributes to smog in hot weather, though research has since shown the 15% blend may not increase smog relative to the more common E10 sold year-round. E10 contains 10% ethanol.

In April, governors from major corn-producing Midwestern states including Iowa, Nebraska and Illinois requested that the EPA effectively lift the ban in their states. EPA head Michael Regan said in September the agency intends to act on the request before next summer.

Critics say allowing a different fuel grade in a region that is serviced by a select amount of pipelines can create shipping challenges.

The biofuel industry has faced legal hurdles in expanding U.S. E15 sales in the past.

A federal appeals court last year struck down an effort by former President Donald Trump’s administration to allow year-round E15 sales, arguing it did not have the authority, a decision that had been sparked by a challenge from the refining industry

Nutrien sticks to fertilizer expansion plan despite farmers balking at high prices

Nutrien Ltd NTR.TO, the world’s biggest fertilizer producer, intends to follow through on plans to expand production capacity of potash and nitrogen, despite a sharp pullback in potash demand due to high prices, its chief executive said on Thursday.

“We view this as a temporary lull and our confidence in the outlook for the fundamentals of our business has not changed,” CEO Ken Seitz said on a conference call.

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