Global Ag News for Feb 21.24

TOP HEADLINES

Biden Set to Delay Gasoline Policy Shift Meant to Boost Ethanol

The Biden administration is preparing to grant a policy shift intended to encourage greater sales of higher-ethanol E15 gasoline while delaying its effectiveness until 2025, according to people familiar with the plan.

• Under the change proposed last year, widely sold gasoline containing 10% ethanol, or E10, would no longer be partially waived from volatility limits meant to curb air pollution in some Midwestern states during the summer
• Change would put E10 on the same regulatory footing as higher-ethanol E15
  • Shift is expected to encourage more E15 sales in the Midwest while effectively requiring production of a new, less-volatile raw gasoline, or blendstock, for the region
• The Environmental Protection Agency had proposed the change taking effect in April 2024, in response to a binding 2022 petition from governors of corn- and ethanol-producing Midwestern states
  • Oil refiners and some elected officials have urged the EPA to further delay the shift to prevent supply shocks or price spikes — especially if there isn’t sufficient time to adapt between the rule’s finalization and June 1, when anti-smog volatility limits normally take effect
• The EPA will likely issue emergency waivers allowing wider E15 sales this summer to soften the blow, adopting a strategy used in 2023 and 2022, Agriculture Secretary Tom Vilsack said at a Renewable Fuels Association conference in San Diego
• Reuters earlier reported the planned delay; an EPA spokesman declined to comment because the proposed rule is in an interagency review process

FUTURES & WEATHER

Wheat prices overnight are down 3 in SRW, down 2 1/4 in HRW, down 3 in HRS; Corn is down 1 1/2; Soybeans down 6 3/4; Soymeal down $4.10; Soyoil down 0.02.

For the week so far wheat prices are up 17 1/4 in SRW, up 17 1/4 in HRW, up 7 in HRS; Corn is up 1 1/2; Soybeans up 1/2; Soymeal down $1.30; Soyoil down 0.18.

For the month to date wheat prices are down 29 in SRW, down 41 1/2 in HRW, down 35 1/2 in HRS; Corn is down 27 1/2; Soybeans down 56; Soymeal down $26.50; Soyoil down 0.64.

Year-To-Date nearby futures are down 7.6% in SRW, down 9.1% in HRW, down 8.6% in HRS; Corn is down 11.4%; Soybeans down 9.3%; Soymeal down 10.9%; Soyoil down 5.1%.

Chinese Ag futures (MAY 24) Soybeans up 1 yuan; Soymeal down 30; Soyoil down 14; Palm oil up 42; Corn up 18 — Malaysian Palm is up 3.  Malaysian palm oil prices overnight were up 3 ringgit (+0.08%) at 3863.

There were no changes in registrations. Registration total: 772 SRW Wheat contracts; 0 Oats; 6 Corn; 241 Soybeans; 125 Soyoil; 1 Soymeal; 81 HRW Wheat.

Preliminary changes in futures Open Interest as of February 20 were: SRW Wheat down 7,872 contracts, HRW Wheat up 1,274, Corn down 5,021, Soybeans down 1,061, Soymeal down 179, Soyoil down 1,465.

Brazil: Wet season showers in central Brazil exploded over the weekend, bringing heavy amounts to most of the region. Southern areas saw just some isolated amounts. The heavy rain is preferred as most of the safrinha corn planting has been completed and the region is short of subsoil moisture. Southern areas could use more rainfall, however. Scattered showers continue in much of the country through this weekend. A front coming north from Argentina will bring heavier showers this weekend into next week.

Argentina: Limited showers moved through over the weekend as a front moved through. A front moving through on Thursday should bring some needed showers and another Sunday into Monday should do something similar. A more active pattern is forecast in early March.

Europe: Scattered showers went through northern areas of the continent over the weekend but also hit parts of the southeast as well, including Italy. A large storm system will move through starting on Wednesday with widespread impacts throughout the continent. In addition to widespread precipitation, temperatures will drop across the western half of the continent, but only back to normal.

Australia: Scattered showers went through eastern New South Wales this weekend while the rest of the country was largely dry. Eastern areas will again see potential for showers this week. Southwestern areas will watch for the potential of tropical remnants to move through this weekend. Soil moisture is low in many areas well ahead of the harvest and subsequent wheat planting and will need much more rain to fall over the next couple of months.

Northern Plains: It was dry over the weekend with rising temperatures. It should be mostly warm and dry through the weekend. A larger storm system is likely to move through early next week with widespread precipitation possible, including some snow.

Central/Southern Plains: Some isolated snow moved through over the weekend but quickly melted off with rising temperatures. A system will move through Wednesday night and early Thursday with some limited showers. Otherwise it should be dry through the weekend. A larger system will move through early next week with potential for widespread precipitation and a brief drop in temperatures.

Midwest: A system moved through late last week and early this weekend with some scattered showers including some brief snow. Rising temperatures over the weekend melted off most of the new snow, however. Well above normal temperatures this week will mean that a system that comes through on Thursday will spread rain across the southern half of the region. A smaller clipper system may bring showers to eastern areas this weekend.

Delta: A system will move through on Thursday with scattered rain showers and continue the building of soil moisture in the region, as should a system for early-to-mid next week.

The player sheet for Feb. 20 had funds: net buyers of 8,000 contracts of SRW wheat, buyers of 2,500 corn, buyers of 3,000 soybeans, buyers of 2,000 soymeal, and sellers of 1,500 soyoil.

TENDERS

• CORN SALE: The U.S. Department of Agriculture (USDA) confirmed private sales of 155,000 metric tons of U.S. corn to Japan for shipment in the 2024/25 marketing year.
• CORN SALE: The Korea Feed Association (KFA) in South Korea purchased about 66,000 metric tons of animal feed corn expected to be sourced from South America or South Africa on Friday.
• WHEAT SALE: Jordan’s state grains buyer purchased about 50,000 metric tons of hard milling wheat to be sourced from optional origins in an international tender on Tuesday.
• SOYMEAL SALE: The USDA confirmed private sales of 228,000 metric tons of U.S. soymeal to the Philippines for shipment in the 2023/24 marketing year.
• BARLEY TENDER: Jordan’s state grains buyer has issued an international tender to purchase up to 120,000 metric tons of animal feed barley.
• FEED GRAIN TENDERS: Iranian state-owned animal feed importer SLAL has issued international tenders to purchase up to 120,000 tonnes of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 115,921 metric tons of food-quality wheat from the U.S., Canada and Australia in a regular tender that will close on Feb. 22.
• VEGETABLE OILS TENDER: Egyptian state grains buyer the General Authority for Supply Commodities (GASC) said on Tuesday it was seeking vegetable oils in an international tender for arrival March 25-April 15 and/or April 16-30. The deadline for offers is Feb. 22.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 88,800 metric tons of rice to be sourced from the United States and China.
• FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by Feb. 28 and arrive in Japan by March 21, via a simultaneous buy and sell (SBS) auction, which will be held on Feb. 21.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.

 

TODAY

 

US Inspected 919k Tons of Corn for Export, 1.186m of Soybeans

In week ending Feb. 15, according to the USDA’s weekly inspections report.

• Soybeans: 1,186k tons vs 1,342k the previous wk, 1,584k a yr ago
• Wheat: 381k tons vs 408k the previous wk, 374k a yr ago
• Corn: 919k tons vs 892k the previous wk, 624k a yr ago

US Corn, Soybean, Wheat Inspections by Country: Feb. 15

Following is a summary of USDA inspections for week ending Feb. 15 of corn, soybeans and wheat for export, from the Grain Inspection, Packers and Stockyards Administration, known as GIPSA.

• Soybeans for China-bound shipments made up 658k tons of the 1.19m total inspected
• Mexico was the top destination for corn inspections, Japan led in wheat

US to Approve E15 Gasoline Expansion Starting 2025: Reuters

The Biden administration will approve a request from a group of Midwest governors to allow year-round sales of gasoline with 15% ethanol, Reuters reports, citing two unidentified people familiar with discussions.

• Start date will be pushed into next year, Reuters says
• The one-year delay could put off potential price spikes and supply issues that could arise from the decision until after the US election, the people told Reuters
• The administration is expected to issue a decision by late March
• EPA declined to comment to Reuters

 Vilsack Sees Favorable Path for Ethanol Jet-Fuel Credits

US Secretary of Agriculture Tom Vilsack tells ethanol producers he’s pushing to ensure they can qualify for tax incentives aimed at encouraging production of more climate-friendly airplane fuel from farm crops including corn.

• “I’m working to make sure that as we create these incentives, they include room for climate smart agricultural practices,” he said at the Renewable Fuels Association’s annual ethanol conference in San Diego
  • “I’m confident that it will happen”
• NOTE: Comments come as the biofuels industry awaits a Biden administration update of the Energy Department’s GREET, a model for calculating greenhouse gas emissions
  • Revisions expected to be unveiled by March 1 will determine how easy or tough it will be for makers of sustainable aviation fuel (SAF) from farm products to take advantage of potentially lucrative tax credits
• Vilsack said he was puzzled by recent media reports, which he didn’t identify, about the upcoming GREET changes
  • Reuters reported last week that the White House is set to back a tougher climate model for ethanol, making it more difficult for producers to qualify for SAF tax credits
• Vilsack said American farmers are taking steps to improve their land and productivity, and the resiliency of their farms
  • “This GREET model I think reflects that”

 Brazil Soy Exports Seen Reaching 7.3 Million Tns In February Versus 7.55 Million Tns In Same Month A Year Ago- Anec

• BRAZIL SOY EXPORTS SEEN REACHING 7.3 MILLION TNS IN FEBRUARY VERSUS 7.55 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 1.86 MILLION TNS IN FEBRUARY VERSUS 1.28 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
• BRAZIL CORN EXPORTS SEEN REACHING 716,718 TNS IN FEBRUARY VERSUS 1.94 MILLION TNS IN SAME MONTH A YEAR AGO- ANEC
• BRAZIL WHEAT EXPORTS SEEN REACHING 715,863 TNS IN FEBRUARY VERSUS 522,988 TNS IN SAME MONTH A YEAR AGO- ANEC

 Brazil soybean production view cut as crop tour progresses – Agroconsult

Brazil’s 2023/2024 soybean crop estimate has been reduced to 152.2 million metric tons from the previous estimate of 153.8 million tons, agribusiness consultancy Agroconsult said on Tuesday, citing adverse crop weather in key producing states.

Agroconsult, which began a tour of Brazil’s main soy producing regions 33 days ago, said the expedition has so far covered almost 30,000 kilometers, representing 60% of the areas it intends to survey.

In Mato Grosso, Brazil’s biggest farm state, Agroconsult experts evaluated crops in the north, west, middle-north and southeast regions. The areas planted in the state between the beginning of September and mid-October, which correspond to around 40% of the total, were the most affected by high temperatures and low rainfall, Agroconsult said.

The areas planted in Mato Grosso throughout October and November have shown better potential, despite also being affected by adverse weather, according to the consultancy.  The average yield estimate for Mato Grosso was maintained at 52.5 bags per hectare, 17.7% below the previous harvest, Agroconsult said. Another state hurt by dry weather in December and January was Mato Grosso do Sul, Agroconsult said referring to fields in the south of that state.

After visiting farms there, Agroconsult lowered average yield forecast for Mato Grosso do Sul to 57.5 bags per hectare from 59 bags in the previous projection. In Parana and Rio Grande do Sul, where farmers reported dry weather in January and early February, average yields potential was cut to 58 and 53 bags per hectare, respectively, compared to 60 and 55.5 before the crop tour, Agroconsult said.

EU 2023/24 soybean imports 7.20 mln T by Feb. 13, rapeseed 3.54 mln T

European Union soybean imports so far in the 2023/24 season that started in July had reached 7.20 million metric tons by Feb. 13, data published by the European Commission showed on Tuesday.

The Commission said data was only available until Feb. 13 due to persisting technical issues.

Argentina grains waterway re-opened, but boats must limit loads

Argentina’s Parana River, a global grains thoroughfare, reopened to shipping traffic on Tuesday after a grounded boat was freed, though boats were told to load less grain while the damage to the channel was assessed.

Shipping traffic had been snarled after the ship Clara Insignia, loaded with wheat, ran aground near the waterway’s main channel and was stuck for several days, blocking the channel down river from the Rosario grains port hub.

The boat was freed late on Monday, but navigation remained closed earlier on Tuesday while checks were made on the shipping channel.

“Navigation is now freed up,” Guillermo Wade, the head of the maritime port chamber, told Reuters, adding that he had received notification from authorities that ships could go up the Parana again to the Rosario port terminals.

But although traffic was normalised, Wade said it was being “loaded at a lower shipping draft (less volume on the ships) because the dredging vessel is still working to improve the depth.”

Argentina is a leading exporter of processed soybeans, the No. 3 for corn and a major wheat producer. Some 80% of farm produce goes down the Parana river, a waterway that runs through Brazil, Paraguay, before arriving at the sea in Argentina.

Shipping traffic through the Parana is relatively light at this time of the year since transport of soybeans and corn mainly starts around April.

Russia May Export Up to 70m Tons of Grains in 2024: Minister

Russia plans to supply up to 70m tons of grain abroad in 2024, Agriculture Minister Dmitry Patrushev said in meeting with President Vladimir Putin broadcast late Tuesday.

• NOTE: Patrushev earlier estimated exports volume at 66m tons
• Sowing area in 2024 is increased by 300K ha to 84.5m ha
• Russia will start supplying pork to China this year

Russia says it shipped 200,000 tonnes of free grain to six African countries

Russia’s agriculture minister said late on Tuesday that Moscow had completed its initiative of shipping 200,000 metric tonnes of free grain to six African countries, as promised by President Vladimir Putin in July.

Russia shipped 50,000 tonnes each to Somalia and the Central African Republic and 25,000 tonnes each to Mali, Burkina Faso, Zimbabwe and Eritrea, Agriculture Minister Dmitry Patrushev told Putin during a meeting, according to transcript on the Kremlin’s website.

Putin had promised to deliver free grain to the six countries at a summit with African leaders in July, soon after Moscow withdrew from a deal that had allowed Ukraine to ship grain from its Black Sea ports despite the war Russia has been waging.

The deal, known as the Black Sea grain initiative, had helped lower prices on the global market. But Putin argued it was failing to get supplies to the countries in most urgent need.

“After the Russia-Africa summit, we have been maintaining relations (with African countries and building cooperation,” Patrushev told Putin. “As a result, we were able to deliver this volume of wheat to these countries quite quickly.”

He also told Putin that Russia expects to export up to 70 million metric tonnes of grain in the 2023-2024 agricultural year. In the previous season, Russia shipped 66 million tonnes worth almost $16.5 billion, he added.

The 2023-2024 agricultural year started July 1, 2023, and lasts until June 30, 2024.

LIVESTOCK SURVEY: US Cattle on Feed Placements Seen Down 12.3%

January placements onto feedlots seen falling y/y to 1.69m head, according to a Bloomberg survey of ten analysts.

• Would be the biggest y/y drop since April 2020
• Estimates range from -18.4% to -6% y/y change
• Feedlot herd as of Feb. 1 seen rising by 0.1% y/y to 11.72m head
• Marketings seen falling 0.2% y/y

Peru reports bird flu outbreak on laying hens farm, WOAH says

Peru has reported an outbreak of the highly pathogenic bird flu virus on a laying hens farm in the department of La Libertad in the northwestern part of the country, the Paris-based World Organisation for Animal Health (WOAH) said on Tuesday.

The virus killed 4,000 birds and the rest of the 27,000-strong flock were slaughtered, WOAH said, citing a report from the Peruvian authorities.

Chicken Profits Surge on Higher Prices and Lower Costs, BMO Says

Chicken processing profits have surged in the US as producers including Pilgrim’s Pride Corp. benefit from higher prices and lower feed costs, according to BMO Capital Markets Corp.

So-called cutout margins in the industry more than doubled in January from a year earlier and continued to expand in February, rising above the historical average for the period, BMO analysts Andrew Strelzik and Benjamin Mayhew wrote in a note to clients. Producers have taken advantage of stronger consumer demand, a reduction in inventories and cheaper supplies of grain, they said.

The profitability surge brings much-needed relief to an industry that saw earnings plunge last year amid spiking costs and a supply glut. It’s an indication that the worst is behind it, and is in contrast with the beef sector, where meatpackers’ margins remain severely constrained by the lowest cattle availability in roughly seven decades.

Shares of Pilgrim’s Pride rose as much as 2.1% on Tuesday to the highest intraday level since August 2022.

American Biofuels Boom Has Crop Trader Andersons Eyeing M&A

Crop trader The Andersons Inc. is ready to expand its renewable-fuels business.

The Ohio-based company is “actively pursuing opportunities for growth in the renewables space, including carbon-reduction plans,” it said in a statement Tuesday announcing fourth-quarter earnings.

Renewable diesel, which is similar to the petroleum-based version but made with plant-based oils and animal fats, has been a boon for crop traders as demand soars for cleaner energy. Efforts to turn corn-based ethanol into a climate-friendly jet fuel could also be a long-term tailwind for farm suppliers.

The Andersons said it produced record amounts of ethanol in the fourth quarter. Increasing world crop supplies as well as global instability also mean “fundamentals are shifting” to benefit the company’s network of grain elevators, which it uses to ship supplies where they’re needed.

“Across our businesses, we have a robust pipeline of opportunities that include both investment in our facilities and M&A with a strong balance sheet to support this growth,” the company said in the statement.

It will hold a conference call with investors at 11 a.m. New York time on Wednesday.

Chinese Phosphate Export Potential Perks Up

As fertilizer prices stabilize amid crop-price declines, phosphate affordability for farmers reached its worst level of the past decade. China, the marginal producer, is expected to return to the global phosphate market with exports by the end of 1Q. Buyers in North America will be met with less competition and more supply in 2Q, after South America stepped back after their planting season ebbed in 4Q. A 4Q23 ban on phosphate exports from China firmed global prices. We estimate an integrated Chinese producer can manufacture at $427 a metric ton. Publicly traded Mosaic and Nutrien are the largest phosphate producers in the US.

As of mid-February, DAP had reached its most expensive in the past 10 years in terms of bushels of corn required to purchase a metric ton of fertilizer.

US Spring Fertilizer Season Starts Early as Imports Rise Broadly

Ammonia prices in the US were stable to soft as warm weather prompted early spring applications. US fertilizer imports tracked above last year for all products, while phosphate affordability deteriorated to the worst in 10 years. Chinese phosphate exports could return to the global market by the end of 1Q.

 

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