Global Ag News for Apr 29.24

TOP HEADLINES

Russian state weather forecaster sees drought threat in May in part of ‘breadbasket region’

Russia’s state weather forecaster said on Saturday it sees a threat of drought persisting in May in the eastern half of the Southern Federal District, one of the country’s key regions for wheat cultivation and exports.

“On the predominant territory of the European part of Russia …conditions for spring sowing operations and vegetation of most agricultural crops will be mainly close to average,” Hydrometcentre said in a weather forecast for May.

“But in the eastern half of the Southern Federal District against the background of a possible deficit of precipitation the threat of drought will remain.”

Conditions in May for spring sowing in the Asian part of Russia, in the Urals and Western Siberia – and for the vegetation of winter grain crops – are satisfactory, it said.

Industry analysts have already started lowering grain crop forecasts amid dry weather in the south of the country.

Roman Vilfand, scientific director of the Russian Hydrometeorological Centre, on Friday described the weather situation for crops as “generally normal”, noting that it was satisfactory in the Southern and North Caucasus districts, but marginally favourable in some of their areas.

As of April 19, farmers had seeded 3.3 million hectares of grains compared to 3.8 million hectares in the same period in 2023. That included 0.6 million hectares of spring wheat, compared to 1.0 million last year, the Sovecon agency said.

Russia’s grain harvest in 2024 may drop to 132 million metric tons from 144.9 tons in 2023, the Russian Agriculture Ministry said last week.

FUTURES & WEATHER

Wheat prices overnight are down 10 1/2 in SRW, down 2 3/4 in HRW, down 1/2 in HRS; Corn is down 1/4; Soybeans up 5; Soymeal up $1.50; Soyoil up 0.23.

Markets finished last week with wheat prices up 24 1/2 in SRW, up 49 in HRW, up 40 1/4 in HRS; Corn is unchanged; Soybeans up 5 3/4; Soymeal up $1.40; Soyoil up 0.11.

For the month to date wheat prices are up 36 in SRW, up 70 in HRW, up 50 in HRS; Corn is down 4 3/4; Soybeans down 23; Soymeal up $5.20; Soyoil down 2.71.

Year-To-Date nearby futures are down 5.4% in SRW, up 0.5% in HRW, down 3.6% in HRS; Corn is down 6.7%; Soybeans down 9.9%; Soymeal down 11.3%; Soyoil down 5.5%.

Chinese Ag futures (JUL 24) Soybeans down 10 yuan; Soymeal down 4; Soyoil up 60; Palm oil up 108; Corn down 9 — Malaysian Palm is down 1.  Malaysian palm oil prices overnight were down 1 ringgit (-0.03%) at 3895.

There were no changes in registrations. Registration total: 438 SRW Wheat contracts; 0 Oats; 10 Corn; 499 Soybeans; 710 Soyoil; 26 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of April 26 were: SRW Wheat down 9,103 contracts, HRW Wheat down 12,687, Corn down 39,164, Soybeans down 32,868, Soymeal down 16,661, Soyoil down 9,182.

Northern Plains: Scattered showers and moderate rain fell across the Dakotas over the weekend, being much lighter in Montana. The region will be more widespread active this week as a system moves through on Monday night and Tuesday with another for Wednesday and Thursday and yet another this weekend or early next week. The active weather will make it difficult to get out into the field in some areas, but help to ease the remaining drought and add soil moisture.

Central/Southern Plains: Heavy rain and severe storms littered the region over the weekend, causing some areas of flooding and storm damage. Southwestern areas did not receive much precipitation, however. The pattern continues to be active with multiple storm systems moving through over the next two weeks, keeping planting slower and aiding soil moisture in many areas. The southwest is not in a favored location for getting precipitation into the area this week as the weather continues to trend away from them and to others farther north and east. Wheat conditions are likely to fall some more in most of these areas.

Midwest: Two storm systems moved through the region over the weekend, bringing heavy rain to the southwest and some severe weather. The second system continues through Monday. But the pattern stays active and the gap between storms remains short as another will move through some areas on Tuesday with another for Wednesday through Friday and another eyeing the region for early next week. Long-term deficits are being eroded quickly in some areas, like Missouri, but wet field conditions are going to slow planting down quite a bit. Not all areas are getting the heavy rain though, and may find some gaps between thunderstorms to continue working. The water is likely to be needed for the summer though, which should be overall beneficial.

Delta: Scattered showers went through over the weekend and a front will bring heavier rain through on Monday. The region continues to be fairly wet, but the gaps between rains has been longer than areas farther north and west. Even still, planting progress has been quick this spring. Scattered showers will be moving through at times, though and slow down additional progress.

Canadian Prairies: Scattered showers went through over the weekend but were not very widespread. An active pattern will bring multiple storm systems through the region over the next two weeks, which may be helpful for bringing additional moisture over the expansive drought, but slow planting progress and could contain some snow in the cooler air at times.

Brazil: Much of the safrinha corn growing areas will be dry for the foreseeable future, though far northern areas may see some isolated showers at times. That means that it will also be hot, which will force corn to draw upon its limited subsoil moisture as the crop goes through the rest of pollination and grain-fill. Damage to the crop will become more apparent with time. Rio Grande do Sul, which is in the midst of corn and soybean harvest in the far south, is seeing fronts waffle around in the region that will keep them wet through next week, disrupting the remaining harvest and make planting of winter wheat difficult. Those fronts may get into the far southern safrinha growing areas of Parana and southern Mato Grosso do Sul, but that is not forecast to amount to very much.

Argentina: A front will continue to waffle around northern Argentina through next week as disturbances move through the country. Those disturbances will bring occasional showers to southern areas but heavier rain farther north with the front. That will make corn and soybean harvest more difficult where the rain occurs. Cold air will build behind the front this week and may lead to frosts.

Europe: Scattered showers moved back through western areas over the weekend, which is bad news for the UK and France which continue to be too wet, but favorable for Spain. A system will continue to spin in the region through much of hte week, but eventually transfer showers across the south later this week. Another system likely goes through the continent this weekend into next week with more rain. Temperatures will be generally warmer for the next week outside of Spain where it will be cooler. That largely flips for next week.

Black Sea: Isolated showers fell in eastern Ukraine over the weekend, but most areas were unfavorably dry. The front that brought the showers moves through southwestern Russia for Monday and Tuesday, but with limited showers. Southern areas may be blessed with more showers later this week and weekend. But a front will move through next week that could bring some cold temperatures. It might be cold enough for frost, but cooler temperatures would be beneficial for reducing moisture demand for dry soils.

Australia: It was dry over the weekend. A system may bring some showers through western areas on Tuesday and Wednesday, which some showers may develop on the east coast. There is some potential for a system to make its way through eastern areas late this week and weekend, which would bring some beneficial rain if it does. Wheat planting continues to increase and the hope for better soil moisture will grow as El Nino continues its march toward La Nina over the next couple of months.

The player sheet for 4/26 had funds: net buyers of 1,500 contracts of SRW wheat, sellers of 2,000 corn, buyers of 2,000 soybeans, and sellers of 1,500 soymeal.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 116,900 metric tonnes of rice.
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.
• WHEAT TENDER: Turkey’s state grain board TMO issued an international tender to sell and export 100,000 metric tons of durum wheat

 

 

TODAY

Canada Crushed 961K Tons of Canola in March: StatsCan

Canola processing rose 4.2% in March from a year ago, according to Statistics Canada data released Friday on agency’s website.

• Oil production totaled 411k tons, and meal output at 554k tons
• Aug.-March crushings up 11.3% from year ago to 7.373m tons

 

China’s Top Corn Region to Cut Acreage as Farmers Switch to Soy

China’s corn acreage in its top growing region is expected to fall this year, as farmers worry about oversupply and switch to soybeans to benefit from government subsidies.

Corn plantings in the northeast may drop as much as 3%, Cofco Futures Co. said in a note on Monday, citing results from a recent tour. The region, comprising Heilongjiang, Liaoning, Jilin and Inner Mongolia, accounts for nearly half of China’s crop, which is due to be harvested in October.

China produced a record 289 million tons of corn last year, and in January prices plunged to their lowest since September 2020. At the same time, the authorities are working to increase yields, which could mitigate the impact of reduced plantings. The nation is also trying to raise output of oilseeds like soybeans to reduce its reliance on overseas supplies.

The government is stockpiling more domestic corn to support prices as well as restricting imports.

US share in China’s soybean market to dwindle as Argentina boosts supply

• U.S. share of China’s soybean imports seen dropping from 24%
• Near record Argentine output gives buyers more options
• South American soybeans quoted well below U.S. cargoes
• China’s purchases of Argentine beans set to rise in 2nd half

U.S. soybean exports to China, which have been declining for several years as Brazil builds its dominance in the world’s biggest oilseed market, face a further threat in 2024 as bumper supply from Argentina heightens competition.

The U.S. made up under a quarter of China’s soybean imports last year versus 51% in 2009, according to the United Nations Commodity Trade Statistics Database, as rising Chinese demand has been met with surging production from Brazil and Argentina.

“This year we have large soybean supply coming from Argentina which is going to heat up competition,” said one trader in Singapore at an international company that owns oilseed processing factories in China.

“U.S. share is already shrinking. They are going to lose more to Argentina this year.”

The drop in U.S. soybeans to China could add more pressure on Chicago Board of Trade soybean futures Sv1, which have dropped almost 10% in 2024 after losing some 15% last year.

China is by far the biggest importer of soybeans, which are crushed to make protein-rich meal for fattening animals and oil used in cooking and a range of products. China’s soybean imports have nearly doubled in 15 years to 99.41 million metric tons in 2023, worth $60 billion.

“This year, Brazilian soybean output has declined slightly but Argentina’s production has increased,” said an oilseed trader at a state-owned trading firm in Beijing. “Argentine beans are likely to replace some U.S. beans during the fourth quarter.”

BIG CROPS, COMPETITIVE PRICES

Argentina, the No.3 soybean grower after Brazil and the United States, is forecast to produce around 50 million metric tons in 2024, more than double the previous year’s output of 21 million tons, when a historic drought decimated the crop.

Even though Brazil’s output is expected to decline this year, the agricultural powerhouse will have ample supplies to meet demand from its top customer, traders said.

Brazilian crop agency Conab reduced the country’s soybean production to 146.522 million metric tons in the 2023/24 cycle, 5.2% below last year.

Competitive prices offered by Latin American suppliers are driving their rising share of China’s soybean market, traders said, although rivalry between Beijing and Washington is also a factor.

Brazilian soybeans were quoted at $1.30 per bushel premium to November Chicago Board of Trade contract SX24, compared with $2.30 being priced for U.S. beans. Argentina’s June shipment is being offered at $1.45 premium to July SN24.

In March, China’s soybean imports from the United States fell by half from a year earlier.

“We have cut down our soybean imports from the U.S. this year,” said a second trader in Singapore at a privately-owned trading company, citing cheaper Brazilian beans. “In fact, it has been pretty drastic, we have hardly been buying U.S. beans.”

The upcoming U.S. presidential election is also prompting some Chinese buyers to take more cargoes from Brazil and Argentina to lower risks of supply disruptions.

“U.S. market share will continue to decline because you have the political backdrop of elections,” said a Shanghai-based trader with an international trading firm. “If Trump wins, it will be bad for the U.S.-China relationship. A lot of crushers have concerns about possible restrictions on importing U.S. beans.”

During the trade war under Donald Trump’s presidency, China diversified its soybean imports, increasing purchases from Brazil and Argentina to reduce reliance on U.S. soybeans and mitigate the impact of higher tariffs.

China, which buys more than 60% of soybeans traded worldwide, is likely to purchase 100 million tons of the oilseed in 2024, similar to last year, as it capitalises on cheaper prices and adds to stockpiles despite declining demand from the animal feed sector, traders said.

U.S. growers are steeling themselves for the bumper harvests from Latin America.

The U.S. industry is developing newer markets such as Southeast Asia and banking on higher domestic demand for making renewable fuels, said Jeff O’Connor, a soybean farmer in Illinois, the top producing state.

“What we are losing internationally to China we cannot make up for domestically in one year’s time. We cannot replace that overnight,” he said.

Argentina’s Rosario grains port loses global No. 2 spot due to drought

Argentina’s massive Rosario farming port lost its spot as the world’s No. 2 grains export hub in 2023, a report from a local exchange showed on Friday, underscoring the impact of a historic drought that hammered corn, wheat and soy last year.

Rosario shipped out 42.4 million metric tons of grains last year, falling below the sprawling Santos port in Brazil, which exported 62.3 million tons. New Orleans, in the United States, nabbed the No. 1 spot, the Rosario grains exchange report said.

The Argentine port was the top in the world in 2019 and held the No. 2 spot from 2020 to 2022, the exchange added.

“The impact of the historic drought that affected production of Argentine grains in the 2022/23 campaign dented shipment numbers last year,” the exchange said in a report.

“That pushed Gran Rosario to give up its second place in the ranking that it had obtained between the years 2020-2022.

The South American country’s grains production has rebounded in the latest 2023/24 season, though the corn crop has been hit by an insect plague spreading disease, while soy faces potential cuts due to dry and hot weather in the northern farm regions.

The Rosario exchange also acknowledged the “phenomenal performance” of the Santos port in Brazil, which doubled its farm exports in six years, “hand in hand with an explosion in Brazilian grains production.”

Argentina oilseed union SOEA calls port strike for Monday

The oilseed workers’ union at one of Argentina’s largest agro-export ports on Saturday said it would begin an indefinite strike from Monday to protest against the government’s proposed tax and labor reforms.

Argentina is one of the world’s main exporters of soybean meal and oil. The strike will affect the country’s San Lorenzo port, the union, SOEA, said in a statement, adding that it will affect 80% of the oilseed companies that use the port.

San Lorenzo is one of the main export ports in the city of Rosario.

The oilseed workers strike will begin the same day as one held across the country by Senasa – the union for state workers who monitor food quality – which could also affect shipments of flour and soybean oil.

The oilseed workers’ strike will begin from 1100 local time (1400 GMT) on Monday when Argentina’s Congress begins to debate taxes on high salaries and labor reform proposed by President Javier Milei, who took power in December pledging to eliminate high inflation and adjust public spending.

The Senasa strike will also begin on Monday and will run for 72 hours.

Milei hopes Congress will approve his package of libertarian reforms in May, amid widespread resistance from the center-left opposition and unions.  Milei is struggling to tackle rampant inflation, which has hit 200% annually, as experts say efforts to correct the runaway figure is driving unemployment and poverty in the country.

The agro-export sector is Argentina’s largest supplier of foreign currency, which the country needs to stabilize its economy.

In addition to the potential impact on foreign currency reserves, the strike will begin in the middle of harvesting soy and corn, which will also be affected.

CORN/CEPEA: Prices move down to the level of October/23

Corn prices are decreasing in Brazil. The fact that many purchasers are away from trades, the progress of the summer crop harvest and the good development of the second corn crop in many regions explain the downward trend. In some areas surveyed by Cepea, quotations are the lowest since October/23.

From April 18-25, the ESALQ/BM&FBovespa Index (Campinas, SP) dropped 2.2%, closing at BRL 58.01 per 60-kilo bag on April 25 – this is the lowest value since October 3, 2023. In the partial of April (up to April 25), the decrease is 6.1%.

Consumers say they have stocks and close new deals in the spot market only when they need to. As for sellers, while most of them are flexible regarding trades, due to the need to make cash flow, others are away from the market, expecting increases in the next months due to the recent dollar valuation (which can boost the export parity) and the possibility of a not very big crop. Conab estimates a decrease of 8% in the area and a production of 85.61 million tons, 16% less than in 2023/24.

On the average of the regions surveyed by Cepea, corn values moved down 1.3% in the wholesale market (deals between processors), but rose 0.4% in the over-the-counter market (paid to farmers) over the last seven days.

EXPORTS – In 15 days working days of this month, shipments totaled only 34 thousand tons, below the 470 thousand tons verified in April/23. Anec forecasts exports at 81.7 thousand tons in April.

CROPS – Players surveyed by Cepea say that the second corn crop may start to be harvested in May in some areas in Mato Grosso, since crops have been developing well. Conab has indicated this week that sowing activities finished in all states, favored by rains.

As for the summer crop, the harvest had totaled 56.7% of the area until April 21, upping 3.8 percentage points in one week – Conab data.

SOYBEAN/CEPEA: International price rises sustain quotations in Brazil

Soybean values are firm in Brazil, sustained by international increases. Averages in April (until April 25) of the ESALQ/BM&FBovespa Index (Paranaguá) and the CEPEA/ESALQ Index (Paraná) are 2.2% and 2.9% higher than those registered in March and are already the highest since January this year. In that period, concerns with weather conditions on crops in South America were boosting quotations.

The ESALQ/BM&FBovespa Index (Paranaguá) rose 0.5% from April 18-25, closing at BRL 128.15 per 60-kg bag on April 25. The CEPEA/ESALQ Index (Paraná) upped 1.1%, to close at BRL124.98 per 60-kg bag. On the average of the regions surveyed by Cepea, soybean prices increased 0.6% in the over-the-counter market (paid to farmers) and 0.5% in the wholesale market (deals between processors). From April 18-25, the US dollar downed 1.5%.

In the United States, prices rose due to the lack of soil moist in some areas and to oil valuations.

CROPS – The soy harvest is close to the end in Brazil. Data from Conab indicate that 86.8% of the area had been harvested up to April 21, below the 89% verified a year ago.

BYPRODUCTS – Quotations have presented different trends this week. The value of soy oil dropped 0.5% between April 18 and 25, at 5,107.83 BRL per ton (in São Paulo city with 12% ICMS) on April 25. On the average of the regions surveyed by Cepea, soymeal prices increased 0.5% in the last seven days.

Cargill Plans to Keep Expanding Oilseed Processing in Brazil

• Company sees potential for acquiring more crushing plants
• Investments in 2024 will slow from last year’s record

Cargill Inc., the world’s biggest crop trader, has plans to continue expansion for oilseed crushing in Brazil, including through acquisitions, even as margins for the sector have floundered recently.

The company poured a record 2.6 billion reais ($508 million) into investments in the South American country last year. And while that figure will slow in 2024, the company still plans to invest above its historical average, said Paulo Sousa, who leads the company in Brazil.

“Cargill continues to see Brazil as the main source of additional agriculture-products supply in the next years, so we will keep a consistent pace of investments here,” Sousa said in an interview.

The push is a demonstration of how the agribusiness giant remains bullish on the long-term outlook for Brazil agriculture even as a rebound in global grain supplies and lower prices have eroded profits across the industry. Brazil overtook the US as the world’s top exporter of corn last year, after already winning the top spot for soybeans for about a decade. The agricultural powerhouse has seen one bumper crop after another, but has still struggled some with farmer bankruptcies.

Growing demand for crop oils that can be used for biofuels is underpinning Cargill’s oilseed-crushing expansion, Sousa said. There’s also been a boom for the meal that’s made by processing soybeans.

Russia Grain Trader Accuses Moscow of Inflating Prices

• Russian grain exporter TD Rif has seen its shipments blocked
• Firm said authorities have punished those who don’t comply

Major Russian grain exporter TD Rif has accused Moscow of trying to control and inflate export prices, another escalation in a dispute between the government and one of the country’s biggest wheat traders.

The shipper accused the country’s agriculture ministry of encouraging inflated offer prices in a letter to a buyer earlier this month seen by Bloomberg. Rif said that authorities have punished those who don’t comply by denying the paperwork needed for export, among other measures.

In a response to a request for comment from Bloomberg, a Rif spokeswoman denied the company had anything to do with the letter.

“As market participants, we have become hostages to these manipulations, which are having an extremely negative impact on our position and reputation,” the April 10 letter said, adding that Moscow’s moves were also denting the competitiveness of Russian wheat internationally.

In a fresh twist on Friday, the firm said in a statement on its website that it was changing its name to Rodnie Polya LLC. Its press service said the new name better suits its business model.

Issues with government push-back on pricing have also disrupted Russian wheat exports from other traders earlier in the season.

Officials from the Russian agriculture ministry didn’t reply to emails seeking comment about the letter. The agriculture regulator Rosselkhoznadzor said that pricing and market regulation are not part of its mandate.

TD Rif’s ships have been getting stuck in ports, as Russia’s agricultural watchdog has faulted its cargoes for not meeting safety and quality standards, disrupting exports to key buyers including Egypt. The firm’s long-time owner has said cargoes are being unfairly blocked and that it’s under pressure to sell its assets at a low price.

Russian authorities recently held up two Egypt-bound vessels linked to the company — under circumstances that remain in dispute — prompting Cairo to step in to help resolve the matter.

Under the agriculture ministry’s policy, all offers from Russian exporters, including those in Egyptian tenders, “were made at a single, inflated price,” Rif’s letter alleged. Companies offering lower prices have faced “unfair sanctions” including the denial of phytosanitary approvals, it added.

NZ Institute Says La Niña to Replace El Niño in Third Quarter

NZ’s National Institute for Water and Atmospheric Research comments in seasonal outlook, published Monday in Wellington.

• El Niño is expected to ease by June
• La Niña conditions are then favored to develop between July and September
  • Northeasterly winds tend to become more common during La Niña events, bringing moist, rainy conditions to northeastern areas of the North Island and reduced rainfall to the lower and western South Island
  • Warmer than average air and sea temperatures can occur around New Zealand during La Niña

 

 

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