Global Ag News for May 23.24

TOP HEADLINES

Top US Green Diesel Maker ‘Confident’ in Used Cooking Oil Purity

Diamond Green Diesel, the biggest US producer of renewable diesel, is taking all possible steps to ensure the used cooking oil it takes in to make biofuel is pure.

• The partnership between Darling Ingredients and Valero Energy has “turned boats away that don’t have the proper documentation” for shipments of used cooking oil, or UCO, Suann Guthrie, SVP of investor relations and sustainability for Darling, said during a talk at a TD Cowen conference
• The company also tests the products it receives
  • NOTE: UCO is among high-value ingredients for making low-carbon fuel; there’s concern in the US that UCO imports from Asia could be tainted with fresh palm oil, which doesn’t qualify for credits under US renewable-fuel law
• “We feel pretty confident that the UCO we are using is in fact used cooking oil and not laced or spiked,” Guthrie said
• Diamond Green is agnostic on a recent push by US soybean industry lobbyists to raise tariffs on UCO from China: Guthrie

FUTURES & WEATHER

Wheat prices overnight are down 2 1/2 in SRW, down 1 in HRW, down 2 1/2 in HRS; Corn is up 1 1/4; Soybeans up 1/2; Soymeal up $0.10; Soyoil unchanged.

For the week so far wheat prices are up 37 3/4 in SRW, up 35 3/4 in HRW, up 22 1/2 in HRS; Corn is up 9 1/4; Soybeans up 17 1/2; Soymeal up $9.10; Soyoil up 0.57.

For the month to date wheat prices are up 87 1/4 in SRW, up 63 1/4 in HRW, up 29 3/4 in HRS; Corn is up 15 3/4; Soybeans up 83 3/4; Soymeal up $26.40; Soyoil up 2.87.

Year-To-Date nearby futures are up 9.7% in SRW, up 8.6% in HRW, up 1.5% in HRS; Corn is down 2.0%; Soybeans down 3.7%; Soymeal down 2.1%; Soyoil down 4.2%.

Chinese Ag futures (JUL 24) Soybeans up 20 yuan; Soymeal up 19; Soyoil up 12; Palm oil down 30; Corn up 9 — Malaysian Palm is up 42. Malaysian palm oil prices overnight were up 42 ringgit (+1.09%) at 3910.

There were no changes in registrations. Registration total: 1,479 SRW Wheat contracts; 39 Oats; 747 Corn; 469 Soybeans; 2,589 Soyoil; 85 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of May 22 were: SRW Wheat up 12,362 contracts, HRW Wheat up 608, Corn down 7,182, Soybeans up 9,300, Soymeal up 215, Soyoil down 1,539.

 

Northern Plains: A few more storm systems will move through the region through Monday. Some heavy rain fell in southeastern areas on Tuesday, and more may develop. Cooler temperatures will stay in place through Monday, and may cause some snow to mix in early Friday across North Dakota. Cold may also produce some limited frosts that will not help with germinating crops.

Central/Southern Plains: A front across the south and more systems moving through will keep the region active through Monday, causing severe weather and areas of heavy rain over portions of the region. Southwestern areas that continue to deal with drought are not forecast to see a lot of heavy rain, though thunderstorms that move through could bless limited areas with heavier amounts. Temperatures will fluctuate with fronts moving through, but in general will be cooler across the northwest and warmer across the south. Temperatures will be milder next week as a brief break in the active pattern allows areas to dry out. A system moving into the region late next week and weekend could make for some more active weather.

Midwest: A large system that moved through on Tuesday brought widespread heavy rain and severe weather to the northwest. The front to the system will settle somewhere near the Ohio River and stay active for the rest of the week. Additional systems will move through the region this weekend and especially early next week that leave further planting windows short. Only limited areas are going to be lucky enough to be dry, an unusual statement as we head into summer. After a few day’s break next week, another system may come through late next week and weekend.

Delta: The main storm track will be to the north this week, but a front settling in the northern portions of the region for the next few days will be active with thunderstorms, causing heavy rain and severe weather potential. Additional storm systems may go through this weekend and early next week that could get more of the region active as well.

Canadian Prairies: A system is moving out of the region, though showers may develop for Wednesday. The storm track is farther south, but showers will still sneak into the boundaries of the region across the east on Friday and across the south this weekend into next week. Any rain will continue to make planting progress slower, but also help to ease drought conditions.

Brazil: A front in southern Brazil continues with more bouts of heavy rain that will make flooding conditions worse again. That front shifts northward for Friday and the weekend, where showers will get into southern safrinha corn growing areas, favorable for any crop it rains on.

Argentina: Cold and dry conditions continue into next week, though northeastern areas will see some showers with a front Wednesday and Thursday. The cold is producing more frosts, unfavorable for winter wheat planting and establishment. But drier weather will increase the remaining corn and soybean harvest.

 

The player sheet for 5/22 had funds: net sellers of 2,000 contracts of SRW wheat, buyers of 5,000 corn, sellers of 4,000 soybeans, buyers of 2,750 soymeal, and buyers of 2,500 soyoil.

 

TENDERS

• SOYMEAL PURCHASE: The Korea Feed Association (KFA) in South Korea purchased up to 60,000 metric tons of soymeal to be sourced from optional origins in a private deal on Monday without issuing an international tender.
• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins
• RICE PURCHASE: Indonesian state purchasing agency Bulog is believed to have purchased about 210,000 metric tons of rice an international tender for up to 300,000 tons which closed his week
• DURUM WHEAT SALE: Turkish state grain board TMO has sold an estimated 75,000 metric tons of durum wheat in an export international tender for the same volume on Wednesday.
• SOFT MILLING WHEAT SALE: Tunisia’s state grains agency is believed to have purchased about 100,000 metric tons of soft wheat in an international tender for the same volume on Wednesday.
• CORN TENDER: South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 metric tons of animal feed corn to be sourced from optional origins

 

DOE: US Ethanol Stocks Fall 1.1% to 24.212M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 24.399 mln bbl
• Plant production at 1.019m b/d, compared to survey avg of 1.017m

 

 

TODAY

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending May 16.

• Corn est. range 800k – 1,450k tons, with avg of 1,093k
• Soybean est. range 300k – 700k tons, with avg of 511k

 

Brazil second corn crop expected to fall 10.5%, consultancy says

Drought in two key Brazilian corn-growing states is reducing the potential size of the country’s second corn crop, according to Agroconsult, an agribusiness consultancy that this week is kicking off a countrywide field tour.

Agroconsult said on Wednesday that Brazil’s 2023/24 second- corn crop, known as safrinha corn, is expected at 96.7 million metric tons, down 10.5% from last year’s safrinha crop.

Safrinha corn represents 70%-80% of national production and is mainly exported in the second half to countries such as China, competing directly with U.S. farmers. Brazil is one of the biggest corn exporters.

Global corn stockpiles, however, are set to reach five-year highs in 2024.

Parana and Mato Grosso do Sul are expected to lose part of the crop due to dry weather during March and April, despite having sown second-corn in a more favorable time window than last year.

“The scenario in Mato Grosso do Sul, without a doubt, is the most worrying,” said Agroconsult’s crop tour coordinator, Andre Debastiani. “The entire southern region of the state was affected by drought, which has already caused irreversible damage.”

However, good yield potential in two center-western states should partly offset losses elsewhere, Agroconsult said, highlighting “well-distributed rainfall” during corn’s development stage in Brazil’s top farm state Mato Grosso.

At the onset of the season, Agroconsult believed farmers would reduce the planted area of second corn by around 1 million hectares (2.471 million acres) driven by higher production costs and falling prices. This month, however, Agroconsult raised its estimate for safrinha area to 16.3 million hectares (40.2 million acres), although plantings would be 662,000 hectares smaller than in 2022/23.

Parana farmers, for example, increased their safrinha area by 10.9% this season as farmers there felt they’d be able to sow it during the ideal climate window, Agroconsult said.

Mato Grosso, where second-corn area fell 5.5%, had indications earlier of a much greater reduction in planted area, which did not happen, Agroconsult said. Much of Rio Grande do Sul is hit by severe floods, however the southern state does not produce safrinha corn.

 

CROP TOUR: Illinois Wheat Yields Seen at a Record 104.8 Bu/Acre

Crop tour hosted by Illinois Wheat Association estimates soft red winter wheat yields in the state at 104.8 bu/acre, above tour findings a year ago of 97.1 bushels, according to data released on Wednesday.

• Outlook surpasses US Department of Agriculture forecast for 83 bu/acre
• USDA’s outlook is down from 2023’s all-time high of 87 bu/acre
• Crop tour surveyed 58 fields on Tuesday in southern part of Illinois
• “Some of these fields that had extremely high averages were high-performing fields, which bumped up the average,” said Megan Dieken, associate executive director of the Illinois Wheat Association
• She added that the “head scab” crop disease was seen in some fields, potentially taking down some of the yield estimates
• NOTE: Bigger US wheat yields are helping to offset crop losses in top wheat exporter Russia

 

Weaker La Nina Augurs Well for Argentina Crops: Rosario Bourse

A La Nina climate pattern that’s set to take hold later this year will be weaker than initially thought, reducing the threat of drought for Argentina’s 2024-25 crops, Rosario Board of Trade said in a report.

• “We’ve gone from a forecast of a very tough scenario — where fears were building of another crop disaster in the 2024-25 season — to one where rains and moisture levels won’t be far from the statistical average,” Rosario analysts wrote
• Prediction now is for La Nina to be moderate-strong, rather than very strong
• NOTE: La Nina normally brings dryness in Argentina that can curtail crop yields
• NOTE: Argentina’s 2024-25 wheat-planting season is just starting; soy planting is mainly Nov./Dec.
  • Two corn crops are mainly planted between Sept. and Dec.

 

Argentina soybean production slightly down amid harvest delays

LSEG Commodities Research & Forecast

2023/24 ARGENTINA SOYBEAN PRODUCTION: 48.5 [47.2–50.1] MILLION TONS, DOWN <1% FROM LAST UPDATE

2023/24 Argentina soybean production is slightly (<1%) lowered to 48.5 [47.2–50.1] million tons, as significant late season delays continue to drag the whole harvest season into late May/early June amid very cold conditions. Our current estimate puts planted area at 16.9 million hectares, slightly below 17.3 million hectares reported by both Bolsa de Cereales in Buenos Aires and Bolsa de Comercio in Rosario. In May’s WASDE (10 May), USDA placed Argentina soybean production at 50 million tons, unchanged from its previous update. Bolsa de Cereales in Buenos Aires and Bolsa de Comercio in Rosario currently forecast production at 50.5 and 50 million tons, respectively.

According to the latest crop progress report from the Ministry of Agriculture, as of 16 May, soy harvest was only 61% complete nationally, significantly behind last year’s pace of 72%. Bolsa de Cereales in Buenos Aires also reported a progress of 63.7%, well behind schedule. The recent crop damages from the stunt/spiroplasma disease by leafhoppers are mostly on corn, but soy farmers also remain cautious amid unfavorable late season conditions. Much drier weather is in the forecast, which should help fields dry out and enable harvest to catch up, but farmers are facing very cold temperatures (near-freezing conditions depending on the location), warranting close attention. Most core producing areas of the central Pampas are likely to continue to see cold weather at least through the end of the month, which could play as another significant adverse factor for late season activities

 

Area expansion and yield recovery to increase 2024/25 Canada wheat production

LSEG Commodities Research & Forecast

2024/25 CANADA WHEAT PRODUCTION: 34.3 [31.2–37.6] MILLION TONS

Continued area expansion and expected yield recovery from last season set 2024/25 Canada wheat production at 34.3 [31.2–37.6] million tons, up 7.5% from last season, amid some acreage shifts from rapeseed and other crops, despite the prevailing unfavorable early season conditions. Total planted area is projected at 11 million hectares, up 1% from last season, which is slightly (<1%) above the StatCan’s latest outlook of 10.9 million hectares in its Principal Field Crop Areas report (11 March). The USDA’s World Agricultural Outlook Board (WAOB) has pegged its estimate of Canada wheat production at 34 million tons on 10 May.

Some acreage shifts from rapeseed to wheat or other spring crops are expected, amid vegetable oil market complexities. The expected increase in wheat area largely stems from its current stronger competitive ability compared to other grains/oilseeds, on the back of soaring prices and potentially higher profitability. Its main acreage competitor, rapeseed, typically carries higher cost of production and requires heavier use of nitrogen-based fertilizers, giving another price/cost advantage to wheat. On the other hand, early season conditions are less than favorable, warranting attention. Planting conditions are not atrocious, but far from ideal as unfavorable wet conditions linger across the southern Prairies. Alberta plantings are largely in line with the five-year average at 32.5%, but Saskatchewan is showing a significant delay (only 32% complete so far, vs. 5-year average of 54% and 10-year average of 45%), mounting concerns. Despite the recent precipitation, the overall soil moisture conditions throughout the core crop areas of Western Canada remain poor, which should be seen as a major threat to yield this season, as our June through August weather outlook points to a dry (albeit cool) summer.

 

AGCO Sees ‘Significant’ Buyer Interest in Grain, Protein Unit

AGCO Corp., one of the world’s biggest makers of farm machinery, said there’s outside interest from buyers for its business segment that includes grain storage and animal production as the company nears a conclusion on a strategic review for the unit.

AGCO and other tractor makers, including market leader Deere & Co., have been under pressure from declining agriculture income, which gives their farmer customers less to spend on new equipment. The smallest US cattle herd in decades was also limiting growth in the protein segment.

There’s a “significant amount of external interest on this,” AGCO Chief Financial Officer Damon Audia said Wednesday during the JP Morgan Global, Technology, Media and Communications Conference. He added that a final conclusion was expected in the “midsummer time-frame.”

AGCO’s grain and protein business includes the crop-bin brand GSI and feed- and seed-handler Cimbria. AGCO also sells Massey Ferguson and Fendt tractors.

 

Brazil Fertilizer Prices Strengthen as Soybean Demand Builds

Fertilizer prices were up slightly for urea, ammonium sulfate, phosphates and potash in Brazil, with nitrogen interest described as slow and sellers focused on potash and phosphates for soybeans.

 

Nitrogen Firms; Phosphates, Potash Follow

Urea in Brazil jumped 6.6%, to $320-$325 a metric ton (mt) cost-and-freight from last week’s $300-$310, with new trades reported from North Africa and Russia. Granular ammonium sulfate followed the urea market higher, strengthening 4.6% to $165-$175/mt from last week’s $160-$165. New monoammonium phosphate trades in Brazil were reported at $570-$575/mt for Russian origin, up from last week’s $555-$570, while potash prices in Brazil moved up $5 from last week, to $305-$315/mt, with sellers failing to transact at $320.

 

Fertilizer Prices Mixed as Market Shifts to Seasonally Slower 2Q

Prices for ammonia continued to drop in the US Midwest early this week as spring fertilizer demand slows and growers shift focus to spring fieldwork. New Orleans phosphates were up slightly and urea prices rebounded in several international markets, while China’s potash buying spree is slowing as its use season ebbs.

 

US Midwest Ammonia Falls, Global Urea Firms

Ammonia continued to fall in the US Midwest as spring demand winds down, with terminal prices dropping $10-$15 a short ton (st) from last week in the Corn Belt and even more in the southern US. Urea was down $20 st in the Pacific Northwest, though prices were up slightly at New Orleans (NOL) and internationally, with increases reported in Brazil, Egypt, Indonesia and the Mediterranean. Other nitrogen fertilizers were up as well in international markets, including ammonium sulfate in Brazil, ammonium nitrate in France and calcium ammonium nitrate in Germany. NOLA phosphates prices strengthened $5-$15 st from last week, while potash prices in Brazil firmed $5 a metric ton.

 

 

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