TOP HEADLINES
Drought is Frying Mexico’s Tortilla Corn
Severe drought is plaguing Mexico’s winter corn crop, the bulk of which is white corn used to make tortillas and other foods.
The prospect of more costly tortillas would be yet another burst of food inflation for U.S. consumers. But in Mexico the price of tortillas is a matter of national importance and one in which the government regularly intervenes, rewarding growers with price supports and currying favor with voters by keeping prices for the staple low.
Most of Mexico is in drought, but it’s particularly dry along the Gulf of California in Sinaloa, where most of the country’s winter corn is grown.
U.S. Agriculture Department officials recently toured fields in Sinaloa with heavily armed escorts and encountered a dire situation heading into the spring harvest, said Lance Honig, chief of the departments crops branch.
It was already dry in autumn before the corn was planted, according to the Agriculture Department, and conditions have only gotten worse since, with local reservoirs running dry.
“They don’t have the water to irrigate as they would need to to get good yields,” Honig said. Reservoir conditions in most of these areas were focusing on are at 15% capacity or less.”
FUTURES & WEATHER
Wheat prices overnight are up 2 3/4 in SRW, up 2 3/4 in HRW, down 1 in HRS; Corn is down 1/2; Soybeans up 2 3/4; Soymeal up $1.40; Soyoil up 0.15.
For the week so far wheat prices are down 12 3/4 in SRW, up 1 3/4 in HRW, down 12 in HRS; Corn is down 6 1/4; Soybeans down 21 1/4; Soymeal up $3.00; Soyoil down 2.67.
For the month to date wheat prices are down 6 3/4 in SRW, up 1 1/2 in HRW, down 9 in HRS; Corn is down 14; Soybeans down 30; Soymeal down $1.80; Soyoil down 1.76.
Year-To-Date nearby futures are down 11.7% in SRW, down 8.8% in HRW, down 12.1% in HRS; Corn is down 9.1%; Soybeans down 10.1%; Soymeal down 12.5%; Soyoil down 3.5%.
Chinese Ag futures (MAY 24) Soybeans down 8 yuan; Soymeal down 3; Soyoil down 84; Palm oil down 50; Corn down 10 — Malaysian Palm is down 41. Malaysian palm oil prices overnight were down 41 ringgit (-0.95%) at 4277.
There were no changes in registrations. Registration total: 438 SRW Wheat contracts; 0 Oats; 37 Corn; 499 Soybeans; 710 Soyoil; 26 Soymeal; 0 HRW Wheat.
Preliminary changes in futures Open Interest as of April 11 were: SRW Wheat up 1,534 contracts, HRW Wheat down 833, Corn up 3,135, Soybeans up 9,206, Soymeal up 4,508, Soyoil up 5,629.
Northern Plains: Drier conditions are largely expected through the weekend outside of a few minor showers. A larger storm system will move through next week, likely in a couple of pieces, that should bring some scattered showers through the region as well as a round of colder air. The cold may persuade producers to slow down on planting and fieldwork, but wetter soils are not very widespread through the region and folks may get out and work them anyway.
Central/Southern Plains: A system brought widespread and heavy precipitation to southern portions of the region this week. Warm and dry conditions follow for the weekend. But another storm system will move through in a couple of pieces next week that should bring more scattered showers through, as well as a burst of colder air. Forecasts are trending toward being cold enough for widespread temperatures in the 10s for winter wheat areas later next week. Windy conditions and limited showers could dry out soils a bit. The storm track for next week is not favorable for bringing widespread rain to the driest areas in the southwest. Despite some heavier rain in streaks elsewhere, planting conditions are not all that bad and should continue to progress between storm systems.
Midwest: A system is bringing more rounds of showers through the south and east through Friday, as well as some stronger winds that could slow down operations again. Warmer and drier weather this weekend should promote fieldwork, but then another long and drawn-out storm system is forecast for next week that should bring more areas of thunderstorms and heavy rain. Potential for heavier rain over western areas will be helpful for dry soils there. A burst of some colder air will fill in behind the system. The forecast for frosts is currently not anticipated to affect wheat, but could slow down fieldwork and planting operations for a bit again.
Brazil: Scattered showers will likely continue across central and northern Brazil well into next week. A front will continue to produce areas of showers for southern areas into next week as it meanders around as well. The front will eventually sweep northward next week and drier conditions will follow behind it for a while. Despite this, the recent weather pattern has been overall favorable for safrinha corn, but the wet season rainfall will be shutting down soon and fronts moving up from Argentina are going to take over the rainfall events for the rest of the season, which usually stall out in the south. Soil moisture is still well-below normal across much of the safrinha corn growing areas, even in the the more active pattern of the last couple of weeks.
Argentina: A front across the north will produce a storm system along it that will pull south through the country this weekend and early next week, bringing widespread areas of showers and thunderstorms that should include more heavy rain. With corn and soybeans maturing and in the early stages of harvest, the rainfall is not all that beneficial and should start to be a hindrance for operations. However, drier conditions are likely to develop for a period behind that system for probably a week, which will help most areas to dry out.
Black Sea: Showers will continue to be limited for the rest of this week, which does not look all that helpful for building back in some topsoil moisture after a stretch of dry weather over the last several weeks. A front and system will push through the region next week and offer some areas of showers as well as a burst of cooler temperatures to slow down winter wheat’s growth that has gotten to be too fast for this time of year. The cooler temperatures may or may not bring a risk of frost later next week, but probably nothing that would be damaging at this time. Instead, the system may linger in the region later next week and could provide some meaningful precipitation in the cooler temperatures.
Australia: Drier conditions are good for cotton and sorghum harvest, but not for conditioning soils ahead of winter wheat and canola planting, which typically starts up next week. Some areas may choose to delay planting to wait for more favorable soil moisture for better winter crop establishment. The ending El Nino and eventual turn to La Nina should favor the winter crops later this year.
The player sheet for 4/11 had funds: net sellers of 4,000 contracts of SRW wheat, sellers of 4,000 corn, sellers of 2,500 soybeans, buyers of 1,500 soymeal, and sellers of 4,500 soyoil.
TENDERS
- WHEAT SALES: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 121,485 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
- FAILED CORN TENDER: South Korea’s Major Feedmill Group (MFG) is believed to have rejected all offers and made no purchase in an international tender to buy up to 140,000 tonnes of animal feed corn on Thursday.
- CANCELED CORN PURCHASES: Chinese buyers have canceled shipments of Ukrainian-origin animal feed corn together totaling several hundred thousand metric tons, traders said. The precise volumes were unclear, but some traders spoke of about 300,000 tons canceled in up to five Panamax shiploads which had previously been bought for April/May shipment.
PENDING TENDERS
- 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.
- FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.
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 April 4, according to data on the USDA’s website.
- Top buyer of soybeans: Mexico with 173k tons
- Top buyer of corn: Japan with 221k tons
- Top buyer of wheat: Philippines with 90k tons
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 April 4, according to data on the USDA’s website.
- Mexico bought 19.7k tons of the 47.4k tons of pork sold in the week
- South Korea led in beef purchases
Brazil April Soybean and Corn Crop Estimates
- Output est. cut from 112.75m tons, Brazil’s national supply co. says in its monthly report.
- Analysts in a Bloomberg survey were expecting 114.4m tons
- Yield seen lower at 5,444 kg/ha vs 5,538 kg/ha last month
- Area planted raised to 20.382m ha vs 20.361m ha last month
- Soybean production est. lowered to 146.5m tons vs 146.9m tons
Argentine Soybean, Corn Estimates April 11: Exchange
The Buenos Aires Grain Exchange releases weekly report on website.
- 2023-24 corn production est. lowered by 2.5m tons
- Corn harvest 15.3% complete
- Soybean production est. cut to 51m tons vs 52.5m tons
China March soybean imports fall to lowest in four years
China’s soybean imports in March fell nearly 20% from the same month a year earlier, data showed on Friday, its lowest in four years as poor hog margins discouraged crushing for feed consumption. Total imports for the month came to 5.54 million metric tons, according to the General Administration of Customs.
Soybean arrivals into the world’s top soybean buyer in January-March amounted to 18.58 million tons, down 10.8% from the same period last year, the data also showed. That is the lowest first quarter import figure since 2020. The data is in line with forecasts by analysts and traders for first-quarter arrivals to reach 18-19 million metric tons.
“We believe the imports will still continue to grow this year, but the growth rate will decrease as China’s feed demand is weak, and consumer consumption is also weak,” said Rosa Wang, analyst at Shanghai-based agro-consultancy JCI.
China’s cereal and oilseed imports are expected to remain near record highs this year despite a recent spate of cancellations as lower global prices and a domestic output shortfall prompt purchases.
Soybean imports are expected to jump in the second quarter after the completion of the harvest season in Brazil.
The soybean harvest in the world’s largest producer for the 2023/24 cycle had reached 78% of the planted area as of last Thursday, agribusiness consultancy AgRural said on Monday.
Brazilian soybean production will rise to 156.5 million metric tons this year due to an expanded planting area, agribusiness consultancy Agroconsult said on Wednesday.
China Boosts Forecast for Corn Imports in 2023-24: Agri Ministry
China increased its forecast for corn imports in 2023-24, but only a limited volume of these shipments is expected to circulate in the market, the agriculture ministry said in a report.
- China buys corn for commercial use in animal feed and to replenish state reserves
- Corn imports are seen at 20m tons in the year started October, up from 17.5m tons, according to the China Agricultural Supply & Demand Estimates issued late Thursday
- The revision was made given that imports so far this year have been high, the ministry said; they would see a clear drop later
- Estimates for production, imports and consumption of soybeans, cotton and edible oils were unchanged
- Farmers are selling domestic soybeans at a faster pace as companies including state-owned crusher Jiusan Group are constantly making purchases, the ministry said
US Miss. River Grain Shipments Fall, Barge Rates Decline: USDA
Barge shipments down the Mississippi river declined to 424k tons in the week ending April 6 from 659k tons the previous week, according to the USDA’s weekly grain transportation report.
- Barge shipments of corn fell 36% from the previous week
- Soybean shipments down 23% w/w
- St. Louis barge rates were $9.10 per short ton, a decline of $0.52 from the previous week
Most Australian sowing areas to get above-median rainfall in June-Aug, weather bureau says
Most of Australia’s main cropping areas are likely to see median or above-median rainfall during June-August, the country’s weather bureau said on Friday, raising the prospect of better yields of winter crops including wheat, barley and canola. Australia is a major exporter of both grains and the oilseed.
Farmers have been ramping up sowing of winter crops this month, with rainfall in the east fuelling optimism about crops in the region. Dry conditions in the west, however, are threatening production of canola in particular.
The Bureau of Meteorology in its first winter forecast said rain was likely to be below the median in most cropping areas in May, but above-median in June. The weather bureau also predicted above-average temperatures during the southern hemisphere winter.
Australia’s key winter cropping areas are in the southeast and southwest.
Bird flu pushes US dairy farmers to ban visitors, chop trees
Dairy farmers in the United States are raising their defenses to try to contain the spread of bird flu: banning visitors, cutting down trees to discourage wild birds from landing, and disinfecting vehicles coming onto their land.
South Dakota on Thursday became the eighth state to find highly pathogenic avian influenza (HPAI) in a dairy herd, after the U.S. Department of Agriculture reported infections in North Carolina, Texas, Kansas, Ohio, Michigan, Idaho and New Mexico.
While the first cases appear to have been introduced to herds in Texas and Kansas by wild birds, the USDA said transmission among cattle was also possible. Agricultural officials in Michigan and Ohio said infected herds in those states received cattle from Texas.
Reuters spoke to seven dairy farmers in five states who said they are reinforcing safety and cleaning procedures, with three producers exceeding government recommendations.
“Think of our farm now as a gated community for cows,” said Karen Jordan, who raises about 200 dairy cattle in Siler City, North Carolina. “Only the most essential person can get past the gate.”
Even before North Carolina’s outbreak, Jordan, 64, said she was limiting visitors who could unintentionally carry in contaminated bird droppings on boots or vehicles. She also started chopping down about 40 small trees to avoid attracting wild birds during spring migration.
The first confirmed case in a dairy herd on March 25 and the second human case in two years on April 1 have heightened concerns in the U.S. about the spread of the virus to animals and people. Bird flu has decimated poultry flocks globally since 2022 and infected mammals ranging from seals and foxes to skunks.
The U.S. Centers for Disease Control and Prevention said the risk to humans remains low, but has asked states for plans to test and treat potentially impacted farm workers.
REDUCED MILK PRODUCTION
While bird flu is lethal to poultry, cows appear to recover. The outbreaks in dairy herds primarily affect lactating cows, the USDA said, reducing milk production and prompting farmers to isolate sick animals while keeping their milk out of the food supply.
U.S. milk production grew to nearly $60 billion in 2022. Dairy farmers now fear a drop in demand for milk and cheese, after the USDA reported bird flu in unpasteurized milk samples, though agricultural officials say pasteurized milk is safe.
Futures prices for milk dropped as infections expanded last week, before the market rebounded. Beef cattle futures also plunged on fears of reduced demand, although there have been no confirmed cases of the virus in cattle raised for meat.
The USDA has not issued quarantine orders for infected dairy herds but last week recommended minimizing the movement of cattle and testing milk samples from lactating cows if they must be moved. Producers were also urged to monitor livestock for illnesses; isolate newly added cows; and keep wildlife and domestic pets like cats away from farm buildings to reduce the spread of the virus.
The agency advised farmers to pay “special attention to good milking practices, such as equipment disinfection.” In interviews with Reuters, animal-health authorities raised the possibility that milking machines may play a role in spreading infections among cows, though that has not been confirmed.
“We cannot rule out other possible modes of HPAI transmission, including equipment,” the USDA said in an email.
Seven state and industry officials said farmers face challenges because of uncertainty over how the virus is spreading and the exposure of open-aired barns to wild birds.
Idaho, North Carolina and more than a dozen states that have not confirmed cases in cattle imposed additional requirements on shipments to protect their herds.
Nebraska, the second-biggest U.S. cattle producer after Texas, on April 1 began requiring producers to obtain permits to bring breeding dairy cows into the state so officials can better track animal movement.
Texas advised producers to monitor their herds and keep sick animals at home. Kansas recommended limiting the movement of cattle but has not mandated extra restrictions, said Justin Smith, the state’s animal health commissioner.
“These dairies have got a lot at stake,” Smith said in an interview. “If they have concerns about that movement, they need to reassess it, versus me mandating a reassessment.”
Yogurt maker Danone said it is advising suppliers to isolate cattle that may have been exposed to the virus and report any cases to local officials.
Interested in more futures markets? Explore our Market Dashboards here.
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.