Global Ag News for Apr 3.24

TOP HEADLINES

Top US Egg Maker Idles Texas Plant After Bird Flu Outbreak

Cal-Maine Foods Inc., the biggest egg producer in the US, has culled roughly 3.6% of its flock after birds at a Texas facility tested positive for avian flu, adding to concerns over a widening outbreak.

Nearly 1.6 million laying hens and 337,000 pullets were destroyed and production at the Parmer County plant has temporarily ceased, the company said in a statement. Shares of the producer plunged as much as 6.1%, the biggest intraday decline since October, before erasing declines.

That’s the biggest bird flu casualty in the US since Dec. 7, when 2.6 million birds were killed at an egg farm in Ohio after the virus was found in the facility, according to data from the US Department of Agriculture’s Animal and Plant Health Inspection Service. Cal-Maine also reported an outbreak at a Kansas facility in December that affected 684,000 hens.

The latest Cal-Maine infections come at a time when highly pathogenic flu is spreading in dairy cattle herds — including in Texas — raising concerns about the potential impact on the food chain. In 2022, the worst-ever global outbreak of the disease prompted more than 72 million birds to be killed in the US to slow the spread of the virus.

FUTURES & WEATHER

Wheat prices overnight are up 1/2 in SRW, up 2 1/4 in HRW, up 2 3/4 in HRS; Corn is up 1; Soybeans down 2 1/4; Soymeal down $2.70; Soyoil up 0.37.

For the week & month so far wheat prices are down 16 1/4 in SRW, down 20 in HRW, down 13 3/4 in HRS; Corn is down 14 1/4; Soybeans down 15 3/4; Soymeal down $10.90; Soyoil up 1.13.

Year-To-Date nearby futures are down 13.4% in SRW, down 12.0% in HRW, down 12.8% in HRS; Corn is down 9.2%; Soybeans down 9.1%; Soymeal down 15.3%; Soyoil up 2.6%.

Chinese Ag futures (MAY 24) Soybeans up 17 yuan; Soymeal down 40; Soyoil up 62; Palm oil up 174; Corn up 7 — Malaysian Palm is up 91. Malaysian palm oil prices overnight were up 91 ringgit (+2.11%) at 4403.

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 2 were: SRW Wheat up 5,285 contracts, HRW Wheat up 546, Corn down 7,512, Soybeans up 8,938, Soymeal up 6,359, Soyoil up 6,484.

Weather: A strong, slow-moving storm system centered over the middle Mississippi Valley will drift northward today. Elsewhere, rain and snow showers will gradually overspread the western U.S. during the mid- to late-week period, with some precipitation reaching the Plains on Saturday. The NWS 6- to 10-day outlook for April 7 – 11 calls for the likelihood of near- or above-normal temperatures in most areas from the Plains to the East Coast, while cooler-than-normal conditions will cover southern Florida and the western U.S. Meanwhile, near- or below-normal precipitation in the East and West should contrast with wetter-than-normal weather across the remainder of the country, including the Plains and the Mississippi Valley.

The player sheet for 4/2 had funds: net sellers of 4,500 contracts of SRW wheat, sellers of 7,000 corn, sellers of 5,000 soybeans, sellers of 4,000 soymeal, and buyers of 1,500 soyoil.

TENDERS

• CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 metric tons of animal feed corn in an international tender on Tuesday, with the grain expected to be sourced from Argentina.
• FOOD WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 113,535 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close late on Thursday, April 4.
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 metric tons of milling wheat which closed on Tuesday.
• WHEAT PURCHASE UPDATE: Saudi Arabia bought 795,000 metric tons of wheat in a tender, the General Food Security Authority (GFSA) said on Monday. The arrival of wheat shipments is expected in Saudi Arabia between June and July 2024, the GFSA said.

 

 

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending March 29 are based on seven analyst estimates compiled by Bloomberg.

• Production seen lower than last week at 1.046m b/d
• Stockpile avg est. 26.166m bbl vs 26.092m a week ago
  • Would be the highest since March of last year

Lower Profits for Brazil’s Soy Farmers Will Restrict Planting

Brazil soy farmers aren’t expected to make investments or expand their planted area in the next crop season because of lower crop prices and upcoming debt payments, said Cleiton Gauer, superintendent at IMEA, a private agency responsible for crop forecasts in Mato Grosso.

• Current soy prices aren’t high enough to cover farming costs in Mato Grosso: IMEA
• Soy farmers earnings before items such as interest, taxes, depreciation and amortization expected to be 83% lower in 2024-25 season due to higher costs and falling soy prices: IMEA
  • Corn farmers forecast to see financial losses in 2024-25 for the second harvest in a row
• Grain growers will keep soy acreage unchanged while also lowering investments, especially in machinery, according to Mauro Osaki, a researcher at University of Sao Paulo
  • In the 2023-24 crop year, soy farmers in Sorriso, a key city in Brazil’s biggest producing state Mato Grosso, saw negative net-operational revenue due to falling prices and soy yields
• Osaki and Gauer spoke at a press conference

USDA Cuts Brazil 2023/24 Corn Output on Smaller Planted Area

Corn production in Brazil is seen at 122m tons in the current season, according to the latest US Department of Agriculture report.

• That’s 2m tons lower versus the previous March 8 estimate
• Planted area estimate reduced to 21.5m hectares from previous 22m hectares
  • Delay in the soybean harvest, which precedes the sowing of corn, has led producers to decrease the planted area of corn for 2023/24
• “Despite initial optimistic projections for this harvest, the El Niño hindered planting and the development phase of the summer crop in the south region of Brazil,” report says
• Brazil corn exports for 2023/2024 seen at 45m tons, a cut from the previous forecast of 52m tons
  • Brazilian corn likely to lose market share to U.S. and Argentina on less competitive prices: USDA

China Asks Traders to Curb Some Arrivals of Overseas Corn

• Country seeks to bolster prices as farmers prepare to plant
• Corn prices in China near lowest in more than three years

Chinese customs have asked some traders to limit deliveries of foreign corn into bonded areas in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season.

Traders use this method to bring in grain at cheaper rates. The country has an official corn-import quota of 7.2 million tons, which benefits from a tariff of just 1%. Above that, cargoes are subject to duties of 65%. However, corn brought into bonded areas can be blended with other ingredients and processed into animal feed, which is then imported at a lower duty.

Local officials are asking traders and processors to keep arrivals below levels the previous year, said the people, who declined to be identified as they are not authorized to speak publicly. Authorities stepped up checks on cargoes and tightened requirements for processors, according to one of the people.

Major US Ports Pushing Capacity Limits, Shipping Veteran Says

• Containers stacked six high are imperiling pavement integrity
• Says limits ‘closer than most people think,’ expansion needed

The biggest US ports are stretching capacity limits and need to expand to handle anticipated growth in inbound shipping, according to shipping industry veteran John McCown.

Even before the Baltimore bridge disaster that shut one of the East Coast’s most important delivery points, space was so constrained at the nation’s 10 largest ports that containers unloaded from ocean-going vessels were being stacked six high in some places, said McCown, founder of Blue Alpha Capital and former CEO of Trailer Bridge Inc.  The stacks can’t go any higher without threatening to crack pavements below, he noted.

“Capacity limits are closer than most people think,” McCown said Tuesday at the Port of the Future conference at the University of Houston. “Our container system is approaching its physical limits.”

Over the next 20 years, the US will need to expand inbound shipping capacity by the equivalent of four Ports of Los Angeles, said McCown, a senior nonresident fellow at the Center for Maritime Strategy.

“Inbound traffic will continue to grow,” he said. “We need to take steps now.”

THE U.S. WILL WARM INTO MID-APRIL IN A VERY ACTIVE PATTERN THAT WILL BOOST SOIL MOISTURE LEVELS – LSEG Commodities Research & Forecast

What to Watch:

Temperatures will remain cool this week in the Midwest, but a strong warming trend will then arrive over the weekend across the U.S. and it will continue into the foreseeable future

At least two major cyclones will bring widespread rains to the U.S. through 7-10 days, the first of which is already impacting the Midwest

Upcoming rains will boost soil moisture in a favorable trend for winter wheat, and increasing warmth will aid spring plantings as the month unfolds

PAST WEATHER

A strongly divided weather pattern was recorded over the major U.S. crop areas in the past week. Temperatures were 2-5 °F warmer than normal along the core Midwest states, 5-15 °F colder than normal spanning the Plains and Upper Midwest, and near normal elsewhere across the country. 7-day precipitation totals were 20-40 mm (~0.8-1.6 in) wetter than normal along the Mississippi River Valley and surrounding areas, while most other regions of the U.S. received near normal rainfall. The uptick in Midwest rains was beneficial for boosting soil moisture ahead of spring crop plantings, as well as for winter wheat development.

FORECAST

The North Atlantic Oscillation (NAO) will flip into its positive phase event during the latter portion of the 15-day forecast. This will support the potential for increasing U.S. warmth beyond 10 days. On 10-day numerical model performance, the EC has recently outperformed the GFS in North America. This means that the EC is the preferred model for the 10-day outlook. Numerical model performance has been improving of late, making for a high confidence forecast.

U.S. weather will trend toward increasing warmth and a very active pattern into mid-April. Cool temperatures will linger this week over the Midwest U.S. with conditions 4-8 °F below normal, while other areas will be near normal through 5 days. Much warmer temperatures will then overspread most major crop regions of the U.S. as a major change in the 6-10 day forecast. Multiple cyclones will impact the U.S. through the next 10 days, as precipitation totals will be 25-75 mm (~1-3 in) wetter than normal spanning most of the Midwest, Plains, and Mississippi Delta regions (see figure below). Only the Southeast U.S. will be dry, and the action from the first cyclone is already beginning in the Midwest, a storm that will bring severe thunderstorms, heavy rains, and modest snowfall to various states in the next few days. Another storm farther down the line in the 10-day outlook will be more focused on bringing rains to the Plains and southern states. Beyond 10 days, warm temperatures are likely to persist or intensify further over the country. Warming temperatures and widespread rains will both be favorable for winter wheat development and soil moisture levels for upcoming spring crop plantings.

Bird Flu Spooks Meat, Milk Traders as Virus Hits Dairy Cows

• Consumer reaction uncertain even as USDA reassures on risks
• Virus found in cows across several states; one person infected

A virus that has killed millions of birds is spreading among US dairy cows, raising concerns that the outbreak may hurt demand for dairy and beef.

While the US Department of Agriculture has said there’s little safety risk, the outbreak is unsettling the industry, with cattle and milk prices taking a hit. There’s concern some shoppers will balk at drinking milk or eating beef.

“Risks to consumer demand for dairy are prevalent in conversations,” StoneX Group Inc. analyst Dave Kurzawski said in a note to clients. He added that while there are “big risks on the table,” the impact of the illness on buyer behavior is unclear.

Bird flu has been confirmed in dairy cows across several states, with the USDA saying Monday it has been found in New Mexico and five additional herds in Texas. The virus has even infected a person in Texas, while the biggest US egg producer idled a plant after the virus was found in the facility.

The infection of cows by the same virus strain that emerged in Europe in 2020 — and has since caused an unprecedented number of deaths in wild birds and poultry globally — is also raising concerns on the supply side.

Infected Texas dairy cattle are experiencing decreased lactation and low appetite, with older cows more likely to be severely impacted. Some herds have reported pneumonia and clinical mastitis — an inflammatory disease — the Texas Animal Health Commission said by email. Most animals seem to recover in as many as two weeks with supported care, albeit with reduced milk production levels.

Some cows may never see their milk production recover to pre-infection levels, in which case they might be culled, according to a HighGround Dairy report Monday. “The longer-term impact on supply is not entirely clear, as farmers are trying to maintain herd inventories in a time of tight cattle supplies,” it said.

For an individual farmer who has already been struggling with low prices and low margins, even a small amount of lost production adds another challenge, according to Alan Bjerga, executive vice president of communications and industry relations at the National Milk Producers Federation. But he added that the overall impact to the industry should be mild.

“When you consider the tiny number of farms with confirmed illnesses, the limited number of cows affected, the limit of that sickness to only older animals, and the fact that cows that become ill eventually recover to produce milk again,” the impact on the milk supply is minuscule, he said.

While no cases have been found in beef herds so far, cattle futures fell 2.7% on Monday following the confirmation of a person in Texas had been affected. The market trimmed some losses on Tuesday.

The person in Texas most likely contracted bird flu after being exposed to infected dairy cows, public health officials said. The US Centers for Disease Control and Prevention said the risk to the general population remains low.

“The market has made a huge leap here into the idea that beef demand is definitely going to be severely impacted by bird flu,” Dennis Smith, an analyst at Archer Financial Services Inc., said in an interview.

Still, milk from impacted animals is being diverted or destroyed so it doesn’t enter the human food supply, and the CDC said people should not eat uncooked or undercooked food from animals that may be infected. The Food and Drug Administration isn’t aware that any milk or dairy product from symptomatic cows has been sent for commercialization.

“There continues to be no concern that this circumstance poses a risk to consumer health, or that it affects the safety of the commercial milk supply,” the USDA said. In addition, milk loss has been too limited to have a major impact on supply and prices, the agency said.

Panama Canal Will Need Rest of Year to Recover From Drought

The Panama Canal will need at least the rest of this year to fully recover from the 2023 drought that depleted water levels, choked vessel traffic and cost shippers millions of dollars.

La Niña is expected to usher in ample rains in a matter of weeks, providing relief after record dryness afflicted the key transit channel in 2023, said Argelis Moreno Lopez, senior forecast and market analysis specialist in the Panama Canal Authority’s strategic planning division. The moisture deficit is so severe that it will take months of precipitation to rectify, she added.

“By the end of April, rain is going to begin and we’re going to have a lot,” Lopez said Tuesday during the Ports of the Future conference at the University of Houston. “That will reverse the situation and go back to normal at the end of the year or next year.”

Completed Construction at Nebraska Renewable Diesel Plant Delayed to 2026 — OPIS

Completion of construction on an 80-million-gal/year renewable diesel facility in Nebraska has been delayed until 2026, a company involved in the project said Tuesday.

Heartwell Renewables, a joint venture between The Love’s Family of Companies and Cargill, broke ground on the plant in November 2022 with plans for the project to be completed this summer. Now, however, completion of the facility will likely occur “in phases over the next two years,” Chuck Miller, Cargill’s senior communications manager, told OPIS.

“While we’ve experienced challenges in access to labor, supply chain issues stemming from COVID and construction delays, we’ve equipped ourselves with the right talent and expertise to manage them,” Miller said. “We continue to be extremely excited and invested in this project.”

Heartwell “will be the only entity of its kind to both manufacture and distribute renewable diesel fuel all the way to the retail pump,” he added.

The site, located in Hastings, is expected to employ more than 500 people during its construction, according to Miller, and more than 80 during its operation.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

US Agriculture Sentiment Rises in March: Purdue Univ.

The Purdue University/CME Group’s agricultural sentiment index increased to 114 points in March from 111 in Feb., according to a survey of 400 agricultural producers.

• Current conditions component declined by 2 points from Feb.
• Future expectations up by 5 points

 

 

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