Global Ag News for Dec 22.22

TOP HEADLINES

Mexico Poultry Union Wants Decree Permitting GMO for Livestock

Mexico’s National Poultry Union called on the government to amend a decree in the national daily gazette to clarify that a ban on GMO corn won’t prohibit GMO feed for poultry and livestock, according to a statement by the group.

• “This would help create an environment of certainty and offer space for dialogue among the sectors involved to plan and carry out programs that will lead us to self sufficiency in national production of corn for livestock consumption”
• Mexico consumes 42m tons of white and yellow corn but national production is only 28m tons: statement
• Consumption of yellow corn in Mexico is over 18.5 million tons, and 80% of that, or 15 million tons, is for livestock feed: statement
• Group applauded the government’s proposal to postpone ban on GMO imports until January 2025

FUTURES & WEATHER

Wheat prices overnight are up 5 1/4 in SRW, up 5 3/4 in HRW, up 1 3/4 in HRS; Corn is up 1 3/4; Soybeans up 1 3/4; Soymeal down $0.12; Soyoil down 0.14.

For the week so far wheat prices are up 15 3/4 in SRW, up 21 1/4 in HRW, up 18 3/4 in HRS; Corn is up 10 1/2; Soybeans down 1 3/4; Soymeal down $0.96; Soyoil up 2.01.

For the month to date wheat prices are down 22 1/2 in SRW, down 30 in HRW, down 13 1/2 in HRS; Corn is down 3; Soybeans up 10 3/4; Soymeal up $35.50; Soyoil down 5.59.

Year-To-Date nearby futures are down 0% in SRW, up 8% in HRW, down -5% in HRS; Corn is up 12%; Soybeans up 11%; Soymeal up 10%; Soyoil up 17%.

Chinese Ag futures (MAR 23) Soybeans down 21 yuan; Soymeal up 17; Soyoil up 8; Palm oil up 52; Corn up 9 –Malaysian palm oil prices overnight were down 62 ringgit (-1.57%) at 3898.

There were changes in registrations (-7 SRW Wheat, -85 HRW Wheat). Registration total: 2,788 SRW Wheat contracts; 0 Oats; 154 Corn; 91 Soybeans; 774 Soyoil; 291 Soymeal; 410 HRW Wheat.

Preliminary changes in futures Open Interest as of December 21 were: SRW Wheat up 127 contracts, HRW Wheat down 443, Corn up 3,535, Soybeans down 5,873, Soymeal up 4,293, Soyoil down 6,672.

Brazil Grains & Oilseeds Forecast: Mostly dry conditions return across southern Brazil Wednesday and through the remainder of the week. A cold front will push into the area this coming weekend, which will benefit the developing corn and soybeans. Below-normal temperatures are also expected after the passage of the cold front.

Argentina Grains & Oilseeds Forecast: A cold front will lift through the area late this week, providing some beneficial rainfall to the area which will help the developing corn and soybeans. Behind the cold front, below-normal temperatures will follow and allow for a more extended cool-down. Drier conditions will also return later this weekend after the cold front.

Northern Plains Forecast: Cold air will remain entrenched across the region through this weekend. Scattered snow showers will continue Wednesday, along with gusty winds that will create some blizzard conditions and dangerous wind chills. Drier conditions return for the end of the week before another system is possible late this weekend.

Central/Southern Plains Forecast: Widespread rain and snow will filter into the region Wednesday and tomorrow while areas across the southwest Plains will miss out on much of this precipitation. Well-below-normal temperatures will follow this system into this weekend, along with the risk for some winter kill on wheat across areas of the southwest Plains where precipitation will be scarce.

Midwest Forecast: A very cold air mass will continue to push into the region and hang on through the end of the week and into early next week. A significant system will begin to bring widespread snow showers and blizzard conditions during the next few days, along with dangerous wind chills. Conditions dry out by the end of the week before another system arrives late this weekend.

The player sheet for Dec. 21 had funds: net buyers of 10,000 contracts of SRW wheat, buyers of 5,000 corn, buyers of 1,000 soybeans, buyers of 1,000 soymeal, and  buyers of 1,000 soyoil.

TENDERS

• WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 56,000 tonnes of milling wheat to be sourced from the United States in a tender on Thursday
• WHEAT TENDER: Iraq’s state grains buyer is believed to have purchased about 150,000 tonnes of wheat expected to be sourced from Australia in an international tender this week.

PENDING TENDERS

• CORN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued new international tenders to purchase around 25,000 tonnes of food-quality soybeans free of genetically modified organisms (GMOs)
• FOOD WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 144,441 tonnes of food-quality wheat from the United States and Canada in a regular tender that will close on Dec. 22.
• SUNFLOWER OIL TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 24,000 tonnes of crude sunflower oil
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp has issued an international tender to purchase an estimated 83,672 tonnes of rice to be sourced from the United States.
• RICE TENDERS: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of rice.

TODAY

DOE: US Ethanol Stocks Fall 1.4% to 24.067M Bbl

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

• Analysts were expecting 24.405 mln bbl
• Plant production at 1.029m b/d, compared to survey avg of 1.041m

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

Estimate ranges are based on a Bloomberg survey of four analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Dec. 15.

• Corn est. range 600k – 900k tons, with avg of 733k
• Soybean est. range 800k – 1,300k tons, with avg of 1,100k

Indonesia Sees Palm Oil Exports at 36-38M Tons in 2023

Indonesia palm oil exports seen “normalizing” to 36-38m tons in 2023, from est. 34.67m tons this year, says Eddy Abdurrachman, president director of the Indonesia Oil Palm Plantations Fund Management Agency on Thursday.

• Indonesia sees contributing 32% of global oil and fats output next year
• Indonesia may start building ‘mini cooking oil factories’ next year to avoid repeat of shortage
• Indonesia seen collecting about 30t rupiah from palm oil export levy in 2023
• CPO prices seen moving at around $970/ton until mid-2023
• Agency sees posting cash surplus next year with around 20t rupiah carried over from this year

Indonesia Sees Exporting 34.67M Tons of Palm Oil in 2022

Indonesia sees exporting about 34.67m tons of palm oil this year, lower than 37.78m tons last year, says Eddy Abdurrachman, president director of the Indonesia Oil Palm Plantations Fund Management Agency on Thursday.

• Agency sees collecting about 34.5t rupiah from palm oil export levies this year
• Indonesia has replanted about 273,666 ha of oil palm plantation since 2016
• Indonesia seen consuming 10.6m kiloliters of biodiesel in 2022 vs. 9.29m kl last year
• Agency spends 34.56t rupiah on biodiesel incentives this year vs. 51.86t rupiah in 2021

Ukrainian minister sees big fall in 2022 corn harvest, smaller corn area in 2023

Ukraine’s corn production could fall to 22-23 million tonnes this year from 41.9 million in 2021 because of a reduction in the harvested area caused by Russia’s invasion, its agriculture minister said on Wednesday.

Russia invaded Ukraine in late February and swathes of land in the east, south and north of the country were occupied or damaged by hostilities.

“It would be good if we harvest 22 to 23 million tonnes (of corn),” Agriculture Minister Mykola Solsky, whose country is a major global exporter of corn, told Reuters in an interview.

The ministry in September, forecast the 2022 corn crop at 25 million to 27 million tonnes.

Solsky said farmers, facing a lack of fuel and funds, had left a lot of corn in their fields, and these areas could be harvested by spring.

“It means less volume and worse grain quality,” he said.

Ukraine has already completed the 2022 wheat and barley harvest, threshing 19.4 million and 5.6 million tonnes respectively.

Farmers had also harvested 18.4 million tonnes of corn from 70% of the expected area with a yield of 6.27 tonnes per hectare as of Dec. 15, according to agriculture ministry data.

The overall grain harvest totalled almost 45 million tonnes as of Dec. 15 and the ministry, which has forecast a total harvest of 51 million tonnes, has said 49.2 million tonnes could potentially be exported, depending on the logistical situation.

The exports could include 16.3 million tonnes of wheat, it said.

Ukraine’s exports have fallen significantly so far this season due to the war and Russian blockades of Ukrainian seaports.

Three leading Ukrainian Black Sea ports were unblocked at the end of July under a deal between Moscow and Kyiv brokered by the United Nations and Turkey.

MORE SUNFLOWER, LESS CORN

Solsky said a large area of non-harvested corn would prevent farmers from sowing corn again on these fields, with sunflower a possible replacement crop next spring.

“Harvesting corn in winter means that the fields will not be ready for the spring sowing of corn and this is another reason why there will be less corn. The fields will be sown with something else,” he said.

“I think there will be millions more hectares of sunflower planting. First and foremost, by reducing corn crops.”

He said Ukraine, the world’s major sunflower oil maker and exporter in peacetime, would export a “few million” tonnes of sunseed this season, leaving local sunoil refineries without raw materials.

Ukraine traditionally processes the lion’s share of its sunseed output domestically, exporting a very insignificant amount of the commodity.

Ukraine had harvested 10.1 million tonnes of sunseed from 4.6 million hectares, or from 98% of the expected area, as of mid-December. The sunseed harvest totalled 16.38 million tonnes in 2021.

SWINE/CEPEA: Valuation of live pigs raises farmers’ purchase power

High demand for pork meat, majorly because of the holiday season, has been raising live pig prices in Brazil. As for the major inputs consumed in the activity, corn values are firm, and for soybean meal, quotations on the rise, but valuations have been lower than that for pork meat. Thus, the purchase power of pig farmers in São Paulo and in Santa Catarina has increased against these inputs.

Between December 13 and 20, live pig prices rose a staggering 5.3% in the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba), to BRL 7.91/kg on Tuesday, 20.

In the corn market, Cepea surveys show that quotations have been firm in most of the regions, underpinned by the high exports’ performance in the last months and the possible increase in the demand from abroad – bombings at Ukrainian ports and concerns about the drought in Argentina are leading importers to Brazil. Thus, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) closed at BRL 86.05/bag on Dec. 20th, stable (-0.02%) compared to that on Dec. 13th.

As for soybean meal, high demand (in Brazil and from abroad) is underpinning quotations. In Argentina (the number one world supplier of soybean meal), the supply of the 21/22 crop is low, and agents are uncertain about the output from the 2022/23 crop, due to unfavorable weather. Thus, China is expected to import soybean meal from Brazil. In Campinas, soybean meal devalued 1.4% in the last seven days, to BRL 2,925.82/ton on Dec. 20th.

Thus, considering the ESALQ/BM&FBovespa Index for corn (Campinas) from Tuesday (20), the pig farmers from SP were able to purchase 5.52 kg of corn by selling a kg of animal, 5.4% more than that from the previous Tuesday (13). Of soybean meal (sold in Campinas), farmers were able to buy 2.7 kg by selling a kg of swine, 3.9% up from that on the previous Tuesday.

German Rapeseed Area Rises to 5-Year High, Wheat Down 1.9% Y/y

German farmers have sown 1.2m hectares of rapeseed for the 2023 season, up 7.6% y/y, according to a government statement.

• That would be the highest since the 2018 season
• Plantings are up due to high prices, given the war in Ukraine and Canada’s poor 2021 harvest
• Farmers planted 5m hectares of winter grain for 2023, little changed from the prior year:
  • Wheat area at 2.8m hectares, down 1.9% y/y
  • Barley area at 1.3m hectares, up 5.1% y/y

Storm Forces US Ethanol Cuts, Signaling Threat of Gas Crunch

• Natural gas prices are becoming ‘untenable’ for biofuel makers
• Plants are being affected in the Dakotas, Minnesota, Wisconsin

Some US ethanol producers are cutting back production as soaring natural gas prices amid bitterly cold temperatures in parts of the country are becoming “untenable” for the biofuel makers.

The reduction for ethanol is signaling a potential squeeze on gas supplies just as the Arctic blast is set to raise demand from consumers to heat their homes. During an extreme cold spell in February 2021, production curbs at biofuel plants were among the first signs of a gas crunch that ultimately sent energy bills soaring in Texas. At that time, some ethanol producers also sold gas back to the grid. So far this week, there are no reports of those kinds of sales.

Natural gas prices are spiking to “untenable levels for many ethanol producers, causing some to drastically reduce output,” said Geoff Cooper, head of the Renewable Fuels Association. The freeze is also causing delays in getting rail cars needed to ship product, he said.

Ethanol plants are being affected in the Dakotas, Minnesota, Wisconsin, and parts of Iowa and Nebraska, said Cooper, who declined to identify which companies are reducing production.

US Fertilizer Prices Fall as Traders Look Ahead to Spring Needs

Nitrogen, phosphate and potash prices continue to fall in the US as the autumn application season ends and winter and spring pricing programs begin. Declines this week were led by producers’ spring prepay ammonia offers and winter fill programs for potash, while urea and phosphates remained under pressure at New Orleans and inland.

Most Fertilizer Products Flat-to-Down in Wednesday Whisper

Most fertilizer products were level-to-lower, with urea showing the most consistent weakness as prices fell at New Orleans (NOLA), inland North American markets and Brazil. Urea ammonium nitrate and ammonium sulfate were also down. The NOLA phosphate market was quiet, though Brazil prices firmed. Brazil potash continued to drop, while NOLA and inland US took a breather. Inland ammonia prices were stable, though a drop at Tampa for January was less certain due to a new plant outage in Europe because of natural gas prices.

Prices or movements quoted in our Wednesday Whisper may not reflect the full range to be reported in the final Friday edition of the Green Markets weekly.