Global Ag News For Dec 30.22

TOP HEADLINES

Ukraine Corn Harvest 78% Complete as of Dec. 30: Government

Ukrainian farmers have harvested corn from 78% of planted areas as of Dec. 30, according to a government statement.

• 21.4m tons of corn harvested from 3.3m hectares
• NOTE: Corn harvest totaled 20.2m tons on Dec. 22

FUTURES & WEATHER

Wheat prices overnight are down 1 1/2 in SRW, down 1/2 in HRW, up 1/2 in HRS; Corn is down 1/2; Soybeans up 10 3/4; Soymeal up $0.35; Soyoil down 0.36.

For the week so far wheat prices are up 1 1/4 in SRW, down 4 1/4 in HRW, down 14 1/2 in HRS; Corn is up 15 1/4; Soybeans up 46 3/4; Soymeal up $1.24; Soyoil up 1.95.

For the month to date wheat prices are down 23 in SRW, down 33 3/4 in HRW, down 28 1/2 in HRS; Corn is up 12; Soybeans up 51 1/2; Soymeal up $46.00; Soyoil down 4.28.

Yearend…finally. Year-To-Date nearby futures are up 1% in SRW, up 9% in HRW, down -7% in HRS; Corn is up 15%; Soybeans up 15%; Soymeal up 14%; Soyoil up 17%.

Chinese Ag futures (MAR 23) Soybeans down 4 yuan; Soymeal up 31; Soyoil up 42; Palm oil up 96; Corn up 4 –Malaysian palm oil prices overnight were up 88 ringgit (+2.15%) at 4178.

There were changes in registrations (-3 Soybeans, 219 Soyoil, -58 Soymeal). Registration total: 2,788 SRW Wheat contracts; 0 Oats; 154 Corn; 88 Soybeans; 993 Soyoil; 147 Soymeal; 310 HRW Wheat.

Preliminary changes in futures Open Interest as of December 29 were: SRW Wheat up 2,565 contracts, HRW Wheat up 376, Corn up 10,415, Soybeans down 3,107, Soymeal down 3,150, Soyoil up 5,953.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana: Mostly dry through Saturday. Scattered showers Sunday night-Monday. Temperatures near normal through Saturday, near to above normal Sunday-Monday. Mato Grosso, MGDS and southern Goias: Scattered showers through Monday. Temperatures near normal through Monday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires: Isolated showers Saturday. Scattered showers Sunday. mostly dry Monday. Temperatures near to above normal Friday-Saturday, near to below normal Sunday-Monday. La Pampa, Southern Buenos Aires: Mostly dry through Saturday. Scattered showers Sunday. Mostly dry Monday. Temperatures near to above normal Friday-Saturday, near to below normal Sunday-Monday.

Northern Plains Forecast: Mostly dry Friday-Saturday. Isolated to scattered showers Sunday-Monday. Temperatures near to above normal through Monday. Outlook: Mostly dry Tuesday-Thursday. Isolated showers Friday. Mostly dry Saturday. Temperatures near to below normal Tuesday-Wednesday, near to above normal Thursday-Saturday.

Central/Southern Plains Forecast: Mostly dry Friday-Saturday. Scattered showers Sunday night-Monday. Temperatures above normal through Monday. Outlook: Scattered showers Tuesday. Mostly dry Wednesday-Thursday. Isolated showers Friday. Mostly dry Saturday. Temperatures near to below normal Tuesday-Wednesday, near to above normal Thursday-Saturday.

Western Midwest Forecast: Mostly dry Friday-Sunday. Scattered showers Monday. Temperatures above normal through Monday.

Eastern Midwest Forecast: Isolated to scattered showers through Saturday. Mostly dry Sunday. Scattered showers Monday. Temperatures above to well above normal through Monday. Outlook: Scattered showers Tuesday, east Wednesday. Mostly dry Thursday. Isolated showers Friday-Saturday. Temperatures above to well above normal Tuesday-Saturday.

The player sheet for Dec. 29 had funds: net sellers of 5,000 contracts of SRW wheat, sellers of 1,500 corn, sellers of 2,000 soybeans, sellers of 1,500 soymeal, and  buyers of 2,500 soyoil.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. issued an international tender to purchase an estimated 113,460 tonnes of rice to be sourced from the United States. The deadline for submissions of price offers is Dec. 29.

TODAY

Argentine Soy, Corn, Wheat Estimates Dec. 29: Exchange

The Buenos Aires Grain Exchange releases weekly report on website.

• 2022-23 soybean and corn area estimates both are unchanged from the previous week
• 2022-23 wheat harvest advanced to 91.4% complete from 78.3%

Argentina Drought Threatens 3% of Soy Plantings: Exchange

Argentina needs more rain soon to unlock fieldwork on parched farms, the Buenos Aires Grain Exchange said in a weekly report.

• If rains don’t fall in the next couple of weeks, 500,000 hectares (~1.2m acres) of planned plantings risk being abandoned
  • For now, the bourse has kept its soy area estimate at 16.7m ha
  • Soy planting is 72% complete, trailing last season by 9.2 percentage points
• Bourse may cut its wheat estimate again, currently at 12.4m metric tons, if yields in key southern regions continue to disappoint
  • Wheat harvest 91% complete
  • NOTE: Rosario Board of Trade trimmed its wheat forecast earlier this month by 2.5% to 11.5m tons
  • NOTE: Parched Wheat Crop Augurs Tough Quarter Ahead for Cash-Strapped Argentina
• Early-planted corn is suffering from the drought

Russian wheat harvest to total 102.65 mln tonnes in net weight in 2022 – Rosstat

According to preliminary data, Russia will harvest 102.65 million tonnes of wheat in net weight in 2022, the Federal State Statistics Service (Rosstat) said.

The agency also updated data on the overall grain harvest. It revised up to 150.98 million tons from 150.7 million tonnes previously.

Palm Oil Expected to Be 25% Lower in 2023 on Rising Supply: MPOB

The average local price of crude palm oil is expected to be 25% lower in 2023 due to higher output and increased availability of other major vegetable oils, according to the Malaysian Palm Oil Board.

• Palm oil prices are forecast to average 3,800 ringgit/ton in 2023, compared with an estimated 5,100 ringgit this year, Ahmad Parveez Ghulam Kadir, director general of the board, said in a statement
  • Prices have dropped since the start of the third quarter because of high production, rising stockpiles and declining soybean oil prices
  • Weaker soyoil prices due to higher output in Brazil and the US, and a stronger ringgit could also affect palm oil
• Malaysia’s palm oil stockpiles are expected to be at 2m tons at the end of 2023, compared with an estimated 1.85m tons this year and 1.61m tons in 2021
• Palm oil output is forecast to rise to 19m tons next year, from 18.5m tons in 2022, due to a likely increase in the “productive areas,” especially the Peninsular Malaysia and Sarawak
  • Improved weather conditions in the second half of 2023 will also help production
• A labor shortage that impacted output in 2022 may stabilize next year because foreign worker applications are being approved in stages
• Exports of palm oil and its products rose 1.3% from a year earlier to 22.43m tons during January-November
• Ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will increase demand for palm oil products as Malaysia’s access to new markets such as Canada, Mexico and Peru is broadened

Wheat Winterkill in Question — Market Talk

The damage done to US winter wheat from the arctic blast that passed through the country over the past week will be difficult to fully assess until harvest-time in March, says Marex in a note. “We are likely to see desiccated leaves, especially given the high winds that we have seen along with this front,” says Robert Phillips of Marex. “This will cause the wheat to look like someone took a flame thrower to it, but that does not necessarily mean that the plant’s crown has sustained any damage.” Wheat plants without a damaged crown– the portion of the plant’s stalk under the soil’s surface–are likely to regenerate and be healthy by harvest-time, says Phillips. In trading, CBOT most-active wheat futures are down 1.7%.

India Allows Edible Oil Imports at Low Taxes for Another Year

The base import tax on crude palm, soybean and sunflower oils will continue to be zero for another year until March 31, 2024, according to a finance ministry notification late Thursday.

• Importers still pay an agriculture infrastructure tax of 5%, and a social welfare levy of 10% on the infra duty; effective tax stays at 5.5%
  • NOTE: India currently allows duty-free imports of 2m tons each of crude soybean and sunflower oils per year for 2022-23 and 2023-24 fiscal years; infrastructure and social welfare levies are applicable when the govt quota is not availed
• The base import tax on refined palm olein and palm oils will remain 12.5%; the government also imposes a social welfare levy of 10%, increasing the effective duty to 13.75%
• The base import tax on refined grades of soybean and sunflower oils will continue to be 17.5%; effective duty rises to 19.25% on both the oils after the welfare levy
  • NOTE: India, the world’s biggest buyer of edible oils, depends on overseas supplies for 60% of its needs
  • NOTE: Demand for vegetable oils, which are widely used to prepare sweets, fried food and other treats, rises during the festival season that generally begins in September and ends in November

SOYBEAN/CEPEA: Lower output and high demand raise quotations in 2022

The 2021/22 soybean season began with agents concerned about the decrease in the supply of soybean in Brazil, majorly in the southern area of the country and in some regions in southeastern and central-western Brazil. As significant losses were also registered in Argentina and in Paraguay, higher supply in the United States was not enough to offset these decreases in production. Thus, world stocks decreased, underpinning prices abroad and in Brazil, where the annual average in 2022 set a record, in real terms (values were deflated by the IGP-DI from Nov/22).

In Argentina – the major world supplier of soybean meal –, besides lower soybean production, in March, the federal government raised the export tariffs on soybean by-products, aiming to soften the economic crisis in Argentina. Also, a truckers strike hampered trades in the country. As a result, the world demand for soybean meal and oil increased high.

This scenario was worsened by the Russia-Ukraine war, which reduced the supply of sunflower oil, one of soy oil’s major competitors – Ukraine is the top exporter of this product. Besides, some countries reduced palm oil sales, aiming to stop inflation – as observed in Indonesia, the world’s number one producer and exporter of palm oil.

However, in the second semester, prices weakened, influenced by both the agreement between Russia and Ukraine on the exports of some Ukrainian products from the Black Sea and the harvesting of the 2022/23 crop in the United States. In Argentina, the government stablished a special system called “soybean dollar”, aiming to encourage farmers to sell part of their stocks. Indeed, liquidity increased in Argentina, and the interest of importers in the products from Brazil and the United States decreased.

Still, between October and November, the international demand for the Brazilian product was high, boosted by logistic issues in the United States, due to the low level of the Mississippi River.

In the last quarter of 2022, Brazilian sales were hampered by blockades in the highways that lead to the port of Paranaguá (PR), which hampered road transportation and resulted in ship queues at ports. Besides, Brazilin farmers began to focus on sowing the 2022/23 season and avoided selling the remaining of the 2021/22 crop.

CORN/CEPEA: In a year of record crop, exports limit price decreases

Corn prices started 2022 in an upward trend, boosted by low ending stocks and concerns related to the 2021/22 summer crop – its productivity was affected by unfavorable weather conditions. After the first quarter, players were focused on the second crop, with a record production, which has been pressing down values since then.

However, price drops in Brazil were limited by high international values, due to the restricted global supply. The Russia-Ukraine war, which has begun in late February, pushed up the export parity and favored Brazilian shipments.

The 2021/22 season in Brazil started with ending stocks at 7.78 million tons, 27% less than in the previous crop, and with 24.97 million tons in the summer crop, lower than the productive potential initially forecast by Conab.

In this scenario, between January and March, the average of the ESALQ/BM&FBovespa Index (Campinas/SP) for corn was high, at BRL 97.53 per 60-kilo bag. Since then, because sowing activities have been satisfactory in the Central-South, values have started decreasing. The average of the first semester was BRL 92.39 per bag, only 1% above that registered in the same period of 2021, in nominal terms.

At the ports of Paranaguá (PR) and Santos (SP), average prices were at BRL 93.35/bag and 92.91/bag in the first semester, moving up 13% and 19%, respectively, compared to the same period in 2021. Shipments were moving at a good pace: 6.3 million tons were exported from January to June 2022, against only 3.6 million tons in the first semester last year, according to data from Secex.

Because of the combination of prices at high levels in the first semester and the expectation of firm demand, the second corn crop area increased 9%. The weather favored productivity, which rose by 30% compared to the previous second crop. Therefore, the second crop totaled 85.61 million tons, 42% up in relation to 2021/22.

As a whole, the 2021/22 production in Brazil (considering three crops) totaled 112.83 million tons, 30% more than the previous and a record. Total production and initial stocks (7.78 million tons) and the imports, forecast at 2.8 million tons, resulted in 2021/22 availability of 123.69 million tons. The domestic consumption was at 75 million tons, generating a surplus of 48 million tons, according to data from Conab.

The domestic surplus at high levels and at competitive prices in the global market increased the international demand in the second semester. Therefore, Brazilian sellers were trading both at ports and in the domestic market, sustaining the ESALQ/BM&FBovespa Index (Campinas/SP) between BRL 80 and 86/bag in the second semester. However, the Index closed at BRL 86.42/bag on December 28, moving down 4.3% in 2022. At Brazilian ports, on the other hand, due to the firm demand and high international prices, increases were significant.

Indonesia Issues Decree on Revised 2023 Biodiesel Allocation

Indonesia cuts biodiesel allocation for state-owned energy company Pertamina by 1.2% for 2023 as govt decides to start B35 biodiesel blending mandate in February, according to a decree issued by the Energy and Mineral Resources Ministry.

• Pertamina Patra Niaga and Kilang Pertamina Internasional will get a total of 10.51m kl of biodiesel in 2023
• Total biodiesel allocation kept at 13.15m kl next year, including 156,531 kl of reserves quota
• Reserves quota to be used in case of higher-than-expected consumption next year, said Edi Wibowo, director of bioenergy at the ministry by text message on Friday
• Biodiesel quota for other fuel retailers also slightly reduced

Indonesia Cuts Palm Oil DMO: Exports Ratio to 1:6 Starting Jan.

Indonesia, the world’s biggest oil palm grower, will reduce the ratio of exports to six times of domestic sales requirement from eight times currently, according to Budi Santoso, director general of foreign trade at the trade ministry.

• Policy effective from Jan. 1, Santoso said by text message, without explaining more details
• NOTE: Govt sets the ratio at 1:8 since November

Indonesia weather agency predicts dry 2023, warns of forest fire risks

Indonesia will face its driest weather since 2019 next year, the country’s weather agency forecast on Thursday, citing the weakening of the La Nina pattern.

The BMKG agency warned less rain could increase the risk of forest fires while the trend of the past three years also suggested a heightened risk of earthquakes and tsunamis.

“Starting May until April 2023, it will be getting dryer compared to the past three years, so the risk of forest fire rises,” BMKG Director Dwikorita Karnawati told reporters.

She said the influence of La Nina, which refers to the cooling of ocean surface temperatures combined with winds and rains, will end around March 2023, causing lower rainfall.

Dwikorita said next year’s dry season could be similar to that in 2019, when more than 1.65 million hectares (4.1 million acres) of forests burned. The fires cost the country at least $5.2 billion in damage and economic losses, according to the World Bank estimates.

Indonesia has been able to limit the losses since then, with just over 200,000 hectares of forests and land burnt between January and November of this year, the environment ministry data showed.

In order to prevent forest fires, Dwikorita said BMKG along with the enviroment ministry would conduct weather modification in April or May. The term usually refers to cloud seeding – shooting salt flares to trigger rainfall in dry areas.

While droughts in major palm oil planting areas in 2019 also hit output that year, BMKG made no prediction on the impact of 2023 weather on crops.

China’s sow herd up 0.2% in November vs month ago – agriculture ministry

China’s sow herd increased by 0.2% in November from the month before to 43.88 million sows, according to data published by the Ministry of Agriculture and Rural Affairs on Friday.

The herd was also 2.1% larger than a year ago, the data showed.

Grain Shipments on Mississippi River Fell 21% Last Week: USDA

Barge shipments down the Mississippi river declined to 626k tons in the week ending Dec. 24 from 790k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 21% from the previous week
• Soybean shipments down 22% w/w
• St. Louis barge rates were $32.92 per short ton, a decline of $0.71 from the previous week