Global Ag News For Jan 5.23

TOP HEADLINES

Kenya to Double Corn Output in 2023 as Dam Construction Begins

Planting of 10,000 acres to begin in Feb. at state-owned Galana Kulalu farm on the Kenyan coast, President William Ruto says in live television broadcast on Wednesday.

• The next 10,000 acres will be prepared for production in six months, doubling the existing 20,000 acres of land
• Construction of dam to begin in 90 days to expand irrigation capacity to as many as 400,000 acres in the next two years
• “The solution to lowering the cost of living is increasing food production”

FUTURES & WEATHER

Wheat prices overnight are up 3 1/2 in SRW, up 4 in HRW, up 5 3/4 in HRS; Corn is up 2 3/4; Soybeans up 3/4; Soymeal down $0.30; Soyoil up 0.93.

For the week and month so far wheat prices are down 43 in SRW, down 43 1/4 in HRW, down 29 1/2 in HRS; Corn is down 22; Soybeans down 39 3/4; Soymeal down $1.13; Soyoil down 0.29.

Year-To-Date nearby futures are down 5.4% in SRW, down 4.9% in HRW, down 3.1% in HRS; Corn is down 3.2%; Soybeans down 2.6%; Soymeal up 0.8%; Soyoil down 1.1%.

Chinese Ag futures (MAR 23) Soybeans down 35 yuan; Soymeal down 47; Soyoil down 90; Palm oil down 104; Corn up 9 — Malaysian palm oil prices overnight were down 78 ringgit (-1.87%) at 4091.

There were changes in registrations (-479 Soyoil, -20 Soymeal). Registration total: 2,788 SRW Wheat contracts; 0 Oats; 154 Corn; 181 Soybeans; 514 Soyoil; 39 Soymeal; 280 HRW Wheat.

Preliminary changes in futures Open Interest as of January 4 were: SRW Wheat up 1,996 contracts, HRW Wheat up 582, Corn down 5,562, Soybeans up 712, Soymeal up 574, Soyoil up 1,207.

Brazil Grains & Oilseeds Forecast: A front brought scattered showers through southern Brazil over the last couple of days, but it is dry behind the front going into early next week. Showers have been somewhat disappointing recently across the south, which is causing concerns for reproductive to filling corn and soybeans. Otherwise, conditions over central and northern Brazil continue to be favorable for filling soybeans.

Argentina Grains & Oilseeds Forecast: Dry conditions continue in Argentina until a front moves through early to mid-next week. Showers with that front are expected to be very isolated. Conditions continue to be poor for corn and soybeans in the country as rounds of heat and dryness are only broken up by inadequate showers. That streak looks to continue through most of the month of January.

Northern Plains Forecast: Some light snow will linger over eastern South Dakota Wednesday, but it is drier elsewhere in the Northern Plains and should remain that way going into next week. Temperatures will be on the cooler side of normal for the next few days but should rise next week.

Central/Southern Plains Forecast: Heavy snow fell across Nebraska over the last couple of days, with some reports over 12 inches. Southwestern areas of the Plains missed out on any meaningful precipitation. The region will be drier going into next week, with only a slight chance for isolated showers Friday into Saturday.

Midwest Forecast: A strong system moved through the Midwest over the last couple of days with widespread precipitation and heavy snow and ice across the far northwest. Though the system is strong, temperatures behind the system will not be overly cold outside of snow-covered areas, which will be on the cooler side of normal until next week. Otherwise, temperatures remain above normal for this time of year.

The player sheet for Jan. 4 had funds: net sellers of 8,500 contracts of SRW wheat, sellers of 14,500 corn, sellers of 3,500 soybeans, sellers of 1,500 soymeal, and  sellers of 2,000 soyoil.

TENDERS

• FEED WHEAT SALE: An importer group Thailand is believed to have purchased about 75,000 tonnes of animal feed wheat expected to be sourced from optional origins in an international tender on Wednesday.
• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 124,000 tonnes of U.S. soybeans for shipment to unknown destinations in the 2022/23 marketing year.
• SOYBEAN SALE: South Korea’s state-backed Agro-Fisheries & Food Trade Corp has bought about 6,000 tonnes of food-grade soybeans free of genetically-modified organisms (GMOs) in an international tender for up to 25,000 tonnes which closed on Wednesday
• WHEAT, BARLEY TENDER: Tunisia’s state grains agency has issued an international tender to purchase around 100,000 tonnes of soft milling wheat and about 75,000 tonnes of animal feed barley.
• FEED WHEAT TENDER: An importer group in the Philippines has issued a tender to purchase around 110,000 tonnes of animal feed wheat.

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 was Dec. 29.

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Dec. 30 are based on six analyst estimates compiled by Bloomberg.

• Production seen slightly higher than last week at 965k b/d
• Stockpile avg est. 24.643m bbl vs 24.636m a week ago
• Would be the highest level since last April

Brazil Wheat Exports Seen Reaching 280,715 Tns In January – Anec

• BRAZIL EXPORTED 77.8 MILLION TNS OF SOY IN 2022 VERSUS 86.6 MILLION TNS IN 2021 – ANEC
• BRAZIL EXPORTED 20.4 MILLION TNS OF SOYMEAL IN 2022 VERSUS 16.88 MILLION TNS IN 2021 – ANEC
• BRAZIL EXPORTED 43.17 MILLION TNS OF CORN IN 2022 VERSUS 20,6 MILLION TNS IN 2021 – ANEC
• BRAZIL EXPORTED 3.2 MILLION TNS OF WHEAT IN 2022 VERSUS 1.1 MILLION TNS IN 2021 – ANEC
• BRAZIL SOY EXPORTS SEEN REACHING 1.3 MILLION TNS IN JANUARY – ANEC
• BRAZIL CORN EXPORTS SEEN REACHING 4.3 MILLION TNS IN JANUARY – ANEC
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 1.33 MILLION TNS IN JANUARY – ANEC
• BRAZIL WHEAT EXPORTS SEEN REACHING 280,715 TNS IN JANUARY – ANEC

Brazil soybean production down again as excessive moisture concerns mount in Goiás/Minas Gerais

2022/23 BRAZIL SOYBEAN PRODUCTION: 152.6 [141.5–163.3] MILLION TONS, DOWN 1% FROM LAST UPDATE

2022/23 Brazil soybean production is down again by 1% to 152.6 [141.5–163.3] million tons, as excessive moisture risks increase in key crop areas of the Central-West/Southeast while the lack of moisture continues in the South. Our current median estimate is 0.6 million tons above the USDA’s World Agricultural Outlook Board (WAOB)’s 152 million tons, which assumes total soy sowings at 42.9 million hectares and national level yield of 3.54 tons per hectare (tph) (vs. Refinitiv Ag Research’s 43.1 million hectares and 3.54 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged soy production and area at 153.5 million tons and 43.4 million hectares, respectively.

The past two weeks brought split weather for crops in Brazil. Below-average temperatures were observed in the South, with essentially every other major soybean area seeing temperatures 1-4°C above average. Weekly rainfall totals also showed a similar pattern, with only Rio Grande do Sul and some portions of Paraná/Santa Catarina experiencing deficits (30-50 mm below average) while the rest of the country seeing continued well above average (up to 60 mm) totals over the past 15 days. Flooding risks and excessive moisture concerns are increasing in Goiás (or the eastern half of the Central-West) and Minas Gerais (or the western half of the Southeast), in particular, as they have been bombarded with heavy rains since mid-December (though the intensity has diminished lately). There appears to be no end in sight to wetness in these two regions, warranting close attention. Meanwhile, dryness lingers in the second largest soy producer Rio Grande do Sul, showing a startling contrast. With sowing season largely coming to an end, continued lack of moisture there will soon start making its impact on yield, warranting attention.

Argentine government says 80.1% of 2021/22 soybean crop sold so far

Argentine farmers have so far sold 80.1% of the 2021/22 soybean harvest, the country’s agriculture ministry said on Wednesday, slightly behind the 80.5% sold during the same period in the previous cycle.

Producers in Argentina, the world’s top exporter of processed soy, sold 551,000 tonnes of the season’s soybean in the week of Dec. 22-28, marking one of the highest weekly figures seen in recent months. The total 2021/22 soybean harvest reached 44 million tonnes.

Soybean sales boomed after a temporary preferential exchange rate was established for producers by the government. This ended in late December.

Regarding 2021/22 corn harvest, the government said producers have sold 75.7% of the 59 million tonnes produced, down from the 77.9% seen in the 2020/21 cycle.

Corn planting for the 2022/23 cycle began in September, but progress was hampered by prolonged drought conditions as the country suffered the driest austral spring registered in the last 35 years, according to the Rosario grains exchange.

Argentina’s producers have sold 49% of the 6.6 million tonnes of 2022/23 wheat production.

The government expects the 2022/23 wheat crop to produce some 13.4 million tonnes, as the National Meteorological Service (SMN) forecasts the drought will likely continue to affect the country’s farming regions for a few more months.

Egypt Can Buy Wheat Via Governments, Adding to Crop-Import Shift

Egypt, one of the world’s top wheat importers, is further shaking up its crop-buying strategy.

The state-run General Authority for Supply Commodities is allowed now to import the grain and vegetable oils via government-to-government deals, the Cabinet said Wednesday. That marks an added shift in its purchasing process: GASC began straying from its regular wheat tenders last year, in favor of private negotiations with traders.

Egypt typically imports about 11 million to 12 million tons of wheat a season — about half of which is booked by GASC — and its purchases are closely tracked as a global benchmark.

The country was hard hit by a surge in wheat prices in the aftermath of Russia’s invasion of Ukraine. While costs have since eased, the country’s currency is trading at a record low, adding to import challenges.

Palm Oil Reserves in Malaysia Seen at Four-Month Low on Yields

• Stockpiles likely fell 4.4% in December from a month earlier
• Full-year output was probably only slightly higher than 2021

Palm oil inventories in Malaysia likely shrank to the smallest since August as the seasonally low production cycle and monsoon weather curbed output in the world’s second-biggest grower.

Inventories contracted about 4.4% in December from a month earlier to 2.19 million tons, according to the median of 11 estimates in a Bloomberg survey of analysts, traders and plantation executives. That’s the second monthly decline, although stockpiles still ended the year about 36% higher than end-2021.

Recent widespread flooding in parts of the country did not disrupt harvesting and transport of palm oil as much as initially feared, traders said. Labor shortages and monsoon rainfall did little damage to production, according to Paramalingam Supramaniam, a director at Selangor-based broker Pelindung Bestari Bhd. “Thus, we’ll have a sanguine level of end-stocks.”

Crude palm oil production likely fell 3% to a five-month low of 1.63 million tons, the survey showed. That brings full-year output to 18.46 million tons, higher than the 18.12 million tons produced in 2021. Exports in December probably eased 2% to 1.49 million tons, the first monthly drop since August.

Investor attention will now shift toward January production, when the number of harvesting days will be smaller due to the Lunar New Year holidays. The focus will also be on the pace of exports and the looming impact of the higher biodiesel mandate in top producer Indonesia, Paramalingam said.

India’s Palm Oil Imports Seen Strong for Second Month: GGN

India’s palm oil imports stayed strong for a second month in December as traders and processors preferred the tropical commodity over expensive soybean and sunflower oils, according to Rajesh Patel, managing partner of GGN Research.

• Inbound shipments totaled about 1.1 million tons compared with 1.14 million tons in November
  • That was just short of the 1.17 million tons in September, which was the highest in a year
• Shipments in December 2021 were 565,943 tons
• Prices of imported palm oil were $325 to $350 per ton cheaper compared with soybean oil bought from overseas in December: Patel
  • The difference is currently about $300
• Soybean oil’s premium over palm climbed to as high as almost $560 a ton in December, compared with an average of about $390 in 2022, according to data compiled by Bloomberg
• Shipments last month comprised 856,000 tons of crude palm oil and 247,000 tons of RBD palm olein
• Soybean oil imports rose to 253,000 tons from 229,373 tons a month earlier; sunflower shipments were 187,000 tons vs 157,709 tons
• Total edible oil imports in December were 1.54 million tons vs 1.53 million in November
• As of Jan. 1, vessels carrying 549,000 tons of edible oils, comprising 316,000 tons of palm oil, 74,000 tons of soybean oil and 159,000 tons of sunflower oil, were waiting at ports, or scheduled to arrive in the next few days, Patel said
• NOTE: The Solvent Extractors’ Association of India will release its vegetable oil import data for December in the middle of January

US Fertilizer Prices Decline as Traders Weigh Spring Needs

Nitrogen, phosphate and potash prices remain under pressure in the US as buyers review producers’ recently released winter and spring pricing programs. Though China’s Covid-19 policy change hasn’t disrupted urea manufacturing, newly announced tariffs indicate the country’s fertilizer exports will be limited in 1H.

New Year Brings Lower Fertilizer Prices

Most fertilizer prices continued to fall in early January, led by a reset of Tampa ammonia to $975 a metric ton (mt) vs. December’s $1,030. Though New Orleans (NOLA) urea prices were mostly unchanged, inland urea continued to soften, with urea ammonium nitrate (UAN) also falling at some terminals. NOLA phosphate and potash were quiet while inland warehouse prices had additional downward pressure in the Corn Belt, Northeast and Eastern Canada. A significant price reset was also reported in Eastern Canada for potassium fertilizers, with new offers down C$165-$200/mt for muriate of potash and down C$100-$150/mt for sulfate of potash magnesia.