Global Ag News for July 17.23

TOP HEADLINES

Rain raises Rhine river levels in Germany; north still too shallow

Water levels on the river Rhine in Germany have risen sharply after heavy rain in southern regions but are still too shallow in northern areas for cargo vessels to sail fully loaded, commodity traders said on Monday.

Water levels in southern sections of the river are deep enough to allow normal vessel sailings with full loads, they added. Water at the chokepoint of Kaub has risen to levels allowing transit with full vessel loadings, they said.

Dry weather in June meant the river became too shallow for vessels to sail fully loaded and vessel operators imposed surcharges on freight rates to compensate for vessels sailing partly empty, increasing costs for cargo owners.

The Rhine is still too shallow for normal sailings in northern areas around Cologne and Duisburg. Some vessels, depending on the type, can only sail less than half full in northern regions, the traders said.

The Rhine is an important shipping route for commodities such as grains, minerals, coal and oil products, including heating oil.

German companies faced supply bottlenecks and production problems in the summer of 2022 after a drought and heat wave led to unusually low water levels on the Rhine.

FUTURES & WEATHER

Wheat prices overnight are up 21 1/4 in SRW, up 14 in HRW, up 8 1/2 in HRS; Corn is up 8 3/4; Soybeans up 14 3/4; Soymeal up $5.40; Soyoil up 0.83.

Markets finished last week with wheat prices up 36 1/2 in SRW, up 31 3/4 in HRW, up 42 1/2 in HRS; Corn is up 23; Soybeans up 40; Soymeal up $17.50; Soyoil up 0.78.

For the month to date wheat prices are up 31 3/4 in SRW, up 43 in HRW, up 75 3/4 in HRS; Corn is up 27 3/4; Soybeans up 42 1/4; Soymeal up $9.10; Soyoil up 2.62.

Year-To-Date nearby futures are down 13.8% in SRW, down 5.1% in HRW, down 4.9% in HRS; Corn is down 24.0%; Soybeans down 1.6%; Soymeal down 10.2%; Soyoil up 3.5%.

Chinese Ag futures (SEP 23) Soybeans down 18 yuan; Soymeal up 10; Soyoil down 44; Palm oil down 20; Corn up 10 — Malaysian palm oil prices overnight were up 36 ringgit (+0.93%) at 3917.

There were changes in registrations (22 Corn, 11 Soybeans, 129 Soyoil). Registration total: 1,398 SRW Wheat contracts; 448 Oats; 44 Corn; 11 Soybeans; 353 Soyoil; 0 Soymeal; 147 HRW Wheat.

Preliminary changes in futures Open Interest as of July 14 were: SRW Wheat up 2,280 contracts, HRW Wheat up 1,752, Corn down 2,096, Soybeans up 7,139, Soymeal up 2,166, Soyoil down 906.

US Weather: U.S. weekend weather was dry from the eastern Dakotas into Minnesota and from much of Iowa into central Missouri. Rain fell in most other Midwest areas with sufficient amounts for soil moisture improvements in eastern Kansas and far northwestern Missouri and from northeastern Illinois to southwestern Michigan and northern Indiana. Erratic rain fell in other areas with much of it light. High temperatures were near normal in the north and a little warmer biased in the south. The next 10 days to two week should see timely rainfall in many Midwestern, Delta and southeastern states crop areas; however, some restricted rain may continue from a part of the eastern Dakotas through northeastern Iowa and southern Minnesota to northern Illinois and a part of northern Missouri. Temperatures will be cooler than usual in the Midwest and northern Plains this week and then warmer next week with near to above normal temperatures expected.

The player sheet for 7/14 had funds: net buyers of 7,500 contracts of SRW wheat, buyers of 10,500 corn, buyers of 500 soybeans, buyers of 500 soymeal, and  sellers of 2,000 soyoil.

TENDERS

• FEED WHEAT PURCHASE: An importer group in Thailand is believed to have purchased about 60,000 metric tons of animal feed wheat expected to be sourced from the European Union in a deal on Thursday.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp has issued an international tender to purchase an estimated 43,000 metric tons of rice. The deadline for submissions of price offers in the tender is July 10.
  • Demand has been light in recent weeks but dealers were noting a slight uptick in interest from end users even if fresh sales were scarce, a dealer said.
  • The rising interest could lead to firmer basis levels in the coming weeks, the dealer added.
  • Scattered downtimes at processors led to variable supplies in the country, a Minnesota dealer said.

TODAY

CFTC Money Managers’ Commodity Positions for July 11

The following details net long positions held by money managers for selected commodities, according to Commodity Futures Trading Commission.

• Net long positions for corn fell by 44,843 contracts
• WTI crude oil net long positions rose by 32,848 contracts
• Copper down by 5,309 contracts

CROP SURVEY: US June Soybean Crush Seen at 171.4M Bushels

Projections are based on a survey of six analysts conducted by Bloomberg News on July 13-14.

• Soybean crush seen 4.1% higher vs June of last year, and a decline of 3.6% vs a month ago
• Oil stocks at the end of last month seen at 1.856b lbs vs 1.767b a year earlier
• The National Oilseed Processors Association is scheduled to release its monthly report on July 17.

Ukraine Grain-Export Deal Collapses as Russia Terminates It

• Russia says terms of agreement have not been fulfilled so far
• Move heightens uncertainty over global food supplies

The Ukraine grain-export deal has ended almost a year into its run after Russia terminated the pact, heightening uncertainty over global food supplies and escalating tensions in the region.

Moscow had repeatedly threatened to leave the deal but last agreed to a two-month extension in May, which ran to July 17. The corridor’s shutdown will hit key buyers like China, Spain and Egypt.

The “arrangements have ceased to be in force today,” a Kremlin spokesman said, according to Russian news agency Tass. “Unfortunately, the part concerning Russia in this Black Sea agreement has not been fulfilled so far. Therefore, it is terminated.”

The move jeopardizes a key trade route from Ukraine, one of the world’s top grain and vegetable oil shippers, just as its next harvest kicks off. It also comes after Russia on Monday said Ukrainian drones damaged a key bridge to Crimea.

Russia has notified Turkey and the United Nations — which had brokered the pact — it won’t extend the deal, Interfax reported. Moscow has said it will return to the agreement once its conditions are met.

A UN spokesperson for the Black Sea Grain Initiative did not immediately have a comment. Ukraine’s presidential office didn’t immediately comment.

The pact has ensured the safe passage of almost 33 million tons of crop exports via the Black Sea since it was signed in July 2022, helping world food-commodity prices ease from the record levels reached after Russia’s invasion.

However, the corridor has faced repeated disruption in recent months and is nearly empty, tempering the immediate interruption to world crop flows. The bigger risk lies longer-term, as fractured and costly export logistics could spur Ukrainian farmers to further cut harvests already shrinking under the weight of the war.

No new vessels have been approved to join the grain deal since late last month and Russia has blocked one of the three open ports. Ship inspection times have progressively grown longer, with fewer than one cleared per day in the first half of this month.

Read more: As Ukraine Grain Deadline Approaches, Pact Is Already Broken

The closure will heighten reliance on alternate trade routes via the Danube River and Ukraine’s European Union neighbors, although the routes remain expensive and some countries have pushed back against the inflow. Some traders have signaled interest in continuing Black Sea shipments even if the deal collapses, although that would require military and government approval.

Brazil 2023/24 soybean crop seen at 163.2 mln tns – Safras – Reuters

• BRAZIL 2023/2024 SOYBEAN CROP SEEN AT 163.2 MILLION TNS – SAFRAS & MERCADO
• BRAZIL SOYBEAN AREA TO SURPASS 45 MILLION HA FOR FIRST TIME EVER IN 2023/24, SAYS SAFRAS & MERCADO
• BRAZIL 2023/2024 TOTAL CORN CROP SEEN AT 137.4 MILLION TNS – SAFRAS & MERCADO

China’s Summer Wheat Output Falls 0.9% on Year After Rain Damage

China’s wheat output harvested in summer fell 0.9% from a year earlier, the National Bureau of Statistics says in statement.

• Wheat output in summer harvest declined to 134.53m tons in 2023: statement
• Summer grain output fell to 146.13m tons in 2023, also down 0.9% from a year earlier: statement

Brazil Seen Slowing Soy Expansion, Reducing Corn Area: Safras

Farmers in Brazil are seen expanding soybean planting by 2.5% to 45.6 million hectares (113m acres), while cutting down on corn, in the 2023-24 season, consulting firm Safras & Mercado said by email.

• Production is seen potentially up by 4.5% at a record 163.3m metric tons
  • A 2.5% increase in soybean acreage would mark the slowest yearly expansion since the 2018-19 season, based on official estimates
  • Most farmers will likely avoid more aggressive expansion amid tighter profit margins, Safras analyst Luiz Fernando Roque said
  • El Nino weather conditions set to benefit yields in southern states
• Total corn planting seen down by 1% to 22 million hectares, with production down 1.4% to 137.4m tons, due to lower prices
• Cotton area seen up 0.1% at 1.68m hectares

China to buy more Brazilian soybeans for Q4 as U.S. crop suffers – traders

• Brazilian soybeans $576/T for Oct/Nov, below U.S. prices
• Large Chinese buyers actively taking Brazilian Q4 cargoes
• Ample Brazilian supplies to ease tight world supply
• Dry weather in U.S. Midwest seen reducing U.S. yields

China, the world’s biggest soybean importer, is likely to buy a larger volume of the oilseed from Brazil than usual for September to December, three trade sources said, as prices of new-crop U.S. shipments rise on expectations of lower supply.

Following a bumper crop in Brazil, more of its beans will be available later in the year, easing concerns about tighter world supplies following lower planting in the U.S. and an output decline in drought-hit Argentina earlier this year.

“Brazil has plenty of beans to ship, while the U.S. crop is highly uncertain,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. “Brazil is a safety valve not just for China but for the U.S. as well in case its production drops.”

Freshly harvested U.S. soybeans typically dominate the global export market from September onwards as the Brazilian export season, which is active from the second quarter of the year, draws to a close.

This year, Brazil, the world’s biggest soybean exporter, produced a record crop of around 155.7 million metric tons. Output in the U.S., the No. 2 supplier, is likely to suffer due to lower planting and dry weather, traders said.

Large Chinese importers have been actively booking Brazilian cargoes for September and October, taking advantage of lower prices, traders said.

“Brazil beans are still competitive, it still has beans to offer, and in September the main supplier will still be Brazil,” said one Beijing-based trader. “Right now, especially this year, there’s a very big gap between Brazil beans and U.S. beans.”

Brazilian soybeans for October shipment are being offered at $576 a metric ton, including cost and freight, to China, while U.S. cargoes are being quoted above $580 a ton.

Usually, buyers are willing to pay premiums of $12-$15 a ton for Brazilian beans, which have a higher protein content compared with the oilseed from the U.S.

Biden Rejects Oil Refineries Seeking Biofuel-Blending Exemptions

The Biden administration on Friday rejected more than two dozen oil refinery requests for exemptions from US biofuel-blending requirements.

The Environmental Protection Agency’s decision is a blow to 15 unidentified small refineries that had sought the waivers from requirements to blend renewable fuels into gasoline and diesel, arguing the mandates were too costly.

However, the agency determined none of the 26 rejected applications demonstrated they experienced disproportionate economic hardship caused by their compliance with the Renewable Fuel Standard mandates. The rejected applications sought relief from quotas for 2016-2018 and 2021-2023 compliance years, an EPA official said.

The move is consistent with the EPA’s approach to the issue since President Joe Biden took office. The agency last year rescinded dozens of previously granted RFS exemptions, part of a bid to reorient the program after years of legal fighting over the waivers. Although the RFS authorizes waivers for some small refineries that can show they’ve suffered an economic hardship under the biofuel mandate, a federal court has held that the exemptions may only be granted when those financial woes are caused by compliance to the rules.

Biofuel advocates have argued against the waivers, saying they diminish the RFS and dilute the power of annual blending requirements. Under the program, fuel importers and refiners are generally obligated to mix biofuels into their gasoline and diesel — or buy tradable credits known as renewable identification numbers from others that do.

SOYBEAN/CEPEA: Brazil may be the top soybean meal exporter in the world in 2022/23

Brazil is expected to raise soybean meal exports in the 2022/23 season, becoming the top world supplier of this by-product – surpassing Argentina, which currently holds the first position. Brazil was last the top world supplier of meal in 1997/98.

Thus, the export premiums for soybean in Brazil continue to rise, pointing to higher rises for the long-term contracts. According to data from Cepea, at the port of Paranaguá (PR), the export premium of soybean for shipment in August/23 had bids at USD 11.00/short ton and asks at BRL 13.00/short ton on Thursday, 13. In the previous week, bids were at USD 6.00/short ton, and asks, at USD 9.00/short ton.

Thus, on Thursday (13), soybean FOB price at the port of Paranaguá was calculated at USD 479.06/short ton, 4.3% higher in seven days. In this context, on the average of the regions surveyed by Cepea, meal prices rose 0.8% between July 6-13. However, domestic valuations were limited by the 2.8%-dollar depreciation against the Real in the last seven days, to BRL 4.79 on July 13th. Consumers’ cautiousness limited valuations in many regions surveyed by Cepea. However, most agents are signaling the necessity of buying new batches for the short term.

ESTIMATES – According to a report released by the USDA on July 12, Brazil is estimated to export 12.5 million tons of soybean meal in the 22/23 season (Oct/22 – Sept/23), a record. According to Secex, this season (until June/23), Brazil has exported 15.26 million tons of the product, which accounts for 71% of the total forecast by the USDA.

Higher Brazilian exports are linked to both lower soybean processing in Argentina – which is estimated at 30 million tons, the lowest in the last 18 seasons – and higher demand for domestic consumption in the country, which is also forecast to be a record, at 3.35 million tons. As a result, meal exports from Argentina are estimated to total 21.2 million tons, the lowest volumes since the 2044/05 season.

Still according to the USDA, the USA are expected to export 12.70 million tons of soybean meal, the highest since 2017/18. Domestic consumption is forecast to grow this season too, forecast at 35.56 million tons, also a record.

As for demand, the European Union, the number one importer of soybean meal in the world, is expected to reduce purchases by 4.21% in the 2022/23 season, to 16 million tons. This is due to their domestic consumption, which may be the lowest since 2012/13. Indonesia, the number two importer of soybean meal in the world, is estimated to purchase 5.7 million tons of the product in 22/23, a record a 3% higher than that imported in the previous season.

SOYBEAN – Soybean prices have increased in Brazil this week, boosted by higher demand in both the domestic and the international market. Between June 6-13, the ESALQ/BM&FBovespa Paranaguá (PR) Index increased 0.1%, to BRL 144.80/bag (USD 30.23)/bag on Thursday, 13. The CEPEA/ESALQ Index Paraná rose 1.2%, to BRL 136.02 (USD 28.40/bag) per 60-kg bag on July 13. On the average of the regions surveyed by Cepea, soybean prices rose 1.3% in both the over-the-counter market (paid to farmers) and the wholesale market (deals between processors).

CORN/CEPEA: Progress of the harvesting in BR and high world output keep purchasers away from mkt

The progress of the harvesting of the second crop of corn in Brazil, which is expected to set a record, and better weather conditions in the United States – which are raising the world production estimates, despite the recent concerns about a drought in the country – are keeping purchasers away from the Brazilian spot market. Thus, corn sales have been low in Brazil, and quotations are fading.

Besides the larger area allocated to corn crops in the current season, favorable weather conditions during crops development in Brazil have influenced the high output in the 2022/23 season. On the other hand, in the US, June was marked by a dry and hot weather, however, the return of rains between late June and early July recovered many crops, raising the optimism about productivity in the 2023/24 season.

PRICES – As the harvesting advances, purchasers continue away (waiting for quotations to drop more steeply) and sellers need to sell corn, domestic prices are fading. Between July 6-13, the ESALQ/BM&FBovespa Index (Campinas, SP) dropped 2.3%, to BRL 54.06 per 60-kg bag on Thursday, 13.

Regionally, prices dropped more steeply in central-western Brazil in the last days, since the harvesting is advancing faster in this region, raising sales needs due to warehousing difficulties. On the other hand, in São Paulo – where activities have not begun yet –, quotations increased: in the Mogiana, values rose 0.8% in the last seven days.

On the average of the regions surveyed by Cepea, between July 6-13m corn prices rose 1.9% in the over-the-counter market (paid to farmers) and 0.4% in the wholesale market (deals between processors).

PORTS – Not even the progress of the harvesting, valuations abroad and the higher export parity were able to raise liquidity at Brazilian ports. Farmers are delivering batches previously purchased. Besides, soybean exports have been high, hampering corn logistics.

ESTIMATES – In Brazil, estimates released this week by Conab show that the Brazilian corn output in the 2022/23 season may by 13% higher than that from 2021/22. For the second crop, estimates are 14% higher, at 98.04 million tons.

Thus, considering initial stocks, production and imports, the domestic availability of corn in the 2022/23 season is estimated at 137.76 million tons. Consumption is forecast at 79.43 million tons. Exports estimates have been kept at 48 million tons, and imports, at 1.9 million tons. Thus, by the end of the season, stocks are expected to total 10.33 million tons, 28% higher than that in the previous season.

CROPS – The harvesting of the second crop of corn is advancing in most Brazilian regions, having reached, by July 8th, 29.3% of the national area, according to data from Conab.

Paraguay ‘would love’ more trade with China, but Taiwan better for development

Paraguay “would love” to do more trade with China, but Taiwan offers the best bet for moving the largely agricultural economy up the value chain, the country’s president-elect Santiago Pena said on Saturday on a visit to Taipei.

Paraguay is the last South American country with formal relations with Taiwan, which China claims as its own territory. Honduras ended decades of ties in favour of Beijing this year, and only 13 countries now recognise Taiwan.

Pena pledged during his election campaign to maintain more than six decades of relations with Taiwan despite pressure from Paraguay’s agricultural sector, which wants to open up lucrative Chinese markets to soybeans and beef.

Speaking to reporters, Pena said he was “fully committed” to Taiwan and happy with his meetings this week, which have included with President Tsai Ing-wen and Economy Minister Wang Mei-hua.

“We have no constraints on doing trade with China. We would love to do more trade with the PRC,” he said, referring to the People’s Republic of China.

But Paraguay cannot rely on a single market, as a small country does not have the same negotiating clout as Brazil or the United States and does not want to be flooded with Chinese goods while only be able to export raw materials.

“Paraguay is a powerhouse on food production, but still at a very early stage. We provide very low value-added goods. Grains, soy and beef,” he said.

“We need to advance in giving more value added and for that, having a closer collaboration with Taiwan puts us closer on a path to developing an industrial sector than we would have if we had relations with China.”

Pena, who takes office on Aug. 15, said he did not know whether Tsai or Vice President William Lai, who is running to succeed her in Taiwan’s January elections, would come to the ceremony, though added he would be delighted to receive either or both.

“I have no doubt it will be a large delegation, it will be a high-level delegation.”

If Lai, goes he would likely travel via the United States on what would officially be a stopover but would allow him to meet U.S. officials and discuss his policy priorities should he win the election. Lai leads in most opinion polls.

Taiwan’s presidential office said that they were still in the planning stages of who would attend and would make an announcement once details were set.

Indonesia to keep domestic palm oil sale rules ahead of B35 – official

Indonesia has no plan to change rules mandating palm oil exporters sell a portion of their output to the domestic market, M. Firman Hidayat, a senior official with a ministry overseeing the rules, told Reuters on Monday.

Exporters currently can only ship palm oil four times the amount they sell domestically. Starting Aug. 1, Indonesia will fully implement a mandate to have a 35% palm oil blend in biodiesel, called the B35 programme.

Prices for US Renewable Credits Slump on Bets for Exemptions

Credits tracking compliance with US biofuel-blending mandates are falling in advance of expectations the EPA will make decisions on a slew of refinery applications for waivers from 2022 and 2021 biofuel-blending mandates.

• D6 ethanol RINs are down 4.2% on the day to $1.5/RIN; D4 biomass-based RINs down 4.8% to $1.5/RIN as of 11:47am New York time: data compiled by Bloomberg
• In an email to stakeholders, the agency said it “will announce decisions involving petitions from small refineries for exemption from the Renewable Fuel Standard” at 4 pm Washington time
• EPA is weighing 11 pending applications for exemptions from 2021 biofuel quotas and another 11 for 2022 requirements
• NOTE: The agency last year rescinded dozens of previously granted Renewable Fuel Standard exemptions, part of a bid to reorient the program after a federal court ruling indicated some waivers had been improperly granted

Summer Consumption Pushes Brazil Fertilizer Prices Higher

As demand for summer crops improves in Brazil, fertilizer sellers keep increasing prices to capture better margins. Thin phosphate supply will keep upward pressure on prices as providers rebuild inventories. Potash also firmed on stronger demand, but resistance from buyers could temper nitrogen prices ahead of the next planting season.

China’s first-half pork output up 3.2% at 30.32 mln metric tons

China’s pork output in the first half of the year rose 3.2% from a year earlier to 30.3 million metric tons, data showed on Monday.

China slaughtered 375.48 million hogs in the first six months of the year, up 2.6% from a year ago, data from the National Bureau of Statistics also showed.

US, Canada Fertilizer Prices Slip as Fill Programs Continue

Most fertilizer prices in the inland US and Canada continue to fall as producers launch more summer programs, though ammonia rebounded slightly with the release of fall prepay pricing. India’s potash imports are below trend, pressuring the nation to increase them during 3Q plantings despite its high-cost contract at $422 a metric ton cost-and-freight.

US Ammonia Prices Strengthen, Others Flat to Lower

A round of fall prepay offers for ammonia pushed prices higher in the Midwest, to $375-$430 a short ton (st) vs. earlier fill-program offers at $290-$365, depending on location. However, ammonia was the only fertilizer strengthening, as fill programs for urea ammonium nitrate (UAN) and ammonium sulfate pressured both markets in the inland US and Canada during the week. Urea prices were up slightly at New Orleans (NOLA) on reports of thin supply and stepped-up demand in international markets, but inland urea in the US and Canada continued to slip. Phosphates were also down at NOLA and flat-to-lower inland, while potash was flat from last week as the industry awaits a fill program.

Stronger demand continued to drive urea prices higher in Brazil, the Middle East and China, as India prepares to announce another tender.

 

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