Global Ag News for July 25.22

HEADLINES TODAY

Wheat prices overnight are up 27 1/2 in SRW, up 28 in HRW, up 22 3/4 in HRS; Corn is up 9 1/2; Soybeans up 8 1/2; Soymeal up $0.30; Soyoil down 0.24.

Markets finished last week with wheat prices down 26 1/4 in SRW, down 25 3/4 in HRW, down 45 1/4 in HRS; Corn is down 37; Soybeans down 56; Soymeal down $1.09; Soyoil down 3.21.

For the month to date wheat prices are down 97 1/2 in SRW, down 103 1/2 in HRW, down 96 1/4 in HRS; Corn is down 46; Soybeans down 133 3/4; Soymeal down $21.70; Soyoil down 6.83.

Year-To-Date nearby futures are up 2% in SRW, up 6% in HRW, down -9% in HRS; Corn is down -3%; Soybeans up 9%; Soymeal up 6%; Soyoil up 7%.

Chinese Ag futures (SEP 22) Soybeans up 8 yuan; Soymeal up 31; Soyoil up 24; Palm oil up 40; Corn up 3 — Malaysian palm oil prices overnight were down 58 ringgit (-1.57%) at 3646.

There were no changes in registrations. Registration total: 2,653 SRW Wheat contracts; 0 Oats; 0 Corn; 6 Soybeans; 194 Soyoil; 0 Soymeal; 1 HRW Wheat.

Preliminary changes in futures Open Interest as of July 22 were: SRW Wheat up 6,390 contracts, HRW Wheat up 2,931, Corn up 6,121, Soybeans down 12,357, Soymeal down 1,647, Soyoil down 5,027.

Northern Plains Forecast: A couple of strings of moderate showers moved through over the weekend, but many areas remained dry. More showers are moving through ahead of and along another cold front moving into the region Monday and Tuesday, but the region will be a bit drier for the rest of the week. Soil moisture is starting to decline in a lot of the region, except where showers are hitting more frequently. Wheat is still in good shape, but we are starting to see more stress coming to corn and soybean crops. Cooler temperatures will be around most of the week, but we will see that increasing this weekend and especially next week, producing more stress.

Central/Southern Plains Forecast: Some showers went through over the weekend, but were spotty where they hit. Two fronts moving south through the region this week will be bringing cooler temperatures to most of the region outside of Texas. The second front will stall across the south with periods of showers later this week, however, offering stress reduction to most of the region. But it will not last long as heat builds back into the region next week.

Midwest Forecast: Scattered showers and plenty of severe weather moved through the region over the weekend. Some areas of crop damage were likely to have occurred, but were probably isolated. The front from the weekend continues to slowly sag south across the region through Tuesday and will be followed by another Wednesday and Thursday. The front will bring scattered showers and they could be very helpful for some of the drier areas scattered around the region. The fronts will also bring in much cooler temperatures. However, the coolness will not last long and heat is forecast to build back in next week.

Canadian Prairies Forecast:  Soil moisture is mostly favorable across the region. A few showers went through over the weekend, but many areas remained dry. Another front moving through on Monday will bring chances for more showers but also much cooler temperatures, which will reduce stress for any of those drier areas. The region looks to get more active this weekend and next week as the storm track returns.

 Europe Grains & Oilseeds Forecast: Heat remained across southern areas of the continent over the weekend while some showers moved across northern areas. Another burst of heat was building north on Sunday but will be pushed aside by another system moving through Tuesday and Wednesday. The front will not make it very far south and heat and dryness are expected to continue for the southern half of the continent this week. After another weak disturbances passes through northern areas this weekend, heat looks like it could build back up north yet again. Heat and a lack of showers will stress some corn areas, though wheat will likely enjoy more favorable harvest conditions.

Black Sea Grains & Oilseeds Forecast: Scattered showers continued over the weekend, favoring reproductive corn and sunflowers, and perhaps limiting some wheat harvest. While temperatures will increase a little this week, showers are forecast to remain in the region, maintaining mostly good conditions for corn and sunflowers.

The player sheet for 7/22 had funds: net sellers of 20,000 contracts of  SRW wheat, sellers of 6,000 corn, sellers of 6,000 soybeans, sellers of 3,000 soymeal, and  buyers of 4,000 soyoil.

TENDERS

• CORN SALE: The Korea Feed Association (KFA) Incheon section in South Korea purchased about 65,000 tonnes of animal feed corn expected to be sourced from South America or South Africa in a private deal on Friday without issuing an international tender, European traders said.
• CORN SALE: The Korea Feed Association (KFA) Busan section purchased some 63,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa in an international tender on Friday
• CORN SALE: South Korea’s Feed Leaders Committee (FLC) purchased about 65,000 tonnes of optional-origin animal feed corn in a private deal on Thursday without an international tender being issued
• SOYMEAL SALE: Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) purchased around 60,000 tonnes of soymeal in an international tender on Friday
• WHEAT SALES: Buyers from China purchased large volumes of Australian and French wheat this week in a sign that the Asian country is taking advantage of a recent dip in prices to fill its large needs, European traders said. Traders reported purchases of around 1 million tonnes of Australian wheat, both for animal feed and flour milling, this week for shipment periods between September and March. In addition China bought at least two shiploads, possibly up to seven, of French wheat this week for shipment between September and November.

PENDING TENDERS

• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins
• BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
• RIDER TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has issued an international tender to purchase an estimated 92,100 tonnes of rice to be sourced from the United States, China and other origins

 Ukraine has harvested 6.5 million tonnes of crops- prime minister

Ukraine has already harvested 6.5 million tonnes of its new crop, the country’s Prime Minister Denys Shmyhal said on Friday.

“The government is maximally involved in supporting the agricultural sector — more than 40 billion hryvnias ($1.09 billion) of accessible loans have been issued,” Shmyhal wrote on Telegram.

He did not specify the quantities of separate harvested crops.

Safras Sees Brazil 2023 Soy Exports at 91.5M Mt

Exports estimate is 19% higher than the 77.2m tons seen in 2022, according to consulting firm Safras & Mercado.

• The stronger exports are supported by an expected record-high production in 2023, Safras & Mercado says
• Brazil soybean exports next year could potentially reclaim the market share lost in the 2021/22 harvest due to crop productivity losses
• Soybean crushing in 2023 may reach 49.5m tons, 3% above the 47.9m tons projected for 2022
• Total output in 2023 is seen at 154.53m tons, with an 18% increase over the previous year
• Soymeal 2023 production is seen at 38m tons, or 3% above 2022
• Soyoil procuction next year is projected at 10m tons, which would also correspond to a 3% increase over the previous year
• Aroun 4.5m tons are expected to be used in the production of biodiesel, with an increase of 10% in comparison to 2022

EU Commission Plans Measures to Boost Arable Land for Cereals

European Commission makes proposal for short-term derogation from rules on crop rotation and maintenance of non-productive features on arable land, in order to boost production capacity for cereals aimed for food products, according to statement.

• Commission estimates measures will put back 1.5 million hectares (3.7 million acres) in production compared with today
• Derogation would be temporary, limited to claim year 2023, and restricted to what is strictly necessary to address global food security concerns arising due to Russian military aggression against Ukraine, therefore excluding the planting of crops which are typically used for feeding animals (corn and soy)
• Commission proposal will be sent to EU Member States before it is formally adopted

Moscow Says Odesa Strike Won’t Affect Grain Plan

Russia said Monday that its missile strike on Odesa targeted a military area and wouldn’t affect plans to resume grain exports from the Black Sea port under a Turkish-brokered deal.

Wheat prices have surged since the Russian attack, which came a day after it signed an agreement to create safe corridors for Ukrainian grain shipments blocked since the invasion, raising global food prices. Ukraine is continuing preparations to resume exports.

Kremlin spokesman Dmitry Peskov also said Russia wasn’t interested in cutting gas supplies to Europe and would reinstall a repaired Nord Stream 1 turbine once it arrives and resume flows to technical capacity. The comments come as Foreign Minister Sergei Lavrov began a tour of Africa by decrying the impact of sanctions on Russia’s food exports and renewing a threat to remove what he called Ukraine’s “regime” despite slow progress on the ground.

Ukraine, Russia Reach Deal to Unblock Grain Stranded by War

• Countries ink parallel agreements with Turkey, UN in Istanbul
• Deal could help revive crops trade from major global exporter

Russia and Ukraine reached a deal aimed at releasing millions of tons of grain from Ukraine’s Black Sea ports that, if implemented, would mark a major step toward shoring up global food supplies.

Government officials from Kyiv and Moscow signed agreements with Turkey and the United Nations at a meeting in Istanbul. Grain ship traffic should begin in the coming days, said Turkish President Recep Tayyip Erdogan. The accord involves shipments from three Ukrainian ports: Odesa, Chornomorsk and Pivdennyi, said United Nations Secretary-General Antonio Guterres.

“This is an unprecedented agreement between two parties engaged in bloody conflict,” Guterres said at the ceremony.

The deal could help revive agricultural trade from one of the world’s biggest wheat, corn and vegetable-oil exporters. If realized, that would help ease strained global grain supplies and take some pressure off food prices that surged to records levels in recent months.

However, many logistical hurdles remain and it’s uncertain how quickly exports will progress with Russia’s war still raging. The grain corridor deal is valid for three months but can be extended if needed, Guterres said in an interview with Turkey’s NTV news.

Read more: Ukraine grain challenge: Evade mines, find ships and trust Putin

Ukraine faces challenges from finding enough ships to carry the backlogged grain, to getting insurance to cover operations. The plan’s success also hinges on Moscow’s security assurances and President Vladimir Putin living up to his side of the bargain, at a time when the Kremlin is moving to annex occupied lands and continues to advance in Ukraine’s east.

The three Ukrainian ports involved accounted for just over half of its seaborne grain exports in the 2020-21 season, UkrAgroConsult data show.

The supervision of the plan will be coordinated from a joint center in Istanbul, according to Erdogan. Defense Minister Sergei Shoigu signed the deal for Russia and Infrastructure Minister Oleksandr Kubrakov signed for Ukraine in a separate accord.

Officials have been working to reach a deal for month and tensions were evident during the signing — the Ukrainian and Russian representatives didn’t join Erdogan and Guterres at the head table during opening remarks, and signed separate agreements respectively with Turkey and the UN.

Benchmark wheat futures in Chicago traded 3.5% lower after the signing, paring earlier losses and leaving them little changed on the week. Corn and soybeans rose.

Palm Oil to Remain Weak in 3Q Before Rebounding in 4Q: Minister

Crude palm oil prices are likely to remain weak for most of 3Q on Indonesia’s move to boost exports and ease high inventories, Malaysia’s commodities minister Zuraida Kamaruddin said in a statement.

• Prices seen averaging 4,800 to 5,200 ringgit a ton in 3Q
• NOTE: Futures trading at about 3,700 ringgit a ton Monday
• With the expected resumption of Indonesia export levy from September and decline in palm oil production in 4Q, prices may climb to 5,000-5,500 ringgit a ton in final three months: minister

Indonesia B35 Plan Is Temporary to Cut Excess Stockpiles: Nurwan

The plan to increase palm oil content in diesel fuel to 35% from 30% is a temporary measure aimed at reducing excess supply of the tropical oil, Oke Nurwan, a special staff at the trade ministry, says on CNBC Indonesia TV on Monday.

• “After the situation returns to normal, we can return to B30,” says Nurwan
• Nurwan also says that the govt will push ahead with a plan to abolish the domestic market sale obligation (DMO) policy for palm oil once it is confident that local cooking oil supplies are secure and prices affordable

SOYBEAN/CEPEA: China and Brazilian processors lower demand, and prices fade

Soybean prices have dropped in both Brazil and the United States this week. Domestic devaluations were linked to the lower demand from Brazilian processors and from abroad – majorly from China – and to decreases in the export premiums.

In Brazil, agents from processors purchased high volumes of soybean in the first fortnight of July, which has reduced the need of new acquisitions this week. Besides, these purchasers are aware of the lower international demand. It is important to consider that, in the first semester of 2022, Brazil exported 53.07 million tons of soybean, the lowest volume for the period since 2019. Lower Brazilian exports are linked to the decreases of shipments to China and the Netherlands, by 11.53% and 19.8% between the first semester of 2021 and the first half of 2022, according to data from Secex.

As for sellers, most of them prefer to trade corn rather than the remaining soybean, expecting to sell soybean at higher prices in the coming months – based on the bad weather conditions in the Northern Hemisphere. This scenario has widened the gap between asking and bidding prices, reducing liquidity in Brazil.

At the port of Paranaguá (PR), the export parity for soybean is at BRL 188.88/60-kilo bag for shipment in August/22, 3.6% lower than that on the previous Thursday, 14. For shipment in March/23, parity points to prices at BRL 173.98/bag, 2% down from that on the 14th. This decrease in linked to the devaluations of contracts at CME Group. Price drops (FOB) were limited by the dollar appreciation against the Real (by 1%) between July 14 and 21, to BRL 5.491 on July 21.

In the Brazilian spot market, between July 14 and 21, the ESALQ/BM&FBovespa Index Paranaguá (PR) and the CEPEA/ESALQ Index Paraná decreased by 2.8% and 2.3%, respectively, closing at BRL 186.13 (USD 33.90)/60-kilo bag and at BRL 181.40 (USD 33.04)/bag on July 21. On the average of the regions surveyed by Cepea, prices dropped by 1.8% in both the over-the-counter market (paid to farmers) and the wholesale market (deals between processors).

CORN/CEPEA: Purchasers leave the market, and Index drops to BRL 80/bag

Cepea, July 22 – Corn prices continued to fade in the Brazilian market and abroad this week. In Campinas (SP), the ESALQ/BM&FBovespa Index for corn returned to around BRL 80 per 60-kilo bag – on Thursday, 21, it closed at BRL 80.85 (USD 14.72)/bag, the lowest nominal level since Dec. 30, 2020, and 2.1% down from that on July 14th.

Corn devaluations are linked to the progress of the second crop harvest, which is keeping purchasers away from the market, since they expect values to decrease more steeply. Besides, better weather conditions in the United States have pressed down future contracts, which lowered prices at Brazilian ports.

It has been reported that warehouses in south-eastern Brazil are already full, while in central-western BR, corn is stored in the open air, which may lower quality.

As for sellers, a few agents that have room to stock corn appropriately and that has cash to pay for investments in the coming months have been unwilling to sell corn at the current price levels, opting to wait for quotations to rise – based on the possible higher demand for exports. So far, deals for export have been low, since many farmers decided to wait for the new crop to be harvested, but now are facing low prices.

Paraná and Mato Grosso – which altogether will account for more than 60% of the national output this season – have sold 6% and 63.5% of their productions, according to data from Seab/Deral and Imea. So far, production estimates for PR are at 15.44 million tons, and for MT, at 39.15 million tons.

In the spot market, prices are dropping steeply in most of the regions surveyed by Cepea. Between July 14 and 21, on the average of the regions surveyed by Cepea, corn prices decreased by 3.8% in the over-the-counter market (paid to farmers) and by 2.3% in the wholesale market (deals between processors).

At ports, despite the devaluations abroad, the dollar limited steeper price drops. In Paranaguá (PR) and Santos (SP), quotations decreased by a slight 0.1% and 0.9% in seven days, to BRL 85.29 and BRL 84.73/bag on Thursday, 21. The dollar rose by 1%, to BRL 5.491.

CROPS – Favored by the weather, the harvesting is advancing in Brazil. According to Conab, by July 16, 49.2% of the national crop had been harvested, against 39.8% in the previous week and 30% in 2021.

US Fertilizer Prices Keep Sinking; ITC Rejection May Hit Margins

Summer fill programs nudged US fertilizer prices lower again, with phosphate, ammonia and ammonium sulfate significantly below the spot market during the seasonal reset. A urea ammonium nitrate (UAN) fill program pushed prices down early in the week. The ITC’s rejection of CF Industries’ UAN antidumping petition may hurt producer margins but help US farmers.

UAN Falls With Fill Program Launch in Friday Findings

CF Industries launched a urea ammonium nitrate (UAN) fill program during the week at $400 a short ton (st) at New Orleans (NOLA), $415-$420 at production plants in Oklahoma and Iowa, and $435-$443 at river terminals in the Corn Belt. Though well below the last prompt prices, competitors were reported to be matching or beating those prices, so additional declines may be forthcoming. NOLA urea fell $23-$45/st from the previous week in the wake of India’s latest urea tender, which saw a significant drop in both price and volume. Midwest prices also fell for ammonium thiosulfate and ammonia polyphosphate as new fill programs circulated.

Price drops of $20/st were seen for NOLA phosphates and potash, with additional declines of up to $30-$35 anticipated for the next potash business.

Brazil Fertilizer Prices Decline Amid Delayed Demand

Fertilizer prices fell in Brazil as demand pulled back significantly ahead of September and the upcoming planting season. Sluggish orders and higher supply suggest a $10 per metric ton drop in potash, with additional declines anticipated for nitrogen prices in the wake of lower-than-expected offers in the latest India urea tender.

Brazilian Farmers Reduce Orders, Hoping for Price Cuts

Nitrogen fertilizer prices in Brazil have dropped $20 per metric ton at the low end of the range amid a pullback in orders after last week’s urea-price increase. Though they could rise again if global ammonia supply grows tight due to natural gas cost increases in Europe, the lower-than-expected volumes and offers in India’s latest urea tender may push the Brazilian market down even more in the coming days.

Phosphate prices in Brazil have stabilized, but declines are anticipated as the planting season approaches and suppliers seek to release inventories. A $10 per metric ton reduction in potash prices this week came amid signals that imports were bolstering supplies, though logistics constraints are expected, mainly due to delayed demand for the September-October planting season.

Barter Ratios: Higher Prices Bite Brazilian Fertilizer Demand

Brazilian farmers are waiting for crop-nutrient price relief as the urea-to-corn barter ratio was steady in July. Nitrogen remains an expensive input, with the ratio — priced in dollars — above average since 2Q21. A weakening real has supported the higher-than-normal level as farmers purchase inputs in dollars but sell their crop in Brazil’s currency. Fertilizer negotiations slowed in July as spot corn prices fell and growers waited to buy in season. Brazil heavily imports urea in 2H, shipping in one-third of annual urea demand in 4Q.

Brazilian farmers purchase crop inputs on the barter ratio. The measure calculates the number of bags of grain needed to buy one ton of inputs at current prices. The barter ratio is a hedge against currency fluctuation and credit availability.

Russian Nitrogen Cargoes Advance; Potash Demand Decreases

Russian fertilizer exports to Brazil have resumed a regular schedule, signaling supply relief for the upcoming planting season. Urea imports, though 36.6% lower in 2022 than last year, have jumped to 171,000 metric tons in the past three weeks. Weekly potash-import volumes are down 27% since June, but demand may simply be balancing out 2022’s above-average start, as Brazilian shipments overall on the nutrient are up 37% this year. Given American and European trade restrictions, lower demand from Russia’s top potash customer (29.7% of 2021 Russian exports went to Brazil) may hint at price cuts if new buyers aren’t found.

Over the next two months, 635,000 metric tons of fertilizer are expected to arrive from Russia, led by nitrogen (36% of scheduled cargoes), potash (31%), and phosphate (19%).

India Cumulative Monsoon Rainfall 11% Above Normal as of July 24

India has so far received 422.2 millimeters of rains during the current monsoon season, which runs from June through September, compared with a normal of 380.3 millimeters, according to data published by the India Meteorological Department on July 24.

• The eastern and northeastern region got 15% below normal rains
• Rainfall in the southern peninsular region was at 32% above normal

U.S. Cattle on Feed Rose to 11.34M Head on July 1

The feedlot herd rose 0.4% from a year ago, according to the USDA’s monthly report. Analysts were expecting a drop of 0.2%

• Placements onto feedlots down 2.4% y/y to 1.629m head
• Cattle marketed from feedlots increased 2% to 2.061m head

US Beef Production Falls 1% This Week, Pork Rises: USDA

US federally inspected beef production falls to 539m pounds for the week ending July 23 from 545m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter down 1.3% from a week ago to 665m head
• Pork production up 1% from a week ago, hog slaughter rises 1.3%
• For the year, beef production is 1% above last year’s level at this time, and pork is 3.1% below