Global Ag News for June 12.23

TOP HEADLINES

Canada Joins US Trade Complaint Against Mexico’s GMO Corn Ban

Canada will join a trade dispute initiated by the US over Mexico’s restrictions on genetically modified corn imports.

“Canada shares the concerns of the US that Mexico’s measures are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market,” Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau said in a statement Friday.

The ministers said Canada will participate as a third party in the dispute settlement consultations, and will “continue to work with Mexico and the US towards an outcome that preserves trade predictability and market access for our farmers and exporters.”

Last week, US Trade Representative Katherine Tai requested dispute settlement consultations with Mexico under the US-Mexico-Canada Agreement.

Mexico is the second-largest market for US corn, where it’s used largely for animal feed. American officials have repeatedly criticized the Mexican government’s GMO corn prohibition, calling it unscientific.

If the dispute settlement consultations fail, the US could request a dispute resolution panel. That escalation could ultimately result in more serious countermeasures, such as tariffs against Mexico.

Canada is not a major corn exporter, but Bloomberg reported earlier this year that it’s concerned overall about Mexico putting arbitrary prohibitions on agriculture produced using biotechnology. The northern nation is the world’s top producer and exporter of canola, a genetically-modified crop that is used in everything from deep-frying to salad dressing, with Mexico one of the top buyers.

FUTURES & WEATHER

Wheat prices overnight are up 3/4 in SRW, down 5 1/4 in HRW, down 1/2 in HRS; Corn is up 12 1/4; Soybeans up 7 1/2; Soymeal up $3.40; Soyoil unchanged.

Markets finished last week with wheat prices up 1 1/4 in SRW, down 30 3/4 in HRW, down 12 1/2 in HRS; Corn is up 2 1/4; Soybeans up 29; Soymeal down $0.70; Soyoil up 3.36.

For the month to date wheat prices are up 36 3/4 in SRW, up 3 1/4 in HRW, up 31 1/4 in HRS; Corn is up 21; Soybeans up 65 1/4; Soymeal up $5.00; Soyoil up 5.81.

Year-To-Date nearby futures are down 21.1% in SRW, down 11.1% in HRW, down 14.0% in HRS; Corn is down 9.8%; Soybeans down 8.8%; Soymeal down 16.3%; Soyoil down 15.2%.

Chinese Ag futures (SEP 23) Soybeans down 15 yuan; Soymeal up 24; Soyoil up 120; Palm oil up 80; Corn down 4 — Malaysian palm oil prices overnight were down 31 ringgit (-0.92%) at 3336.

There were no changes in registrations. Registration total: 2,389 SRW Wheat contracts; 2 Oats; 0 Corn; 0 Soybeans; 1,088 Soyoil; 11 Soymeal; 97 HRW Wheat.

Preliminary changes in futures Open Interest as of June 9 were: SRW Wheat down 8,276 contracts, HRW Wheat down 3,819, Corn down 6,789, Soybeans down 100, Soymeal up 2,589, Soyoil up 330.

Northern Plains: Scattered showers moved through the region Friday and Saturday, bringing widespread precipitation, but did not hit all areas equally. A system will come through later this week with scattered showers as well, but again will miss many areas. The pattern remains active for the region though for the rest of June.

Central/Southern Plains: A front brought widespread showers to the region over the weekend. A couple of disturbances will continue showers across parts of the region for the next few days and a system will move through late this week with more potential for showers. Recent and forecast precipitation will do its best to ease drought conditions further but that may not translate to improved conditions in all places.

Midwest: A front has swept through most of the region through Sunday afternoon with scattered showers that have hit most areas of the region. Some areas were missed and only got light precipitation amounts, but it was the first widespread event in a long time for the region. A low-pressure system is forming along the front and will spin around the Great Lakes with some continued showers through at least Tuesday. Another disturbance may follow behind it and a system will move through Friday through the weekend with the next chance for widespread showers. The forecast coverage and intensity is uncertain with this system, as is the forecast for next week. Any drought reduction is likely to be sporadic in the region, though growth may not be overly widespread either.

Delta: Scattered showers went through over the weekend and several disturbances will create more showers in the region this week, increasing soil moisture and reducing concern about growing dryness in the region.

Canadian Prairies: Some areas of Alberta saw showers over the weekend, including dry areas in the south, but most areas were dry. The region will be more active this week, especially with a system moving through Wednesday and Thursday that should bring more widespread showers to western areas that had been drier over the last couple of weeks. Additional systems are expected this weekend and next week as well. Temperatures will be more variable and less consistently hot over the next couple of weeks.

Australia: Conditions continue to be mostly favorable, benefiting wheat and canola establishment while El Nino continues to build in the Pacific. The event favors hotter and drier conditions in eastern Australia, which may start to impact the country’s crops in spring when they emerge from semi-dormancy.

The player sheet for 6/9 had funds: net buyers of 1,000 contracts of SRW wheat, sellers of 3,500 corn, buyers of 11,000 soybeans, sellers of 3,000 soymeal, and  buyers of 8,000 soyoil.

TENDERS

• SOYBEAN PURCHASE: The U.S. Department of Agriculture confirmed private sales of 197,000 metric tons of U.S. soybeans for shipment to unknown destinations in the 2022/23 marketing year.
• WHEAT TENDER CANCELED: Tunisia’s state grains agency has canceled an international tender to purchase up to 100,000 metric tons of soft milling wheat which was set to take place on Friday.
• FAILED SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL is believed to have made no purchase in an international tender for 120,000 metric tons of soymeal sourced from Brazil which closed on Wednesday

PENDING TENDERS

• SOYOIL AND SUNFLOWER OIL TENDER: Egypt is seeking at least 30,000 tons of soybean oil and 10,000 tons of sunflower oil in tender on Tuesday, the state grain buyer, the General Authority for Supply Commodities, says in a statement.
• CORN TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 140,000 metric tons of animal feed corn to be sourced from optional origins.
• SOYMEAL TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 35,000 metric tons of soymeal animal feed sourced from optional origins.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 62,200 metric tons of rice.
• WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 56,000 metric tons of grade 1 milling wheat to be sourced from the United States.

TODAY

SOYBEAN/CEPEA: Weather in the US concerns market; prices move up

The low volume of rainfall in the United States, scenario that may affect the development of soybean crops, has been concerning players and boosting future quotes. In Brazil, values are also increasing, but the upward trend has been limited by the dollar devaluation against Real and by the high domestic supply.

Sellers in Brazil are limiting trades in the spot market, waiting for international price rises to be transferred to domestic values. However, it is worth mentioning that the 2022/23 crop is estimated by Conab at 154.81 million tons, 23% up compared to the previous and that the current pace of trades is below that verified in previous crops, which can limit increases.

The ESALQ/BM&FBovespa Paranaguá (PR) Index rose 1.3% between June 1 and 7, to BRL 135.53 (USD 27.52)/bag on June 7. The CEPEA/ESALQ Index Paraná increased 0.1% in the same period, to BRL 127.53 (USD 25.89) per 60-kg bag June 7. On the average of the regions surveyed by Cepea, soybean prices dropped 0.4% in the over-the-counter market (paid to farmers) and 0.6% in the wholesale market (deals between processors) from June 1-7. Dollar quotes dropped 1.8%, at BRL 4.925 on June 7.

BYPRODUCTS – Soybean meal and soybean oil prices continue to move down in this early June, despite price rises for these products in the international market. Purchasers in Brazil are expecting decreases for the soybean, due to the higher production.

The soy harvest is practically finished, with only some areas left in Santa Catarina, Rio Grande do Sul and Maranhão. Conab indicates that the total harvested reached 99.5% up to June 3.

The fallow period may start on June 10 in Paraná and on June 15 in São Paulo and it may last for 90 days.

Anec (National Association of Cereal Exporters) estimates that soybean exports are likely to total 13.11 million tons in June, against 9.94 million tons in the same month last year. Despite the increase in one year, the volume would be lower than that verified in May 2023 (14.49 million tons).

CORN/CEPEA: Harvest is delayed in Brazil, but expectations are still good

The second crop harvest has been advancing more significantly in Mato Grosso only, but expectations for both production and quality are positive in most producing regions in Brazil.

Consumers have been postponing trades because of the perspective of high supply in the coming weeks. Sellers, in turn, are interested in closing deals in the spot market and/or in closing contracts for future delivery, and many of them are flexible regarding prices and due dates. This scenario keeps corn prices in a downward trend – values have been moving down since March.

Data from Conab show that, up to June 3, the harvest had started only in Mato Grosso, with 0.7% of the total. In the same period of 2022, activities had reached 3%.

In Mato Grosso alone, Imea indicates that activities totaled 1.26% up to June 2, an advance of 0.78 percentage point in one week, but a delay of 4.72 p.p. in relation to the crop before. The productivity is likely to be higher this season, leading the production to total 48.99 million tons, 11.7% up in relation to the crop before (43.83 million tons).

As for the summer crop, the harvest has reached 83.2% of the area, according to Conab, 3.5 p.p. below the pace observed in the same period of 2022.

PRICES – In Campinas, the ESALQ/BM&FBovespa Index for corn dropped 0.3% between June 1 and 7, to BRL 53.72 (USD 10.91) per 60-kg bag on June 7. On the average of the regions surveyed by Cepea, quotations decreased 2.7% in the over-the-counter market (paid to farmers) and 1.5% in the wholesale market (deals between processors).

As for exports, Anec (National Association of Cereal Exporters) estimates 1.65 million tons in June, against 1.5 million tons in the same month last year.

Malaysia May Palm Oil Stocks Rises to 1.69m Tons: MPOB

Malaysia’s palm oil stocks rose to 1.69m tons in May from 1.5m tons in April, according to Malaysian Palm Oil Board.

• Palm oil production rose to 1.52m tons from 1.2m tons in April
• Palm oil exports fell to 1.08m tons from revised 1.09m tons in April

Ukraine’s Grain Exports Are Down 2% Y/y So Far This Season

Ukraine’s grain exports in the 2022-23 season stand at 46.7m tons as of June 12, compared with 47.8m tons a year earlier, the agriculture ministry said on its website.

Total includes:

• 16.1m tons of wheat, down 14% y/y
• 2.7m tons of barley, down 54% y/y
• 27.7m tons of corn, up 21% y/y

India’s soybean, soybean meal imports to drop in 2022-23 on higher domestic output

India’s soybean import is estimated to decline by 9.90 per cent to 5 lakh tonnes in the ongoing 2022-23 oil year (October-September), as against 5.55 lakh tonnes in the previous year, on higher domestic supplies, industry body SOPA said on Monday.

Similarly, import of soybean meal — an animal feed — is also expected to decline substantially to 4,000 tonnes from 6.45 lakh tonnes in the said period, it said.

Oil year runs from October to September.

Releasing the estimates, the Soybean Processors Association of India (SOPA) said domestic production is pegged at 124.11 lakh tonnes during the 2022-23 oil year, as against 118.89 lakh tonnes in the previous year.

The carry over stock is estimated higher at 25.15 lakh tonnes, as against 1.83 lakh tonnes in the said period.

As a result, total import of soybean and soybean meal is projected to be lower this year.

However, export of soybean meal is likely to increase substantially to 17 lakh tonnes in 2022-23, from 6.44 lakh tonnes in the previous year. Already 14.53 lakh tonnes have been exported during the October-May period of the 2022-23 oil year.

As on June 1, soybean stock with traders and farmers stood at 59.58 lakh tonnes.

Indian Farmers Reduce Planting of Monsoon-Sown Rice, Pulses

Farmers planted rice in 352,000 hectares (869,810 acres) as of June 9, compared with 491,000 hectares a year earlier, according to the farm ministry.

• Monsoon-sown pulses were sown in 109,000 hectares vs 175,000 hectares
• Oilseeds were sown in 78,000 hectares vs 117,000 hectares
• Sugar cane was planted in 4.75m hectares vs 4.71m
• Cotton was planted in 1.43m hectares vs 1.31m

Coceral Cuts EU Grain Crop Forecast by 6.8M Tons on Dry Weather

This year’s grain harvest in the EU, plus the UK, is now seen at 296.7m tons, Coceral says in an emailed report.

• The outlook is down from a March forecast for 303.5m tons due to dryness in the northern half of the bloc
• Would still top last year’s harvest of 291.1m tons
• Production cut for areas including the Baltics, Denmark, Germany and Spain

Key Argentina Crop Region Sees Slowest Wheat Planting in 5 Years

Wheat planting in Argentina’s “zona nucleo” region on the Pampas farm belt is just 18% complete versus 55% at the same stage last year, the Rosario Board of Trade said in a report.

• NOTE: Zona nucleo accounts for roughly a fifth of Argentine wheat planting
• Fields in the west are too dry to get seeds in the ground; in the east they’re too soggy for fieldwork after rains came

Argentina soy, corn trucks entering key grains port at 22-year low

Argentina’s main grains port is seeing the lowest number of trucks with soy and corn in at least 22 years, the Rosario grains exchange said on Friday, after a historic drought battered production of the two key crops.

The South American country is the world’s top exporter of processed soy oil and meal, though could lose at least part of its soy crown to Brazil due to the crippling drought. It is also the world’s No. 3 corn exporter and an important wheat producer.

The Rosario grains exchange said in a report that around 280,000 trucks with soy and corn had entered the port in the March-May period, less than half the number in the same period of 2022 and 62% below the average of the last five years.

The vast majority of Argentina’s grains production is transported by truck and some three-quarters of it goes through the inland river ports at Rosario.

The exchange said the drop-off in trucks was even more pronounced for corn, partly due to a delayed harvest.

The exchange added that soybean imports in the first four months of the year had hit a record for the period of more than 3 million metric tons as the country’s famed crushing plants looked to reduce idle capacity.

The Rosario exchange estimates 2022/23 soybean production at 21.5 million metric tons, down 49% from the previous season due to the drought. With corn it forecasts 32 million metric tons, down 37% versus the previous season.

Strong Supply, Delayed Demand Pressure Brazil Fertilizers

China’s deal with Canpotex failed to firm potash prices in Brazil as competition remains high and demand slow in the region. Phosphate prices plunged amid strong imports, while nitrogen failed to respond to upward pressure from a new Indian urea tender.

Potash Prices Drop in Brazil After China Contract

China’s annual potash contract with Canpotex closed 48% below last year. Though the deal raised expectations for Brazil potash prices to stabilize as China re-engages in the market, delayed demand in the former and high competition between sellers drove potash prices down another $10 a metric ton (mt) vs. last week, to $330-$350 cost-and-freight. Urea prices in Brazil also fell $10/mt amid strong inventories, dimming hopes for a price correction there after the new India tender. Phosphate imports plunged to $440-$470/mt vs. last week’s $470-$490 as oversupply and aggressive offers from China further pressured the market.

Fertilizer prices will likely remain under pressure for the remainder of the soybean season until demand improves. Nitrogen prices also face additional declines before use for corn picks up in 3Q.

Fertilizer Fill on Horizon as Spring Application Winds Down

An early surge in spring fieldwork and near-term US demand caused fertilizer stockpiles to tighten inland, yet prices for urea, phosphates and potash are under pressure as consumption wanes and suppliers strive to empty bins. Fill pricing could reset the nitrogen market 16% lower.

Fertilizer Prices Pressured as Demand Ebbs for the Week

Inland ammonia and urea ammonium nitrate (UAN) prices extended declines this week as corn side-dressing demand peaks. Corn Belt ammonia prices dropped another $25-$45 a short ton (st) vs. last week, with summer fill programs expected to launch later in June. UAN prices were also down $20-$25/st in the Corn Belt, with urea falling $10-$25 vs. last week. New Orleans (NOLA) urea plunged as spring demand ebbs, with prompt barges dropping to a broad $280-$340/st vs. last week’s high of $400. Phosphates were down marginally at NOLA, but inland warehouses saw steeper declines as suppliers strive to end the season with empty bins.

Domestic and international potash prices were also pressured following news of a new contract between Canpotex and China at $307 a metric ton on a cost-and-freight basis, down sharply from 2022’s $590.

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