Global Ag News for May 18.23
Drought-Ravaged Crops Force US to Resort to Rare Wheat Imports
- Two cargoes of Polish grain have arrived in Florida this year
- US farmers are abandoning crops at highest rate in a century
The US is resorting to purchases of European wheat after a drought upended crop markets, pushing local prices higher.
At least two cargoes of Polish grain have arrived in Florida this year, with more expected over the next few months, according to people familiar with the matter, who asked not to be identified because the deals are private. Crop handler Andersons Inc. supplied the wheat to Ardent Mills’s flour factory in Tampa, the people said.
The rare imports are a blow for the US, which has been losing its relevance in the global wheat market to top shipper Russia. Last year’s drought has hampered shipping through the Mississippi River, making it more expensive to haul crops by rail. The dismal weather also means American farmers are poised to abandon wheat crops at the highest rate in more than a century, making hte deals profitable.
“It’s an unusual trade route, but it makes sense because US wheat is expensive,” said Miroslaw Marciniak, a market analyst at InfoGrain in Warsaw. “It’s cheaper for US processors on the East coast to ship grains from Europe than to haul them from Kansas.”
American hard red winter wheat — the variety used in all-purpose bread — has been trading at a wide premium to crops from other major global suppliers. Meanwhile, some eastern European nations are saddled with surpluses, which recently sparked restrictions on imports from war-torn Ukraine.
The wide price gap has allowed for deals to be struck for supplies of wheat from some European countries to be shipped to the US through at least October, one of the people said. The deals also allow for the grain to be delivered to another Ardent Mills facility in Albany, New York, the person said.
Andersons Chief Executive Officer Pat Bowe said imports from Europe make sense given the price difference, but declined to comment on whether the company had done any such deals. Ardent didn’t respond to a request for comment.
Trade data from the European Union shows Poland has shipped about 79,000 tons of wheat to the US so far in the 2022-23 season. More such cargoes from the Baltic to the US are likely given the price spread, Marciniak said.
US farmers may only harvest 67% of their winter wheat planted acres this year, the lowest ratio since 1917, the US Department of Agriculture estimates.
FUTURES & WEATHER
Wheat prices overnight are down 12 in SRW, down 24 1/4 in HRW, down 21 in HRS; Corn is down 7 1/2; Soybeans down 7; Soymeal down $5.00; Soyoil down 0.10.
For the week so far wheat prices are down 18 in SRW, down 14 in HRW, down 3 in HRS; Corn is down 29 1/2; Soybeans down 57 1/2; Soymeal down $12.20; Soyoil down 3.03.
For the month to date wheat prices are down 20 1/4 in SRW, up 85 in HRW, up 35 in HRS; Corn is down 31; Soybeans down 89 1/4; Soymeal down $12.10; Soyoil down 5.36.
Year-To-Date nearby futures are down 22.1% in SRW, down 2.8% in HRW, down 10.2% in HRS; Corn is down 17.9%; Soybeans down 12.3%; Soymeal down 12.1%; Soyoil down 27.1%.
Chinese Ag futures (JUL 23) Soybeans down 25 yuan; Soymeal down 13; Soyoil down 14; Palm oil down 8; Corn up 7 — Malaysian palm oil prices overnight were down 39 ringgit (-1.14%) at 3395.
There were changes in registrations (-44 Corn). Registration total: 2,389 SRW Wheat contracts; 2 Oats; 11 Corn; 22 Soybeans; 1,175 Soyoil; 73 Soymeal; 97 HRW Wheat.
Preliminary changes in futures Open Interest as of May 17 were: SRW Wheat down 1,277 contracts, HRW Wheat down 1,165, Corn down 2,230, Soybeans down 6,250, Soymeal up 6,392, Soyoil up 13,365.
Northern Plains: A front will bring scattered showers through the Northern Plains Wednesday and Thursday, along with a shot of colder air, but the rain is not forecast to be heavy, and the cold will only last a day or two. Wetter areas have had a chance to dry out and that continues through the weekend. More showers may be possible next week, an overall favorable pattern for reducing drought and supporting crop establishment.
Central/Southern Plains: A front moving through the Central and Southern Plains over the next few days should bring additional showers to much of the region, which may further improve soil moisture, including some of the deepest drought areas in the southwest. With additional showers possible next week as well, the pattern remains favorable for early crop development.
Midwest: A front will move through the Midwest later this week with additional scattered showers and thunderstorms, though they will be mostly light. Temperatures are up and down for the next week, but will trend to the warm side again. Conditions are mostly favorable for early development, though there are some wet pockets that could use some dry weather to continue planting.
Delta: Scattered showers continue to be possible in the Delta through Saturday. Wetter soils in the region are mostly favorable for developing crops. Drier conditions are likely to set in by the weekend and continue next week.
Canadian Prairies: A front moving through the Canadian Prairies is producing some showers, but most areas are being missed. The drop in temperatures that follows will be short-lived and temperatures will rise again going into the weekend. Conditions are mostly favorable for continued planting, though more showers are needed across the region’s drought area, which is fairly widespread. Models are supporting more rainfall for next week.
Argentina: A front will go through Argentina with showers over the next few days, and the pattern will favor additional fronts moving through to end May. Precipitation coverage and intensity is uncertain, however. Drier conditions are in place for winter wheat planting and establishment and rainfall is desperately needed.
The player sheet for 5/17 had funds: net sellers of 13,000 contracts of SRW wheat, sellers of 9,500 corn, sellers of 12,500 soybeans, sellers of 1,500 soymeal, and sellers of 2,500 soyoil.
- CORN PURCHASE: The Korea Feed Association (KFA) in South Korea purchased about 68,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa in a private deal on Tuesday without issuing an international tender
- CORN SALES CANCELLATION: The U.S. Agriculture Department said private exporters reported the cancellation of 272,000 tonnes in U.S. corn sales to China. The grain had been slated for shipment in the 2022/23 marketing year.
- FEED WHEAT TENDER: An importer group in the Philippines has issued a tender to purchase around 40,000 tonnes of animal feed wheat
- BARLEY PURCHASE: Japan will import 380 tonnes of feed-quality barley for livestock use via a simultaneous buy and sell (SBS) auction that closed on Wednesday, the Ministry of Agriculture, Forestry and Fisheries (MAFF) said.
- WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 113,555 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
- CORN TENDER: South Korea’s Major Feedmill Group (MFG) has issued an international tender to purchase up to 70,000 tonnes of animal feed corn to be sourced from optional origins
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 43,500 tonnes of rice.
- MILLING WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 113,555 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on May 18.
GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report
Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending May 11.
- Corn est. range -300k – 650k tons, with avg of 185k
- Soybean est. range 50k – 600k tons, with avg of 298k
CROP TOUR: Kansas Wheat Yields Drop Below USDA’s Estimate
Hard red winter wheat yields are estimated at an average 27.5 bu/acre, according to data collected from 276 fields Wednesday on the second day of the Wheat Quality Council’s annual crop tour.
- That’s below USDA’s forecast for Kansas of 29 bu/acre on May 12
- It’s also below the crop tour’s estimate of 37 bu/acre a year ago
- Two-day combined crop tour estimate is 28.7 bu/acre after 594 stops
- NOTE: Tour wraps up Thursday with final yield and production estimates for top US wheat state Kansas
China soybean imports reached a record high, global soybean supplies remain at risk – Refinitiv Commodities Research
As expected, China soybean imports continued to grow amid economic recovery, recent price declines and possible shortage of soybean supplies. Refinitiv trade flows tracked 8.8 million tons of soybean imports in China this April, a five-year high for the month. Moreover, 10.2 and 10.3 million tons of soybeans are heading for China and will arrive in Chinese ports in May and June, respectively. Accumulated soybean imports in the first of the year will reach 49.3 million tons, which is an all-time high and 16% above last year’s same period.
Brazil is the leading supplier of China soybean imports. A total of 7.1 million tons of Brazilian soybeans arrived in China in April. Refinitiv trade flows indicate soybean imports from Brazil will grow to 8.6 and 9.7 million tons for May and June, respectively. Soybean imports from the U.S. are also stronger than usual with 1.9 million tons of April arrivals and 1.7 and 0.6 million tons for May and June respectively. Imports from Argentina and Uruguay dropped to negligible levels due to halved production.
Refinitiv continues to foresee relatively tight global soybean supplies before 2023/24 Brazil soybeans come to the market next February. As the largest soybean importer, China tends to take advantage of recent reduced prices to rebuild its soybean inventory. In spite of positive outlooks of 2023/24 U.S. and South American soybean production, soybean supplies remain at risk. 2022/23 Argentina production was revised down to 22.8 million tons by Refinitiv Agriculture Research on 17 May, down 20 million tons from last year, which largely offset production gains in Brazil. On the other hand, North America summer weather outlooks call for relatively warm and dry conditions, which poses some risks to 2023/24 U.S. soybean production. Should U.S. soybean production be reduced by the expected warm and dry conditions, together with substantial production losses in Argentina this year, soybean supplies in the market could be quickly drained off.
White House Reviews Three-Year Slate of Biofuel-Blending Quotas
The White House is reviewing an EPA plan to set biofuel-blending requirements for 2023, 2024 and 2025, while weighing bigger policy changes to encourage electric vehicles powered by renewable natural gas.
- The Office of Information and Regulatory Affairs began vetting EPA’s final draft rule Monday, according to online notice
- The agency is subject to a court-ordered deadline to finalize the 2023 standards by June 14
- EPA is under pressure to increase blending requirements for biomass-based diesel from fuel makers, who say proposed targets undercount existing production, and shelve its plan to reward EV manufacturers with biofuel compliance credits when electricity from some renewable sources is used to power the cars
- More than two dozen lawmakers have warned EPA the EV proposal violates federal law and the intent of Congress, which mandated a study of the feasibility of that approach in 2007
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