Global Ag News for May 19.23

TOP HEADLINES

Western Australia’s Grain Production Seen Lower in 2023: GIWA

The state’s 2023 crop production is expected to be lower than the previous two years, according to a report Friday from the Grain Industry Association of Western Australia.

• Reduced planted area, lack of subsoil moisture in the top third of the state’s grain-growing region, and the percentage of crop still not emerged from the ground will result in lower output
• A big swath of the center of the state has had enough rain to bog down machinery, while other growers have had very little rain
• Cropped area expected to be ~8.2m-8.3m hectares, 8% lower y/y
  • Canola area is down 18% on 2022
  • Wheat area will be down slightly from 2022 due to ongoing dry conditions in the north of the state and low rainfall fringes further south
• NOTE: Western Australia is country’s largest wheat exporting state

FUTURES & WEATHER

Wheat prices overnight are up 6 3/4 in SRW, up 4 1/2 in HRW, up 5 1/2 in HRS; Corn is up 2 1/2; Soybeans up 7 1/4; Soymeal up $2.30; Soyoil up 0.34.

For the week so far wheat prices are down 21 1/4 in SRW, down 20 in HRW, down 18 in HRS; Corn is down 30 3/4; Soybeans down 53 1/2; Soymeal down $17.60; Soyoil down 2.12.

For the month to date wheat prices are down 15 1/4 in SRW, up 85 1/4 in HRW, up 30 1/4 in HRS; Corn is down 27 1/4; Soybeans down 78 3/4; Soymeal down $16.00; Soyoil down 4.04.

Year-To-Date nearby futures are down 22.5% in SRW, down 3.5% in HRW, down 11.8% in HRS; Corn is down 18.1%; Soybeans down 12.0%; Soymeal down 13.2%; Soyoil down 25.7%.

Chinese Ag futures (JUL 23) Soybeans up 14 yuan; Soymeal up 7; Soyoil up 22; Palm oil down 12; Corn up 2 — Malaysian palm oil prices overnight were up 91 ringgit (+2.68%) at 3483.

There were changes in registrations (-22 Soybeans). Registration total: 2,389 SRW Wheat contracts; 2 Oats; 11 Corn; 0 Soybeans; 1,175 Soyoil; 73 Soymeal; 97 HRW Wheat.

Preliminary changes in futures Open Interest as of May 18 were: SRW Wheat up 246 contracts, HRW Wheat up 785, Corn down 12,955, Soybeans up 4,785, Soymeal up 4,215, Soyoil down 738.

Northern Plains: A front brought some showers through the Northern Plains Wednesday, but amounts have been light. A shot of colder air is also going through, but will only last a day or so. Wetter areas have had a chance to dry out and that continues through the weekend. Delays to planting in North Dakota may have been made up this week. More showers may be possible next week, an overall favorable pattern for reducing the remaining drought and supporting crop establishment.

Central/Southern Plains: A front moving through over the next few days will bring additional showers to much of the Central and Southern Plains, which may further improve soil moisture, including some of the deepest drought areas in the southwest. This comes on the heels of widespread drought reduction in the region last week. With additional showers being possible next week as well, the pattern remains favorable for early crop development and forages, and further drought reduction.

Midwest: A front will move through the Midwest with scattered showers and thunderstorms through Saturday, though mostly light. Temperatures are up and down, but will trend warm again next week. 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 that moved through the Canadian Prairies on Wednesday produced some showers, mostly in Manitoba, and most areas were missed. The drop in temperatures that follows will be short-lived. Conditions are mostly favorable for continued planting, though more showers are needed to relieve the region’s drought, which is fairly widespread. Models are supporting more rainfall for next week, though are uncertain how that will manifest and how widespread the rain might be.

The player sheet for 5/18 had funds: net sellers of 5,500 contracts of SRW wheat, sellers of 1,000 corn, sellers of 4,000 soybeans, sellers of 6,000 soymeal, and  buyers of 3,500 soyoil.

TENDERS

• CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) has purchased an estimated 66,000 tonnes of animal feed corn expected to be sourced from South America in an international tender on Thursday
• MILLING 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: Iranian state-owned animal feed importer SLAL has issued an international tender to purchase up to 120,000 tonnes of animal feed corn to be sourced from Brazil or Argentina.

PENDING TENDERS

• 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.
• FEED WHEAT TENDER: An importer group in the Philippines has issued a tender to purchase around 40,000 tonnes of animal feed wheat.

TODAY

US Export Sales of Pork and Beef by Country

The following shows US export sales of pork and beef product by biggest net buyers for week ending May 11, according to data on the USDA’s website.

• Mexico bought 15.5k tons of the 31.9k tons of pork sold in the week
• Japan led in beef purchases

RusAgroTrans Sees Russia 2023 Wheat Harvest at 84.1m Tons: IFX

Head of the RusAgroTrans analytical center Igor Pavensky sees Russia’s 2023 wheat harvest at 84.1m tons, Interfax reported, citing comments at Rusgrain conference in Sochi.

• Forecast boosted by 1.6m tons in May due to improved situation in the south, Volga and central regions
• Sees total grain harvest in Russia at 129.8m tons
• Pavensky estimates total Russian grain exports from July 2022-April 2023 at a record 50.7m tons, including 41m tons of wheat
• Expects total grain exports this season to be 59.3m tons; total wheat exports seen at 48m tons

Brazil’s Abiove Oilseed Group Raises Country’s Soymeal Production View To 40.6 Million Tns – May Report

• BRAZIL’S ABIOVE OILSEED GROUP RAISES COUNTRY’S SOYMEAL EXPORT VIEW TO 21.4 MILLION TNS FROM 21 MILLION TNS – MAY REPORT
• BRAZIL’S ABIOVE OILSEED GROUP RAISES COUNTRY’S SOYBEAN EXPORT VIEW TO 95.7 MILLION TNS FROM 93.7 MILLION TNS – MAY REPORT
• BRAZIL’S ABIOVE OILSEED GROUP RAISES COUNTRY’S 2022/2023 SOYBEAN OUTPUT VIEW TO 155 MILLION TNS FROM 153.6 MILLION TNS – MAY REPORT
• BRAZIL’S ABIOVE OILSEED GROUP RAISES COUNTRY’S SOYMEAL PRODUCTION VIEW TO 40.6 MILLION TNS FROM 40.2 MILLION TNS – MAY REPORT

Argentina Soy Estimate Slashed Another 6.7% to 21m Tons: Bourse

The Buenos Aires Grain Exchange cut its forecast for Argentina’s soy harvest to 21m metric tons from 22.5m, according to a weekly report.

• Yields are coming in even lower than expected and many fields are being entirely abandoned by farmers
• Harvest is 69% complete
• NOTE: The Rosario Board of Trade recently reduced its estimate to 21.5m metric tons

World Wheat Stockpiles Cut 6M Tons on Shrinking Harvests: IGC

World wheat stockpiles in the 2023-24 season are now seen at 271m tons, down from an April outlook for 277m tons, the International Grains Council said Thursday in a note.

• NOTE: That would be a five-year low, according to figures on IGC’s website
• Production estimate lowered to 783m tons, from 787m tons
  • Outlook for US crop cut to 45.2m tons, from 49.4m tons, and EU harvest also trimmed, it says in a separate emailed report
• World corn stockpiles seen at 272m tons, up from 264m tons, on bigger crops
• Total grain stockpiles cut to 580m tons, from 581m tons, as consumption climbs

Ukraine Corn Plantings So far in 2023 Lag Behind Year Earlier

Ukrainian farmers have sowed 3.3 million hectares of corn so far this year, Agriculture Ministry says on website, lagging behind year-earlier plantings.

• Total planting area for spring-sown grains has reached 4.7m hectares
  • That includes 256,900 hectares of wheat and 759,600 hectares of barley
• Sugar beet sowing is nearly over, with 207,400 hectares planted
• NOTE: Ukrainian farmers had planted 4.2m hectares of corn by the same period last year, Agriculture Ministry said May 20, 2022

Russia to Discuss Wheat, Meat Exports at Chinese Business Forum

Russia plans to discuss issues, including winter wheat and meat shipments to China, when government officials and company executives attend a business forum in China next week, Agriculture Minister Dmitry Patrushev says at agriculture conference aired by RBC TV.

Patrushev said he plans to attend forum in China

Three New Inbound Vessels Approved for Ukraine Crop Corridor: UN

The Joint Coordination Centre in Istanbul today authorized three new inbound vessels to head to Odesa and Chornomorsk ports, Farhan Haq, spokesperson for the UN secretary-general, said at a press briefing.

• Those vessels are the first new ships to be authorized since May 4: Haq
• Three other ships are on outbound journeys through the corridor
  • Two of those are preparing for inspection in Istanbul; one had been stranded in Ukraine since March 2022 and is now departing
• Haq said the four parties to the Ukraine grain deal may meet for discussions on Friday or early next week

China Tightens Checks on Soybean Imports, Crimping Local Supply

• Desert Osprey has been waiting off Tianjin port since April 1
• Local shortage now may turn to glut when inspections ease

China has tightened inspections of soybean cargoes arriving at its ports, causing congestion and shortages on the domestic market.

The Desert Osprey, laden with 49,400 tons of US soybeans, has been waiting off the port of Tianjin, a key import hub in northern China, since the start of April. Some inbound cargoes can take as long as 20 days to clear customs, up from about 3-5 days, forcing some processors to suspend operations, traders said.

China imports about 60% of the world’s internationally traded soybeans and relies on overseas supplies for more than 80% of its consumption, with most of those purchases coming from the US and Brazil. The delays pushed up the cost of soybean meal, a core feed ingredient for hog farmers, by as much as 20%.

The tighter inspections take the form of increased sampling and a longer list of items that need to be checked, said the traders, who declined to be identified because they aren’t authorized to speak publicly. These have affected cargoes at the main ports. While it’s unclear why customs are doing this, there’s some speculation that it may be to support local soybean prices at planting time.

Still, local shortages of soybeans now may be replaced by a glut in the future, when the cargoes finally pass customs and come onto the domestic market.

“Operating rates at crushing plants are currently only about 50%,” or about 15-20 percentage points below normal, said Zhu Rongping, an analyst at Mysteel, a commodities consultancy. “Supply pressure will be huge in future if the delays continue,” and there’s a risk the quality of beans will deteriorate, she said.

Inventories Drop

Spot prices of soymeal in Shandong, a major processing hub, jumped as much as 20% from late March through early May, though they have since eased and are more than 25% below the peak in November. The country’s inventories of soybean meal were 60% less than levels a year earlier as of May 19.

The extra inspection time is costing shipowners money as the backup of vessels waiting to enter agricultural berths at Chinese ports increases. The Desert Osprey loaded its cargo at Zen-Noh Grain Corp.’s elevator in Louisiana on Feb. 15, according to shipping data analyzed by Bloomberg.

While the backlog has started to ease at some ports, inspection procedures on soybean cargoes in general are more stringent and taking longer, traders said. More pressure may kick in as May arrivals should be larger. April soybean imports were 10% less than a year ago at 7.26 million tons, due to the delays.

Corteva CFO Sees Supply Woes in Crop-Protection Products

Corteva Inc. is facing inventory challenges for crop inputs as it tackles increasing operation costs.

• “We have this need to replenish quickly, particularly inventory on the crop protection side,” Dave Anderson, chief financial officer at Corteva said during a presentation at the BMO Global Farm to Market Conference in New York
• He also points to “higher commodity costs and ingredient costs” as a key driver for supply decisions for growers

Andersons CEO Sees Corn and Soy Helping to Curb Food Inflation

Despite the current drought-stricken state of US wheat, corn and soybeans are in much better shape and will help to curb food price inflation, according to the chief executive officer of crop handler Andersons Inc.

The dry conditions for wheat are mostly limited to parts of Texas and Kansas, Pat Bowe said Thursday in a Bloomberg TV interview in New York.

“We expect the corn and soybean crops to be good in the US,” he said. “We could see a weakening of commodity prices, which could help curb food inflation.”

ETHANOL MARGINS AT 9-YEAR HIGH AS CORN PRICES WENT DOWN – Refinitiv Commodities Research

2022/23 U.S. CORN CONSUMPTION FOR ETHANOL: 5,279.5  MILLION BUSHELS, UNCHANGED FROM LAST UPDATE

The ethanol industry has experienced a promising start to the year, marked by encouraging profits and favorable market conditions. As of May 17, the average ethanol margins in the corn belt were at $0.45/gal, reaching the nine-year high record. Factors such as anticipated increases in U.S. corn production for 2023/24, intensified competition from Brazilian corn, the cancellation of Chinese corn purchases, and the extension of the Black Sea grain deal by two months have loosened the pressure on corn prices and contributed to the industry’s exceptional margins.

In April, corn for ethanol use totaled 398.7 thousand bushels, a 21.9% decrease from March and 18.5% above the April 3-year average. As of May 16, the accumulated corn consumption for ethanol during the 2022/23 season has reached 3,622.57 million bushels. This is 3.7% above the 3-year average and only 2.9% lower than the previous season, leading to the 3rd largest season for corn consumption for ethanol use.

The consumption of corn for ethanol production typically experiences an upturn during the warmer months, driven by heightened motor-gasoline demand. The Environment Protection Agency (EPA) is poised to authorize summer gasoline sales with higher ethanol blends, further bolstering the industry. The Energy Information Administration (EIA) estimates the ethanol share of finished gasoline consumption will increase to 10.48% by the end of 2023, rising from 10.39% in 2022. This upward trend is expected to continue, reaching 10.53% in 2024. This, coupled with favorable industry margins, is set to provide a significant boost to corn-based biofuel production.

Based on the market indicators, Refinitiv’s Agriculture Research maintains 2022/23 U.S. corn consumption for ethanol use at 5,279.5 million bushels. This is 29.5 million bushels more than the USDA’s May estimate. The USDA forecasted the 2023/24 season at 5,300 million bushels.

Tour estimates lowest Kansas winter wheat yield in over two decades

Wheat yield potential in Kansas was estimated at 30.0 bushels per acre (bpa) on Thursday by crop scouts on an annual Wheat Quality Council tour, the lowest since at least 2000.

The figure in the biggest U.S. winter wheat producer is below the five-year crop tour average of 45.62 bushels per acre from 2017-2022, reflecting the impact of months of drought. No tour was held in 2020 due to the coronavirus pandemic.

The U.S. Agriculture Department on May 12 estimated yields at 29 bushels per acre in Kansas.

Farmers, grain traders and food companies are watching crop conditions closely as the U.S. government expects domestic wheat stocks to fall to a 16-year low. A poor crop from the United States, the world’s No. 5 wheat exporter, leaves the world more vulnerable to shortages and could result in higher food prices.

Tour scouts on average projected the Kansas harvest at 178 million bushels, below the USDA’s estimate for 191.4 million and last year’s harvest of 244.2 million due to expectations that many farmers won’t bother to harvest their wheat.

In most of the 652 fields the tour checked, scouts could see the ground through the wheat crop because plants were thin and short. When crops are in good shape, they form a canopy over the soil.

One field in Marion County, Kansas, had visible cracks in the soil on Thursday. Plants that would normally be about 30 inches (76 cm) tall were only 20 inches (50 cm) due to dryness.

“You can tell that this is not normal for this part of the country,” said Dave Green, executive vice president of the Wheat Quality Council.

Some farmers in western Kansas said rains helped improve the crop in recent weeks. They want more rain, along with cool temperatures, between now and harvest in about four to six weeks.

Experts caution that rains now are arriving too late to significantly benefit yields in many places.

“In southern Kansas, it’s getting to the stage where it’s too late,” said Joel Widenor, an agricultural meteorologist with the Commodity Weather Group. “Sure, (rain) will help out a little … but it certainly won’t have the impact that some of the earlier rains had.”

Another round of more widespread showers is expected in the last week of May that could benefit wheat in northern Kansas, where crops are less mature and still developing, Widenor said.

In Healy, Kansas, located in the western third of the state, wheat grower Vance Ehmke said he is living rain-to-rain and already expecting the worst harvest in his 48 years of farming.

“If it quits raining, we’re just dead meat,” Ehmke said.

Malaysia Expects Dry Weather to Be Worse Than in Recent Years

• May-Sept Southwest Monsoon season to be drier than 2020-22
• Small potential for mercury to climb higher: Weather Office

Malaysia may experience drier weather than in recent years during the ongoing Southwest Monsoon season that’s set to run through September, according to the Meteorological Department, bringing little respite from the hot spell that’s engulfed the country.

The Southeast Asian nation may continue to see temperatures of up to 37C (98.6F) for at least three straight days on lesser rain, the weather office said in a written response to Bloomberg News. Such conditions, characterized as a Level 1 alert by the authority, prevailed in five districts as of Thursday.

Asia is in the grip of blistering heat over the last several weeks amid an emerging El Nino weather pattern. Temperatures soared to an all-time high in Vietnam and Laos earlier this month, while Singapore posted its highest temperature in 40 years at 37C on Saturday.

Still, strong winds and heavy rain in some parts of Malaysia will likely prevent the heat from worsening, the Met Department said. Malaysia defines a technical heat wave, or Level 2 alert, as temperatures of between 37C to 40C for at least three straight days.

MET Malaysia said “the potential to reach Level 2 (Heatwave) is small.” “However, Level 1 may happen especially in the outbacks because the days without rain outnumber days with rain.”

Malaysia has been protected from the worst of Asia’s scorching temperatures due to a combination of heavy rain and wind speeds of as high as 50 kilometers (31 miles) per hour over the west coast of the peninsular and west of Sabah, MET Malaysia said. The country’s all-time highest temperature of 40.1C was recorded on April 9, 1998, during the El Nino phenomenon.

The weather office said it is still prepared for the situation to worsen, given the potential for the dry weather to lead to open burning and haze.

Cross-border haze may also occur on the possibility of uncontrolled open burning and less rainfall in neighboring Indonesia, the Met Department said, as it outlined the worse-case scenario for Malaysia. Prolonged dry conditions could affect water levels in dams, while power consumption may climb on rising use of air-conditioners, it added.

The Southwest Monsoon Season is characterized by lesser rainfall, more dry than rainy days, and the squall line phenomenon. The squall line brings downpours, strong winds and lightning in some parts of Malaysia in the early mornings and could last several hours. Peninsular Malaysia and Sarawak is expected to be drier throughout the season, according to the weather office.

Even so, Malaysia’s Deputy Prime Minister Ahmad Zahid Hamidi said the government does not see a need to declare a heat wave emergency despite the country currently experiencing a spell of hot weather, local media reported Tuesday.

The authorities are monitoring the situation and the government may reconsider if the temperature reaches 40C, Zahid said after chairing the National Disaster Management Agency meeting.

Indonesia Sees Having Its Own CPO Benchmark Pricing by Yearend

Govt expects to issue a new rule in June that would require exporters to trade CPO on local exchanges before shipping their products overseas, according to the Commodity Futures Trading Regulatory Agency, known as Bappebti.

• Indonesia would have its own CPO benchmark pricing by the end of the year once the regulation takes effect, Bappebti Head Didid Noordiatmoko says in a briefing on Friday
• The new policy would enable the govt to use local CPO pricing as its only reference for determining export duties
• Indonesia, the world’s largest palm oil producer, exports nearly 3m tons of CPO annually

US generated fewer renewable fuel credits in April, EPA says

The United States generated fewer renewable fuel blending credits in April versus the month prior, data from the Environmental Protection Agency (EPA) showed on Thursday.

About 1.16 billion ethanol (D6) blending credits were generated last month versus 1.22 billion in March, according to the data.

About 603 million biodiesel (D4) blending credits were generated in April versus 619 million in the month prior.

The credits are used by oil refiners and importers to show compliance with EPA-mandated ethanol blending quotas for petroleum-based fuels. They are generated with every gallon of biofuel produced.

US Miss. River Grain Shipments Fall, Barge Rates Increase: USDA

Barge shipments down the Mississippi river declined to 293k tons in the week ending May 13 from 463k tons the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn fell 24% from the previous week
• Soybean shipments down 61% w/w
• St. Louis barge rates were $9.03 per short ton, an increase of $0.15 from the previous week

US Crops in Drought Area for Week Ending May 16: USDA

The following table shows the percent of US agricultural production within an area that experienced drought for the week ending May 16, according to the USDA’s weekly drought report.

• All major crops and livestock herds listed below saw declines in drought exposure last week
• Corn crops experiencing moderate to intense drought dropped by 4 percentage points from the previous week to 25%

 

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