Global Ag News for May 22.23
China’s Buying a Lot of Commodities From Russia, Just Not Wheat
China’s wheat imports are booming, but one top supplier is missing out: Russia.
The Asian nation is on track to be the largest buyer of the food staple this season, and Russia is the biggest exporter. While Beijing said last year that it would allow imports from all parts of Russia, trade has been hampered by a slew of issues, including phytosanitary regulations and transport challenges.
The future of wheat and meat shipments is likely to feature on the agenda when Russian government officials and executives attend a business forum in China this week, according to Agriculture Minister Dmitry Patrushev.
There is work to do. China has been buying a lot of wheat, with total imports surging more than 60% from a year earlier to about 6 million tons in the first four months of the year. Of that, Russia supplied just a trickle — 30,000 tons.
Wheat is an exception in China’s buying spree from Russia. Beijing’s purchases of energy and aluminum have soared as sanctions cut supplies to the West.
FUTURES & WEATHER
Wheat prices overnight are down 4 3/4 in SRW, down 11 in HRW, down 6 3/4 in HRS; Corn is up 7 1/4; Soybeans up 10 1/2; Soymeal up $0.30; Soyoil up 0.05.
Markets finished last week with wheat prices down 60 1/2 in SRW, down 85 in HRW, down 76 in HRS; Corn is down 30 3/4; Soybeans down 83; Soymeal down $21.50; Soyoil down 2.37.
For the month to date wheat prices are down 33 1/2 in SRW, up 37 in HRW, down 3 3/4 in HRS; Corn is down 23 1/4; Soybeans down 101 1/2; Soymeal down $23.00; Soyoil down 4.35.
Year-To-Date nearby futures are down 24.2% in SRW, down 8.4% in HRW, down 15.1% in HRS; Corn is down 17.2%; Soybeans down 13.3%; Soymeal down 14.4%; Soyoil down 25.8%.
Chinese Ag futures (JUL 23) Soybeans down 12 yuan; Soymeal down 40; Soyoil down 52; Palm oil down 26; Corn up 21 — Malaysian palm oil prices overnight were down 36 ringgit (-1.03%) at 3445.
There were no changes in registrations. 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 19 were: SRW Wheat up 2,424 contracts, HRW Wheat down 2,029, Corn up 3,018, Soybeans up 3,064, Soymeal up 782, Soyoil up 4,472.
Northern Plains: It was quiet over the weekend, allowing for field drainage of some wet areas to get more planting done. Isolated to scattered showers will develop this week, increasing by late week. Waves of showers are forecast to continue next week. Rain will be good for seed in the ground, but may make it more difficult for those yet to plant to get done on time.
Central/Southern Plains: Scattered showers went through some of the driest areas of the region late last week. More isolated showers will pop up throughout the week in the High Plains, spreading eastward at times. The rainfall may help to further reduce drought in some areas and is beneficial for developing summer crops and forages.
Midwest: A front went through the region with scattered showers on Saturday, leaving the region drier by Sunday. Drier conditions are expected for most of the week, which will help those with planting yet to do complete their tasks. Western areas will start to see showers bleeding eastward from the Plains over the weekend and could start to see some farther east next week as well. If showers disappoint, it will start to get dry again in some areas across the eastern Midwest, which may be concerning.
Delta: Scattered showers moved through on Saturday. Wetter soils in the region are mostly favorable for developing crops. Drier conditions have developed in the region and are likely to continue for the next week. Shower potential returns next week. Overall conditions continue to be very good across the region.
Canadian Prairies: Drier conditions last week allowed for some good seeding progress in the region. Widespread scattered showers are forecast this week, hitting most areas with at least some decent rainfall. Northern Alberta may receive some heavy rainfall early this week. Periods of showers may continue into next week as well, which may slow down seeding progress, but benefit soil moisture and drought reduction.
Argentina: Scattered showers went through over the weekend, favorable for increasing soil moisture for wheat. A few more fronts will move through this week with additional showers. Temperatures will fall below normal next week, which may produce frosts and freezes, limiting growth for wheat.
The player sheet for 5/19 had funds: net sellers of 3,000 contracts of SRW wheat, sellers of 500 corn, sellers of 8,000 soybeans, sellers of 2,500 soymeal, and unchanged soyoil.
- CORN PURCHASE: The Korea Feed Association (KFA) in South Korea purchased about 65,000 tonnes of animal feed corn expected to be sourced from either South America or South Africa on Thursday.
- 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.
- 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.
U.S. reports case of atypical mad cow disease
The U.S. Department of Agriculture (USDA) announced on Friday an atypical case of Bovine Spongiform Encephalopathy (BSE), commonly called mad cow disease, in an older beef cow at a slaughter plant in South Carolina.
USDA said the animal never entered slaughter channels and the agency did not expect any trade impacts as a result.
It was the seventh detection of BSE in the United States since 2003 and all but one have been atypical.
“This finding of an atypical case will not change the negligible risk status of the United States and should not lead to any trade issues,” USDA’s Animal and Plant Health Inspection Service said in a statement.
US Cattle on Feed Fell to 11.61M Head on May 1
The feedlot herd fell 3.4% from a year ago, according to the USDA’s monthly report. Analysts were expecting a drop of 3.5%
- Placements onto feedlots down 4.2% y/y to 1.748m head
- Eighth consecutive month of y/y declines
- Cattle marketed from feedlots declined 10.1% to 1.701m head
Brazil 2022/23 Soy Output Est. Raised to 155.7m Tons: Safras
Brazilian soybean production in 2022/23 is expected to total 155.66m tons, up 21.1% over the previous season’s harvest, which totaled 128.5m tons, consultancy firm Safras & Mercado says in an emailed report.
- In April, when the previous report was released, projection was 155.08m tons
- If confirmed, it will be the biggest harvest in history, Safras said
- Safras & Mercado sees an increase of 4.8% in the area, estimated at 44.39m hectares, compared with 42.34m hectares in 2021/22
- The survey points out that average productivity should increase from 3,050 kilos per hectare to 3,530 kilos
Russia Wheat-Crop Forecast Raised to 88m Tons on Rains: SovEcon
Russia’s 2023 wheat harvest is now estimated at 88m tons, up from a prior estimate for 86.8m tons, research firm SovEcon says in a note.
- That’s due to improving crop conditions in the country’s south after rain in the past 30 days
- Of the total, winter-wheat output is seen at 63.9m tons and spring-wheat at 24.1m tons
- Total output of grains and pulses seen at 136.3m tons, the second-highest on record
- NOTE: SovEcon says the crop estimates are based on the territory Russia controlled at the start of 2022
Russia targets 55 mln tonnes of grain exports annually – minister
(This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine.)
Russia plans to harvest on average around 130 million tonnes of grain a year and export up to 55 million tonnes, Russian First Deputy Agriculture Minister Oksana Lut said.
She added that Moscow had managed to increase its grain exports despite some countries rejecting Russian grain because of the conflict in Ukraine, which Russia calls its “special military operation”.
“Despite the decrease in the number of buying countries, we have increased our sales volumes… We are not chasing the number of countries, we are chasing good partnerships,” Lut said on the sidelines of an industrial forum on Friday.
Russia is currently shipping around 80% of its grain to the Middle East and North Africa, with Turkey, Egypt, Iran, Saudi Arabia and Algeria comprising the top five buyers, according to Eduard Zernin, the head of Russia’s grain exporters union.
Agriculture Minister Dmitry Patrushev said earlier this week that the grain harvest would be at least 123 million tonnes in 2023 while grain exports would total around 50-55 million tonnes in the 2023-2024 season.
The Black Sea grain deal allowing for the safe passage of Ukrainian farm produce was extended for two more months this week. However, Moscow says it wants to see more progress on implementing parts of the package affecting Russia, including readmitting its agricultural bank to the international payment system SWIFT and restarting an ammonia pipeline between Russia and Ukraine.
Ukraine Largest Port Says Russia Blocks Ships, Undermining Deal
Ukraine’s port of Pivdennyi — the country’s largest — said Russia is sabotaging its operations by not allowing inspections of inbound vessels, in violation of a UN-brokered export agreement that was extended just days ago.
- No vessels have been included on the list for inspections since April 29; Russia hasn’t explained why it’s rejecting Pivdennyi-bound ships, port officials said in a letter to Ukraine President Volodymyr Zelenskiy
- As a result, 1.5m tons of grains and sunflower oil bound for African countries and Asia, which have been at the port for two months, can’t be exported
- There are 26 vessels awaiting access to Pivdennyi and the fleet’s losses exceed $50m, according to the letter
- “The described sabotage automatically has an impact on future contracts with traders — at the moment, contracts are not signed and they won’t be signed unless there is a transparent understanding of the Black Sea grain initiative operation,” it said
- NOTE: Pivdennyi is one of three ports from where foodstuff exports are allowed under the agreement, with the capacity to handle 50% of shipments
- A UN spokesperson for the Black Sea Initiative referred to comments on Thursday from the agency, which called for all parties to ensure that vessels can make use of all three ports, making use of capacity and meeting industry demands
Russia to Raise Base Price for Wheat Duty to RUB 17k: Ministry
The base price for calculating Russia’s wheat-export duty will rise to 17,000 rubles/ton from 15,000 rubles as of June 1, according to Russia’s agriculture ministry.
- Change will allow farmers to keep more funds, agriculture Minister Dmitry Patrushev told reporters at conference in Sochi
- NOTE: IKAR earlier told Interfax that such a change would reduce the duty, but would “not be a radical improvement”
- NOTE: The export season runs July-June; the export tax on wheat is currently 4,728 rubles/ton, according to Interfax
SOYBEAN/CEPEA: Once again, world supply may set a record; prices fade
With the current weather conditions favorable to soybean sowing in the Northern Hemisphere and the end of the harvesting in Brazil, soybean prices dropped in Brazil and abroad in the last days. Weak international demand influenced that scenario too, since purchasers have been postponing deals, expecting quotations to drop in the coming weeks. These agents are based on the high world supply of soybean, estimated by the USDA at 410.58 million tons in the 2023/24 season, a new record and 10.8% higher than the 370.4 million tons forecast for the current season (22/23).
In the Brazilian spot market, the CEPEA/ESALQ Index Paraná closed at BRL 128.84 (USD 25.93) per 60-kg bag on May 18th, the lowest since August 27th, 2020, and a steep 3.6% down from that on the previous Thursday, 11. The ESALQ/BM&FBovespa Paranaguá (PR) Index dropped 3.2% in that period, to BRL 136.28 (USD 27.43)/bag on Thursday. On the average of the regions surveyed by Cepea, soybean prices decreased 3.2% in the over-the-counter market (paid to farmers) and 3% in the wholesale market (deals between processors) between May 11-18.
However, the 0.5%-dollar appreciation against the Real in the last seven days limited devaluations in Brazil – on May 18th, the American currency closed at BRL 4.969.
The area allocated to soybean crops in Brazil in the 2023/24 season is estimated by the USDA to total 45.6 million hectares, a record, leading to an output of 163 million tons, 5.16% higher than that in the 2022/23 season (estimated at 155 million tons). Soybean processing may total 55.75 million tons (Oct/23-Sept/24), 4.69% higher than the 53.25 million tons forecast for 2022/23.
Domestic consumption is forecast to increase too, by 4.74%, to 59.7 million tons in the 2023/24 season, a new record. Exports are estimated to increase from 93 million tons in the current season to 96.5 million tons in the coming season, also a record. Thus, ending stocks may be the highest in all-times, forecast at 40.34 million tons, 21.9% up from that last season (33.09 million tons).
CORN/CEPEA: Harvesting begins in Mato Grosso; prices continue to drop
The harvesting of the second crop of corn has just begun in Mato Grosso, and prices are still fading, influenced by estimates for high outputs in Brazil and in the United States, where favorable weather conditions are raising the expectations for high production. However, corn sales have been low in the Brazilian market and for exports, since agents have been prioritizing deliveries. In the USA, sowing has been faster than that last season, and as the weather is favorable, prices have faded this week too.
PRICES – Corn sales were low in the last days, as the interest of purchasers was weak. Between May 11-18, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) dropped a steep 3.7%, closing at BRL 56.51 (USD 11.37) per 60-kg bag on Thursday, 18. This month, this Index has decreased 14%.
On the average of the regions surveyed by Cepea, quotations decreased 7.3% in the over-the-counter market (paid to farmers) and 5.4% in the wholesale market (deals between processors). This month, values have dropped 11% in both markets.
ESTIMATES – The USDA released a report on May 12th indicating that the world production of corn in the 2023/24 season is expected at 1.21 billion tons, 6 million tons (+6%) higher than that last season. For Brazil, estimates point to a maintenance of production, while in Ukraine, it is expected to decrease. Brazil is expected to export 56 million tons of corn in the 2023/24 season.
CROPS – The current weather conditions are favoring activities in most of the regions surveyed in Brazil. According to Conab, the harvesting of the second crop has just begun in Mato Grosso State, with activities forecast to step up in late May/early June. As for the summer crop, 72.4% of the national area had been harvested by May 13th, according to Conab.
PORTS – As observed in the domestic market, corn exports have been low in May too. The current scenario is linked to the low prices paid at ports and majorly logistics – the transportation of soybean is usually a priority in the first semester. Thus, in the first nine working days of May, Brazil exported a slight 76 thousand tons of corn, with the daily average of shipments at 8.4 thousand tons, a steep 83% down from that in May/22.
China’s soybean imports from Brazil fall further in April
China’s soybean imports from Brazil fell 16% in April compared with the same month a year ago, data showed on Saturday, keeping supplies from the South American nation well behind last year’s level after delays to its harvest.
The world’s top buyer of soybeans imported 5.3 million tonnes of the oilseed from Brazil, its largest supplier, versus 6.3 million tonnes a year earlier, General Administration of Customs data showed.
Chinese buyers took advantage of this year’s record Brazilian soy crop and cheap prices to step up purchases earlier this year.
But a delayed Brazilian harvest and loading of beans slowed shipments, while increased inspections by China on soybean arrivals last month further reduced imports, traders said.
So far this year, imports from Brazil remain 28% behind that of a year ago, with 9.21 million tonnes in the first four months, compared with 12.7 million tonnes in the same period of 2022.
Imports from the United States continue to edge higher, rising by 11% in April from the year before to 1.82 million tonnes.
U.S. shipments for this year so far stand at 18.24 million tonnes, compared with 15 million tonnes last year.
For corn, arrivals from the United States fell to 53,099 tonnes, down from 1.51 million tonnes a year ago. Total Chinese corn imports in April contracted 55% on a year ago to 1 million tonnes, with Ukraine the dominant supplier.
Indonesia April Palm Oil Exports Fall 14.85% M/m: Intertek
Indonesia’s palm oil exports fell 14.85% m/m in April, according to Intertek Testing Services.
- Palm oil exports fell to 1.67m tons from 1.96m tons in March
- Crude palm oil shipments fell to 52.6k tons from 92.2k tons in March
- RBD palm olein shipments fell to 702.4k tons from 702.95k tons in March
- RBD palm oil shipments fell to 332.05k tons from 432.97k tons in March
- Palm oil sales to European Union fell to 370.42k tons from 506.17k tons in March
- Palm oil sales to India rose to 376.1k tons from 333.08k tons in March
- Palm oil sales to China fell to 259.74k tons from 351.24k tons in March
US Pork Production Up 1.5% This Week, Beef Down: USDA
US federally inspected pork production rises to 521m pounds for the week ending May 20 from 514m in the previous week, according to USDA estimates published on the agency’s website.
- Hog slaughter up 1.7% from a week ago to 2.408m head
- Beef production down 0.6% from a week ago, cattle slaughter falls 0.6%
- For the year, beef production is 4.7% below last year’s level at this time, and pork is 0.8% above
Brazil investigates four more suspect cases of avian flu in wild birds
Brazil is investigating another four new potential cases of highly pathogenic avian influenza (H5N1) in wild birds, according to authorities from the state of Espirito Santo, where Brazil’s first ever cases were confirmed this week.
After the birds showed symptoms consistent with H5N1, samples were taken from the four, all of them from the Thalasseus acuflavidus species (Cabot’s terns), according to a statement from Espirito Santo’s Agriculture, Supply, Aquaculture and Fisheries agency on Friday.
The samples are being processed by a reference lab of the World Organization for Animal Health (WOAH) in the city of Campinas. State authorities expect to get test results back sometime next week.
As part Brazil’s National Avian Influenza Surveillance Plan, Espirito Santo said it is mapping out “focus areas” and inspecting properties, public or private, where birds can be found.
A case of the highly infectious bird flu on a farm usually results in the entire flock being killed and can trigger trade restrictions. Detection among wild birds does not spark bans under WOAH guidelines.
Espirito Santo is Brazil’s third biggest egg producing state and Brazil is the world’s biggest chicken exporter.
The birds whose samples are now being processed were captured in the municipalities of Nova Venecia, Itapemirim, Linhares and Vitoria, Espirito Santo authorities said.
Some 26 birds being kept at Espirito Santo’s rehab center for wild species, Ipram, were culled to contain potential transmission, the statement added.
Ipram is where the weakened shore birds were taken before Brazil announced its first cases of highly pathogenic avian influenza on Monday.
The virus arrived in South America through migratory birds. Normally, these animals will only spread bird flu for around five days but the virus’ presence in small sea life the birds feed on may have enabled its broader spread this year.
U.S. Gulf Urea Nitrogen Fertilizer Price Rises 6%
Nitrogen fertilizer, represented by U.S. granular urea sold at NOLA, rose 6% to $398 per short ton in the week ended May 19, according to Green Markets data compiled by Bloomberg Intelligence.
- Click here for BI’s Agricultural Chemicals Dashboard.
- U.S. Gulf NOLA urea rose 7.87% during the last month and was up 26.8% during the last 3 months
- Major Urea nitrogen benchmark prices were mixed
- Shares of Yara International ASA and Nutrien Ltd. were up, while CF Industries Holdings Inc. was down in the latest week
- All major UAN nitrogen benchmark prices fell while UAN Black Sea fell the most during the last week
- Major Ammonia nitrogen benchmark prices were unchanged
- Natural gas, which drives producer costs, has increased 18% during the last week and was up 12% during the last month
- The price of corn, a driver of fertilizer purchases, decreased 4.3% during the last week and was down 12% during the last month
Fertilizer Prices Fall as Suppliers Fight for Market Share
Lower commodity prices and competition between suppliers continue to weigh on the Brazil phosphate and potash markets ahead of the next buying season. With corn demand expected to improve in Q3, nitrogen prices in Brazil will likely stabilize despite strong inventories.
Phosphate, Potash, Urea Prices Decline Again in Brazil
High inventory and competition between suppliers continue to push fertilizer prices down in Brazil ahead of the next soybean season. Phosphate prices fell to $520-$535 a metric ton (mt) vs. last week’s $530-$550 amid strong imports from Russia, which claimed 52% of Brazil’s market share for January-April, up from 45% last year and 66% higher than the import volumes from Morocco for the same period. Potash prices slipped $10/mt vs. last week to $350-$390/mt as buyers push for discounts in the wake of declining commodity prices. Urea dropped $5-$10/mt to $315-$325. An expected India tender in the coming weeks may give urea prices some stability, but high inventories could continue to pressure prices in the off season.
Interested in more futures markets? Explore our Market Dashboards here.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.