Global Ag News for May 24.23

TOP HEADLINES

CROP TOUR: Illinois Soft Red Wheat Yields Seen Breaking Record

Soft red winter wheat yields in Illinois are estimated at 97.12 bu/acre, exceeding USDA’s forecast of 78 bu, according to Tuesday’s tour by the Illinois Wheat Association.

• That’s above the crop average of 68.5 bu/acre a year ago and the state record of 79 bu
• Estimates based on 57 samples
• Soft red winter wheat accounts for about 15% of total US wheat production
  • NOTE: This variety primarily grown east of the Mississippi river, including Illinois where farmers alternate between planting wheat and soybeans
• The war in Ukraine sparked higher prices that pushed farmers to plant; USDA’s forecast shows 35% increase in planted area in 2023 versus 2022
• NOTE: Fields in Southern Illinois are showing some disease pressure and early frost damage but overall the crop quality should not be an issue: Mark Krausz, association president

FUTURES & WEATHER

Wheat prices overnight are down 4 in SRW, down 8 1/4 in HRW, down 3 1/4 in HRS; Corn is down 3/4; Soybeans down 1; Soymeal down $1.20; Soyoil up 0.18.

For the week so far wheat prices are up 13 1/4 in SRW, up 9 in HRW, up 13 1/2 in HRS; Corn is up 22 1/4; Soybeans up 14 1/2; Soymeal down $3.90; Soyoil up 0.67.

For the month to date wheat prices are down 15 1/2 in SRW, up 57 in HRW, up 13 3/4 in HRS; Corn is down 8 1/4; Soybeans down 97 3/4; Soymeal down $27.20; Soyoil down 3.73.

Year-To-Date nearby futures are down 21.9% in SRW, down 6.2% in HRW, down 12.9% in HRS; Corn is down 15.0%; Soybeans down 13.0%; Soymeal down 15.3%; Soyoil down 24.9%.

Chinese Ag futures (JUL 23) Soybeans up 30 yuan; Soymeal down 19; Soyoil down 24; Palm oil down 14; Corn down 4 — Malaysian palm oil prices overnight were up 32 ringgit (+0.95%) at 3410.

There were changes in registrations (-12 Soyoil). Registration total: 2,389 SRW Wheat contracts; 2 Oats; 11 Corn; 0 Soybeans; 1,163 Soyoil; 47 Soymeal; 97 HRW Wheat.

Preliminary changes in futures Open Interest as of May 23 were: SRW Wheat up 1,844 contracts, HRW Wheat up 3,646, Corn up 4,480, Soybeans up 1,405, Soymeal up 3,592, Soyoil up 2,140.

Northern Plains: Isolated to scattered showers will develop in the Northern Plains throughout the week and are forecast to continue next week as well. 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: More isolated to scattered showers will pop up in the Central and Southern Plains throughout the week in the High Plains, spreading eastward at times and continuing through next week as well. The rainfall may help to further reduce drought in some areas and is beneficial for developing summer crops and forages.

Midwest: Drier conditions are expected in the Midwest for most of the next week, which will help those with planting yet to do complete their tasks. Western areas may 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: Wetter soils in the Delta 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 but isn’t a large chance. Overall conditions continue to be good across the region for developing crops for now.

Canadian Prairies: Drier conditions last week allowed for some good seeding progress in the Canadian Prairies. Widespread scattered showers have developed in the region and are forecast to continue throughout the week, hitting most areas with at least some decent rainfall. Northern Alberta is receiving 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 Argentina 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 5/23 had funds: net buyers of 5,500 contracts of SRW wheat, buyers of 4,500 corn, buyers of 6,000 soybeans, sellers of 2,500 soymeal, and  sellers of 3,000 soyoil.

TENDERS

• SOYMEAL PURCHASE: Iranian state-owned animal feed importer SLAL is believed to have purchased about 260,000 tonnes of soymeal in an international tender which closed on Monday
• CORN PURCHASE: Taiwan’s MFIG purchasing group bought about 65,000 tonnes of animal feed corn to expected to be sourced from Brazil in an international tender on Wednesday
• MILLING WHEAT PURCHASES: Buyers in the United States have recently purchased about 210,000 tonnes of European Union origin wheat expected to be sourced from Poland and Germany
• MILLING WHEAT PURCHASES: A group of South Korean flour mills bought an estimated 135,000 tonnes of milling wheat to be sourced from the United States, Australia and Canada in an international tender on Tuesday.
• FEED WHEAT PURCHASE: An importer group in the Philippines is believed to have bought around 40,000 tonnes of animal feed wheat in an international tender issued last week.

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
• WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 56,000 tonnes of grade 1 milling wheat to be sourced from the United States.

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending May 19 are based on six analyst estimates compiled by Bloomberg.

• Production seen higher than last week at 997k b/d
• Stockpile avg est. 22.978m bbl vs 23.191m a week ago

Brazil to reap large second corn crop due to higher yields, consultancy says

Brazilian farmers will reap a large second corn crop in spite of planting some of it outside the ideal growing window, according to data released on Tuesday ahead of a crop tour of the country’s main producing states.

Agroconsult, the agribusiness consultancy organizing the tour, estimates that Brazil’s second corn crop will reach 102.4 million tonnes in 2022/2023 due to an anticipated 11% jump in average yields and a planting area as big as last year.

A previous forecast had projected Brazil’s second corn production, which represents 70%-75% of national output in a given year, at 97.2 million tonnes, Agroconsult said.

Brazil will export a projected 54 million tonnes of corn in 2022/2023, as supplies are abundant and demand from countries like China will continue to drive sales, Agroconsult predicted.

However, congested ports and limited storage capacity may compromise corn export volumes, especially early in the second half of the year, when Brazil’s new second corn crop will compete with soybeans for logistical space, Agroconsult said.

Brazilian farmers harvested a record soybean crop above 154 million tonnes this season, government data shows.

Though Agroconsult said the outlook is good for overall second corn production in Brazil, some 20 million tonnes of the second corn harvest is still “at risk,” noted Andre Debastiani, the firm’s crop tour coordinator.

He highlighted potential weather-related risks in areas including Mato Grosso do Sul, Parana, Sao Paulo and Minas Gerais, where corn was planted later than usual.

Farmers in those states may face low rains or even frost before the harvest, although weather models don’t suggest huge problems, Debastiani said.

Brazil soy exports seen reaching up to 15.9 mln tns in May – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 15.9 MILLION TNS IN MAY VERSUS 15.76 MILLION TNS IN PREVIOUS ESTIMATE – ANEC
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.49 MILLION TNS IN MAY VERSUS 2.6 MILLION TNS IN PREVIOUS ESTIMATE – ANEC
• BRAZIL CORN EXPORTS SEEN REACHING 387,009 TNS IN MAY VERSUS 570,618 TNS IN PREVIOUS ESTIMATE – ANEC
• BRAZIL’S ANEC DOESN’T RULE OUT SHORTER CARGO LOADING FOR SOYBEANS IN MAY, SAYS EXPORTS COULD END UP BELOW OFFICIAL LINEUP OF 15.9 MILLION TNS

EU Soft-Wheat Exports Rise 13% Y/y in Season Through May 21

The European Union’s soft-wheat exports in the season that began July 1 reached 28m tons as of May 21, compared with 24.9m tons in a similar period a year earlier, the European Commission said on its website.

• Leading destinations include Morocco (4.49m tons), Algeria (3.9m tons) and Nigeria (2.38m tons)
• EU barley exports were 5.82m tons, compared with 6.82m tons
• Corn imports stand at 24m tons, against 14.7m tons

EU 2022/23 soybean imports fall 12%, rapeseed gains 40%

European Union soybean imports in the 2022/23 season that started in July had reached 11.36 million tonnes by May 21, down 12% from the 12.93 million tonnes a year earlier, data published by the European Commission showed on Tuesday.

EU rapeseed imports so far in 2022/23 had reached 6.94 million tonnes, up 40% from the 4.97 million tonnes a year earlier, the data showed.

Soymeal imports over the same period totalled 14.01 million tonnes, down 3% from 14.51 million a year earlier, while palm oil imports stood at 3.56 million tonnes, down 21% year on year.

The Commission listed the following five largest supplier countries to the EU so far in 2022/23 per product, compared with a year earlier:

Ukraine’s Grain Exports Fall 4.6% in Season So Far: Ministry

Ukraine has exported 44.6m tons of grain so far in the season that began last July, the Agriculture Ministry says on its website.

The total includes:

• 15.3m tons of wheat, down 18% y/y
• 2.6m tons of barley, down 54% y/y
• 26.4m tons of corn, up 19% y/y

Ukraine says Russia prevents Black Sea grain deal port operating

• Black Sea Grain Initiative was extended last week
• Ukraine says Russia is not allowing it to work fully
• Russia denies slowing inspections under deal
• Black Sea deal has helped tackle global food crisis

The Ukrainian port of Pivdennyi has halted operations because Russia is not allowing ships to enter it, in effect cutting it out of a deal allowing safe Black Sea grain exports, a Ukrainian official said on Tuesday.

The Black Sea Grain Initiative signed by Russia and Ukraine last July, and extended last week for two months, is intended to guarantee the safe wartime export of grains and foodstuffs from three Ukrainian ports – Odesa, Chornomorsk and Pivdennyi.

The United Nations, which together with Turkey, brokered the deal and its extension, expressed concern on Monday that Pivdennyi – near Odesa on the Black Sea – had not received any ships since May 2 under the deal.

“Formally, the port of Pivdennyi is in the Initiative, but in fact it hasn’t been there for a month. It has no incoming fleet,” Ukrainian Deputy Renovation Minister Yuriy Vaskov said.

“They (Russia) have now found an effective way to significantly reduce (Ukrainian) grain exports by excluding the port of Pivdennyi, which handles large tonnage vessels, from the initiative,” he said in written comments.

Vaskov called the move a “gross violation” of the agreement.

The Black Sea grain deal was agreed to help tackle a global food crisis aggravated by Moscow’s invasion of Ukraine in February 2022.

Under the agreement, all ships bound for Ukrainian ports must be inspected by a joint team including Russian inspectors. The Russian inspectors have since April 29 refused to inspect ships bound for Pivdennyi, Vaskov said.

Pivdennyi is the largest port included in the deal in terms of throughput. Restoration ministry data show it is storing about 1.5 million tonnes of food items for future export to 10 countries, with 26 ships due to come for them.

U.S. State Department spokesperson Matthew Miller told reporters on Tuesday that Russia’s actions were “a clear violation of their commitments” under the grain deal.

“(Russia’s) continued obstruction of this initiative and threats to withdraw threaten to push up global food prices, threaten to reduce food accessibility for vulnerable populations around the world, and we once again call on Russia to stop holding global food supplies hostage,” Miller said.

The Russian embassy in Washington did not immediately respond to a request for comment on Miller’s remarks.

US EPA recommends delaying electric vehicles biofuel program -sources

The U.S. Environmental Protection Agency has recommended delaying a scheme that would give electric vehicle (EV) manufacturers tradable credits under a federal biofuel program, in a final rule that the White House will now review, two sources familiar with the matter said.

The plan would have given EV automakers, such as Tesla TSLA.O, credits for charging vehicles using power generated from renewable natural gas, or methane collected from sources such as cattle or landfills. Reuters first reported in early May that the EPA was considering the delay over concerns the plan could trigger lawsuits.

The EPA proposed last year the inclusion of EVs into the nation’s Renewable Fuel Standard (RFS) program, a major rehaul of an often contentious law that mandates the amount of biofuels oil refiners must blend into the nation’s fuel mix.

The EV industry had expected the new scheme to be finalized under a June 14 deadline, along with final biofuel blending obligations for the years 2023-2025. The delay, however, now throws the EV scheme into political limbo.

The November proposal foresaw EV manufacturers could generate as many as 600 million credits in 2024 and 1.2 billion of them by 2025. Prices for an equivalent cellulosic biofuels (D3) credit have traded at $2.14 each on Tuesday, traders said.

D3 credit prices have risen from around $1.94 each after Reuters first reported on May 1 that the EPA was considering a delay in the EV program, traders said.

That suggests market participants were concerned about potential oversupply of EV credits in the credit pool if the scheme was finalized, said Josh Price, an energy analyst at Capstone LLC, a Washington, D.C.-based firm that advises investors and companies on public policy.

The Biden administration is still hopeful it will pass a final rule on the EV program before the end of the year, even if it is uncoupled from the annual blending mandates, the two sources told Reuters.

President Joe Biden has promised to boost the electric vehicle industry in an effort to reduce carbon emissions and fight climate change. The credits would have added to billions of dollars of incentives under the Inflation Reduction Act to accelerate the energy transition.

The EPA did not comment on the delay, but told Reuters it is currently considering comments on the proposed rule and working to finalize a rule by the June deadline. The agency sent the proposed final rule to the White House for review last week.

Most credits generated under the RFS are for blending liquid fuels such as corn-based ethanol into gasoline. Adding credits for power generated from renewable gas and then used for charging EVs would take the program in a new direction.

Delaying the EV provision, however, would inject uncertainty into ongoing credit negotiations between automakers, biogas and renewable natural gas producers, and marketers, Price said.

The delay in finalizing the EV credit program may also mean more volume is available for other renewable fuel pools under the 2023-2025 mandate, including blending for renewable diesel and sustainable aviation fuel (SAF).

 

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