Global Ag News for May1.24

TOP HEADLINES

Biden Paves Way for US Corn to Profit From Green Jet Fuel

• Treasury Department gives guidance on tax credit for producers
• Biofuel producers are counting on jet fuel to offset EV impact

President Joe Biden’s administration issued long-awaited guidance on the production of green jet fuel, paving the way for US corn ethanol producers to profit from the new market.

The Treasury Department on Tuesday released guidance on the tax credit available for producers of sustainable aviation fuel, or SAF, a measure established as part of Biden’s landmark climate law.

US biofuel producers have lobbied the government for months to ensure corn ethanol qualifies for the credit. The industry is counting on SAF to make up for an expected loss of ethanol demand from autos due to the rise of electric vehicles.

Biden is calling for a surge in US production of SAF by 2030 to clean up an industry that’s tough to electrify. US commercial aviation consumes about 10% of all transportation energy and generates 2% of the country’s carbon dioxide pollution, with those figures growing faster than any other industry, according to John Podesta, a senior adviser to the White House on climate policy.

The tax credit provides incentives for the production of SAF that achieves a life-cycle greenhouse gas emissions reduction of at least 50% versus petroleum-based jet fuel, the Treasury Department said.

The guidance also outlines a so-called safe harbor for SAF makers who use ethanol made from corn grown using certain emission-reduction practices, including use of “energy efficient” fertilizer. It means the biofuel makers would qualify for the credit without fear of an IRS audit or penalty, US Agriculture Secretary Tom Vilsack said. The same would apply to green jet fuel made from soybeans, he said.

FUTURES & WEATHER

Wheat prices overnight are up 2 1/2 in SRW, down 3 3/4 in HRW, down 3 3/4 in HRS; Corn is down 1; Soybeans down 6 1/4; Soymeal down $6.30; Soyoil up 0.15.

For the week so far wheat prices are down 16 1/2 in SRW, down 22 3/4 in HRW, down 3 in HRS; Corn is down 4 1/4; Soybeans down 20 1/2; Soymeal up $0.80; Soyoil down 2.38.

Year-To-Date nearby futures are down 6.8% in SRW, down 3.0% in HRW, down 2.2% in HRS; Corn is down 6.7%; Soybeans down 11.6%; Soymeal down 12.1%; Soyoil down 11.6%.

Malaysian palm oil prices overnight were down 97 ringgit (-2.48%) at 3818. China’s markets are closed for Holiday.

There were no changes in registrations. Registration total: 1,438 SRW Wheat contracts; 0 Oats; 10 Corn; 631 Soybeans; 2,583 Soyoil; 226 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of April 30 were: SRW Wheat down 305 contracts, HRW Wheat down 5,493, Corn up 395, Soybeans down 2,093, Soymeal down 5,800, Soyoil up 439.

Northern Plains: The region will see more widespread showers this week as a system moves through on Tuesday with another for Wednesday and Thursday and yet another this weekend. The active weather will make it difficult to get out into the field in some areas, but help to ease the remaining drought and add soil moisture.

Central/Southern Plains: The pattern continues to be active with multiple storm systems moving through over the next two weeks, keeping planting slower and aiding soil moisture in many areas, though flooding may still be a concern across some areas. The southwest is not in a favored location for getting precipitation into the area this week, but possibly this weekend. Wheat conditions are likely to continue falling if significant rain does not come soon.

Midwest: The pattern is active as a system moves across the region Wednesday through Friday and another eyeing the region for early next week. Long-term deficits are being eroded quickly in some areas like Missouri, but wet field conditions are going to slow planting down quite a bit.

Delta: The region continues to be fairly wet, but the gaps between rains have been longer than areas farther north and west. Even still, planting progress has been quick this spring. Scattered showers will be moving through at times though, and slow down additional progress.

Canadian Prairies: An active pattern will bring multiple storm systems through the region over the next two weeks, which may be helpful for bringing additional moisture over the expansive drought, but slow planting progress and could contain some snow in the cooler air at times.

Brazil: Much of the safrinha corn growing areas will be dry for the foreseeable future, though far northern areas may see some isolated showers at times. That means that it will also be hot, which will force corn to draw upon its limited subsoil moisture as the crop goes through the rest of pollination and grain-fill. Damage to the crop will become more apparent with time. Rio Grande do Sul, which is in the midst of corn and soybean harvest in the far south, is seeing fronts waffle around in the region that will keep them wet through next week, disrupting the remaining harvest and make planting of winter wheat difficult. Those fronts may get into the far southern safrinha growing areas of Parana and southern Mato Grosso do Sul at times, but that is not forecast to amount to very much.

Argentina: A front will continue to waffle around northern Argentina through next week as disturbances move through the country. Those disturbances will bring occasional showers to southern areas but heavier rain farther north with the front. That will make corn and soybean harvest more difficult where the rain occurs. Cold air will build behind the front this week and may lead to frosts.

The player sheet for 4/30 had funds: net sellers of 2,000 contracts of SRW wheat, sellers of 2,000 corn, sellers of 8,000 soybeans, sellers of 2,000 soymeal, and sellers of 4,500 soyoil.

 

 

TENDERS

• SOFT WHEAT TENDER: Algeria’s state grains agency OAIC issued an international tender to buy soft milling wheat to be sourced from optional origins
• DURUM WHEAT SALE: Turkish state grain board TMO is believed to have provisionally sold an estimated 100,000 metric tons of durum wheat in an export tender for the same volume
• CORN PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased an estimated 134,000 metric tons of animal feed corn in an international tender
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 metric tons of milling wheat.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 116,900 metric tonnes of rice.
• CORN, SOYMEAL TENDERS: Algerian state agency ONAB has issued international tenders to purchase up to 160,000 metric tons of animal feed corn and 70,000 tons of soymeal.

 

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending April 26 are based on seven analyst estimates compiled by Bloomberg.

• Production seen higher than last week at 963k b/d
• Would be the first increase in four weeks
• Stockpile avg est. 25.497m bbl vs 25.733m a week ago

Argentina grains strike lifted as lawmakers push forward divisive reforms

Argentina’s oilseed sector workers lifted their two-day strike late on Tuesday after the lower house of Congress approved contentious reforms backed by President Javier Milei but opposed by some unions.

Business at the South American country’s top grains ports had been paralyzed by striking union workers, holding up shipments of soy, corn and wheat from one of the world’s top farm exporters. Activity at the shipping hubs in Rosario, the key agricultural export area, was beginning to normalize by Tuesday evening.

“We’re lifting the action now,” Daniel Succi, secretary general of the SOEA oilseed worker union, told Reuters.

Next week a union meeting will be held “to see how we proceed,” he added.

On Monday, oilseed and maritime worker unions kicked off a strike to protest labor reforms backed by Milei, which lower house lawmakers approved alongside a package of fiscal measures on Tuesday. The two groups later lifted the strikes, though oilseed union workers hinted that another work stoppage could come when the Senate takes up the contentious reforms.

Gustavo Idigoras, head of the grains exporters and processors chamber, confirmed that earlier on Tuesday all port operations had ground to a halt.

Argentina is a major world supplier of processed soybeans. Revenue from grains shipments are a major source of foreign currency needed to pay down debt and finance imports for the cash-strapped government during a prolonged economic slide.

The union federation comprising other maritime and river workers that also protested the reforms lifted its strike midday on Tuesday, said Leonel Cardozo, the Timbues regional delegate of the SOMU Maritime Workers Union.

Milei took power four months ago pledging to slash public spending and stave off hyperinflation, but his reform push has faced stiff resistance from center-left opponents. The bills on the table include provisions to lower the threshold for salaries subject to income tax, part of a slimmed-down version of an earlier Milei-backed package.

Lower House Votes to Expand Milei Executive Powers for One Year

Argentina’s lower house approved the first chapter of President Javier Milei’s new omnibus bill, which would declare an emergency in all administrative, financial, economic and energy matters and thus expand his executive powers over those areas for one year. Milei’s executive powers were approved in a 134 to 117 vote

Brazil Soy Exports Seen Reaching 13.62 Million Tns In April Versus 13.48 Million Tns Forecast In Previous Week – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 13.62 MILLION TNS IN APRIL VERSUS 13.48 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.16 MILLION TNS IN APRIL VERSUS 2.44 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL CORN EXPORTS SEEN REACHING 76,655 TNS IN APRIL VERSUS 81,728 TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL WHEAT EXPORTS SEEN REACHING 109,126 TNS IN APRIL VERSUS 110,592 TNS FORECAST IN PREVIOUS WEEK – ANEC

Brazil corn production down on continued dryness across southern Central-West and Southeast – LSEG Commodities Research & Forecast

2023/24 BRAZIL CORN PRODUCTION: 119.9 [114.7–125.1] MILLION TONS, DOWN <1% FROM LAST UPDATE

2023/24 Brazil total corn production is slightly (<1%) lowered to 119.9 [114.7–125.1] million tons, mostly due to continued lack of moisture throughout the Southeast and the eastern parts of the Central-West, despite relatively healthy second crop conditions in the South and overall steady vegetation density recoveries following early April rains. Our current median estimate is now 4.1 million tons below the USDA’s World Agricultural Outlook Board (WAOB)’s 124 million tons, which assumes total corn sowings at 21.9 million hectares and national level yield of 5.66 tons per hectare (tph) (vs. LSEG Ag Research’s 21.6 million hectares and 5.57 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 111 million tons and 20.4 million hectares, respectively. The growing discrepancy between the USDA and CONAB’s estimates warrants attention.

Recent weather has had mixed impacts on the core safrinha corn areas of Brazil. Temperatures throughout Brazil were up to 2-4°C above average over the past two weeks, except for portions of southern Mato Grosso that experienced temperatures slightly below average. In terms of precipitation, Mato Grosso and Paraná were largely favored, with near to above normal rainfall. However, the core second crop areas of Mato Grosso do Sul/Goiás and most of the Southeast continued to experience dryness, with little if any precipitation since early March. Continued dryness in these regions will likely have a detrimental impact on yield at this stage, as most crops are already going through vegetative development. As of 28 April, Brazil’s first corn was 59.8% combined nationally according to the latest CONAB crop progress report (29 April), slightly behind last year’s 63.6%. Safrinha corn sowing season is essentially over in all crop regions, on schedule. Vegetation density derived from satellite imagery remains near or above historical median levels in most major producing states, but could plummet abruptly if warm and dry weather persists through May, warranting close attention.

Australia Wheat Output Seen Near 26M Tons in 2024/25: USDA FAS

Production of wheat in Australia is expected to be little changed at 25.8 million tons in the 2024-25 season, the USDA’s Foreign Agricultural Service said in a report.

• That would still see production 3% below the 10-year average
• Exports are expected to decline by 2.5 million tons to 17.5m tons for the 2024-25 market year as higher exports this season have drawn down stock
• Barley and sorghum production for 2024-25 is also seen little changed from the current season

 

 

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