Global Ag News for Nov 21.23

TOP HEADLINES

China says pig production capacity too high -state media

China’s sow herd at the end of October was still larger than needed at 42.1 million pigs, state media reported on Monday, raising the supply of live pigs to the market and pressuring prices.

The number of breeding sows was slightly lower than September’s 42.4 million and has been declining for 10 months.

However, given the rising production rate of sows and lower than expected pork consumption, pig production capacity is still too much, said state broadcaster CCTV, citing the Ministry of Agriculture and Rural Affairs.

Hog prices at 15.18 yuan per kilogram are 42% lower than a year ago.

The ministry will “stabilise” land, environmental, financial and other supportive policies to encourage a more reasonable level of production, it added without providing further detail.

FUTURES & WEATHER

Wheat prices overnight are up 1 in SRW, up 1/2 in HRW, up 3 1/2 in HRS; Corn is up 1 3/4; Soybeans up 8 1/4; Soymeal up $6.70; Soyoil down 0.40.

For the week so far wheat prices are down 5 1/2 in SRW, down 7 1/4 in HRW, down 4 in HRS; Corn is up 3 1/4; Soybeans up 34; Soymeal up $12.90; Soyoil up 0.79.

For the month to date wheat prices are down 13 3/4 in SRW, down 20 1/2 in HRW, down 1 in HRS; Corn is down 3 3/4; Soybeans up 65; Soymeal up $32.00; Soyoil up 1.16.

Year-To-Date nearby futures are down 31.4% in SRW, down 31.3% in HRW, down 24.3% in HRS; Corn is down 30.7%; Soybeans down 9.5%; Soymeal down 2.5%; Soyoil down 17.2%.

Chinese Ag futures (JAN 24) Soybeans up 7 yuan; Soymeal up 22; Soyoil up 44; Palm oil up 26; Corn up 7 — Malaysian Palm is up 18. Malaysian palm oil prices overnight were up 18 ringgit (+0.46%) at 3952.

There were changes in registrations (-46 Oats). Registration total: 2,950 SRW Wheat contracts; 548 Oats; 4 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.

Preliminary changes in futures Open Interest as of November 20 were: SRW Wheat up 2,250 contracts, HRW Wheat down 3,232, Corn down 3,765, Soybeans down 1,245, Soymeal up 6,707, Soyoil down 814.

Brazil: Heavy rain from the south started to work northward this weekend. Those showers will be more typical of the wet season rains in central Brazil all week long. Deficits are large here and will take more than a week’s worth of normal rainfall to turn around. Showers do look to become more isolated for next week. Another round of heavier rain will move back into southern Brazil midweek. Any breaks from the wet pattern are still looking to be short across the south, also unfavorable for developing corn and soybeans.

Argentina: Showers were more limited this weekend. A front will move through Tuesday and Wednesday with scattered showers but then be drier again until next week. Though the dryness is not welcome, soil conditions are more favorable than they were earlier this year or in previous years, a good turn around in conditions. As long as the drier weather does not last too long, the overall favorable conditions continue.

Northern Plains: A system tracking to the south was close enough to get some rain into South Dakota on Sunday. Some showers may continue over the eastern Dakotas on Monday, but it is looking drier, even with a cold front sagging south on Wednesday. That front could bring some highland snow and a sharp drop in temperatures below normal. A reinforcing shot of colder air is possible this weekend into next week.

Central/Southern Plains: A system moved into the region on Sunday and brought widespread showers. Those showers largely missed drier western wheat areas, unfavorable for wheat there. But other eastern areas saw good rainfall. The rain pulls out on Monday. Another system may bring showers to southern areas late in the week and a cold front dropping south could bring highland snow and a burst of much colder air for the weekend into next week.

Western Midwest: A system brought showers into southwestern areas on Sunday with a system that will push northeast through much of the region early this week. A stronger cold front will move through later this week with a burst of colder air. Models disagree if the front will produce precipitation. Any precipitation now will delay the remaining harvest and fieldwork but increase soil moisture for winter wheat before it goes dormant.

The player sheet for Nov. 20 had funds: net sellers of 6,000 contracts of SRW wheat, buyers of 1,500 corn, sellers of 8,500 soybeans, buyers of 6,000 soymeal, and  buyers of 5,500 soyoil.

TENDERS

• CORN SALE: The U.S. Department of Agriculture confirmed private sales of 104,000 metric tons of U.S. corn to Mexico for shipment in the 2023/24 marketing year.
• SUGAR TENDER: Egypt’s General Authority for Supply Commodities on Monday announced a tender to import 50,000 tonnes of raw sugar and/or 50,000 tonnes of refined white sugar, all from any origin, on behalf of the Egyptian Sugar & Integrated Industries Company. The deadline for offers is Nov. 25.
• SOFT MILLING WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat for shipment to two ports only
• ANIMAL FEED BARLEY TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy a nominal 50,000 metric tons of animal feed barley to be sourced from optional origins
• CORN TENDER: Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 metric tons of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa
• CORN, SOYMEAL TENDERS: Iranian state-owned animal feed importer SLAL has issued international tenders to purchase up to 180,000 metric tons of animal feed corn and 120,000 tons of soymeal.
• NON-GMO SOYBEAN TENDERS: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has issued international tenders to purchase around 50,000 metric tons of food-quality soybeans free of genetically-modified organisms (GMOs).

PENDING TENDERS

• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.

TODAY

USDA CROP PROGRESS: Winter Wheat Crop 48% Good/Excellent

Highlights from the report:

• Winter wheat 48% G/E vs 47% last week, and 32% a year ago
• Winter wheat planted 95% vs 93% last week, and 98% a year ago
• Winter wheat emerged 87% vs 81% last week, and 86% a year ago
• Corn harvest 93% vs 88% last week, and 96% a year ago
• Cotton harvested 77% vs 67% last week, and 78% a year ago

US Inspected 554k Tons of Corn for Export, 1.609m of Soybeans

In week ending Nov. 16, according to the USDA’s weekly inspections report.

• Wheat: 358k tons vs 223k the previous wk, 291k a yr ago
• Corn: 554k tons vs 707k the previous wk, 499k a yr ago
• Soybeans: 1,609k tons vs 1,940k the previous wk, 2,494k a yr ago

US Corn, Soybean, Wheat Inspections by Country: Nov. 16

Following is a summary of USDA inspections for week ending Nov. 16 of corn, soybeans and wheat for export, from the Grain Inspection, Packers and Stockyards Administration, known as GIPSA.

• Soybeans for China-bound shipments made up 1.01m tons of the 1.61m total inspected
• Mexico was the top destination for corn inspections, Taiwan led in wheat

Brazil 2023/24 Soy Planting 68% Done as of Nov. 16: Agrural

Soybean planting is 68% complete as of Nov. 16, compared to 61% in prior week and 80% a year earlier, according to an emailed report from AgRural consulting firm.

• “With slowness in the South and North/Northeast due, respectively, to excess and lack of humidity, Brazilian planting is now the lowest for this time of year since the 2019/20 harvest”: AgRural
• 2023/24 summer corn planting in Brazil’s Center-South region is 80% complete, versus 76% a week earlier and 82% a year before

Brazil 2023/24 Summer Corn Planting 86.3% Done Nov. 17: Safras

Compares with 87.3% last year, and a five-year average of 87.2%, according to a report from Safras & Mercado consulting firm.

• Seeding is 100% complete in Rio Grande do Sul, 97.9% in Parana, 95.6% in Sao Paulo and 81.2% in Mato Grosso do Sul

Ukraine Sees Winter Wheat Harvest at 18M-20M Tons in 2024

Ukraine’s winter wheat planting is about to be completed on more than 4m hectares, Deputy Agriculture Minister Taras Vysotskyi says on television.

• Winter wheat planting is on a par with the previous year
• Farmers may harvest between 18m and 20m tons of winter wheat from this area in 2024

WHEAT/CEPEA: Weather continues to affect crops in the South; prices are on the rise

The frequent rainfall in Southern Brazil remains affecting both quality and the volume of the cereal that will be harvested in this crop. In Argentina, projections are again revised downwards. This scenario keeps wheat prices on the rise in the Brazilian market.

According to Conab, the harvest in Brazil reached 87.2% until November 11. In Paraná, activities are practically finished, Seab/Deral says. In Rio Grande do Sul, Emater indicates that the harvest totaled 89% of the area up to Nov. 16 and that the quality is low (PH below 78).

In Argentina, Bolsa de Cereales reduced the wheat crop forecast to 14.7 million tons due to frosts. Up to Nov. 15, 20.2% of the area had been harvested. In the United States, sowing activities of the winter crop reached 93% until November 12, below that registered in the same period last year (95%), but the same average over the last five years.

PRICES – Between November 10 and 17, the prices paid to wheat farmers (over-the-counter market) in Paraná increased 8.67%, 4.54% in Santa Catarina and 4.51% in Rio Grande do Sul. In the wholesale market (deals between processors), values moved up 1.84% in São Paulo, 6.29% in PR, 2.06% in RS and 4.14% in SC.

Based on data from Conab (Brazil’s National Company for Food Supply), between November 6 and 10, the import parity price for the wheat from Argentina delivered to Paraná state was at USD 261.57/ton. Considering the average of the US dollar in that period, at BRL 4.8944, the wheat imported was sold at BRL 1,280.22/ton, while for the Brazilian wheat traded in Paraná, the average was lower, at BRL 1,181.83/ton, according to data from Cepea. In Rio Grande do Sul, the price of the product from Argentina closed at USD 244.68/ton, which accounts for BRL 1,197.55/ton – against BRL 1,165.67/ton on the average of the state calculated by Cepea.

Argentine government forecasts agricultural boom in 2023-24

Argentina’s government is expecting the country to experience an agricultural boom over the 2023/24 agricultural year. This comes after Argentina’s agricultural activity was adversely affected by severe droughts, with soybean production slumping to 20mn tons, resulting in a $20bn revenue loss.

The Buenos Aires Grain Exchange (BCBA) observed that October was a turning point for the industry, explaining in its report that, “long-awaited rains helped restore soil moisture profiles in key regions, although even more millimetres of rain is still needed west of Buenos Aires and in the north-central region of Córdoba.”

According to the forecasts of both the BCBA and the Rosario Stock Exchange (BCR), a 150% rise in overall production can be expected, thereby driving revenue 125% upwards. The BCBA also indicated that an area 8.75% larger than the 2022/23 year had been planted.

While Economy Minister Sergio Massa had pledged to institute a scheme to boost agricultural production by 150% to 50mn tons should he be elected president, his loss to Javier Milei in the recent runoff election means his agenda will not come to fruition. Markets will now await President-elect Milei’s approach.

Indonesia Sept. Palm Oil Exports Rise to 2.693m Tons: Gapki

Indonesia’s palm oil exports rose to 2.693m tons in September from 2.073m tons in August, according to Indonesian Palm Oil Association (Gapki).

• Palm oil output rose to 4.537m tons from 4.221m tons in August
• Palm oil stockpiles fall to 3.103m tons from revised 3.238m tons in August
• Palm oil domestic consumption fell to 1.979m tons from 2.037m tons in August
• Palm oil for biodiesel domestic consumption fell to 924,000 tons from 956,000 tons in August

China says pig production capacity too high -state media

China’s sow herd at the end of October was still larger than needed at 42.1 million pigs, state media reported on Monday, raising the supply of live pigs to the market and pressuring prices.

The number of breeding sows was slightly lower than September’s 42.4 million and has been declining for 10 months.

However, given the rising production rate of sows and lower than expected pork consumption, pig production capacity is still too much, said state broadcaster CCTV, citing the Ministry of Agriculture and Rural Affairs.

Hog prices at 15.18 yuan per kilogram are 42% lower than a year ago.

The ministry will “stabilise” land, environmental, financial and other supportive policies to encourage a more reasonable level of production, it added without providing further detail.

Palm Oil May Slump in 2024 on Higher Vegoil Output, Fitch Says

Average prices of crude palm oil are expected to be “significantly lower” in 2024 due to higher production of palm and other vegetable oils, according to Fitch Ratings.

• Output will be lifted by favorable weather conditions, Fitch said in its Nov. 20 report
• Benchmark crude palm oil prices in Kuala Lumpur may average at $650/ton in 2024, sharply down from a projected level of $830 this year
• Lower prices will weaken margins and Ebitda of producers
  • Still, their earnings will be supported by higher fruit yields, oil output and lower unit production costs
• A strong El Niño could start to affect yields in 2H next year, Fitch says

Ukraine soybean exports outlook up, rapeseed down : APK-Inform

Ukraine’s APK-Inform agriculture consultancy increased its outlook for soybean 2023/24 exports for the country, while revising down its forecast for rapeseed exports late on Monday.

The consultancy said in a report Ukraine was likely to export 3.02 million metric tons of soybean and 3.57 million tons of rapeseed in the current 2023/24 July-June season, without giving other details.

A month ago, the consultancy forecast these exports at 2.95 million tons of soybean and 3.69 million tons of rapeseed.

APK-Inform said Ukraine, a traditional exporter of oilseeds and vegetable oils, harvested 4.4 million tons of rapeseed and 4.95 million tons of soybean in 2023.

US Biofuel Credits Seen Sliding as Blend Deadline Looms: Height

Credits tracking US biofuel-blending mandates are seen sliding further ahead of a Dec. 1 compliance deadline based on commodity price futures, says Benjamin Salisbury, director of research at Height Capital Markets.

• In 2024, D6 ethanol RINs now trading around $0.84/RIN could decline to $0.67/RIN, the analyst wrote in a note on Monday
  • Forecast is tied to an expectation of ethanol futures averages declining 7% from $1.87 today to $1.74 and gasoline rising from $2.22 to $2.24: Salisbury
  • Forecasts for D6 shortages should lessen if higher blends of ethanol are adopted in the US: Salisbury
• D4 biomass-based diesel RINs are trading at parity with D6 at around $0.85/RIN; they have fallen nearly 50% since mid-July
  • Since then, soybean oil prices have jumped 33% relative to diesel prices, pulling down the price needed to incent RIN generation: Salisbury

US Milk Production Fell 0.4% Y/y in October, USDA Says

Agency releases report on website.

• Output for the 24 major-producing states was 17.94b lbs, 69m less than in October of last year
• Milk per cow averaged 2,013 lbs, a 0.1% decline from last year
• Estimated output for all the US fell 0.5% y/y to 18.71b lbs

US Egg Production Rose 3.5% in October From Year Ago: USDA

The US produced 9.55b eggs in October vs 9.22b in the same period a year ago, according to a report from the USDA.

• Output of table eggs rose 3.9% y/y to 8.23b
• Hatching eggs up 1.1% to 1.32b
• Chicken and egg production in millions:

River Rhine in south Germany stays closed to shipping, may reopen soon

Parts of the river Rhine in south Germany remained closed to shipping on Tuesday after heavy rain this month but falling water levels could lead to a reopening later on Tuesday, navigation authorities said.

Rhine river shipping remains stopped around the chokepoint of Maxau in south Germany, the German inland waterways navigation agency WSA said. The southern sector of the Rhine around Maxau was closed last week.

But water levels are falling and the river could reopen on Tuesday afternoon or Tuesday evening, the water level forecasting service of the Rheinland-Pfalz state government in south Germany said.

High water means vessels do not have enough space to sail under bridges and the blockage prevents vessels sailing to Switzerland.

Shipping on northern sections of the Rhine is operating normally, including at the important points of Duisburg, Cologne and Mannheim.

The Rhine is a major shipping route for commodities including minerals, coal and oil products such as heating oil, grains and animal feed.

The Rhine has repeatedly suffered from low water levels because of unusually dry summers in recent years.

Widespread warmth could prevail across North America in December – Refinitiv Commodities Research

• Largely mixed precipitation pattern portrayed in December
• Warmth likely to prevail next month

DECEMBER WEATHER OUTLOOK

Crop Impacts (Wheat): The expected warm weather across winter wheat regions should bode well for crops if verified, keeping winterkill risks at bay. However, dry conditions will act unfavorable in two ways, drawing down soil moisture reserves while also potentially leading to a lack in protective snowpack should a cold air outbreak arrive and bring about winterkill threshold temperatures.

Temperature Outlook: The forecasted temperature anomalies for December in North America (Figure 1) feature the potential for widespread warmth across the vast majority of the U.S. and Mexico, with the north-central U.S. and Canada in areas of equal chances or warmth or coolness. This pattern is generally supported by the top analogs (Appendix 1) and probability map (Appendix 3). The latest EC extended run shows a different pattern, with cool weather prevailing across the western two-thirds of the U.S. during the next 4 weeks and warmth confined to Canada and the Southeast U.S. The latest EC seasonal model for December shows widespread warmth across most of North America, however, adding confidence to the temperature forecast.

Precipitation Outlook: The forecasted precipitation anomalies for December in North America (Figure 2) show a largely mixed outlook. Dry conditions are expected from northern Mexico stretching through the Midwest U.S. The western two-thirds of Canada is expected to be drier than normal as well, as is south Florida and Caribbean. On the other hand, wet weather is expected in south-central Mexico, the eastern U.S. Coast, and parts of the Northwest U.S. during December. This pattern is supported by a consensus among the top analogs (Appendix 2) and probability map (Appendix 4). The latest EC extended run depicts wet weather in the Southeast U.S., while there is not much agreement elsewhere. The latest EC seasonal run for December also shows wet weather in the Southeast U.S., though there is not much of a signal elsewhere, adding some uncertainty to the mix.

RSPO Plans New Palm Oil Traceability System to Meet New Rules

The Roundtable for Sustainable Palm Oil is working on a new certification, trade and traceability system in preparation for tighter global rules including the EU deforestation law, it said in a statement on Tuesday.

• The Roundtable formed a consortium of global agriculture technology firms (Agridence, CIED and NGIS) that will improve and digitize the system
• There will be a new digital platform to expand PalmTrace, the current one, said Aryo Gustomo, director for assurance
  • Data protection implications of new system are being assessed
• The Roundtable seeks to increase the number of smallholders participating in sustainable production, says Francisco Naranjo, technical director
  • The new system can be a tool for smallholders to show compliance with the EU’s deforestation law
• The Roundtable has certified 4.9m ha of palm plantations in 23 countries
• Production of sustainable certified palm oil estimated at 15.4m tons in 2022, +4.8% y/y; consumption 9.2m tons, +7.4% y/y: Roundtable data

 

Interested in more futures markets?  Explore our Market Dashboards here.