Global Ag News for Nov 30.23

TOP HEADLINES

China’s Farmers Forced to Let Vegetables Rot as Demand Wanes

Chinese farmers in some provinces are being forced to let fresh vegetables rot in their fields due to weak demand and ample supply, according to a local news report and videos posted on social media.

Piles of vegetables like cabbages and radishes have been left unharvested or destroyed in some cases across key producing regions from Shandong to Inner Mongolia, local media outlet Jiemian reported. Videos on Chinese social media platforms show distressed farmers and crops left to rot.

China is grappling with a gloomy jobs market and an ailing property sector, which is a key threat to growth, and data released Thursday showed economic activity shrank in November. Restaurants and supermarkets have slowed buying of vegetables amid a sluggish economy, according to Jiemian.

Heavy rains across regions in the north and northeast this year delayed the harvest of vegetables grown on open land. When those crops finally hit the market, it coincided with supplies from greenhouses, leading to a glut. Prices have declined, but that hasn’t been enough to spur buying interest.

Farmers have struggled to sell their vegetables in Henan, despite prices sliding to low levels, according to local media outlet Dahe.cn. The province is the second-largest producer of vegetables in China.

Around the same time last year, Chinese farmers were forced to destroy healthy crops because of strict Covid-19 measures. Trucks and merchants were either unwilling or couldn’t enter the villages to collect agricultural produce because of movement controls and quarantine orders.

Chinese farmers have boosted vegetable production over the past decade under a government push to bolster food supplies. Output in 2022 was around 800 million tons, up 26% since 2013, according to official data.

FUTURES & WEATHER

Wheat prices overnight are down 2 in SRW, down 1 3/4 in HRW, unchanged in HRS; Corn is up 1/4; Soybeans down 1/2; Soymeal down $0.60; Soyoil up 0.23.

For the week so far wheat prices are up 6 1/2 in SRW, up 21 in HRW, up 10 3/4 in HRS; Corn is down 6 1/2; Soybeans up 15 3/4; Soymeal down $7.70; Soyoil up 2.58.

For the month to date wheat prices are down 1 1/2 in SRW, down 8 3/4 in HRW, down 3 1/4 in HRS; Corn is down 17; Soybeans up 36; Soymeal up $8.40; Soyoil up 2.04.

Year-To-Date nearby futures are down 29.5% in SRW, down 28.2% in HRW, down 26.0% in HRS; Corn is down 33.5%; Soybeans down 11.4%; Soymeal down 6.5%; Soyoil down 17.3%.

Chinese Ag futures (JAN 24) Soybeans up 2 yuan; Soymeal down 13; Soyoil up 10; Palm oil down 20; Corn up 5 — Malaysian Palm is up 23. Malaysian palm oil prices overnight were up 23 ringgit (+0.59%) at 3895.

There were changes in registrations (-4 SRW Wheat, 100 HRW Wheat). Registration total: 2,946 SRW Wheat contracts; 522 Oats; 4 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 457 HRW Wheat.

Preliminary changes in futures Open Interest as of November 29 were: SRW Wheat down 9,030 contracts, HRW Wheat down 8,114, Corn down 32,341, Soybeans down 897, Soymeal down 8,287, Soyoil down 3,675.

Brazil: Scattered showers continue in central Brazil, but at a reduced coverage and intensity thanks to El Nino. Forecasts have these showers picking up again this weekend as a front moves into the region, beneficial for soybean development. Southern Brazil continues to see too much rain for developing corn and soybeans, especially in Parana. But the southern state of Rio Grande do Sul did see a break over the weekend and precipitation looks more limited here for the next couple of days. Any break is beneficial to help soils drain. A front moving through this weekend could bring some heavier rain back through, though.

Argentina: A front will continue to bring scattered showers Wednesday and another follows closely behind it for Thursday and Friday, bringing good rainfall to much of the country’s growing regions. Additional showers may continue in some areas over the weekend and next week as well. Overall, conditions are mostly favorable for corn and soybean planting and development.

Australia: Scattered showers continue over eastern areas through Friday, helping to ease extremely dry conditions in a lot of this part of the country. It is too late for wheat and canola, which is delaying harvest and could cause quality issues instead, but will help developing cotton and sorghum. Western areas continue to be too dry with little precipitation forecast for the next week and eastern areas will join them next week.

Northern Plains: It continues to be dry this week as clippers pass off to the north and any stronger storms will pass by to the south. One of these clippers may make it through the region with some light showers early next week. Temperatures will be warmer compared to normal for the next couple of weeks.

Central/Southern Plains: Temperatures moderating this week will go above normal this weekend, so the recent snow that fell will not last long. The melting snow should build at least a little soil moisture for wheat. Additional storm systems will pass through the region Thursday through the weekend, which may help to build more soil moisture in eastern areas.

Midwest: Colder air created lake-effect snow this week, but temperatures are moderating and will go above normal this weekend. Scattered showers will move through with a system Thursday and Friday with more streaks of showers this weekend into early next week. It will be mostly rain, though some snow may mix in for a few areas. The precipitation will help to build soil moisture and ease drought that remains.

Delta: The region is starting to become more active, with more systems lining up to move through late this week, weekend, and possibly next week as well. The pattern favors drought reduction and increases to water levels on the Mississippi River, though the latter effect may be slow.

The player sheet for Nov. 29 had funds: net buyers of 4,500 contracts of SRW wheat, buyers of 500 corn, buyers of 1,000 soybeans, sellers of 3,000 soymeal, and  sellers of 1,000 soyoil.

TENDERS

• WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 109,325 metric tons of milling wheat to be sourced from the United States in a tender on Thursday
• CORN PURCHASE: The Korea Feed Association (KFA) Incheon section purchased up to 65,000 metric tons of animal feed corn in an international tender which closed on Wednesday, European traders said. It was expected to be sourced optionally from the United States, South America or South Africa. No purchase was reported of a second consignment of up to 68,000 tons also sought in the tender from the KFA’s Incheon section which is also known as the Feed Buyers’ Group.
• MILLING WHEAT TENDER: The Lebanese government has issued an international tender to purchase 30,000 metric tons of milling wheat.
• NON-GMO SOYBEAN TENDER CANCELED, RE-ISSUED: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has canceled an international tender to purchase around 50,000 metric tons of food-quality soybeans free of genetically-modified organisms (GMOs) which closed on Nov. 27 and separately issued a new international tender for the same volume.
• WHEAT RESERVES UPDATE: Iraq has two million tonnes of wheat reserves for the next season, the Iraqi state news agency said on Wednesday quoting the country’s Trade minister Atheer Al-Ghurairi.
• SUGAR CONSUMPTION: Egypt’s supply ministry said that local sugar consumption is 3.2 million metric tons.

PENDING TENDERS

• SUGAR TENDER: Egypt’s General Authority for Supply Commodities 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 was Nov. 25.
• FEED BARLEY TENDER: Jordan’s state grain buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley.
• NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 20,000 metric tons of food-quality soybeans free of genetically-modified organisms (GMOs).
• MILLING WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 metric tons of milling wheat.
• WHEAT TENDER: A government agency in Pakistan has issued an international tender to purchase and import 110,000 metric tons of wheat.

TODAY

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Nov. 23.

• Corn est. range 600k – 1,300k tons, with avg of 1,030k
• Soybean est. range 850k – 1,500k tons, with avg of 1,110k

DOE: US Ethanol Stocks Fall 1.3% to 21.379M Bbl

According to the US Department of Energy’s weekly petroleum report.

• Analysts were expecting 21.575 mln bbl
• Plant production at 1.011m b/d, compared to survey avg of 1.031m

Argentina’s Coastal Wheat Crop Will Buoy National Output: Maroun

Rains that are in line with what’s typically expected during an El Niño pattern along Argentina’s coast will help to ensure the country’s wheat output meets current estimates, according to Damian Marcó, a broker from local dealer Maroun.

• Crops in some coastal areas are reaching yields that are above expectations, offsetting losses in the Northern region caused by delayed rains
• NOTE: Bolsa de Rosario forecast Argentina’s wheat output at 13.5 million tons this year
• Farmers are waiting for President-elect Javier Milei to take office before making more wheat deals because of speculation for further devaluation of the peso against the dollar, Marcó says; Sales offers tend to increase from mid-December on
• Farmers have barely sold wheat so far this season, waiting for the election results, Marcó says

Malaysia Nov. Palm Oil Exports 1.383m Tons: AmSpec

Malaysia’s palm oil exports were 1.383m tons in November, according to AmSpec Agri.

• Palm oil exports rose 2.81% m/m

Malaysia Nov. Palm Oil Exports +10.5% M/m: Intertek

Following is a summary of Malaysia’s Nov. palm oil exports according to Intertek Testing Services.

• Total exports for Nov. 2023: 1.531m tons
• Crude palm oil exports: 391,290 tons, 25.6% of total
• EU led all destinations for total exports: 446,290 tons

Iraq Has 2M Tons of Wheat in Reserve, Trade Minister Says

The staple is enough to cover the country’s requirements until next year’s harvest, Iraq’s Trade Minister Atheer Dawood said in a statement.

• The country will continue to offer contracts for wheat imports
• The ministry also has other food reserves to cover four months
• NOTE: Iraq’s wheat harvest season normally starts in April
• NOTE: The country’s grain board is in charge of distributing wheat for the state-subsidized food program, which requires 4.5m to 5m tons each year

Slovakia Extends Ban on Ukraine Food Imports to 14 Commodities

Slovak government approves the extension of the ban on grain imports from Ukraine to more commodities, agriculture minister Richard Takac tells reporters in Bratislava after government session.

• The government approved the extension of import ban to 14 commodities, including honey, malt, sugar, soybeans and bran
• Slovakia has so far banned the imports of four commodities until the end of the year – wheat, maize, rapeseed, and sunflower seeds

GrainCorp Says Working to Protect Grain at Site After Flooding

GrainCorp’s Deniliquin site has experienced some flooding around the covered bunkers, with the company working to protect the grain stored and mitigate the floodwaters, according to a spokesperson.

• The Deniliquin area in New South Wales received heavy rain of up to 140 milliliters on Tuesday
• No other GrainCorp sites have been impacted
• NOTE: The harvest of grains such as wheat and barley typically starts around November in Australia

IKAR Sees Russia 2024 Wheat Crop at 92m Tons in First Estimate

Russia’s 2024/25 wheat harvest is seen at 92m tons, Dmitry Rylko, director of Moscow-based consultant IKAR, said by email.

• Wheat export potential seen at 48m tons, according to IKAR’s first forecast for the 2024/25 season
• “Russia will have second-largest area under winter wheat ever, the state of winter wheat is quite strong”
• Recent rains should improve situation in Eastern Stavropol
• Total grain production seen at 145m tons; total grain export at 63m tons

Palm oil market to see slightly positive price trend in 2024, says MARC

The palm oil market is expected to show a slightly positive price trend going into 2024, ranging between RM3,700 and RM4,100 per tonne, as it recovers from substantial selling pressure as witnessed in sunflower oil over the past few months.

According to Malaysian Rating Corp Bhd (MARC), seasonal production trends, hotter climate conditions, and increasing demand for biofuels are expected to exert upward pressure on palm oil prices.

“Prices of edible oils have been volatile over the past couple of years, driven by a combination of factors, including export restrictions, labour shortages, and the Russia-Ukraine conflict, resulting in a lower supply of edible oils.

As a homegrown Malaysian company, YTL Cement has been very much a part of the nation’s development. Being a leader in the building materials industry, its commitment extends beyond business to making a positive and lasting impact on the communities where it operates.

“In 2022, the geopolitical conflict between Russia and Ukraine led to a global sunflower oil supply shortage, causing palm oil prices to reach record highs,” it said in a statement.

The local rating firm explained that in July 2022, the formation of the Black Sea Grain Initiative, which allowed Ukraine to export sunflower oil through the Black Sea region, had resulted in a steady global supply of sunflower oil.

For the year ended Aug 31, 2023, Ukraine’s sunflower oil exports rose by 27.3% to 5.7 million tonnes.

Due to its bountiful harvest of seed crops, Russia’s sunflower oil exports also rose by 28.6% to 4.1 million tonnes. This led to prices dropping below soybean oil, with Europe experiencing discounts versus palm oil prices. Sunflower oil typically trades above soybean oil, followed by palm oil.

Soybean oil, a key palm oil substitute and determinant of palm oil prices, has also been affected by the El Niño weather conditions, MARC said.

“In the near term, supply constraints are expected to drive up palm oil prices. Typically, palm oil production declines after peaking in September or October, with the first quarter of the year having the lowest output.

“This seasonal trend of lower production will reduce palm oil inventories, and exert upward pressure on prices, especially in the first quarter of 2024,” MARC said.

With the ongoing El Niño conditions, seasonal effects and pricing differentials, crude palm oil prices are expected to trend slightly upwards in the near term.

On the flip side, downside risks to these estimations include lower-than-expected demand from India and China, the loosening of Indonesia’s export restrictions, favourable weather conditions, and higher-than-expected production of edible oils.

Vilsack sees China’s purchases of US corn rising again, urges end to over-reliance on single markets

U.S. Agriculture Secretary Tom Vilsack on Wednesday said China took advantage of lower prices for corn in Brazil, leading to a nearly 20% drop in U.S. exports to China, but he expected the numbers to rise again over time.

At the same time, he told Reuters in an interview, the U.S. government was working hard to reduce American exporters’ over-reliance on China and other big markets and encourage greater diversification.

“The reality is that our market has been a little tight … and our prices are a little higher than our friends in Brazil and in South America, and so as a result, China is taking the opportunity as they often do, to take advantage of low cost,” Vilsack said. “Over time, we’ll continue to see a righting and balancing of that.”

He made no specific prediction for future corn purchase levels by China.

Exports of U.S. agricultural and related products to China through September totaled about $19.9 billion, the slowest pace in three years and down 18% from the January-to-September period last year, according to U.S. Census Bureau trade data. Exports to all countries are only down 12%.

Vilsack, the former governor of farm state Iowa, underscored the importance of diversifying U.S. agricultural exports.

Vilsack told the President’s Export Council on Wednesday that the U.S. Department of Agriculture would start accepting applications for an initial $300 million to help U.S. agricultural exporters break into new markets outside China, Canada, Mexico and the European Union.

The new Regional Agricultural Promotion Program (RAPP) established by USDA in October will provide a total of $1.2 billion over five years to non-profit U.S. agricultural trade groups, state trade groups and agricultural cooperatives to help them tap new markets and expand market share in others.

Vilsack said the middle class was growing in many places across South and Southeast Asia, Latin America, the Middle East and Africa, driving demand for high quality products.

USDA said diversification would focus on three regions – Africa; Latin America and the Caribbean; and South and Southeast Asia – in the first phase of the new program, with $25 million set aside specifically for work in Africa.

Oilseeds and grains are the top U.S. export to China, accounting for $25.4 billion last year, far ahead of other goods such as semiconductors. But Brazil has been eating into the U.S. share of the Chinese market after harvesting bumper crops of soybeans and corn.

Milei Picks Architect of Argentine Borrowing Boom to Run Economy

Javier Milei’s choice of Luis Caputo as his economy minister is a gesture of reassurance to those who were worried about the radical libertarian president-elect’s unorthodox economic proposals. It’s a signal of his willingness to work with the market-friendly center-right establishment. It will also send a positive sign to bondholders, who seem to like Caputo.

Caputo was the finance minister for Mauricio Macri and ran the negotiations with bondholders that paved the way for a return to international markets in 2016. Of course, he then oversaw the wave of Argentine borrowing that ended in default just a few years later (during which, he even persuaded investors to buy a 100-year Argentina sovereign bond.) By the time Caputo moved to the central bank in June 2018, Argentina was the biggest sovereign borrower in emerging markets, with $68 billion of bonds in Bloomberg’s index.

Argentina and bondholders will have a lot to talk about. The country’s debt wall looks very hard to surmount and there is a strong likelihood of default in 2024 or 2025.

Fertilizers Mixed as China’s Export Curbs Help Balance Market

Global nitrogen buying eased after India’s latest urea tender, which should sate its appetite for at least a month. Our scenario suggests soybeans could prevail in farmers’ plans for 2024, pushing nitrogen up the agenda for our December webinar. Yet exports from China, the nitrogen and phosphate swing supplier, look likely to be curbed through 2Q.

NOLA Urea Rebounds, Other Fertilizers Mixed

Ammonia prices were stable in the Corn Belt amid heavy fall application, with the December Tampa ammonia price rolling over from November’s $625 a metric ton (mt). Ammonia was slated to strengthen $55 a short ton (st) in California on Dec. 1, while urea and urea ammonium nitrate (UAN) prices were falling in the western US and Canada, even though the New Orleans (NOLA) urea price rebounded to $295-$310/st vs. last week’s $292-$305. NOLA phosphates were also up slightly for prompt barges, though NOLA potash dropped to $315-$330/st vs. last week’s $330-$335. Higher prices for phosphoric acid and ammonium polyphosphate were scheduled to take effect on Dec. 1 in the western US.

Slow Demand Pressures Brazil Ammonium Sulfate, MAP Prices

Ammonium sulfate and phosphate prices slipped in Brazil as sellers tried to spur demand for corn safrinha, which is estimated to be 20-30% down from normal. Farmers remain focused on delayed soybean planting, but better weather and improved barter ratios are seen as positives for near-term demand, and sellers are eager to find new buyers for large volumes blocked at ports.

Nitrogen Mixed, Potash Stable, Phosphate Down

Nitrogen prices were mixed in Brazil, with urea strengthening and ammonium sulfate dropping from last week. Urea firmed to $315-$330 a metric ton (mt) cost-and-freight, up from last week’s $300-$330. Ammonium sulfate continued to retreat in Brazil, slipping $10 at the top of the range, to $150-$165/mt, with sources reporting new bids around $140-$145/mt. Monoammonium phosphate (MAP) prices in Brazil dropped slightly, falling to $560-$565/mt, down $5 from last week at the top of the range. Brazil potash prices narrowed to $320-$330/mt for the latest business, within last week’s $315-$335 range.

Australia raises bushfire risks ahead of El Nino summer

Australia faces an increased risk of bushfires during the approaching summer, authorities warned on Thursday, with the El Nino weather pattern expected to generate hotter and drier conditions across large swathes of the country.

Three years of incessant rain has increased vegetation, but the intense heatwaves common during Australia’s December-February summer can quickly turn this into tinder-dry bushland, fuelling fires. Climate change has amplified the country’s weather extremes in recent years, experts say.

“Compared with the spring outlook, more capital cities are now facing increased risk,” Emergency Management Minister Murray Watt said in a statement, urging residents to update their bushfire plans and pack emergency and evacuation kits.

Australia sweltered in an intense spring heat wave in September that sparked dozens of bushfires, prompting authorities to issue a fire ban for Sydney, though recent rain across the east has doused many fires.

Those record dry conditions and above-average temperatures are expected to continue well into 2024, the National Council for Fire and Emergency Services said in its bushfire outlook on Thursday.

Some areas burnt during the 2019-20 “Black Summer” fires, which destroyed an area the size of Turkey and killed 33 people, could come under threat again this summer, the report said.

Australia declared an El Nino weather pattern – which usually brings below-average rain and above-average daytime temperatures – was under way in September.

“We are now looking at a potentially very challenging summer ourselves. Everything we see now is happening in the context of climate change on a planet that is now hotter and more volatile,” said Simon Bradshaw, research director at the independent nonprofit Climate Council.

Even though rain set records in November for some places in Australia’s east, climate experts expect the coming bushfire season to be the worst in about four years.

The Bureau of Meteorology said it was not unusual to have wet weather during El Nino as it increases but does not guarantee drier conditions.

Brazil’s oil, gas regulator authorises biodiesel imports

Brazil’s National Petroleum, Natural Gas and Biofuels Agency (ANP) has revised the regulations governing biodiesel imports heralding a shift which is to allow foreign biofuels to contribute up to 20% of the nation’s overall supply, Argus reported on November 24.

The updated framework imposes a cap, limiting the volume of imported biodiesel to 20% of the total required for mandatory blending in fossil diesel.

However, such imports are excluded from the confines of regulated contractual volumes.

To maintain stability, the ANP mandates that distributors secure a minimum of 80% of their anticipated supply through long-term contracts.

This marks a departure from the prior ANP regulations, which confined the sale of imported biodiesel solely to fuel distributors for their internal use or for experimental purposes sanctioned by the agency.

“The opening up of biodiesel imports in Brazil has the potential to facilitate access to the product on the global market, presenting diverse alternative sources,” said ANP.

ANP’s decision has been met with enthusiasm from the fuel distribution sector, while producers have expressed criticism towards the measure.

In related news, ethanol sales in Brazil rose by nearly 25% in October, year on year, on the back of favourable pricing parity for the biofuel at fuel stations in key consuming states.

The consumption of hydrated ethanol reached 1.61mn cubic metres in October, up from 1.19mn cubic metres in October 2022, as per data reported by the National Petroleum, Natural Gas and Biofuels Agency (ANP).

 

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