Global Ag News For Sept 23.22

HEADLINES TODAY

Argentina Wheat Production Forecast Tumbles on Drought: Rosario

A third consecutive month with hardly a drop of rain in September leads the Rosario Board of Trade to slash its wheat forecast by 6.8% to 16.5m metric tons from 17.7m, according to a monthly estimates report.

• 16.5m would be the smallest harvest in seven years
• The dryness, mixed with frosts and bouts of heat, mean 40% of wheat plants are in a poor condition
• Rosario analysts see a bigger corn-to-soy switch in the upcoming planting season than they first thought a month ago
• Planting of corn fit for export seen falling 2.8% m/m to 7m hectares (17.3m acres) from 7.2m
  • Last season’s corn area was 7.4m
• Soy planting seen rising 1.2% m/m, to 17m ha from 16.8m
  • Last season’s soy area was 16.1m
  • Parched fields are particularly bad for the early corn crop that’s started to be planted, so farmers are shifting to soy and late corn

FUTURES MARKETS & WEATHER

Wheat prices overnight are down 13 1/4 in SRW, down 10 3/4 in HRW, down 10 3/4 in HRS; Corn is down 9 1/4; Soybeans down 8; Soymeal down $0.25; Soyoil down 1.21.

For the week so far wheat prices are up 38 1/2 in SRW, up 33 1/2 in HRW, up 28 1/4 in HRS; Corn is up 3 1/2; Soybeans down 1 1/4; Soymeal up $0.46; Soyoil down 0.82.

For the month to date wheat prices are up 66 in SRW, up 56 1/4 in HRW, up 37 1/2 in HRS; Corn is up 8 1/2; Soybeans up 26 1/2; Soymeal up $11.30; Soyoil down 2.23.

Year-To-Date nearby futures are up 17% in SRW, up 21% in HRW, down -2% in HRS; Corn is up 15%; Soybeans up 9%; Soymeal up 7%; Soyoil up 21%.

Chinese Ag futures (JAN 23) Soybeans up 33 yuan; Soymeal down 9; Soyoil down 82; Palm oil down 102; Corn down 12 — Malaysian palm oil prices overnight were down 60 ringgit (-1.57%) at 3766.

There were no changes in registrations. Registration total: 3,084 SRW Wheat contracts; 0 Oats; 0 Corn; 5 Soybeans; 48 Soyoil; 147 Soymeal; 40 HRW Wheat.

Preliminary changes in futures Open Interest as of September 22 were: SRW Wheat up 7,143 contracts, HRW Wheat up 2,332, Corn up 6,475, Soybeans up 7,578, Soymeal up 118, Soyoil up 1,326.

Northern Plains Forecast: Scattered showers Friday. Isolated showers Saturday. Mostly dry Sunday-Monday. Temperatures near to above normal Friday-Monday. Outlook: Mostly dry Tuesday-Saturday. Temperatures near to above normal Tuesday, above to well above normal Wednesday-Saturday.

Central/Southern Plains Forecast: Isolated to scattered showers Friday, mostly north. Mostly dry Saturday-Monday. Temperatures near to above normal Friday-Monday. Outlook: Mostly dry Tuesday-Saturday. Temperatures near to above normal Tuesday-Wednesday, above to well above normal Thursday-Saturday.

Western Midwest Forecast: Isolated showers Friday-Monday. Temperatures near to below normal Friday, near to above normal Saturday-Sunday, near normal Monday.

Eastern Midwest Forecast: Isolated to scattered showers Friday-Monday. Temperatures near to below normal Friday, near to above normal Saturday-Monday. Outlook: Isolated showers Tuesday. Mostly dry Wednesday-Saturday. Temperatures near to below normal Tuesday-Wednesday, near to above normal west and near to below normal east Thursday-Friday, near to above normal Saturday.

Brazil Grains & Oilseeds Forecast: Showers have continued to provide good soil moisture for Brazil as planting increases. Another front Sunday into next week will add to rain totals, especially in central Brazil. Lower temperatures are moving into the region, but frosts are not forecast. Conditions overall are quite good to start the planting season.

Argentina Grains & Oilseeds Forecast: Low temperatures have led to some scattered frosts in Argentina during the last couple mornings. Dryness and low temperatures have pushed the first phase of corn planting back by quite a bit and may have damaged wheat. Some showers may drift through the country during the next week, but will be very isolated and not overly helpful.

The player sheet for Sept. 22 had funds: net buyers of 2,500 contracts of SRW wheat, buyers of 1,000 corn, buyers of 3,000 soybeans, sellers of 6,000 soymeal, and  buyers of 3,500 soyoil.

TENDERS

• CORN SALE: U.S. exporters sold 105,000 tonnes of corn for delivery to Mexico during the 2022/2023 marketing year, the U.S. Department of Agriculture said.
• CORN SALE: U.S. exporters also sold 101,600 tonnes of corn for delivery to unknown destinations during the 2022/2023 marketing year, the USDA said.
• WHEAT PURCHASE: An importer group in the Philippines is believed to have bought around 45,000 tonnes of animal feed wheat to be sourced from Australia in an international tender which closed on Thursday

PENDING TENDERS

• WHEAT TENDER: A government agency in Pakistan has issued a new international tender to purchase and import 300,000 tonnes of wheat
• WHEAT TENDER: Jordan’s trade ministry is seeking 120,000 tonnes of wheat shipped in March and April in an international tender closing Sept. 27, a government source said. Jordan’s state grains buyer opened the new tender after making no purchase in a Tuesday tender.
• BARLEY TENDER: Jordan’s state grain buyer is seeking 120,000 tonnes of barley for shipment in March and April in a international tender closing Sep. 28, a government source said.

TODAY

China’s Spot Soymeal Prices Jump to Record in Sign of Shortage

• The rally could boost feed costs and keep pork prices elevated
• Supplies from Argentina and US are coming but will take time

China is facing a soybean meal shortage, at least in the short term, with prices of the feed ingredient soaring to a record in some provinces.

Spot prices have jumped as much as 10% this week in the main processing hubs of Guangdong and Shandong, according to data from Shanghai JC Intelligence Co. The rally could drive up feed costs for hog farmers and spur a further run-up in pork prices that Beijing is trying to cool amid inflation risks.

Traders are scrambling for the feed ingredient, with some saying there’s no guarantee that those who have placed orders can secure supplies. The main reason for the shortage is weak imports of soybeans as demand languished. China’s soybean imports fell 9% in the first eight months from last year.

An improvement in demand also helped drive up soybean meal prices, said Rosa Wang, an analyst at JCI. Pig farmers tend to fatten their herd during this period to meet seasonally higher demand for pork products in winter.

More supplies are arriving but will take time. Chinese importers have stepped up soybean purchases in recent weeks, notably from Argentina. The US harvest is also just starting, which will ease supply tightness in the coming months.

China will receive 6.8 million tons of soybeans in September, 5 million tons in October and 8.8 million in November, consultancy Mysteel Group estimates. The soybeans are crushed to produce meal for animal feed and oil for cooking.

The nearby shortage is reflected in the backwardation on the Dalian Commodity Exchange. Soybean meal for November delivery is priced at 4,667 yuan ($657) a ton, about 600 yuan more expensive than January, the most active contract.

Argentina 22-23 Corn Planting Heavily Delayed on Drought: Bourse

Corn planting is 3% complete, lagging the same stage last year by 5.5 percentage points, the Buenos Aires Grain Exchange says in a weekly report.

• NOTE: Farmers are currently planting the first of two corn crops
  • Many farmers are switching to the late corn crop or soybeans as a strategy against the drought
  • EARLIER: Drought, High Costs Push Argentine Farmers to Grow More Soy
• Rains are needed for planting plans to be fulfilled: bourse
• Corn area estimate, first announced in an August report, is kept at 7.5m hectares, down 2.6% from last year’s 7.7m

WHEAT:

• Despite rains a few days ago, wheat plants are still struggling
• 42% of the crop is in a poor-to-very poor condition vs 34% last week
• Plants in some key growing areas have lost 60% of their yield potential

Palm Oil Imports by India Seen Rising 3.5% in 2022-23: Group

Palm oil purchases by the world’s biggest importer are expected to climb to 8m tons in 2022-23, from 7.73m a year earlier, according to Sudhakar Desai, CEO of Emami Agrotech Ltd. and president of the India Vegetable Oil Producers Association.

• Soybean oil imports seen falling to 3.6m tons from 4.05m in 2021-22, Desai said at Globoil conference in India’s Agra city on Thursday
• Sunflower oil purchases likely at 2.25m tons vs 1.89m tons
• Total edible oil imports are expected to rise to 14m tons in 2022-23 from 13.78m a year earlier
• Domestic production likely at 8.95m tons vs 9.1m tons
• India’s closing stockpiles seen at 2.36m tons next year, compared with 2.87m a year earlier
• Crude palm oil prices on cost and freight basis in India likely in the range of $900-$1,000/ton during October-December; $1,100-$1,150 in January-March quarter of 2023
  • Soyoil prices CNF India seen in the range of $1,200-$1,350 both in 4Q of 2022 and 1Q of 2023
  • Sunflower prices CNF India $1,300-$1,450 until March 2023

India’s top palm oil buyer expects 23% jump in imports

India’s palm oil imports could jump 23% in 2022/23 to an eight-year high of 9.5 million tonnes, as a rebound in consumption and competitive prices prompt refiners to increase purchases, the country’s top palm oil buyer said.

“Palm is very attractive as prices are under pressure because of stocks,” Sanjeev Asthana, chief executive officer at Patanjali Foods Ltd, said on the sidelines of Globoil conference.

Palm oil’s big discount to soyoil is unsustainable and it is likely to narrow in the coming months, he said.

Palm oil futures have dropped nearly half from their record highs and palm oil is again at a sizeable discount to rival oils, dealers said.

Palm oil is offered at $950 a tonne including cost, insurance and freight (CIF) to India for October shipment, compared with $1,250 for crude soyoil, according to them.

Higher palm oil imports could bring down the country’s soyoil imports to around 3 million tonnes from 4.1 million tonnes in the current year ending Oct. 31, Asthana said.

French Corn Harvest a Quarter Done, Topping 2021 Pace: AgriMer

About 26% of the French corn harvest was collected as of Sept. 19, up from 14% a week earlier, crops office FranceAgriMer said on its website.

• At this time last year, the corn harvest was only 1% done
• The share of the crop in good or very good condition held at 43%, steady with the prior week
• Compares to 89% last year

Saskatchewan Says Harvest Progress Slowed by Cool, Wet Weather

Many producers experienced cool, damp weather which halted or slowed their harvest operations, the province’s agriculture ministry said Thursday in a report.

• 73% of crops harvested, up from 64% a week earlier and ahead of five-year average of 68%
• There were several reports of frosts across the province, but damage is low as crops are well advanced
• 77% of spring wheat, 94% of durum and 52% of canola harvested

Malaysian palm prices seen tumbling to 2,500 rgt by year-end -analyst Mistry

Malaysian palm oil prices will plunge to 2,500 ringgit ($547.29) by the end of December, weighed down by improving production, demand destruction and a slowdown in major economies, leading analyst Dorab Mistry said on Friday.

Malaysia’s benchmark crude palm oil prices will decline to 3,000 ringgit ($656.74) a tonne by end-Sept and continue tumbling to its lowest since mid-July 2020 by year-end, Mistry, director of Indian consumer goods company Godrej International, said.

The contract rallied to a record high in March, surpassing 7,000 ringgit ($1,532.23), after Russia’s invasion of Ukraine triggered a global edible oil shortage, but prices have corrected by nearly 50% since.

High prices had caused demand destruction and the low production seen earlier in the year is now recovering strongly, Mistry told the Globoil conference in Agra, India.

Mistry pegged Malaysia’s production in 2022 to rise to 18.2-18.5 million tonnes, compared with 18.1 million tonnes last year. Output in the largest producer Indonesia is seen rising by 3 million tonnes.

Looking ahead, Mistry expects interest rates and recession to be the key price drivers.

“Once markets realise that inflation has been conquered, we are likely to see a recovery in equity markets – possibly in the last two months of the year,” Mistry said.

But a recovery in commodity prices will take time depending on the U.S dollar, he added.

For the 2022/23 season, Mistry has a bearish outlook and sees a possibility of a recovery after December 2022 in equities.

He also said Indonesia should scrap all export taxes on palm oil exports until December 2022 to bring down stocks, which are weighing on the prices.

Pakistan Set to Boost Wheat Imports as Floods Prevent Planting

Pakistan’s Prime Minister Shehbaz Sharif fears the nation will not be able to plant wheat in time after catastrophic floods left about a third of its land underwater, forcing the country to buy more from abroad.

“The land is not going to be ready for wheat sowing so we will have to import additional tonnage,” which will cost a lot of money and further deplete our scarce foreign-exchange resources, Sharif said in an interview with Bloomberg Television in New York. “All this put together is a nightmare.”

The South Asian nation has suffered torrential rains and floods, which have killed more than 1,500 people, damaged millions of acres of crops and caused more than $30 billion of damage. As much as 45% of its cotton crop has been destroyed, as well as half of the vegetable production in worst-hit Sindh province, which forced the country to boost imports after prices soared 500%.

Pakistan Leader Says ‘All Hell’ to Break Loose Without Debt Deal

Pakistan is in talks with Russia to procure wheat, said Sharif. The country isn’t anticipating an immediate shortage of the grain with sufficient stockpiles to last for about half a year.

Sharif has made an urgent appeal for debt relief after the floods, exacerbated by climate change, displaced millions of people in the nation. Some of the affected areas should be clear of flooding in two to three weeks, but it could take as long as three months in some places, the Prime Minister’s office said.

Russia’s Historic 100 Million-Ton Wheat Crop Piles Up at Home

• SovEcon says storage has become an issue for some farmers
• Record harvest so far is not converting into record exports

Russia’s wheat harvest could reach a historic 100 million tons, according to consultant SovEcon, with the commodity piling up at home as the nation struggles to export large volumes.

Farmers across the country are finishing up the bountiful harvest after good growing conditions throughout the summer. The huge supply in the world’s top shipper would usually help to bring down world prices. But so far this season, government export taxes and logistical issues from its war in Ukraine are keeping more grain than usual at home.

“Storage has been an issue for a few months for some farmers,” SovEcon Managing Director Andrey Sizov said by phone. “We haven’t seen anything like this since 2017-18.”

Russian wheat export prices have recently turned more competitive against other origins like France and the U.S., meaning that shipments could increase. Higher prices and issues with shipping Russian cargoes — some insurers and banks shunned Russian commodities after its invasion of Ukraine in February — slowed exports earlier in the season. Food exports are not targeted by sanctions, but some institutions are wary of doing business with Russia as a result of those measures.

Wheat prices spiked globally after a Russian blockade of Ukraine’s ports strangled that country’s exports, pushing up food prices. While a deal to reopen the ports struck in July helped ease prices, the escalation of the war in Ukraine has sent wheat back to levels seen before the agreement.

The International Grains Council also hiked its Russia wheat crop estimate by nearly 6 million tons on Thursday, but it doesn’t expect that extra supply to leave the country — keeping the export outlook unchanged at 36.5 million tons.

“This huge crop is not fully converting into huge exports,” Sizov said.

Russia Wheat Crop to Be Record 100m Tons; Exports Lag: SovEcon

Russia’s 2022 wheat harvest is now seen at a record 100m tons, up from a prior estimate of 94.7m tons, researcher SovEcon said in an emailed note.

• That’s due to high yields in most regions for spring wheat, which accounts for about 30% of total output
  • NOTE: Says 2022 forecasts are based on the area Russia controlled at the start of the year
• “The export campaign continues to lag badly compared to the average pace,” says Andrey Sizov, head of SovEcon
• Shipments in first three months of the season which began in July are estimated at 10.2m tons, down 14% vs the five-year average
  • Cites strong ruble and export tax

World Wheat Reserve to Rise Y/y as Crops Grow, Trade Dips: IGC

World wheat stockpiles in the 2022-23 season are now seen at 286m tons, versus an August estimate of 275m tons, the International Grains Council said in a report on Thursday.

• That would put stockpiles above last year’s 279m tons and be the highest in at least four seasons
• The increase is due to rising production, as crops swell in Russia, Canada and Australia
  • Russia harvest estimate raised to 93.4m tons, from 87.6m tons
• Trade outlook kept steady from August at 193m tons; slightly lower than previous year
  • Russian export estimate unchanged at 36.5m tons

CORN

• Stockpile estimate cut to 262m tons, versus 265m tons
• Production outlook falls due to a smaller US crop

TOTAL GRAINS

• Stockpile estimate raised to 587m tons, versus 577m tons
• That would still be lower than the prior season

Depleted Rhine water level in Germany holds above crisis lows

Water depths on the river Rhine in Germany have fallen after dry weather this week but remain well above the crisis lows of this summer, vessel brokers and commodity traders said on Friday.

Rain is expected in south German river catchment areas over the weekend and next week, which is expected to raise water levels again, they said.

Weeks of high temperatures and scant rainfall in August had reduced the commercial artery’s water levels, causing delays to shipping and pushing up freight costs. There were fears disruption could even hit overall German economic growth.

The reference water level at the chokepoint of Kaub WL-KAUB near Koblenz was at 1.13 metres on Friday, down from 1.39 metres on Monday. But that is a huge improvement from only 32 centimetres in August, which caused significant shipping disruption.

Vessels need a Kaub reference waterline of about 1.5 metres to sail fully loaded.

Shallow water after this summer’s heatwave and drought compelled some freight vessels to sail about 25% full in August, increasing costs for cargo owners who needed more ships to deliver their goods.

China Jiangxi Issues Highest Drought Alert; 95% of Regions Hurt

Eastern Chinese province of Jiangxi upgrades its drought alert to the highest level, or red, according to a statement from the local weather center.

• 95% of regions in Jiangxi are hurt by severe drought, which will continue in the coming week
• Drought has lasted for 73 days in Jiangxi, since some areas began being affected July 12

US Barge Shipments of Grain Fell 16% Last Week: USDA

Shipments along the Mississippi, Illinois, Ohio and Arkansas rivers declined in the week ending Sept. 17 from the previous week, according to the USDA’s weekly grain transportation report.

• Barge shipments of corn rose 85% from the previous week
• Soybean shipments down 43% w/w