Global Ag News for Oct 5

TODAY—DELIVERABLE STOCKS

Overnight trade has SRW Wheat down roughly 2 cents, HRW down 2; HRS Wheat down 1, Corn is up 1 cent; Soybeans up 9;  Soymeal up $2.50, and Soyoil up 35 points.

Chinese Ag futures are closed for a week long holiday (Oct 1st thru 8th).

Malaysian palm oil prices were up 56 ringgit at 2,777 (basis December) at midsession supported by rival vegoils and ideas a La Nina pattern could hurt output in the next few months.

U.S. Weather Forecast: The 6 to 10 day forecast for the Midwest has dry weather continuing through the upcoming weekend with a front moving in next Monday/Tuesday bringing light to moderate rainfall mainly to MN and NW IA. Lighter amounts of rainfall look to impact northern sections of the Midwest. Remnants of Hurricane Delta look to impact southern IL, the southern half of IN, and all of OH the first half of next week. Temps will warm to average through the week with the upcoming weekend and first half of next week being above normal. The Southern Plains over the 6 to 10 day period looks mainly dry. Temps will be running above average.

South America Weather Forecast: The Brazilian growing regions has little rainfall for most areas except for central/east (light amounts for northern Rio Grande do Sul, Santa Catarina, and southern Parana) over the next 10 day period. Some rains are also seen for Mato Grosso. Rains do look to develop north of Parana bringing moderate amounts for the weekend into early next week with 85% coverage. The Argentine growing regions has mostly dry weather over the next 10 days.

The player sheet had funds net buyers of 10,000 contracts of SRW Wheat; net sold 1,000 Corn; net bought 1,000 Soybeans; sold 6,000 Soymeal, and; net bought 7,000 Soyoil.

We estimate Managed Money net long 45,000 contracts of SRW Wheat; long 165,000 Corn; net long 257,000 Soybeans; net long 87,000 lots of Soymeal, and; long 94,000 Soyoil.

Preliminary Open Interest saw SRW Wheat futures up roughly 6,500 contracts; HRW Wheat up 1,900; Corn down 3,100; Soybeans up 10,300 contracts; Soymeal down 2,600 lots, and; Soyoil down 2,100.

Deliveries were ZERO Soymeal and ZERO Soyoil.

There were no changes in registrations—Registrations total 109 contracts for SRW Wheat; ZERO Oats; Corn 361; Soybeans 1; Soyoil 1,907 lots; Soymeal 250; Rice ZER0; HRW Wheat 135, and; HRS 1,195. 

The U.S. soybean harvest was 38% complete as of Sunday, the U.S. Department of Agriculture said in a weekly crop progress report on Monday, ahead of the five-year average of 28% and the average estimate in a Reuters analyst poll of 36%.

Pre-harvest yield expectations for the Iowa corn and Nebraska soybeans were below average, but the final results on these Crop Watch fields came in well below what the producers had hoped for. Unfavorable weather, such as drought and the derecho, were mostly to blame.

Many of the U.S. Crop Watch growers reported relatively slow harvest progress in their areas over the past week as scattered showers, equipment breakdowns, and high moisture levels were prohibitive. But they believe the expected dry and warm week ahead will accelerate activity over the next several days, especially for soybeans.

Five Crop Watch soybean fields are left to be harvested, and it is possible all five could be completed within the next week. Five corn fields remain as well, though the Illinois producer was halfway finished with his field as of Monday morning.

The growers have been rating yield potential each week on a scale from 1 to 5. Scores of 1 or 5 represent yields close to or exceeding 15% below or above average, while 2 and 4 are assigned to yields around 5% to 10% from the recent field average.

The unweighted, eight-field average corn yield fell to 3.5 from 3.59 as an increase in Illinois was offset by a plunge in Iowa. The disappointing soybean result in Nebraska reduced average bean yield to 3.16 from 3.31.

Wheat futures lead the way higher for row crops in pre-market trading, climbing 1.4%; US and world wheat futures are rising on the prospect of another 2 weeks of below normal rainfall for the winter wheat areas for European Russia, says AgResource; Southwest Russia could see a few spits of rain, but totals will be well below normal and the market is accordingly adding weather/supply premium; ongoing speculation that Russia may institute a new quota for wheat exports has been a recent factor pushing US wheat futures higher.

A sharply rising corn price paid by Neeley Biofuels’ hypothetical ethanol plant on Monday took a bite out of the plant’s profit margin since DTN’s last update on Aug. 14; the 50-million-gallon plant in South Dakota paid $3.79 per bushel for corn on Monday, a spike from $3.25 paid in the middle of August based on the October futures price on the Chicago Board of Trade; as a result, the plant’s net-profit margin fell from a 9.4-cent-per-gallon profit to a 7.6-cent loss; during the height of the COVID-19 economic shutdown, Neeley Biofuels reported a 16.1-cent loss; most ethanol plants are not paying debt; if the hypothetical plant was not paying debt, it would see a 24-cent-per-gallon profit; that’s a decrease of 17 cents since the August update; for this update, Neeley Biofuels received $1.63 per gallon for its ethanol, based on the rack price — the same price received in our Aug. 14 update; the price received for dried distillers grains came in at $147 per ton, up from $112.

Climate change could render swathes of agricultural land largely useless for farming in the U.S. South, and force Midwestern farmers to move corn and soybeans elsewhere as crop yields decline, researchers said; the profits of growing six key crops are set to fall by almost a third by 2070, the research said, though losses could be reduced by shifting traditional crop heartlands – potentially reshaping distinctive regional landscapes and livelihoods.

Even if Covid-19 subsides in the next few months, further government support will be needed to keep the US farm economy afloat heading into next year’s planting season, says the Co-Director of the Agricultural & Food Policy Center at Texas A&M University; says government payments must continue or else the farm economy will drop off considerably; if the payments were to simply drop off, I don’t think that’s something any of want to see; adds current prices don’t support US farms surviving on their own, even if they’ve risen in recent trading; we’re looking at prices largely in break-even range.

CME Group announced that open interest in soybean futures reached a record of 1,005,393 contracts on October 2, 2020, up from the previous open interest record of 994,165 set on September 30, 2020.

A scarcity of rainfall expected in Brazil in the coming days should further delay soybean planting, impacting supply in January, consulting firm AgRural said; through Oct. 1, producers in Brazil planted only 1.6% of the estimated soybean area, below a five-year average of 4.5% for the country at this time of the season; at the end of January 2020, Brazil’s biggest farm state Mato Grosso had already harvested 9 million tons of the oilseeds, or 25% of the state’s total crop, which is not going to occur in 2021; it is hard to imagine that even one third of that will be harvested in January given the current scenario,” said AgRural analyst; all of the action will take place in February.

Terra Santa Agro, one of Brazil’s largest agricultural producers, on Monday started planting part of its next soybean crop on dry soil due to scarce rains in Mato Grosso state; the company will plant a total area estimated at 81,000 hectares (200,155 acres) this season; soybeans up to 14,000 hectares may be planted in dry soil, though the risk of replanting in this particular area is deemed low as rains are expected to begin from Oct. 10.

Argentine labor group Urgara, which represents grains inspectors at export hubs, has reached a preliminary agreement averting a threatened wage strike against private agro-export companies, the union said; Urgara held a 24-hour work stoppage early last week to press its case for higher wages; the short-lived strike temporarily halted some grains cargo ships from being loaded.

Ukraine’s grain exports have fallen 14.9% so far in the season that runs from July 2020 to June 2021, to 12.3 million tons, the economy ministry said; that included 8.7 million tons of wheat – around 50% of the volume permitted for exports this season – 2.9 million tons of barley, and 678,000 tons of corn

European Union imports of maize could rise to 20 million tons this season after drought is expected to leave the bloc with a smaller than average crop at a time of ample international supply, the EU’s executive said; for the EU’s 27 member countries, the European Commission’s official forecast is for 2020/21 maize (corn) imports of 19 million tons against 18.4 million last season; but record projected global maize output could drive further consumption of the cereal for livestock feed.

French soft wheat shipments outside the European Union in September fell to their lowest monthly level in at least 11 years as activity continued to ease after a poor harvest; soft wheat exports to destinations outside the EU totaled 166,000 tons in September, the third month of the 2020/21 season; that was the smallest monthly volume going back to the 2009/10 season, with only nine ships carrying French soft wheat over the course of the month.

European wheat rose on Monday to equal last week’s two-year high as weather concerns in major exporting countries and steady international demand supported prices; December milling wheat was up 1.0 euro, or 0.5%, at 197.75 euros ($233.05) a ton; it earlier hit 198.50 euros, matching last Thursday’s two-year high, but faced resistance ahead of a life-of-contract high of 199 euros and the psychological 200 euro threshold.

Growth in pork exports from the European Union will slow significantly as Germany faces trade restrictions following a swine fever outbreak and Chinese demand contracts, the EU’s executive forecasted; Germany, the EU’s largest pork producer, has been barred from trade with major importing countries, including China and South Korea, after African swine fever (ASF) was detected in wild boar last month; after increasing by 15% in the first half of the year, including a doubling of volumes to China, EU pork exports were expected to rise by only 2% over 2020, the Commission said in a short-term agricultural outlook report; in its previous outlook in July, the Commission forecast a 10% increase in full-year pork shipments.

Refinitiv trade flow models showed Malaysia palm oil exports during September rose to 1.56 million tons, up by 5% compared to August, citing higher shipments to key destinations to Europe, but partially weighed down by shipments to India and China.

Malaysia’s palm oil prices may decline next year as higher rainfall boosts palm oil fruit yields and output, Fitch Ratings said; average prices of crude palm oil (CPO) is expected to drop to $560/ton in 2021, compared with $600/ton or higher in 2020, the rating agency said; this is primarily to due to higher CPO output from a weak-to-moderate La Nina.

Malaysian authorities will rectify poor labor conditions that led to an American ban on palm oil imports from the government-linked agribusiness, FGV Holdings, the resource minister said, while admitting that the embargo could negatively affect the country’s economy.