Global Ag News for July 6th

TODAY —- EXPORT INSPECTIONS, CROP PROGRESS

US grain markets were closed overnight and will start trading with the morning session.

Chinese Ag futures (SEP 21) Soybeans up 91 yuan ; Soymeal down 18; Soyoil up 40; Palm oil up 104; Corn down 5 — Malasyian Palm is up 37. Markets finished last week with wheat prices up 12 in SRW, up 10 1/4 in HRW, up 30 3/4 in HRS; Corn is up 60 1/2; Soybeans up 129 1/4; Soymeal up $3.34; Soyoil up 5.04.

Malaysian palm oil prices overnight were down 16 ringgit (-0.41%) at 3864 after extending to the highest level in four weeks as duty cuts and improving margins in top importer India fueled buying interest for the tropical oil.

The player sheet for 7/2 had funds: net sellers of 4,500 contracts of  SRW wheat, sellers of 10,500 corn, sellers of 17,500 soybeans, sellers of 9,500 soymeal, and  buyers of 2,500 soyoil.

Preliminary changes in futures Open Interest as of July 2 were: SRW Wheat down 917 contracts, HRW Wheat up 841, Corn up 6,801, Soybeans down 358, Soymeal down 1,260, Soyoil up 1,670.

There were changes in registrations (-5 Oats, -227 Soyoil). Registration total: 20 SRW Wheat contracts; 4 Oats; 0 Corn; 13 Soybeans; 388 Soyoil; 407 Soymeal; 1,249 HRW Wheat.

TENDERS

• SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has bought around 15,600 tonnes of soybeans free of genetically-modified organisms (GMOs) for food use in an international tender for the same volume
• WHEAT TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC,) said on Monday it had bought 240,000 tonnes of wheat in an international purchasing tender for shipment Sept. 1-15.

PENDING TENDERS

• CORN, BARLEY AND SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 60,000 tonnes of corn, 60,000 tonnes of animal feed barley and 60,000 tonnes of soymeal
• WHEAT TENDER: Iranian state agency the Government Trading Corporation (GTC) issued an international tender to purchase about 60,000 tonnes of milling wheat
• WHEAT TENDER: Jordan’s state grain buyer issued a tender to buy 120,000 tonnes of wheat, with a bidding deadline of July 6
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• WHEAT TENDER: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 tonnes of milling wheat
• WHEAT TENDER: The Ethiopian government issued an international tender to buy about 400,000 tonnes of optional-origin milling wheat,

Argentina 2020/21 corn production to hit record, government says

Argentina’s 2020/21 corn production is set to hit a record of 59 million tonnes, the country’s Agriculture Ministry said on Friday, an estimate which includes both commercial grain and that used by farmers themselves and not sold.

Argentina is the world’s third largest corn exporter and an important supplier to Asia and North Africa. It is also the world’s top exporter of processed soy and an important producer of wheat.

The South American country’s government usually has forecasts above those of the domestic grains exchanges, which only include commercialized corn in their projections.

The Buenos Aires grains exchange estimates a harvest of 48 million tons for 2020/21 corn, though on Thursday it noted that the yields of the crop were higher than expected. The harvest is just over half completed.

Brazil corn export season kicks off timidly – shipping data

Brazil’s corn export season kicked off this month, albeit slowly, with the number of ships expected to load and depart with the product in July being less than half what it was in the same year-ago month, Cargonave shipping data showed.

Some 39 vessels are lined up to load corn at Brazilian ports this month, down from 85 in the same period a year ago, according to Cargonave.

In 2020, Brazil exported around 33 million tonnes but this year weather problems slashed output, compromising exports. According to market projections, Brazil is now poised to export about 20 million tonnes of corn this year.

“There were lots of contract washouts, with people redirecting sales to the internal market,” said Frederico Humberg, chief executive of trading firm AgriBrasil.

Brazil typically exports most of its corn starting in the middle of the year, after the second corn crop is harvested from the fields. With the country’s second corn crop, planted after soybeans are harvested, Brazil competes aggressively with the United States in global markets. In 2021, however, a drought and more recently frosts slashed the country’s output and reduced Brazil’s export prospects. A broker, speaking on condition of anonymity, told Reuters domestic buyers are paying more than external buyers, affecting shipments as less corn is going to be exported. According to grain exporting group Anec data, Brazil will ship about 2.5 million tonnes of corn in July, compared with 5 million tonnes from the same month last year. Regarding soybeans, Cargonave shipping data shows 116 vessels that will be loaded with the oilseeds during the month, down from 130 last year.

Driest River Since 1944 Lightens Loads on Argentine Soy Waterway

Bulk vessels have ~4.5 feet (1.4 meters) of draft less than they should in the shipping channel along Argentina’s Parana River, Guillermo Wade, head of port group CAPyM, says by phone from export hub Rosario.

• Handymax ships are loading ~9,000 tons fewer; Panamaxes are loading ~11,000 tons fewer: Wade
• The river level at Rosario, which doesn’t include the dredged shipping channel, is just 12cm (4.7 inches), when the average for this time of year is more than 3 meters, according to government data
• Situation shows no sign of improving, with water levels forecast to edge beneath the last low of 1944, when readings were more than a meter into the negative
• That could happen by September: Wade

Malaysia July 1-5 Palm Oil Exports -10.61% M/m: Intertek

Malaysia’s palm oil exports fell 10.61% m/m during July 1-5, according to Intertek Testing Services.

EU Wheat Harvest Faces a Delay Due to Weather: Copa & Cogeca

The start of the wheat harvest faces a delay of more than a week following low spring temperatures and excessive moisture in recent weeks, which has slowed plant development, farm lobby Copa & Cogeca said in a statement.

• Soft-wheat output could reach 130 million tons, up 7% from a year earlier
• The total grains harvest to rise 1.6% to 292.4 million tons due to a surge in plantings and better yield prospects
• Spring grains production is expected to be down
• “This positive outlook for cereals should allow for the replenishment of EU-27 ending stocks for 2021/2022,” said Jean-Francois Isambert, chair of the cereal working party
• Rapeseed crop is expected to rise 2.7% to 16.8 million tons

Indian Cooking Oil Processors Seek Curbs on Refined Palm Imports

(Bloomberg) — Indian vegetable oil processors urged the government to reimpose restrictions on various grades of refined palm oil to protect farmers as well as refiners, according to a statement by the Solvent Extractors’ Association of India. Allowing import of refined palm oils will not bring down prices but will kill the domestic industry, the association said in a letter to the government

Palm Oil Faces Risk as Reserves May Climb to Nine-Month High

• Malaysia reserves rose to 1.65 million tons in June: survey
• Labor constraints may limit higher harvesting, Cultrera says

Palm oil stockpiles in Malaysia are set to expand to a nine-month high as production picks up, offering evidence of a sustained increase in supply that may drag prices down again.

Inventories probably rose 5.1% in June from the previous month to 1.65 million tons, according to the median of nine estimates in a Bloomberg survey of analysts, traders and plantation executives. That’s the highest since September, and means that stockpiles have rebounded 30% after bottoming at the end of last year.

Wheat Yields in Russia Are Running Higher Y/y: Ministry

Russian farmers harvested 590k hectares of wheat as of July 5 during the 2021 season, versus about 1.6m hectares at the same time last year, according to data from the Agriculture Ministry’s analytical center. The average wheat yield is 3.29 tons/hectare, 0.23 tons above last year

Ukraine’s Grain Exports Fell 21% in 12 Months Through June: IFX

Ukraine’s grain exports amounted to 44.6m tons in the 12 months that ended in June, news service Interfax reported, citing preliminary data from the nation’s agriculture ministry.

• Ukraine’s wheat exports dropped by 19% y/y to 16.4m tons
• Corn shipments shrank by 24% y/y to 23m tons
• Barley exports fell by 17% to 4.2m tons
• NOTE: In 2019/2020 marketing year Ukraine exported 56.7m tons of grains

Ukraine harvests 274,500 tonnes of new crop grain – Ukraine General Newswire

As of July 2, Ukrainian agrarians harvested early grain and leguminous crops on a total area of 75,000 hectares, a total of 274,500 tonnes of grain of the new harvest were threshed, the Ministry of Agrarian Policy and Food said on Facebook.

• According to the ministry, the overwhelming majority of the harvested crop was winter barley of 274,400 tonnes from 75,000 hectares, 130 kg were harvested. As of July 2, harvesting started in Zaporizhia, Mykolaiv, Odesa and Kherson regions.
• The Ministry of Agrarian Policy said the average yield of winter barley in 2021 increased by 19.6% compared to 2020, to 36.6 dt/ha, winter wheat by 12.6%, to 25 dt/ha. The department recorded the highest average yield of grain and leguminous crops in Odesa region of 42.2 dt/ha.
• The ministry said the agrarians of Kherson region harvested 5% of the planned area, ahead of other regions of Ukraine in this parameter.

Ukraine does not see grain export limits for two months, official says

Ukraine’s agriculture ministry does not expect to impose grain export restrictions in the next two months of the 2021/2022 season that began on July 1, a senior ministry official said on Monday.

Ukraine Black Sea ports resume operations

Ukraine’s major Black Sea ports resumed operations on Tuesday, the state sea port authority said. The authority said on Monday poor weather had affected ports in Odessa, Mykolayiv, Kherson and Olvia.

Brazil’s Winter Corn Crop Harvest 12% Complete: AgRural

Harvest of winter corn crop is 12% complete as of July 1, according to a report from consulting firm AgRural.

• Compares with 5% a week earlier, and 23% a year before
• Center-south crop estimate cut to 54.6m mt from 60m mt in May 27: AgRural
  • Estimate cut due mainly to frost in corn fields, output also affected by drought
  • Total 2020/21 Brazil crop estimate now at 85.3m mt, vs 102.5m mt in 2019/20

Brazil’s Winter Corn Crop Has 49.1% Sales Completed: Safras

Compares with 49.8% a year ago, consulting firm Safras & Mercado says in emailed report.

• On June 7, percentage was at 42.7%
• Winter corn harvest in Brazil’s Center-South region is 7.8% done as of July 2
  • Compares with 20.2% a year ago, 5-year average 17.9%

China Sees Less Demand for Corn on Increased Use of Alternatives

• More local wheat and rice are being used in animal feed
• Hog farmers could limit their expansion because of losses

China’s top agriculture think-tank has cut its estimates for domestic corn demand because of record imports of barley and sorghum and expanding use of local wheat and rice in animal feed.

2020-21 Year

• Center cuts estimate for total corn demand by 3 million tons to 278 million tons, or 5% less than a year earlier
• Think-tank also reduces estimate for demand from animal feed mills by 3 million tons to 180 million tons, or 6.6% less than a year earlier
• The decrease was down to larger-than-expected imports of barley and sorghum and use of substitutes such as domestic rice and wheat
• Total imports of corn and other feed grains — barley and sorghum — are estimated at a record 45.5 million tons, up 163% on year

2021-22 Year

• Center cuts corn consumption estimate by 5 million tons to 286 million tons, but it’s still up 2.9% on year
• Prediction for feed mill demand is reduced by 4 million tons to 188 million; refinery use seen flat from previous year at 78 million tons
• Starch and alcohol demand weakens, exports of starch also drop
• Corn import estimate unchanged at 20 million tons; barley and sorghum imports seen at 10 million tons each
• Wheat use for animal feed seen at 36 million tons; rice use for animal feed seen at 33 million tons
• Hog farms are making losses, which could worsen and hurt restocking of herds, while some farms may cut the number of overweight hogs
• Commercial corn inventories seen falling to 7.4 million tons by the end of 2021-22 from 10.6 million tons a year earlier

USDA attache sees Brazil 2021/22 soybean crop at 143.5 million tonnes

Following are selected highlights from a report issued by the U.S. Department of Agriculture’s Foreign Agricultural Service post in Brasilia:

“For 2021/22, Post forecasts soybean planted area at 40.3 million hectares (ha), and production at 143.5 million metric tons (MMT), based on a yield of 3.56 mt per ha (hectare). Post revised up 2020/21 planted area estimate by 300,000 ha to 38.8 million ha, and the production estimate by 3 MMT, to a record-setting 137 MMT. Despite much handwringing over the delayed planting due to drought and then delayed harvest due to too much rain, Brazilian farmers collected their largest soybean harvest yet. Soybean exports in the 2021/22 are forecast at 94 MMT, shattering this season’s expected record shipments of 87 MMT. Post forecasts 47.7 MMT of soybeans destined for processing in the 2021/22 MY, an increase of just over 2% on the 2020/21 estimate of 46.5 MMT. Soybean crush was lowered for the current season, owing to the slack in domestic demand for soybean oil.”

China to buy 20,000 tonnes of frozen pork for its state reserves on July 7

• China will buy 20,000 tonnes of frozen pork for its state reserves on July 7, said a notice posted on Sunday on the China Merchandise Reserve Management Centre.
• Live hog prices in the world’s top pork producer plunged 65% from January to early June as outbreaks of disease triggered panic selling, and as a glut of large pigs were sent to slaughter.
• Beijing last bought from the market in February and March 2019, when it made three purchases totalling 200,000 tonnes.

Court Strikes Trump EPA Rule for Full-year 15% Ethanol Sales

A federal appeals court on Friday threw out a Trump-era Environmental Protection Agency rule change that allowed for the sale of a 15% ethanol gasoline blend in the summer months.

The decision deals a significant blow to the ethanol industry and corn farmers who grow the crop from which the fuel additive is made. They had anticipated increased ethanol demand through year-round sales of the higher blend.

Most gasoline sold in the U.S. today is blended with 10% ethanol. Corn farmers and ethanol refiners have pushed for the government to allow the widespread sale of a 15% ethanol blend.

Tortilla Price Spike Leads Mexico to Consider Corn Imports (1)

• AMLO also floats limiting cooking gas prices amid spike
• Annual inflation seen above 5% for the remainder of the year

Mexico is considering boosting corn imports and capping cooking gas prices as an inflationary spike hits tortilla prices, a staple for the country’s families.

Inflation in Latin America’s second-largest economy quickened to around 6% in the second quarter, driven by fuel and food prices. The spike led the central bank to increase the key interest rate by a quarter-point last week, surprising economists, who see inflation slowing to only 5.58% by the end of the year.

Russian Wheat Exports Rise 13% in 2020/2021 Season: Agency

Wheat shipments for the 2020/2021 season totaled 39.1m tons as of June 30, the Federal Center of Quality and Safety Assurance for Grain and Grain Products said on its website, citing inspections before exports.

• Wheat exports totaled about 600k tons in week to June 30, compared with about 500k tons a week before
• Exports of all grains are at 49.8m tons in the season
• NOTE: Data are preliminary and include exports to the Eurasian Economic Union, which is a customs union of countries that includes Russia
• NOTE: 2020/2021 season ended June 30

WHEAT/CEPEA: Frosts in corn crops boost wheat prices

Cepea, July 5 – Frosts in different areas in Brazil last week affected a small part of wheat crops and, specially, second corn crops. As for corn, both the planting and the development of some areas, mainly in Paraná and Santa Catarina, had already been affected by a low volume of rainfall, which may reduce production. As farming activities demand wheat as a substitute for corn, this scenario is likely to increase the demand for wheat.

CORN/CEPEA: Sellers are away from trades due to frosts; prices move up again

Despite harvesting advances of the second crop in Brazil, corn prices resumed increasing this week in most part of regions surveyed by Cepea. Frosts have been registered in some areas this week, which concerned sellers, and they are away from trades in the spot market.

Between June 24 and July 1st, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) soared 5.8%, closing at 91.25 BRL (18.08 USD)/bag on July 1st. On the average of the regions surveyed by Cepea, the prices paid to corn farmers (over-the-counter market) increased by 5.2%; in the wholesale market (deals between processors), prices upped 3.1%.

In spite of the recent price increase, quotes dropped significantly in June. On the average of the regions surveyed by Cepea, the prices paid to corn farmers downed 8.1%, and in the wholesale market, 11%. The Index, in turn, decreased 10.5% in June.

The pace of exports continues stable, since many producers prefer to trade corn in the Brazilian market. In June, shipments totaled 92.16 thousand tons, 70% less compared to one year ago, but higher than the 13.9 thousand tons exported in May, according to data from Secex. Conab estimates exports at 29.5 million tons in the 2020/21 season – in 2021, up until now, Brazil shipped 3.9 million tons.

Fires Keep Hundreds of Rail Cars From Reaching Vancouver Port

Rail cars carrying grain and other goods are unable to reach the Port of Vancouver due to wildfires in British Columbia, Ag Transport Coalition says Monday in a report.

• Less than 300 rail cars were unloaded at Canada’s biggest port for the third straight day Sunday, primarily due to CN Rail and CP Rail line outages near Lytton, B.C. that are impacting traffic to Vancouver
• The number of rail cars unloaded at Vancouver dropped by 92% from prior week
• Port terminal lacks available rail cars due to the mainline disruption caused by Lytton fire
• “We would expect few if any unloads over the next 24 to 48 hours as traffic for all sectors, not just grain, are caught in the corridor backlog,” report says
• More than 400 rail cars are idled near Kamloops, B.C. and more than 550 are halted west of the provincial border with Alberta, report says

EU Food Watchdog Rules Locust Is Safe for Human Consumption

The European Food Safety Authority concluded that consuming whole and ground migratory locust “is not nutritionally disadvantageous” and is safe under the proposed uses, it says in an emailed document.

• Application was filed by Fair Insects BV, a Protix company, as part of the novel foods legislation
• The panel also concluded possible allergic reactions in people with allergy to crustaceans, mites and mollusks
• NOTE: EFSA has so far received 17 insect-related novel food applications