Global Ag News for Dec 21.23

TOP HEADLINES

US Food Exports Worth $28 Billion at Risk From Border Closures

• Two US-Mexico rail crossings in Texas have been shuttered
• ‘The crossing closures are causing exports to be lost’

Rail-border closures between the US and Mexico are disrupting a $28.5 billion market for American agricultural exports, a coalition of grain and food producers is warning.

More than 40 US food companies and associations, including a key group representing the nation’s grain producers, sent a letter addressed to Secretary of Homeland Security Alejandro Mayorkas urging the government to reopen the El Paso and Eagle Pass international rail crossings in Texas.

Roughly two-thirds of all US agricultural exports to Mexico move via rail.

US Customs and Border Protection temporarily shuttered the crossings this week, citing “a recent resurgence of smuggling organizations moving migrants through Mexico via freight trains.” Railroads have also called for the crossings to reopen.

“The crossing closures are causing exports to be lost,” the coalition said in the letter seen by Bloomberg News.

While US grain growers have faced stiff competition from crop producers in Brazil, exports to Mexico have remained robust. In 2022, shipments of US foodstuffs to Mexico totaled $28.5 billion, making it the second-largest export market for agriculture, the letter said. That figure was expected to stay strong, or climb for 2023. The recent closings put that trade at risk.

The letter, signed by the National Grain and Feed Association and the National Corn Growers Association, said that trains are stalled in at least six US states, with that number expected to grow.

“We have also heard of customers in Mexico telling US suppliers they will begin to look to other countries if the US cannot provide a resilient and reliable supply chain,” the letter said.

The delays are coming as exporters were already diverting shipments due to historically low water levels on the Mississippi River and the Panama Canal — issues that have underscored the importance of US trade with Mexico, traditionally the top buyer of American corn.

“Each day the crossings are closed we estimate almost 1 million bushels of grain exports are potentially lost along with export potential for many other agricultural products,” the letter said.

FUTURES & WEATHER

Wheat prices overnight are up 3 1/2 in SRW, up 5 1/4 in HRW, up 4 3/4 in HRS; Corn is down 1/4; Soybeans down 5 1/4; Soymeal down $1.20; Soyoil down 0.80.

For the week so far wheat prices are down 15 3/4 in SRW, down 12 1/2 in HRW, down 8 in HRS; Corn is down 13 1/2; Soybeans down 21; Soymeal down $9.10; Soyoil down 0.19.

For the month to date wheat prices are up 15 1/2 in SRW, down 12 3/4 in HRW, down 6 3/4 in HRS; Corn is down 13 1/4; Soybeans down 51 3/4; Soymeal down $26.70; Soyoil down 2.09.

Year-To-Date nearby futures are down 22.5% in SRW, down 29.0% in HRW, down 23.0% in HRS; Corn is down 30.8%; Soybeans down 14.2%; Soymeal down 16.7%; Soyoil down 22.0%.

Chinese Ag futures (MAY 24) Soybeans up 28 yuan; Soymeal down 17; Soyoil up 8; Palm oil up 2; Corn up 11 — Malaysian Palm is down 37. Malaysian palm oil prices overnight were down 37 ringgit (-0.98%) at 3741.

There were changes in registrations (-33 Soybeans). Registration total: 2,100 SRW Wheat contracts; 159 Oats; 6 Corn; 497 Soybeans; 147 Soyoil; 0 Soymeal; 301 HRW Wheat.

Preliminary changes in futures Open Interest as of December 20 were: SRW Wheat up 2,459 contracts, HRW Wheat up 965, Corn up 4,199, Soybeans down 27,948, Soymeal down 10,534, Soyoil down 6,421.

Brazil: Widespread heavier rainfall is forecast to continue in central Brazil through the end of the year, helping to turn around conditions for pod-setting soybeans. Southern areas will also see scattered showers, which could be heavier in some areas as well. These southern areas had some drier periods the last couple of weeks, allowing this stretch of heavier rain to not be as negative of a factor for developing corn and soybeans.

Argentina: Showers have been frequent lately, keeping soils moist. Another storm system will move through this weekend with widespread showers and frequent bursts of rain are forecast going into January as well. Overall conditions are very favorable for developing corn and soybeans, though some areas are a little too wet and the remaining planting has slowed some.

Australia: Showers continue in northeastern areas through the weekend while other areas will be drier. Dryness across the west is concerning for cotton and sorghum, but not so much in the southeast. Northeastern areas will find the increasing rain favorable for developing crops.

Northern Plains: Above-normal temperatures continue to be forecast through the end of the year. Scattered showers are likely to move through this weekend, which may include snow.

Central/Southern Plains: A small disturbance will send rain through the region Thursday and Friday and a stronger system will develop in the region over the weekend. That one has potential to bring some accumulating snow to some areas along with cooler temperatures going into Christmas Day.

Midwest: Above-normal temperatures have moved back into the region and will be around through most of next week as well. Scattered showers will move through Friday and Saturday, but a potentially stronger storm will move through Sunday into next week that may include some snow.

Delta: A disturbance should bring more showers through Friday and Saturday with another coming through this weekend into early next week. The forecast rainfall is good for both reducing drought and increasing water levels on the Mississippi River.

The player sheet for Dec. 20 had funds: net sellers of 5,000 contracts of SRW wheat, sellers of 2,000 corn, sellers of 2,500 soybeans, sellers of 2,000 soymeal, and  sellers of 500 soyoil.

TENDERS

• CORN SALE: South Korea’s Feed Leaders Committee (FLC) purchased about 65,000 to a maximum 68,000 metric tons of corn to be sourced from optional origins in an international tender on Wednesday
• SOYMEAL SALE: The Korea Feed Association (KFA) in South Korea purchased around 60,000 metric tons of soymeal expected to be sourced from South America in a deal on Wednesday
• CORN SALE: Algerian state agency ONAB is believed to have bought about 80,000 metric tons of animal feed corn to be sourced from Argentina in an international tender this week
• FEED BARLEY SALE: Jordan’s state grain buyer has purchased about 60,000 metric tons of animal feed barley to be sourced from optional origins in an international tender which closed on Wednesday
• 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.

PENDING TENDERS

• 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)
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
• FEED WHEAT TENDER: A group of importers in Thailand issued an international tender to purchase an estimated 193,300 metric tons of animal feed wheat
• RICE TENDER: Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) set a tender to import natural white wholly milled short-grain Indian rice, it said in a statement. GASC, on behalf of Egypt’s Holding Company for Food Industries, sought arrival of the rice from Feb. 1-19 and/or Feb. 20-March 10. The deadline for offers is Dec. 21 and they should be accompanied by three samples, of two kilograms each, GASC said.
• WHEAT TENDER: A government agency in Pakistan 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 five analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Dec. 14.

• Corn est. range 800k – 1,500k tons, with avg of 1,019k
• Soybean est. range 1,300k – 2,500k tons, with avg of 1,984k

Brazil 2023/24 soybean output seen below last season’s at 156.5 mln T – Celeres

Brazilian farmers will reap 156.5 million metric tons of soybeans in the 2023/24 season, below an estimated 158.9 million tons of production recorded in the previous cycle, according to a revised crop forecast on Wednesday from agribusiness consultancy Celeres.

Brazil’s biggest soybean grower, Mato Grosso state will harvest an estimated 42.1 million tons of the oilseed, a 10.3% annual drop as farmers there deal with a severe drought, according to Celeres data.

SovEcon Raises Russian 2024 Wheat Harvest Estimate on Weather

Consultant SovEcon raised its estimate for Russia’s 2024 wheat harvest by 1.5m tons to 91.3m tons, Managing Director Andrey Sizov said in a blog post.

• “Weather conditions in most winter-wheat regions are favorable for crop development”
• Says if there are no big weather events, a good crop “could start to exert pressure on global wheat prices in the second half of 1Q”

French Wheat Area Falls to Lowest in at Least Two Decades: Argus

The soft-wheat area in France for the 2024 harvest is likely to fall to 4.238m hectares after weeks of heavy rain, according to Argus Media.

• That would be the lowest since at least 2000, the firm says
• NOTE: Argus — which acquired Agritel in 2020 — collected feedback from more than 1,200 farmers during the week ended Dec. 14
  • Soft-wheat in France is typically sown through November and harvested from June, although Argus said its results reflect some late plantings still underway
• Much of France received 20.8-35.5 centimeters of rain from mid-October to mid-December, with even higher totals in some areas — such as Nouvelle Aquitaine, Argus says
• Rapeseed plantings forecast at 1.341m hectares, versus 1.35m hectares the prior year

Brazil 2023/24 soybean output seen below last season – Celeres

Brazilian farmers will reap 156.5 million metric tons of soybeans in the 2023/24 season, below an estimated 158.9 million tons of production recorded in the previous cycle, according to a revised crop forecast on Wednesday from agribusiness consultancy Celeres.

Brazil’s biggest soybean grower, Mato Grosso state will harvest an estimated 42.1 million tons of the oilseed, a 10.3% annual drop as farmers there deal with a severe drought, according to Celeres data.

Persistent uncertainties about Brazil’s weather were the main driver for the estimate, according to the consultancy.

“The high-intensity impact caused by El Nino has limited the country’s water regime, especially in the north-central region and reaching part of Mato Grosso,” Celeres said.

Despite the return of rains in recent weeks, a new round of heat waves at the end of this month should reduce the potential recovery of the crops, “so negative adjustments to the current harvest figure cannot be ruled out.”

Brazil soy hindered amid historic yield drop in Mato Grosso-Itau BBA

Brazilian soybean farmers are expected to reap 153 million metric tons of soybeans in the 2023/24 cycle, 5 million tons below a previous forecast, reflecting the struggle of growers in top farm state Mato Grosso amid an El Niño-related drought.

According to analysts at Itau BBA on Wednesday, weather maps had indicated good rainfall and showers well distributed in the center of Brazil in the beginning of December.

However, as the days went by, rainfall once again was below average over most of the country, which led to the latest downward revision of the national soybean crop.

Itau BBA believes Brazil’s soy output will be lower than last season’s production of 154.6 million tons as estimated by crop agency Conab, as a result of problems in Mato Grosso.

“We reduced yield for Mato Grosso crops, with a drop around 20% in relation to [the state’s yield] potential,” said Itau BBA analysts, who now project Mato Grosso’s soy output below 40 millions of tons.

Citing historical data from Conab, Itau BBA also said Mato Grosso’s sharpest percentage drop in yield was 11% for the 1989/90 harvest.

“If we are correct, this should be the worst year in history for the oilseed in the state,” Itau BBA analysts wrote.

After several consecutive months with temperatures above average, rainfall in the first half of December failed improve in Brazil, Itau BBA analysts said of the world’s biggest soybean supplier.

December also saw the occurrence of yet another heat wave, not the first in the grain season that kicked off the September, which brought temperatures above 40 degrees Celsius in several areas of the country, Itau BBA analysts pointed out.

Argentina soybean production up on improved soil moisture in key crop areas – Refinitiv Commodities Research

2023/24 ARGENTINA SOYBEAN PRODUCTION: 47.9 [42.6–52.0] MILLION TONS, UP 2% FROM LAST UPDATE

2023/24 Argentina soybean production is increased by 2% to 47.9 [42.6–52.0] million tons, reflecting improved soil moisture across the eastern Pampas thanks to recent widespread above normal precipitation amid cool weather. Our current estimate puts planted area at 16.9 million hectares, below 17.3 and 17.4 million hectares reported by Bolsa de Cereales in Buenos Aires and Bolsa de Comercio in Rosario, respectively. In December’s WASDE (08 December), USDA placed Argentina soybean production at 48 million tons, unchanged from its previous update in November. Bolsa de Cereales in Buenos Aires and Bolsa de Comercio in Rosario both currently forecast production at 50 million tons.

Cool and wet weather has been the predominant feature in Argentina’s eastern core in late November and early December. Most major crop areas of Buenos Aires, Santa Fe, Córdoba, Entre Ríos and Santiago del Estero – which combined account for more than 90% of the country’s total soy production – experienced temperatures 1-3°C below normal over the past 30 days, with well above average precipitation (100-200 mm in total, up to 150 mm above normal). The drought-relieving rains after months of extreme dryness were welcome and undoubtedly beneficial to the crops in these key regions, greatly restoring soil moisture storage there (except in southeastern Córdoba and northwestern Buenos Aires, where the total amount was still insufficient). These key producing provinces should continue to receive a decent amount of precipitation through next week (albeit less intense than recent weeks), keeping outlooks afloat.

Despite overall improved soil moisture, soy planting is only 65% complete so far nationally according to the Ministry of Agriculture, still lagging behind the 5-year average of 70%, though slightly ahead of last year’s 62%. Bolsa de Cereales in Buenos Aires also reported a progress of 59.5%, a near record low according to our available data. To add insult to injury, the latest long-term outlook by our LSEG Weather Research team suggests that significant heat/dryness risks may be targeting the central Pampas from December through February, the soybean crop’s prime growth period, warranting close attention.

EU 2024-25 Soft-Wheat Output Forecast Down Y/y: Strategie Grains

EU 2024-25 soft-wheat production is now seen down slightly y/y at 124.8m tons, analysis firm Strategie Grains said in its first forecast for the next season.

• EU 2024-25 barley and corn estimates expected higher than last year
• EU wheat ending stocks seen “relatively high” at end of 2023-24 season
• “This stems from large-scale imports of Ukrainian grains and the squeeze on exports to third countries caused by intense competition from Russian grains”
• Animal feed demand is projected to rise slightly in 2024-25
• Human/industrial demand also forecast to rebound, but “will remain below the levels seen before the war in Ukraine”

Argentina Sea Grain Ports Still Out of Power After Storm

• Terminals run by major agricultural traders in the Atlantic export hub of Bahia Blanca still have no electricity supply after a storm hit on Dec. 16, said Federico Spoturno, a spokesman for port group CPPC
• No truck cargoes arrived on Wednesday at grain terminals in the Bahia Blanca/Necochea coastal region, according to trucking agency Williams Agroservicios
• Navigation buoys and beacons are operative, allowing ships to enter and leave harbor, according to a note from the Bahia Blanca port authority circulated by shipping agency Nabsa

EU Opens Anti-Dumping Probe Into China Biodiesel

The European Commission opens anti-dumping proceeding concerning imports of biodiesel originating in China, according to a notice in the EU’s Official Journal.

• Follows complaint on Nov. 7 by the European Biodiesel Board
• Complainant claimed that it is not appropriate to use domestic prices and costs in China, alleged “significant distortions”
• Evidence provided by the complainant shows that the volume and the prices of the imported product under investigation have had a negative impact on quantities sold, prices and market share held by EU industry, resulting in substantial adverse effects on the overall performance
• Provisional measures may be imposed normally not later than seven months, but in any event not later than eight months after notice publication

China’s Xi Urges Better Disaster Relief in Food Security Push

President Xi Jinping urged China to improve how it prevents and mitigates disasters that affect farming as part of efforts to enhance food security, an increasingly prominent priority for the country.

Communist Party leaders also pledged to stabilize the acreage devoted to grain production and boost crop yields on a large scale, to ensure output in 2024 stays above 650 million tons, according to a report from the state-run Xinhua news agency covering the year’s most important rural policy conference, which was held this week.

One measure being studied is whether the main grain-consuming regions should subsidize the top producing regions, Xinhua said.

More frequent extreme weather events and lingering geopolitical tensions have threatened China’s agriculture and food supplies this year. That’s pushed the authorities to offer more financial support for grain production and to encourage diversifying the sources for its imports, among a slew of measures designed to cushion shocks and cut risks.

More work must be done to ensure a smooth recovery after disasters strike, Xi told the meeting, where priorities for the new year are laid out. The president also emphasized the role of science and technology in modernizing agriculture, as well as efforts to improve the quality of arable land and the need to establish a more diversified system of food supplies.

The conference also urged China to consolidate its success in expanding soybean output — a crop typically used to feed livestock — without explicitly calling for more production. Beijing is trying to cut its reliance on overseas supplies, especially from the US, but farmers have lost money due to the policy as local beans struggle to compete with imports.

World’s ‘Largest Grain Storage’ project to bolster India’s agricultural ecosystem

Over the years, lack of agricultural storage capacity has led to the wastage of large quantities of food grains throughout the country which leads to farmers being forced to sell their crops at low prices. To counter this and to bolster the grain storage capacities, ‘World’s Largest Grain Storage Plan in Cooperative Sector’ has been running in 24 states/ UTs of India.

The marquee project aims to create various agri infrastructures at the Primary Agricultural Credit Societies (PACS) level, which will include Warehouses, Custom Hiring Centers, PUs, and Fair Price Shops among others. With this decision, farmers will now get modern grain storage facilities at the block level through PACS, which will strengthen food security, and empower the farmers by enabling them to realize better crop prices.

Notably, the Primary Agricultural Credit Societies (PACS) are grassroots-level institutions and their membership includes individual farmers, artisans, and members of other weaker sections of the society as shareholders. Leveraging the potential of more than 1,00,000 PACS, the plan seeks to create decentralized storage capacity and essential infrastructure to enhance the economic viability of PACS.

Boosting India’s Agricultural Sector

The project is being implemented by the National Cooperative Development Corporation (NCDC) in collaboration with NABARD, Central Warehousing Corporation (CWC), and Food Corporation of India (FCI) in 24 PACS of 24 different States/ UTs. The construction has already been started at five PACS, one each in the States of Tripura, Haryana, Tamil Nadu, Uttar Pradesh, and Madhya Pradesh.

It is noteworthy that the farmers will able to store their produce in these godowns and they can avail bridge finance for the next cycle of crop and sell the produce at a time of their choice, or sell their whole crop to the PACS at MSP, which would enable them to avoid distress sale. Through the PACS network, the farmers will be able to get various agri inputs and services at the Panchayat/ village level. Further, through diversification of business, the farmers could get additional sources of income.

Why Storage Grain Project is important?

With limited arable land and a rapidly growing population in India, the need for a robust network of food grain storage facilities becomes essential. Further, India runs the world’s largest food programme under the National Food Security Act 2013, which covers around 81 crore people. Therefore, to ensure the food security of a huge population, a robust network of food grain storage facilities becomes imperative.

With decentralised storage capacities ranging from 500 MT to 2,000 MT. These initiatives will not only bolster food security but also empower farmers, paving the way for a prosperous future in agriculture.

Weather Concerns Pressure Fertilizer Prices in Brazil

Dry weather in Brazil continues to create risks for soybeans, with fertilizer demand falling below expectations for next season’s crop, pushing nitrogen and potash prices down this week as plentiful supply continues to outpace demand. Phosphate prices in Brazil were flat from last week.

Nitrogen, Potash Prices Fall in Brazil

Urea prices in Brazil were down roughly 5% to $320-$330 a metric ton (mt) cost-and-freight (CFR) vs. last week’s $340-$345. Urea bids were reported around $300/mt CFR, even as some sellers withdrew offers amid talk that a new India tender may be imminent. Ammonium sulfate was down 4.4% in Brazil to $155-$165/mt from last week’s $160-$175 amid persistent reports of long positions from sellers of nitrogen fertilizers. Monoammonium phosphate (MAP) prices remained at last week’s $550-$565/mt, while potash in Brazil fell 6.5% to $285-$295/mt from last week’s $305-$315. Lower potash transactions were reported but couldn’t be confirmed.

 

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