Global Ag News for Dec 20.23

TOP HEADLINES

China grants Russia right to supply corn and rice from all regions

Russia and China have signed an addendum to amend the protocol on phytosanitary requirements for corn, rice, soybeans, and rapeseed.

Sergei Dankvert, head of Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), and Yu Jianhua, head of China’s General Administration of Customs, have signed the document.

Rosselkhoznadzor said that the amendments grant Russian enterprises the right to begin supplying corn and rice from all of Russia’s regions. Exports are currently limited to the Primorsk, Transbaikal, and Khabarovsk territories, as well as the Amur Region and the Jewish Autonomous Region.

Meanwhile, the main producers of these crops are located in the European part of the country.

The respective parties have also signed a protocol on veterinary and sanitary requirements for feed for non-productive livestock exported from Russia to China.

FUTURES & WEATHER

Wheat prices overnight are down 1 1/2 in SRW, down 1 3/4 in HRW, down 3 in HRS; Corn is up 1/2; Soybeans up 1 3/4; Soymeal unchanged; Soyoil up 0.10.

For the week so far wheat prices are down 8 in SRW, down 3 in HRW, down 5 1/2 in HRS; Corn is down 9 3/4; Soybeans down 7 1/4; Soymeal down $4.20; Soyoil up 0.79.

For the month to date wheat prices are up 23 1/4 in SRW, down 3 1/4 in HRW, down 4 1/4 in HRS; Corn is down 9 1/2; Soybeans down 38; Soymeal down $21.80; Soyoil down 1.11.

Year-To-Date nearby futures are down 21.6% in SRW, down 28.0% in HRW, down 22.7% in HRS; Corn is down 30.3%; Soybeans down 13.3%; Soymeal down 15.6%; Soyoil down 20.3%.

Chinese Ag futures (MAY 24) Soybeans up 17 yuan; Soymeal down 31; Soyoil unchanged; Palm oil up 14; Corn down 1 — Malaysian Palm is up 22.  Malaysian palm oil prices overnight were up 22 ringgit (+0.59%) at 3777.

There were changes in registrations (-66 Soybeans). Registration total: 2,100 SRW Wheat contracts; 159 Oats; 6 Corn; 530 Soybeans; 147 Soyoil; 0 Soymeal; 301 HRW Wheat.

Preliminary changes in futures Open Interest as of December 19 were: SRW Wheat down 822 contracts, HRW Wheat down 1,000, Corn up 4,917, Soybeans down 26,298, Soymeal down 4,283, Soyoil down 3,689.

Brazil: Widespread heavier rainfall is forecast to move back into central Brazil Tuesday and last through the end of the year, helping to turn around conditions for pod-setting soybeans. Southern areas will also see frequent 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: Scattered showers went through over the last several days and continue through at least midweek, 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: A system scraping across the south will build more showers for northeastern areas this week 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: A system moved through over the weekend with scattered showers. Though the system left Sunday, cooler temperatures brought some lake-effect snows to eastern areas on Monday. Any cool temperatures today will be gone quickly and replaced with warmth through the coming weekend. Scattered showers may move through Friday and Saturday, but a potentially stronger storm will move through Sunday into next week that may include some snow. Even so, temperatures are forecast to be above normal through the end of the year.

Delta: Scattered showers went through with a system this weekend, helping to ease drought. 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. 19 had funds: net buyers of 2,500 contracts of SRW wheat, sellers of 3,500 corn, buyers of 6,500 soybeans, sellers of 4,500 soymeal.

TENDERS

• WHEAT SALE: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), said it bought 480,000 metric tons of Russian wheat in an international tender. The purchase comprised 180,000 tons for Feb. 1-14 shipment, as well as 300,000 tons for Feb. 15-29 shipment.
• SOYBEAN SALES: The U.S. Department of Agriculture confirmed private sales of 132,000 metric tons of U.S. soybeans for shipment to unknown destinations in the 2023/24 marketing year.
• WHEAT TENDER UPDATE: The lowest offer in an international tender from Bangladesh’s state grains buyer to purchase and import 50,000 metric tons of wheat was assessed at $315.29 a ton liner out
• 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.
• FAILED MILLING WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender for 120,000 metric tons of milling wheat, traders said.

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)
• CORN, SOYMEAL TENDER: Algerian state agency ONAB has issued international tenders to purchase up to 200,000 metric tons of animal feed corn and 70,000 tons of soymeal
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
• FEED BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase up to 120,000 metric tons of animal feed barley
• 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

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Dec. 15 are based on six analyst estimates compiled by Bloomberg.

• Production seen lower than last week at 1.067m b/d
• Stockpile avg est. 22.098m bbl vs 22.1m a week ago

LIVESTOCK SURVEY: US Cattle on Feed Placements Seen Falling 3.9%

November placements onto feedlots seen falling y/y to 1.83m head, according to a Bloomberg survey of ten analysts.

• Estimates range from -5.6% to -1.7% y/y change
• Feedlot herd as of Dec. 1 seen rising by 2.2% y/y to 11.95m head
• Marketings seen falling 6.6% y/y

US Hog and Pig Inventory Survey Before USDA Report

The US hog herd as of Dec. 1 seen falling 0.6% from a year earlier to 74.44m head, according to the average in a Bloomberg Survey of six analysts.

Brazil Soy Exports Seen Reaching 3.50 Million Tns in December – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 3.50 MILLION TNS IN DECEMBER VERSUS 1.52 MILLION TNS IN SAME MONTH A YEAR AGO
• BRAZIL CORN EXPORTS SEEN REACHING 7.17 MILLION TNS IN DEC VERSUS 7.29 MILLION TNS IN SAME MONTH A YEAR AGO
• BRAZIL WHEAT EXPORTS SEEN REACHING 290,026 TNS IN DECEMBER VERSUS 689,256 TNS IN SAME MONTH A YEAR AGO
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.08 MILLION TNS IN DECEMBER VERSUS 1.35 MILLION TNS IN SAME MONTH A YEAR AGO

Brazil overtakes U.S. as China’s top corn supplier, extends soy lead

Brazil overtook the United States in November to become China’s biggest corn supplier this year while also shipping the most soybeans during a quarter traditionally dominated by U.S. imports, data showed on Wednesday.

Brazil’s pole position comes just a year after China approved corn exports from the South American nation to diversify its suppliers and reduce its dependence on the United States and Ukraine.

Brazil supplied 3.22 million metric of corn tons out of the record high total of 3.59 million tons that arrived in China in November, data from the General Administration of Customs showed. Analysts said they expected Brazil to continue to dominate China’s corn supplies.

“This will be the norm going forward, Brazil’s agriculture production has more competitive advantages,” said Ma Wenfeng, senior analyst at Beijing-based agriculture consultancy Beijing Orient Agribusiness Consultancy.

A bumper harvest and logistical breakthroughs such as the consolidation of northern export routes are boosting the competitiveness of the South American grains powerhouse.

For the first 11 months of 2023, corn imports from Brazil rose to 8.8 million tons while corn imports from the United States tumbled by more than half from a year ago to 6.5 million tons.

China’s total corn imports so far this year came to 22.18 million tons, with 40% shipped from Brazil, while the U.S. accounted for 29%.

Brazil Pulls Ahead of US as Biggest Supplier of Corn to China

• Beijing sought to diversify suppliers as imports increased
• Record quantity of the grain unloaded at ports in November

Brazil has overtaken the US as the leading shipper of corn to China, just a year after the world’s top importer gave the go-ahead for supplies from the South American country.

Cargoes from Brazil amounted to 8.79 million tons in the 11 months through November, or 40% of the overall total of 22.18 million tons, according to customs data. US shipments came in at 6.50 million tons, almost 30% of the total, and down by more than half from a year earlier.

Once dependent on the US and Ukraine, China sought to diversify suppliers as purchases surged, a move that coincided with a record crop in Brazil. Chinese imports have exceeded 20 million tons for three straight years as the country looked to replenish stockpiles, while satisfying demand from the livestock feed and processing industries.

“Brazil had a bumper harvest and their corn was cheap,” said Cherry Zhang, an analyst with Shanghai JC Intelligence Co. “The countries also have friendly relations.” Traders booked a large amount of the grain from the country earlier this year and now those cargoes are arriving, she said. Overall corn imports in November were the highest on record in data going to back to 2005.

Beijing signed a deal with Brazil last year to buy the country’s corn, with the first shipment arriving in January. Imports from Brazil in December are expected to total at least 1.5 million tons, and they are likely to stay high in the new year, according to Shanghai JC estimates.

Lower corn prices in Chicago and logistical issues restricting Brazilian exports could start to push traders back to US supplies, traders and analysts said.

Whichever origin is more attractive, suppliers will have to grapple with a weak domestic market. Corn futures on the Dalian Commodity Exchange are down 16% in 2023, and at their lowest level in more than three years.

“Pessimism is pervading the market,” China brokerage Holly Futures said in a note. “Farmers face a lot of pressure selling their grain, while downstream traders are reluctant to build stockpiles.”

Even though China has an enormous appetite for the grain, the main consumers — livestock farmers and processors — are struggling to make profit, casting a shadow over the strength of demand going forward.

Brazil’s Mato Grosso state to produce 20% less soybeans in 2024, farmer group says

Heat waves and scarce rainfall in Mato Grosso, Brazil’s biggest grain state, are expected to reduce soybean output in the 2023/24 cycle by around 20%, according to a survey released by farmer group Aprosoja on Tuesday.

Aprosoja’s survey concluded that Mato Grosso soy farmers will harvest 36.15 million tons of the oilseed this season, 9.16 million less than in the previous one.

The sharp drop is mainly driven by lower yields, which should fall to 49.68 bags per hectare from 62.30 bags per hectare, Aprosoja said.

The survey was carried out with more than 600 Aprosoja members, covering ​​862,000 hectares, or 7.1% of the entire soybean area in Mato Grosso, the farmer group said.

On average, 34.3% of the farmers surveyed said their crops are in good or excellent condition, while 37.7% said the crop is in fair condition and 27.6% said fields were in bad or very poor condition.

Aprosoja also said the situation could worsen if rains do not return to more normalized levels in the next stages of soybean cultivation.

Farmers in Mato Grosso begin to plant their soy fields in September. Harvest begins in January or February, depending on the farm and the date of sowing.

According Aprosoja’s climate service, maximum temperatures remained above average, reaching up to 44 degrees Celsius (111 degrees F) in certain areas.

In the town of Vera, a key area of production located in the mid-north of the state, rains were 52% lower than in the same period in 2022, the farmer group said, referring to the months of September, October and November.

Mato Grosso’s drought also will lead to a 24.6% second corn area reduction related to climate risk, Aprosoja said.

Second corn is planted after soy is harvested in the same fields.

Delays in soy planting should push back second corn planting in 2024, and farmers will prefer to sow less of it to avoid cultivating corn outside the ideal climate window, Aprosoja said.

Brazil 2024 biodiesel demand seen at 8.9 bln liters after govt upped mix -Abiove

Demand for biodiesel in Brazil will grow to 8.9 billion liters in 2024 compared with 7.3 billion liters estimated for 2023, soybean crusher lobby Abiove said on Tuesday, citing a higher mandatory blend of biodiesel into diesel as driving domestic consumption of cleaner fuel.

Around 70% of Brazil’s biodiesel is produced from the processing of soybeans.

Abiove predicted biodiesel demand at 10.1 billion liters in 2025, when the mandatory biodiesel mix will be 15%, one percentage point higher than the 14% set by the government for March 2024.

Brazil boosted the country’s mandatory biodiesel mix into diesel from early next year, bringing forward previously set blending targets.

Citing the CNPE’s decision, Abiove, which represents firms like ADM, Bunge, Cargill and Cofco, immediately updated projections for soyoil processing related to biodiesel production.

According to an Abiove statement, Brazil’s biodiesel-related soyoil demand will be 4.8 million tons in 2023, 5.8 million tons next year and 7.1 million tons in 2025.

EU Soft-Wheat Exports Drop 16% Y/y in Season Through Dec. 17

The European Union’s soft-wheat exports in the season that began on July 1 were at 14m tons as of Dec. 17, compared with 16.6m tons a year earlier, the European Commission said on its website.

• NOTE: The report only includes data from Italy up to end November; next report will be published Jan. 9
• Leading destinations include Morocco, at 2.06m tons; Nigeria at 1.37m tons; and Egypt, with 1.15m tons
• Barley exports were at 3.08m tons, up 6% y/y
• Corn imports were at 7.89m tons, down 43% y/y

APK-Inform ups Ukraine 2023/24 grain harvest, export forecast

Agriculture consultancy APK-Inform on Wednesday increased its 2023 Ukraine grain harvest forecast to 56.3 million metric tons from a previous outlook of 54.7 million tons.

The consultancy revised up its forecast for the corn harvest to 27.6 million tons from 26 million tons, while keeping its wheat output forecast unchanged at 21.5 million tons.

APK-Inform said Ukraine could export 38.1 million tons of grain in the 2023/24 July-June season, including 13.5 million tons of wheat and 22 million tons of corn.

China grants Russia right to supply corn and rice from all regions

Russia and China have signed an addendum to amend the protocol on phytosanitary requirements for corn, rice, soybeans, and rapeseed.

Sergei Dankvert, head of Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), and Yu Jianhua, head of China’s General Administration of Customs, have signed the document.

Rosselkhoznadzor said that the amendments grant Russian enterprises the right to begin supplying corn and rice from all of Russia’s regions. Exports are currently limited to the Primorsk, Transbaikal, and Khabarovsk territories, as well as the Amur Region and the Jewish Autonomous Region.

Meanwhile, the main producers of these crops are located in the European part of the country.

The respective parties have also signed a protocol on veterinary and sanitary requirements for feed for non-productive livestock exported from Russia to China.

China Vows More Efforts on Grain Production, Boost Yields

China vows to focus on the production of grain and other important agricultural products, as well as stabilize sowing areas of grain in a rural work conference held Tuesday and Wednesday, according to state-run Xinhua news agency.

• To also work on boosting grain yields
• To ensure grain output remains above 650 million tons in 2024
• To strengthen use of technology and reform in agriculture, accelerating the revitalization of the seed industry

Cargill to Resume Grain Loading at Argentina Port Post Storm

• World’s top crop trader says its terminal at the Atlantic port of Bahia Blanca will start running Tuesday, according to a spokesperson.
• Terminal is ready to accept vessels
• The port of Bahia Blanca shut Saturday after a storm and Cargill’s terminal was still closed Monday
• Rival Viterra said its facilities in Bahia Blanca suffered “substantial damage”
• Trader is still determining extent of problems to decide when it will be able to resume operations

 Brazil’s Chicken, Pork Costs to Rise on Higher Corn Prices: ABPA

Rising corn prices due to dryness in Brazilian fields will likely boost chicken and pork production costs in 2024, says Ricardo Santin, CEO of exporter group ABPA.

• Corn won’t reach record prices, Santin says during press conference
  • Brazilian corn production along with output from Paraguay and Argentina and possible tax-free imports from the US could secure supply for poultry and pig industry
• A 3.6% increase in domestic chicken supply next year probably won’t translate into lower prices, since demand is expected to rise with lower unemployment and higher average income
• International chicken prices are expected to recover next year with avian flu spread in North Hemisphere in winter boosting demand for Brazilian poultry
  • Brazil isn’t likely to register avian flu at commercial farms since wild birds migrate to the southern hemisphere by the coastline, far from industry facilities

 Key Brazil Port Considers $60 Million Expansion for Grains

• Port’s investment group is joint venture between Mubadala, EIG
• Final investment decision expected during the first half 2024

The investment group behind Brazil’s Porto do Acu, which handles nearly 40% of Brazil’s oil exports, is looking to expand its footprint in the agriculture sector with facilities that can help serve farmers from the country’s central and southeast regions.

The group is looking to invest 300 million reais ($62 million) to build a terminal that will have an initial annual capacity of 3 million metric tons of grain. The move is a bid to capture the market for crops transported by road, according to Rogerio Zampronha, chief executive officer of Prumo Logistica, the holding company that owns Acu and is a joint venture between private equity firm EIG Global Energy Partners and Abu Dhabi’s sovereign wealth fund Mubadala Investment Co.

Zampronha also cited the potential expansion of a railroad to Porto do Acu, which would increase annual grain volumes to about 16 million tons in the future.

Brazil, Latin America’s biggest economy, is an agricultural powerhouse that’s recently overtaken the US as the world’s largest corn and soybean exporter. Additional investments in the nation’s port terminals are considered key to avoiding congestions like the one seen this year as the country produced record volumes of corn, soybeans and sugar.

Read More: A World Desperate for Sugar Sees It Pile Up in Brazilian Ports

Porto do Acu, located in Rio de Janeiro state, started operations in 2014 and was designed by former billionaire Eike Batista. In addition to being an important oil hub, Acu now operates the fourth-largest iron ore terminal in the country and is preparing to become a hub for offshore wind and green hydrogen.

Grain shipments through Porto do Acu made some initial gains in 2023, moving grain and oilseed cargoes of about 150,000 tons for clients such as Russian trading Sodrugestvo Group.

A final investment decision is expected during the first half of 2024, Zampronha, said. It will take 18 months after that to get the new terminal up and running, he said.

Prumo is seeking to combine grain exports with fertilizers imports, which would reduce freight costs to customers. Porto do Acu has signed an agreement with Toyo Setal to build a fertilizer plant to produce urea and ammonia.

Nitrogen Demand to Grow in 2024 as Lower Prices Lure Farmers

Global demand for ammonia could rise 3% in 2024 as falling prices bring buyers back. Fertilizer-to-crop price ratios should incentivize consumption, but supply availability may be hindered by elevated natural gas costs in 2H. Nitrogen must be applied annually, unlike other fertilizers, and demand is the most inelastic of the fertilizer complex.

Acreage Expansion in Brazil, India Drives Urea

Nitrogen use can’t be skipped by farmers, and most countries rely on imports to meet demand. Urea is the most commonly used nitrogen fertilizer; it’s easy to transport and apply. Import demand is highly seasonal: The Southern Hemisphere demands product in 2H, while the North buys in 1Q. Product moves from regions with low-cost natural gas — the key input for nitrogen production– to major agricultural regions. Brazil and India are the world’s largest urea importers, purchasing 7.8 million and 8.1 million metric tons in 2021, respectively.

Brazilian import demand is forecast to rise 7% a year due to planted-acreage expansion. India is pursuing urea self-sufficiency and plans to restart five older plants by 2025. The new supply could lower India’s annual urea imports by 6 million tons.

WARM/WET WEATHER WILL HOLD IN LATE DECEMBER ACROSS THE U.S., BUT THE NEW YEAR COULD BRING CHANGES – Refinitiv Commodities Research

What to Watch:

Widespread warmth will remain in place over the U.S. through the end of the year, but changes could be in store thereafter

Active weather will be widespread in nature across the country from multiple cyclones in the next 7-10 days, though most will be in the form of rain

Favorably mild and wet conditions for U.S. winter wheat will continue until at least early January

PAST WEATHER

A week of warm temperatures and divided precipitation was recorded along the major U.S. crop regions. Temperatures were 6-11 °F above normal in a widespread pattern, with the warmest conditions centered on Minnesota. 7-day precipitation totals were 25-75 mm (~1-3 in) wetter than normal over most of the Southern Plains, while areas to the east/north through the Midwest were 15-35 mm (~0.6-1.4 in) drier than normal. Snow coverage is very paltry across the country under warm conditions (see figure below), which does create vulnerability to a potential cold air outbreak in the forecast barring major changes. Regardless, the past week of warm weather and moderate precipitation was very favorable for winter wheat.

FORECAST

The Madden-Julian Oscillation (MJO) will develop into a Phase 2 event near the end of the 15-day forecast. This will support the potential for increasing cold risks for the first time this winter beyond 10 days. On 10-day numerical model performance, the GFS has recently outperformed the EC in North America. This means that the GFS is the preferred model for the 10-day outlook. Numerical model performance has been declining of late, making for a low confidence forecast.

Widespread warmth will continue to dominate throughout the 10-day forecast across the U.S., but changes could be in store thereafter. Temperatures will be 5-15 °F above normal spanning the Plains and Midwest states throughout the next 10 days, with the warmest conditions shifting from west to east within the period. A very active pattern is in store for the U.S. under a warm regime, as 10-day precipitation totals will be 25-50 mm (~1-2 in) wetter than normal over all the major winter crop areas. Beyond 10 days, there are growing indications from the MJO and numerical model guidance for at least regionally colder temperatures, and upcoming model runs in the days ahead are likely to trend colder as an item to monitor. For now, another round of warm/wet weather will bode very well for U.S. winter wheat.

 

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