Global Ag News for Jan 25.24

TOP HEADLINES

Ukraine’s Black Sea grain export success tested by Red Sea crisis

• Ukraine is shipping million of tons of food via Black Sea route
• Scheme salvaged grain exports after Moscow quit UN-backed deal
• Red Sea crisis threatens revival in Ukraine’s trade with Asia

Ukraine has managed to boost its Black Sea grain exports to a level not seen since before Russia’s invasion, although the Red Sea shipping crisis poses a new challenge to its crucial agricultural trade.

Kyiv’s success in replacing a UN-backed Black Sea export deal with its own shipping scheme has brought relief for Ukrainian farmers and importing countries while representing a naval breakthrough for Ukraine’s military as a land counteroffensive has stalled.

The export turnaround helped Ukraine’s economy to steady last year and further tamed global food prices after Russia’s invasion in February 2022 drove them to record highs.

Kyiv shipped around 4.8 million metric tons of foodstuffs in December, mostly grain, from its Black Sea ports, surpassing for the first time volumes achieved under the previous UN-sponsored corridor. Moscow quit that deal last July saying commitments to safeguard its own exports were not being respected.

Before Russia’s invasion, Ukraine exported about 6 million tons of food monthly via the Black Sea.

“The alternative Black Sea export corridor from Ukraine has definitely been a positive signal for the agricultural industry,” Svetlana Malysh, senior Black Sea agriculture analyst at LSEG, said, adding: “There are lot of concerns related to the situation in the Red Sea.”

Ukrainian grain exports by sea in January could drop by around 20% compared with last month, a senior Ukrainian official said last week, mostly because of the Red Sea crisis.

Strikes on shipping in the Red Sea by the Iran-aligned Houthis who control much of Yemen have stymied trade between Europe and Asia. The Houthis say they are acting in solidarity with Palestinians as Israel strikes Gaza. Their actions have prompted U.S. and British air strikes against Houthi targets.

Passage through the Red Sea is very important for Ukraine as almost a third of its exports via the Black Sea corridor are sent to China.

Under its new export scheme, Ukraine is also supplying grain to Pakistan for the first time since Russia’s invasion, said Alexander Karavaytsev, senior economist at the International Grains Council.

Grain ships are increasingly being diverted away from the Suez Canal-Red Sea route, according to analysts and traders.

“The Red Sea situation is likely to hamper long-haul shipments from Ukraine,” Karavaytsev said.

FUTURES & WEATHER

Wheat prices overnight are up 2 in SRW, up 5 3/4 in HRW, up 5 1/2 in HRS; Corn is down 1/2; Soybeans up 2 1/4; Soymeal up $2.40; Soyoil up 0.03.

For the week so far wheat prices are up 19 1/2 in SRW, up 23 1/2 in HRW, up 14 1/2 in HRS; Corn is up 6 1/4; Soybeans up 29 1/2; Soymeal up $9.30; Soyoil up 0.48.

For the month to date wheat prices are down 15 1/4 in SRW, down 10 1/2 in HRW, down 13 1/2 in HRS; Corn is down 19 1/2; Soybeans down 55 1/2; Soymeal down $20.30; Soyoil down 0.83.

Year-To-Date nearby futures are down 2.4% in SRW, down 1.6% in HRW, down 1.9% in HRS; Corn is down 4.1%; Soybeans down 3.9%; Soymeal down 5.2%; Soyoil down 1.0%.

Chinese Ag futures (MAY 24) Soybeans down 7 yuan; Soymeal down 6; Soyoil up 14; Palm oil up 58; Corn up 4 — Malaysian Palm is up 46.  Malaysian markets are closed for the Thaipusam Holiday.

There were changes in registrations (-9 Soybeans). Registration total: 849 SRW Wheat contracts; 0 Oats; 6 Corn; 577 Soybeans; 125 Soyoil; 1 Soymeal; 214 HRW Wheat.

Preliminary changes in futures Open Interest as of January 24 were: SRW Wheat down 1,263 contracts, HRW Wheat up 433, Corn up 8,465, Soybeans up 1,708, Soymeal up 1,395, Soyoil up 10,759.

Brazil: Showers in central Brazil had low coverage last week but will continue to be more widespread and consistent through the end of this week. This week’s showers have potential to improve conditions for soybeans that are still maturing, but with harvest already underway for early planted beans, the rainfall could be a setback to harvest progress. More consistent showers will also benefit soil moisture for safrinha corn planting which should start up shortly. By early next week, shower coverage in central Brazil may diminish and shift north leading to below normal precipitation for central states.

Argentina: Conditions started to trend drier last week and there will not be much of a relief in dry conditions through this weekend, as any notable precipitation will stay off to the west and south of the main growing areas. Corn and soybean conditions are likely to fall toward the end of the month as soil moisture may begin to deplete this week.

Australia: Recent rains in the east have been favorable for developing cotton and sorghum. The northeast will be watching Tropical Cyclone Kirrily make landfall in eastern Queensland by Thursday. Heavy rainfall may accompany the tropical cyclone and lead to areas of flooding. Meanwhile, southern parts of Australia will see scattered showers for the mid-week before turning dry again by the end of the week.

Northern Plains: Mostly dry conditions will continue through this weekend as systems largely pass by to the south and east of the region. Above normal temperatures will also continue through the end of January which will lend to mild conditions for livestock. The warmer temperatures will likely reduce the snowpack through the next week as well.

Central/Southern Plains: Warmer temperatures will continue across much of the area into this weekend, but portions of the High Plains, like western Kansas and western Texas, will be closer to normal. Recent rainfall has likely helped improve drought conditions in eastern Texas. One more round of rain is possible by the end of the week and into early this weekend before conditions dry out for early next week. This week’s precipitation should be favorable for increasing soil moisture for areas with dormant wheat.

Midwest: While warmer temperatures are returning to the area, wintry precipitation still managed to tag eastern areas on Tuesday. Additional rainfall is expected through Thursday before a brief period of mostly dry conditions returns Friday. The next round of precipitation will tag eastern areas later this weekend before mostly dry conditions return early next week. Above to well above normal temperatures are expected through this weekend and northern areas could see temperatures rise up to 20 degrees Fahrenheit above normal. Warm temperatures and rainfall will likely lead to a reduction in snowpack for many areas.

Delta: Several rounds of rain remain likely through this weekend, melting the snow. Heavy rain is likely and some areas of flooding are possible in southern areas. Water levels along the Mississippi River will receive a boost and increase transportation for at least a little while. Temperatures will continue to be above normal throughout the rest of this week as well. Drier conditions will finally return by late this weekend into early next week.

The player sheet for Jan. 24 had funds: net buyers of 5,000 contracts of SRW wheat, buyers of 2,000 corn, buyers of 1,000 soymeal, and sellers of 1,000 soyoil.

TENDERS

• U.S. WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 89,650 metric tons of grade 1 milling wheat to be sourced from the United States
• CORN PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) bought an estimated 136,000 metric tons of animal feed corn in an international tender on Wednesday.
• NO PURCHASE IN WHEAT TENDER: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 metric tons of milling wheat which closed on Wednesday.

PENDING TENDERS

• CORN, BARLEY TENDERS: Algerian state agency ONAB issued international tenders to purchase around 160,000 metric tons of animal feed corn and 30,000 metric tons of feed barley
• CORN TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 240,000 metric tons of animal feed corn
• FOOD WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 88,710 metric tons of food-quality wheat from the United States and Canada in a regular tender that will close on Jan. 25.
• RICE TENDER: Indonesian state purchasing agency BULOG has issued an international tender to buy 500,000 metric tons of rice.
• WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 metric tons of milling 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 Jan. 18.

• Corn est. range 750k – 1,400k tons, with avg of 988k
• Soybean est. range 700k – 1,225k tons, with avg of 913k

 

Canada Crushed 943K Tons of Canola in December: StatsCan

Canola processing rose 14.1% in December from a year ago, according to Statistics Canada data released Wednesday on agency’s website.

• Oil production totaled 402k tons, and meal output at 549k tons
• Aug.-Dec. crushings up 14% from year ago to 4.578m tons
• NOTE: Canada is the world’s top canola grower

 

Brazil Soy Exports Seen Reaching 2.3 Million Tns In January – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 2.3 MILLION TNS IN JANUARY VERSUS 0.94 MILLION TNS IN SAME MONTH A YEAR AGO
• BRAZIL CORN EXPORTS SEEN REACHING 3.86 MILLION TNS IN JANUARY VERSUS 4.86 MILLION TNS IN SAME MONTH A YEAR AGO
• BRAZIL WHEAT EXPORTS SEEN REACHING 684,575 TNS IN JANUARY VERSUS 651,163 TNS IN SAME MONTH A YEAR AGO
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.2 MILLION TNS IN JANUARY VERSUS 1.43 MILLION TNS IN SAME MONTH A YEAR AGO

Plummeting vegetation density levels in Mato Grosso and Paraná cut Brazil soybean production – Refinitiv Commodities Research

2023/24 BRAZIL SOYBEAN PRODUCTION: 149.3 [140.1–157.7] MILLION TONS, DOWN 2% FROM LAST UPDATE

Plummeting vegetation density levels in top producers – most notably Mato Grosso and Paraná – cut 2023/24 Brazil soybean production by 2% to 149.3 [140.1–157.7] million tons, despite relatively decent crop conditions throughout the rest of the main crop regions. Our current median estimate is 7.7 million tons below the USDA’s World Agricultural Outlook Board (WAOB)’s 157 million tons, which assumes soybean sowings at 45.6 million hectares and national level yield of 3.44 tons per hectare (tph) (vs. LSEG Ag Research’s 46 million hectares and 3.24 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged soy production and area at 155.3 million tons and 45.3 million hectares, respectively.

The past two weeks featured largely unfavorable weather for most major producing regions in the Central-West and the Southeast. Abnormal warmth was experienced everywhere except in the South, with the largest deviations from average (>6.0 °C) observed in Goiás and Minas Gerais. Areas that saw some of the most pronounced warmth also saw some of the smallest rainfall totals, with some portions of Goiás seeing well below average precipitation (>70 mm below normal) over that period. Satellite imagery continues to show mixed conditions across core soy areas, with near record low vegetation density in Mato Grosso and Paraná, the top two soy producing states of Brazil, but near to above historical median levels in most of the rest of the major crop regions. Such a contrast and a divided pattern will likely continue at least for the short term, having offsetting  effects on national-level yield.

As of 20 January, Brazil’s soybeans are 4.7% harvested nationally according to the latest CONAB crop progress report (22 January), so far largely on schedule thanks to recent dry weather. The LSEG Weather Research team’s February outlook indicates slightly improved conditions (in terms of both temperature and precipitation) during the second half of the crop’s prime growth period, but even in the best case scenario the early season delays will likely cause at least some degree of growth curve shift, forcing crops to miss their ideal development windows and hence lowering yield, warranting attention.

USDA attaché sees China 2023/24 corn imports at 20 mln tons

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

“Heavy rainfall in late summer led Post to increase Marketing Year (MY) 2023/24 corn production upwards by 4.2%. Post estimates corn feed and residual use at 223 million metric tons (MMT) due to decreasing feed demand and low corn prices. Corn starch and ethanol production both regained profitability on low input prices. Post forecasts corn imports at a conservative 20 MMT due to increasing prioritization of domestic grain security and farmer and domestic corn trader outcries to protect farm incomes and buy Chinese grain.”

“Wheat production is adjusted down slightly due to overly wet conditions in early summer just before harvest. Wheat is not expected to be price competitive with corn in feed rations for the remainder of MY2023/24. Post forecasts China’s sorghum imports in MY2023/24 will be up only slightly from last year considering price disadvantages compared to barley and corn.”

SovEcon Raises 2024 Russian Wheat Crop Forecast on Good Weather

SovEcon raised its estimate for Russia’s wheat crop by 0.9m tons to 92.2m tons, CEO Andrey Sizov said by email.

• “Due to the abundant snow cover, the first significant cold snap of the season in January had minimal impact on the winter crops”
  • Says conditions continue to indicate good prospects for the upcoming crop
• Says Russia harvested 92.8m tons in 2023

First Nationwide Strike Against Milei’s Govt

In Argentina, umbrella union CGT and other social movements carry out the first national strike against the reforms proposed by President Javier Milei, which will include a massive protest in front of Congress. Banks and public transportation will partially adhere to the measure, while Aerolineas Argentinas announced that it canceled all of its flights on Wednesday because its unions did not comply with the mandatory conciliation.

SWINE/CEPEA: Purchase power of swine farmers in SP decreases against corn

Sharp price drops for live pigs in the independent market, especially in the second fortnight of January, have been reducing the purchase power of swine farmers in São Paulo against corn. On the other hand, soybean meal quotations have been dropping more significantly than live swine values, which has resulted in an increase of the purchase power against this product.

As for live pigs, the year has started with prices at high levels, but liquidity has started to reduce, pressing down quotations. High supply and low demand from final consumers have refrained slaughterhouses from trades. In the SP-5 region (Bragança Paulista, Campinas, Piracicaba, São Paulo and Sorocaba), the average price for live hogs is at BRL 6.84/kg in the partial of January (up to Jan. 23), for a decrease of 2.1% compared to December/23.

Considering corn, the ESALQ/BM&FBovespa Index (Campinas, SP) has averaged BRL 67.13/60-kg bag in the partial of January, 0.5% up in relation to the month before. Despite the monthly increase, prices have decreased over the last days, due to the low demand and the fact that some sellers are more flexible.

Concerning soybean meal, purchasers are away from trades, since they claim to have stocks for the mid-term. They are expecting lower values in the coming weeks, as the soy harvest advances. Between December and the partial of January, soybean meal values moved down 5.7% in Campinas (São Paulo), to BRL 2,233.99/ton.

As a result, considering the live hogs sold in the SP-5 region and the inputs traded in the wholesale market of Campinas, swine farmers are able to purchase 6.12 kg of corn by selling a kg of hog in the partial of this month, 2.7% below that in December. Of soybean meal, farmers are able to purchase 3.06 kg, for an increase of 3.6% compared to that verified in the month before.

Russia intends to boost exports of vegetable oil by third up to 6.5 mln tonnes – analysts

Russia will export more than 6.5 million tonnes of vegetable oil in 2023, a third more than in 2022, according to joint monitoring by information and analytical agency OleoScope and the Oil and Fat Union.

“The current result is the highest for the country, it was achieved due to record oilseed crops harvests in 2022 and 2023, preservation of duties on oilseed exports and growing demand for domestic finished products abroad,” OleoScope analyst Kirill Lozovoy told Interfax.

The volume of sunflower oil exports increased by 31% to 4.29 million tons. Its share in the structure of exports of all types of oils from Russia amounted to more than 65%. The key buyers were China and India, where 897,000 tonnes (254,000 tonnes in 2022) and 885,000 tonnes (433,000 tonnes) were delivered respectively.

“It is noteworthy that the growth of sunflower oil supplies from Russia was also due to its competitive cost: over the year, export prices ‘sagged’ by about 30%, although, starting from June, a gradual strengthening in prices was logged,” Lozovoy said.

Exports of soybean oil increased by 8% to 668,000 tonnes. With India and Algeria leading in purchases, with 208,000 tonnes (66,000 tonnes) and 180,000 tonnes (191,000 tonnes) respectively.

“A rotation of leaders can be traced here. India, which was not among the top three importers as early as 2022, was able to take the leading position by the end of 2023. In addition, supplies to China increased by 69%, up to 144,000 tonnes,” the analyst said.

Rapeseed oil exports demonstrated the greatest growth, adding 58%. About 1.55 million tonnes were shipped last year, with more than 1.4 million tonnes sent to China.

“The Russian rapeseed oil market is a rather classic example of an export-oriented block of the agricultural sector. There are no serious changes in the domestic consumption of the product. In recent years, the indicator is near 40,000 tonnes and there are no prerequisites for significant growth yet,” Lozovoy said.

The meal category also showed an increase in sales: in 2023, total shipments of all types were estimated at 3.88 million tonnes, 28% more than in 2022. Sunflower meal exports amounted to 2.34 million tonnes (12% more than in 2022). The primary buyers were Turkey and Belarus – 683,000 tonnes (399,000 tonnes) and 621,000 tonnes (436,000 tonnes) respectively.

Soybean meal volumes directed to foreign markets stood at 782,000 tonnes (34% more). The leaders in purchases were Belarus (198,000 tonnes compared with 7,000 tonnes in 2022) and Turkey (193,000 tonnes compared with 106,000 tonnes).

In addition, rapeseed meal exports totaled 738,000 tonnes, with the most active demand from EU countries. Namely, 134,000 tonnes (110,000 tonnes) were delivered to Lithuania and 113,000 tonnes (39,000 tonnes) to France.

 

Europe’s Biodiesel Makers Drop Request for Trade Investigation

• Cargoes shipped via Chinese island have stopped, EBB says
• China hasn’t cooperated in investigation, according to letter

European biodiesel producers have dropped their request for the EU to investigate whether Indonesian biofuel has been avoiding import duties by transiting China and the UK.

The European Biodiesel Board is no longer pursuing the probe, according to a Jan. 19 letter from the lobby group’s attorneys to the European Commission that was seen by Bloomberg.

While it didn’t explicitly provide a reason for the change, the letter noted that biodiesel shipments to the European Union from China’s Hainan Island “immediately stopped” after the start of the investigation last August. The Chinese government has also “refused to reply” to the commission’s request for information in the case, it added.

Because probes normally happen at the request of producers, the withdrawal means the EU’s investigation will likely stop. Neither the EBB nor the commission, the EU’s executive arm, immediately responded to a request for comment.

The EU initiated the probe at the request of the EBB due to concerns that palm-oil based biodiesel was coming into bloc. An increasing amount of Indonesian palm-oil based biodiesel appeared to be exported to China, and then re-exported toward Europe, it said at the time.

The EU wants to phase out the use of palm oil in the production of fuels due to concerns about deforestation. The bloc offers incentives to use waste such as used cooking oil in the production of more advanced biofuels, raising concerns in the industry that feedstocks are being mislabeled.

Hainan, in southern China, in 2022 shipped 470,000 tons of biodiesel to the EU — about 28% of all Chinese biodiesel exports to the bloc — according to European producer group. The fact that the island hasn’t exported any biodiesel to the EU since August shows by itself that “significant circumvention practices” were taking place, the letter said.

The lobby group also identified “fraudulent practices from China and UK operators” that fall outside of the scope of anti-dumping rules, it said, adding that it expects the issue to be dealt with by the relevant authorities.

World’s First Ethanol-to-Sustainable Jet Fuel Plant Opens in US

• LanzaJet to use traditional and advanced ethanol to make SAF
• Opening is wake-up call for Iowa producers, trade group says

The world’s first plant using ethanol to make lower-polluting jet fuel opened in the US, a development that Iowa corn growers and biofuel producers say is a wake-up call to move faster to decarbonize.

Illinois-based LanzaJet Inc. formally unveiled its $200 million facility in rural Georgia at an event Wednesday with investors, including Suncor Energy Inc. and IAG SA’s British Airways as well as US Department of Agriculture Secretary Tom Vilsack and local officials.

The plant, which received US government funds, plans to use biofuel made from both traditional raw materials, including American-grown corn, as well as from advanced technologies, LanzaJet CEO Jimmy Samartzis said in an interview. Located in Soperton, Georgia, the facility will produce 10 million gallons of SAF and renewable diesel per year. US President Joe Biden has called for at least 3 billion gallons of overall SAF production annually by 2030.

Read More: Fate of US Corn Farmers Hinges on Future of Green Air Travel

The opening prompted Iowa groups to warn that farmers and ethanol makers in the top US corn-producing state are at risk of missing out on the chance to significantly profit from the developing market for sustainable aviation fuel, or SAF.

“No Iowa ethanol plant currently has a carbon intensity score low enough to qualify as an ingredient to make SAF,” according to a statement from the Iowa Renewable Fuels Association and Iowa Corn Promotion Board. By contrast, Brazil, which mainly makes ethanol from sugarcane, produces over 7 billion gallons of ethanol with a carbon score expected to qualify for SAF production, the groups said.

Brazil Urea Firms on Global Pressure; Potash and Phosphates Fall

Urea prices rose in Brazil, fueled by strong global demand and prices. Phosphate and potash prices dropped slightly on efforts to spur soybean demand, but interest remains low among Brazil’s farmers.

Urea Up, Potash and Phosphates Down

Urea prices were up 3.5% in Brazil, to $365-$375 a metric ton (mt) vs. last week’s $355-$360. Ammonium sulfate prices also rose slightly, to $175-$180/mt from last week’s $170-$180, with additional increases expected from key suppliers. Monoammonium phosphate (MAP) was down slightly, to $550-$565/mt from last week’s $550-$570, with future transactions for compound fertilizers trading at an equivalent of $540/mt for MAP. Potash prices also slipped in Brazil, to $285-$300/mt from last week’s $290-$300, with even lower deals reported but not confirmed.

Global Ammonia, Potash Prices Soften as China Contract Looms

Global ammonia remains pressured after an Indian buyer secured contractual supplies at $350 a metric ton (mt) and the Tampa ammonia price for February fell $80 mt from January. Brazilian potash prices continued to soften, with China’s long-term contract set to test a sub-$300 mt floor.

Ammonia Falls While Urea, Phosphates Move Up

An $80-a-metric ton drop in the February Tampa ammonia contract to $445 mt from January’s $525 signals more pressure on the global market, which has seen prices decline in the US Corn Belt and India. The expected restart of European production facilities from falling natural gas prices has added to the declines. Though ammonia fell, urea prices were higher at New Orleans (NOLA), at inland US terminals and in Brazil. NOLA phosphates were flat at midweek, but prices at inland US warehouses edged higher on limited supply. The order period for 1Q potash fill tons in the US and Canada was scheduled to end Jan. 19-23, with a price increase taking effect for 2Q shipments.

 

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