Global Ag News for Dec 27.22

TOP HEADLINES

India to Provide Free Grains Under National Food Program: Goyal

India will distribute free food grains such as wheat and rice to more than 800 million people for one year, Food Minister Piyush Goyal said on Friday after a cabinet meeting.

• The government will spend 2 trillion rupees ($24.1 billion) on the program, Goyal said
• NOTE: The government is required by law to provide as many as 5 kg (11 pounds) of rice, wheat or coarse grains per person per month at highly subsidized prices. Some families also get 35 kg of the food grains under the program
  • NOTE: Earlier people needed to pay 3 rupees per kg for rice and 2 rupees for wheat
• The government will no longer give food grains for free under a separate plan that is scheduled to end on Dec. 31: Goyal

FUTURES & WEATHER

Markets finished last week with wheat prices up 22 1/2 in SRW, up 30 3/4 in HRW, up 22 1/4 in HRS; Corn is up 13 1/4; Soybeans up 3/4; Soymeal down $0.89; Soyoil up 2.19.

For the month to date wheat prices are down 19 1/2 in SRW, down 25 in HRW, down 11 1/4 in HRS; Corn is down 3/4; Soybeans up 9; Soymeal up $35.30; Soyoil down 5.63.

Year-To-Date nearby futures are up 1% in SRW, up 9% in HRW, down -5% in HRS; Corn is up 12%; Soybeans up 11%; Soymeal up 11%; Soyoil up 17%.

Chinese Ag futures (MAR 23) Soybeans up 3 yuan; Soymeal up 38; Soyoil up 266; Palm oil up 288; Corn up 12 –Malaysian palm oil prices overnight were up 270 ringgit (+7.05%) at 4100.

There were no changes in registrations. Registration total: 2,788 SRW Wheat contracts; 0 Oats; 154 Corn; 91 Soybeans; 774 Soyoil; 290 Soymeal; 410 HRW Wheat.

Preliminary changes in futures Open Interest as of December 23 were: SRW Wheat down 742 contracts, HRW Wheat down 1,274, Corn down 4,739, Soybeans down 6,472, Soymeal down 2,245, Soyoil down 8,384.

The player sheet for Dec. 23 had funds: net buyers of 7,000 contracts of SRW wheat, buyers of 3,000 corn, buyers of 5,500 soybeans, buyers of 1,500 soymeal, and  buyers of 1,000 soyoil.

TENDERS

• CORN SALES: The U.S. Department of Agriculture on Friday confirmed private sales of 150,000 tonnes of U.S. corn to Mexico for delivery in the 2022/23 marketing year that began Sept. 1.
• SOYBEAN SALES: The U.S. Department of Agriculture on Friday confirmed private sales of 124,000 tonnes of U.S. soybeans to unknown destinations for delivery in the 2022/23 marketing year that began Sept. 1.

• SUNFLOWER OIL PURCHASE: Turkey’s state grain board TMO has provisionally purchased about 24,000 tonnes of crude sunflower oil in a tender for the same volume which closed on Dec. 23

PENDING TENDERS

• CORN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued new international tenders to purchase around 25,000 tonnes of food-quality soybeans free of genetically modified organisms (GMOs)
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp has issued an international tender to purchase an estimated 83,672 tonnes of rice to be sourced from the United States.
• RICE TENDERS: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of rice.

TODAY

US Cattle on Feed Fell to 11.67M Head on Dec. 1

The feedlot herd fell 2.6% from a year ago, according to the USDA’s monthly report. Analysts were expecting a drop of 2.9%

• Placements onto feedlots down 2.1% y/y to 1.925m head
• Cattle marketed from feedlots increased 1.2% to 1.891m head

Canada Canola Processing Rose 12.3% Y/y in November: StatCan

Canola processing rose 12.3% in November from a year ago, according to Statistics Canada data released Friday on agency’s website.

• Oil production totaled 361k tons, and meal output at 516k tons
• Aug.-Nov. crushings up 3% from year ago to 3.19m tons
• NOTE: Canada is the world’s top canola grower

CORN/CEPEA: Brazilian purchasers continue away from the market but exports are high

Brazilian purchasers have been away from the national spot market of corn, working with the product in stock and waiting for better opportunities to buy the cereal. Thus, liquidity has been low in Brazil. On the other hand, Brazilian corn exports have been much higher than the volume shipped last year – there are more ships getting ready to set sail in the coming weeks.

According to data from Secex, this month (12 working days so far), Brazil has exported 3.38 million tons of corn, which accounts for 99% of the total exported in Decemberlast year (3.41 million tons). Anec estimates the volume to be shipped this month to reach 6.58 million tons.

Since February, 38 million tons of corn have been exported by Brazil, two-fold the volume from 2021 (18 million tons). The difficulties caused by the Russia-Ukraine war, concerns about the crop in the United States, Europe and China and the dollar appreciation boosted Brazilian corn exports.

As for prices at ports, despite the international valuation of corn this week, the dollar depreciation pressed down quotations. Between Dec. 15th and 22nd, values dropped a steep 3.6% at the port of Santos (SP) but remained stable (+0.1%) at the port of Paranaguá (PR). The American currency closed at BRL 5.177 on Dec. 22nd, 2.7% down from that on the 15th.

In the interior of Brazil, quotations remained stable between Dec. 15th and 22nd. On the average of the regions surveyed by Cepea, prices dropped 0.1% in the over-the-counter market (paid to farmers) but increased 0.4% in the wholesale market (deals between processors). In Campinas (SP), the ESALQ/BM&FBovespa Index for corn decreased 0.4%, to BRL 85.58 (USD 16.53) per 60-kilo bag on Thursday.

CROPS – Sowing of the summer crop of corn is near the end but low rainfall in southern Brazil is concerning farmers – some of them have already begun estimating a reduction in the output of the 2022/23 season

By Dec. 17th, 82.3% of the national crop of corn had been sown, according to data from Conab – activities have ended in Minas Gerais, São Paulo, Paraná and Santa Catarina.

SOYBEAN/CEPEA: Dollar depreciation and lower demand press down quotations in BR

Soybean sales have been weak in the Brazilian market this week. Most domestic processors have already halted purchases for delivery still in 2022, and purchasers were absent. Sellers remained away from the market, due to the lower export parity value, which was pressed down the currency exchange rate and international soybean prices.

The American currency dropped 2.7% in the last seven days, to BRL 5.177 on Thursday, 22. On the average of the regions surveyed by Cepea, soybean prices faded 1.5% in both the over-the-counter (paid to farmers) and the wholesale (deals between processors) markets between Dec. 15th and 22nd.

The ESALQ/BM&FBovespa Paranaguá (PR) Index decreased 2.5% in the last seven days, to BRL 178.71 (USD 34.52) per 60-kilo bag on Thursday, 22. The CEPEA/ESALQ Paraná Index dropped 1.9%, closing at BRL 174.79 (USD 33.76) per 60-kilo bag. Abroad, prices faded too, reflecting the low international demand. However, devaluations were limited by the dollar depreciation.

CROPS – The lack of interest in trading the remaining of the 2021/22 soybean crop limited devaluations in Brazil – national farmers are currently focused on crop activities. According to Conab, 95.9% of 43.4 million hectares have been sown in Brazil. Activities are still running in Piauí (98%), Maranhão (69%), Santa Catarina (92%), and Rio Grande do Sul (87%).

WHEAT/CEPEA: Wheat price sets real record, despite highest output in all times

Cepea, December 26th – Despite the record wheat output in Brazil this year, wheat prices have hit the highest levels in the series of Cepea – in some regions, quotations have set new real records. Globally, several factors led to a lower stock/consumption ratio for the second consecutive year. Thus, the domestic demand for wheat continued high, surpassing supply and raising prices.

In the first semester of 2022, the Russia-Ukraine war limited exports from the Black Sea – it is important to consider that, in the 2018/19 and the 2021/22 seasons, these countries exported 30% of all the wheat traded in the world. In the second semester of 2022, the weather hampered production in the European Union, India and Argentina, and Ukraine reduced sowing.

In Brazil, only a few farmers and purchasers closed deals in the market in early 2022. While sellers were considering sales, agents from mills seemed to have stocks. Still, quotations increased. From late February onwards, agents began to monitor the Russia-Ukraine war and its effects on the markets of grains and cereals.

By assessing the effects of the war, Brazilian farmers got to the conclusion that price rises could have positive effects on the crop to be sown. In April and in May, Brazilian agents were focused on the beginning of sowing activities in Brazil. In July, agents became focused on the harvesting and the weather in the northern hemisphere and on the estimates for the southern hemisphere.

In Brazil, prices were on the rise until July, boosted by low domestic supply and concerns about a decrease in the world supply. In real terms (monthly averages were deflated by the IGP-DI), the monthly average prices in July set records in Rio Grande do Sul and in Santa Catarina. In nominal terms, state averages hit the highest levels in Paraná and in São Paulo.

In August and in September, values dropped, reflecting expectations for a record output and the arrival of the 2022/23 crop at the market in September. In December, quotations have decreased too, following the trend observed abroad and also influenced by high supply in Brazil, from both imports and the record national harvest.

In Brazil, Conab estimates the output to total 9.55 million tons, a record and 24.4% higher than that in the 2021/22 season. Both the area and productivity have increased in 2022 compared to that in 2021. Estimates indicate that Rio Grande do Sul will be the top wheat-producing state in Brazil, with high-quality wheat. On the other hand, in Paraná, crops were severely damaged by the weather.

EXPORTS AND IMPORTS – The volume of wheat exported in 2022 was high, raising Brazil’s relevance in the international market. According to Secex, in the first semester, Brazil exported 2.6 million tons of wheat, and in the second half of the year, 74.4 thousand tons, totaling 2.67 million tons in 2022 – against 598.8 thousand tons between January and November of 2021. As for imports, 5.2 million tons had been imported until November, 3.7 million tons in the first semester and 1.5 million tons in the second (until November).

Argentina Soy, Corn to Get Rain From End-Jan. as La Nina Fades

Argentina’s farm belt will see increasingly regular rainfall from the end of January through March as a La Nina climate pattern that’s driven a drought fades, according to a Buenos Aires Grain Exchange report.

• NOTE: Crops need rains over the southern hemisphere summer, mainly January and February, to reach yield potential
• The slow transition out of La Nina will mean bad weather for farms — heat waves and dryness — continues over the next few weeks: Report

Cargill Soy Plant Shuts Down as Deep Freeze Strikes: Notice

Cargill has run out of soybean meal at a processing plant in Sioux City, Iowa, that’s been shuttered since at least Thursday, according to a notice to customers seen by Bloomberg.

• Cargill said it will send updates throughout the holiday weekend and is planning on having soy meal available Monday morning: notice
• Cargill didn’t immediately return an email seeking comment
• NOTE: The closure comes as the US Farm Belt is grappling with plummeting temperatures and a severe winter storm

Ukraine Corn Harvest Was 75% Complete as of Dec. 22: Government

Ukrainian farmers have harvested corn from 75% of planted areas as of Dec. 22, according to a government statement.

• 20.2m tons of corn was harvested across 3.1m hectares
• NOTE: Corn harvest totaled 18.4m tons on Dec. 16

Ukraine Says Over 100 Grain Ships Halted in Bosporus

Ukrainian ships are being held up by Russian inspection teams, the Infrastructure Ministry in Kyiv says on Facebook.

• 99 ships are currently delayed, including 73 ships heading to Ukrainian ports to be loaded and 22 loaded ships making their way to Africa, Asia and Europe
• 9 ships loaded with Ukrainian grain for export left the Odesa port in the past two days

Analysts Expect Brazil Fuel Policy Change in Favor of Ethanol

Brazil fuel policy could change to benefit domestic ethanol sales, analysts warn ahead of the expiration of an unfavorable tax law on Dec. 31.

• There haven’t been signals of any governmental move to extend the policy, Datagro consultancy president Plinio Mario Nastari says
  • Note: A June law reduced ethanol attractiveness to consumers, driving sugar-cane mills to increase sugar output
• Brazilian mills would welcome the opportunity to produce a bit more ethanol in the upcoming season, said Willian Hernandes, a partner at consulting firm FG/A
  • Global sugar supply is seen increasing next year on the back of higher sugar-cane availability in Brazil, which could reduce sugar prices from the second quarter of 2023
• Hydrous ethanol prices sold in Brazil could reach favorable parity of 70% the price of gasoline, Nastari said.
  • Relative prices of sugar seen still higher versus sugar-cane ethanol
  • NOTE: Most cars in Brazil run on different fuels; drivers usually choose ethanol when it’s 70% or less of the price of gasoline
• Mills are stocking up on ethanol in anticipation of this policy change, says Tarcilo Rodrigues of brokerage firm Bioagencia
  • State-level taxes that were capped in the second half of 2022 could also rise, pending newly elected governors’ agenda
  • NOTE: Brazilian States Move to Raise Taxes, Likely Boosting Inflation

Baltic Exchange’s Main Sea Freight Index Falls 8.2% To 1,515 Points

BALTIC EXCHANGE’S MAIN INDEX FALLS 8.2% TO 1,515 POINTS

US Fertilizer Prices Decline as Traders Consider Spring Needs

Nitrogen, phosphate and potash prices remained under pressure in the US, as winter and spring pricing programs continued to make the rounds. The first spring prepay offers for ammonia, announced the previous week, were generating only modest interest as traders await stronger commitments from growers.

Urea, UAN, Potash Prices Continue to Fall at Year’s End

The final work week of the year brought additional downward pricing adjustments for several fertilizers. New Orleans (NOLA) urea slipped to $450-$455 a short ton (st) vs. last week’s $445-$475, while NOLA urea ammonium nitrate (UAN) prices plunged to $450-$460/st vs. the prior week’s $500. Inland urea and UAN markets were also under pressure, with falling prices noted in the Northern Plains, California, the Pacific Northwest and Western Canada.

After the previous week’s major price drops for spring prepay ammonia and winter fill potash pricing programs in the US Midwest, both products were largely unchanged this week, though new potash fill offers in the western US and western Canada showed significant drops from fall pricing. In Brazil, phosphate prices were up while urea, ammonium sulfate and potash continued to weaken.

Year-End Fertilizer Inventories Up in Brazil But Prices Mixed

Market participants forecast higher year-end fertilizer inventories in Brazil, rising to 8-10 million metric tons from 7 million at the end of 2021. Despite the increase, fertilizer prices appear mixed, with phosphates moving up as potash and urea continue to slip.

MAP Rises, Potash Finds Stability, Urea Weakens

Monoammonium phosphate (MAP) prices in Brazil rose to $640-$655 a metric ton (mt) vs. last week’s $630-$640 amid reports that some sellers are sold out and inventories are becoming scarce in parts of the country. Potash prices slipped to $480-$520/mt vs. last week’s $500-$520, capping a 3% decline in average values for the month. Despite the softer market, potash prices are generally expected to stabilize as some sellers pull back from the market. Urea fell to $480-$490/mt vs. last week’s $500-$505, capping a 10% decline in average values for the month.

As with potash, some sellers in Brazil believe the urea market is close to the bottom and set to rise soon, depending on when the next India urea tender is called and when North America’s spring demand heats up.

US Beef Production Falls 10.1% This Week, Pork Down: USDA

US federally inspected beef production falls to 470m pounds for the week ending Dec. 24 from 523m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter down 10.1% from a week ago to 562m head
• Pork production down 31.7% from a week ago, hog slaughter falls 31.8%
• For the year, beef production is 1.3% above last year’s level at this time, and pork is 2.5% below