Global Ag News for Feb 1.22

TODAY – USDA FATS & OILSEEDS, GRAIN CRUSHINGS

Wheat prices overnight are up 5 1/4 in SRW, up 3/4 in HRW, up 2 1/4 in HRS; Corn is unchanged; Soybeans down 1/2; Soymeal up $0.16; Soyoil down 0.46.

For the week so far wheat prices are down 22 1/2 in SRW, down 23 1/2 in HRW, down 11 1/2 in HRS; Corn is down 9 3/4; Soybeans up 19 3/4; Soymeal up $0.89; Soyoil down 0.89. For the month to date wheat prices are down 4 1/4 in SRW, down 19 1/2 in HRW, up 2 1/4 in HRS; Corn is up 32 3/4; Soybeans up 150 3/4; Soymeal up $21.40; Soyoil up 7.83.

China and Malaysian markets are closed for holidays.

There were changes in registrations (-4 Oats). Registration total: 1,900 SRW Wheat contracts; 17 Oats; 50 Corn; 316 Soybeans; 137 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of January 31 were: SRW Wheat down 2,556 contracts, HRW Wheat down 684, Corn up 9,156, Soybeans up 9,701, Soymeal down 344, Soyoil up 939.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers Monday. Mostly dry Tuesday-Wednesday. Isolated to scattered showers Thursday-Friday. Temperatures near normal Monday, near to above normal Tuesday-Friday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Friday. Temperatures near normal through Friday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry Monday-Tuesday. Isolated showers Wednesday-Friday. Temperatures near to below normal through Tuesday, near to above normal Wednesday-Thursday, near to below normal Friday. La Pampa, Southern Buenos Aires Forecast: Mostly dry Monday-Tuesday. Isolated showers Wednesday-Friday. Temperatures near to below normal through Tuesday, near to above normal Wednesday-Thursday, near to below normal Friday.

The player sheet for Jan. 31 had funds: net sellers of 16,500 contracts of  SRW wheat, sellers of 8,000 corn, sellers of 12,000 soybeans, buyers of 4,500 soymeal, and  sellers of 2,000 soyoil.

TENDERS

• SOYBEAN SALE: Private exporters reported the sale of 129,000 tonnes of soybeans for delivery to China, the U.S. Agriculture Department said. USDA said 66,000 tonnes were booked for delivery in 2021/22, with the balance slated for 2022/23
• SOYMEAL, BARLEY TENDER: Iranian state-owned animal feed importer SLAL has issued international tenders to buy up to 60,000 tonnes of animal feed barley and 60,000 tonnes of soymeal.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 46,344 tonnes of rice to be mainly sourced from China with some from Thailand
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat that can be sourced from optional origins.
• BARLEY TENDER UPDATE: Jordan’s state grains buyer reissued an international tender to purchase 120,000 tonnes of animal feed barley.

 U.S. Corn, Soybean, Wheat Inspections by Country: Jan. 27

Following is a summary of USDA inspections for week ending Jan. 27 of corn, soybeans and wheat for export, from the Grain Inspection, Packers and Stockyards Administration, known as GIPSA.

• Soybeans for China-bound shipments made up 728k tons of the 1.41m total inspected
• Mexico was the top destination for corn inspections, Japan led in wheat

CROP SURVEY: U.S. Soybean Crush and Corn for Ethanol

The following is from a Bloomberg survey of six anlaysts.

• Soybean crush seen at 197.5m bu in Dec., a 2.3% rise from a year ago
• Crude and once-refined soybean-oil reserves at end of December seen at 2.51b lbs, up from 2.111b
• Corn used in ethanol production seen up 10.9% y/y to 478.6m bu
• The USDA is scheduled to release its Dec. Fats and Oils report along with the Grain Crushings report on Feb. 1 at 3pm

Brazil 2021-22 Soy Harvest 10% Done as of Jan. 27: AgRural

• Compares with 5% a week earlier and 2% a year before, according to consulting firm AgRural.
• Summer corn harvest 14% done, compared with 1.5% a year earlier, AgRural says

India Targets to Boost Palm Production to Cut Edible Oil Imports

The world’s biggest importer of palm, soybean and sunflower oils is aiming to increase crude palm oil production to 2.8m tons by 2029-30, from an estimated 1.12m tons in 2025-26, according to the Economic Survey, an annual report card on the economy.

• The area under oil palm may rise by 650,000 hectares by 2025-26, from 370,000 hectares at present, said the survey, presented in parliament by Finance Minister Nirmala Sitharaman Monday
• NOTE: India’s Addiction to Cooking Oil Imports Seen Lasting for Years
• NOTE: India’s inbound shipments were almost flat at around 13 million tons in the year ended October, with palm oil accounting for 63%, soyoil 22% and sunflower oil 14%, according to the Solvent Extractors’ Association of India
• Separately, the survey also said the agriculture and allied sectors are expected to grow by 3.9% in the fiscal year ending March 31, from 3.6% a year earlier

Russian Wheat Exports Decline 21% Y/y So Far This Season: Agency

Russian wheat shipments for the 2021-22 season amounted to 23.6m tons as of Jan. 27, down 21% from a year earlier, the Federal Center of Quality and Safety Assurance for Grain and Grain Products said on its website, citing inspections before exports.

• That means wheat exports totaled about 600k tons in the week to Jan. 27, compared with 300k tons in the period to Jan. 20
• Exports of all grains are at 33.1m tons so far this season
  • Barley exports declined 33% y/y
  • Corn exports rose +16% y/y
• NOTE: Data are preliminary and include exports to the Eurasian Economic Union, which is a customs union of countries that includes Russia

Weaker Fertilizer Demand in Brazil Drives Nitrogen Down Sharply

The Brazilian fertilizer market saw another dramatic drop in Urea prices this week as farmers pulled back purchases. Declines appear poised to continue next week, as buyers are anecdotally still holding back, waiting for prices to drop further. Urea remains on a steeply declining path, with price drops of at least $50 per metric ton (mt) under way, and bids of $500 reported at ports. Phosphates may also fall if speculation about China exports returning to the global markets proves to be accurate.

Potash prices are facing tight supply, supported partly by geopolitical events. Conflict in Ukraine, potential export restrictions in Belarus and Canpotex’s inventory that is sold-out through 1Q all make supply less certain. Despite increased interest, negotiations are reportedly slow while prices remain stable.

India Cuts Fertilizer Subsidy Even as Supply Crisis Lifts Prices

• Financial help for nutrients to fall to $14 billion next year
• Government to promote chemical-free farming across India

India will reduce subsidies on soil nutrients, such as urea, di-ammonium phosphate and potash, even as prices have climbed on a global supply squeeze.

The world’s biggest buyer of urea and di-ammonium phosphate will spend 1.05 trillion rupees ($14 billion) in the year from April 1, down from 1.4 trillion a year earlier, Finance Minister Nirmala Sitharaman said in her budget speech in parliament. The government will promote chemical-free natural farming throughout the country, she said on Tuesday.

The move may potentially hurt crop yields and earnings of farmers as fertilizer use may fall in the country, where nearly 60% of the 1.4 billion population depends on farming, directly or indirectly, for their livelihood. Small and marginal farmers having as much as 2 hectares (4.9 acres) of land constitute some 86% of the total land holdings in the country.

India is among the worst-affected nations to have been hit by a fertilizer crisis. Prices of crop nutrients have soared globally as tight coal and natural gas supplies forced some fertilizer plants in Europe to close. China and Russia have also curbed exports to safeguard their domestic availability. Fertilizer prices are expected to remain elevated this year.

WHEAT/CEPEA: Despite dollar depreciation, prices continue firm in BR

Wheat prices have been firm in Brazil, despite the pressure from the US dollar depreciation against the Real. Domestic quotations have been underpinned by higher wheat prices abroad, which keep the import parity also high. In the last days, import parity values and domestic prices neared even more. Meanwhile, liquidity in Brazil, majorly in Paraná, has been similar to that in the same period of previous years.

In 2021, Brazil harvested the highest wheat crop in all times, also 23.2% higher than the previous. In Paraná, the output was the fourth highest and 3.8% up from that in 2020. According to data from Seab/Deral, 88.6% of the harvest from 2021 had been sold by farmers by January 27, 2022. This volume accounts for 2.8 million tons, which is higher than that traded in the same period last year and also above the average of the last five years. Of the 3.2 million tons produced in Paraná, 65% were classified as type 1 (highest quality); 22%, as type 2; 10%, as type 3; and 4%, no type.

Data from Cepea indicate that, between January 21 and 28, the prices paid to wheat farmers rose by 0.38% in Rio Grande do Sul (RS) and by 0.29% in Santa Catarina (SC); in Paraná (PR), values remained stable. In the wholesale market (deals between processors), prices increased by 0.81% in PR, 0.60% in SC, 0.58% in São Paulo and 0.57% in RS. The US dollar dropped by 1.17% in the week, closing at BRL 5.393 on Friday, 28.

Based on data from Conab (Brazil’s National Company for Food Supply), between January 17 and 21, the import parity price for the wheat from Argentina delivered to Paraná State was USD 307.82/ton. Considering the average of the US dollar in that period, at BRL 5.4757, the wheat imported was sold at BRL 1,685.54/ton, while for the Brazilian wheat traded in Paraná, the average was lower, at BRL 1,683.75/ton, according to data from Cepea. In Rio Grande do Sul, the import parity for the product from Argentina would be of USD 288.64/ton (BRL 1,580.53/ton), against BRL 1,603.54/ton on the average of the state surveyed by Cepea.

LIVESTOCK: U.S. Cattle Herd Falls to 91.9 Million Head

The U.S. Jan. 1 herd fell 2% from the same time a year ago, according to the USDA’s semi-annual cattle inventory report.

• Number of cows and heifers that have calved fell by 2% y/y
• Heifers 500+ pounds fell by 2.1% y/y
• Last year’s calf crop fell by 1.2% y/y