Global Ag News for Feb 17.22

 TODAY – EXPORT SALES

Wheat prices overnight are up 4 1/2 in SRW, up 6 in HRW, up 5 1/2 in HRS; Corn is down 3/4; Soybeans up 8 1/4; Soymeal up $0.48; Soyoil down 0.12.

For the week so far wheat prices are down 13 1/4 in SRW, down 9 in HRW, down 1 3/4 in HRS; Corn is down 5 1/2; Soybeans up 13 1/2; Soymeal down $0.19; Soyoil up 1.27. For the month to date wheat prices are up 24 1/2 in SRW, up 33 3/4 in HRW, up 53 in HRS; Corn is up 21 1/2; Soybeans up 104 1/4; Soymeal up $35.10; Soyoil up 2.11.

Year-To-Date nearby futures are up 2% in SRW, up 2% in HRW, down -3% in HRS; Corn is up 9%; Soybeans up 20%; Soymeal up 10%; Soyoil up 19%.

Chinese Ag futures (MAY 22) Soybeans down 38 yuan ; Soymeal up 33; Soyoil up 126; Palm oil up 84; Corn up 6 — Malaysian Palm is up 74. Malaysian palm oil prices overnight were up 74 ringgit (+1.36%) at 5507.There were no changes in registrations. Registration total: 1,900 SRW Wheat contracts; 17 Oats; 50 Corn; 146 Soybeans; 137 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of February 16 were: SRW Wheat down 1,674 contracts, HRW Wheat up 340, Corn up 5,653, Soybeans down 5,011, Soymeal up 3,726, Soyoil up 8,834.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers Wednesday-Sunday, mostly north. Temperatures near to above normal through Sunday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Sunday. Temperatures near normal through Sunday.

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

The player sheet for Feb. 16 had funds: unchanged SRW wheat, buyers of 9,000 corn, sellers of 21,500 soybeans, buyers of 5,250 soymeal, and  buyers of 4,500 soyoil.

TENDERS

• SOYBEAN SALE: U.S. exporters sold 132,000 tonnes of soybeans for delivery to China during the 2022/2023 marketing year, the U.S. Department of Agriculture said.
• WHEAT PURCHASE: Algeria’s state grains agency OAIC purchased 60,000 tonnes of optional-origin milling wheat, in an international tender. Negotiations will continue on Thursday
• WHEAT PURCHASE: A group of South Korean flour mills bought around 82,000 tonnes of milling wheat to be sourced from the United States and Canada in an international tender, European traders said, comprising 50,000 tonnes to be sourced from the United States and 32,000 tonnes from Canada involving a range of different wheat types.
• VEGETABLE OIL PURCHASE: Egypt’s state grains buyer GASC said it bought 34,500 tonnes of vegetable oils in an international tender for arrival April 5-25, specifically 28,500 tonnes of sunflower oil and 6,000 tonnes of soyoil.
• WHEAT TENDER: Egypt’s General Authority for Supply Commodities (GASC) set a tender to buy an unspecified amount of wheat from global suppliers for shipment from April 1-10. Deadline for offers is Feb. 17.
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat sourced from optional origins
• FEED BARLEY, CORN, SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 60,000 tonnes of animal feed barley, 60,000 tonnes of feed corn and 60,000 tonnes of soymeal, European traders said. The deadline for submission of price offers in the tender is Feb. 16.
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 72,200 tonnes of rice to be sourced from the United States and Vietnam
• FEED WHEAT TENDER: An importer group in the Philippines is believed to have purchase around 45,000 tonnes of animal feed wheat from Australia
• FAILED WHEAT TENDER: Syria’s state grains agency is believed to have made no purchase in a tender to buy 200,000 tonnes of milling wheat which closed on Monday, Feb. 14
• FAILED FEED WHEAT OR BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) received no offers for feed-quality wheat or barley in a simultaneous buy and sell (SBS) auction, it said after the tender closed. The ministry had sought 80,000 tonnes of feed wheat and 100,000 tonnes of feed barley to be loaded by May 31 and arrive in Japan by July 28.
• FAILED RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp. has rejected all offers and made no purchase in an international tender for 46,344 tonnes of rice which was its first rice import tender in 2022

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer has issued an international tender to purchase 50,000 tonnes of milling wheat. The deadline for submission of price offers is Feb. 14.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 54,692 tonnes of food-quality wheat from the United States in regular tenders that will close on Feb. 17.
• WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase 54,920 tonnes of grade 1 milling wheat to be sourced from the United States
• SUNFLOWER OIL TENDER: Turkey’s state grain board TMO has issued an international tender to purchase and import about 6,000 tonnes of crude sunflower oil
• BARLEY TENDER: Turkey’s state grain board TMO has issued an international tender to purchase an estimated 255,000 tonnes of animal feed barley
• BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley

Russian Wheat Exporter OZK Aims to Send 500k Tons a Year to UAE

Russian wheat exporter OZK sees potential shipments of about 500,000 tons to the United Arab Emirates a year, company says in statement to Bloomberg News.

• NOTE: OZK is considering setting up a trading house in the UAE, Interfax reported
• New joint venture in Egypt will start this year; JV plans to supply up to 500,000 tons of wheat there
• Russian government plans to purchase grain and sugar for its state grains fund are “a positive signal for the market, and in the future will help smooth out the impact of high world prices on the domestic market,” company said.

Duma to Recommend Russia Considers Axing Grain Export Duty: IFX

Russia’s State Duma recommended that the government and industry groups look at the possibility of canceling the nation’s grain duty, or changing the calculation rates, Interfax reports, citing draft parliamentary regulations.

NOTE: Russia started the floating tax from June 2 as part of efforts to reduce domestic food price inflation

Wheat and Rice Output Seen Climbing to Record in India: Ministry

Food grain production in India, the world’s second-biggest grower of rice and wheat, is likely to climb to record 316.06m tons in 2021-22, from 310.74m tons a year earlier, according to a statement by the farm ministry.

• Wheat output may increase to 111.32m tons in 2021-22 from about 109.59m tons a year earlier, according to the ministry’s second advance estimates
  • Rice output may rise to 127.93m tons from about 124.37m tons
  • Pulses production seen at record 26.96m tons, compared with 25.46m tons
  • Corn output may climb to an all-time high of 32.42m tons from 31.65m tons
• Sugar cane harvest will likely be a record at 414.04m tons, compared with about 405.4m tons
• Cotton production is seen falling to 34.06m bales of 170kg each from 35.25m bales
• Production of oilseeds may rise to 37.15m tons from 35.95m tons
  • Rapeseed output may climb to a record 11.46m tons from 10.21m tons
  • Soybean harvest seen at 13.12m tons compared with 12.61m tons
  • Peanut production seen falling to 9.86m tons from 10.24m tons

Argentine farmers may sell some soybeans to Paraguay, says chamber

In a reversal of normal trade patterns, Argentine farmers could occasionally make soybean sales to processing plants in Paraguay, where a severe drought is hammering crops, Argentina’s CIARA-CEC chamber of oilseed crushers and export companies said on Wednesday.

CIARA-CEC head Gustavo Idigoras said soy exports to Paraguay would likely be sporadic. At the end of last year, 45% of Argentine crushing plants were idle and that figure could rise, he added.

Argentina is the world’s top exporter of processed soy oil and soymeal, used from Europe to Southeast Asia to fatten hogs and poultry. The trade with Paraguay, the world’s fourth-largest soybean exporter, is usually the other way around, with the larger neighbor normally importing Paraguayan beans to process.

But landlocked Paraguay is facing its worst soy harvest in a decade due to the drought and could see production cut in half from the previous season.

Paraguay’s trade industry body told Reuters earlier on Wednesday that the country’s soybean crushing industry will run out of beans to process by the middle of the year, adding it was in talks to import beans for the first time ever. (Full Story)

Importantly, Argentina is also suffering the effects of the drought, which has already led to significant losses of soybean and corn crops.

Last month Argentina’s Rosario exchange (BCR) slashed its estimates for 2021/22 soy production to 40 million tonnes from 45 million tonnes, or an 11% cut, due to the drought.

Kazakhstan sees 2022/23 grain exports at 8-9 mln T – report

Kazakhstan’s agriculture ministry sees grain exports at 8-9 million tonnes in the upcoming 2022/23 marketing season, up from 7.0-7.3 million tonnes in the current season, the Interfax news agency reported on Thursday.

Kazakhstan mostly ships grains to its Central Asian neighbours, Afghanistan, China, and Black Sea ports.

Egypt Local Wheat Output Seen at 9.5M-10M Tons This Year

Egypt’s wheat cultivation area increased to 3.6m feddans for current season, Agriculture Minister Saeed El-Kosser tells Bloomberg in an interview.

IGC forecasts record global rapeseed harvest this year

The International Grains Council (IGC) has forecast a record global rapeseed harvest for the current crop year, Germany’s Union for the Promotion of Oil and Protein Plants (UFOP) reported on 3 February.

The International Grains Council (IGC) has forecast a record global rapeseed harvest for the current crop year, Germany’s Union for the Promotion of Oil and Protein Plants (UFOP) said it also expected sowing conditions to remain favourable this year.

In its second projection of global rapeseed cultivation for the 2022/23 marketing season, the IGC raised its estimate to a record level due to considerable price increases and rising demand in the current crop year, according to the report.

The IGC said it expected the global rapeseed area to expand to a record 40M ha for the current season, with the largest increases in planted area forecast in key rapeseed-producing countries, such as Canada and the EU-27.

Top U.S. Biodiesel Plant Halts Soybean Deliveries After Fire

Louis Dreyfus Company halted deliveries of soybeans at its processing plant in Indiana, one of the U.S.’s biggest producers of feed and fuel, according to a statement Wednesday on the company’s website.

The closure follows a fire at a plant in Claypool that broke out in a bag room and was extinguished late Tuesday, Louis Dreyfus said in an emailed statement. No injuries were reported. More than 50 fire trucks responded, local media reported.

Louis Dreyfus, the “D” in the quartet of global agricultural traders known as the ABCDs, says the facility is the largest fully integrated soybean processing and biodiesel plant in the U.S.

An extended outage could lift prices for soybean meal, which has already surged as drought shrank crops in South America. Soy processing in North America has also fallen short of expectations.

Soymeal futures in Chicago jumped 2.3% to $447.20 per short ton at 9:39 a.m. local time.

China Soy Buyers Walk Away From Brazilian Cargoes as Prices Soar

• Roughly 10 cargoes have been canceled since last week: people
• Move follows poor crush margins and spike in Brazilian premium

Some Chinese soybean processors are walking away from contracts to buy shipments from Brazil because a sudden jump in export prices from the Asian country’s biggest supplier has made crushing unprofitable.

About 10 cargoes from the South American nation have been canceled since last week in a move known as a washout, according to people familiar with the matter. In a washout, no physical delivery is performed on a contract with the agreement of both buyer and seller.

The move comes after Chinese soybean crushing margins turned negative and export premiums spiked in Brazil because of a drought that slashed the harvest in the world’s biggest grower, said the people, who asked not to be identified as the information is private.

Prospects for Brazil’s crop have deteriorated after weeks of dry weather, with analysts repeatedly cutting estimates for a harvest that was initially expected to be a record. Importers have been turning to American soybeans, with the pace of U.S. exports rising at a time of year when Brazilian cargoes normally dominate. Benchmark Chicago futures have risen to near an eight-month high.

Chinese processors are running losses of about $20 a ton on imported soybeans at the moment, said the people. Buyers are likely to put purchasing plans on hold for all overseas supplies, they added.

China, the world’s biggest importer of soybeans, is especially vulnerable to inflationary pressures stemming from the blistering rally in oilseed prices. The country has the largest pork industry on the planet and depends heavily on foreign supplies of soybeans for its processing industry, which produces meal for hog feed and cooking oil.

“Margins are bad, hog prices are awful and people don’t want to long a bunch of meal,” said Darin Friedrichs, co-founder and market research director of Sitonia Consulting, a China-based agricultural information service provider.

Live hog prices have roughly halved in the past year, prompting Beijing to plan pork purchases to bolster state reserves.

Urea Prices Decline, Potash Rebounds

Followings reports of India’s hefty take of nearly 1.4 million metric tons (mt) in its latest urea tender, urea prices slipped at New Orleans (NOLA) to $525-$550 a short ton (st) in early-week trading vs. last week’s $525-$575. Phosphate prices were mostly unchanged at NOLA, while potash was up at NOLA and across North America in the wake of Nutrien’s announcement that it has closed its 1Q order book and is raising prices by $25/st for 2Q tons. The potash market also got a boost from reports of new contracts between Canpotex and buyers in India and China at $590/mt cost-and-freight, more than double China’s $247 in 2021.

India Tender Pressures Urea; Potash Rallies Amid Supply Concern

India booked a large volume of urea in its latest tender and appears to be done buying phosphates this season, while China may let some supply leave the country despite an export ban until May. Canpotex settled an 11-month potash contract with India and China at $590 a metric ton, more than 2x China’s 2021 contract price and at the higher end of recent spot business into Southeast Asia.

US Points to China for Export Purchase Shortfall

The Biden administration has placed the blame on China for failing to meet its purchasing commitments under the 2020 Phase One trade deal by over $100B. In a report, the US Trade Representative said that while China did implement some of the terms of the deal, such as opening its market to new agricultural products and other services, it didn’t buy enough US export goods. The USTR says that its working now to ensure China “lives up to its existing trade commitments.” According to USDA data, China committed to purchasing over 61.8M metric tons of corn, soybeans and wheat in the 2020/21 marketing year, which is well up from 19.9M tons committed to by China in 2019/20.

Fertilizer Price Jump Hasn’t Curbed French Grain Sowing: AgriMer

High prices for nitrogen-based fertilizers hasn’t significantly deterred French grain plantings, Benoit Pietrement, chair of the grains council at FranceAgriMer, said Wednesday at a press briefing.

• That’s because wheat, barley and corn prices remain strong
• FranceAgriMer further trimmed its outlook for French soft-wheat exports due to a lull in sales to Algeria, according to Marc Zribi, head of its grain unit
  • NOTE: AgriMer also cut its export outlook in January, citing Algeria
  • The country is holding a fresh tender this week
• France is shipping more durum-wheat to Italy amid a shortfall in Canadian supply
• Grain loadings and deliveries from Ukraine and Russia accelerated in recent days as tensions mounted, Zribi said

Bolsonaro says Russian fertilizer producers to double supply to Brazil

Brazilian President Jair Bolsonaro met Russian fertilizer makers in Moscow on Wednesday and said they will double their supplies to Brazil where farmers are facing shortages.

“The supply will be doubled,” he told reporters after attending a Russian-Brazilian business conference. (Full Story)

Brazil depends on imports for 95% of its potash and is a major buyer from top suppliers Canada, Russia and Belarus. Last year, Brazil imported some 10 million tonnes.

2021/22 BRAZIL CORN PRODUCTION: 108.0 [98.3–114.5] MILLION TONS, DOWN <1% FROM LAST UPDATE

In spite of improved weather conditions across central/northern Brazil, dismal long-term outlooks for second crop corn in the South fractionally lower 2021/22 Brazil total corn production to 108.0 [98.3–114.5] million tons. Our current median estimate is 6.0 million tons below the USDA World Agricultural Outlook Board (WAOB)’s 114 million tons, which assumes total corn sowings at 20.8 million hectares and national level yield of 5.48 tons per hectare (tph) (vs. Refinitiv Ag Research’s 20.7 million hectares and 5.23 tph, respectively). Brazil’s agriculture state agency (CONAB) has lately pegged corn production and area at 112.3 million tons and 20.9 million hectares, respectively.

Over the past two weeks rainfall patterns across Brazil remained mixed, while temperatures tended to stay consistently warm throughout. Central-West Brazil received some favorable precipitation, with rainfall in some areas approaching 130 mm in total, near normal. Portions of the Southeast even struggled with localized flooding due to heavy inundation (up to 100 mm above average). On the other hand, extreme drought conditions continued to plague much of the South (Paraná and Rio Grande do Sul in particular), exacerbating already dire soil moisture and exerting further downward pressure on late season first crop corn yields.

Continued dryness and heat in the South are still adversely impacting crops in late grain fill stages, but at the same time have allowed first corn harvests and second corn sowings to speed up. As of 12 February, Brazil’s first corn is 18% harvested according to the latest CONAB crop progress report (14 February), largely in line with last year’s pace. The second corn is 35% planted nationally, well ahead of last year’s 10%, partly thanks to rapid soybean harvest pace (+15% compared to last year). The latest long-term outlook by the Refinitiv’s Weather Research team (02 February) indicates a divided precipitation pattern(wet-north and dry-south) will continue to be in store throughout March and April, warranting close attention.

2022/23 U.S. WINTER WHEAT PRODUCTION: 37.9 [34.6–41.2] MILLION TONS, UNCHANGED FROM LAST UPDATE

Outlooks for 2022/23 U.S. winter wheat planted area and production are unchanged at 35.1 million acres and 37.9 [34.6–41.2] million tons, respectively. In Winter Wheat and Canola Seedings (12 January), USDA set its initial estimate of 2022/23 plantings at 34.4 million acres, up 2% from last season. This prediction is directionally in line with what we have been calling for (first released on 29 September 2021), which suggested an upward shift in winter wheat plantings from last season’s 33.6 million acres.

The past 15 days featured a relatively moderate weather pattern (compared to recent weeks) across the key hard red winter (HRW) wheat regions through the eastern soft red winter (SRW) belt. With an exception of some portions of the SRW belt early this week the temperatures have been largely near to above normal (up to 3 °C above normal especially across the Central Plains). As winterkill risks fade away, the lack of moisture throughout the Plains and Southwest U.S. is becoming the greatest threat to yield potential. At the moment none of the HRW producing states in the Plains are completely drought-free. Kansas’ topsoil moisture supplies are reported to be 80% short or very short, and over 90% of the Oklahoma region is currently in the severe/extreme drought category. The similar goes for the key crop areas of northern Texas (where over 70% of the state’s total wheat is grown), which has barely received any rain since the beginning of the planting season. Most eastern U.S. regions are expected to pick up some degree of rainfall later this week and next week, but the western portion of the Southern Plains and Southwest U.S. will likely continue to miss out on precipitation, warranting close attention.

Washington: US Department of Agriculture has issued the following news release:

Corn farmers who “split-apply” nitrogen now have another option for insurance coverage. The USDA’s Risk Management Agency (RMA) today announced the details of its Post Application Coverage Endorsement (PACE) in certain states for non-irrigated corn, providing coverage for producers who use this practice that saves producers money and is considered better for natural resources.

PACE provides payments for the projected yield lost when producers are unable to apply the post nitrogen application during the V3-V10 corn growth stages due to field conditions created by weather. PACE is offered in select counties in 11 states, including Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. It is available as supplemental coverage for Yield Protection (YP), Revenue Protection (RP), and Revenue Protection with Harvest Price Exclusion (RP-HPE) policies. The first sales closing date to purchase insurance is March 15, 2022.

To “split-apply” nitrogen, growers make multiple fertilizer applications during the growing season rather than providing all the crop’s nitrogen requirements with a single treatment before or during planting. This practice can lead to lower input costs and helps prevent runoff and leaching of nutrients into waterways and groundwater.

This new crop insurance option builds upon RMA’s efforts to encourage use of conservation practices, including cover crops. For example, RMA recently provided $59.5 million in premium support for producers who planted cover crops on 12.2 million acres through the new  Pandemic Cover Crop Program . Additionally, RMA recently updated policy to allow producers with crop insurance to  hay, graze or chop cover crops  at any time and still receive 100% of the prevented planting payment. This policy change supports use of cover crops, which can help producers build resilience to drought.