Global Ag News for Feb 28.22

TODAY – EXPORT INSPECTIONS

Wheat prices overnight are up 45 1/2 in SRW, up 41 1/4 in HRW, up 31 1/4 in HRS; Corn is up 24; Soybeans up 37 1/2; Soymeal up $0.41; Soyoil up 2.80.

Markets finished last week with wheat prices up 100 1/2 in SRW, up 92 1/4 in HRW, up 30 1/4 in HRS; Corn is up 26 1/2; Soybeans up 18; Soymeal up $0.11; Soyoil up 4.12. For the month to date wheat prices are up 139 in SRW, up 148 in HRW, up 88 3/4 in HRS; Corn is up 55 1/4; Soybeans up 126 3/4; Soymeal up $29.80; Soyoil up 6.92.

Year-To-Date nearby futures are up 17% in SRW, up 18% in HRW, up 0% in HRS; Corn is up 16%; Soybeans up 23%; Soymeal up 11%; Soyoil up 27%.

Chinese Ag futures (MAY 22) Soybeans down 205 yuan; Soymeal down 147; Soyoil down 218; Palm oil down 304; Corn up 3 — Malaysian palm oil prices overnight were up 333 ringgit (+5.58%) at 6299.

There were no changes in registrations. Registration total: 1,857 SRW Wheat contracts; 0 Oats; 17 Corn; 68 Soybeans; 137 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of February 25 were: SRW Wheat down 9,668 contracts, HRW Wheat down 2,235, Corn down 57,102, Soybeans down 19,706, Soymeal down 11,701, Soyoil down 17,712.

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

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

The player sheet for Feb. 25 had funds: net sellers of 25,000 contracts of  SRW wheat, sellers of 45,000 corn, sellers of 30,000 soybeans, sellers of 8,000 soymeal, and  sellers of 10,000 soyoil.

TENDERS

• SOYBEAN SALES: The U.S. Department of Agriculture confirmed private sales of 285,000 tonnes of U.S. soybeans to unknown destinations, including 159,000 tonnes of old-crop and 126,000 tonnes of new-crop supplies, as well as sales of an additional 334,000 tonnes of U.S. new-crop soybeans to China.
• CORN TENDER PASSED: Taiwan’s MFIG purchasing group rejected all offers and made no purchase in an international tender for up to 65,000 tonnes of animal feed corn which closed on Friday

PENDING TENDERS

• BARLEY-SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued international tenders to purchase up to 60,000 tonnes of barley and 60,000 tonnes of soymeal
• 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 BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley
• WHEAT TENDER: Turkey’s state grain board TMO issued an international tender to purchase about 435,000 tonnes of milling wheat
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins

China lifted restrictions on Russian wheat weeks before eruption of conflict: Report – Asian News International

Just before the unprecedented rise in tensions between Russia and Ukraine, China signed a deal with Russia lifting import restrictions on Wheat and Barley, media reports said.

The lifting of restrictions, part of a broader group of new deals between Russia and China, was signed between Russian President Vladimir Putin and his Chinese counterpart Xi Jinping during Putin’s visit to China at the opening ceremony of the Winter Olympics in Beijing earlier this month, reported Fox Business.

The details of the deal emerged when the Chinese General Administration of Customs issued a notice on February 23 announcing the lifting of restrictions.

“You don’t go and give a lifeline to Russia in the middle of a period when they are invading another country,” Australian Prime Minister Scott Morrison was quoted as saying on Friday. “That is simply unacceptable,” he further said.

Russia is the largest exporter of wheat in the world, and previously faced restrictions on exports to China over plant disease concerns, the report said. Adding further that, China’s move would hurt other major exporters of wheat to China, including Australia, European Union (EU), Canada. (ANI)

Putin on Thursday announced that special military operations are being launched “to protect” the people in the Donbas region of Ukraine. He also warned other countries that any attempt to interfere with the Russian action would lead to “consequences”.

Argentina Crops Can Get $1.8b More on Russia-Ukraine War: Report

Rising prices because of the conflict will bolster the value of Argentina’s exports in the current 2021-22 season to an estimated $41.6b from $39.8b last week, according to a joint report by the Buenos Aires Grain Exchange and farm institute INAI.

• Imports of fuel and other agricultural inputs like fertilizers will be costlier, limiting the positive impact on Argentina’s trade balance
• The report notes downside risks to profiting off the price rally from a drought that may further lower expectations for Argentina’s crop production and a new policy of export quotas for corn and wheat
• 95% of wheat and 60% of corn for the 2021-22 season are already registered for export, making those volumes immune to new price movements
• Higher prices may spur Argentina farmers to expand planting next season
• In a middle-ground scenario, where the war drags out and Ukraine crop production halts, 2022-23 Argentina planting would change in the following way vs. current estimates:
  • +1% wheat, +4% corn, -1% soy, +18% sunflowers
  • NOTE: Ukraine’s sunflower oil exports account for half of all global supplies

Argentina soy harvest in central zone could be lowest in 14 years -exchange

Argentina’s 2021/22 soybean harvest in the country’s important core farming region is set to fall to its lowest level in 14 years, the Rosario grains exchange said in a report on Friday, a reflection of how drought is hitting grains in the country.

Argentina is the world’s leading exporter of soybean oil and meal, the no. 2 exporter of corn and an important wheat grower.

However, the country has been hit by drought in different farming regions since December, forcing the Rosario exchange to cut sharply its estimate for nationwide soy production to 40.5 million tonnes, from an initial 45 million tonnes.

The exchange said that in the important core farming zone the harvest of the oilseed would be 12.4 million tonnes, due to the impact of the dry weather, which it said was the lowest in the last 14 years.

In that core region where 4.45 million hectares were planted with soy, the exchange said that there are 2 million hectares in regular condition and 670,000 in a bad condition, of which 185,000 are already considered lost.

“That amounts to around 30% of expected production lost,” it said, citing its cut to 12.4 tonnes for the soy harvest forecast from the 17.7 million tonnes it estimated in October.

The Rosario exchange said that while moderate to heavy rains are expected in the core belt over between Saturday and Monday, with over half of plants in fair-poor condition “it is very likely that negative adjustments will continue”.

The exchange previously also sharply adjusted its forecast for corn production due to lack of rain, to 48 million tonnes from its initial 56 million tonne forecast.

The exchange said that a higher than usual number of farmers are harvesting corn crops early in Argentina’s key agricultural zone and “yields obtained up to now are not at all promising.”

Brazil 2022 Soy Exports Expected to Reach 80.5m Tons: Safras

Estimate is 7% lower than the 86.1m tons seen in 2021 and lower than 85.5m tons expected in January, consulting firm Safras & Mercado says in an emailed report.

• Soy imports seen at 1m tons; 16% increase y/y
• Soy demand seen at 131.6m tons; 3% drop y/y

Malaysia’s Feb. 1-28 Palm Oil Exports 1,210,993 Tons: AmSpec

Shipments rose 9.6% from 1,105,407 tons exported during Jan. 1-31, according to AmSpec Agri on Monday.

Traders Balk at Russian Wheat as Largest Buyer Chases Supply

• Traders say they may struggle to make offers in Egypt tender
• Cost to supply wheat from other countries is also increasing

Russia’s invasion of Ukraine is roiling global agricultural markets, with some traders warning they’re unlikely to offer wheat from the vital Black Sea region at a closely watched Egyptian buying tender on Monday, while others won’t participate at all.

Egypt is one of several countries in the Middle East and North Africa that rely on massive wheat imports to feed their citizens, and Black Sea nations — particularly Russia and Ukraine — are key suppliers. Egypt canceled a previous tender on Thursday after only receiving one offer of French wheat and has now scheduled a new one.

While ports in Ukraine are closed, some Russian exporters are fulfilling existing contracts and ships are departing, said one person familiar with the matter. Still, at least one shipping company had vessels loaded with grain that were unable to depart a Russian port as of Friday evening, another person said.

Read the latest on the Russian invasion of Ukraine here

And new deals are not being made. Traders say they are staying away from Russian grain, while exporters can’t agree to contracts at the moment because they don’t know if they will be able to fulfill them as the situation evolves, people familiar with the matter said.

Olam Expects Supply Disruptions in Agrifood Trade to Ease in 2H

Supply disruptions to the world’s biggest food staples will start to subside in the second half of 2022, according to Olam International Group CEO Sunny Verghese.

• Major drivers include bad weather, Covid-related restrictions on labor and logistics, as well as higher fertilizer prices, Verghese said in a briefing in Singapore on Monday
• Brazilian soybean production was hurt by an “aggressive La Nina” and there could be further downward revisions for the crop. “La Nina is not done yet, and the crop is not made yet,” he said
• There has been massive port congestion which has driven up food costs as well as inflation
• Fertilizer prices continue to surge as they’re linked to crude oil, and because of disruptions related to the Russia-Ukraine crisis; a large part of potash comes from Belarus, as well as Ukraine and Russia
• Production of palm oil, the world’s most-consumed edible oil, has been hurt by lack of labor in Malaysia, though output will likely be restored in July-Sept; backwardation in palm oil is “extraordinary,” reflecting short-term tightness
• Inflation will take a while longer to subside as all these factors ease over time

SOYBEAN/CEPEA: Prices surpass BRL 200/bag in BR; premium and international values rise too

Amid high demand for soybean, the competition between Brazilian and international agents has been fierce. This scenario added to expectations for a crop failure in South America boosted export premiums and domestic prices to nominal records. This week, the ESALQ/BM&FBovespa Index Paranaguá has surpassed BRL 200.00/60-kilo bag for the first time ever.

Domestic valuations are also linked to price rises abroad. At CME Group (Chicago), future contracts surpassed USD 17.00/bushel, influenced by expectations for higher demand for the product from the United States.

Besides, quotations have also been influenced by the war between Russia and Ukraine, which hampers exports from the Black Sea region. Russia is the number two major oil-exporting country in the world, which has pushed up oil prices in the USA, resulting in valuations of future contracts for soy oil – this scenario tends to encourage the mix of biodiesel to diesel oil, and soy oil is the major raw material used in the production of biodiesel.

Export premiums for soybean in Brazil have increased too, returning to record levels. This scenario resulted in higher FOB prices and, consequently, high export parity. For shipment in April/22, parity is calculated at BRL 204.74/bag; for May/22, at BRL 206.33/bag; for June/22, at BRL 206.91/bag; for July/22, at BRL 208.84/bag; and for August/22, at BRL 211.81/bag – this calculation was based on the future dollar traded at B3 on Thursday (24).

Thus, in the Brazilian spot market, the ESALQ/BM&FBovespa Index Paranaguá rose by 3.2% between Feb. 17 – 24, to BRL 201.35 (USD 39.35) per 60-kilo bag on Thursday (24), the highest nominal level in the series of Cepea, which began in March 2006. On Thursday, the average price for soybean at the port of Rio Grande (RS) closed at BRL 206.84/bag, and at the port of Santos (SP), at BRL 201.64/bag, both records.

The CEPEA/ESALQ Index Paraná for soybean increased by 2.9%, to BRL 197.50 (USD 38.60)/60-kilo bag on Feb. 24, a nominal record in the series of Cepea, which began in July/97. On the average of the regions surveyed by Cepea, prices rose by 2.8% in the over-the-counter market (paid to farmers) and by 2.7% in the wholesale market (deals between processors). These valuations reduced the interest of farmers in closing contracts for large volumes, largely mainly for the 2022/23 crop.

CROPS – Price rises have been constrained by the recent rainfall in Rio Grande do Sul and in Argentina, which raised expectations for higher production in part of the area sown later.

On the other hand, in southern, northern and northeastern Brazil, temperatures have been high and the weather is dry, favoring the progress of the harvesting. According to data from Conab, 33% of the national soybean crop had been harvested by Feb. 19, more than the 15.5% from the same period last year.

In Paraná, Deral/Seab has revised down production estimates for the state’s 2021/22 soybean crop, to 11.635 million tons, against 12.829 million tons in January and 41% down from that in the season before. Losses reflect the severe drought during beans development.

CORN/CEPEA: Corn price nears USD 7.00/bushel in the USA, but remains stable in BR

The war between Russia and Ukraine has boosted grains prices in the international market, since the conflict has raised concerns about the world supply of both corn and wheat. At CME Group (Chicago), the first contract of corn hit USD 6.95/bushel on Thursday (24), the highest level since July 2, 2021.

Tensions in Eastern Europe hamper exports from the Black Sea region. On a report released in early February, the USDA estimated corn exports from Ukraine in the 2021/22 season at 33.5 million tons, and from Russia, at 4.5 million tons, which, altogether, account for 20% of the world exports and 3% of world consumption. However, these estimates are expected to be revised by the USDA.

Wheat, which substitutes corn in feed, has also been valued by the current international scenario, helping to push up corn prices. Besides, oil valuations have influenced price rises for corn too, since it raises the competitiveness of corn ethanol, majorly in the USA.

BRAZIL – Despite international valuations, corn prices have been practically stable in Brazil this week. Purchasers stayed away from the market, and sellers were focused on crops – either on the harvest of the summer crop or on sowing the second crop.

For the coming weeks, agents believe there will be lower availability of trucks for transport, since soybean exports have been a priority, which is expected to keep domestic liquidity low.

Between February 17 – 24, the ESALQ/BM&FBovespa Index (Campinas, SP) rose by a slight 0.4%, to BRL 96.89 (USD 18.93) per 60-kilo bag on Thursday, 24. However, on the average of the regions surveyed by Cepea, the prices paid to corn farmers (over-the-counter market) decreased by 1%; in the wholesale market (deals between processors), values dropped by 0.1%.

PORTS – The conflicts in Eastern Europe may increase the demand for the Brazilian corn, and farmers may take advantage of the current valuations to sell the second crop and offset lower demand from Ukraine and Russia. However, so far, demand has been weak, but prices have already increased in the spot market. At the port of Paranaguá (PR), the average price for corn rose by 4.2% in the last seven days, to BRL 92.37/bag.

As for sales of the second crop, this month, the average price at ports is currently at BRL 83.24/bag for shipment in July/22, lower than the July/22 Future traded at B3 (São Paulo Stock Exchange), which closed at BRL 90.60/bag on Thursday (24).

CROPS – The harvesting of the first crop of corn and sowing of the second crop advanced in Brazil in the last days. In Paraná, 38% of crops had been harvested by Feb. 21, according to estimates from Seab/Deral. In São Paulo, 14% of crops have been harvested, according to data from Conab released on Feb. 19.

In Rio Grande do Sul, 57% of crops have been harvested, according to data from Emater released on Feb. 24. A higher number of farmers reported losses as the harvesting advanced in the last days – over 70% in Passo Fundo and 80% in Tupanciretã.

As for the second crop, by Feb. 18, 68.4% of crops had been sown in Mato Grosso, according to Imea. In Paraná, 36% of the second crop has been sown. In Mato Grosso do Sul, 22.9% of crops had been sown by Feb. 18, according to Famasul.

India to Ship Record Wheat as Ukraine Crisis Upends Trade Flows

India is set to benefit from the shifts in global wheat trade as Russia’s invasion of Ukraine leaves a vital source of supply hanging in balance.

The uncertainty caused by the war means that importing nations will be looking to buy wheat from elsewhere. India’s exports could exceed a record 7 million tons in 2021-22 if the conflict drags on, according to Vijay Iyengar, chairman and managing director of Singapore-based Agrocorp International Pte.

“Everyone in the market is working to find out how much would be the incremental demand for Indian wheat,” said Iyengar, whose company trades about 12 million tons of grains annually. He expects the demand to come mainly from Asian countries.

Asia markets are well supplied for the April-May period but from July and August onward, the coverage is very low, Iyengar said.

Indonesia, one of the biggest buyers of Ukraine wheat, is starting to seek alternatives and eying supplies from Argentina, Brazil, India and other European countries, according to an industry group official.

Strategie Grains expects initial one-month halt to Ukraine oilseed supply

Russia’s attack on Ukraine is expected to halt the processing and export of Ukrainian oilseed crops for at least one month, curbing flows of sunflower seed to the European Union, consultancy Strategie Grains said.

Russia’s military intervention in Ukraine has rattled agricultural markets, with both countries being major exporters of cereals and oilseeds, leaving importers searching for alternative sources. (Full Story) (Full Story)

“For now, we have considered in our (supply and demand) balances a halt of one month to Ukrainian crushing and to exports from Ukraine, be they oil, seed or meal exports,” Strategie Grains said in a monthly European oilseed report.

The firm had trimmed its forecast for 2021/22 EU sunflower seed imports partly to factor in disruption to supplies from Ukraine, it said.

Ukraine is a major supplier of oilseed products to the EU, notably rapeseed and sunflower oil.

In its report released to clients on Friday, Strategie Grains said it had not yet assumed any curb on oilseed supplies from Russia while it waited to assess the Western sanctions against Moscow. (Full Story)

A prolonged conflict in Ukraine could have a sharper impact on oilseed markets and hamper a rebalancing of world supply and demand after tensions in the past year, Strategie Grains said.

For EU production, the consultancy kept its forecast of this year’s rapeseed crop unchanged at 18.2 million tonnes, up 7.4% on last year.

 China to Start Pork Purchases for State Reserves ‘Immediately’

China will start purchasing pork for state reserves “immediately” after prices fell in the week of Feb. 21-25, the economic planning agency NDRC says in a statement.

NDRC will increase pork purchases as needed to ensure the hog market is operating stably.

China’s agriculture ministry says to facilitate commercialization of GM soybeans, corn

China’s agriculture ministry said on Monday that it will facilitate the commercialization of genetically modified soybeans, corn and cotton crops.

China will improve management of GM varieties of the crops, the Ministry of Agriculture and Rural Affairs said in its 2022 work plan of regulation on GM crops.

Nitrogen Demand Growing in 2022, Yet Price Hike to Test Farmers

Global demand may rise 5% for ammonia and 2% for urea in 2022 as plant outages end and the industry restocks. High crop prices will incentivize consumption, but supply availability may be hindered by elevated natural gas prices. 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 2023. The new supply could lower India’s annual urea imports by 6 million tons

Brazil Fertilizer Prices Disrupted as Russia Tensions Escalate

Fertilizer prices in the Brazilian market were thrown into uncertainty by Russia’s invasion of Ukraine and may remain unstable into early March. Prices increased early in the week ended Feb. 25, with potash up $10 a metric ton and phosphates up $30 a ton. Urea also rose, reflecting the impact of elevated natural gas costs in Europe. Further increases are likely after Mosaic and Yara suspended price lists, ensuring adjustments. Market participants are cautious about new negotiations, concerned that further trade restrictions may be imposed. Brazil depends on Russia for nitrogen, phosphates and potash supplies. In 2021, Russia accounted for 28.2% of potash, 30.6% of high concentrated phosphates and 17.7% of urea imports. Any economic sanctions on Russia will affect fertilizer pricing and availability.

U.S. Cattle on Feed Rose to 12.2M Head on Feb. 1