Global Ag News for Mar 13.24

TOP HEADLINES

Uruguay Prepares for Bumper Soy Crop After Brutal Drought Year

• Farm company ADP exects its soy output to double in 2024
• Consulting firm Exante sees soy crop close to 3.5 million tons

Uruguay is preparing for one of its best soy harvests in years after rains helped farmers recover from a devastating drought the previous season, according to one of the country’s biggest agribusiness companies.

“It’s shaping up to be very good year,” said Marcos Guigou, executive director and founder of Agronegocios del Plata, in an interview. “I don’t think it’s going to be a record, but it will be up there in the ranking.”

ADP, as the company is known, expects its soy production will double from last year to about 78,000 metric tons thanks to yields of around three tons per hectare, Guigou added.

Soy is one of Uruguay’s top exports with shipments topping $1 billion in a year of high prices and a good harvest. Montevideo-based consulting company Exante forecasts a harvest of almost 3.5 million metric tons this year. That would represent a more than fourfold increase from 2023 when one of the worst droughts in generations scorched fields and triggered a drinking water crisis in the capital.

Uruguay’s farmers are in desperate need of a bumper crop because benchmark soy prices have tumbled about 22% from their 52-week high. Exante said in a recent report that the almost 40% increase in bank borrowings by soy farmers in 2023 was accompanied by a jump in late payments.

Crop insurance and income from winter crops like wheat, barley and canola helped prevent farm failures after the drought, Guigou said.

ADP is tapping tax breaks to deploy irrigation systems on some of the 26,000 hectares (64,250 acres) it rents to mitigate drought risks and to help lock in long-term leases with land owners, he said.

“We’ll have 1,000 hectares irrigated next year. In five years between 10% and 20%” of our land will be irrigated, Guigou said.

 

FUTURES & WEATHER

Wheat prices overnight are up 3 1/4 in SRW, down 1/2 in HRW, up 1 in HRS; Corn is up 1; Soybeans down 8 1/4; Soymeal down $4.30; Soyoil up 0.23.

For the week so far wheat prices are up 13 in SRW, up 8 in HRW, up 10 1/4 in HRS; Corn is up 3; Soybeans up 3 3/4; Soymeal down $6.50; Soyoil up 1.88.

For the month to date wheat prices are down 25 1/2 in SRW, up 9 1/2 in HRW, up 14 in HRS; Corn is up 13 1/4; Soybeans up 47; Soymeal up $5.70; Soyoil up 2.84.

Year-To-Date nearby futures are down 14.7% in SRW, down 2.9% in HRW, down 5.1% in HRS; Corn is down 9.0%; Soybeans down 8.6%; Soymeal down 13.5%; Soyoil down 1.3%.

Chinese Ag futures (MAY 24) Soybeans up 32 yuan; Soymeal down 2; Soyoil up 14; Palm oil up 34; Corn down 4 — Malaysian Palm is up 67. Malaysian palm oil prices overnight were up 67 ringgit (+1.62%) at 4196.

There were changes in registrations (-6 SRW Wheat, -22 Soybeans, 44 Soymeal). Registration total: 451 SRW Wheat contracts; 0 Oats; 61 Corn; 642 Soybeans; 711 Soyoil; 144 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of March 12 were: SRW Wheat up 666 contracts, HRW Wheat down 2,379, Corn up 2,498, Soybeans up 6,417, Soymeal down 5,296, Soyoil up 3,082.

Brazil: Scattered showers will be limited to central and especially northern Brazil this week, unfavorable for safrinha corn as it will be drier across the south. A front moving north out of Argentina this weekend or early next week will bring in more widespread and beneficial showers, however.

Argentina: A front is stuck in the middle of the country and will produce scattered showers throughout the week, favorable for filling corn and soybeans. The front will move into northern areas this weekend where it will probably remain active into next week. Some areas will get too much rain and others not enough, but overall is widespread enough to be beneficial for both corn and soybeans.

Europe: A large low-pressure system continues to move through southeastern Europe with scattered showers through Wednesday. Other systems will scrape through northern areas later this week and weekend. Good rain has fallen across the south recently, favoring early-developing winter wheat. This week’s rain should help other areas as well, though France remains too wet and could use some drier conditions, but that is not on the table right now. Temperatures continue to be mild to warm and wheat should continue to develop early.

Black Sea: Sub-freezing temperatures moved into the region over the weekend, but wheat is not developed enough to have been damaged by the frost. A system will move through the region with isolated to scattered showers over the next couple of days. Though it is not all that widespread, soil moisture in the region is favorable. Temperatures will be rising later this week and most of the crop is in favorable condition.

Australia: Agricultural areas in Australia were dry over the weekend. Southeastern areas should see some showers later this week, but will be light and not very helpful for building soil moisture as cotton and sorghum continue to mature and producers get started with harvest. Soil moisture continues to be low ahead of the winter wheat and canola planting period, which starts in mid-April. The demise of El Nino and eventual turn to La Nina should favor the winter crops later this year, however.

Northern Plains: Above-normal temperatures will be in place this week, melting what remains of last week’s snow. A system will scrape southern areas of the region Wednesday and Thursday. A clipper system will move through on Friday and Saturday with more showers and a quick burst of cold air. The cold may not stick around for very long, but additional clipper systems moving through next week should reinforce that cold air going through next week.

Central/Southern Plains: Above-normal temperatures continue in the region for the next couple of days. A stronger storm system is forecast to move into the region on Wednesday with scattered showers through at least Friday, but an upper-level low-pressure center could keeps showers in the region through the weekend. A cold front will slide through the region over the weekend and bring a burst of colder air through. It won’t last long, but another clipper should move through later next week with another burst of cold air and potential showers.

Midwest: A weak front will go through on Tuesday with potential showers and thunderstorms, but will be limited. A bigger system will affect the region on Wednesday and Thursday and be followed by a clipper this weekend with more showers and a burst of colder air. The cold may not last all that long, but another clipper moving through later next week should bring more showers and another burst of cold air.

Delta: A system will move through later this week with scattered showers and thunderstorms. A stronger cold front will move through this weekend with more showers and a drop in temperatures. Soil moisture continues to be in good shape prior to spring planting. Soil temperatures are supportive of planting, but a colder temperatures moving in behind a strong cold front this weekend and another later next week should limit early activity.

The player sheet for 3/12 had funds: buyers of 500 corn, sellers of 6,500 soybeans, buyers of 1,000 soymeal, and buyers of 4,000 soyoil.

TENDERS

• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 114,305 metric tons of food-quality wheat from the U.S., Canada and Australia in a regular tender that will close on Thursday.
• BARLEY PURCHASE: Jordan’s state grain buyer purchased about 60,000 metric tons of animal feed barley in an international tender.
• NO MAJOR PURCHASES IN CROP TENDER: Iranian state-owned animal feed importer SLAL is believed to have made no major purchases in tenders which closed on March 6 for 180,000 metric tons of animal feed corn, 120,000 tons of feed barley and 120,000 tons of soymeal.

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
• FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries said it would seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by June 30 and arrive in Japan by Aug. 29, via a simultaneous buy and sell auction that will be held on March 13.
• WHEAT TENDER: The Taiwan Flour Millers’ Association issued an international tender to purchase an estimated 56,400 metric tons of grade 1 milling wheat to be sourced from the United States.

 

TODAY 

 

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending March 8 are based on seven analyst estimates compiled by Bloomberg.

• Production seen slightly higher than last week at 1.058m b/d
• Stockpile avg est. 26.316m bbl vs 26.051m a week ago
• Would be the highest since March of last year

Brazil 2023-24 Soybean Crop Seen at 146.9M Tons: Conab

Output est. cut from 149.4m tons, Brazil’s national supply co. says in its monthly report.

• Analysts in a Bloomberg survey were expecting 148.3m tons
• Yield seen lower at 3,251 kg/ha vs 3,314 kg/ha last month
• Area planted raised to 45.178m ha vs 45.089m ha last month
• Corn production est. cut to 112.8m tons vs 113.7m tons

Brazil Soy Exports Seen Reaching 13.71 Million Tns In March Versus 12.81 Million Tns Forecast In Previous Week – Anec

• BRAZIL SOY EXPORTS SEEN REACHING 13.71 MILLION TNS IN MARCH VERSUS 12.81 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.21 MILLION TNS IN MARCH VERSUS 2.11 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL CORN EXPORTS SEEN REACHING 146,571 TNS IN MARCH VERSUS UP TO 146,783 TNS FORECAST IN PREVIOUS WEEK – ANEC
• BRAZIL WHEAT EXPORTS SEEN REACHING 694,869 TNS IN MARCH VERSUS 613,973 TNS FORECAST IN PREVIOUS WEEK – ANEC

Brazil farmers hoard soy as low price constrains deals – Datagro

Brazilian soybean farmers are hesitantly selling their new crop as depressed domestic prices dent plans to cash in on their produce, a survey carried out by agribusiness consultancy Datagro found on Tuesday.

Datagro is the second firm this week to say Brazilian soy farmers are reluctant to trade in their beans this season, citing unattractive prices for the country’s best-selling agricultural commodity.

By March 1, sales of Brazil’s 2023/24 soybean harvest reached 33.2% of expected production, below the 33.8% observed in the same period last year and way lower than the 62.6% record for the 2020/21 harvest.

Brazil, which exports most of its soybean output, competes with the U.S. and Argentina in global markets. Most of Brazil’s soy goes to China.  The average of soy sales for the last five years, at this time in the season, is 48.5% of the expected crop, Datagro said.

The monthly increase by March 1 was just 2.2 percentage points, lower than the 2.6 percentage points recorded in the previous monthly survey and far from the 7.2 percentage point advance for the same period in 2023.

Flavio França Junior, a Datagro analyst, said that the below-normal increase in the pace of sales “is a direct reflection of the new generalized drop in prices in February.”

He added that factoring in the strong decline in January soy sales, Brazilian farmers have sold close to 20% less of this season’s soy crop so far.

Although growers may have a greater need to sell crops in March to meet financial commitments, persistently low prices means deals will be limited in Brazil, Datagro said. Considering the current production estimate at 147.31 million metric tons, Brazilian producers have negotiated 48.90 million tons of their soybeans so far, Datagro added. For the same reasons, sale of the country’s 2024/25 soy harvest, which farmers will only plant in September, have also progressed little, according to Datagro.

India Feb. Vegetable Oil Imports Fall to 974,852 Tons: SEA

India’s vegetable oil imports fell to 974,852 tons in February from 1.2m tons in January, according to the Solvent Extractors’ Association of India.

• Palm oil imports fell to 497,824 tons from 782,983 tons in January
• Soybean oil imports fell to 172,936 tons from 188,859 tons in January
• Sunflower oil imports rose to 297,092 tons from 220,079 tons in January

Ukraine 2024 Grain, Oilseed Harvest to Fall, Trade Group Says

Ukraine’s 2024 grain and oilseed harvest is estimated to fall to 76.1 million tons, 8% below last year, according to an emailed report from the Ukrainian Grain Association.

• The forecast is based on a reduction in the area under cultivation, caused by “unfavorable global price conditions and relatively expensive export logistics,” UGA said.
• Total includes:
  • Estimated wheat harvest at 20m tons, down from 22m tons in 2023
  • Barley at 4.6m tons compared to 5.8 million tons in 2023
  • Corn at 26.3 million tons, more than 3 million tons below last year
  • Sunflower oil production may touch 13.6 million tons, almost flat y/y
• New 2024/2025 season exports may shrink to 43.7m tons, compared to the current season’s potential 53.1m tons.
  • This depends upon the continued safe operation of the Ukrainian Black Sea corridor and the Danube route
• The Agriculture Ministry says 12 regions have already started sowing, with a planted area of 68K hectares

Argentina’s Caputo Mulls Bringing Back Soy Dollar: LPO

Argentina Economy Minister Luis Caputo is studying a measure to improve the FX rate for exporters similar to the so-called “soy dollar,” La Politica Online reported citing people familiar with the matter.

• Caputo has discussed the measure with Milei as a means to avert a new devaluation: LPO
• Caputo-Milei meeting on the topic comes after central bank chief Santiago Bausili discussed the topic with exporters

CHINA SOYBEAN DEMAND OUTLOOKS REMAIN UNCLEAR, ALTHOUGH MARCH IMPORTS TO INCREASE. – LSEG Commodities Research & Forecast

After sluggish imports in the first two months of 2024 amid the Chinese New Year, China soybean imports are projected to rebound in March thanks to the increased U.S. soybean arrivals and unprecedented Brazil soybean exports.

Over the past month, China soybean crushing margins have increased dramatically from the 10-year low level set in early February thanks to decreasing imported soybean prices and recent increases in domestic soybean oil prices. But domestic soybean meal and oil prices remain at the three-year low levels, indicating less feed and food demand for soybeans. Soybean import demand in the largest soybean consuming country unlikely exceeds last year’s high level.

On the other hand, the depletion of Brazil soybean stock slightly increased China’s demand for U.S. soybeans temporarily. But the harvest of new crop soybeans in Brazil starting from late January/early February has largely increased the competitions in the soybean export markets. Soybean export prices have slumped in the last couple of months amid massive supplies in South America and lack of strong demand. The trend may continue barring extreme weather and resulting area and production losses in the U.S. this spring.

Argentina downpour drenches crop fields, flash floods in Buenos Aires

Intense rains in Argentina are beginning to leave the soil too wet in key agricultural areas, which could also make it harder to harvest the 2023/24 soybean crop, a climate specialist said on Tuesday, though the conditions could be good for the 2024/25 wheat crop.

The heavy rains also caused flooding in parts of the city of Buenos Aires, with residents wading through up to waist-high waters and storms bringing “a lightning strike every second,” meteorologists said.

In the past 24 hours, Argentina’s main agricultural regions have seen between 15 mm and 75 mm of rain, according to the national meteorological service, which predicts more over the next few days.

Growers in the Buenos Aires, Santa Fe and Entre Rios provinces have seen between 140 mm and 150 mm of rains so far this month, which is above average, meteorologist German Heinzenknecht said in an interview, adding the areas are likely to see similar amounts in the rest of March.

“We’re going to potentially close out March with excessive wetness in a large part of the core agricultural area,” said Heinzenknecht, a meteorologist at the Applied Climatology Consulting Firm (CCA).

“The harvest in some sectors might not be so easy due to this issue,” he added.

In coming weeks, as the Southern Hemisphere summer turns to autumn, farmers will begin to harvest soybeans, which are largely turned into oil and flour. Argentina is a top global supplier of both.

With high soil humidity and combines unable to trudge through the mud, soy plants could lose beans from pods that open, or beans could begin to sprout or fungi could begin to grow.

“The important thing now is for the rains to not keep going in April,” Heinzenknecht said, adding less precipitation is forecast for the month.

However, Agriculture Secretary Fernando Vilella told reporters at the U.S. Chamber of Commerce in Argentina that the recent rains for now continue to favor soybean growth.

“It is raining and this is good to ensure the soybeans’ final productivity,” Vilella said.

The Rosario grains exchange estimates the 2023/24 soybean harvest at 49.5 million metric tons.

The Ethanol Industry Thrives in the current Bearish Corn Market – LSEG Commodities Research & Forecast

2023/24  U.S. CORN CONSUMPTION FOR ETHANOL: 5,464.4 MILLION BUSHELS, UNCHANGED FROM LAST  UPDATE

While the lackluster global demand for U.S. corn has fueled a bearish market, the ethanol industry has been consuming corn at record-high levels. The accumulated corn consumption for ethanol in 2023/24 has reached a record high of 2,837 million bushels, surpassing the previous record of 2,818.8 million bushels in 2021/22. This figure represents a 5.9% increase above the long-term average, indicating robust demand for corn in ethanol production.

Ethanol margins continue to reach historic record highs, surpassing the margins from the previous year. As of March 12, ethanol margins soared to an average of $1.37 per gallon, particularly prominent in key production regions like the Corn Belt, marking an all-time high for this part of the season.

In February, corn consumption for ethanol production increased significantly to 434.5 thousand bushels, up from 398.6 thousand bushels in January and 410.9 thousand bushels in February 2023.

According to market indicators, LSEG Agriculture Research projects the U.S. corn consumption for ethanol in 2023/24 to be 5,464.4 million bushels, while the USDA’s March WASDE estimate is slightly lower at 5,375 million bushels. These revisions underscore the robust outlook for ethanol consumption, reaffirming the ethanol industry’s strong position and positive momentum in the market.

On the policy front, recent developments in the ethanol sector include the Biden administration reconsidering ethanol’s impact on greenhouse gas emissions and the expected approval of year-round sales of higher ethanol blends like E15 starting in 2025. The administration aims to balance environmental concerns with industry growth goals, with ongoing discussions focusing on sustainable practices and quantifying environmental impacts.

Brazil says China clears 38 more meat plants for export

The Brazilian government has said 38 additional meat plants have been cleared to sell products to China in what it hailed as an historic move as both countries celebrate 50 years of diplomatic relations, according to a statement on Tuesday.

China is the main destination for Brazilian exports of beef, pork and chicken, the Brazilian government noted.

The Asian country imported 2.2 million metric tons of meat valued at more than $8.2 billion from Brazil last year, the statement said.

ABPA, a lobby group representing pork and poultry processors including BRF BRFS3.SA and JBS JBSS3.SA, welcomed the decision, saying this is the first time in five years China cleared new Brazilian chicken plants.

“The outlook is good for Brazilian sales to the Asian country thanks to the new licenses, especially considering new business groups will have access to this important market for the first time,” ABPA’s markets director Luis Rua said in a statement.

The agriculture ministry said Brazil now has 144 meat plants authorized to export to China, including the 38 new permits announced on Tuesday.

Abrafrigo, a beef lobby, said more export authorizations will make Brazil more competitive against rival suppliers in the United States, for example.

“Additional export permits will no doubt increase exports to China,” said Abrafrigo president Paulo Mustefaga, citing supply issues in the U.S., which also sells large meat volumes to China but currently is dealing with low cattle inventories.

The 38 new licenses include eight export permits for chicken slaughterhouses, 24 for cattle slaughterhouses, one for a beef processing unit and five for chicken, pork and beef warehouses.

“It is a historic day in the Brazil-China trade relationship, a historic day for our agriculture,” Agriculture Minister Carlos Favaro was quoted as saying in the government’s statement.

 

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