Global Ag News for Mar 2.22

TODAY – EIA WEEKLY PETROLEUM STATUS REPORT

Wheat prices overnight are up 51 in SRW, up 44 1/4 in HRW, down 2 1/4 in HRS; Corn is down 10 1/2; Soybeans down 21 1/2; Soymeal down $0.54; Soyoil down 0.83.

For the week so far wheat prices are up 175 in SRW, up 156 1/4 in HRW, up 91 1/4 in HRS; Corn is up 58 1/4; Soybeans up 82 3/4; Soymeal up $0.62; Soyoil up 6.45. For the month to date wheat prices are up 101 in SRW, up 94 1/4 in HRW, up 57 1/2 in HRS; Corn is up 24 1/2; Soybeans up 31 3/4; Soymeal up $2.60; Soyoil up 2.86.

Year-To-Date nearby futures are up 37% in SRW, up 30% in HRW, up 12% in HRS; Corn is up 22%; Soybeans up 27%; Soymeal up 10%; Soyoil up 35%.

Chinese Ag futures (MAY 22) Soybeans up 132 yuan; Soymeal up 28; Soyoil up 382; Palm oil up 690; Corn up 22 — Malaysian palm oil prices overnight were down 102 ringgit (-1.51%) at 6660.

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 March 1 were: SRW Wheat up 5,582 contracts, HRW Wheat up 1,868, Corn up 29,412, Soybeans up 8,929, Soymeal up 1,260, Soyoil up 6,533.

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

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

The player sheet for 3/1 had funds: net buyers of 18,500 contracts of  SRW wheat, buyers of 25,000 corn, buyers of 20,000 soybeans, buyers of 3,500 soymeal, and  buyers of 12,000 soyoil.

TENDERS

• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 264,000 tonnes of soybeans to China for delivery during the 2022/23 marketing year that begins Sept. 1, 2022.
• WHEAT PURCHASE: Turkey’s state grain board TMO has started making provisional purchases of wheat in an international tender on Wednesday with about 75,000 tonnes initially bought
• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries bought 24,074 tonnes of food-quality wheat from the United States in regular tenders that closed on Wednesday
• FEED BARLEY TENDER PASSED: Jordan’s state grain buyer made no purchase in an international tender for 120,000 tonnes of animal feed barley that closed on Tuesday
• WHEAT TENDER: Tunisia’s state grains agency issued an international tender to purchase about 75,000 tonnes of durum wheat
• CORN TENDER: Taiwan’s MFIG purchasing group issued an international tender to buy about 65,000 tonnes of animal feed corn which can be sourced from the United States, Brazil, Argentina or South Africa
• CORN TENDER: The Korea Feed Association (KFA) has issued an international tender to purchase up to 204,000 tonnes of corn to be sourced from optional origins

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
• 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
• WHEAT TENDER: Algeria’s state grains agency OAIC issued an international tender to purchase a nominal 50,000 tonnes of durum wheat, which closes on March 2, with offers to remain valid until March 3.

U.S. Corn Used for Ethanol at 474M Bu in January

Argentina’s Soybean Output Seen Slipping to 41m tons: USDA

Argentina soybean production will slip to 41m tons in 2021-22, USDA’s Foreign Agricultural Service says in a report.

• Forecast is 4m tons below USDA’s official estimate
• Soybean exports are reduced to 3m tons, ~700.000 tons below the official estimate
• Crush is seen at 39.4m tons, same as USDA’s official estimate
• Contributing to tight supplies, a severe drought has reduced production in Paraguay, which will limit shipments from that country
• Argentina soybean imports will slide to 2.2m tons, less than half the prior year’s total

Paraguay Soy Exporters See Alternatives If Russian Market Closes

Paraguay’s soy industry can find willing buyers for its beans in Argentina and Brazil if sanctions disrupt exports to Russia, Hugo Pastore, executive director of grain and oilseed export chamber Capeco, said in a telephone interview.

• Paraguay will have very little soy to sell to Russia this year with production seen below 4 million metric tons
  • NOTE: Paraguay’s soy production averaged approx. 9.8 million tons a year between 2017 and 2021, according to data compiled by Capeco
  • NOTE: Russia purchased 13.4% of the 30.3 million tons of soy Paraguay exported during that five-year period, according to central bank data
• The first soy harvest yielded about 3 million tons, with the second soy crop suffering from hot, dry weather
• Farmers probably planted the second crop on less than 500,000 hectares
  • NOTE: Drought could push Paraguay’s 2022 soy production to its lowest level since 2009, when farmers harvested just 3.6 million tons, according to Capeco data

Black Sea Chaos Spurs Buyers to Book Australia Wheat Further Out

• CBH says buyers eyeing Australian supplies in third quarter
• Supply chain is ‘certainly trying its best to respond’: Tiller

With wheat flows from the Black Sea region snarled by Russia’s invasion of Ukraine, buyers are starting to consider forward contracts for Australian grains as far out as the third quarter, said top shipper CBH Group.

The war in Ukraine has left the world’s biggest importers scrambling for grain as shipments from the two countries grind to a virtual standstill. Russia and Ukraine normally account for more than 25% of global wheat exports, and there are increasing concerns that the fighting and chaos in the country will also reduce prospects for the harvests this summer.

As the market digests the upheaval, nascent demand for longer-dated contracts could become more pronounced, Ben Tiller, head of trading at CBH, told a conference Wednesday. “Buyers have initially, I think, thought there is some time yet before they need to make a decision for positions that may be right out to quarter three of 2022.” Tiller said. That sentiment has now shifted.

China Moves to Secure Commodities Rocked by Ukraine War

• Officials order agencies to ensure energy, commodity supplies
• State-owned buyers to scour markets for oil, gas, iron ore

China’s top government officials have issued orders to prioritize energy and commodities supply security, sparked by concerns over disruptions stemming from the Ukraine-Russia war.

Government agencies, including the country’s top economic planning body — the National Development & Reform Commission — have been ordered to push state-owned buyers to scour markets for materials including oil and gas, iron ore, barley and corn to fill any potential gaps brought on by the conflict, according to people familiar with the matter. The officials made no mention of prices, the people said, indicating the cost of imports isn’t a focus right now.

Ensuring supplies is of high priority for the country, with officials worried about the impact surging global costs of commodities will have on the Chinese economy, the people said, requesting anonymity because they’re unauthorized to speak to the media. Beijing is ramping up its emphasis on energy and food security after already feeling the squeeze from the pandemic, supply chain pressures and geopolitics such as the diplomatic spat with Australia. The officials did not provide specific guidance on how to ensure supplies, leaving it to the agencies to map out, the people said.

The NDRC didn’t reply to a fax seeking comment. Oil prices in London rose as much as 7.7% on Wednesday, while aluminum extended an advance to 1.3%. Corn futures in Chicago jumped 2.9% to the highest since 2012, and wheat surged 7.6%.

The surge in commodities prices due to the war is likely to complicate measures to sustain China’s growth. Officials are expected to unveil further steps to support the economy as the National People’s Congress begins this weekend, and the industry ministry has warned against indiscriminate production curbs that disrupt the supply of raw materials to the industrial sector.

China is heading into peak demand season for many commodities, and the risk of supply disruptions because of Russia’s invasion of Ukraine will exacerbate rising prices of everything from metals to fertilizers.

Malaysia Feb. 1-28 Palm Oil Exports to EU 354,742 Tons: SGS

Following is a table of Malaysia’s palm oil export figures, according to estimates by independent cargo surveyor SGS Malaysia Sdn.

• EU imported 354,742 tons; +36.5% m/m
• India imported 161,840 tons; -19.3% m/m
• China imported 98,100 tons; -18.8% m/m

CME Raises Crop Futures Margins Amid Price Surge

CME raises margins further on corn, soybeans, wheat and other crop futures, according to a notice on the exchange website.

• Margin hikes follow increases last week
• The rates will be effective after the close of business on March 02, 2022
• Wheat futures have jumped 22% since Feb. 18, corn 11%, soybeans 5.4%

EU Soft-Wheat Exports Fall 1.9% in Season Through Feb. 27

Soft-wheat shipments during the season that began July 1 reached 17.9m tons as of Feb. 27, versus 18.2m tons in a similar period a year earlier, the European Commission said Tuesday on its website.

• NOTE: Figures for the prior season include trade for the U.K. until Dec. 31, 2020, when the country departed the EU customs union
• Top soft-wheat destinations are Algeria (2.76m tons), China (1.7m tons) and Egypt (1.64m tons)
• EU barley exports at 5.2m tons, versus 5.3m tons a year earlier
• EU corn imports at 11m tons, steady versus a year earlier

EU 2021/22 soybean imports at 8.71 mln T by Feb. 27, rapeseed 3.23 mln T

European Union soybean imports in the 2021/22 season that started in July had reached 8.71 million tonnes by Feb. 27, data published by the European Commission on Tuesday showed.

The volume compared with 9.69 million tonnes by the same week in the previous 2020/21 season, the data showed.

EU rapeseed imports so far in 2021/22 had reached 3.23 million tonnes, compared with 4.45 million tonnes a year earlier.

Soymeal imports so far in 2021/22 were at 10.60 million tonnes against 11.62 million a year ago, while palm oil imports stood at 3.38 million tonnes versus 3.80 million.

Ethanol producers, 16 states challenge EPA U.S. vehicle rules

A group of 16 U.S. states, some corn and soybean growers associations, the American Fuel And Petrochemical Manufacturers and others are challenging the U.S. Environmental Protection Agency’s (EPA) tougher vehicle emission rules.

The corn growers, a Valero Energy VLO.N subsidiary and other ethanol producers said the new EPA rules revising emission requirements through 2026 “effectively mandate the production and sale of electric cars rather than cars powered by internal combustion engines.”

Texas Attorney General Ken Paxton filed a challenge joined by Ohio, Alabama, Arkansas, Alaska, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina and Utah. The state of Arizona filed a separate legal challenge.

An EPA spokeswoman said the agency is reviewing the petitions and declined further comment.

The new rules, which take effect in the 2023 model year and require a 28.3% reduction in vehicle emissions through 2026, reverse former President Donald Trump’s rollback of car pollution cuts and aim to speed a U.S. shift to more electric vehicles. (Full Story)

U.S. President Joe Biden wants 50% of all new vehicles sold in 2030 to be EV or plug-in hybrid models but has not endorsed California’s plan to phase out new gas-powered light-duty vehicles by 2035.

The state soybean groups and another Valero subsidiary said the final rule exceeds “EPA’s authority by favoring one technology, electric vehicles, over others, including” ethanol produced by the farmers.

The EPA failed to “adequately considering the vast greenhouse gas reduction benefits provided by renewable fuels,” they added.

The Competitive Enterprise Institute and Domestic Energy Producers Alliance also filed a separate challenge saying the rule seeks “to establish stringent fleet-wide automobile emission standards with credit trading and enhanced credits for electric vehicles, but the agency lacks the legal authority to issue such a rule.”

The suits were made public a day after conservative U.S. Supreme Court justices on Monday appeared skeptical of the EPA’s authority to issue sweeping regulations to reduce carbon emissions from power plants in a case that could undermine Biden’s plans to tackle climate change.

Soaring Fertilizer Prices Are About to Increase the Cost of Food

Ben Riensche, who farms 16,000 acres in Iowa, would be ecstatic to get $80 per acre selling his corn. But it’ll cost him $240 an acre to feed the plants with nitrogen, triple what he’s used to paying. And that’s not counting what he’ll spend on two other important fertilizers, phosphate and potash, which he says have each doubled in price since he purchased supplies for his 2021 crops.

Pandemic-induced supply bottlenecks and the rising cost of natural gas, a key production input, are among the factors sending fertilizer prices soaring. Add disruptions stemming from Russia’s invasion of Ukraine, and consumers will be paying more for almost every plate of food. “You think they squawk about having gas go from three to four dollars a gallon?” says Riensche. “Wait until the grocery bill is $1,000 a month.”

Russia is a major low-cost exporter of many kinds of crop nutrients. “No other nation has the same breadth of readily exportable fertilizer supply,” says Alexis Maxwell, an analyst with Bloomberg’s fertilizer analysis and news publication Green Markets. “Their fertilizers move to all continents.”

If the global trade in fertilizer is further disrupted, it will mean higher costs for farmers across the globe, and in turn more food inflation at a time when global food prices have already been hitting record highs. Prices for the widely used nitrogen fertilizer urea in New Orleans surged 29% from the previous week—a record for the 45-year Green Markets index—after Russia invaded Ukraine.

They were already sky-high, thanks to a gas crunch in Europe that has forced some producers to dial back production or, in some cases, close. That’s on top of elevated freight rates, increased tariffs, extreme weather, and sanctions on Belarus, which accounts for about a fifth of the global supply of the mined nutrient potash.

Major buyers of Russia’s plentiful fertilizer supplies are scrambling for product. In Brazil, the world’s top importer of fertilizer, coffee cooperative Minasul logged sales equivalent to 20 million reais ($4 million) on a day soon after the invasion, says its president, Jose Marcos Magalhaes. It usually sells from 2 million to 3 million reais in agriculture inputs, such as fertilizer and pesticides, daily.

In the U.S., Iowa’s attorney general has commissioned a market study on the “unprecedented” increase in fertilizer prices, while U.S. Department of Agriculture Secretary Tom Vilsack has warned fertilizer companies and other farm suppliers against taking “unfair advantage” of the Ukraine conflict to indulge in price gouging.

Riensche, the farmer in Iowa, says it’s only a matter of time before the rest of America becomes intimately acquainted with the price dynamics of a commodity previously taken for granted. “You’re gonna have a stunning reality,” he says.

Turkey to Apply Measures to Mitigate War Risk on Grain Supply

Turkey will apply measures to manage the possible reflection of developments between Russia and Ukraine and to ensure continuation of food and commodity supply, Treasury and Finance Ministry says in statement after Financial Stability Committee meeting on Tuesday.

• Measures to be taken especially on grain and oil seeds supply
• Turkey to continue to inspect prices at stores and impose fines over excessive pricing

Kernel Temporarily Suspends Grain Export, Oilseed Processing

As a result of the military actions, the Group temporarily suspended grain export and oilseed processing operations in Ukraine, including the procurement of grain and oilseeds, infrastructure, and logistics activities, Warsaw-listed company says in regulatory filing.

• Several hundreds of its employees have been mobilized to the military forces of Ukraine, and the Group is focused on providing the necessary protective equipment and providing additional financial support to such employees
• There are two fatalities among its employees
• Firm has not had any severe damages of its assets, but situation remains complex and changeable; there is limited communication with those of Group’s assets located on the territories occupied by Russia, and there is uncertainty about the condition of such assets
• The most intensive military actions are in the northern Ukraine including Sumy and Chernihiv regions where Group has substantial farming operations, the eastern Ukraine including Kharkiv region where Group owns two oilseed processing plants and operates a farming cluster, and the southern Ukraine

Drought-hit Morocco Doubled Wheat Imports in January: Regulator

Morocco more than doubled wheat imports to 805,000 tons in January from a year earlier as a severe drought impacted the North African nation, data from the foreign trade regulator Office des Changes shows.

• January imports were highest in five years and compare with 338,000 tons in same month of 2021
• Average cost of imported wheat in January was 3,238 dirhams ($337) per ton vs 2,669 dirhams a year earlier
• Barley imports in January cost 264m dirhams vs 77 million dirhams a year earlier
• Energy imports rose 67% in value to 7.9 billion dirhams, while volumes climbed just 15% y/y to 579,000 tons

U.S. Agriculture Sentiment Rises in February: Purdue Univ.

The Purdue University/CME Group’s agricultural sentiment index increased to 125 points in Feb. from 119 in Jan., according to a survey of 400 agricultural producers.

• Current conditions component declined by 1 point from Jan.
• Future expectations up by 10 points