Global Ag News for Nov 6.23

TOP HEADLINES

Global Food Prices Drop for Third Month on Sugar and Grains

• UN’s FAO says only dairy price index increased in October
• Lower food-commodity prices are filtering through to stores

Global food prices declined for a third month as markets continue to roll back from record levels last year, easing inflationary pressures in some countries.

An index of food-commodity prices fell 0.5% in October, according to a report on Friday from the United Nations’ Food and Agriculture Organization. That decline was driven by a drop in sugar and grains.

The slump in prices from a peak in March 2022 is gradually helping to tame grocery inflation, which added to the cost-of-living crisis triggered by Russia’s invasion of Ukraine. It takes a while for lower food-commodity prices to filter through to supermarkets, which have been contending with high energy and labor expenses.

The FAO’s sugar price index fell 2.2%, driven by the strong pace of Brazilian production. Still, concerns remain over tight global supply and prices are 47% above year-earlier levels.

The grain index was dragged down by a 2% decline in rice prices, as demand was “passive,” the agency said. Wheat prices dropped 1.9% amid strong US supplies and competition among exporters.

Meat and vegetable oil prices also fell, while the FAO’s index for dairy products was the only one to increase.

Falling food-commodity costs are starting to ease inflationary pressures in countries from Ghana to New Zealand.

FUTURES & WEATHER

Wheat prices overnight are down 3 1/2 in SRW, down 3 3/4 in HRW, down 4 3/4 in HRS; Corn is up 2; Soybeans up 14 1/4; Soymeal down $0.20; Soyoil up 0.60.

Markets finished last week with wheat prices up 3 in SRW, down 5 1/4 in HRW, down 1 1/2 in HRS; Corn is up 1; Soybeans up 58 3/4; Soymeal up $15.40; Soyoil down 2.43.

For the month to date wheat prices are up 12 3/4 in SRW, up 10 1/2 in HRW, up 7 in HRS; Corn is up 1/2; Soybeans up 55 1/2; Soymeal up $10.90; Soyoil down 1.46.

Year-To-Date nearby futures are down 28.2% in SRW, down 28.0% in HRW, down 23.7% in HRS; Corn is down 29.4%; Soybeans down 11.5%; Soymeal down 7.6%; Soyoil down 21.7%.

Chinese Ag futures (JAN 24) Soybeans up 20 yuan; Soymeal up 66; Soyoil up 16; Palm oil down 14; Corn up 16 — Malaysian Palm is down 16.  Malaysian palm oil prices overnight were down 16 ringgit (-0.42%) at 3752.

There were changes in registrations (-128 Oats). Registration total: 3,005 SRW Wheat contracts; 607 Oats; 4 Corn; 598 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.

Preliminary changes in futures Open Interest as of November 3 were: SRW Wheat down 1,214 contracts, HRW Wheat up 1,045, Corn up 6,499, Soybeans down 565, Soymeal up 3,827, Soyoil down 1,546.

Brazil: Southern areas finally got a break from the heavy rain this weekend, but it will not last long as another system moves in later this week and weekend with potential for more heavy rain. Central areas got a nice boost in precipitation coverage over the weekend, but that will move north for most of this week. Occasional showers through the weekend will be below-normal in coverage and intensity, causing a return to more concerns for the soybean crop. Soybean planting continues to be slow in central Brazil as the dryness has made for more producers waiting for good soil moisture. This may lead to issues with the safrinha crop later this season. Flooding across the south has also produced issues for pulling wheat out and planting and developing corn and soybeans.

Argentina: It was dry over the weekend after a week of good rain in the country. A system will move through with scattered showers Tuesday and Wednesday, while another system will move through Friday through this weekend. Rainfall should be beneficial for most areas as the weather situation continues to take a positive turn for the country.

Northern Plains: Isolated showers fell over the region this weekend, being very light and mostly rain. Temperatures rose significantly and melted a lot of the snowpack in the region, though some remains over northeast North Dakota, where remaining fieldwork will be slow. A couple of disturbances will move through this week, with mixed precipitation and continued difficulties in accomplishing the remaining fieldwork.

Australia:  Scattered showers developed in eastern areas over the weekend, producing some areas of heavy rain. Scattered showers continue here for most of the week as the hot and dry El Nino pattern takes a break. The rain is too late for winter wheat and canola and will hamper harvest instead. In contrast, the rain will benefit cotton and sorghum planting and establishment. Dryness elsewhere is unfavorable for all crops.

Central/Southern Plains: Some showers went through Nebraska this weekend, but most areas stayed dry. A front will move through the region this week but be mostly dry until Thursday when a disturbance develops along it, bringing showers to southern areas which should be helpful for winter wheat where they hit. Temperatures will be mostly near or above normal for the next couple of weeks, which should help to keep winter wheat alive, making moisture important for root development before it goes dormant for winter.

Western Midwest: Isolated light showers moved through the region this weekend until a system moved through northern areas Sunday night, which continues to bring light to moderate rain across Wisconsin and Michigan Monday, slowing progress for fieldwork. Temperatures have risen and will be warm this week until another front moves through Wednesday and Thursday. That front will bring some showers through the region and bring temperatures back down to normal but any chilly air will not last long with warmer temperatures building again next week. The up-and-down temperature pattern and occasional precipitation will make the remaining fieldwork difficult in some cases, especially across the north, but could help with water levels on the Mississippi River.

The player sheet for Nov. 3 had funds: net buyers of 2,000 contracts of SRW wheat, buyers of 6,000 corn, buyers of 8,000 soybeans, buyers of 5,000 soymeal, and  sellers of 2,000 soyoil.

TENDERS

• WHEAT SALE: A group of South Korean flour mills bought an estimated 50,000 metric tons of milling wheat to be sourced from the United States in an international tender held on Thursday.
• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 131,150 metric tons of U.S. soybeans for shipment to unknown destinations in the 2023/24 marketing year.

PENDING TENDERS

• WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins
• OFFERS RECEIVED ON WHEAT TENDER: The lowest offer in an international tender from Bangladesh’s state grains buyer to purchase and import 50,000 metric tons of wheat which closed on Oct. 30 were assessed at $294.95 a metric ton liner out
• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 177,000 metric tons of rice, largely from the United States.
• WHEAT TENDER: Jordan’s state grain buyer issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.

TODAY

Winter Wheat Area Growth Expected To Be Limited: FAO-AMIS

Growth in winter wheat areas in the northern hemisphere for the 2024 harvest is expected to be limited, reflecting softer crop prices this year, according to a report from the UN Food and Agricultural Organization on Friday.

• Southern hemisphere indicators suggest a 5% pull back in corn plantings in Brazil as farmers favor soybeans
• Also cut back in area used for corn in Argentina
• South Africa expected to see marginal increase in plantings
• The forecast for world cereal stocks by the end of 2024 seasons was lowered to 881 million tons, but still points to a 2.6% increase above opening levels

Ukraine Grain Group Raises Corn Harvest Forecast by 0.8m Tons

Ukrainian Grain Association increased corn harvest forecast by almost 3% to 28.8m tons, according to emailed statement.

• Corn exports in marketing year are seen at 23m tons
• Sunflower harvest forecast is raised to 14.2m tons from 13.9m tons
• The forecast for the combined grain and oilseeds harvest increases by 1.4% to 81.6m tons; with potential exports of 50m tons

SOYBEAN/CEPEA: International demand is firm; exports hit a record in October

The international demand for the Brazilian soybean is firm, favored by the limited supply in other countries in South America and the lower productivity in the United States. Moreover, prices in Brazil have been attractive due to lower export premiums and the dollar valuation against Real.

In October, soybean exports totaled 5.5 million tons, a record for the month. In 2023 (up to October), the volume sold hit 92.8 million tons – data from Secex. In the second semester alone, shipments have amounted more than 30 million tons of soybean, 16.7% more than in the entire second semester of 2022.

Secex also says that the average revenue obtained in October was equivalent to USD 31.37/60-kilo bag (or BRL 158.91/bag), the highest since April this year. It is worth noting that the average price in the spot market was significantly below that received with shipments in October.

This scenario leads sellers to be cautions regarding trades in the spot market and many of them are preferring to stock the product. Between Oct. 26 and Nov. 1, the ESALQ/BM&FBovespa soybean Index (Paranaguá) downed 0.8% and closed at BRL 142.06 (USD 28.55)/bag on Nov. 1. From September to October, the monthly average dropped 2.1%.

The CEPEA/ESALQ Index (Paraná) rose 0.1%, from Oct. 26 to Nov. 1, to BRL 136.71 per 60-kg bag (USD 27.47)/bag on November 1. The average in October decreased 1.6% in relation to September. On the average of the regions surveyed by Cepea, prices dropped 0.1% in the over-the-counter market (paid to farmers), but moved up 0.3% in the wholesale market (deals between processors). In the monthly comparison, prices decreased 2% and 1.7%, respectively.

BYPRODUCTS – From Oct. 26 to Nov. 1, soy oil prices increased 0.7%, at BRL 5,266.67 per ton (in São Paulo city with 12% ICMS) on Nov. 1. As for soybean meal, on the average of the regions surveyed by Cepea, prices rose 0.1% in the same comparison.

CORN/CEPEA: Firm demand and refrained sellers sustain prices in Brazil

Purchasers are willing to close deals in the spot market, while sellers are away from trades – they are focused on crop activities. In this scenario, corn prices increased in Brazil, returning to BRL 60.00 per 60-kilo bag. At ports, exports are firm and prices are moving up, despite decreases of dollar quotes and in the international market.

The ESALQ/BM&FBovespa Index (Campinas, SP) closed at BRL 60.03 (USD 12.06)/bag on November 1st, for an increase of 2.1% compared to that on October 26. In October, the Index rose 4.4%, and the monthly average is 8.3% higher than that in September.

Between Oct. 26 and Nov. 1, on the average of the regions surveyed by Cepea, corn prices increased 0.4% in the wholesale market (deals between processors) and 0.6% in the over-the-counter market (paid to farmers). In October, price rises were 3.9% and 2.1%, respectively.

PORTS – Although the pace of trades at ports reduced in October, corn shipments remained firm, as a result of deals closed previously. Data from Secex indicate that 8.44 million tons were shipped in October, 24.5% more than in October/22, but for a decrease of 3.5% in relation to September/23.

Prices in Paranaguá (PR) and Santos (SP) rose 3% and 2.2% from September to October.

CROPS – Conab indicates that sowing activities hit 37.2% of the area in Brazil up to Oct. 29, a weekly progress of 4.2 percentage points, but a delay of 2.6 p.p. compared to the same period in 2022.

Ukraine 2023/24 grain exports fall to 9.8 mln T so far, ministry says

Ukraine’s grain exports have fallen to 9.8 million metric tons so far in the 2023/24 July-June marketing season, agriculture ministry data showed on Monday.

The ministry said that by Nov. 7 last year, one day later, Ukraine had exported 14.3 million tons of grain.

The volume exported this season includes 4.9 million tons of wheat, 4.1 million tons of corn and almost 700,000 tons of barley. In the previous season Ukraine exported 5.4 million tons of wheat, 7.7 million tons of corn and 1.2 million tons of barley.

The ministry said traders had exported 550,000 tons of grain so far in November compared with 1.07 million tons over Nov. 1-7, 2022.

The ministry gave no explanation for the drop but traders and farmers’ unions have said blocked Ukrainian Black Sea ports and Russian attacks on the country’s Danube River ports are the main reasons for lower exports.

Ukraine has traditionally shipped most of its exports through its deep water Black Sea ports.

The government said in a resolution published last week that a new export regime would be introduced for key food commodities aimed at preventing abuses such as tax avoidance.

Ukraine’s government expects a harvest of 79 million tons of grain and oilseeds in 2023, with its 2023/24 exportable surplus totalling about 50 million tons.

Cold Snaps Delay Corn Harvest in China’s Northeastern Region

• Heavy snowstorms may hurt drying and transport of grains
• Corn futures in Dalian have rebounded since mid-October

Cold snaps are hitting China’s northeastern region, disrupting harvesting of grains from corn to rice and bolstering prices.

Extreme weather patterns from heavy rains to scorching temperatures have battered various agricultural producing regions in China this year, damaging quality and threatening output. The weather woes in the top grains belt pose a fresh test of the country’s drive to achieve food security. China is the world’s largest corn and soybean importer.

Heavy snowstorms are hitting parts of Heilongjiang, Jilin and Inner Mongolia this week, which would could hurt drying, storage and transport of autumn grains, the National Meteorological Center said in a report on Monday.

Harvesting of corn and soybeans in the northeast is coming to an end and supplies are ready to hit the market. However, rain and snow, brought by the cold snaps, are impacting the logistics and sale of grains like corn, while farmers are holding off from sales, which could stabilize prices, Holly Futures said in a report on Monday.

China’s corn futures traded on the Dalian Commodity Exchange have rebounded since the middle of October, and rose almost 1% to 2,575 yuan ($354) per ton on Monday. Prices of the feed grain have been under pressure due to poor demand from the struggling livestock sector.

The blizzards and strong winds in the northeast will increase the difficulty of harvesting rice in parts of Liaoning province, and could damage corn that is still being dried in some areas of Jilin and Heilongjiang. Greenhouses could be damaged and vegetables in an early growth stage could be frozen as well, the agriculture ministry warned over the weekend.

Russian Drones Targeted Area Near Ukraine’s Odesa Port at Night

Russia aimed Shahed drones at infrastructure near Odesa port, regional governor Oleh Kiper says on Telegram.

• Storages, loading equipment and trucks with grain were damaged, fire was eliminated
• Ukrainian air defense intercepted 15 drones
• City of Odesa was attacked by missiles of different types and drones
  • Missiles hit areas in the city and a conserved industrial building
  • Several residential buildings and a museum were damaged

Brazil’s August fertilizer deliveries hit monthly record, up 32.6% – ANDA

Brazil’s fertilizer deliveries in August hit a monthly record, with a volume of 5.5 million tons, up 32.6% from the same period last year, according to ANDA, an association representing local fertilizer companies.

Corn Winter Season Risks Push Fertilizer Prices Down

After increasing 1.9% in late October, Brazil urea prices fell $10 a metric ton on delayed domestic purchases amid compromised affordability and safrinha-production risks. Brazil’s fertilizer deliveries to end-users improved 10.4% year over year from January through August, but 4Q numbers may be hurt by delayed purchases

Brazil Urea, Potash Prices Fall, Phosphates Stay Strong

Nitrogen prices in Brazil lost traction as 4Q demand for corn safrinha continues to be delayed amid growers weighing input cost risks and planting decisions. Urea fell $10 a metric ton (mt) on a cost-and-freight basis as traders struggle to find new buyers. Farmers are delaying purchases while focusing on soybean planting, which is being affected by drought in Mato Grosso. Replanting soybeans would limit the safrinha seeding period, while farmers are also considering switching to other crops or using less fertilizer. Monoammonium phosphate (MAP) prices were firm amid limited supplies from key international producers, and potash prices weakened on aggressive offers from Belarus.

Nitrogen Market Stable as US Autumn Season Kicks Off

The global nitrogen market was steady amid another urea tender from India and rising European natural gas prices. The US autumn fertilizer season is set to kick off as harvest nears completion and soil temperatures drop. Input scarcity is keeping nitrogen production rates low in Europe, while falling energy prices in China are sending the pace of output to new highs.

US Urea Prices Mixed, Potash Strengthens on Brisk Demand

Urea prices were up slightly at New Orleans (NOLA) but down at most inland US terminals in early November. NOLA urea prices strengthened $10 a short ton (st) from last week in a thinly traded market, with firming natural gas prices in Europe and concerns about potential production curtailments in the Middle East cited as contributors. Inland prices for urea remained under pressure, however, with small declines also reported for inland phosphates as the autumn application season moves into high gear. Midwest potash prices continued to strengthen as producers report strong demand, with Corn Belt potash up $10/st from last week.

International urea prices were mixed, with the Brazil market falling $10 a metric ton (mt) from last week but Egypt prices climbing to $390-$410/mt vs. the prior week’s $385.

India to extend free food grains programme by five years, says Modi

India is planning to extend its free food grains programme by five years, Prime Minister Narendra Modi said on Saturday, as the government tries to shield consumers from rising prices of cereals ahead of a general election early next year.

The extension will offer relief to consumers, but it will also lead to higher government spending and require New Delhi to procure more wheat and rice from farmers to sustain the welfare programme, which provides free grains to more than 800 million people.

Modi confirmed the move at an election rally in Durg, a city in the central state of Chhattisgarh, where state elections are due this month.

The grains programme, estimated to cost the government around 2 trillion rupees ($24.06 billion) this year, was due to expire at the end of the year.

India, the world’s second-largest producer of wheat and rice, has restricted exports of both cereals to curb rising prices at home.

A Mumbai-based dealer with a global trade house said the government would be forced to keep export restrictions in place for a longer period because it needs to purchase from farmers to run the programme.

“Without export restrictions, local prices would rise above the government set floor prices, and they would fail to procure enough,” he added.

For the first time in eight years, India’s rice output is expected to drop this year, raising the prospect that New Delhi will extend curbs on exports of the grain to keep a lid on food prices ahead of elections.

Global rice prices jumped to a 15-year high after India, the world’s biggest rice exporter that accounts for more than 40% of global rice exports, curbed exports of non-basmati rice varieties in July.

India last year banned wheat exports in a surprise move after a heat wave curtailed output.

LIVESTOCK: USDA Cattle and Hog Slaughter Estimates

The following is for week ending Saturday, Nov. 4:

• Cattle slaughter estimate at 632k, down 5.4% from a year ago
• Hog slaughter at 2.677m, up 4% y/y

 

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