TOP HEADLINES
Ukraine Military Says Russian Missile Hit Commercial Vessel
- Ship with Liberia flag was struck when entering Black Sea port
- Rare attack could undermine passage of grain exports
Ukraine’s military said a commercial ship on the Black Sea was struck Wednesday by a Russian missile, a rare attack that may threaten to undermine the passage of key exports such as grain.
The vessel was hit at the port of Pivdennyi, according to an official familiar with the matter, who asked not to be identified discussing security issues. The hub is one that has been key to Ukrainian grain shipments.
“Continuing its terror against civil shipping, the foe has insidiously launched an anti-radar missile Kh-31P toward one of Odesa region’s seaports from its tactical aviation airplanes in the Black Sea,” Ukraine’s military said on its Telegram channel, without naming the facility.
The rocket hit a ship under the Liberian flag that was entering the port, killing one person and injuring four, including three Philippine citizens, the military said.
Kyiv recently opened a unilateral corridor from the region to allow ships to export commodities like grains and metals from its deep-sea ports in Greater Odesa, after Moscow in July pulled out of the United Nations-backed Black Sea grain deal that had guaranteed safe movement of crop vessels.
Wheat futures earlier rose as much as 5% in Chicago, before paring gains.
The civil vessel was supposed to ship iron ore to China, according to Infrastructure Minister Oleksandr Kubrakov. The incident was the 21st “deliberate Russian attack” on port infrastructure since the end of the grain deal, he said on Facebook.
“That is why Ukraine does everything to strengthen its air defense to shield the south of Ukraine from Russian terrorist attacks,” Kubrakov said.
FUTURES & WEATHER
Wheat prices overnight are down 7 1/2 in SRW, down 5 1/2 in HRW, down 4 in HRS; Corn is down 1 1/2; Soybeans up 1 3/4; Soymeal down $0.10; Soyoil up 0.26.
For the week so far wheat prices are up 12 1/4 in SRW, up 6 in HRW, up 10 1/2 in HRS; Corn is down 2 3/4; Soybeans up 15 3/4; Soymeal up $7.60; Soyoil up 0.85.
For the month to date wheat prices are up 28 1/2 in SRW, up 20 1/4 in HRW, up 22 1/4 in HRS; Corn is down 4 1/4; Soybeans up 57; Soymeal up $18.70; Soyoil down 1.21.
Year-To-Date nearby futures are down 26.2% in SRW, down 26.9% in HRW, down 22.1% in HRS; Corn is down 30.1%; Soybeans down 10.9%; Soymeal down 6.0%; Soyoil down 21.3%.
Chinese Ag futures (JAN 24) Soybeans up 13 yuan; Soymeal down 2; Soyoil down 4; Palm oil down 50; Corn up 2 — Malaysian Palm is down 25. Malaysian palm oil prices overnight were down 25 ringgit (-0.66%) at 3743.
There were changes in registrations (-55 SRW Wheat, -3 Soybeans). Registration total: 2,950 SRW Wheat contracts; 607 Oats; 4 Corn; 707 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.
Preliminary changes in futures Open Interest as of November 8 were: SRW Wheat down 15,343 contracts, HRW Wheat down 4,391, Corn down 7,170, Soybeans up 1,989, Soymeal down 4,204, Soyoil up 6,006.
Australia: Scattered showers and areas of heavy rain continue in the east through Thursday 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.
Brazil: Southern areas got a break from the heavy rain this weekend, but heavy rain will be moving in over the next day or two that will exacerbate flooding and wetness issues for the remaining wheat harvest as well as corn and soybean planting. Central areas got a nice boost in precipitation coverage last week, but that has moved north for this week. Occasional showers through next week will be well below-normal in coverage and intensity, causing a return to more concerns for the soybean crop where planting is slow and necessitating replanting. This may lead to issues with the safrinha crop later this season.
Argentina: A system continues to bring scattered showers Wednesday, while another system will move through Friday through this weekend. More systems are lining up for next week as well. Rainfall should be beneficial for most areas as the weather situation continues to take a positive turn for corn and soybeans.
Northern Plains: Light mixed precipitation will continue to bring difficulties in accomplishing the remaining fieldwork over the next few days. Warmer and drier conditions are expected for the weekend and most of next week, which should create more favorable conditions.
Central/Southern Plains: A front will move through the region Wednesday but be mostly dry until Thursday when a disturbance develops along it. That will bring showers to southern areas which should be helpful for winter wheat where they hit. Temperatures will briefly fall after the front goes through, but rise well above normal again next week, making moisture important for root development before wheat goes dormant for winter.
Western Midwest: Scattered showers moved through northern areas over the last few days, making fieldwork more difficult there. Temperatures will briefly fall behind a front Wednesday and Thursday. That front will bring more showers through the region but any chilly air will not last long with very warm 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. 8 had funds: net buyers of 9,000 contracts of SRW wheat, buyers of 3,000 corn, buyers of 2,500 soybeans, buyers of 2,000 soymeal, and buyers of 500 soyoil.
TENDERS
- SOYBEAN SALES: Chinese importers bought at least five more U.S. soybean cargoes on Wednesday in a second day of active buying after booking their largest purchases in months a day earlier, two U.S. exporters familiar with the deals said.
- SOYBEAN SALES: The U.S. Department of Agriculture (USDA) confirmed private sales of 433,000 metric tons of U.S. soybeans to China and a total of 476,500 tons to undisclosed destinations. All the sales were for shipment in the 2023/24 marketing year.
- CORN SALES: The USDA confirmed private sales of 270,000 metric tons of U.S. corn to Mexico for shipment in the 2023/24 marketing year.
- CORN SALE: The Korea Feed Association (KFA) purchased an estimated 65,000 metric tons of animal feed corn expected to be sourced from South America or South Africa in an international tender on Wednesday.
- WHEAT SALES: Algeria’s state grains agency OAIC is believed to have bought around 600,000 to 690,000 metric tons of milling wheat in an international tender which closed on Tuesday.
- MILLING WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat which can be sourced from optional origins.
- FEED WHEAT, BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley, to be loaded by Jan. 31 and arrive in Japan by Feb. 29, via a simultaneous buy and sell auction that will be held on Nov. 15.
PENDING TENDERS
- 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: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy a total of 108,890 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Nov. 9.
TODAY
GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report
Estimate ranges are based on a Bloomberg survey of five analysts; the USDA is scheduled to release its export sales report on Thursday for week ending Nov. 2.
- Corn est. range 600k – 1,200k tons, with avg of 855k
- Soybean est. range 900k – 1,500k tons, with avg of 1,215k
Brazil soy exports seen reaching 5.15 mln tns in November – Anec
- BRAZIL SOY EXPORTS SEEN REACHING 5.15 MILLION TNS IN NOVEMBER VERSUS 1.92 MILLION TNS IN SAME MONTH A YEAR AGO
- BRAZIL CORN EXPORTS SEEN REACHING 8.35 MILLION TNS IN NOVEMBER VERSUS 5.47 TNS IN SAME MONTH A YEAR AGO
- BRAZIL SOYMEAL EXPORTS SEEN REACHING 2.26 MILLION TNS IN NOVEMBER VERSUS 1.35 MILLION TNS IN SAME MONTH A YEAR AGO
China’s Northeast Expects More Rains, Affecting Corn Crop: CASDE
China’s northeastern region is expecting more rains, which will have a negative impact on transport and storage of fall grains like corn, the country’s agriculture ministry said in a report on Thursday.
- Corn prices have climbed lately as farmers held back sales of the crop and state stockpiler Sinograin made purchases, the ministry said in its latest China Agricultural Supply & Demand Estimates
- Forecasts for output, imports and consumption of corn in 2023/24 remain unchanged from previous month
- The ministry in October raised its estimates for corn output in the 2023/24 year, citing higher yields of the grain, even after heavy rains hit main producing regions
- The percentage of fields affected by extreme weather patterns this year is still limited, while rising acreage and yields have helped secure another bumper harvest of fall grains, govt-affiliated Farmers’ Daily said Thursday
China lowers forecast for 2023/24 domestic soy crop
China’s 2023/24 soybean crop will be slightly lower than predicted last month, the agriculture ministry said on Thursday, after drought early in the planting season impacted yields in the key northeast growing area.
Output is seen at 20.89 million tons, 2.7% lower than last month’s forecast, but still an increase of 600,000 tons from the previous year, according to the monthly Chinese Agricultural Supply and Demand Estimates (CASDE) report.
Overall, however, soybean quality is significantly better than normal and the protein content is higher, added the report, with an increase in output in northern and southern areas.
The report also lowered its outlook for cotton production by 100,000 tons compared with last month after unfavorable weather during the sowing and growing periods hurt yields in some areas of Xinjiang.
Argentina Wheat Forecast Cut by 5.6% to 13.5m Tons: Rosario
The Rosario Board of Trade cut its forecast for Argentina’s wheat crop in its monthly estimates report.
- Harvest will be just 1.7m metric tons more than last season’s frazzled crop
- Recent rains that ended a prolonged drought came too late for many plants
- Wheat harvest 10% complete
- SOY/CORN:
- Soy planting 11% complete
- Soy area and production estimates unchanged at 17.4m hectares (43m acres) and 50m tons
- Corn planting 27% complete
- Rains are helping corn already in the ground, production estimate unchanged at 56m tons
Palm Oil Prices May Climb to 4,000 Rgt/Ton by End 1Q: Glenauk
Palm oil prices may climb to 4,000 ringgit/ton by the end of March, according to Julian McGill, an agricultural economist and managing director of consultancy Glenauk Economics.
- Indonesian output has seen a “very modest” increase this year, McGill said at an industry conference in Kuala Lumpur on Thursday
- Production expected to be flat or decline in 2024, depending on rainfall during the current El Niño
- At best, output in 2023 may increase by 1m tons y/y
- There’s been a slowdown in area growth caused by limited new planting
- Soybean crushing in Argentina has collapsed, but other regions have yet to increase their crushing to an amount sufficient enough to compensate
- Meanwhile, US biodiesel demand is shifting toward soybean oil, which will require significantly greater volumes of crushing
Vegetable Oil Prices Set to Climb on Tight Supplies, Mielke Says
Vegetable oil prices are set to rise next year amid an expected global deficit in production, according to Thomas Mielke, executive director of Hamburg-based Oil World.
- Current bearish market sentiment is temporary, he said at an industry conference in Kuala Lumpur on Thursday
- Palm oil prices are now close to their lows; will rise in 2024 and 2025 due to insufficient supplies and lower growth in other edible oils
- Palm prices may climb by $100-$150 within next 4-6 months
- Price volatility has increased and there are concerns that it will remain high
- Mielke reiterated his estimates for Indonesian palm oil output to stagnate in 2024, and Malaysian production near 18.4m tons
- Growth in global output of sunflower and rapeseed oils estimated to slow from combined 5.5m tons in 2022-23, to 0.7m tons in 2023-24
- Growth in palm oil production in 2023-24 seen at smallest in four years
- Higher biodiesel production in Indonesia — during a time of falling stockpiles — will slash availability of exports and lift global prices
- Severe drought in Brazil is jeopardizing soy plantings
Cofco Will Secure Deforestation-Free Soy in $30 Million Deal
- Deal involves securing 50,000 tons of soybeans from Brazil
- Pressure mounts in commodity supply chains to protect forest
Cofco International Ltd., the trading unit of China’s largest food company, will help secure soybeans that are certified as deforestation-free for a dairy firm in a $30 million deal that’s part of a broader move in commodity supply chains to support agriculture that doesn’t hurt critical ecosystems.
Cofco will source 50,000 metric tons of Brazilian soybeans that meet the criteria for China’s Modern Farming Group, which makes dairy products, Cofco said in an emailed statement. The deal is the first like it under a new World Economic Forum initiative aimed at encouraging more sustainable practices in the Asian nation.
The soybeans sourced by Cofco will be certified by a third party auditor. The two companies signed a signed a memorandum of understanding, and the transaction is expected to completed within a year. Both companies intend to gradually increase the volume of sustainable soy trade after that, Cofco said in an emailed message.
“This purchase order for deforestation-and-conversion-free soybeans is a milestone and sends a positive market signal from China to the global commodity market,” Jack Hurd, executive director of the Tropical Forest Alliance at the World Economic Forum, said in a note.
China Books More Than 1 Million Tons of US Soy in a Week
- Purchases come ahead of bilateral talks between Biden, Xi
- Sales show US is beginning to claw back share from Brazil
More than 1 million tons of US soybeans have been booked for China this week, ahead of the first meeting between the two nations’ presidents in about a year.
National stockpiler Sinograin has booked at least 20 cargoes — equal to about 1.2 million tons — of US soybeans this week, according to sources familiar with the matter. The supply is for delivery between December and March, they said, asking not to be identified discussing private deals.
The purchases will help bolster Chinese inventories and are seen as a gesture of goodwill ahead of bilateral talks between president’s Xi Jinping and Joe Biden, expected in San Francisco next week.
It also shows that US supply is beginning to claw back market share from Brazil as its harvest wraps up. Brazil’s sales to China have surged recently, with its cargoes more competitive even during the start of the usual US export window.
Amid the recent purchases, “US Gulf basis rose, while rail freights also jumped,” said Thiago Milani, head of trading and origination for 3Tentos, an agribusiness company in Brazil. “But the US will likely stay more competitive in December and January, with Brazil more competitive again February onwards.”
Chicago soybean futures are up about 5% so far this month.
The US Department of Agriculture on Wednesday reported 433,000 tons of soybean export sales to China for the 2023-24 marketing year, following 236,000 tons the prior two days. Another 476,500 tons of soybean sales were reported Wednesday for unknown destinations.
India Edible Oil Imports May Drop to ~16M Tons in 2023/24: Group
India’s edible oil imports will likely ease to 16.2 million tons in 2023-24, from a record 16.96m tons, according to Sudhakar Desai, president of the Indian Vegetable Oil Producers’ Association.
- The “remarkable” increase in imports last year has triggered a substantial build-up in stockpiles and stimulated consumption, he said at an industry conference in Kuala Lumpur on Thursday
- India’s consumption is likely to increase to 25.38m tons in 2023-24 from 24.4m tons a year ago
- Palm oil imports in 2023-24 may ease to ~9.1m tons, from 10.1m tons
- Soybean oil purchases may slip to 3.62m tons, down from 3.87m tons; sunflower oil may rise to 3.5m tons, from 2.99m tons
- Domestic edible oil production may rise to 9.22m tons in 2023-24 from 9.06m tons
- There’s possible growth in local mustard, soy and palm oil output
- Oilseed cultivation income has been very competitive with other crops
- Palm oil imports seen at 2.22m tons in Oct-Dec, 2.12m tons in Jan-March
- Palm oil futures may fluctuate in a range of 3,600-3,900 ringgit/ton for the next three months; possible for prices to rise to 4,200 by March 2024 due to tightening stockpiles, particularly in Malaysia
- While Malaysia will see a build-up of inventories to ~2.7m tons, they may tighten by April-May next year
USDA attaché trims India 2023/24 wheat crop forecast to 106 million T
Following are selected highlights from a report issued by the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) post in New Delhi:
“On Oct. 27, 2023, India’s Ministry of Agriculture and Farmers Welfare released Indian crop year 2023/2024 (July-June) First Advance Estimate for the kharif (fall harvested) crop. Production is estimated at 148.6 million metric tons (MMT), or 9 MMT lower than last year’s kharif grain crop. FAS New Delhi (Post) is lowering to 130 MMT the MY 2022/2023 rice production estimate premised on tight domestic market supplies, as reflected in firm prices and the Indian government imposing export restrictions. The MY 2023/2024 rice production forecast is lowered to 128 MMT due to below-par 2023 monsoon rains and El Niño conditions arriving in the latter part of 2023. The MY 2023/2024 wheat production forecast is revised lower to 106 MMT based on a continued tight domestic market situation.”
Food Price Shock in Some Countries Much Worse Than 2007-08: Gro
Food prices are significantly higher than they were in 2007-08 in many parts of the world because local currencies have fallen sharply against the dollar, said Sara Menker, founder and CEO of data analytics company Gro Intelligence.
“What worries me the most is the narrative that food prices have come off … because we are all following futures markets which are dollar-denominated as a gauge for where food prices are,” she said in a Bloomberg Television interview.
While wheat futures are down double digits year-on-year, the staple is up double digits in Egypt because of the slump in the nation’s currency, she said. Menker cited Argentina, Lebanon and Syria as places where food costs have soared, and said rising prices are hurting the economic outlook for Sub-Saharan Africa.
Brazil turns 100 pct soybean oil into biofuel in historic first
In a historic first, Brazil’s state-owned oil company Petrobras has succeeded in processing 100 percent soybean oil into biofuel, the company announced Wednesday.
“The Riograndense Petroleum Refinery (RPR) has accomplished a historic achievement by successfully processing 100 percent soybean oil in a fluid catalytic cracking unit at the refinery,” the company said in a statement.
The chief executive of Petrobras, Jean-Paul Prates, said the oil company was firmly and irreversibly on the path to energy transition.
“We are producing typical petroleum products from vegetable oil. It’s a combination of innovation and energy transition that benefits Brazil. Petrobras is once again leading significant processes of technical, economic, and social transformation, with global impact,” said Prates.
The trial was made possible through a cooperation agreement signed in May 2023 between the RPR shareholder companies, including Petrobras, Braskem and Ultra.
Petrobras is investing nearly 45 million reais (about 9 million U.S. dollars) to complete the development of technologies.
Felipe Jorge, director superintendent of RPR, said Petrobras’ technology makes biorefining an effective transition strategy for the future.
“The first step has been taken,” said Jorge. “Petrobras’ licensed technology for Riograndense will enable us to produce renewables as early as next year while continuing to serve our current product and fuel market.”
Corteva to Halt Some Manufacturing as Seed, Pesticide Sales Fall
- Production cut to result in as much as $460 million in charges
- Later farmer purchases in Brazil contributed to lower sales
Seed and pesticide behemoth Corteva Inc. is halting production of crop protection products at a California plant and other sites as the company contends with quarterly losses and sinking sales.
Corteva announced the shakeup as it posted lower revenue and a bigger-than-forecast loss for the third quarter. The plan to stop production in Pittsburg, California, and other undisclosed locations will lead to charges of as much as $460 million through next year and about $100 million in savings by 2025, the Indianapolis-based company said in a statement.
Corteva slashed its profit and sales outlook for this year late last month as problems in its Brazil business, including later-than-usual farmer purchases, dented revenue. Sales in the world’s biggest supplier of soybeans have been hurt in part by tighter farmer margins and competition from generic pesticides.
Shares of Corteva have fallen about 17% this year. The stock slid in after-market trading on Wednesday.
Mosaic Warns of Depleted Fertilizer Stockpiles as Demand Returns
Fertilizer stockpiles will need replenishing next year, boosting the demand outlook for the slumping crop nutrients industry, according to supplier Mosaic Co.
Global shipments of potash, a key crop nutrient, are expected to increase by 5 million metric tons next year to reach 70 million metric tons, Chief Executive Officer James O’Rourke said Wednesday during an earnings call. Such a volume would be the highest since at least 2021, prior to Russia’s invasion of Ukraine.
Supplies have remained constrained by sanctions on exports from key producer Belarus as well as logistical constraints amid dwindling inventories. Even so, nutrient prices have declined after a surge in the past two years prompted farmers to cut down on use, leaving distributors with a glut.
Excess inventories in agriculture powerhouse Brazil now have been fully worked through, paving the way for stronger sales and profits into 2024, according to Mosaic.
Farmers around the world are now seeking to replenish soil nutrients, leading to a rebound in demand for potash and phosphates when supplies are tight. The company’s shipments of potash and phosphate to meet demand from North American farmers during the spring planting season were the highest in five years, O’Rourke said.
“We are seeing strong consumption returning,” he said.
Shares of Mosaic, which on Tuesday reported third-quarter profit that trailed analysts’ expectations, rose as much as 5% on Wednesday on the outlook. The Tampa, Florida-based company is down 24% this year.
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