Global Ag News for July 3.24

TOP HEADLINES

 

 

FUTURES & WEATHER

Wheat prices overnight are up 2 in SRW, down 1/4 in HRW, down 1/4 in HRS; Corn is unchanged; Soybeans up 4 1/4; Soymeal down $0.10; Soyoil up 0.30.

For the week and month so far wheat prices are up 9 1/2 in SRW, up 5 3/4 in HRW, up 17 3/4 in HRS; Corn is up 1/2; Soybeans up 13 1/4; Soymeal down $7.30; Soyoil up 3.23.

Year-To-Date nearby futures are down 10.2% in SRW, down 7.8% in HRW, down 13.2% in HRS; Corn is down 14.3%; Soybeans down 10.2%; Soymeal down 4.1%; Soyoil down 0.8%.

Chinese Ag futures (SEP 24) Soybeans up 15 yuan; Soymeal up 27; Soyoil up 86; Palm oil up 62; Corn up 6 — Malaysian Palm is down 9.

Malaysian palm oil prices overnight were down 9 ringgit (-0.22%) at 4080.

There were changes in registrations (-576 SRW Wheat, -18 Oats, -206 Corn, -110 Soybeans). Registration total: 759 SRW Wheat contracts; 19 Oats; 541 Corn; 20 Soybeans; 2,576 Soyoil; 0 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of July 2 were: SRW Wheat down 1,449 contracts, HRW Wheat up 1,701, Corn up 6,238, Soybeans up 10,248, Soymeal up 9,290, Soyoil down 14,791.

 

Northern Plains: Showers will cross the region every couple of days going through early next week. The frequent passage of storm systems could bring heavier rain through areas in the southeast that don’t need it. Temperatures will be near or below normal for the next week, keeping growth slow.

Central/Southern Plains: Drought areas have been receiving a little more consistent rainfall lately, which should help those areas. But some across the south have seen less recently, where drought may start to develop soon. An active pattern over the next ten days will favor multiple fronts stalling in the region, bringing bursts of cooler air behind them and plenty of rain, which should be favorable for developing crops in most areas. Southern areas may catch some rains at times as well. They’ll be hot until the weekend though as fronts largely stall around Kansas or Oklahoma until then.

Midwest: Several fronts and systems moving through the region over the next ten days should bring plenty of opportunities for widespread moderate to heavy rainfall. Models are favoring the western half of the region with the heaviest amounts, which saw some heavier rain Monday night and includes some flooded areas. Eastern areas are still forecast to see chances for needed rainfall through next week, but not as much as farther west. Eastern areas are also forecast to be hotter more frequently than those in the west, which may cause some issues if the rain does not materialize.

Delta: Fronts will largely stay off to the north this week while temperatures remain mostly above normal. There is a better chance for a shower-producing front moving through this weekend into early next week, which may stall out for a few days as well as bring through some milder air. That would certainly be beneficial if it occurs.

Canadian Prairies: Cooler than normal temperatures will stick around the region through the weekend. Widespread showers went through on Monday and several more systems will bring widespread showers through the weekend. Showers are more likely to be scattered with limited chances for heavy rain. But areas that may get hit multiple times could see some flooding. That would be exacerbated in areas across the north and east that have had issues with heavy rain in recent weeks.

 

The player sheet for 7/2 had funds: net sellers of 4,000 contracts of SRW wheat, buyers of 3,500 corn, sellers of 3,500 soybeans, buyers of 1,500 soymeal, and buyers of 5,500 soyoil.

TENDERS

• CORN SALES: The U.S. Department of Agriculture confirmed private sales of 100,000 metric tons of U.S. corn to Colombia for delivery in the 2023/24 marketing year that began Sept. 1, 2023.
• WHEAT TENDER PASSED: Jordan’s state grain buyer is believed to have made no purchase in an international tender to buy 120,000 metric tons of milling wheat
• CORN PURCHASE: South Korea’s Feed Leaders Committee (FLC) purchased about 65,000 metric tons of corn expected to be sourced from South America in an international tender
• SOYMEAL PURCHASE: Leading South Korean animal feed maker Nonghyup Feed Inc. (NOFI) purchased up to 60,000 metric tons of.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 129,660 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on July 3.

PENDING TENDERS

• FEED BARLEY TENDER: Jordan’s state grain buyer was believed to have made no purchase in an international tender for 120,000 metric tons of animal feed barley which closed on June 26.

 

 

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending June 28 are based on six analyst estimates compiled by Bloomberg.

• Production seen lower than last week at 1.034m b/d
• Stockpile avg est. 23.348m bbl vs 23.423m a week ago

 

Brazilian Soybean Harvest Forecast Cut to 150M Tons by USDA

USDA’s office in Brazil lowers its forecast for 2023-24 soybean harvest in the South American nation by 2.6 million metric tons.

• The crop was reduced due to flooding in Rio Grande do Sul and lower yields in Mato Grosso, Mato Grosso do Sul, Paraná and São Paulo states.
• Total crush for 2023/24 estimated at 55.1m tons and exports at 94m tons
• For the 2024/25 crop that will be seeded in September, forecast raised to 160m tons, with a marginal increase in area
• USDA said farmers are experiencing tighter margins and profits due to yield losses caused by climate adversities and falling international prices between late 2023 and early 2024
  • However, recent devaluation in the real will allow producers to invest in technological packages to maintain yields without expanding planted area

 

Agroconsult Sees Brazil’s Total Corn Output at 126.5M Tons

Brazil is expected to harvest 126.5 million tons of corn in 2023-24 season, 10.7% below the 141.8 million tons of the previous year, said Rally da Safra expedition coordinator André Debastiani.

• Rally da Safra is promoted by Agroconsult
• Second crop of corn expected to reach 100.5 million tons in 2023-24, 9.9% lower than last season
• Total planted area decreased by 6.4%, to 21.4 million hectares (52.9 million acres)
• Corn exports to reach 42.1 million tons, 23% down from 2022-23 volume
  • Corn farm selling are delayed, with 34.9% of production sold, as farmers have been postponing deals waiting for higher prices, said Debastiani
• Domestic corn consumption is expected to grow 6.1%, to 85.1 million tons
  • Demand for animal protein seen increasing 2.6% to 60.1 million tons
  • Corn use in ethanol production to grow 24.8%, to 16.6 million tons

 

Brazil Seen to Cut Soy Planted Area, Raise Output: Agroconsult

Brazil’s soy planted area in the 2024-25 season is expected to be scaled back to about 46 million hectares (114 million acres), due to a reduced area in flood-ravaged state Rio Grande do Sul, said Agroconsult President André Pessôa.

• Brazil planted 46.4m hectares in 2023-24 season crop
  • It would be the first soy area decrease since 2006, Pessôa said
  • Summer corn area, the smaller crop corn in Brazil, to be the same or slightly smaller following Rio Grande do Sul planting reduction and potential problems in southern Brazil due to La Niña
• Country’s soy production has potential to grow to near 170 million tons, from 156.5 million tons in 2023-24 season, if rains and temperatures stay within average: Pessôa

 

China’s COFCO projects bigger Brazil soy, corn harvests in 2025

China’s COFCO International projects a potential increase of Brazilian soybean and corn harvests in the 2024/25 cycle while also gearing up to advance the expansion of a key port terminal next year, positioning it as one of the largest grain exporters in the country.

In written answers to Reuters on Tuesday, Luiz Noto, the company’s new CEO for grains and oilseeds in Brazil, said the firm would begin operating the first phase of the new terminal in the port of Santos, Latin America’s largest, in the first half of 2025.

When phase two is completed, in 2026, the company’s export capacity will increase from 4.5 million to 14 million tons.

“COFCO has enormous growth potential and a robust plan to become increasingly relevant in the markets in which it operates throughout Latin America, especially in Brazil,” Noto said in an email.

Its enlarged terminal will mainly ship soybeans and corn, but the company could also used it to exports coffee, sugar and cotton, he said.

Brazil, the largest global producer and exporter of soybeans, had the potential to harvest around 170 million tons of the oilseed in 2024.

But a severe drought in the Center-West and excessive rains in the South reduced output to 152.5 million tons, according to data from oilseed lobby Abiove for 2023/24.

In the case of corn, a smaller planted area and lower yields mean lower production volumes and exports.

Despite smaller-than-anticipated soy production, Noto said overall Brazilian soybean exports are doing well in 2024, citing “stronger accumulated exports compared to 2023” without providing details.

“As for corn exports, our numbers show a lower export volume for 2024 compared to 2023, mainly due to a smaller harvest and stronger domestic demand for ethanol use,” Noto said.

 

LIQUIDITY IS LOW, BUT EXCHANGE RATE INCREASE SUSTAINS VALUES IN BRAZIL

There were only some players operating in the soybean market in late June. While some consumers claimed to have stocks in the mid-term, many producers were unwilling to trade large amounts – they were focused on the dollar valuation against Real (+6.3% in June), which tends to attract importers to Brazil. Another reason for players to be away from closing deals is the possible increase in the international demand for Brazilian products – the crushing industry union in Argentina announced to be on strike at the end of June.

Prices remained firm due to the dollar valuation. The ESALQ/BM&FBovespa Index (Paranaguá) moved up 1.56% from May 31 to June 28, closing at BRL 139.94 per 60-kg bag on June 28. The CEPEA/ESALQ Index (Paraná) rose 0.92% in the same comparison, to close at BRL 134.50 per 60-kg bag.

Price rises in Brazil were limited by expectations of high stocks. Players surveyed by Cepea say there are batches from the previous season stocked. Data from the USDA indicate that initial stocks in the 2023/24 crop in Brazil were a record, at 36.81 million tons. This scenario pressed down export premiums in the country.

HOST-FREE PERIOD – Some regions in Brazil are likely to start the 2024/25 sowing activities earlier this crop. Embrapa indicated that the host-free period was readjusted, allowing the anticipated planting in many regions in Brazil.

 

Argentina Poised for First China Corn Cargoes in 15 Years

• Grain shipments would show robust bilateral trade to continue
• China is grappling with extreme weather that threatens crops

Argentina is preparing corn shipments to China that will be the first in 15 years, the latest move by the two countries to expand agricultural trade.

Cargoes that Cofco International Ltd. has been putting together could be the first since China re-opened its doors to Argentine corn following drawn-out diplomatic talks, said Gustavo Idigoras, head of Ciara-Cec, a national crop-export group whose members include the major agricultural trading houses.

Argentina completed steps a few weeks ago to get approval from Beijing to open the Chinese market for its corn, after striking an agreement on sanitary requirements last year. Argentina’s corn harvest is in full swing, with 55% of the crop collected through June 26.

Corn shipments to China would show that the two countries are likely to maintain a robust trade relationship under the leadership of Javier Milei, who once vowed to curb ties with Beijing if he became Argentina’s president. He took office in December. Chinese trade and investment drive swaths of Argentina’s economy, ranging from commodities and energy to banking.

In January, Chinese customs authorities also authorized traders in Argentina to export wheat for the first time.

 

India’s June palm oil imports rise to 6-month high on lower prices

India’s palm oil imports rose by 3% in June from the previous month to reach the highest level in six months on robust demand from refiners for upcoming festivals and as the oil traded at a discount to rival oils, five dealers told Reuters.

Higher palm oil purchases by India, the world’s biggest importer of vegetable oils, could support the benchmark Malaysian palm oil futures that are trading near their highest level in more than two months.

Palm oil imports in June jumped to 788,000 metric tons, the highest since December, according to estimates from dealers.

“Buyers made purchases anticipating demand from the upcoming festival season. Additionally, palm oil was nearly $80 per ton cheaper than other oils, which made it attractive,” said Sandeep Bajoria, CEO of Sunvin Group, a vegetable oil brokerage.

Palm oil imports could rise to 850,000 tons in July, Bajoria added.

Crude palm oil’s (CPO) imports are offered at about $985 a metric ton, including cost, insurance and freight (CIF), in India for August delivery, while soyoil and sunflower oil are offered around $1,065 and $1,050 a ton, respectively, dealers said.

India’s sunflower oil imports in June jumped 14% from a month earlier to a record 467,000 tons, dealers said.

Sunflower oil imports could have exceeded 500,000 tons in June, but a few vessels were unable to berth at the ports before the month’s end, said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.

Soyoil imports fell 16% in June to 273,000 tons, dealers said.

Industry body the Solvent Extractors’ Association of India (SEA) is likely to publish its data on June imports by mid-July.

Higher imports of palm oil and sunflower oil lifted the country’s edible oil imports by 2% to 1.53 million tons, the highest in 10 months, they said.

India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.

 

MGEX Spring Wheat Stocks Down 5.6% From Year Ago: June 30

Stocks of hard spring wheat stored in Minnesota and Wisconsin warehouses fell y/y to 10.954m bushels in the week ending June 30, according to the Minneapolis Grain Exchange’s weekly report.

• Compared to the previous week, stockpiles fell by 76k bu
• Stockpiles in Duluth/Superior warehouses down 7k bu from the previous week

 

La Nina threatens Latin America with hurricanes and droughts, experts say

Latin America and the Caribbean should brace for the arrival of La Nina, the climate pattern seen fueling a highly active hurricane season in the Atlantic and greater climate variability across the region, experts said on Tuesday.

The World Meteorological Organization organized a webinar on La Nina’s threat as Hurricane Beryl, the 2024 Atlantic season’s first hurricane and the earliest storm on record to reach the Saffir-Simpson Scale’s maximum Category 5 level, was tearing across the eastern Caribbean.

La Nina, a climate pattern that begins with colder-than-normal ocean temperatures in the central and eastern equatorial Pacific, is linked to both floods and drought, as well as an increase in the frequency of hurricanes in the Caribbean.

“Again, now, (we are in) a transition to the La Nina phenomenon,” said Jose Luis Stella, of the Regional Climate Center for Southern South America, warning that La Nina threatens to bring “rapid variability” to an already extreme climate.

The experts on Tuesday said that La Nina could cause a repeat of historic droughts in South America similar to those recorded between 2020 and 2023.

“We just went through three years with a fairly prolonged La Nina event that brought … historic droughts, with great impact and then a fairly rapid transition to El Nino,” said Stella.

In Latin America, both La Nina and El Nino, which involves a warming of the tropical Pacific Ocean’s surface and can affect jet stream winds above the Pacific, have had costly impacts on regional economies by hurting crops like wheat, rice and corn.

Both patterns tend to last between nine and 12 months, and usually occur every two to seven years, although they do not have a regular calendar.

 

Monsoon Comes Early and Covers all of India in Boost for Crops

• Heavy rain seen in several states, including Punjab, this week
• Risk of flash floods in some eastern and northeastern regions

The monsoon has covered the entire country about six days earlier than normal, according to the India Meteorological Department, boosting prospects for crops such as rice, corn and soybeans.

Heavy rains are expected this week in several states, including Punjab, Haryana, Uttar Pradesh, Bihar and Maharashtra, the weather department said in a statement. There is a risk of localized floods, water logging in low-lying areas and the closure of subways mainly in urban areas, it said.

The weather pattern, which irrigates half of the nation’s farmland, started its journey from the southern state of Kerala on May 30, two days earlier than its normal onset date. After a poor start, with rains being 11% below a long-period average in June, the situation has been improving and the cumulative rainfall is now only 5% below normal. The IMD has predicted ample rains in July.

The revival bodes well for farm activities in the world’s most populous country, where agriculture supports about 60% of its 1.4 billion people. A bumper harvest shapes the health of the fifth-biggest economy, keeps a lid on food inflation, which was at 8.7% in May, and provides comfort to the government to export commodities. India has restricted shipments of wheat, rice and sugar to maintain adequate local supplies.

 

Chinese Beef Prices Plunge as Appetite for Premium Meat Wavers

• Local government urged to provide subsidies and forage
• Beef is a pricey option for China’s cash-strapped diners

The Chinese beef market is facing a conundrum.

The government has pushed farmers to raise production at home and opened the door to more imports, but a slowing economy has left meat piling up in freezers and dragged local prices to a five-year low.

Wholesale prices have dropped 18% from last year’s peak to around 62 yuan ($8.53) a kilogram. Much of the cattle industry is now loss-making and could increasingly become a drain on the public purse after the farm ministry urged local authorities to provide subsidies and forage to farmers.

Food security is a hot topic for the government, which has sought to promote self-reliance across key markets including beef. The deflationary pressures now gripping the economy have forced Beijing to step in and support a variety of sectors from livestock to grains. Now the challenge is to keep farmers solvent, stabilize production and ride out a period of losses, a task made trickier for the beef industry because of a flood of meat from overseas.

China’s beef imports advanced 23% in the first five months of the year as Beijing went on a spree of granting more market access to other countries — call it food diplomacy — to warm up relations with nations including Brazil and Spain. Australia has recently been added to the list.

 

US Agriculture Sentiment Weakens in June: Purdue Univ.

The Purdue University/CME Group’s agricultural sentiment index fell to 105 points in June from 108 in May, according to a survey of 400 agricultural producers.

• Current conditions component improved by 1 point from May
• Future expectations down by 5 points
• “High input costs and the risk of lower prices for the products they produce continue to weigh on farmer sentiment, along with concerns about rising interest rates,” according to the report’s authors James Mintert and Michael Langemeier

 

 

 

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