Global Ag News for Apr 12.22

TODAY – Biden Will Allow Sale of Higher-Ethanol Gas in Bid to Tame Costs

Wheat prices overnight are up 31 1/4 in SRW, up 28 in HRW, up 14 3/4 in HRS; Corn is up 8 3/4; Soybeans up 17 3/4; Soymeal up $0.48; Soyoil up 1.00.

For the week so far wheat prices are up 62 in SRW, up 63 1/2 in HRW, up 28 1/2 in HRS; Corn is up 6 3/4; Soybeans down 16; Soymeal down $0.36; Soyoil up 0.44.  For the month to date wheat prices are up 118 1/4 in SRW, up 143 3/4 in HRW, up 78 1/2 in HRS; Corn is up 34 1/2; Soybeans up 54 3/4; Soymeal down $0.40; Soyoil up 5.27.

Year-To-Date nearby futures are up 44% in SRW, up 46% in HRW, up 18% in HRS; Corn is up 30%; Soybeans up 26%; Soymeal up 13%; Soyoil up 34%.

Chinese Ag futures (SEP 22) Soybeans down 44 yuan; Soymeal down 23; Soyoil up 86; Palm oil up 100; Corn down 10 — Malaysian palm oil prices overnight were up 175 ringgit (+2.91%) at 6180.

There were no changes in registrations. Registration total: 2,185 SRW Wheat contracts; 1 Oats; 0 Corn; 132 Soybeans; 98 Soyoil; 0 Soymeal; 154 HRW Wheat.

Preliminary changes in futures Open Interest as of April 8 were: SRW Wheat down 553 contracts, HRW Wheat down 346, Corn up 13,361, Soybeans up 624, Soymeal down 3,574, Soyoil up 2,007.

Northern Plains Forecast: Scattered showers Tuesday-Thursday. Isolated showers Friday. Temperatures below to well below normal Tuesday-Friday. 6-to-10-day outlook: Mostly dry Saturday. Scattered showers Sunday. Mostly dry Monday-Wednesday. Temperatures below to well below normal Saturday-Wednesday.

Central/Southern Plains Forecast: Scattered showers through Wednesday. Mostly dry Thursday. Scattered showers Friday. Temperatures above to well above normal Tuesday, below normal northwest and above normal southeast Wednesday, below normal Thursday, below normal north and above normal south Friday. 6-to-10-day outlook: Scattered showers Saturday-Sunday. Mostly dry Monday-Wednesday. Temperatures below normal north and above normal south Saturday-Sunday, below to well below normal Monday-Wednesday.

Western Midwest Forecast: Scattered showers through Wednesday, north Thursday-Friday. Temperatures near to above normal through Wednesday, below normal Thursday-Friday.

Eastern Midwest Forecast: Scattered showers through Wednesday, north Thursday-Friday. Temperatures above to well above normal through Wednesday, below normal west and above normal east Thursday, near to below normal Friday. 6-to-10-day outlook: Mostly dry Saturday. Scattered showers Sunday-Tuesday. Mostly dry Wednesday. Temperatures below to well below normal Saturday-Wednesday.

Canadian Prairies Forecast: Alberta, Saskatchewan, Manitoba Forecast: Isolated showers Tuesday. Moderate to heavy snow east Wednesday. Temperatures below to well below normal through Wednesday. Scattered showers east Thursday-Friday. Temperatures below to well below normal Thursday-Friday.  Isolated to scattered showers Saturday-Sunday. Mostly dry Monday-Wednesday. Temperatures below to well below normal Saturday-Wednesday.

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

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry through Friday. Temperatures below normal Tuesday-Friday. La Pampa, Southern Buenos Aires Forecast: Mostly dry through Friday. Temperatures below normal through Friday.

The player sheet for 4/11 had funds: net buyers of 12,000 contracts of  SRW wheat, sellers of 1,000 corn, buyers of 14,500 soybeans, sellers of 4,500 soymeal, and  sellers of 2,500 soyoil.

TENDERS

• CORN SALE: The U.S. Department of Agriculture confirmed private sales of 680,000 tonnes of U.S. corn to China for shipment in the 2021/22 marketing year and 340,000 tonnes for shipment in 2022/23.
• WHEAT TENDER: Egypt’s state grains buyer set a tender on Monday to buy an unspecified amount of wheat from European import origins included in its tender book. The General Authority for Supply Commodities (GASC) said that deadline for offers is April 13 and suppliers can submit bids on FOB or C&F basis, with payment at sight.
• WHEAT TENDER UPDATE: Bangladesh’s state grains buyer received the lowest price offer assessed at $399.19 a tonne CIF liner out in an international tender to purchase and import 50,000 tonnes of wheat which closed on Monday

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• WHEAT TENDER: South Korea’s leading feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 207,000 tonnes of animal feed corn with the Black Sea region excluded as an origin
• BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley
• 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

Few Trucks Arriving at Argentina Grain Ports Amid Diesel Strike

Just 1,170 trucks were lined up to enter ports on Monday, when the daily average last week was closer to 6,000, trucking agency AgroEntregas says on Twitter.

• NOTE: Argentine Transporters’ Association FeTrA started a strike on Monday to protest diesel shortages
• Truckers are blocking access to several ports run by Cargill, Louis Dreyfus and other traders: AgroEntregas

Up to 100 Agricultural Ships Stuck at Ukraine Ports: UAC

Almost all Ukrainian ports remain blocked or occupied, which has trapped up to 100 vessels carrying grain and agricultural products, analyst UkrAgroConsult says in a note.

• Some grain consignments are transported by rail to Romania, Bulgaria ports
• Estimated shipping costs from Black Sea region up 50-80% y/y
• There’s also risks from drifting sea mines and insurance companies are increasing payments for war-related risks
• Rising freight rates “will make Black Sea grains less competitive in the world market”
  • “The freight cost will keep growing as long as the hostilities in Ukraine continue”

Egypt Soybean Imports Seen Rising 11% in 2022-23

Egypt’s Soybean imports are forecast to rise by 11% in the October 2022 through September 2023 marketing year due to increased crushing capacity, the U.S. Agriculture Department said.

Soybeans imports are expected to rise to 4.0 million metric tons compared with 3.6 million tons this year, the USDA said in its annual Egypt Oilseeds and products report.

U.S.-origin soybean exports to Egypt have risen dramatically from 2016-17 to 2020-21, currently accounting for 72.2% of the total beans being exported to Egypt. Other major exporters include Argentina, Ukraine, Uruguay, Brazil and Paraguay, the report said.

Between October 2021 and January 2022, Egypt had already imported some 1.81 million tons of soybeans; with 90% of the volume coming from the U.S., an increase of around 18% compared with the prior-year period’s 1.54 million tons of imported soybeans; when 89.6% of the volume came from the U.S., it said.

In 2022-23, Egypt’s soybean production is forecast to rise to 34,000 tons, from 9,000 tons this year, largely due to an increase in harvested area, the report said.

WHEAT/CEPEA: Lower world stock push up international prices; sowing begins in Brazil

Wheat prices are rising again in the international market, influenced by estimates for higher consumption and lower world stocks in the 2021/22 season. On the other hand, in Brazil, values are following opposite directions: while the prices paid to wheat farmers are fading, due to expectations for larger area, in the wholesale market (deals between processors), quotations have increased, following international valuations and the dollar appreciation against the Real. In Paraná, sowing has begun, having reached 0.1% of the state area, according to Deral.

In the report released this month, the USDA estimates the world consumption of wheat to total 791.08 million tons, 0.5% up from that forecast in March and 1.1% higher than that last season. World stocks are estimated to be 1.1% lower than that reported in March and 4.2% below that in the 2020/21 season, totaling 278.42 million tons, majorly because of lower production in India. Thus, the stock/consumption ratio decreased from 35.8% estimated in March to 35.2% in April.

BRAZILIAN MARKET – In Brazil, according to Cepea surveys, the prices paid to wheat farmers dropped by 1.49% in Paraná (PR), 1.4% in Santa Catarina (SC) and 0.99% in Rio Grande do Sul. In the wholesale market (deals between processors), quotations increased by 0.76% in São Paulo, 0.69% in PR and 0.66% in SC – in RS, values dropped by 1.21%. In the same comparison, the dollar rose by 0.77% against the Real, closing at BRL 4.705 on Friday, 8.

CROPS – In this month’s report, Conab revised down imports’ estimates compared to that forecast in March, to 6.5 million tons between Aug/21 and Jul/22. Thus the estimates for domestic availability (initial stocks + output + imports) were raised to 15.49 million tons, 10.4% up from the previous season.

As for demand, consumption estimates were revised down from that reported in March, to 12.15 million tons, 2.1% higher than that last season. However, exports estimates were revised up again, to 3 million tons between Aug/21 and Jul/22, still due to the higher acceptance of lower pH wheat and the strong dollar. This volume is 2.6-fold that from the previous season (+164%). With these changes, ending stocks, by Jul/22, may total 337.8 thousand tons.

For the new 2022/23 season, which will begin in August, the output is estimated at 790 million tons, 3% higher than that last season. Imports are forecast to total 6.5 million tons, and exports, a million tons. With consumption estimated at 12.75 million tons, the domestic availability of wheat is forecast at 14.75 million tons, 4.8% down from that in 2021. Thus, ending stocks, in July/23, were revised up to 995.4 thousand tons.

EXPORTS AND IMPORTS – In March, Brazil exported 801 thousand tons of wheat, lower than the record set in February (836.84 thousand tons). Between April/21 and Mar/22, shipments totaled 2.85 million tons, the highest since Jan/13 (2.63 million tons).

As for imports, in March, Brazil imported 527.70 thousand tons of wheat, 5.8% more than that in March, but still 13.6% less than that in Mar/21. Of the total imported, 85.5% came from Argentina; 6.6%, from Paraguay; 6.2%, from Uruguay; and 1.7%, from the Netherlands. In the last 12 months, imports totaled 6.05 million tons, according to Secex.

Indonesia Sees CPO Output Rising 3% This Year: Agriculture Min.

Indonesia agriculture ministry estimates crude palm oil production to increase to 48.24m tons from 46.85m tons in 2021, according to Ali Jamil, acting director general of estate crops, at the agriculture ministry.

• Govt seeks to boost palm oil output from small holders from 3.3 ton CPO/ha currently by replanting program, Jamil told parliamentary hearing on Tuesday
• Smallholders plantation seen contributing 16.3m tons to national CPO production this year
• Indonesia collected 12.47t rupiah of palm oil exports levy in Jan.-March, according to presentation slides from Eddy Abdurrachman, president director of Indonesia Oil Palm Plantations Fund Management Agency (BPDPKS) at the hearing
• In 2021, the agency raised 71.64t rupiah from palm oil exports levy

India’s Southwest Monsoon Seen Normal in 2022, Skymet Says

The June-September monsoon season is expected to be normal this year, New Delhi-based private forecaster Skymet Weather Services says Tuesday.

• Rains are likely to be 98% of the long-term average of 880.6mm, the company says on its website
• Rajasthan, Gujarat, Nagaland, Manipur, Mizoram and Tripura states could be at risk of receiving below-normal rains throughout the season
• Punjab, Haryana, Uttar Pradesh and some areas of Maharashtra and Madhya Pradesh may witness above-normal rainfall during the monsoon period
• The occurrence of El Nino is ruled out this year

Egypt Looks to Buy Wheat Outside Tenders to Secure Supply

• The government currently only books cargoes via tenders
• Egypt plans to soon let companies also submit offers directly

Egypt’s government plans to soon allow buying wheat outside of tenders as the biggest importer of the grain seeks more ways to secure supplies amid disruption from the war in Ukraine.

The government currently only books cargoes via tenders and typically mostly from Black Sea countries like Russia and Ukraine, where flows have been upended by the war. It now wants to let companies to also be able to submit offers directly to the Supply Ministry, said people familiar with the matter who asked not to be identified because they’re not authorized to speak to media.

Under the changes, the cheapest offers that aren’t selected in tenders run by the General Authority for Supply Commodities would then be allowed to be submitted directly to the Supply Ministry the following day for consideration, the people said. Egypt also plans to accept 50,000-ton cargoes for direct purchases, rather than the usual 60,000- or 55,000-ton shipments favored in tenders, the people said.

The most-populous Arab nation uses its wheat imports it as the cornerstone of a bread-subsidy program for millions of people. But the Ukraine war has sent wheat prices soaring — putting pressure on the Egyptian government’s finances — and made it harder to secure cargoes from the Black Sea region.

Changes to Egyptian tenders that have already taken place include the introduction of specific origins. On Monday, GASC announced a tender for Wednesday seeking wheat of European origin only.

Morocco Plans to Boost Wheat Reserves: Agriculture Minister

The finance and agriculture ministries started an initiative this month to gradually build the kingdom’s reserves of soft and durum wheat, Agriculture Minister Mohamed Sadiki said in replies to lawmakers’ questions.

• Note (April. 7): A government spokesman said it delayed a plan to boost national inventories of energy products, grains, oilseeds and medical equipment due to the surge in international prices and lack of financial resources
• State grains agency ONICL will manage the additional reserves in coordination with private operators
• Of 3.52m hectares planted with grains during the fall, soft wheat acreage was 44% and durum wheat 24%
• The “worst drought in over 40 years” destroyed 53% of grain-planted areas and left another 10% in bad shape, the minister said
  • About a fifth of grain-planted areas are in good shape and 16% are in average condition
• Domestic sugar output this year is projected to drop 4% to 372,000 tons

Biden Will Allow Sale of Higher-Ethanol Gas in Bid to Tame Costs

• Analysts say policy shift could spur ‘slight’ gasoline savings
• Trump-era rule allowing year-round E15 sales rejected by court

President Joe Biden plans to allow expanded sales of higher-ethanol gasoline in an effort to lower fuel prices and counter the political blowback from them.

Biden is set to unveil the initiative during a Tuesday visit to a Poet LLC ethanol mill in Iowa — the top U.S. corn state. The change, which would apply on a temporary basis over the summer months, would waive anti-pollution restrictions that effectively block warm-weather sales of E15 gasoline in areas where smog is a problem.

The shift could yield a modest effect on pump prices given that in areas where’s it already available, E15 sells at a 5- to 10-cent per gallon discount to regular gasoline, said Patrick DeHaan, head of petroleum analysis at retail tracker Gas Buddy. E15 is gasoline comprised of 15% ethanol.

A senior administration official estimated that the use of E15 could save motorists, on average, 10 cents a gallon. The administration has blamed the increase in prices squarely on Russia’s invasion of Ukraine.

“It may also reduce oil consumption, replacing it with corn consumption,” DeHaan said. “However, the war on Ukraine could boost corn prices in the months ahead, so the calculus could change.”

The measure marks another attempt by Biden to douse high gasoline costs and inflation that are wearing on voters with the approach of the November midterm elections. In poll after poll, voters have cited inflation as one of their top concerns. This move would allow the widespread sale of E15 from June 1 through Sept. 15, when many Americans take to the roads on summer vacations.

Earlier: ‘Cheap’ Ethanol Seen as Potential Blunt to Gasoline Price Shocks

Ethanol producers and their allies in Congress have been imploring the administration to make the change permanent, after a successful legal challenge by oil refiners led to a court last year overturning an initial attempt by the Trump administration.

Biofuel advocates argue that the seasonal limitations can discourage filling stations from offering the higher-ethanol blend. About 2,300 of the nation’s more than 150,000 stations now sell E15, and though it is available in roughly 30 states, the fuel is most widely offered in the Midwest.

The president’s move is “good news for farmers and ethanol producers,” according to Monte Shaw, executive director of the Iowa Renewable FuelsAssociation. “Summer sales this year could account for about 250 million gallons of E15. But the impact goes far beyond summer sales in 2022. This means retailers aren’t forced to abandon E15.”

Biden campaigned on promises to promote ethanol and support the 17-year-old Renewable Fuel Standard law that compels the use of plant-based alternative fuels. However, once in the White House, he’s faced the same challenges as did his predecessors in balancing competing demands from oil refiners and agricultural interests.

According to an Environmental Protection Agency guidance document, waivers can be used in limited instances, such as supply emergencies, but cannot be put in place to address price concerns.

High corn prices could still blunt any savings for increasing the ethanol content in summer fuel supplies. Corn futures recently touched the highest level since 2012 as severe drought ravaged key U.S. growing regions. At the same time, the war in Ukraine is disrupting farming activity in a crucial supplier.

A fact sheet listing the Biden administration’s fuel-related efforts also said that the EPA is proposing a change that would allow canola-based biofuels to qualify for credits under a federal program that compels refiners to blend plant-based alternatives into gasoline and diesel.

Brazil May Look to U.S. for Fertilizer Supply Ahead of Planting

Urea and phosphate prices backed off in New Orleans (NOLA) as wet weather delayed demand from North American farmers for a second week, raising the possibility of U.S. exports of surplus fertilizer to Brazil to take advantage of a record premium. Brazilian buyers are scrambling to replace imports from sanctioned suppliers Russia and Belarus.

Brazilian Market Suggests Potash Rally Isn’t Over: Weekly Wrap

Brazilian potash prices are at a record premium to the world as buyers struggle to find non-sanctioned supply. Brazil’s main potash import season begins in 2Q, just as sanctions on Russia and Belarus eliminate key producers from the global market. Last year, Brazil sourced 46% of its 12.8 million metric tons of potash imports from Russia and Belarus. Though Brazil is trading at a record $335-a-ton premium to the U.S. market to incentivize imports, its options are limited. Buyers can turn to Canada, but India and China moved first and snapped up some excess Canadian supply with long-term contracts in February.

Nutrien and Mosaic are the largest publicly traded potash producers. Bringing on new capacity takes about five years. Potash deposits are few and primarily in eastern Europe and Canada.