Global Ag News For Apr 8.22

TODAY

Wheat prices overnight are up 1 3/4 in SRW, down 1/4 in HRW, up 1/4 in HRS; Corn is down 3; Soybeans up 5 3/4; Soymeal up $0.13; Soyoil up 0.09.

For the week so far wheat prices are up 45 1/2 in SRW, up 61 1/4 in HRW, up 37 1/2 in HRS; Corn is up 26 1/4; Soybeans up 70; Soymeal up $1.24; Soyoil up 2.01. For the month to date wheat prices are up 25 in SRW, up 43 1/4 in HRW, up 22 3/4 in HRS; Corn is up 14 1/4; Soybeans up 33; Soymeal down $6.00; Soyoil up 2.95.

Year-To-Date nearby futures are up 33% in SRW, up 34% in HRW, up 13% in HRS; Corn is up 27%; Soybeans up 24%; Soymeal up 12%; Soyoil up 29%.

Chinese Ag futures (SEP 22) Soybeans up 39 yuan; Soymeal up 30; Soyoil up 76; Palm oil up 78; Corn down 24 — Malaysian Palm is up 94. Malaysian palm oil prices overnight were up 94 ringgit (+1.61%) at 5921.

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 7 were: SRW Wheat down 3,671 contracts, HRW Wheat down 352, Corn up 2,564, Soybeans up 2,532, Soymeal up 4,715, Soyoil up 5,234

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

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

Western Midwest Forecast: West: Mostly dry Friday-Sunday. Scattered showers Monday. Temperatures below normal through Saturday, near normal Sunday, above normal Monday

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

 Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated showers to scattered showers through Friday. Temperatures near to above normal through Friday. Mato Grosso, MGDS and southern Goias Forecast: Isolated showers through Friday. Temperatures near to above normal through Friday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Isolated showers Friday. Temperatures near to above normal Friday. La Pampa, Southern Buenos Aires Forecast: Isolated showers Friday. Temperatures near to above normal Friday.

Canadian Prairies Weather: Alberta, Saskatchewan, Manitoba Forecast: Mostly dry Friday. Temperatures above normal Friday. Isolated to scattered showers Saturday-Wednesday. Temperatures above normal Saturday, near to below normal Sunday, below to well below normal Monday-Wednesday.

 The player sheet for 4/7 had funds: net sellers of 6,500 contracts of  SRW wheat, buyers of 2,500 corn, sellers of 10,000 soybeans, sellers of 1,000 soymeal, and  buyers of 5,000 soyoil.

TENDERS

• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 137,516 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that closed on Thursday.
• FEED WHEAT PURCHASE: An importer group in the Philippines is believed to have bought around 55,000 tonnes of animal feed wheat expected to be sourced from India in an international tender which closed on Wednesday the tender were considerably higher at around $400 a tonne c&f, they said. (Full Story)
• 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

PENDING TENDERS

• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat
• BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley

 Ukraine Farmers Switching From Corn to Soy, Sunflowers: Club

Given the current lack of export capacity in Ukraine, farmers are trying to plant less corn, Roman Slaston, director general of the Ukrainian Agribusiness Club, said Thursday in a webinar.

• They’re switching toward soybeans or sunflowers on expectations that logistics could be disrupted for a lengthy period
• Expects Ukraine to seed about 14m hectares of spring crops
  • NOTE: The agriculture ministry recently forecast spring plantings at 13.4m hectares, down 21% y/y
• With ports blocked, the country is redirecting grain exports by rail to its western border with EU countries
  • Total capacity will only be about 1m tons per month, about 15-20% of normal volumes
  • With that capacity, it would take up to 2 years for Ukraine to ship its current surplus
  • It could also create a storage crunch once the next harvest arrives

FAO-Amis Cuts 2021-22 Trade Estimates for Corn, Wheat and Soy

The global corn-trading estimate was cut to 177.8m tons from 187.5m tons on reduced export expectations for Ukraine and Russia, FAO-AMIS said in a report.

• Also cites lower expected imports for some countries due to reduced world availability and high prices
• The wheat-trade outlook was lowered to 189.8m tons from 194m tons
  • Soy-trade projection was reduced to 157.1m tons from 160.1m tons
• Cites smaller import forecast for China, and lower shipments from Brazil, Paraguay and Ukraine

Ukrainian PM says this year’s harvest will be 20% less than last year

Ukrainian Prime Minister Denys Shmyhal said on Friday this year’s grain harvest is likely to be 20% less than last year because of a reduced sowing area following Russia’s invasion.

He said there was a shortage of fuel for farmers but Ukraine knew how to keep them supplied. He also said Ukraine had large stocks of grain, cereals and vegetable oil, and could feed its population.

At Least 20% of Ukraine Wheat Crop May Go Unharvested: FAO

Global wheat production outlook for 2022 cut from March estimate to 784m tons, largely due to the conflict in Ukraine, the UN’s Food and Agriculture Organization says Friday in a report.

• NOTE: Last month, FAO had projected 790m tons
• Ukraine wheat crop expected to fall below its five-year average, with at least 20% of plantings unharvested due to “direct destruction, constrained access or a lack of resources to harvest crops”
  • Yields also seen declining because of disruptions to inputs and fieldwork
• Good weather is bolstering Russian crop prospects, but there are also concerns about imports of agricultural inputs
• Long-term dryness is hurting yield prospects for the U.S. crop

FOR THE 2021-22 SEASON:

• Outlook for world grain trade cut to 469m tons, down 14.6m tons from March
  • Ukraine wheat exports cut 5m tons on port closures and Russia cut 3.5m tons on financing and freight challenges
  • Ukraine corn exports cut 12.5m tons and Russia by 2m tons
  • Bigger sales from EU, India, Argentina and U.S. will only partly make up for the losses
• World grains production estimate up slightly to 2.8b tons
• World grain stockpiles raised to about 851m tons, up 15m tons from March
  • That’s based on bigger Ukraine and Russian stockpiles from the export losses

China’s Corn Prices Will Remain High Due to Lockdowns: CASDE

China’s domestic corn prices will remain high as transportation of grain in major growing regions in the northeast is hampered by virus control measures, according to China Agricultural Supply and Demand Estimates.

• Demand for corn in animal feed has weakened due to high prices and as hog farming continues to be unprofitable
• However, with the surge in wheat prices, the proportion of corn used in feed has increased
• NOTE: Dalian corn futures jumped to a record this week; lockdown in Jilin, China’s second-biggest corn-growing province, is disrupting spring planting activity
• CASDE maintains its 2021-22 supply and demand forecasts for corn, soybeans, cotton and sugar
• It cut forecast for China’s 2021-22 vegetable oil production to 29.59 million tons, down 70,000 tons from previous estimate; rapeseed oil output is expected to be lower

Brazil Slashes Soy Exports Estimate as Local Crushing Soars

Brazil’s 2022 soybean exports was reduced to 77m tons from 80.2m tons in the previous report as attractive crushing margins may boost domestic processing of the oilseed, Brazil’s national supply company Conab says Thursday in a report.

• Shipments seen falling from 86m tons last season
• Local crush projection was raised to 46.5m tons from 42.9m tons
• Winter-corn crop, also known as safrinha, seen at 88.5m tons, up from 86.15m tons previously
  • Production seen jumping 46% y/y
• Planted area seen rising 7% y/y to 16m ha, seeding is 98% complete
• Yields may rise in most of growing regions as weather has been beneficial so far
  • Only Minas Gerais and Goias have raised some concerns after declining precipitation in March
• Corn exports estimate was raised to 37m tons from 35m tons
  • Shipments totaled 20.8m tons past season

U.S. Corn Crops in Drought Area Drop to 31%: USDA

Brazil 2022 Wheat Crop May Surpass 10 Million Tns, Set A New Record -StoneX

BRAZIL 2022 WHEAT CROP MAY SURPASS 10 MILLION TNS, SET A NEW RECORD -STONEX

BRAZIL’S WHEAT PLANTED AREA SEEN UP 20.6% IN 2022 -STONEX

Canada’s canola exports seen rebounding in 2022/23 -USDA attache

Following are selected highlights from a report issued by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Ottawa:

“Canola ending stocks are forecast to close marketing year (MY) 2021/22 at just 15% of the five-year average, driven by reduced yield due to drought and strong global demand for oilseeds. Assuming a return to average yields, canola exports are forecast to nearly double in MY 2022/23, driven by strong global demand for oilseeds and a rebuilding of exportable supplies. Canola yield recovery is dependent on vast canola-growing areas of Saskatchewan and Alberta receiving more spring rain and lessening current drought conditions. Six crush plant expansions and new builds are projected to bump canola crush capacity from 11 million metric tons (MT) in 2021 to at least 17 million MT by 2025. … In marketing year (MY) 2022/23, Canada’s total production of oilseeds (canola, soybean, and sunflower seeds) is expected to increase 35% over the previous year to 25.7 million metric tons (MT) based on expectations of improved canola yields.”

Sales of Brazil 2021/2022 soy crop lag compared with last season

Sales of Brazil’s 2021/2022 soybean crop reached 55% of estimated output through April 1, a considerable advance from the past few weeks but below last year’s record level of 71.5% at this time.

According to a statement on Thursday from Datagro, an agribusiness consultancy, Brazil will have an estimated soy production of 125.11 million tonnes in the current cycle.

This means Brazilian soy farmers have sold an estimated 68.81 million tonnes of their crop, Datagro said.

Datagro also noted Brazil, the world’s biggest soy producer and exporter, sold 6.9% of the estimated production from the 2022/2023 crop, which they will begin to plant later this year.

This lags the 8.4% average for the past five years and is well below the 12.8% for the same period in 2021.

“This conservative stance is related to farmers’ insecurity regarding agricultural inputs they will be able to use in the next crop,” França Junior, an analyst with Datagro, said in the statement.

He specifically mentioned sky-high fertilizer costs as a result of trade disruptions in the wake of Russia’s attack on Ukraine.

Rains Drives Biggest South African Locust Infestation in Decades

• Parts of country had heaviest rain on record in December
• Brown locust infestation began in September, has spread

South Africa is experiencing its biggest infestation of brown locusts in decades with heavy rains allowing the crop-eating insects to multiply rapidly.

The infestation, which started in September, has spread to three provinces – the Eastern Cape, Northern Cape and Western Cape – and 80 million rand ($5.4 million) has already been spent combating it with insecticide, the agriculture department said in a statement on Thursday.

“Due to the amount of rainfall received, the outbreak tends to escalate” allowing the locusts to quickly breed, the department said. “The wind is also playing a role in migrating the swarms to the areas where” the locusts haven’t been seen before, including citrus farms in the Eastern Cape, it said.

South Africa has had an exceptionally wet rainy season driven by the La Nina weather phenomenon, which usually results in above normal rainfall in Southern Africa. In December many districts in the country had their heaviest rain since records began in 1921. Much of South Africa experiences a summer rainy season with rains falling from about November through to April.

Slovak Prime Minister Offers Ukraine Help With Wheat Exports

Slovakia will offer Ukraine help with wheat exports by rail transport as its traditional Black Sea ports are blocked by the Russian army, Prime Minister Eduard Heger tells reporters before his departure for Kyiv.

Slovakia also wants to offer Ukraine team of experts to investigate the Russian army’s alleged war crimes; will also document testimonials from Ukrainian refugees who arrived in Slovakia

French Soft-Wheat Ratings Steady, Corn Planting Begins: AgriMer

EPA Yanks Refinery Biofuel Waivers, Skips Credit Mandate

• Refineries denied waivers from 2018 biofuel-blending quotas
• EPA says they won’t have to buy biofuel credits to comply

The Biden administration on Thursday rescinded 31 refineries’ previously granted waivers from 2018 biofuel-blending requirements — but said it will not require the facilities to buy compliance credits to fulfill the quotas.

The Environmental Protection Agency’s move was designed to stave off disruptions in a tight market for those compliance credits, something that could drive up already high gasoline prices.

The approach underscores the continued legal and political pitfalls surrounding the 17-year-old Renewable Fuel Standard program that compels refineries to mix alternatives such as corn-based ethanol into gasoline and diesel. Joe Biden promised to promote ethanol and other biofuels when campaigning for president, but once in the White House he’s faced the same dilemma predecessors did in balancing competing demands from oil refiners and agricultural interests.

At issue is the EPA’s 2019 decision to grant 31 refineries exemptions from 2018 biofuel blending quotas while denying the relief to five others. After renewable fuel supporters challenged the move, the U.S. Court of Appeals for the District of Columbia Circuit in December gave the EPA 120 days to issue new decisions.

With its action Thursday, the EPA said the 31 previously granted exemptions were wrongly authorized because any economic hardship suffered by the facilities was not directly caused by the RFS program itself.

The EPA said in a notice it was providing the 31 previously exempted refineries an “alternate compliance approach” so they can fulfill 2018 requirements without buying or redeeming biofuel compliance credits known as renewable identification numbers, or RINs. Under the EPA’s plan, the affected refineries can fulfill their obligations by resubmitting annual compliance reports for 2018.

Refining advocates had warned the Biden administration that forcing refineries to acquire RINs to satisfy previously waived quotas could spur excessive demand for available credits and potentially higher gasoline costs, undermining White House efforts to lower prices at the pump.

The EPA appeared sympathetic to those concerns. “Limited available RINs makes it impracticable for these 31 small refineries to meet their 2018 obligations under the existing compliance scheme,” the EPA said. By contrast, the agency said, a drawdown of 1.4 billion credits would seriously jeopardize the ability of refiners to satisfy future quotas and could result in “serious harmful impacts” to the entire program.

The denials could provide legal support for a separate EPA proposal to reject more than 60 other refinery requests for waivers from quotas spanning 2016 to 2021, the agency said. The agency said the new rejections were consistent with a 2020 decision by the 10th Circuit U.S. Court of Appeals that previous exemptions had been improperly granted because refineries’ economic hardship wasn’t tied to the RFS.

The Biden administration is set to finalize blending quotas for 2020, 2021 and 2022 by June 3.

Containers Pile Up at China Ports as Lockdown Blocks Trucks

• Refrigerated and hazardous cargo pile up at Shanghai port
• Drop in Shanghai’s exports to impact other Asia nations: Citi

Containers full of frozen food and chemicals are piling up at China’s biggest port in Shanghai as a Covid lockdown in the city and compulsory virus testing means truckers can’t get to the docks to pick up boxes.

A shortage of trucks to haul containers from the port is impeding the clearance of imports, Ocean Network Express said in a customer advisory Wednesday. While the port is operating normally, there are a “critically high” number of refrigerated containers and items classified as dangerous goods piled up at two storage yards, meaning some ships carrying those types of cargo may not be able to unload any more boxes at the port, it said.

Shanghai is now the epicenter of China’s worst Covid outbreak in two years, with more than 21,000 cases reported just on Thursday. The shortage of trucks is also hitting companies in the city, which have been able to continue working through the lockdown, with chip giant Semiconductor Manufacturing International Corp. struggling to secure trucks to ship out finished goods.

Truckers form a crucial component of supply chains in China, moving raw materials from coastal ports to factories further inland. The backlog is likely contributing to growing ship queues off China, threatening even more delays and higher freight rates in coming months.

Tightened restrictions on truckers in other parts of China are also delaying the delivery and return of containers to ports, according to freight forwarders. There is a possibility that containers of frozen food or hazardous items like lithium batteries or chemicals won’t be able to land at Shanghai and will need to be re-routed to other ports, ONE said.

Yantian terminal at Shenzhen port in southern China halted the collection and delivery of containers at all berths for about two hours Thursday evening to smooth out port operations, according to an advisory sent to customers. Truckers were advised not to arrive earlier to pick up boxes as they could get held up.

The trucker shortage and closures of warehouses in Shanghai are also affecting nearby Zhejiang and Jiangsu, Citigroup Inc. analysts said in a report. The two provinces are major manufacturing hubs that produce about one third of China’s total exports.

India’s import bill for edible oil likely to jump by $2 billion

India’s import bill for edible oils is slated to jump by $2 billion, following the sharp rise in prices after Russian attack on Ukraine. Supply disruptions caused by the conflict in Ukraine have pushed up sunflower prices from $1,500 per tonne to $2,050 per tonne. Soya oil is now trading at $1,800 per tonne from $1,500 per tonne prior to the war, while palm oil is up from $1,400 per tonne to $1,700.

“The import bill has gone up by around $ 2 billion annually due to the invasion and overall price table going up,” Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy firm told FE.

India has contracted 45,000 tonne of sunflower oil from Russia and another 20,000 tonnes of sunflower from Argentina for the current month at $2100 per tonne. The ongoing conflict between Russia and Ukraine has pushed up edible oil prices sharply in the March quarter. Prices had shot up to $2,200 per tonne right after the attack but have cooled down with Russia and Argentina increasing supply.

India imports 130 lakh tonne of oil annually. The normal cost of this would have been $18 billion but due to invasion, the import bill has gone by $20 billion, claim industry players. The country used to import 2 lakh tonne of sunflower oil per month, but now we will get 1 lakh tonne which will serve the core demand of consumers. Other users will switch over to soya or palm oil or local domestic oil like rice brand and ground nut oil.

Refined sunflower oil constitutes 10% of India’s consumption of 230-240 lakh tonne of edible oils (all types) annually. The country imports nearly 60% of its edible oil requirement.

Around 90% of India’s annual crude sunflower oil requirement of 22-23 lakh tonne comes from Ukraine to the tune of 70% and 20% from Russia and the remaining 10% from Argentina. For the current oil year starting from November 2021, volume wise, the highest import has been of palm oil. Out of 130 lakh tonne annually around 80 lakh tonne is palm oil, 35 lakh tonne is soy oil and sunflower oil is around 15 lakh tonne.

At present, Ukraine supplies are tight because the war situation continues. Although sunflower sowing has started in Ukraine, it has to be completed by May 15, industry people said. They believe that because of the war disruption, sowing will not exceed 55-60% for the coming season. According to the Solvent Extractors Association of India (SEA), India had imported around 10 lakh tonnes of edible oil in March 2022. Of this, sunflower imports accounted for 1.70 lakh tonnes. In March last year, India had imported around 9.6 lakh tonnes of edible oil.

Food Prices Jump Most on Record as War Sparks Supply Chaos

• UN gauge of world food costs climbed to fresh record in March
• Higher prices are contributing to inflation and hunger crisis

Global food prices are surging at the fastest pace ever as the war in Ukraine chokes crop supplies, piling more inflationary pain on consumers and worsening a global hunger crisis.

The war has wreaked havoc on supply chains in the crucial Black Sea breadbasket region, upending global trade flows and fueling panic about shortages of key staples such as wheat and cooking oils. That’s sent food prices — which were already surging before the conflict started — to a record, with a United Nations’ index of world costs soaring another 13% last month.

Ukraine’s ports are closed and many vessels are avoiding the region, which accounts for about a quarter of all grains trade. Farmers in Ukraine, the top sunflower-oil exporter, are expected to drastically cut crop plantings and the nation is struggling to export supplies already harvested. Elsewhere in the world, high energy and fertilizer prices are raising food-production costs, which is feeding through to bigger grocery bills or threatening output.

The food price rally is felt most in poor countries where groceries make up a large share of consumer budgets — and the fallout from Russia’s invasion has sent costs of basic foods like bread soaring. The United Nations’ World Food Programme recently said expensive staples in import-dependent Middle Eastern and North African nations are putting people’s resilience at a “breaking point.”

The surging costs are spurring some countries to hold off on imports, seek new suppliers or draw down local stockpiles, though that won’t be a long-term fix, said Erin Collier, an economist at the UN’s Food and Agriculture Organization.

“It’s basically kind of deterring demand,” she said in an interview. “That can only last for so long. Wheat is a staple food.”

The FAO’s gauge of global prices has jumped about 75% since mid-2020, eclipsing levels seen in 2008 and 2011 that contributed to global food crises. Last month’s surge helped prices round out a seventh straight quarterly gain, the longest such run since 2008.

The UN has warned that prices could still climb much more.

That’s bad news for the world’s hunger problem. Cost increases stemming from the war and resulting sanctions on Russia will — without action — push more than 40 million additional people into extreme poverty, according to an analysis published last month by the Center for Global Development, a non-profit think tank whose funders include Bloomberg Philanthropies.

Morocco Wheat Inventories Sufficient for 5 months: Official

Authorities 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, government spokesman Mustapha Baitas tell reporters in Rabat.

• Note: In Oct, Morocco’s King Urges New Govt to Boost Food, Energy Inventories
• “There is no telling” how high prices can go: Baitas
• Recent rainfall buoys outlook for local farmers and GDP growth: Baitas
• Grain harvest this year will not match last year’s 10.2m tons: Baitas