Global Ag News for Aug 5th

TODAY – EXPORT SALES

Wheat prices overnight are up 2 1/2 in SRW, up 2 3/4 in HRW, up 8 1/2 in HRS; Corn is up 2 1/4; Soybeans down 7 1/2; Soymeal down $0.20; Soyoil down 0.29.

For the week so far wheat prices are up 16 in SRW, up 23 3/4 in HRW, up 6 3/4 in HRS; Corn is up 3 3/4; Soybeans down 31; Soymeal down $0.19; Soyoil down 1.78.

Chinese Ag futures (SEP 21) Soybeans up 34 yuan ; Soymeal down 10; Soyoil up 170; Palm oil up 166; Corn up 19 — Malasyian Palm is down 79. Malaysian palm oil prices overnight were down 79 ringgit (-1.84%) at 4212 after two days of gains, with inventories in second-biggest grower Malaysia estimated to have increased for a fifth month to the highest level since September even as production weakens.

Midwest corn, soybean and winter wheat forecasts: West: Mostly dry Wednesday. Isolated showers Thursday, north Friday. Scattered showers Saturday-Sunday. Temperatures above normal north and below normal south Wednesday-Thursday, near to above normal Friday-Saturday, above normal Sunday. East: Mostly dry Wednesday. Isolated showers Thursday-Saturday. Scattered showers Sunday. Temperatures near to below normal through Thursday, near to above normal Friday-Saturday, above normal Sunday. 6 to 10 day outlook: Scattered showers Monday-Friday. Temperatures above normal Monday-Thursday, near to above normal Friday.

The player sheet for 8/4 had funds: net sellers of 4,500 contracts of  SRW wheat, sellers of 5,000 corn, sellers of 3,000 soybeans, buyers of 2,000 soymeal, and  sellers of 2,000 soyoil.

Preliminary changes in futures Open Interest as of August 4 were: SRW Wheat down 661 contracts, HRW Wheat up 4,292, Corn down 6,017, Soybeans down 2,771, Soymeal down 1,551, Soyoil down 71.

There were changes in registrations (-20 Soymeal). Registration total: 0 SRW Wheat contracts; 0 Oats; 0 Corn; 0 Soybeans; 388 Soyoil; 155 Soymeal; 1,288 HRW Wheat.

TENDERS

• WHEAT PURCHASE: Algeria’s state grains agency OAIC purchased around 300,000 tonnes of optional-origin milling wheat in an international tender which closed on Monday
• WHEAT PURCHASE UPDATE: Turkey’s state grain board TMO confirmed final purchases of only around 245,000 tonnes of wheat in an international tender which closed on Wednesday
• WHEAT TENDER PASSED: Jordan’s state grain buyer, the trade ministry, made no purchase in an international tender to buy 120,000 tonnes of milling wheat which closed on Wednesday
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 80,000 tonnes of feed wheat and 100,000 tonnes of feed barley

PENDING TENDERS

• WHEAT TENDER: Japan’s Ministry of Agriculture sought 119,435 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender.
• WHEAT TENDER: The Taiwan Flour Millers’ Association issued an international tender to purchase 48,000 tonnes of grade 1 milling wheat to be sourced from the United States
• WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 400,000 tonnes of wheat
• WHEAT TENDER: Jordan’s state grain buyer has issued a new tender to buy 120,000 tonnes of milling wheat which can be sourced from optional origins

GRAIN EXPORT SURVEY: Corn, Soy, Wheat Sales Before USDA Report

Estimate ranges are based on a Bloomberg survey of six analysts; the USDA is scheduled to release its export sales report on Thursday for week ending July 29.

• Corn est. range 100k – 700k tons, with avg of 452k
• Soybean est. range 150k – 700k tons, with avg of 386k

DOE: U.S. Ethanol Stocks Fall 0.4% to 22.649M Bbl

According to the U.S. Department of Energy’s weekly petroleum report.

• Analysts were expecting 22.655 mln bbl
• Plant production at 1.013m b/d, compared to survey avg of 1.007m

Argentine farmer sales of 2020/21 soy down 7.7% from last year

Argentine producers have sold 26.3 million tonnes of soybeans from the 2020/21 season, the Agriculture Ministry said on Wednesday, marking a 7.7% reduction in sales versus the same point in the previous season. At this time last year, 28.5 million tonnes of the oilseed had been sold, according to a report with data through July 28.

Farmers say they are hanging onto more soy due to recent instability in the local currency, fearing that if they sell and bank pesos, the value of those savings will fall. Argentine grains are priced in U.S. dollars and tend to hold their value.

For soybeans in the 2021/22 crop year, whose sowing begins in October in Argentina, there have already been sales of 1.3 million tonnes, below the 1.5 million registered on the same date in the cycle that has just ended, according to official data. The government said in the report that 2020/21 corn sales had reached 35.8 million tonnes, about 3.1 million tonnes more than those registered by the same date last year. The exchange expects a 2020/21 corn harvest of 48 million tonnes. It estimates that 81.4% of the harvest is in so far.

Argentine truck strike hits Bahia Blanca grains port, halting export climb

Arrival of freshly harvested soybeans and corn has been halted at the Argentine port of Bahia Blanca at the height of export season due to a protest by truckers who have blocked roads to press their demands for better pay, local officials said.

No grain trucks have entered Bahia Blanca terminals since the strike began on Friday, bogging down operations just as the port was becoming more important due to logistical problems further north in the country’s main grains hub of Rosario.

Unusually low water levels of the Parana River at the Rosario ports hub in Santa Fe province has cut the amount of cargo that can be loaded onto each ship by 25%. So ships are increasingly being topped off in the deeper Atlantic port of Bahia Blanca in Buenos Aires province. This increases logistical costs while pumping up prices that exporters in those two areas are willing to pay farmers for corn and soy, which are harvested in April-August.

French 2021/22 wheat shipments outside EU hit decade-low in July

French soft wheat shipments outside the European Union fell to their lowest in over a decade for July, Refinitiv data showed, as a rain-hampered harvest contributed to a slow start to the 2021/22 export season.

Soft wheat exports to destinations outside the 27-country bloc totalled 349,200 tonnes in July, the first month of the 2021/22 season, an initial estimate based on Refinitiv loading data showed.

The volume was about 74,000 tonnes lower than non-EU soft wheat exports in July last season, and the lowest July volume recorded by Refinitiv data which started in the 2009/10 season.

Malaysia Aug. 1-5 Palm Oil Exports +12.61% M/m: Intertek

Malaysia’s palm oil exports rose 12.61% m/m during Aug. 1-5, according to Intertek Testing Services.

EU corn ethanol crush margins hit 8-year low

• Weather across the Atlantic squeezing EU ethanol producer margins
• Corn and natural gas rally turn ethanol crush margins negative

The simple ethanol crush margin from corn for EU producers hit the lowest ever level on Aug. 3 since records started in July 2013 by S&P Global Platts, at minus Eur153/cu m, as unfavorable weather conditions in major exporting countries led to a rally in global corn prices.

Despite Brazil, the second largest corn exporter globally and one of the largest suppliers to the EU, being in mid-harvest, domestic Brazilian corn prices are rallying on expectations of further downward revisions in the country’s corn output for the 2020-21 season (February-January), according to several government and private agencies.

European natural gas prices hitting all-time highs at Eur42.70/MWh on Aug. 2 on a tight global market exacerbated the situation for EU ethanol producers, with one source saying, “at the moment the cash margins are super negative, the less efficient plants will have to cut production if the situation continues.”

Despite an improvement in EU mobility data and sources highlighting healthy ethanol demand in major driving countries, T2 ethanol prices dropped 5% since July 1, and was assessed at Eur618/cu m FOB Rotterdam as of Aug. 3.

Palm Oil Stockpiles to Keep Climbing Even as Production Slackens

• Higher inventories may redirect market focus to weak demand
• Output may have shrunk to the lowest level in four months

Malaysia’s palm oil inventories likely extended their climb to the highest in 10 months as a slump in exports countered weaker production.

• Stockpiles reached 1.62 million tons in July, up from 1.61 million tons in June, according to the median of 10 estimates in a Bloomberg survey of analysts, traders and plantation executives. That’s the highest level since September.
• The rise in reserves is a reminder that the market may not have given enough attention to the sluggish level of demand. Palm oil rallied more than 20% in July, posting its biggest increase since 2009, as traders focused on production issues in Malaysia and a run-up in rival soybean oil prices. That was despite a drop in Malaysian exports, with shipments to top buyer India particularly weak.
• Exports from the world’s second-biggest grower probably fell 4.9% to 1.35 million tons in July, according to the Bloomberg survey. Production may have declined 5% to 1.53 million tons, the lowest in four months, with a persistent labor shortage and most of the country still under a virus-induced lockdown.
• The outlook for August is bearish as production is expected to rebound 10%-13% from a month earlier and demand could shrink 15%-20%, said Marcello Cultrera, an institutional sales manager and broker at Phillip Futures in Kuala Lumpur. An accelerated vaccine roll-out will aid palm oil operations in Malaysia, but exports will have to compete with cheaper products from Indonesia.

Fertilizer Costs Expected to Hit Near-Record Highs in 2022

The cost of fertilizer for farmers has rocketed up over 50% in Illinois in the past year, according to the University of Illinois. This uptick is expected to continue in 2022, making costs the highest they’ve been since 2015 and nearing record prices seen in 2008. The reason for the move? Surging prices for fertilizer ingredients like anhydrous ammonia, diammonium phosphate and potash. For farmers, higher input costs affect their decisions on what to plant–a key question when looking at tight supplies for row crops like corn, wheat, and soybeans.

DBV Says Rains Hurting Prospects for German Grains, Rapeseed

Harvests are progressing slowly in Germany due to difficult weather with persistent rains, denting crop production prospects, farmers association DBV says Wednesday in a report.

• Most winter barley has been collected, and harvest is now seen at about 9m tons, below the outlook for 9.3m tons at start of the season
• Wheat production is also likely to be revised downwards
  • Feedback from regional associations suggests yields could be up to 15% below June expectations
  • That would put output slightly above 21m tons, versus earlier expectations for about 23m tons
• For rapeseed, forecast of 3.7m tons is also “highly unlikely” to be achieved and output is likely to be closer to 3.4m tons

Global food prices decline in July

Global food commodity prices fell in July for the second consecutive month, according to a benchmark United Nations report released today.

The FAO Food Price Index averaged 123.0 points in July 2021, 1.2 percent lower than the previous month although still 31.0 percent higher than its level in the same period of 2020. The index tracks changes in the international prices of the most globally traded food commodities. The July drop reflected declines in the quotations for most cereals and vegetable oils as well as dairy products.

The FAO Cereal Price Index was 3.0 percent lower in July than in June, pushed down by a 6.0 percent month-on-month drop in international maize prices associated with better-than-earlier projected yields in Argentina and improved production prospects in the United States of America, even as crop conditions in Brazil remained a concern. Prices of other coarse grains such as barley and sorghum also dropped significantly, reflecting weaker import demand. However, wheat quotations edged 1.8 percent higher in July – reaching their highest level since mid-2014 – in part due to concerns over dry weather and crop conditions in North America. At the same time, international rice prices hit two-year lows, impacted by currency movements and a slow pace of sales caused by high freight costs and logistical hurdles.

The FAO Dairy Price Index declined 2.8 percent from June, impacted by slower market activity in the Northern hemisphere due to ongoing summer holidays, with skim milk powder registering the largest drop, followed by butter, whole milk powder and cheese.

The FAO Vegetable Oil Price Index reached a five-month low, declining 1.4 percent from June, as lower prices for soy, rape and sunflower seed oils more than offset rising palm oil values. A lower biodiesel blending mandate in Argentina pressured soyoil prices lower, while those for rape and sunflower oils were influenced by prospective record supplies for the 2021/22 season.

In contrast, the FAO Sugar Price Index increased by 1.7 percent in July, its fourth monthly increase. The rise was mostly related to firmer crude oil prices as well as uncertainties over the impact of recent frosts on yields in Brazil, the worlds largest sugar exporter, while good production prospects in India prevented a larger jump.

The FAO Meat Price Index rose marginally from June, with quotations for poultry meat rising the most due to increased imports by East Asia and limited production expansions in some regions. Bovine meat prices also strengthened, buoyed by high imports from China and lower supplies from major producing regions. Meanwhile, pig meat prices fell, following a decline in imports by China.

Brazil Exporters Gain as Shipping Snags Hamper Argentina

Brazil is stepping into the breach as Argentina, the world’s biggest shipper of soybean meal, copes with a drought that’s drying up its main crop waterway and slowing transport. Brazil’s exports of soymeal, used in food and animal feeds, jumped to a 17-year high last month. Increased shipping costs have made the commodity more expensive in Argentina, encouraging global importers to turn to its neighbor.