Global Ag News for Dec 1st

Brazil’s Low Biodiesel Mandate Is ‘Mortal Blow,’ Crushers Say

Wheat prices overnight are up 6 3/4 in SRW, up 5 1/2 in HRW, up 11 3/4 in HRS; Corn is up 4 3/4; Soybeans up 11; Soymeal up $0.03; Soyoil up 0.63.

For the week so far wheat prices are down 46 1/4 in SRW, down 41 1/4 in HRW, down 26 3/4 in HRS; Corn is down 19 1/2; Soybeans down 24 1/2; Soymeal down $0.73; Soyoil down 3.04. For the month to date wheat prices are up 6 3/4 in SRW, up 38 3/4 in HRW, down 11 1/4 in HRS; Corn is down 4; Soybeans down 21 1/4; Soymeal up $11.70; Soyoil down 5.21.

Chinese Ag futures (JAN 22) Soybeans down 16 yuan ; Soymeal down 32; Soyoil down 172; Palm oil down 140; Corn down 15 — Malasyian Palm is up 12. Malaysian palm oil prices overnight were up 12 ringgit (+0.26%) at 4684.

There were changes in registrations (42 Oats, -562 Soybeans, ). Registration total: 1,618 SRW Wheat contracts; 144 Oats; 2 Corn; 342 Soybeans; 233 Soyoil; 1 Soymeal; 108 HRW Wheat.

Preliminary changes in futures Open Interest as of November 30 were: SRW Wheat down 7,168 contracts, HRW Wheat down 2,783, Corn down 34,328, Soybeans down 8,109, Soymeal down 6,328, Soyoil down 2,810.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Mostly dry through Saturday. Temperatures near normal through Saturday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Saturday. Temperatures near normal through Saturday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Mostly dry Tuesday. Isolated showers Wednesday. Mostly dry Thursday. Scattered showers Friday. Mostly dry Saturday. Temperatures near to below normal through Saturday. La Pampa, Southern Buenos Aires Forecast: Mostly dry Tuesday. Isolated showers Wednesday. Scattered showers Thursday-Friday. Mostly dry Saturday. Temperatures near to below normal through Saturday.

The player sheet for Nov. 30 had funds: net sellers of 22,500 contracts of  SRW wheat, sellers of 30,000 corn, sellers of 20,000 soybeans, sellers of 15,000 soyoil and unchanged in soymeal.

TENDERS

• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 132,000 tonnes of U.S. soybeans for delivery to unknown destinations in the 2021/22 marketing year that began Sept. 1.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 51,773 tonnes of food-quality wheat from the United States in regular tenders that will close on Dec. 2 and Dec. 3.

PENDING TENDERS

• WHEAT TENDER: An Ethiopian government agency issued an international tender to buy about 400,000 tonnes of milling wheat
• BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley
• 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
• WHEAT TENDER: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 tonnes of milling wheat

ETHANOL: U.S. Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Nov. 26 are based on seven analyst estimates compiled by Bloomberg.

Production seen lower than last week at 1.075m b/d

• Stockpile avg est. 20.265m bbl vs 20.164m a week ago
  • Would be the second straight w/w increase

CROP SURVEY: U.S. Soybean Crush and Corn for Ethanol

The following is from a Bloomberg survey of six anlaysts.

• Soybean crush seen at 195.3m bu in Oct., a 0.6% drop from a year ago
• Crude and once-refined soybean-oil reserves at end of October seen at 2.338b lbs, up from 1.968b
• Corn used in ethanol production seen up 7.8% y/y to 468m bu

‘Atmospheric River’ to Dump Rain Onto a Flooded Western Canada

• British Columbia closes off roads for ‘most intense’ storm yet
• More supply chain challenges threaten to raise commodity costs

British Columbia, home to Canada’s biggest port, is bracing for its most intense deluge after a series of damaging rain storms and historic flooding.

A so-called atmospheric river is threatening to dump more water on parts of the far west province that are already saturated, Armel Castellan, a meteorologist for Environment and Climate Change Canada told reporters Tuesday. Such ‘rivers’ are long, narrow regions in the sky that carry volumes of water from the tropics and release downpours when they make landfall.

Damage from heavy rains have exacerbated supply chain challenges, preventing goods like grain and lumber from reaching the Port of Vancouver and threatening to raise commodity costs at a time when inflation is already hitting consumers.

“This could be the most intense storm yet,” said Mike Farnworth, British Columbia’s minister of public safety. “We have proactively closed roadways that may be at risk of flooding or landslides to protect the public.”

More than 100 millimeters (3.9 inches) of rain are forecast to hit parts of British Columbia’s coast and Vancouver Island between Tuesday and Wednesday evening. Other areas like Fraser Valley, which has already seen some flooding, could receive another 80 millimeters by Wednesday evening, Castellan said.

Brazil’s Low Biodiesel Mandate Is ‘Mortal Blow,’ Crushers Say

The Brazilian government’s decision Monday to keep a mandate of only 10% biodiesel content mixed into fossil diesel next year deals a “mortal blow” to soybean crushers who had invested to produce more, Abiove industry association says in emailed statement.

• A previous long-term plan had set a 13%-14% blend mandate for 2022, requiring an estimated biodiesel output of about 8.6b liters (2.3b gallons)
  • That now drops to 6.2b liters
• The change undermines the industry’s predictability, compromises investments that have been made and discourages future investments in the biodiesel sector: Abiove
• Decision goes against Brazil’s commitment announced at COP26 to reduce greenhouse emissions by 50% by 2030: Abiove

Brazil Corn Exports Seen Reaching 2.893 Million Tns In November – Anec

BRAZIL SOY EXPORTS SEEN REACHING 2.286 MILLION TNS IN NOVEMBER VERSUS 2.6 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC

BRAZIL CORN EXPORTS SEEN REACHING 2.893 MILLION TNS IN NOVEMBER VERSUS 3 MILLION TNS FORECAST IN PREVIOUS WEEK – ANEC

Brazil Clamors for Fertilizer Tons as Shortage Concerns Loom

Brazil’s fertilizer-price surge may taper next week as supply strains ease. Russia confirmed it will honor all contracts to Brazil, yet uncertainty remains about whether prices will benefit in the squeezed market. Brazil is the largest buyer of Russia-produced ammonia nitrate, importing 1.3 million metric tons from January-October. Russia’s new export quota on ammonia nitrate for Dec. 1-May 31 of 744,000 tons is 1 million below year-earlier shipments.

The Brazilian government has proposed measures including tax reductions, R&D incentives and fertilizer usage campaigns as part of its National Plan. Though the plan may not alleviate current market tensions, it could help mitigate longer-term risks.

EU Soft-Wheat Exports Up 11% Y/y; Still Missing French Figures

Soft-wheat shipments during the season that began July 1 reached 11.62m tons as of Nov. 28 vs 10.45m tons in a similar period a year earlier, the European Commission said Tuesday on its website.

• NOTE: Figures for France, one of the EU’s top grain exporters, are complete only until July
• NOTE: Data for the prior season include trade for the U.K. until Dec. 31, 2020, when the country departed the EU customs union
• Top soft-wheat destinations were Algeria (1.81m tons), Egypt (1.2m tons) and Nigeria (911k tons)
• EU barley exports totaled 4.12m tons, compared with 3.43m tons a year earlier
  • China is the top market at 1.61m tons, Saudi Arabia second at 506k tons
• EU corn imports reached 5.17m tons, against 7.09m tons a year earlier

Malaysia Nov. 1-31 Palm Oil Exports to India 402,795 Tons: SGS

• India imported 402,795 tons; +34.4% m/m
• China imported 261,635 tons; +17.7% m/m

Indonesia Sees Partial Implementation of B40 Biofuel in 2025

Indonesia, one of the world’s biggest users of biofuel, says 40% blending of biodiesel with gasoil, so-called B40, is possible in selected regions like Java and Bali in 2025 as long as the industry has capacity to provide the ingredients, said an official from the energy and mineral resources ministry.

• The composition of B40 based on scientific recommendations would be 30% fatty acid methyl ester (Fame) and 10% hydrogenated vegetable oil (HVO), Dadan Kusdiana, director general of new and renewable energy at the ministry, said at a conference Wednesday.
  • Another recommended composition is 30% Fame and 10% distilled palm methyl-ester (DPME)
• Total Fame production capacity installed is sufficient to supply the required amount for B40, but Indonesia needs time to prepare its DPME and HVO production
• State owned energy company, Pertamina may produce HVO in large volumes starting in 2024
  • Domestic demand for biodiesel is seen rising to almost 14 million kiloliters from a combined biodiesel mandate of B30 and B40 in 2024 and 2025; that compares with 9.41 million kl this year
• Govt will prepare national standard for B40 specifications and supporting regulations to give certainty for investor
• NOTE: Indonesia currently has a national mandate to use 30% of palm-biofuel with 70% diesel

Indonesia Targets Biggest Downstream Palm Oil Industry in World

Indonesia, the top palm oil producer, aims to build the world’s largest downstream industry for the tropical oil as it transforms the economy from a producer of raw materials to a creator of more valuable products, Finance Minister Sri Mulyani Indrawati said at a conference.

• Tax and levy policies are designed to support the development of a downstream industry, she said on Wednesday; the government has set up a special economic zone for the industry
• Indonesia wants the capacity to stabilize crude palm oil prices
• Country’s domestic demand for palm oil will continue to increase as the government is committed to implementing its biodiesel blending mandate, according to Joko Supriyono, chairman of the Indonesian Palm Oil Association, known as Gapki.
• Renewable energy from palm oil can be a solution for the energy crisis in some parts of the world, he said
• The group sees countries shifting from pandemic to endemic in terms of the virus with the acceleration of vaccinations; some likely to have reached herd immunity; Gapki is optimistic Indonesia wiill achieve a sustainable recovery even amid omicron concerns
• Palm oil uses under 10% of the global land bank for vegetable oils, said Airlangga Hartarto, Coordinating Minister for Economic Affairs; but it’s more productive, with 1 ton of palm oil requiring 0.3 hectare of land, while 1 ton of soybean oil needs 2.2 hectares, he said

Palm Oil Giant Warns Omicron Lockdowns Could Curb Supplies

• Lack of foreign workers may restrict production next year
• Fear of new Covid variants on everyone’s mind: FGV CEO

More lockdowns due to the emergence of the new Covid variant could delay the arrival of much-needed plantation workers in second-biggest grower Malaysia and curb palm oil supplies next year, according to one of the world’s largest producers.

“Should there be a shutdown in the countries where foreign labor is sourced from, then it will definitely impede the departure of foreign workers that we are expecting to arrive by the first or second quarter of 2022,” Mohd Nazrul Izam Mansor, Group CEO for FGV Holdings Bhd., said at a briefing late Tuesday.

The Malaysian-listed planter currently only has 70% of its required labor on estates, and is pinning hopes that the first batch of 7,000 foreign workers that it plans to hire will arrive by the end of the first quarter, Nazrul said. If the number of workers “remain stagnant,” palm oil output will not improve next year as initially expected, he said.

Malaysia’s palm oil output is on course for its weakest showing in five years as planters grapple with an acute labor shortage in the country that was worsened by a protracted lockdown and a spike in Covid cases. That’s turned palm oil, the world’s most-consumed cooking oil, into a leading driver of this year’s stunning rally in global vegetable oil markets.

EPA Appears to Miss Deadline — Market Talk

Liquidation by speculators has been the chief factor pressuring CBOT grain futures lower, but another factor hurting corn today is the apparent lateness of the EPA in proposing its new biofuel mandates. Traders were expecting the EPA to report its guidance for biofuel blending rules through 2022, and it missing its own deadline may be a source of pressure for corn going forward. “EPA did propose an extension in this deadline, but little else is known about volumes or the timing of publication,” AgResource says..

China to suspend sales from cotton reserves from Dec 1

China’s cotton reserves management company said on Wednesday it will suspend its sales from Dec. 1 based on the current market situation. Cotton prices have dropped recently after Beijing launched a new round of daily auctions to boost supply of the fibre to the market.