Global Ag News for Dec 6.23

TOP HEADLINES

Smithfield Foods ends contracts with 26 US pig farms, citing oversupply

Smithfield Foods said on Tuesday it will end contracts with 26 hog farms in the U.S. state of Utah, in the latest contraction by the world’s largest pork processor in the face of an industry oversupply.

Pork producers have been losing money as pig prices and consumer demand for pork have struggled at a time of high costs for labor and other expenses.

Smithfield, owned by Hong Kong’s WH Group, said it will terminate employees who support its dealings with farms that raise hogs under production contracts. Layoffs may total about 70 employees, or up to one third of the 210 workers in Smithfield’s Utah hog production operations.

“Our industry and company are experiencing historically challenging hog production market conditions,” CEO Shane Smith said.

Smithfield in October said it would close a pork processing plant in Charlotte, North Carolina. The company previously said it was permanently closing 35 hog farm sites in Missouri and laying off employees.

Smithfield needs such cutbacks to remain competitive, Smith said. A company statement cited an “industry oversupply of pork, weaker consumer demand and high feed prices” as challenges, though futures prices for corn used for livestock feed last month fell to their lowest level in nearly three years.

U.S. meat companies also grappled with an excess of chicken this year and tightening supplies of cattle due to drought.

Tyson Foods, the biggest U.S. meat company by sales, shut U.S. chicken plants that employed thousands of workers. Last month, Tyson said it would also close two plants where hundreds of workers cut and package meat.

FUTURES & WEATHER

Wheat prices overnight are up 5 in SRW, up 4 3/4 in HRW, up 2 1/4 in HRS; Corn is up 1 3/4; Soybeans up 5; Soymeal up $2.90; Soyoil down 0.17.

For the week so far wheat prices are up 35 1/4 in SRW, up 19 1/4 in HRW, up 10 in HRS; Corn is up 7 1/2; Soybeans down 12 1/4; Soymeal up $8.80; Soyoil down 1.23.

For the month to date wheat prices are up 38 1/4 in SRW, up 24 1/2 in HRW, up 11 3/4 in HRS; Corn is up 9 1/2; Soybeans down 32 1/4; Soymeal down $3.30; Soyoil down 2.17.

Year-To-Date nearby futures are down 21.6% in SRW, down 26.0% in HRW, down 23.8% in HRS; Corn is down 30.5%; Soybeans down 13.6%; Soymeal down 9.4%; Soyoil down 21.3%.

Chinese Ag futures (JAN 24) Soybeans down 58 yuan; Soymeal down 4; Soyoil down 92; Palm oil down 176; Corn up 2 — Malaysian Palm is down 62. Malaysian palm oil prices overnight were down 62 ringgit (-1.64%) at 3719.

There were changes in registrations (-114 HRW Wheat). Registration total: 2,946 SRW Wheat contracts; 522 Oats; 660 Corn; 596 Soybeans; 62 Soyoil; 0 Soymeal; 400 HRW Wheat.

Preliminary changes in futures Open Interest as of December 5 were: SRW Wheat down 1,607 contracts, HRW Wheat up 878, Corn up 776, Soybeans down 4,028, Soymeal down 4,317, Soyoil down 1,883.

Brazil: Some areas of central Brazil continue to see lower rainfall amounts by happenstance. Scattered showers will continue over the country this week, but may be a little more isolated in coverage by the second half of the week. That is not certain, however, and precipitation will still be around, favoring those areas that are indeed hit by rain. Southern states continue to deal with too much rain this week but may get a better break late this week and into early this weekend before another system arrives by Sunday. These areas need drier weather to drain saturated soils for developing corn and soybeans.

Argentina: A system will produce widespread, light showers today and Wednesday. With another system moving through this weekend, conditions continue to be mostly favorable for planting and development of corn and soybeans.

Australia: Eastern areas have been much wetter in recent weeks, which has disrupted the wheat and canola harvest, but favored the development of cotton and sorghum crops. Western areas have been drier. Some rain will move through southern areas later this week which may be more beneficial for developing cotton and sorghum but continue to disrupt the wheat and canola harvest, which may cause quality concerns as well.

Northern Plains: A weak clipper moved through on Monday, providing some areas of snowfall. Another system will move along the Canadian border Thursday with scattered rain and snow showers in some areas. A cold front will move through with the system but temperatures behind the front will still be mild or warm for December.

Central/Southern Plains: Mostly dry conditions will continue through Thursday. A cold front will move through on Friday and will develop a system with scattered showers. Models are starting to show a bit more agreement on how the system will evolve. Cooler air may fill in for a couple of days behind the front, but will still be relatively mild for December in most areas. Southwestern areas could use more soil moisture, but have the winter season to see good precipitation to potentially eliminate drought.

Midwest: A weak clipper will continue to move through the eastern half of the region today with a mix of rain and snow, but accumulation will be limited. Very warm temperatures will flood the region mid-to-late week. A cold front will move through Friday and Saturday with some slightly cooler temperatures, but with potential for increased precipitation as well as accumulating snow. If the precipitation occurs, it would help with the remaining drought areas and increases for water levels on the Mississippi River.

Delta: Mostly dry conditions will continue through Thursday. A front will come through with potential for widespread precipitation Friday through the weekend, which may help with the drought and increasing water levels on the Mississippi River. However, temperatures aren’t expected to cool off much behind the cold front as they will remain near-normal.

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

TENDERS

• WHEAT SALE: Exporters sold 198,000 metric tons of U.S. soft red winter wheat to China for 2023/24 delivery, the U.S. Department of Agriculture said.
• WHEAT PURCHASE: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), bought 180,000 metric tons of Ukrainian and Russian wheat in an international tender.
• DURUM WHEAT PURCHASE: Algeria’s state grains agency OAIC is believed to have purchased around 450,000 to 500,000 metric tons durum wheat in a tender which closed on Tuesday
• CORN PURCHASE: The Korea Feed Association (KFA) is believed to have purchased an estimated 65,000 metric tons of animal feed corn in an international tender.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is looking to buy 132,504 metric tons of food-quality wheat from the U.S., Canada and Australia in a regular tender that will close on Dec. 7.

PENDING TENDERS

• NON-GMO SOYBEAN TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 20,000 metric tons of food-quality soybeans free of genetically modified organisms (GMOs).
• WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said on Wednesday that it will seek 60,000 metric tons of feed wheat and 20,000 tons of feed barley to be loaded by Feb.. 7, 2024 and arrive in Japan by March 7, via a simultaneous buy and sell (SBS) auction that will be held on Dec. 13.
• WHEAT AND CORN TENDER: Leading South Korean feedmaker Nonghyup Feed Inc. (NOFI) has issued an international tender to purchase up to 69,000 metric tons of animal feed corn and 65,000 tons of animal feed wheat
• MILLING WHEAT TENDER: The Lebanese government issued an international tender to purchase 30,000 metric tons of milling wheat
• MILLING WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat
• WHEAT TENDER: Bangladesh’s state grains buyer issued another international tender to purchase 50,000 metric tons of milling wheat
• WHEAT TENDER: A government agency in Pakistan issued an international tender to purchase and import 110,000 metric tons of wheat.

TODAY

ETHANOL: US Weekly Production Survey Before EIA Report

Output and stockpile projections for the week ending Dec. 1 are based on six analyst estimates compiled by Bloomberg.

• Production seen higher than last week at 1.034m b/d
• Stockpile avg est. 21.498m bbl vs 21.379m a week ago

CROP SURVEY: Brazil 2023-24 Soybean Output Seen at 159.9M Tons

Brazil soybean production seen 2.5m metric tons below the national forecast agency’s previous est., according to the avg in a Bloomberg survey of eight analysts.

• The range of estimates varied from 155.7m tons to 166.2m tons
• Brazil’s corn crop seen 5.8m tons higher at 124.9m tons

EU Soft-Wheat Exports Drop 18% Y/y in Season Through Dec. 3

The European Union’s soft-wheat exports in the season that began on July 1 were at 12.5m tons as of Sunday, compared with 15.3m tons in the same period a year earlier, the European Commission said on its website.

• NOTE: The report is missing export data from Bulgaria since mid-September, and data from Italy since 17 November
• Leading destinations include Morocco, at 1.9m tons; Nigeria, 1.3m tons; and Egypt, with 1m tons
• Barley exports were at 2.8m tons, down 1% y/y
• Corn imports were at 7.4m tons, down 43% y/y

Brazil Seen Losing Top Corn Exporter Spot in 2023-24: Itau BBA

After unseating the US as the world’s top corn exporter, Brazil will likely be downgraded to second place again in the 2023-24 season, according to analysts from Itau BBA’s Consultoria Agro.

• Brazil’s winter-corn crop seen smaller year-on-year, while domestic consumption grows with demand from ethanol plants, analyst Francisco Queiroz says during event in Sao Paulo
  • Farmers in top producing state of Mato Grosso are shifting to other crops such as cotton, sesame and sorghum
• Brazil’s soybean production to total 158 million tons in 2023-24 season
  • That compares with initial estimates of 162.4 million tons
  • Outlook could get a lot worse if it doesn’t rain as expected in December

Ukraine grain exports down at 13.7 mln T so far in 2023/24 – ministry

Ukraine’s grain exports have fallen to around 13.7 million metric tons so far in the 2023/24 July-June marketing season, agriculture ministry data showed on Wednesday.

The ministry said that by Dec. 9 last year, Ukraine had exported almost 19 million tons of grain.

Ukraine exported 3.86 million tons of grain in November, including 1.3 million tons of wheat and 2.4 million tons of corn, the ministry data showed.

Traders union UGA said Ukrainian combined grain and oilseed exports rose to 4.5 million tons in November from 3.5 million tons in October largely because the country has been actively increasing its exports via an alternative shipping route.

The volume exported this season includes 6.1 million tons of wheat, 6.6 million tons of corn and 889,000 tons of barley.

In the previous season by Dec. 9, Ukraine had exported 7.2 million tons of wheat, 10.2 million tons of corn and 1.5 million tons of barley.

The ministry said traders had exported 626,000 tons of grain so far in December compared with 1.1 million tons by Dec. 9, 2022.

Ukraine has traditionally shipped most of its exports through its deep water Black Sea ports.

Ukraine’s government expects a harvest of 79 million tons of grain and oilseeds in 2023, with its 2023/24 exportable surplus totalling about 50 million tons.

Decreases in sown area reduced 2024/25 Ukraine wheat production prospects. – Refinitiv Commodities Research

2024/25 UKRAINE WHEAT PRODUCTION: 21.5 [20.4-22.6] MILLION TONS, 2.4 % DOWN FROM LAST UPDATE

Smaller sown area (4.87 million hectares (mha)) reduced 2024/25 Ukrainian wheat production to 21.5 [20.4-22.6] million tons (mmt). According to the Ukrainian Ministry of Agrarian Policy and Food, farmers have planted 4.162 mha of winter wheat, 95.6 % of projected wheat acreage. The acreage under winter wheat for the occupied territories of Ukraine decreased by almost 10%.

Past two weeks featured cool conditions across western Ukraine with temperatures 2-4°C below normal. High precipitation activity was observed in central and eastern regions, especially in Dnipropetrovsk, Kharkiv, and Poltava Oblasts (40-66 mm above normal). Soil moisture has been improving rapidly, and with additional snow coverage over the Ukraine, will be beneficial for winter wheat crops. According to the latest weather forecast cool conditions will sustain across the northern and western Ukraine, with above average snow precipitation. We will monitor satellite imagery and weather condition in the upcoming weeks and update our forecast accordingly.

Some Australian farmers get a boost from above-average Nov rains

Australia’s rainfall in November was 37.8% above the 1961–1990 average, the country’s weather bureau said on Wednesday, a boost for many farmers after a hot, dry period that hit crops in one of the world’s largest agricultural exporters.

However, the Bureau of Meteorology (BOM) said overall rainfall in the southern hemisphere spring was 20.1% below average, the lowest for spring since 2019, after the driest September and fifth-driest October on record.

It said soil moisture remained very much below average in southern Australia, areas in Western Australia and along the eastern and northern coasts.

The Australian government said this week it expected a wheat crop of 25.5 million metric tons, 37% less than last year, when rain was more plentiful.

Recent very strong rain has also damaged the quality of the wheat harvest, analysts say.

However, rain has helped summer crops such as sorghum and lifted livestock prices, which had plunged to multi-year lows due as dry weather scorched pastures.

The weather bureau has said it expects a hotter than usual summer with below median rainfall in western and northern Australia and roughly median rainfall in other areas.

ADM Says Investing To Expand Crush Capacity At Three Oilseed Processing Facilities In Brazil

• ADM CONTINUES TO MEET FOOD SECURITY, SUSTAINABILITY NEEDS WITH BRAZIL CRUSH EXPANSION, REFINED GLYCERIN ACQUISITION
• ARCHER-DANIELS-MIDLAND CO- INVESTING TO EXPAND CRUSH CAPACITY AT THREE OILSEED PROCESSING FACILITIES IN BRAZIL
• ARCHER-DANIELS-MIDLAND CO- INVESTMENTS ARE EXPECTED TO ADD APPROXIMATELY 400,000 METRIC TONS PER YEAR TO ADM’S CRUSH CAPACITY IN BRAZIL

Indonesia’s Biodiesel Use Seen at 13.4M Kiloliters in 2024

The figure is based on fuel demand and its growth for next year, according to Dadan Kusdiana, Indonesia’s secretary general at the energy and mineral resources ministry says by text messages on Wednesday.

• Official biodiesel allocation for the B35 mandate in 2024 still pending decision from related ministers’ meeting this week
• NOTE: Indonesia currently requires biodiesel to contain 35% palm oil, a policy known as the B35

Brazil’s Coamo to invest in corn-based ethanol plant

Brazil’s biggest grain farmer cooperative Coamo, based in the southern state of Parana, plans to invest in a corn-based ethanol plant that would be able to produce 258 million liters of the biofuel per year, its head told Reuters on Tuesday.

Airton Galinari said he would put the matter to a vote by Coamo members on Dec. 13.

 

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