TOP HEADLINES
Global Food Prices Post Biggest Annual Drop Since 2015
- Steep drop in raw prices could indicate relief for consumers
- Fall in wholesale prices take time to feed through to retail
Global food prices posted the biggest annual drop since 2015, amid signs that lower wholesale food prices are starting to feed through to supermarket shelves.
An index of food-commodity prices created by the United Nations’ Food and Agriculture Organization fell about 10% in 2023, according to data released on Friday.
While the index tracks raw commodity costs rather than retail prices, the steep drop could indicate potential relief on the way for consumers, as food prices ease from a 2022 peak that followed Russia’s invasion of Ukraine and contributed to a cost-of-living crisis in countries across the world.
Corn and wheat futures prices saw their biggest annual declines in a decade last year, as supply concerns faded. Futures prices for hogs and palm oil also posted big declines.
While the UN’s index is now at the lowest level since February 2021, lower wholesale costs have been taking some time to percolate down to supermarkets and consumers. However, there are signs that food inflation is cooling. The indicator fell sharply in the UK last month to to the lowest since June 2022, while food, fuel and alcohol price rises have also slowed in New Zealand. In Pakistan, bigger production is likely to help slow food price rises.
The FAO grain index fell more than 16% compared to this time last year, despite increasing slightly last month due to weather-related disruption in shipments from key exporters. In December, falls in the price indices for sugar, vegetable oils and meat “more than offset increases in dairy products and cereal” according to the organization.
FUTURES & WEATHER
Wheat prices overnight are up 3 1/4 in SRW, up 6 in HRW, up 9 in HRS; Corn is down 1/4; Soybeans down 3; Soymeal down $4.10; Soyoil up 0.24.
For the week so far wheat prices are down 11 1/2 in SRW, down 11 in HRW, down 4 in HRS; Corn is down 5; Soybeans down 33 1/4; Soymeal down $13.70; Soyoil up 0.20.
Chinese Ag futures (MAY 24) Soybeans down 30 yuan; Soymeal down 28; Soyoil up 8; Palm oil up 26; Corn down 27 — Malaysian Palm is up 24. Malaysian palm oil prices overnight were up 24 ringgit (+0.66%) at 3681.
There were changes in registrations (-56 Soybeans, 100 Soymeal). Registration total: 1,295 SRW Wheat contracts; 0 Oats; 6 Corn; 739 Soybeans; 147 Soyoil; 100 Soymeal; 291 HRW Wheat.
Preliminary changes in futures Open Interest as of January 4 were: SRW Wheat down 2,944 contracts, HRW Wheat down 1,313, Corn up 12,696, Soybeans up 2,512, Soymeal up 2,472, Soyoil up 6,787.
Brazil: Widespread heavy rain has fallen in central Brazil the last several days and continues through most of next week as well, especially from Mato Grosso to Minas Gerais. Southern areas will be drier until a system comes north from Argentina on Monday, followed by several waves of showers for mid-January. Recent drier weather in the south has been overall favorable for draining excessive moisture in the region, but a return to seasonable rainfall would be preferred for developing to filling crops.
Argentina: Frequent rainfall over the last several weeks has put much of the corn and soybean crop in a good place, with some of the long-season corn reaching reproduction with full soil moisture. Rainfall continues to be light the next few days, but still occurring for limited areas in the south. Rainfall is forecast to increase this weekend and should come at a regular clip for next week with several disturbances moving through. Weather continues to favor both corn and soybeans.
Australia: Western areas are much drier, a large concern for cotton and sorghum. A storm system will develop this weekend and bring widespread showers to eastern areas, with lingering showers through most of next week, favorable for cotton and sorghum there.
Northern Plains: Relatively quiet conditions are likely for the next week as systems miss off to the north and south, though some light snow may move through on Friday and Saturday. A strong system early next week will miss the region but one shortly behind it should send temperatures falling well below normal for mid-January as winter finally shows up.
Central/Southern Plains: The storm track will set up over the region and bring several storms through over the next couple of weeks. A moderate storm system will bring a mix of rain and snow to the region Thursday and Friday, and then an even larger system is forecast for early next week which may bring another blizzard with snowfall possible as south as Texas. The panhandles through northern Missouri are most at risk for heavy snow. Another system that follows mid-to-late next week will send temperatures plummeting for mid-January.
Midwest: A couple of systems may scrape through the region this week and weekend, with largely minor areas of precipitation. The southern Midwest could see some areas of more moderate precipitation Friday and Saturday, which would be a mix of rain and snow. A storm system that goes through next week is forecast to be much more significant with impacts, which include a stripe of heavy snow and potential blizzard conditions for some areas. The greatest risks are from Missouri through lower Michigan. Another storm that follows for late next week will send temperatures plummeting across the region, especially in the west — a big flip from the near-record warm December.
Delta: The El Nino storm track brings brought a system through on Wednesday with isolated showers and another on Friday into Saturday with scattered showers. A much larger storm is forecast for next week and may contain severe weather. Water levels on the Mississippi River have been very up and down over the last several weeks with storm systems improving conditions for a while followed by a period of lower flow, but the active weather should be more helpful.
The player sheet for Jan. 4 had funds: net buyers of 5,500 contracts of SRW wheat, buyers of 500 corn, buyers of 4,500 soybeans, sellers of 2,500 soymeal, and sellers of 1,500 soyoil.
TENDERS
- WHEAT SALE: Jordan’s state grains buyer purchased about 120,000 metric tons of hard milling wheat to be sourced from optional origins in an international tender on Thursday.
- CORN SALE: South Korea’s Major Feedmill Group (MFG) has purchased an estimated 68,000 metric tons of animal feed corn in a private deal on Thursday without issuing an international tender.
- WHEAT PURCHASE: A group of South Korean flour mills bought an estimated 50,000 metric tons of milling wheat to be sourced from the United States in an international tender on Friday
- WHEAT PURCHASE: The Taiwan Flour Millers’ Association purchased an estimated 82,975 metric tons of milling wheat to be sourced from the United States in a tender on Friday
PENDING TENDERS
- WHEAT TENDER: Taiwan’s MFIG purchasing group has issued an international tender to buy up to 65,000 metric tons of animal feed corn, which can be sourced from the United States, Brazil, Argentina or South Africa
- RICE TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), set a tender to import natural white wholly milled short-grain Indian rice, it said in a statement. GASC, on behalf of Egypt’s Holding Company for Food Industries, sought arrival of the rice from Feb. 1-19 and/or Feb. 20-March 10. The deadline for offers was Dec. 21 and they should be accompanied by three samples, of two kilograms each, GASC said.
- SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase up to 200,000 metric tons of soymeal.
TODAY
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 Friday for week ending Dec. 28.
- Corn est. range 450k – 1,400k tons, with avg of 863k
- Soybean est. range 300k – 1,300k tons, with avg of 845k
Argentine Soy, Corn, Wheat Estimates Jan. 4: Exchange (Table)
The Buenos Aires Grain Exchange releases weekly report on website.
- 2023-24 wheat production raised to 15.1m tons from 14.7m tons
- 2023-24 corn and soybean planting estimates both unchanged
Argentina Wheat Forecast Jumps 2.7%, May Increase Again: Bourse
The Buenos Aires Grain Exchange raised its wheat output estimate to 15.1m metric tons and said that good yields in the breadbasket region give it room to increase further, according to a weekly report.
- Wheat harvest progress is 84%, with half of fields in southeastern Buenos Aires breadbasket still left to collect
- 42% of soy plants are in a good-to-excellent condition, up from 40% last week
- Soy planting progress is 86%
USDA attaché lowers Brazil 2023/24 soy crop estimate to 158.5 million T
Following are selected highlights from a report issued on Thursday by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service post in Brasilia:
“Post revises down MY 2023/24 soybean production to 158.5 MMT (million metric tons) due to poor weather outlooks resulting from El Niño, particularly in the Centre West states, which may affect final yields currently projected at 3.507 kg/ha. Post increases MY 2022/23 production estimate by 3 MMT, reaching 158 MMT, in the back of record high yields across most producing states. MY 2022/23 soybeans exports and crush are estimated at 102 MMT and 53.3 MMT, respectively, as a consequence of largely available supplies from 2022/23 harvest. Soybean meal and oil production are forecasted to increase during MY 2023/24 to meet increased domestic demand while exports are set to a challenging year with the prospects of Argentina’s resuming regular export levels of by-products. ”
France’s Rouen Grain Exports Dropped 29% in Week to Jan. 3
Grain exports from France’s Rouen port totaled 108,957 tons in the week to Jan. 3, compared with 153,932 tons a week earlier, according to an emailed report.
- Loadings by destination (in tons):
- Soft wheat
- China 50,808
- Portugal 11,262
- Algeria 30,000
- Feed wheat
- Portugal 13,737
- Malt barley
- Germany 3,150
India state fuel retailers raise maize ethanol purchase price -local media
Indian state fuel retailers have raised the purchase price of ethanol made from maize by 5.79 rupees a litre to 71.86 rupees ($0.8635) per litre to encourage its production for blending with gasoline, local media reported.
India is promoting the use of maize as an alternative to sugar to boost ethanol production and ensure sufficient supply of the sweetener in the market.
In December, India directed sugar mills not to use cane juice to produce ethanol as the country’s sugar production is expected to decline in the 2023/24 marketing year that began in October.
Last week, state fuel retailers raised the procurement price for ethanol made from C-heavy molasses, a cane by-product that has hardly any sugar content in it, by 8.87 Indian rupees per litre.
Ethanol makes up about 10.2% of petrol sold in India and the government aims to raise blending to 20% by 2025.
The Indian Sugar Mills Association, a producers’ body, said last month that India’s sugar production is likely to fall to 32.5 million metric tons in the 2023/24 marketing year, down from its previous estimate of 33.7 million tons.
In the preceding marketing year, India is estimated to have produced 36.6 million tonnes of sugar.
US Miss. River Grain Shipments Fall, Barge Rates Increase: USDA
Barge shipments down the Mississippi river declined to 437k tons in the week ending Dec. 30 from 509k tons the previous week, according to the USDA’s weekly grain transportation report.
- Barge shipments of corn fell 19% from the previous week
- Soybean shipments down 16% w/w
- St. Louis barge rates were $12.77 per short ton, an increase of $0.04 from the previous week
Indonesia is confident in EU Biofuel showdown, eyes trade deal by 2024
Indonesia is betting big on winning its lawsuit against the European Union’s biofuel restrictions and insists it won’t derail their long-awaited trade pact, Jakarta Globe reported.
The lawsuit stems from the EU’s Renewable Energy Directive II (RED II), which aims to phase out palm oil-based biofuel by 2030 due to concerns about deforestation and its impact on climate change. Indonesia argues the policy unfairly discriminates against the palm oil industry.
Despite the WTO panel’s ongoing deliberations, Indonesia exudes confidence. Deputy Trade Minister Jerry Sambuaga declared, ‘We are confident about winning the palm oil dispute. Just you wait.’ This optimism stems from strong arguments against ILUC concerns and the potential economic implications for the EU, a major palm oil importer.
While optimistic about palm oil, Indonesia is still appealing a 2023 WTO ruling favouring the EU on its ban on unprocessed nickel exports. This highlights the distinct nature of each dispute and their separate trajectories.
Argentina Seeks to Lure Better GMO Seeds to Rival Brazil, US
- New president’s sweeping reforms include paying seed royalties
- Country would get access to new genetically modified strains
Argentina is seeking to make its decades-old rules governing patented seed technology fit for the modern era, a move that would allow it to compete with agriculture powerhouse rivals Brazil and the US.
As part of new President Javier Milei’s sweeping reforms to liberalize the economy, seed companies including Syngenta Group Co. Ltd., Corteva Inc. and Bayer AG would be able to charge farmers royalties. That would bring investments to Argentina and give the nation access to the latest genetically modified seeds.
An arcane law dating to the 1970s protects farmers from having to pay annual fees to seed companies. As a result, they have been left behind while neighboring Brazil has produced record crops year after year. Without the newest strains, Argentine soybean yields are about 17% lower than in Brazil and the US, according to analysts at the Rosario Board of Trade.
Changing the rules would be “a huge step,” said Pablo Vaquero, a distributor of cotton seeds. “We’ve been falling behind Brazil and the US for years and now they wipe the floor with us.”
Argentina usually is the largest exporter of soy meal and soy oil, the third-biggest exporter of corn and a top global wheat supplier. But its agriculture industry has been in steady decline as governments heavily taxed farmers and meddled with exports. Most farmers voted for libertarian Milei in a bid to reverse the predicament.
The president’s package includes signing Argentina on to the latest global convention — from 1991 — protecting more comprehensively the intellectual property rights of seed breeders. It is set to face resistance in congress, where Milei’s party is a minority.
While the current state of affairs would seem to save farmers money, it’s effectively placed the Pampas crop belt in a time warp where they plant outdated strains that yield less than their rivals abroad.
At a soy conference in September, Juan Jose Blanchard, head of Latin America at Louis Dreyfus Co., underscored how the seed technology problem has contributed to the crop industry’s decline.
“Do you know how many serious programs there are today in Argentina for improving soy genetics?” said Blanchard, an Argentine. “One, two, three maximum. In Brazil there’s a minimum of 30. So if we stay where we are, the gap between Argentina and Brazil in farm productivity is going to get wider and wider.”
If the package goes through, implementation of the seed rules would be at the discretion of local lawmakers and policymakers, said Rodolfo Rossi, a former seed scientist who heads soy association Acsoja.
Previous governments tried and failed to charge farmers for seeds reaped from one harvest and used to plant the next.
For a few years from 2016, Argentina even allowed Monsanto Co. — later acquired by Bayer — to test soy cargoes for its Intacta technology and try to collect royalties. In 2021, Bayer exited the Argentine soy seed business, citing global strategy changes and a redirecting of investments in the country to “profitable” projects.
Saskatchewan workers at grain handler Viterra set to strike
More than 400 Canadian workers at grain handler Viterra are set to strike on Friday in Saskatchewan, pending a last round of talks, the Grain and General Services Union said.
Viterra, based in Rotterdam, is one of Canada’s largest handlers of wheat, canola and other crops. Saskatchewan is the country’s biggest grain-growing province.
Viterra is owned by commodity giant Glencore, the investment arm of the Canada Pension Plan and British Columbia Investment Management Corp.
Negotiations have lasted more than a year around key issues of wages, work-life balance and “workplace respect,” according to a notice Tuesday on the union’s website.
“This strike notice underscores the urgency and gravity of the situation,” said general secretary Steve Torgerson.
Union and Viterra officials are scheduled to meet on Thursday in Regina for a second straight day with a federally-appointed mediator.
Viterra may consider a lock-out if an agreement cannot be reached, and is working on contingency plans to minimize disruptions for customers, the company said in a statement.
“We are committed to the collective bargaining process and remain cautiously optimistic that we will be able to arrive at an agreement,”, said Jordan Jakubowski, vice-president of human resources for Viterra Canada.
Rival Bunge Ltd last year said it would acquire Viterra, subject to regulatory approval in Canada and elsewhere. Canada is one of the world’s largest wheat exporters.
Two union locals are affected – 384 operations and maintenance workers and 65 employees in the company’s Canadian head office.
NZ Institute Says El Niño Weather Patterns Haven’t Been Typical
NZ’s National Institute for Water and Atmospheric Research comments in seasonal outlook.
- El Niño has 100% chance of persisting through March and 85% chance of continuing through autumn
- Unusual ocean heat in the Pacific has contributed to NZ weather patterns that are not historically associated with El Niño, with air pressure and circulation patterns “out-of-sync with what’s expected”
- “The type of El Niño being experienced will likely result in more variable rainfall patterns than experienced during strong El Niños in the past, which may be expressed by a period of heavy rain in mid-to-late January, particularly for the North Island and northern South Island”
- Still, NZ may become less exposed to low pressure systems in February-March, which may lead to drier-than-normal conditions
- Marine heat waves north of New Zealand may enhance the heat and humidity associated with air masses that track toward the country, such as in mid-to-late January; this may cause a marine heat wave to develop or intensify near the North Island
Part of Rhine River in Germany closed to shipping after water rises
Parts of the river Rhine in Germany were closed to shipping on Friday after heavy rain raised water levels, but the river could reopen over the weekend, navigation authorities said.
Rhine river shipping was stopped around Koblenz, the German inland waterways navigation agency WSA said.
Shipping on northern sections of the river is operating normally, despite a rise in water levels, including the important points of Duisburg, Cologne and Mannheim.
Water levels are expected to fall again and the river could reopen on Saturday, a WSA spokesperson said.
High water means vessels do not have enough space to sail under bridges and the blockage prevents vessels sailing to Switzerland.
The Rhine is a major shipping route for commodities including minerals, coal and oil products such as heating oil, grains and animal feed.
The river has repeatedly suffered from low water levels because of unusually dry summers in recent years.
France detects bird flu on vaccinated ducks farm
France has detected bird flu in a duck farm in the Vendee department in Western France, the farm ministry said on its website.
Separately, the Vendee prefecture said a bird flu outbreak had been found among ducks that had been vaccinated against the virus, making it the first such outbreak since France launched a vaccination campaign to stem the spread of the virus last year.
Tokyo’s Top Tuna for the New Year Sells for Nearly $800,000
The priciest giant bluefin tuna sold at Tokyo’s biggest fish market on the first day of business in 2024 fetched ¥114.2 million ($788,440), in an auction for what is considered an auspicious fish that has become a Japanese New Year’s tradition.
The tuna weighed 238 kilograms (525 pounds) and was sold Friday to seafood wholesaler Yamayuki and sushi chain operator Onodera Group — a team that has been the winning bidder of the top fish for four straight years.
The giant tuna was over three times the amount offered last year in the sale at Tokyo’s Toyosu fish market, and the fourth highest since records started in 1999, according to Hiroki Matsushita, an official at the fish market.
Interested in more futures markets? Explore our Market Dashboards here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.