Global Ag News for July 20.23

TOP HEADLINES

US Warns of Russian Threat to Civilian Grain Ships in Black Sea

• Russia lays more mines near Ukrainian ports, White House says
• Moscow makes threats after it cuts off grain trade accord

The Russian military could attack civilian shipping in the Black Sea as part of its effort to target Ukrainian grain facilities, Biden administration officials said Wednesday, citing new intelligence.

“Our information indicates that Russia laid additional sea mines in the approaches to Ukrainian ports,” National Security Council spokesman Adam Hodge said in a statement. “We believe that this is a coordinated effort to justify any attacks against civilian ships in the Black Sea and lay blame on Ukraine.”

The warning came just days after Russia ended the Black Sea grain deal that kept cargoes flowing through the corridor. The accord marked a rare example of Russian cooperation during its war against Ukraine.

Russia’s defense ministry said that all ships headed to the ports from Thursday would be considered as potentially carrying military cargo. It also said flag countries of vessels sailing to Ukraine would be considered as taking Kyiv’s side in the war.

“In addition to this coordinated effort in the Black Sea, we have already observed that Russia targeted Ukraine’s grain export ports in Odesa with missiles and drones on July 18 and 19, resulting in the destruction of agricultural infrastructure and 60,000 tons of grain,” Hodge added.

FUTURES & WEATHER

Wheat prices overnight are up 10 1/2 in SRW, up 13 1/2 in HRW, up 15 1/4 in HRS; Corn is up 6; Soybeans up 5 3/4; Soymeal up $2.00; Soyoil up 0.80.

For the week so far wheat prices are up 76 3/4 in SRW, up 51 1/4 in HRW, up 28 1/4 in HRS; Corn is up 45 1/4; Soybeans up 43 3/4; Soymeal up $15.80; Soyoil up 1.48.

For the month to date wheat prices are up 87 1/4 in SRW, up 80 1/4 in HRW, up 95 1/2 in HRS; Corn is up 64 1/4; Soybeans up 71 1/4; Soymeal up $20.30; Soyoil up 3.27.

Year-To-Date nearby futures are down 6.8% in SRW, down 0.9% in HRW, down 2.8% in HRS; Corn is down 18.8%; Soybeans down 1.4%; Soymeal down 7.1%; Soyoil up 5.4%.

Chinese Ag futures (SEP 23) Soybeans down 25 yuan; Soymeal up 56; Soyoil up 134; Palm oil up 120; Corn unchanged — Malaysian palm oil prices overnight were up 152 ringgit (+3.90%) at 4047.

There were no changes in registrations. Registration total: 1,398 SRW Wheat contracts; 448 Oats; 0 Corn; 11 Soybeans; 303 Soyoil; 0 Soymeal; 147 HRW Wheat.

Preliminary changes in futures Open Interest as of July 19 were: SRW Wheat up 1,754 contracts, HRW Wheat up 8,004, Corn down 8,692, Soybeans up 6,631, Soymeal down 6,125, Soyoil up 3,705.

Northern Plains: Spotty showers continue in the Northern Plains Wednesday and we may see more in eastern areas Friday into the weekend. Milder temperatures will be replaced by heat by next week, though that could be augmented by systems moving through Canada bringing some potential for showers. Drought continues to be a concern, especially with the coming heat, but there is some shot at meaningful rain with those systems north of the border later next week.

Central/Southern Plains: The Central and Southern Plains will remain active through Friday, especially north, with areas of moderate to heavy rain. To the south, heat continues to bake soils across Texas. A front will briefly cool some southern areas this weekend, but the heat will spread through more of the region next week while showers will become less frequent and mainly in the northwest. Conditions will turn unfavorable, coming during pollination and grainfill for a lot of the crop in the region.

Midwest: Areas of showers and thunderstorms and mild temperatures will continue in the Midwest through the weekend, though any good rain will be spotty. We may see some shifting around of the drought conditions on Thursday’s update to the Drought Monitor, but subsoil moisture remains critical across most of the region and cannot take an extended period of heat and dryness without some effect to reproductive to filling corn and soybeans. Unfortunately, heat will increase next week, especially for western areas. Systems moving through Canada may bring fronts into the region, but prospects for rainfall are unknown, though likely to be spotty. Conditions will turn less favorable next week and may continue into August, which may exacerbate drought conditions and pressure crops.

Delta: The Delta will remain active into the weekend and possibly next week as well as a front drives southward through the region and stalls. Milder temperatures will move in with the front. Overall soil moisture remains favorable for developing crops. Heat this week and building in again next week may stress some small areas that have been missing out in the more active pattern.

Canadian Prairies: A system moving through the Canadian Prairies continues to produce scattered showers Wednesday. Several more systems moving off to the north could bring spotty showers to eastern areas later this week and weekend as well. Temperatures will bounce around a bit over the next week as the pattern will be variable. The variability will mean a trough moving through in pieces next week which should offer some additional chances for showers and thunderstorms. Any rainfall would be helpful with wheat and canola in reproductive to filling stages.

The player sheet for 7/19 had funds: net buyers of 15,500 contracts of SRW wheat, buyers of 12,000 corn, buyers of 3,000 soybeans, sellers of 1,000 soymeal, and  buyers of 5,000 soyoil.

TENDERS

• WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries bought a total of 106,366 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that closed on Thursday.
• CORN PURCHASE: Algerian state agency ONAB is believed to have bought an unknown volume of animal feed corn expected to be sourced from Argentina or Brazil in an international tender for up to 240,000 metric tons which closed on Tuesday, European traders said. Initial estimates put the volume bought at between 40,000 to 80,000 tons. It was believed to have been bought at around $250 a ton c&f with the purchase believed to involve one or two consignments for spot shipment positions in July and August.
• VEGETABLE OILS TENDER: Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), set an international purchasing tender for vegetable oils with a July 26 deadline for offers. GASC is seeking an unspecified quantity of sunflower oil and soyoil for arrival between Aug. 20 and Sept. 5 and/or Sept. 6-20, with a requested for offers to be made at sight.

PENDING TENDERS

• RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 43,000 metric tons of rice. The deadline for submissions of price offers in the tender was July 10.
• CORN TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase up to 180,000 metric tons of animal feed corn with Ukrainian supplies still included among grain sources which can be offered.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.

TODAY

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

Estimate ranges are based on a Bloomberg survey of four analysts; the USDA is scheduled to release its export sales report on Thursday for week ending July 13.

• Corn est. range 400k – 800k tons, with avg of 608k
• Soybean est. range 300k – 850k tons, with avg of 508k

US Ethanol Stocks Rise 2.2% to 23.166M Bbl

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

• Analysts were expecting 22.669 mln bbl
• Plant production at 1.07m b/d, compared to survey avg of 1.042m

Russia May Expand Targeting of Ukraine Grain Facilities, US Says

US has information that the Russian military may expand targeting of Ukraine grain facilities that could include attacks on civilian shipping in the Black Sea, says National Security Council spokesman Adam Hodge.

Russia announced that all ships proceeding to Ukrainian ports in the Black Sea will be considered to be potential carriers of military cargo, Hodge says

USDA attaché puts Argentina 2022/23 soy crop at 21.25 mln T

Following are selected highlights from a report released on Wednesday by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service post in Buenos Aires:

“Post estimates MY (marketing year) 2022/2023 soybean production at 21.25 million metric tons (MMT), 3.75 MMT below the official USDA estimate on lower than expected yields. Soybean sales have been driven primarily by government programs offering exchange rate incentives and farmers are holding remaining soybean in anticipation of similar future programs. Precipitation levels have improved in recent months across much of the growing region.”

Brazil’s second-corn crop a record, exports seen at 54 mln T -Agroconsult

Brazilian production of second-corn, which is planted after soybeans are harvested in the same areas, will hit a record 107.2 million metric tons, up 16% from last season, agribusiness consultancy Agroconsult said on Wednesday.

The estimate, made after a national tour of second-corn fields, dashed concerns of significant weather risk for farmers, many of whom planted their second-corn outside of the ideal climate window.

According to Agroconsult, eyes will now gradually turn to Brazil’s 2024 first-corn production, which farmers will start sowing later in the year.

Because corn prices dropped internationally, farmers are likely to reduce first-corn areas, Agroconsult said. Instead, they could grow soybeans or cotton, a decision that will depend on the location of their farms and on weather considerations.

With abundant corn supplies, Brazil is expected to export some 54 million metric tons in the 2022/2023 cycle, including an estimated 5 million metric tons to China, Agroconsult said.

That would be 7.6 million tons higher than in the previous year, and would likely test Brazil’s export logistics capabilities to the limit, Agroconsult said.

In relation to 2023’s second corn, Agroconsult cited much better yields in states like Mato Grosso and Goias, where they rose by 15% and 44%, respectively, to 120.1 bags per hectare and 116.9 bags per hectare.

In its pre-crop tour estimate in May, Agroconsult had expected second-corn output to reach 102.4 million metric tons.

Second-corn represents about 75% of production in a given year and is mainly exported in the second half, competing with U.S. corn in global markets.

But because of delays in soy production in 2023, some farmers will not finish harvesting their second crop until September, which is unusual, Agroconsult said.

Overall, Brazil will reap an estimated 137.4 million metric tons of corn in the 2023/2023 cycle, also a record, including the first and the second crops.

Brazil corn production remains afloat with second crop Safrinha corn harvest in full swing – Refinitiv Commodities Research

2022/23 BRAZIL CORN PRODUCTION: 130.2 [127.3–133.1] MILLION TONS, UNCHANGED FROM LAST UPDATE

2022/23 Brazil corn production is maintained at 130.2 [127.3–133.1] million tons, reflecting high vegetation density levels throughout key second crop Safrinha corn areas of the Central-West and the Southeast, despite delays in harvest progress across the South due to recent excessive moisture. Our current median estimate is now 2.8 million tons below the USDA World Agricultural Outlook Board (WAOB)’s 133 million tons, which assumes total corn sowings at 22.5 million hectares and national level yield of 5.91 tons per hectare (tph) (vs. Refinitiv Ag Research’s 22.1 million hectares and 5.89 tph, respectively). Brazil’s agriculture state agency (CONAB) has recently pegged corn production and area at 127.8 million tons and 22.2 million hectares, respectively. As of 15 July, Brazil’s first corn is 97.1% harvested according to the latest CONAB crop progress report (17 July), in line with last year’s pace of 97.8%. The second corn is 39.3% combined so far nationally, behind last year’s 49.2%. Near record high vegetation density levels in core second crop areas of the Central-West have been keeping Brazil total corn production afloat throughout the season, and this trend is likely to continue into early harvest, promising a near record high yield. Much drier weather is expected throughout the South and areas to the north next week, which should further benefit the harvest efforts.

U.S. total wheat production slightly up but winter wheat harvest delays warrant attention – Refinitiv Commodities Research

2023/24 U.S. WHEAT PRODUCTION: 46.8 [43.7–49.3] MILLION TONS, UP 1% FROM LAST UPDATE

Updated weather/satellite imagery and condition scores increase 2023/24 U.S. total wheat production by 1% to 46.8 [43.7–49.3] million tons, slightly below the USDA’s latest estimate of 47.3 million tons. Our current median estimate puts national-level winter wheat production at 32.3 [30.9–33.4] million tons, up 3.4% from last update. Our current median estimate puts national-level winter wheat yield at 43.0 bushels per acre (bpa), 8.5% below last season and 13.1% below trend yield. Production of total spring wheat is now estimated at 14.5 [12.8–15.9] million tons (with durum and other spring wheat at 1.7 and 12.8 million tons, respectively), down 2% from last update, which is on par with last season’s output. In June Acreage report (30 June), USDA pegged winter wheat planted area at 37 million acres, down fractionally (<1%) from its March estimate. Spring wheat planted area was slightly revised upward (+273 thousand acres) to 12.6 million acres. Our current acreage projections are maintained at 37.1 million acres (for winter wheat) and 12.3 million acres (for spring wheat), respectively.

USDA’s latest Crop Progress report (17 July) continues to indicate decent spring wheat conditions, with 51% of the crop in good or excellent (GEX) condition (vs. 47% last week), though worse than last season’s 71%. Vegetation densities derived from satellite imagery remain near or above historical medians across most core areas of the spring wheat belt, suggesting a positive yield outlook. On the other hand, winter wheat harvest is in full swing across all producing states, but with some delays in key regions, warranting attention. Nationally winter wheat is 56% combined so far, well behind last year’s 69% and the five-year average (which is also at 69%). Drier weather is in the forecast (compared with recent weeks), but portions of the Central Plains and Lower Midwest could receive near to above normal precipitation next week, potentially further hindering harvest activities.

Brazil Looks to Dominate World Corn Trade — Market Talk

Corn exports out of Brazil remain more affordable than their US counterparts, which is likely to weigh on corn futures in the near-term. Corn is up 2.3% currently, but some traders see price pressure as inevitable. “Brazilian corn maintains a slight discount in Asia when accounting for all costs, and there’s little doubt Brazil will dominate global corn trade through the summer and into autumn,” says Daniel Flynn of Price Futures Group in a note. However, factors expected to decrease available corn supply are the ones pushing up prices today, including US weather and destruction in the Black Sea region.

China June soybean imports from Brazil up 32% on year

China’s soybean imports from Brazil jumped 31.6% in June from a year earlier, data showed on Thursday, after large cargoes of cheap beans reached Chinese ports.

The world’s top buyer of soybeans imported 9.53 million metric tons of the oilseed from Brazil, its largest supplier, versus 7.24 million tons a year earlier, data from the General Administration of Customs showed.

Chinese buyers took advantage of this year’s huge Brazilian soy crop and attractive prices to ramp up purchases this year.

Total arrivals last month reached 10.27 million metric tons, and imports are set to stay high through the summer, traders say.

China is also likely to buy a larger volume of the oilseed from Brazil than usual for September to December, three trade sources said, as prices of new-crop U.S. shipments rise on expectations of lower supply.

Shipments from Brazil in the first half of this year hit 29.7 million metric tons, 2 million metric tons higher than last year’s level, the data shows.

June arrivals from the United States reached 527,586 tons, down 32% from a year ago.

U.S. shipments for the first half are still higher than last year, however, at 19.7 million metric tons, up from 17.54 million metric tons in the first half of 2022.

For corn, arrivals from the United States fell to 1.23 million metric tons, down from 2.07 million metric tons a year ago, while Ukraine was the second supplier with 567,000 metric tons.

Total Chinese corn imports in June came to 1.85 million metric tons, down 16% on the year, data previously showed.

A deal allowing the safe Black Sea export of Ukraine’s grain for the past year expired on Monday after Russia quit and warned it could not guarantee the safety of ships.

Poland Gives EU Ultimatum to Extend Ukraine Grain Import Ban

• Five EU nations want to keep restrictions until year-end
• Eastern members of the bloc pledge help with transit shipments

Poland won’t allow imports of Ukrainian grain when a current ban expires in mid-September, and joined four other eastern European Union nations in urging Brussels to extend restrictions until year-end.

The ultimatum comes just days after Russia decided to end a grain-export deal for Ukraine in a move that threatens to disrupt food supplies. Poland, Bulgaria, Hungary, Slovakia and Romania pledged to help Ukraine with transit shipments of its grain through their territories to countries elsewhere.

“The war in Ukraine can’t have a destructive impact on Polish farmers,” Polish Prime Minister Mateusz Morawiecki told reporters following a meeting of agriculture ministers from the five EU countries in Warsaw on Wednesday. “We will be tough and decisive.”

Ukraine has repeatedly called on the EU to end the ban on its crop exports, saying it was helping the Kremlin intensify pressure on the country’s economy. Interfax-Ukraine on Wednesday reported Economy Minister Yulia Svyrydenko as saying that her country was “categorically against” the extension. She also warned Kyiv may respond in kind if the ban is extended.

The European Commission has previously signaled that it would reduce and phase out the “exceptional and temporary” restrictions affecting the eastern European countries. After Russia pulled the plug on the Black Sea deal on Monday, the EU said it would “spare no efforts” to support the stable delivery of agricultural products from Ukraine to global markets via so-called solidarity lanes.

Polish Agriculture Minister Robert Telus said on Wednesday that exports from Ukraine have continued to increase despite the ban.

Western Canada Dock Workers’ Union Says It Will Reissue Strike Notice

• WESTERN CANADA DOCK WORKERS’ UNION SAYS IT WILL REISSUE A STRIKE NOTICE
• WESTERN CANADA DOCK WORKERS’ UNION SAYS IT WILL APPEAL FEDERAL LABOUR WATCHDOG DECISION THAT SAID CURRENT STRIKE IS ILLEGAL; SAYS WILL RESPECT RULING

EU May Approve Use of Tricyclazole Fungicide, Commission Says

European Union may approve the use of Tricyclazole fungicide for plant protection in the region after new data showed higher maximum residue levels will be safe for consumers, a European Commission official said.

• EU approval means European farmers will have access to a product available to other countries, Klaus Berend, head of a unit at the Directorate-General for Health and Food Safety, told the European Parliament Wednesday
• EU farmers aren’t authorized to use the fungicide in rice production, unlike other nations that export to Europe
• Inability to use Tricyclazole puts European farmers at a disadvantage, lawmakers said at Wednesday’s committee on agriculture and rural development meeting
• Earlier this year, the European Food Safety Authority said residue levels of Tricyclazole in rice may be allowed at 0.09 mg/kg, compared with 0.01 mg/kg at present, Berend said
• Commission will submit a draft regulation to EU member states in early September and, if the new level is established, it would apply to both domestic and imported products
• New data means Corteva or any other producer of the fungicide can submit an application for approval of its use in the EU, and rice growers in Europe can work together to encourage such an application, Berend said

 

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