TOP HEADLINES
Port of Rosario receives lowest delivery of corn, soybeans in 22 years
The severe drought that has affected Argentina’s 2022/23-grain harvest has led to the lowest volume of soybean and corn deliveries at the Port of Rosario in 22 years. According to the Rosario Stock Exchange, 280,000 trucks carrying these grains entered the port between March and May, less than half the number in the same period of 2022 and 62% below the average of the last five years.
The country suffered from a severe drought that affected crops throughout 2022 and early 2023. The tight supply scenario in Argentina supported the prices of Brazilian soybeans and corn, but today the losses are already priced in by the market.
The vast majority of Argentina’s grain production is transported by truck, and about three-quarters of it passes through Rosario ports.
“It is noteworthy that the decline is significant in both crops, but so far it is felt more strongly in corn, which has seen its truck use fall by 64%, above the 49% drop in soybeans,” the Rosario Exchange said in a statement. Corn is planted later than soybeans in the country and that explains the difference, the exchange says. “Most of the corn planted in the months of December 2022 and January this year has yet to be harvested.”
The Rosario Exchange estimates that Argentina’s soybean production in 2022/23 will reach 21.5 million tonnes, down 49% from the previous season. For corn, the forecast is 32 million tonnes, a drop of 37%.
The institution adds that soybean imports in the first four months of the year reached a record for the period, with more than 3.05 million tonnes. For all of 2022, imports totaled 3.3 million tonnes.
“In May, preliminary estimates show an entry of soybean ships carrying more than 612,000 tonnes from Brazil. However, imports will likely be higher when we have the complete foreign trade data, since the volume of soybeans brought in by barge, mainly from Paraguay, must also be considered,” the exchange said.
FUTURES & WEATHER
Wheat prices overnight are down 3 1/2 in SRW, down 9 1/4 in HRW, down 8 in HRS; Corn is up 2 1/2; Soybeans up 7 3/4; Soymeal up $0.30; Soyoil up 0.75.
For the week so far wheat prices are unchanged in SRW, down 6 3/4 in HRW, down 1 in HRS; Corn is up 17 3/4; Soybeans up 11 1/2; Soymeal up $4.00; Soyoil up 0.59.
For the month to date wheat prices are up 36 in SRW, down 3/4 in HRW, up 26 1/4 in HRS; Corn is up 30; Soybeans up 70 1/4; Soymeal up $5.60; Soyoil up 6.52.
Year-To-Date nearby futures are down 20.4% in SRW, down 11.0% in HRW, down 13.6% in HRS; Corn is down 9.0%; Soybeans down 9.1%; Soymeal down 16.9%; Soyoil down 14.3%.
Chinese Ag futures (SEP 23) Soybeans down 9 yuan; Soymeal up 1; Soyoil down 38; Palm oil down 76; Corn down 16 — Malaysian palm oil prices overnight were up 82 ringgit (+2.45%) at 3431.
There were no changes in registrations. Registration total: 2,389 SRW Wheat contracts; 2 Oats; 0 Corn; 0 Soybeans; 1,088 Soyoil; 11 Soymeal; 97 HRW Wheat.
Preliminary changes in futures Open Interest as of June 12 were: SRW Wheat down 4,983 contracts, HRW Wheat up 621, Corn down 2,718, Soybeans down 427, Soymeal up 4,811, Soyoil down 3,571.
Northern Plains: Scattered showers moved through the Northern Plains Friday and Saturday, bringing widespread precipitation, but didn’t hit all areas equally. A system will come through later this week with scattered showers as well, but again will miss many areas. The pattern remains active for the region for the rest of June, though.
Central/Southern Plains: A front brought widespread showers to the Central and Southern Plains over the weekend. A couple of disturbances will continue showers across parts of the region for the next few days and a system will move through late this week with more potential for showers. Recent and forecast precipitation will do its best to ease drought conditions further, but that may not translate to improved conditions in all places.
Midwest: A front has swept through most of the Midwest with scattered showers that have hit most areas of the region over the weekend. Some areas were missed and only got light precipitation amounts, but it was the first widespread event in a long time. A low-pressure system is forming along the front and will spin around the Great Lakes with some continued showers through at least Tuesday. Another disturbance may follow behind it Thursday and a system will move through Friday and through the weekend with the next chance for widespread showers. The forecast coverage and intensity are uncertain with this system, as is the forecast for next week. Any drought reduction is likely to be sporadic in the region, though growth may not be overly widespread either.
Delta: Scattered showers went through the Delta over the weekend and several disturbances will create more showers in the region this week, increasing soil moisture and reducing concern about growing dryness in the region.
Alberta: Some areas of Alberta saw showers over the weekend, including dry areas in the south, but most areas were dry. The Canadian Prairies will be more active this week, especially with a system moving through Wednesday and Thursday that should bring more widespread showers to western areas that had been drier over the last couple of weeks. Additional systems are expected this weekend and next week as well. Temperatures will be more variable and less consistently hot over the next couple of weeks.
Argentina: Soil moisture is still suboptimal in Argentina, but the recent run of showers has been helping in some spots. Colder temperatures have settled in and will produce areas of frosts and freezes through much of the week, slowing germination and growth for wheat.
The player sheet for 6/12 had funds: net buyers of 1,000 contracts of SRW wheat, buyers of 10,000 corn, buyers of 2,500 soybeans, buyers of 1,000 soymeal, and sellers of 1,500 soyoil.
TENDERS
- CORN PURCHASE: Algerian state agency ONAB is believed to have bought an unknown volume of animal feed corn to be sourced from optional origins in an international tender for up to 140,000 metric tons.
- VEGETABLE OILS TENDER: Egypt’s General Authority for Supply Commodities said it was seeking vegetable oils in an international purchasing tender for arrival July 20 to Aug. 5, 2023. The deadline for offers is June 13.
- CORN AND SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL has issued international tenders to purchase up to 120,000 tonnes of animal feed corn and 120,000 tonnes of soymeal
PENDING TENDERS
- SOYMEAL TENDER: Algerian state agency ONAB has issued an international tender to purchase up to 35,000 metric tons of soymeal animal feed sourced from optional origins
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 62,200 metric tons of rice.
- WHEAT TENDER: The Taiwan Flour Millers’ Association has issued an international tender to purchase an estimated 56,000 metric tons of grade 1 milling wheat to be sourced from the United States.
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said that it will seek 60,000 tonnes of feed wheat and 20,000 tonnes of feed barley to be loaded by September 30 and arrive in Japan by November 30 via a simultaneous buy and sell (SBS) auction to be held on June 19.
TODAY
USDA CROP PROGRESS: Corn Conditions 61% G/E, Soybeans 59%
Highlights from the report:
- Corn 61% G/E vs 64% last week, and 72% a year ago
- Corn emerged 93% vs 85% last week, and 87% a year ago
- Soybeans 59% G/E vs 62% last week, and 70% a year ago
- Soybeans planted 96% vs 91% last week, and 87% a year ago
- Soybeans emerged 86% vs 74% last week, and 68% a year ago
- Spring wheat 60% G/E vs 64% last week, and 54% a year ago
- Winter wheat harvest 8% vs 4% last week, and 9% a year ago
- Winter wheat 38% G/E vs 36% last week, and 31% a year ago
- Spring wheat planted 97% vs 93% last week, and 92% a year ago
- Spring wheat emerged 90% vs 76% last week, and 70% a year ago
- Cotton 49% G/E vs 51% last week, and 46% a year ago
- Cotton planted 81% vs 71% last week, and 89% a year ago
US Inspected 1.169m Tons of Corn for Export, 140k of Soybean
India Imposes Stockpile Limits on Wheat to Dissuade Hoarders
- Government to sell wheat, rice in open market to ease prices
- India doesn’t need overseas wheat supplies, Chopra Says
India, the world’s second-biggest wheat producer, put limits on stockpiles that traders, wholesalers, retailers and processors can hold to prevent hoarding and ease rising prices.
In addition, the government will also sell wheat and rice from state reserves in the open market to boost supplies and cushion consumers from a surge in food grain rates, Sanjeev Chopra, India’s food secretary, said in New Delhi on Monday.
“Unscrupulous elements are hoarding stocks and that’s why prices are rising,” even as domestic supplies are enough to meet demand, Chopra said. If someone is caught with more than the mandated stockpiles of wheat they will be asked to offload the supplies in the market within a month, he said, adding that the idea is not to “penalize” anyone, but to boost availability of the grain in the market.
India is taking steps to avoid a repeat of last year, when adverse weather hurt crops and prompted the government to restrict exports of wheat, rice and sugar. The country is expected to get normal rainfall this year, but uncertainty still remains as there is a high probability of El Niño developing during the June-September rainy season, the weather pattern that is associated with drier conditions and reduced precipitation in the South Asian nation.
However, that may be offset by positive Indian Ocean Dipole conditions, which are also likely to develop and could bring greater monsoon rainfall.
India, which is also the second-largest consumer of wheat globally, doesn’t need imports of the grain as local supplies are adequate because of a record harvest, Chopra said, while replying to a question on whether the government would consider reducing tax on overseas purchases.
More details from the food secretary:
- The stockpiles limits on wheat will be effective immediately and will be valid until March 31, 2024.
- Traders and wholesalers can hold 3,000 tons, the limit for retailers is 10 tons and processors can carry 75% of annual installed capacity.
- To start with the government will sell 1.5 million tons of wheat in auctions to flour millers, traders, bulk buyers and makers of wheat products from state reserves. The cereal will be sold at 21.25 rupees to 21.50 rupees ($0.26) per kilogram (2.2 pounds) until Dec. 31.
- Wheat prices have risen more than 11% from a year earlier in wholesale markets where farmers sell their crop to traders.
- The government will decide shortly how much rice will be sold in the open market. The grain will be sold at 31 rupees per kilogram until Oct. 31.
- Wholesale prices of rice are higher by more than 10% from a year ago while retail rates are up by 9% during the same period.
The high plains drought is so bad that Kansas is importing wheat from Europe
Kansas is “the wheat state,” the officially adopted moniker that embraces its place as the country’s breadbasket.
Tall white grain elevators, some decorated with wheat murals, loom over tiny farm towns. For decades, Kansas led the nation in wheat production, and the U.S. led the world in wheat exports.
But this year’s meager wheat harvest turns that proud tradition on its head.
Kansas flour mills will likely buy wheat grown in Eastern Europe. It’s like Texas importing oil, West Virginia hauling in coal, or the Saudis shipping in sand.
Aaron Harries, Vice President of Research and Operations at Kansas Wheat, said it’s never happened before.
“That truly is unfortunate,” he said. “And it’s another hit against our domestic farmers.”
Thank Mother Nature.
The High Plains is dry in the best of times. For the last two years, a deep drought withered much of this prime wheat-producing region.
This year’s Kansas wheat harvest is shaping up to be the smallest since 1957 when the Eisenhower administration intentionally suppressed wheat production.
It’s much the same in Oklahoma. The crop is so poor, some farmers are dousing their measly crops with herbicide to contain their losses and collect insurance.
That creates searing economic pain radiating through prairie towns where summer wheat sales are the staff of life.
Seen from a highway, the wheat crop doesn’t look horrible. A lot of it’s green. But step into one of the fields that John Thaemert farms near Sylvan Grove and you start to see the damage.
“All of my wheat looks pretty bad, but this is by far the worst. Thin. Short. Dead spots,” Thaemert said. “You could not justify taking this crop to harvest.”
The surviving plants here are less than half as tall as they should be this year and have hardly produced any grain. It isn’t worth the cost of harvesting, let alone all the money Thaemert spent on seed, chemicals, and fuel to plant and nurture this wheat.
About a quarter of the wheat fields in Kansas are in the same abysmal state. They’re worth more dead than alive.
Farmer Mike McClellan in Palco, Kansas, said he’ll probably kill his entire 1,500-acre wheat crop with herbicide. That will cost him another $20,000, but it will allow him to collect crop insurance. It will also keep the failed plants from drawing any more water from the parched soil and help check soil erosion.
WHEAT/CEPEA: Production may increase in 2023/24; sowing activities advance
The global wheat production is likely to increase in the 2023/24 season. In the Southern Hemisphere, sowing activities are advancing in both Brazil and Argentina.
The USDA estimates the 2023/24 world production at 800.18 million tons, 1.3% more than the forecast released in May and 1.5% higher compared to the 2022/23 crop. As for the 2022/23 season, significant increases are indicated in Argentina (55.4%) and India (9.1%), but a decrease of 10 million tons for Australia.
Concerning the global consumption, the USDA predicts 796.13 million tons in 2023/24, for an increase of 0.4% in relation to 2022/23. Thus, ending stocks may total 270.7 million tons, 1.5% up in the same comparison.
The USDA also says that exports of the 2023/24 season may amount 212.4 million tons, 0.9% more than in the 2022/23 crop, with Russia, European Union and Canada as the main exporters.
In Brazil, sowing activities are advancing. Conab indicates that 40.9% of wheat crops had been planted until June 3, for an advance of 2.3 percentage points in relation to the same period last year. The sowing has been finished in Goiás, Minas Gerais, Bahia, Mato Grosso do Sul and São Paulo. Activities are still taking place in Paraná (66%), Rio Grande do Sul (7%) and Santa Catarina (1%).
As for prices, are moving down because of the low pace of trades. Cepea surveys show that, between June 2 and 9, the prices paid to wheat farmers dropped 0.38% in Rio Grande do Sul, 0.09% in Paraná and 1.27% in Santa Catarina. In the wholesale market (deals between processors), values decreased 1.04% in PR and 3.58% in SP, but rose 1.13% in RS and 1.02% in SC. In the same period, the US dollar decreased 1.6%, closing at BRL 4.876 on June 9.
TRADE BALANCE – According to data from Secex, in May, Brazil imported 283.5 thousand tons of wheat, downing 9.4% compared to April/23 and moving down 46.9% in relation to that in May 2022. As for exports, 71.04 thousand tons were shipped last month, decreases of 74.8% against April and of 39.3% compared to May last year.
Indonesia Aims to Increase 2024 Rice Output to 55.42M Tons
Indonesia sets target for rice production at 55.42 million tons next year, according to Agriculture Minister Syahrul Yasin Limpo at parliament on Tuesday.
- Corn output target 23.34m tons, soybean 349,000 tons and beef/buffalo meat at 405,440 tons in 2024
- Govt plans to expand foodcrop planting areas to boost production and secure supply from local farmers
- Govt encourages early rice planting to make use of available rains before El Nino peaks in August
- Ministry to provide drought and pest resistance seeds, rehabilitate irrigation system, sending water pumps and make wells and water reservoirs
VTB to sell one of Russia’s biggest grain traders, Demetra-Holding, CEO Kostin says
VTB, Russia’s second largest bank, will sell its stake in one of Russia’s biggest grain traders, Demetra-Holding, and is in negotiations with both Russian and foreign buyers, CEO Andrei Kostin told Reuters in an interview.
Demetra has a network of grain elevators, major deep sea grain terminals and its own logistics. It owns a non controlling stake in major grain trader United Grain Company (OZK).
VTB has a 45% stake in the holding.
“We’re coming out of there. It’s decided,” Kostin told Reuters. “We have been out of control for a long time, and we will leave completely.”
He said the asset would be sold this year.
When asked if buyers had been found, he said: “Yes, and even, maybe, there will be not only Russian ones, we’ll see.”
He declined to say who the buyers were but clarified that they would be from “friendly” countries – a word Russia uses to describe countries which have not imposed sanctions on Russia.
When asked if billionaire Vadim Moshkovich was a bidder, Kostin said: “No.”
Asked if it could be the Chinese, Kostin said: “Why China? We have lots of friends, more than 100 countries did not support the anti-Russian sanctions, so we will choose one of them.”
Kostin said VTB saw few prospects for itself in the grain business, adding that a sanctioned bank in the shareholding hindered the holding.
Nitrogen Prices Thaw as US Takes in Rising Russian UAN Supply
CF Industries and Nutrien are likely to offer a steep discount in 3Q’s urea ammonium nitrate (UAN) fill program as US buyers are beset with surging supply from sanctioned Russia. Prices could reset at $185 a short ton at New Orleans this July, a 16% drop from early June.
UAN Price Pop Unlikely as Import Supply Grows
A seasonal pop in UAN prices looks unlikely as the market prepares to reset lower on the 3Q fill. A surge in US imports — up 224% through April– extends supply, while dry weather has some farmers contemplating skipping applications. The seasonal reset in July could cause prices to fall $40 to $185 a short ton in New Orleans as spreads correct. UAN is trading at an 8-cent-a-pound discount to urea, but we expect urea to fall when use ends in June. To incentivize buying in the off-season fill period, prices need to drop from spot levels. The US UAN market of about 13-15 million tons can be met entirely by domestic capacity, but high 2Q use demands imports.
CF Industries is the largest publicly traded US nitrogen producer. The company can alter the urea and UAN production mix at its Donaldsonville, Louisiana, facility.
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