Global Ag News for June 21.22

HEADLINES TODAY

Wheat prices overnight are down 9 in SRW, down 7 1/4 in HRW, down 10 in HRS; Corn is down 16 3/4; Soybeans down 22 1/4; Soymeal down $0.56; Soyoil down 1.29.

Markets finished last week with wheat prices down 56 1/4 in SRW, down 64 in HRW, down 65 1/2 in HRS; Corn is down 1 3/4; Soybeans down 13 1/4; Soymeal up $0.90; Soyoil down 5.23.

For the month to date wheat prices are down 59 3/4 in SRW, down 67 1/4 in HRW, down 87 1/2 in HRS; Corn is up 2 3/4; Soybeans up 5 3/4; Soymeal down $0.60; Soyoil down 4.95.

Year-To-Date nearby futures are up 32% in SRW, up 37% in HRW, up 18% in HRS; Corn is up 31%; Soybeans up 27%; Soymeal up 6%; Soyoil up 29%.

Chinese Ag futures (SEP 22) Soybeans down 52 yuan; Soymeal down 52; Soyoil down 294; Palm oil down 376; Corn down 11 –Malaysian palm oil prices overnight were up 4 ringgit (+0.08%) at 4985.

There were no changes in registrations. Registration total: 1,010 SRW Wheat contracts; 0 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 66 HRW Wheat.

Preliminary changes in futures Open Interest as of June 17 were: SRW Wheat down 5,112 contracts, HRW Wheat down 2,435, Corn up 781, Soybeans up 1,340, Soymeal up 5,880, Soyoil up 1,840.

The player sheet for 6/17 had funds: net sellers of 17,000 contracts of  SRW wheat, sellers of 1,000 corn, sellers of 2,000 soybeans, buyers of 2,500 soymeal, and  sellers of 9,000 soyoil.

TENDERS

• CORN SALE: The U.S. Department of Agriculture (USDA) confirmed private sales of 144,907 tonnes of U.S. corn to Costa Rica for shipment in the 2022/23 marketing year.
• CORN SALE: The USDA confirmed private sales of 105,664 tonnes of U.S. corn to unknown destinations for shipment in the 2021/22 marketing year.
• WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 168,330 tonnes of food-quality wheat from the United States, Canada and Australia in regular tenders that will close on Thursday.
• MILLING WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy soft milling wheat to be sourced from optional origins, European traders said on Sunday.
• BARKLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley
• WHEAT TENDER: Bangladesh’s state grain buyer will issue an international tender to import 50,000 tonnes of milling wheat to replenish reserves

 China’s soybean imports from Brazil fall in May, U.S. shipments jump

China’s soybean imports from Brazil fell in May while shipments from the United States rose sharply, customs data showed on Monday, as high prices curbed demand for South American cargoes.

The world’s top soybean buyer imported 7.79 million tonnes of the oilseed from Brazil in May, down from 9.23 million tonnes a year earlier, data from the General Administration of Customs showed.

Shipments from the United States in May came in at 1.73 million tonnes, up sharply from 244,431 tonnes a year earlier, according to customs data.

Chinese buyers turned to U.S. soybeans for better profits during the peak Brazilian soybean export season, as bad weather pushed up prices of the oilseed in the South American country. (Full Story)

For the first five months of the year, China brought in 20.47 million tonnes of Brazilian beans, up from 15.66 million tonnes in the same period of last year.

Imports from the United States for January to May came in at 16.77 million tonnes, down from 21.51 million tonnes the previous year.

Poor crush margins have been weighing on crushers’ appetite for soybeans in recent months. Crushers in Rizhao lost about 172 yuan ($25.75) from each tonne of soybeans processed. CNSOY-RZO-MRG

Demand for soymeal from the feed sector has come under pressure as the farming sector has struggled to make profits.

COVID-19 curbs also restricted movement of goods and people, disrupting the normal feed trade and dampening business.

But hog margins have improved in the past two months, returning to positive terrain due to rising pig prices. JCI-HOGM-HENAN

With pig prices expected to grow stronger, demand for soymeal could pick up and return crushing margins to positive territory in a couple of months, after crushers work through their large soymeal stocks, traders said.

China currently has ample supplies of soybeans, with 9.67 million tonnes received in May and June arrivals seen at nearly 9 million tonnes, leading to high soymeal inventories.

Brazil Harvests 14.72% Of Second Corn Area In 2021/22 Versus 8.33% Of Historical Average For The Period -Patria Agronegocios

BRAZIL HARVESTS 14.72% OF SECOND CORN AREA IN 2021/22 VERSUS 8.33% OF HISTORICAL AVERAGE FOR THE PERIOD -PATRIA AGRONEGOCIOS

SOYBEAN/CEPEA: Purchasers are willing to trade; prices move up

Soybean prices have increased this week, boosted by the fact that purchasers are willing to trade. These players have been taking advantage of high dollar levels – above 5 BRL – to close short-term deals in the domestic market and complete loads in ships. Sellers, in turn, are willing to make cash flow. Price rises are also related to increases in soybean meal quotations.

Between June 9 and 15, the CEPEA/ESALQ Index Paraná and the ESALQ/BM&FBovespa Paranaguá (PR) Index for soybean rose by 0.4% and 1%, respectively, to BRL 194 (USD 38.61)/bag and BRL 198.66 (USD 39.53)/60-kilo bag and on June 15. In the same period, dollar quotes upped 2.3%, at 5.025 BRL on June 15.

Concerning by-products, the demand for soybean meal by chicken and swine farmers is firm, boosting quotes in the domestic market. Soybean oil values, in turn, decreased, due to the lower demand for biodiesel in Brazil.

SUPPLY AND DEMAND – The USDA released a report on June 10 indicating increases in the production for Brazil and Argentina in the 2021/22 season compared to data released in May, to 126 million tons (+0.8%) and 43.4 million tons (+3.3%), respectively. Still, the global supply may be 4.4% lower than the previous, at 352 million tons. The crushing is also expected to move up in Brazil and Argentina, at 48.5 million tons (2.1%) and 40.3 million tons (0.6%), in relation to the report before. Brazilian exports are likely to hit 82.25 million tons (-0.6% compared to the previous report).

CORN/CEPEA: Harvest begins, but prices move up slightly

Although the second crop harvest has started in important producing regions in Brazil, such as Mato Grosso and Paraná, corn prices registered slight increases in many areas surveyed by Cepea this week. Price rises are linked to the fact that sellers are firm regarding quotations, focused on the higher export parity. Purchasers, in turn, are waiting for better opportunities as the harvest progresses, which has been limiting liquidity. In the ports, dollar valuations and increases in the international market are boosting prices.

From June 9-15, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) increased by 0.5%, to BRL 86.25 per 60-kilo bag on June 15. The price average in June (up to June 15), however, is at 85.63 BRL/bag, the lowest since November/21, in nominal terms.

On the average of the regions surveyed by Cepea, between June 9 and 15, corn prices rose by 2.3% in the over-the-counter market (paid to farmers) and by 0.9% in the wholesale market (deals between processors).

In the ports of Paranaguá (PR) and Santos (SP), quotations moved up 0.3% and 1%, respectively, from June 9-15. The American currency, in turn, increased by 2.3% and is again higher than 5 BRL.

As for exports, data from Secex indicate that, in the partial of this month (eight working days), 288 thousand tons were shipped, higher than the 92 thousand tons registered in June 2021. Imports, in turn, have totaled 51 thousand tons, half the volume observed in the same month last year.

The harvesting continues to advance in Goiás and Mato Grosso. In Paraná, activities were favored by the reduction of rainfall. In Mato Grosso, the harvesting reached 16.22% up to June 10, according to Imea.

Indonesia Sets CPO Reference Price for July at $1,615.83/Ton

Indonesia, the world’s largest palm oil exporter, sets July crude palm oil reference price at $1,615.83/ton, Musdhalifah Machmud, deputy for food and agriculture at the coordinating ministry for economic affairs, says in text messages on Tuesday.

CPO export tax will be at the highest rate of $288/ton in July, with additional levy maintained at $200 as the reference price has reached levels above $1,500

Indonesia Has Issued Export Permits for 1.4M Tons of Palm Oil

Indonesia, the world’s largest palm oil exporter, has issued export permit for a total of 1.4 million ton of the commodity as of Monday noon, according to Oke Nurwan, director general of domestic trade at the trade ministry.

• Permit for as many as 535,998 tons issued for export acceleration program, Nurwan said in text messages on late Monday; Govt allocates 1.16m tons for the program
• The approval will allow shipments of:
  • 36,500 tons of crude palm oil (CPO)
  • 210,107 tons of refined bleached deodorized (RBD) palm oil
  • 288,010 tons of RBD palm olein
  • 1,381 tons of used cooking oil
• While the rest of 867,6682 tons of palm oil issued for the domestic market obligation program, known as DMO, consisting of:
  • 54,070 tons of CPO
  • 355,257 tons of RBD palm oil
  • 455,995 tons of RBD palm olein
  • 2,100 tons of used cooking oil

GrainCorp Braces For Third Bumper Crop Amid Black Sea Turmoil

Major Australian grain exporter GrainCorp Ltd. said it’s preparing to receive a third consecutive bumper harvest from eastern growing regions this season, with more volumes likely to head overseas markets as Russia’s war in Ukraine persists.

Speaking on an investors’ call, Chief Executive Officer Robert Spurway said a greater portion of production would probably go toward export destinations in the next 12 months, while markets remain roiled by war. The disruptive conditions could last for at least two or three years, or maybe more, he said.

“We are seeing strong demand for Australian grain and oilseeds,” Spurway said. The nation has a competitive advantage in Asia given its proximity to major markets, with GrainCorp’s Australia business having a customer base in southeast and northern parts of the continent. The company said it aimed to tap demand from the region’s growing population and shifting dietary trends.

GrainCorp also pointed to increasing opportunities for growth in biofuels and renewables as global demand accelerates.

Ramping up the pace of shipments beyond current capacity levels has proved challenging amid widespread labor shortages in the country, Spurway said, adding export supply chains had been running at “2.5 times our normal” speed.

US Cellulosic Biofuel Mandates Slashed, RIN Credits Slip: BNEF

• Cellulosic biofuel blending requirements cut 18% for 2022
• D3 RIN prices fall to the lowest level since March 2021

The US Environmental Protection Agency (EPA) released the final renewables volume requirements for 2020 through 2022, updating the previously proposed requirements released in December 2021.

The EPA is responsible for setting annual volumes of renewable fuel that US refiners must blend into fossil fuel, or purchase credits, known as RINs, to prove compliance with their obligations.

Renewable volume obligations (RVOs) for three of the four biofuels categories were in line with the proposed volumes for 2021 and 2022. However, requirements for cellulosic biofuels, which generate D3 RINs, were cut by 10% in 2021 and 18% in 2022, compared to proposed levels last year. As a result, D3 RIN prices are down 21% compared to last month to $2.80/RIN, the lowest level since March 2021.

Renewable natural gas (RNG) is a cellulosic biofuel that generates D3 RINs and relies on the credits to compete with fossil-based fuels. Lower credit prices will likely dampen returns for major RNG producers such as Montauk Renewables and Archaea Energy.

US renewable fuel blending mandates, proposed vs final (2021 and 2022) (Note: Conventional biofuels based on total renewable fuels minus advanced biofuels. Cellulosic biofuel (D3), bio-based diesel (D4), advanced biofuel (D5), conventional biofuel (D6))

UAC Raises Russia Wheat Crop Estimate, Sees Export Vessel Risks

Russia’s 2022 wheat crop is now seen at 85.4m tons, up 1.9m tons from a prior forecast, as spring weather was mostly favorable, Kyiv-based analyst UkrAgroConsult says in a note.

• Barley estimate kept steady and corn cut slightly to 14.7m tons due to worsening drought recently in southern areas
• Country’s record wheat export potential in the 2022-23 season “may fall into question” because of shipping challenges
• Almost half of Russia’s grain-export volumes in the July-September period are usually aboard vessels that carry over 50k tons
• Risks have sharply increased for owners of such vessels to enter Russia’s Black Sea ports

Russian Wheat Exports Drop 4.6% So Far This Season: IFX

Russian wheat shipments for the 2021-22 season totaled 35.8m tons so far this season, down 4.6% from the same period a year earlier, Interfax reported, citing comments from Russian Grain Union analyst Elena Turina.

• Russia exported 175,000 tons of grains in the week to June 19, 67% less than the previous week
• Wheat exports fell to 130,000 from 346,700 tons
• Wheat prices increased in Russian and world markets due to small volumes of wheat exports within Russia’s quota at the end of the season: Turina
  • Lower forecasts for harvests in France and India also contributed to the gain in prices
• NOTE: Russia has a wheat-export quota of 8m tons set for the latter part of the season

Ukraine exports 1.5 million tons of grain by land monthly amid port blockade – EFE Ingles

War-hit Ukraine is exporting 1.5 million tons of grain by land each month, a Ukrainian foreign ministry official said on Monday.

“In recent months, we have exported an average of 1.5 million tons of grain by land – by rail and by road,” Olha Trofimtseva, Ambassador-at-Large at the Ministry of Foreign Affairs of Ukraine said at an online briefing on Monday.

European infrastructure and logistics were not equipped to cope with such export flow, Trofimtseva, who is also the Coordinator of the Exporters and Investors Council, said according to the Ukrinform news agency.

She praised efforts by Poland, Germany and other countries to build border transit centers and speed up the passage of trains with Ukrainian grains between countries to ports.

“We have recently heard President (Joe) Biden saying that the United States will also build temporary grain storage facilities in Poland near the Ukrainian border to relieve Ukrainian grain storage facilities before the 2022 harvest,” she said.

The Russian blockade of Ukrainian ports has prevented some seven million tons of wheat, 14 million tons of corn, three million tons of sunflower oil and another three million tons of sunflower meal from reaching the global market, triggering a record hike in grain prices. EFE

Ukraine soon to receive first temporary storage for 2022 grain harvest

Ukraine, which faces a shortage of storage facilities for the 2022 grain crop due to the Russian invasion, will soon receive the first temporary storages from abroad, the agriculture ministry said on Monday.

Ukraine’s agriculture minister told Reuters earlier in an interview that in the autumn when the corn harvest is over, the shortage of storage capacity could reach up to 15 million tonnes. (Full Story)

“The ministry … has appealed to the governments of the United States, Canada, UK and the EU to provide Ukraine with temporary storage facilities. Preliminary results are: the first batch is already sailing to Ukraine,” the ministry said.

It did not specify which storage facilities Ukraine would receive. Earlier, the ministry said that it could be either special big plastic bags or temporary silos.

Ukraine has said its harvest could fall to around 65 million tonnes of grain and oilseeds this year from 106 million tonnes in 2021 due to the Russian invasion.

Spring Crop Sowing Finishes in Ukraine, Area Down 21%: Ministry

Spring-crop sowing has now finished in Ukraine, its agriculture ministry says Friday in a statement.

• While the area was earlier forecast at 14.2m hectares, it ultimately amounted to 13.4m hectares
  • That compares with 16.9m hectares planted last year
• Corn plantings total 4.6m hectares, versus 5.5m hectares last year
• Sunflower plantings total 4.7m hectares, also below the prior year

Ukraine Expects to Export 2M Tons of Grains, OilSeeds in June

Ukraine may export up to 2 million tons of grains, oilseeds and sunflower oil this month, Agriculture Minister Mykola Solskyi said.

• That will be the maximum that current logistics allow after Russia blocked Ukrainian ports following full-scale invasion in late February, Solskyi’s deputy Taras Vysotskyi said separately in a TV interview Monday
• “There is no clear map that Ukraine confirms,” Vysotskyi said about attempts to unblock ports. “Clear security guarantees for civilian ships have not been reached. The main reason – Russia doesn’t want to provide such guarantees. Expert and political discussions are on.”

Kazakhstan to Supply Iran With 1m Tons of Grain in 2022-23

Memorandum was signed during Kazakh president’s visit to Iran, Kazakh ministry of agriculture says in a statement.

• Kazakhstan to supply Iran with wheat, barley, corn, vegetable oil and meat products under the deal
• Iran will supply Kazakhstan with fruit and vegetables, dairy products
• NOTE: In recent seasons Iran has often been among the largest buyers of Russian wheat

JP Morgan Projects High Upside for Ag Commodities

JP Morgan is forecasting that agricultural commodities may have an upside of over 30% through the rest of the year. In that case, prices for some grains may surge well past record highs — with wheat futures going as high as $16 per bushel and corn hitting $13 per bushel. “Unlike previous episodes, the food price shock of 2021/22 has been driven by a confluence of supply, demand, and structural factors including a multi-year La Niña impacting rainfall patterns across the Pacific, ” JP Morgan says. “All of which have been exacerbated by the indefinite close of Ukrainian seaports amid Russian conflict and disruptions to global fertilizer supply chains.”

China’s Planting of Corn and Soybeans Threatened by Searing Heat

• Drought conditions making sowing of key summer crops difficult
• Agriculture ministry sends teams to Henan, Hebei and Shandong

China’s agricultural ministry has sent teams to central and eastern parts of the country as searing heat and a lack of rainfall threaten to hamper summer planting of corn and soybeans.

Maximum temperatures have ranged from 35 to 40 degree Celsius in Henan, Hebei and Shandong provinces since June 15. That’s drying up the soil, which is bad for the sowing of crops, the ministry said in a statement Sunday. Its staff will ensure summer field management and planting goes smoothly by helping exploit water resources and applying anti-drought fertilizers, it said.

Farmers in Henan and Shandong provinces have just reaped a bumper harvestof winter-seeded wheat, and are now planting corn, soybeans and other crops.

Food security is always an important issue in China, but it’s attracting more focus than usual this year amid surging prices for many agricultural commodities that have been exacerbated by Russia’s invasion of Ukraine. Beijing is looking for ways to boost soybean output, given its heavy dependence on imports. Corn futures, meanwhile, jumped last week as farmers in the US also struggled with a hot spell.

Sweltering temperatures in the three Chinese provinces are likely to persistuntil late this week, according to China’s National Meteorological Center. Further south, the threat is more to do with heavy rainfall. Around 220,000 people have been evacuated and crops ruined in Fujian province due to flooding, reported China News Service.

Morocco Wheat Yields Sink 67% Y/y as Drought Stifles Crops: MARS

This year’s wheat yields in Morocco are seen at 0.87 tons per hectare, the EU’s Monitoring Agricultural Resources unit says in a report.

• That’s down 67% from last year and 56% below the five-year average
• “Drought in the December-February period, together with persistently above-average temperatures, are the main causes of a season with a high rate of crop failure”
• In Tunisia, wheat yields are seen 8.7% above average, while Algeria’s wheat yields are 17% below average

Surge in U.S. renewable diesel supply won’t offset loss of petroleum diesel

A flood of U.S. renewable diesel plants set to come online in the next three years will not be enough to offset the loss of petroleum diesel refining capacity from plant closings since 2019, a Reuters analysis of federal data shows.

U.S. refining capacity has declined in the last two years, as plants shut during the outset of the coronavirus pandemic, causing prices to spike. Several plants are being converted to facilities that can produce cleaner-burning renewable diesel, but at least for now, those facilities will not fully replace those refined barrels.

There are at least 12 renewable diesel projects worth more than $9 billion under construction, with another nine proposed. The 12, along with existing plants, are expected to produce about 135,000 barrels per day (bpd) of renewable diesel by 2025 according to EIA data, from around 80,000 bpd now.

However, since 2019, diesel production capacity has dropped by about 180,000 bpd total, according to the U.S. Energy Information Administration, and at least one more U.S. refinery is set to close next year, further reducing output. In addition, those refiners set to produce renewable diesel will also no longer produce gasoline or jet fuel.

Globally, about 400,000 bpd of combined diesel, jet fuel and fuel oil capacity has been lost since 2019, according to calculations from EIA data.

Renewable diesel is made from animal fats, food wastes and plant oils but is chemically equivalent to petroleum-based diesel. It can be produced in existing refinery equipment, but the yield are lower than with diesel. Biodiesel, another plant based diesel, must be mixed with petroleum to operate effectively in engines.

Growing demand and refinery losses have pushed diesel prices to record levels. The retail price of U.S. diesel has surged 80% this year to $5.78 a U.S. gallon, and low inventories have raised the potential for shortages. U.S. stocks of distillates, including diesel, are down 19% from a year ago.

About 1 million bpd of new petroleum refining capacity is planned in the next five years in Asia, the Middle East and on the U.S. Gulf Coast. But experts say startups are difficult to predict due to construction delays, changes in market demand and financing.

Malaysia Halts Import Fees on Animal Feed Inputs to Lower Costs

Malaysia suspended permit fees on imports of animal feed inputs as part of ongoing measures to shelter consumers from rising poultry prices that prompted the government to halt chicken exports earlier this month.

The decision is aimed at slashing import costs of feed ingredients — corn, wheat and soybean — and will take effect Tuesday, the nation’s Agriculture and Food Industries Ministry said in a statement.

Costs of animal feed has soared in Malaysia because of a spike in the global prices of the main ingredients, as well as a weaker ringgit. Malaysia imports most of its supplies of chicken feed, which accounts for two-thirds of poultry farmers’ costs.

US Fertilizer Markets Pressured as Summer Price Reset Begins

US fertilizer prices remain pressured amid reports of reduced spring demand and excess nitrogen inventory. Urea prices continue to fall as spring planting ends, with urea fills already out in Canada at significantly lower prices. Phosphate supply has tightened at New Orleans on lower import volume, even though summer fill programs in the western US and Canada showed sizable drops.

Fertilizer Fill Programs See Big Price Drops

The first summer fill programs for fertilizer were out in the western US and Canada, and at much lower prices than in the spring. Urea fill offers in Western Canada were down more than C$300 a metric ton from spring levels, and monoammonium-phosphate (MAP) programs in California and the Pacific Northwest were $100-$200 a short ton (st) lower. Buyers were still awaiting ammonia fill programs in the Midwest as late-season demand continues on corn, but a summer reset in California saw new ammonia offers falling $463/st, to $1,147/st delivered.

Prompt urea and urea ammonium nitrate (UAN) prices continued to drop at New Orleans (NOLA) and in the Corn Belt, with NOLA urea falling to its lowest since September 2021. NOLA phosphate prices were mixed, but those for potash also dropped slightly.

LIVESTOCK: USDA Cattle and Hog Slaughter Estimates

The following is for week ending Saturday, June 18:

• Cattle slaughter estimate at 667k, up 0.5% from a year ago
• Hog slaughter at 2.372m, down 2.9% y/y