Global Ag News for Mar 10

TODAY—WEEKLY ETHANOL STATS—

Overnight trade has SRW Wheat down roughly 8 cents, HRW down 10; HRS Wheat down 7, Corn is down 8 cents; Soybeans down 13; Soymeal down $3.50, and Soyoil down 25 points.

Chinese Ag futures (May) settled down 15 yuan in soybeans, down 38 in Corn, down 57 in Soymeal, down 76 in Soyoil, and down 84 in Palm Oil.

Malaysian palm oil prices were up 60 ringgit at 3,975 (basis May), a 13 year high, over concerns of labor shortages, India imports.

In Argentina, dryness is still an issue; though, some erratic shower and thunderstorm activity is still expected to increase later this week and especially in the first half of next week. Last evening’s GFS model run was notably drier in Argentina Mar. 19 – 21.

In Brazil, conditions in the north will still be wetter than preferred leading to additional fieldwork delays. Net drying will occur in the south into next Tuesday which will benefit fieldwork progress. Some timely rain is likely in southern Brazil in week 2 of the outlook.

A significant and important precipitation event is still expected Thursday through Sunday from the Hard Red Winter Wheat Region through the Corn Belt and northern Delta. In the other areas impacted by this system, rain and thunderstorm activity will occur with a potential for strong to severe thunderstorms, especially from Oklahoma into the Delta and southwestern Missouri.

The player sheet had funds net buyers of 6,000 contracts of SRW Wheat; sold 7,000 Corn; bought 4,000 Soybeans; bought 1,000 lots of Soymeal, and; net bought 6,000 Soyoil.

We estimate Managed Money net long 25,000 contracts of SRW Wheat; long 353,000 Corn; net long 174,000 Soybeans; net long 61,000 lots of Soymeal, and; long 129,000 Soyoil.

Preliminary Open Interest saw SRW Wheat futures up roughly 195 contracts; HRW Wheat down 1,200; Corn down 3,800; Soybeans up 5,900 contracts; Soymeal up 2,400 lots, and; Soyoil up 2,900.

Deliveries were ZERO Soymeal; ZERO Soyoil; 13 Rice; ZERO Corn; 15 HRW Wheat; ZERO Oat; ZERO Soybeans; ZERO SRW Wheat, and; ZERO HRS Wheat.

There were changes in registrations (Oats down 2)—Registrations total 49 contracts for SRW Wheat; 5 Oats; Corn ZERO; Soybeans 60; Soyoil 1,248 lots; Soymeal 175; Rice 1,010; HRW Wheat 1,291, and; HRS 710.

Tender Activity—Algeria bought 450,000t to 660,000t optional-origin wheat—Philippines seek 385,000t optional-origin feed wheat—

The U.S. Agriculture Department (USDA) left its outlook for domestic corn and soybean supplies unchanged at seven-year lows on Tuesday. While the stocks forecast was slightly bigger than what analysts were expecting, it showed that supplies will remain tight until U.S. farmers begin harvesting crops in the fall when a big-crop will be needed to satisfy robust domestic and export demand.

On the global front, USDA raised its outlook for the Brazilian soybean crop by 1 million to 134 million tonnes and left its outlook for the country’s corn harvest unchanged at 109 million tonnes. USDA lowered its forecast for Argentina’s soybean production to 47.50 million tonnes from 48.00 million.

Wire story reports China is once again the U.S.’s chief customer for agricultural goods, three years after the start of a bruising trade war that prompted American farmers to try to wean themselves off their biggest market. Following a cease-fire between the world’s two largest economies last year, U.S. farmers are shipping record volumes of crops and meat across the Pacific. The surging agricultural exports are helping power a turnaround in the U.S. farm economy, lifting commodity prices and profits for agribusinesses, and fueling expectations that farmers will devote more land than ever for some crops. U.S. agricultural exports to China in 2020 rose to 55.5 million tons and comprised one-quarter of all farm shipments, according to U.S. Agriculture Department data. China is now buying more farm goods than it did before the trade war, and U.S. agricultural officials expect Chinese demand to grow further. The revival of trade relations is rippling across fields and barns throughout the U.S., buoying businesses that suffered as Chinese tariffs on U.S. goods such as soybeans and pork slashed exports and pressured prices.

U.S. shipped 6.2 million tons of corn in February, up 13% from January. The record-breaking February shipments are in line with our expectations for accelerating U.S. corn shipments. Exports to China totaled 1.1 million tons in February, close to a month ago. Meanwhile exports to other destinations (besides China) totaled 5.1 million tons, up 16% from January, and 39% above last year’s same period. U.S. exports during the first half of the 2020/21 market year totaled 26.7 million tons of corn. To reach USDA’s February projection (66.04 million tons), U.S. needs to ship 35.6 million tons in the second half of the market year – which is above the 5-year average of 30.0 million tons for the period, but lower than 2018 when 39.1 million tons were shipped during March-August.

Rapeseed prices are surging to record highs as traders scour the world for supplies of the oil-rich crop, illustrating growing strain across oilseed markets exerted by booming Chinese demand. The scarcity of rapeseed, processed to make oil for cooking, biodiesel fuel and protein meal for livestock, has coincided with reduced supplies of soybeans, sunflower and palm oil. As a result, oilseeds are a major factor in the United Nations’ global food commodity price index reaching a 6-1/2 year high, prompting some individual governments such as Russia to impose measures aimed at curbing grain exports. Poor harvests in Canada and Europe have also tightened supplies with stocks held by major exporters seen falling sharply to an eight-year low by the end of the current 2020/21 season. Rapeseed prices in Europe are booming, with Euronext futures reaching a record high of 528.75 euros ($629.05) a tonne on Monday, up around 40% since the start of the season on July 1, 2020.

China’s wheat carryout in 2020-21 is set to fall for the first time in eight years, though that is not saying much given that the world’s leading grower has more than a year’s worth of supply in storage. What other countries might consider excess inventory is China’s exact intent. Beijing maintains hefty stocks of wheat and rice in order to ensure food security for 1.4 billion people, and production of the grains has recently hovered near all-time highs, encouraged by set purchase prices. Chinese corn prices began to surge last year, topping those for wheat for the first time since Beijing scrapped the price support and stockpiling schemes for corn, roughly five years ago. Domestic wheat prices are now offered at some of the largest-ever discounts to the yellow grain. That is expected to increase wheat feeding in the coming months as the country works to restore pork production, but it seems unlikely that Beijing would tolerate any strong depletion of wheat reserves given the purpose they are intended to serve.

Brazilian farmers will harvest a record soybean crop of at least 130 million tonnes in 2021, Safras & Mercado said. In January, Safras & Mercado forecast Brazil’s soy production at 133.1 million tonnes, an estimate that should be lowered in coming days as rains during the harvest spoil quality and hurt yields in midwestern states.

Port premiums for Brazilian soybeans have turned negative as rains disrupt harvesting and transportation of the oilseeds in key growing states such as Mato Grosso. In some parts of Brazil, trucks are waiting two days in line to unload the freshly reaped grains underscoring the challenges in shipping a record soy harvest delayed by rains. Logistical problems hit premiums as buyers don’t like disruptions. We had not seen negative premiums in years.

Delays getting soybeans from farms to ports reduced exports in February and increased expectations for shipments this month, when Brazil is forecast to ship a monthly record of 15.5 million tonnes of soybeans. With Chinese demand still strong and Brazil’s real currency reeling from political and economic woes, exports of soybeans are forecast to reach 83 million tonnes in 2021. Domestic farmers will harvest a record soy crop of at least 130 million tonnes in 2021, Safras & Mercado projects. Around 62% of the output has been sold compared with 49% in the previous season.

Russian wheat export prices fell last week after two weeks of growth due to lower prices in Chicago and Paris. Russian wheat with 12.5% protein loading from Black Sea ports for supply in March was at $285 a tonne free on board (FOB) at the end of last week, down $2 from the previous week, agriculture consultancy IKAR said. Refinitiv said wheat prices fell by $3.5 to $283.5 per tonne. Sovecon pegged barley at $252 per tonne, up $1. Russia doubled its wheat export tax to 50 euros ($59.5) ($60) per tonne starting from March 1. Sovecon expects Russia’s wheat exports to slow to 2.0-2.5 million tonnes in March due to the higher tax.

Russia wheat exports surged to 3.5 million tons in February, up 18% from February. It is the highest February exports over the past five years. Accumulated exports since July totaled 31.4 million tons, 27% above last year during the time. Given record high production in 2020/21 (85.3 million tons by USDA), adequate supply and 6-year high wheat export prices indicate that Russia is capable of exporting as much as 42 million tons of wheat. However, Russia wheat export tariff has increased to 50 euros/tonne since 1 March. The high export duties substantially reduce the profitability of wheat exports and slow Russia wheat deliveries abroad.

Argentina wheat exports remained at 4-year lows. Refinitiv’s trade flows tracked only 1.0 million tons of wheat shipments, down 23% from January.

Euronext old-crop wheat futures ended lower on Tuesday, dented by the looming expiry of the March contract, talk of a relatively small tender purchase by Algeria and limited revisions in U.S. crop forecasts. May milling wheat settled 1.00 euro, or 0.4%, down at 229.25 euros ($272.44) tonne. Front-month March futures closed 2 euros lower at 236.00 euros ahead of the contract’s expiry on Wednesday. New-crop positions edged up, eroding slightly the large premium held by old-crop positions.

Egypt’s strategic reserves of wheat are sufficient to cover four months of consumption, the supply ministry said. In the current season, nearly four million tonnes of wheat will reach the silos, raising the reserves of this important strategic commodity

—–The country has strategic reserves of vegetable oils sufficient for 4.8 months

Malaysia’s palm oil inventories fell more than expected in February as production declined to its lowest in five years and imports plunged, industry regulator data showed.

Stockpiles in the world’s second-largest producer of palm oil fell 1.8% from January to a three-month low of 1.3 million tonnes.

Crude palm oil production fell 1.85% from the previous month to 1.11 million tonnes, marking a fifth straight month of declines, as a labor shortage and adverse weather conditions continued to curb yields.

Imports which saw a 47% month-on-month decline were way lower while domestic consumption were higher than expectations; exports slumped 5.5% to 895,556 tonnes, their lowest since February 2007.

Malaysia is in talks with Saudi Arabia to increase the kingdom’s imports of the edible oil to 500,000 tonnes in the near future, state media Bernama reported. Saudi Arabia, which constitutes 2% of Malaysia’s palm oil exports, last year imported more than 300,000 tonnes.

Malaysian palm oil product exports for March 1-10 fell 22.6% to 309,898 tonnes from 400,375 tonnes shipped during Feb. 1-10, cargo surveyor Intertek Testing Services said.