Global Ag News for Mar 25.22

TODAY – Canola Processing Plunge in Canada

Wheat prices overnight are down 11 1/2 in SRW, down 10 3/4 in HRW, down 9 1/2 in HRS; Corn is down 3 1/4; Soybeans down 8 1/4; Soymeal up $0.02; Soyoil down 0.39.

For the week so far wheat prices are up 10 1/2 in SRW, up 13 3/4 in HRW, up 13 in HRS; Corn is up 3 1/4; Soybeans up 24 1/2; Soymeal up $0.91; Soyoil up 1.61. For the month to date wheat prices are up 140 1/4 in SRW, up 131 1/4 in HRW, up 79 1/4 in HRS; Corn is up 54 1/4; Soybeans up 55 3/4; Soymeal up $39.80; Soyoil up 1.38.

Year-To-Date nearby futures are up 39% in SRW, up 35% in HRW, up 9% in HRS; Corn is up 26%; Soybeans up 27%; Soymeal up 18%; Soyoil up 31%.

Chinese Ag futures (MAY 22) Soybeans down 9 yuan; Soymeal down 40; Soyoil down 204; Palm oil down 232; Corn down 12 — Malaysian palm oil prices overnight were up 88 ringgit (+1.48%) at 6031.

There were no changes in registrations. Registration total: 2,185 SRW Wheat contracts; 1 Oats; 15 Corn; 247 Soybeans; 98 Soyoil; 0 Soymeal; 154 HRW Wheat.

Preliminary changes in futures Open Interest as of March 24 were: SRW Wheat up 792 contracts, HRW Wheat down 642, Corn down 5,536, Soybeans up 1,302, Soymeal up 2,323, Soyoil down 1,880.

Northern Plains Forecast: Mostly dry Friday-Sunday. Isolated showers Monday. Temperatures near to above normal through Friday, near to above normal west and below normal east Saturday-Sunday, near to above normal Monday. 6-to-10-day outlook: Isolated showers Tuesday. Mostly dry Wednesday. Isolated showers Thursday-Friday. Mostly dry Saturday. Temperatures near to above normal Tuesday, near to below normal Wednesday-Saturday.

Central/Southern Plains Forecast: Mostly dry through Monday. Temperatures near to below normal Thursday, near normal Friday, above normal west and near to below normal east Saturday-Sunday, above normal Monday. 6-to-10-day outlook: Isolated to scattered showers Tuesday-Wednesday. Mostly dry Thursday. Isolated to scattered showers Friday-Saturday. Temperatures above normal Monday-Tuesday, near normal Wednesday-Friday.

Western Midwest Forecast: Isolated showers Friday. Mostly dry Saturday-Monday. Temperatures near to below normal Thursday, near to above normal Friday, below normal Saturday-Monday.

Eastern Midwest Forecast: Isolated showers through Saturday. Mostly dry Sunday-Monday. Temperatures near to above normal Thursday-Friday, below to well below normal Saturday-Monday. 6-to-10-day outlook: Isolated showers Tuesday-Wednesday. Mostly dry Thursday-Friday. Isolated showers Saturday. Temperatures near to above normal west and below normal east Tuesday, near to below normal Wednesday-Saturday.

Canadian Prairies Forecast: Days 1-3: Scattered showers Thursday. Mostly dry Friday-Saturday. Temperatures above normal Thursday, near to below normal Friday, below to well below normal Saturday. Days 4-5: Isolated showers Sunday-Monday. Temperatures above normal west and well below normal east Sunday, near to below normal Monday. 6-10 Day Outlook: Isolated showers Tuesday. Mostly dry Wednesday. Isolated showers Thursday. Mostly dry Friday-Saturday. Temperatures near to below normal Tuesday-Saturday.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Isolated to scattered showers through Friday. Mostly dry Saturday-Monday. Temperatures near to above normal Thursday, near to below normal Friday-Monday. Mato Grosso, MGDS and southern Goias Forecast: Isolated showers through Monday. Temperatures near to above normal through Monday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Scattered showers Thursday. Isolated showers east Friday. Mostly dry Saturday-Monday. Temperatures below normal through Saturday, near normal Sunday, near to above normal Monday. La Pampa, Southern Buenos Aires Forecast: Scattered showers Thursday. Mostly dry Friday-Monday. Temperatures below normal through Saturday, near normal Sunday, near to above normal Monday.

The player sheet for 3/24 had funds: net sellers of 8,000 contracts of  SRW wheat, sellers of 10,000 corn, sellers of 10,000 soybeans, buyers of 2,000 soymeal, and  sellers of 3,000 soyoil.

TENDERS

• FEED GRAIN TENDER: Iranian state-owned animal feed importer SLAL has issued an international tender to purchase up to 60,000 tonnes of animal feed barley, 60,000 tonnes of feed corn and 60,000 tonnes of soymeal
• SOYOIL TENDER: Iran’s state purchasing agency GTC has issued an international tender to purchase about 30,000 tonnes of soyoil
• WHEAT TENDER: Iraq’s state grains buyer has extended the deadline for the validity of price offers in a tender to buy a nominal 50,000 tonnes of hard milling wheat
• BARLEY TENDER: A buyer in Qatar has issued a tender to buy an estimated 105,000 tonnes of animal feed barley
• CORN TENDERS: Turkey’s state grain board TMO issued two tenders seeking a total 500,000 tonnes of animal feed corn in a combination of imports and supplies already in Turkey
• WHEAT TENDER: Bangladesh’s state grains buyer has issued another international tender to purchase 50,000 tonnes of milling wheat

PENDING TENDERS

• SOYBEAN SALE: The U.S. Department of Agriculture confirmed private sales of 318,200 tonnes of U.S. soybeans to unknown destinations for shipment in the 2021/22 marketing year.
• FAILED WHEAT TENDER: Jordan’s state grain buyer made no purchase in an international tender for 120,000 tonnes of wheat which closed on Thursday

 Canola Processing Plunge in Canada Signals Cooking Oil Inflation

• Drought zaps canola supplies in Canada, world’s top grower
• Processors not able to crushat full capacity, analyst says

Canada, the world’s top canola grower and exporter, is crushing the smallest amount of the oilseed in more than four years, in another sign that vegetable oil prices may keep rising.

In February, the processing of oilseeds in the northern nation dropped 21% from a year ago to 629,153 tons, according to Statistics Canada data released Thursday. That’s the smallest monthly crush since 2017. The decline comes as the price of canola soared to an all-time high after drought slashed the nation’s harvest by over a third.

Prices for vegetable oils have been skyrocketing as global demand increases and supplies get caught up in turmoil from the invasion of Ukraine. Canola is crushed to make vegetable oil used in everything from salad dressing to deep-frying, and it’s also used as a biofuel. The high prices are contributing to the worst U.S. inflation in four decades.

Futures touched C$1,177.80 ($937) per metric ton on Wednesday in New York, the highest ever.

“It’s been a bit of a battle as the supplies are tight,” said Ken Ball, a senior commodity futures adviser at PI Financial in Winnipeg, Manitoba. “They aren’t able to crush at full capacity.”

The competition for supplies comes as processors like Richardson International and Viterra Inc. are sinking millions of dollars into expanding and building newcrush facilities in Canada.

Egypt Won’t Tender for Wheat Before Mid-May, Minister Says

The world’s top wheat importer won’t hold its next international tender before mid-May, Egypt’s supply minister said, as it it turns to the local harvest while the war in Ukraine sends prices surging.

The announcement comes after the country scrapped its past two tenders as participation dwindled and offer prices soared in the wake of the conflict. Egypt often pauses its tenders near this time as its local crop is collected, but a three-month break would to be a lengthier than usual lull in purchases.

The country’s General Authority for Supply Commodities, which sources the grain for a subsidized bread program, last booked wheat in mid-February.

Egypt’s economy is coming under increasing pressure from Russia’s invasion of Ukraine, with the two countries now at war previously providing Egypt with much of its wheat.

Authorities target buying 5 million to 6 million tons of local wheat this season, minister Aly El-Moselhy told Bloomberg on Thursday.

Cairo, which has received all the Russian wheat it previously ordered, is exploring alternative sources and will hold talks with Argentina next week, he said.

Talks continue with India, while a potential trade of Egyptian fertilizer exports for Romanian wheat may be discussed at a diplomatic level between the two countries, according to the minister.

The most populous Arab nation let its currency weaken markedly on Monday and this week said it’s seeking support from the International Monetary Fund.

Europe Swaps Sunflower Oil for Rapeseed in Loss of Ukraine Crop

European oilseed crushers, vegetable-oil refiners and bottlers are replacing sunflower oil with the rapeseed variety to make up for the loss of Ukrainian oil-crop exports, industry group FEDIOL said in a statement.

• Processors are also using palm, soybean and rapeseed as replacements in frying oil
• More rapeseed intended for biodiesel is now being allocated toward food uses
  • “This confirms the critical role of crop-based biofuels that are functioning as buffer for the food market to cover the shortfall of commodities in exceptional circumstances”: FEDIOL
  • The group advocates against government intervention in biodiesel markets to prevent worsening the energy market situation
• FEDIOL is seeking looser food labeling rules to enable manufacturers to quickly adapt their vegetable oil mixes

Resuming of Railway Operations Look to Ease Fertilizer Tightness

The resuming of service by Canadian Pacific Railway after the company and the Teamsters Canada Rail Conference reached an agreement to settle their labor dispute via binding arbitration may prove to ease some tightness in North American fertilizer supplies, even if only slightly. “CP is a major supplier of fertilizer, especially potash, to the United States and abroad,” says the USDA in its latest Grain Transportation Report. The agency adds that some disruptions to potash supply are expected, although the main stressor on the fertilizer is coming from transportation disruptions in the Black Sea. “Global potash supplies have declined since producers in Russia and Belarus effectively stopped exporting the commodity following Russia’s invasion of Ukraine,” says the USDA.

Weather favors Brazil’s second corn crop prospects; exports to jump

Favorable weather is boosting Brazil’s second corn prospects, consultancy Safras & Mercado said on Thursday, a boon to farmers and traders who can profit from soaring prices amid the war in Ukraine.

A large producer, Ukraine’s corn plantings may fall by nearly 39% in 2022 as Russia continues to attack the country. (Full Story)

With more supplies on the way, Brazil could raise corn exports to 34.5 million tonnes in 2021/2022, a nearly 66% increase from the previous season, Safras predicts.

Paulo Molinari, an analyst with the consultancy, said Safras could change Brazil’s second-corn output estimate as early as next week.

“Don’t be surprised if we revise it up to more than 83 million tonnes,” Molinari said during an event.

Safras has pegged Brazil’s Center-South second corn output at 83.3 million tonnes, a 44% rise from the previous cycle, when second corn suffered from drought and frost.

Pending confirmation, the analyst said some farmers in Mato Grosso, Goias, Sao Paulo and Minas Gerais may have planted more second corn than initially projected, encouraged by higher prices, driving output higher.

Farmers in Matopiba states, considered Brazil’s new agricultural frontier, could also reap a record harvest, Molinari said, citing more plantings there.

Safras has pegged Brazil’s total corn production this season at 115.7 million tonnes, an unprecedented volume.

India’s wheat production likely to reach all-time high of 112 million tonne: IIWBR-Karnal scientists

India’s wheat production may set a new record this Rabi harvesting season and may reach over 112 million tonne, predict the scientists of the Indian Institute of Wheat and Barley Research (IIWBR), Karnal.

Last year’s wheat production had fallen short to their prediction of 112 million tonne and had reached to around 109 million tonne, but this year the scientists are hopeful that the wheat production may cross the 112 million tonne-mark easily. They claim that Punjab, Uttar Pradesh, Haryana and Madhya Pradesh will be major contributors for increase in wheat production.

Despite there being a considerable increase of acreage under mustard in Haryana and Punjab, he said there will not be any major impact of the fall in acreage in the northern states as area under wheat has increased in Madhya Pradesh. Farmers have adopted high-yielding varieties including HD-2967, HD-3086 and DBW-187, and this year, area under DBW 187 has reported a significant increase.

Scientists said wheat cultivation may become more profitable for farmers in the next couple of years as the IIWBR, Karnal had last year identified three new high-yielding varieties of wheat including DBW-296, DBW-327 and DBW-332. These varieties have an average production capacity of 80 quintal per hectare.

Fall in yield likely in Haryana

On the other hand, officials of the Haryana agriculture department are expecting a fall in the yield thanks to adverse weather conditions. Dr Jagraj Dandi, joint director (statics) of the Haryana state agriculture department, said they are expecting around 124 lakh MT wheat production from 25.5 lakh hectare in state but this may come down to around 120 lakh MT following a sudden rise in temperature in March.

Aditya Dabas, deputy director agriculture Karnal, said even the crop appears healthy but by and large, the weather is not favourable for wheat this year, especially during January and February as around 29 days during these months were without sunlight.

Now, the temperature has increased suddenly, and it may affect the yield, he added. Officials in the Karnal agriculture department predicted around 8-10% decline in yield in district against 20.7 quintal per acre last year.

French Wheat Ratings Steady, Barley Planting Finishes: AgriMer

The share of France’s soft-wheat crop rated in good or very good condition was at 92% as of March 21, even with the prior week, FranceAgriMer data showed on Friday.

• Spring barley was 100% planted, versus 97% the prior week
  • Compares with 99% at this time last year
• NOTE: Parts of north and east France are set for their sunniest start to a year on record, according to Meteo France
  • Trend set to continue this weekend

Ukraine’s Biggest Poultry Firm Resumes Exports as War Rages

• MHP to sow as much as 95% of its land starting April: CFO
• Company to hold call with bondholders March 25 on delays

Ukraine’s largest poultry producer MHP SE has restarted exports and is ready to begin a large-scale sowing campaign, a potential sign of optimism for the region’s commodities trade as Russia’s invasion continues to disrupt flows.

The war is constraining crucial supplies of agricultural commodities that Ukraine sends to world markets, from grains to poultry, as the nation’s ports shuttered and vessels have avoided the region.

Before Russia’s invasion of Ukraine, MHP — which also grows corn, sunflower, wheat and rapeseed — generated about 60% of its $1.9-billion annual revenue from exports. That share dropped to almost zero as the conflict cut the company off from its usual seaborne shipment routes, forcing it to seek alternatives.

“We are considering exporting by railways, but it is difficult because of the differences in infrastructure between the Ukrainian railways and the European railways,” MHP Chief Financial Officer Viktoria Kapelyushnaya told Bloomberg News in an interview. “We have started poultry exports using trucks and in the nearest time expect to increase export volumes.”

Cash Woes

The conflict has also blocked MHP from accessing credit lines. It’s been in talks to extend $126 million in short-term financing facilities that have been maturing.

“The majority has already been agreed to be extended,” Kapelyushnaya said. “It’s very important to preserve the sustainability of the business.”

As part of its efforts to preserve cash, the company said last week it couldn’t make coupon payments on $1.4 billion of bonds. The money on the balance sheet is urgently needed to finance a sowing campaign on 360,000 hectares of land.

To fund the sowing campaign, which may target as much as 95% of its land starting in April, according to Kapelyushnaya, MHP needs about $160 million from March through June, it said earlier this week. As of March 21, the company had $228 million in cash.

“The sowing campaign is concentrated in the center and west of Ukraine, areas which are relatively safer than the rest of the country,” Kapelyushnaya said. “With the products of the sowing campaign, we are expecting positive cash flow from September onwards.”

That may offer some relief to bondholders who were asked by the company for a 270-day extension to a grace period following a missed coupon payment on one of its outstanding dollar bonds. All three of MHP’s dollar bonds, downgraded to default level by S&P Ratings, traded at about 40 cents to the U.S. dollar on Thursday.

The company will hold a call with investors on March 25 to discuss its consent solicitation offer — a request to change the terms of its bond — which would require holders of more than 50% of them to approve it. MHP is working with JPMorgan Chase & Co. as a solicitation agent and Freshfields Bruckhaus Deringer LLP as legal adviser.

China rolls out policies to support grain production

China has introduced a series of policies to boost grain production this year, according to the Ministry of Agriculture and Rural Affairs and the Ministry of Finance.

The country will issue more one-time subsidies for farmers to help them cope with increasing expenditure caused by price hikes of agricultural supplies, the ministries said.

The ministries will continue to support the development of 6.67 million hectares of high-standard farmland, and provide subsidies for the purchase and application of agricultural machinery.

Subsidies shall also be offered for corn and soybean planting, and the minimum purchase price for rice and wheat shall be raised appropriately to effectively protect farmers’ interests.

Meanwhile, the ministries called for building industrial parks and clusters for grain and oil production, thus formulating integrated industrial chains.

Disaster relief funds will be increased to support the prevention and control of pests and diseases, while financial insurance will be enhanced, the ministries said.

China’s Hog Farmers Even More Squeezed by Record Feed Costs

Hog farmers in China, the world’s biggest pork producer, are seeing their profits increasingly squeezed by record expenses for animal feed ingredients, such as soybean meal and corn, and weakening pig prices.

Futures for soybean meal, a vital component of animal feed, have surged about 35% this year on the Dalian Commodity Exchange to an all-time high, while corn is up almost 20% since mid-September and hit the highest ever this month. Live hog futures have fallen to the lowest since the contract listed in early 2021.

Global crop prices have skyrocketed because of drought, increasing demand and turmoil caused by Russia’s invasion of Ukraine. The price moves in Dalian help show how rising costs are affecting China, the world’s largest importer of corn and soybeans. Local cooking oil prices have also soared with soybean oil and palm oil hitting the highest intraday level since 2008. Meanwhile, shares of pork producer WH Group Ltd. fell to a six-year low this month in Hong Kong.

Malaysia’s March 1-25 Palm Oil Exports 1,008,706 Tons: Amspec

Shipments fall 4.9% m/m from 1,060,303 tons exported during Feb. 1-25, according to AmSpec Agri on Friday.

Zambia to Waive 15% Wheat-Import Duty to Mitigate Soaring Prices

Zambia’s government agrees to request from a local millers’ group to waive a 15% wheat-import duty to cushion surging prices and will publish subsidiary legislation soon, Ministry of Agriculture Permanent Secretary Green Mbozi says in text message.

Zambia should start receiving first consignments in next week or two of about 100,000 metric tons of wheat imports, Millers Association of Zambia President Andrew Chintala says by phone Thursday

“All the orders that were made, suppliers have indicated they’ll be able to meet the demand in terms of what has already been placed on order but what has changed is obviously the price,” Chintala says of wheat import orders from members of his association

U.S. Grain Movement by Rail Fell 20.1% Week Ended March 16

U.S. Barge Shipments of Grain Rose 22% Last Week

U.S. Red Meat Production Rose 1% Y/y in February