Global Ag News for May 31.22

HEADLINES TODAY

Wheat prices overnight are down 25 1/2 in SRW, down 26 1/4 in HRW, down 18 1/2 in HRS; Corn is down 2 1/4; Soybeans up 13 3/4; Soymeal up $0.26; Soyoil up 0.72.

For the week so far wheat prices are down 25 1/2 in SRW, down 26 1/4 in HRW, down 18 1/2 in HRS; Corn is down 2 1/4; Soybeans up 13 3/4; Soymeal up $0.26; Soyoil up 0.72. For the month to date wheat prices are up 76 1/4 in SRW, up 103 1/4 in HRW, up 120 1/4 in HRS; Corn is down 38 1/2; Soybeans up 61 1/4; Soymeal up $2.60; Soyoil down 3.89.

Year-To-Date nearby futures are up 47% in SRW, up 51% in HRW, up 31% in HRS; Corn is up 31%; Soybeans up 31%; Soymeal up 6%; Soyoil up 43%.

Chinese Ag futures (SEP 22) Soybeans down 53 yuan; Soymeal up 17; Soyoil up 26; Palm oil down 112; Corn up 2 — Malaysian palm oil prices overnight were up 69 ringgit (+1.11%) at 6301.

There were no changes in registrations. Registration total: 1,010 SRW Wheat contracts; 23 Oats; 0 Corn; 0 Soybeans; 98 Soyoil; 0 Soymeal; 139 HRW Wheat.

Preliminary changes in futures Open Interest as of May 27 were: SRW Wheat up 457 contracts, HRW Wheat up 81, Corn up 1,049, Soybeans up 11,808, Soymeal up 4,411, Soyoil up 3,766.

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

Central/Southern Plains Forecast: Scattered showers through Thursday. Isolated to scattered showers Friday-Saturday. Temperatures near to below normal northwest and above normal southeast Tuesday, near to below normal Wednesday-Saturday. Outlook: Isolated to scattered showers Sunday-Thursday, mostly north. Temperatures near to below normal north and near to above normal south Sunday-Thursday.

Western Midwest Forecast: Scattered showers Tuesday, south Wednesday. Mostly dry Thursday-Friday. Scattered showers Saturday. Temperatures near to above normal Tuesday, near to below normal Wednesday-Saturday.

Eastern Midwest Forecast: Scattered showers through Thursday. Mostly dry Friday-Saturday. Temperatures above to well above normal Tuesday-Wednesday, near to below normal Thursday-Saturday. Outlook: Isolated to scattered showers Sunday-Thursday. Temperatures near to below normal Sunday-Thursday.

Canadian Prairies Forecast:  Scattered showers east Tuesday. Mostly dry Wednesday. Isolated showers east Thursday. Temperatures near to below normal through Thursday. Mostly dry Friday-Saturday. Temperatures near to above normal west and near to below normal east Friday-Saturday. Outlook: Scattered showers southwest Sunday-Thursday. Temperatures near to below normal Sunday-Tuesday, near to above normal Wednesday-Thursday.

 Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana: Scattered showers through Saturday. Temperatures near to above normal north and below normal south through Friday, near to above normal Saturday. Mato Grosso, MGDS and southern Goias: Mostly dry through Saturday. Temperatures above normal through Saturday.

Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires: Mostly dry through Saturday. Temperatures below to well below normal through Thursday, near to below normal Friday-Saturday. La Pampa, Southern Buenos Aires: Mostly dry through Saturday. Temperatures below to well below normal through Thursday, near to below normal Friday-Saturday.

The player sheet for 5/27 had funds: net buyers of 6,000 contracts of  SRW wheat, buyers of 13,000 corn, buyers of 3,000 soybeans, buyers of 2,500 soymeal, and  sellers of 3,000 soyoil.

TENDERS

• WHEAT SALE: A group of South Korean flour mills bought an estimated 124,700 tonnes of wheat to be sourced from the United States, Canada and Australia in a tender which closed on Thursday
• FAILED WHEAT TENDER: Bangladesh is scrapping an international tender to import 50,000 tonnes of wheat as it received only one offer to supply the grain that was too expensive, two officials from the state grains procurement agency said on Friday.

PENDING TENDERS

• RICE TENDER: Egypt’s state grains buyer the General Authority for Supply Commodities (GASC) is seeking at least 25,000 tonnes of white rice in a tender-practice on the account of the Holding Company for Food Industries. Offers were to be submitted by May 19.
• WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 tonnes of milling wheat, traders said. The deadline for submission of price offers is May 29, they said.

Putin ready to facilitate unfettered grain exports from Ukraine’s ports – Kremlin

• Russia ready to allow grain exports from Ukraine ports
• Russia will work with Turkey – Kremlin says
• Putin: if sanctions are lifted, Russia can export more
• United Nations seeking deal to allow food exports

President Vladimir Putin said on Monday that Russia was ready to facilitate the unhindered export of grain from Ukrainian ports in coordination with Turkey, according to a Kremlin readout of talks with President Tayyip Erdogan.

Besides the death and devastation sown by Russia’s invasion of Ukraine, the war and the West’s attempt to isolate Russia as punishment have sent the price of grain, cooking oil, fertiliser and energy soaring, hurting global growth.

The United Nations, which says a global food crisis is deepening, is trying to broker a deal to unblock Ukraine’s grain exports though Western leaders have blamed Russia for holding the world to ransom by blockading Ukrainian ports. (Full Story)

“During the discussion of the situation in Ukraine, emphasis was placed on ensuring safe navigation in the Black and Azov seas and eliminating the mine threat in their waters,” the Kremlin said of Putin’s call with Erdogan.

“Vladimir Putin noted the readiness of the Russian side to facilitate the unhindered sea transit of goods in coordination with Turkish partners. This also applies to the export of grain from Ukrainian ports.”

Putin, according to the Kremlin, added that if sanctions were lifted, then Russia could “export significant volumes of fertilizers and agricultural products.”

It was not immediately clear which Ukrainian ports Putin was speaking of. Ukraine’s main grain export ports include Chornomorsk, Mykolaiv, Odesa, Kherson and Yuzhny.

Erdogan told Putin that peace needed to be established as soon as possible and that Turkey was ready to take on a role in an “observation mechanism” between Moscow, Kyiv and the United Nations, if an agreement is reached.

HARVEST RACE

Ukraine is trying to export its grains by road, river and rail to help avert a global food crisis but will not hit its targets unless Russia’s blockade, an official at Ukraine’s Agriculture Ministry told Reuters last week. (Full Story)

Before Russia sent troops into Ukraine, the country had the capacity to export up to 6 million tonnes of wheat, barley and maize a month but exports collapsed to just 300,000 tonnes in March and 1.1 million in April.

Russia and Ukraine together account for 29% of global wheat exports, mainly via the Black Sea, and for 80% of global exports of sunflower oil.

Ukraine is also a major exporter of corn, barley and rapeseed oil, while Russia and Belarus – which has backed Moscow in the war and is also under sanctions – account for over 40% of global exports of the crop nutrient potash.

Russia has captured some of Ukraine’s biggest seaports and its navy controls major transport routes in the Black Sea, where extensive mining has made commercial shipping dangerous.

Sanctions have also made it hard for Russian exporters to access vessels to move commodities to global markets.

Putin has said Russia will increase wheat exports in the new July-June season due to a potential record crop of 87 million tonnes.

India Maintains Normal Monsoon Rain Forecast for 2022

Rainfall in the June-September monsoon season is likely to be 103% of a long-term average of 87 centimeters, Mrutyunjay Mohapatra, director general of India Meteorological Department said on Tuesday.

• That compares with its April forecast of 99% of average rainfall during the rainy period
• The prediction has an error margin of 4%, Mohapatra said at an online briefing
• NOTE: Normal Indian Monsoon Sets Stage for a Bountiful Crop Season
• Above-normal showers are expected in parts of central and northwestern regions in June
• Maximum temperatures are likely to be above normal in northwestern parts of the country during the month

Ukraine Sees 2022 Winter Wheat Crop Falling to 20.1M Tons

Ukraine’s harvest of winter grains may fall to 28.5m tons in 2022, including a winter wheat crop that’s seen slumping to 20.1m tons, the Ukrainian Grain Association said Monday on Telegram citing research from the state-run Hydro-Meteorological Center.

• NOTE: Ukraine’s 2021 winter-grain harvest was 36.8m tons, including 31.4m tons of winter wheat
• Crop forecasts refer to areas that are under the control of the Ukrainian government
• Winter-grain crop on areas seized by pro-Russian separatists and Russian troops may amount to just 5.3m tons

Ukraine’s Grain Export Drops 62% in May Y/y with Ports Blocked

Ukraine grain exports fell to just over 1 million tons in May, according to Agriculture Ministry’s data published on its website Tuesday.

• Total includes:
  • 42,000 tons of wheat, down 94% y/y
  • 11,000 tons of barley, down 52% y/y
  • About 1 million tons of corn, down 50% y/y
• Exports slumped as seaports are blocked by Russia’s troops
• NOTE: So far Ukraine’s grain exports have reached almost 47m tons in 2021-22 marketing year that ends on Jun. 30, up 12% y/y

Conditions Good for India Monsoon Onset Over Kerala in 2-3 Days

Conditions are becoming favorable for the onset of the monsoon over the southern Indian state of Kerala during the next 2-3 days, according to the India Meteorological Department.

• NOTE: The weather office had forecast that the monsoon will arrive on May 27; the prediction had a margin of error of 4 days
  • The monsoon’s normal start date in Kerala, the first entry point for the country, is June 1
• Monsoon has further advanced into some more parts of the Arabian Sea, entire Maldives and adjoining areas of Lakshadweep
• Rains are seen in parts of several states, including Kerala, West Bengal, Odisha, Maharashtra, Tamil Nadu, and Assam, for five days from Friday
  • NOTE: Rain to spur sowing of summer crops such as rice, corn and pulses

Sinar Mas Agro Unit, 2 Others Get Palm Oil Export Permits

Indonesia has granted export permits to units of Sinar Mas Agro Resources, Synergy Oil and Asian Agri as of Monday, according to Director General of Domestic Trade at the trade ministry Oke Nurwan.

• The company is allowed to export three times as much as its domestic contribution of bulk cooking oil, Nurwan says in a phone interview
• As many as 61 companies are eligible for export permits
• Govt may increase exports ratio when domestic supply seen sufficient with companies speeding up domestic distribution of cooking oil

 SovEcon Lowers Ukraine Wheat-Crop Estimate; Raises Corn Outlook

SovEcon cut its outlook for Ukraine’s wheat output this year by 0.9m tons to 22.2m tons on a smaller areas in regions heavily affected by the war and adverse weather, analyst Andrey Sizov said by email.

• The majority of wheat regions received 60%-80% of the normal rain during May
• Raises corn-crop estimate by 1.2m tons to 27m tons due to a larger area
• “Ukraine is likely to produce a crop substantially above many market estimates,” Sizov said
  • “However, all main sea terminals remain blocked and exports are weak. We don’t expect them to increase above 1.5m tons per month near term, which is below 20% of maximum export capacity during peaceful times”
  • High stockpiles, a relatively good crop and limited shipments will put pressure on farmers profits, which is a risk for winter plantings

Ukraine’s Spring Grain Areas at 78% of Last-Year Level: Govt

Ukraine’s Spring planting campaign is near to completion with Spring grains and legumes being sown on 78% of last year’s area, Agriculture Ministry says in a statement on its website.

• Total areas sown include:
  • 189,300 ha under Spring wheat, up by 8% y/y
  • 928,400 ha under Spring barley, down 31% y/y
  • 4.4m ha of corn, down 14% y/y
• Areas under oilseeds include:
  • 4.3m ha of sunflower, down 30% y/y
  • 1.2m ha under soybean, down 5.5% y/y
• Ukraine sees this year planting areas for all Spring crops, including grains, legumes and oilseeds, at 14.2m ha, down 16.3% y/y
• NOTE: The country’s Spring wheat crop is usually far smaller than its Winter wheat crop

Russia Plans to Up Sunflower Oil Export Quota by 400k Tons: IFX

Russia plans by Aug. 31 to increase the quota on exports of sunflower oil by 400,000 tons, Interfax reports, citing a draft regulation.

• For grist, plans to raise quota by 150,000 tons
• NOTE: Russia introduced an export quota from April 15 of 1.5m tons of sunflower oil and halted the export of sunflower seed and rapeseed from April 1
• Quota on sunflower grist is currently 700,000 tons, according to Interfax

Russian Wheat Exports Increased 8% in Past Week: Interfax

Russian wheat shipments rose 8% in the past week to 329k tons, Interfax says, citing Russian grain union data. The figure compares with 305k tons of wheat export a week before

Argentina 2022-23 Wheat, Barley Exports Seen Worth $6.5b: Bourse

Exports of the grains that are harvested at the end of the year would be a record, the Rosario Board of Trade says in a weekly newsletter.

• At current harvest and price estimates, wheat exports would be worth a record USD $5b
  • Forecast is based on shipments of 12.5m metric tons. Argentina would need to raise its wheat export quota from the current 10m to achieve that volume
  • 2022-23 wheat supplies seen at 21.3m tons, with 19.1m from the harvest and a 2.2m carry-in
• Barley exports seen at a record USD $1.5b
• NOTES:
  • Wheat/barley exports are a key source of dollar revenues for Argentina at the turn of the year, with the benefit of soy dollars mostly felt in 2Q
  • Less Wheat, More Barley Seen in Argentine Breadbasket: Exchange
  • Argentina Says Crop Rally to Neutralize Soaring Energy-Import Bill
• Agriculture traders are rushing to register wheat shipments amid the export quota, with 8.5m of the 2022-23 crop listed so far
• NOTES:
  • Argentina Farmers Forward Sell Record Volume of Wheat Amid Quota
  • 5.3% of wheat has been planted
• Traders are also registering next season’s corn at the quickest pace ever, with 2.6m tons already listed, 26% of the current 10m-ton export quota
  • NOTE: 2022-23 corn starts getting planted in September

Bulgaria Sees This Year’s Wheat Crop at 7m Tons, Premier Says

Bulgaria “could be a part of the solution” to the wheat supply crisis, providing both the grain and the infrastructure at the Varna port for exports, Prime Minister Kiril Petkov tells reporters in Brussels.

Petkov sees this year’s wheat crop at 7m tons; Bulgaria’s domestic consumption is at about 2m tons

Australia Heading for Third Bumper Crop on Record Plantings

• Farmers are especially upbeat on prospects for canola
• Rabobank says export program is expected to be strong

Australian farmers are poised for a potential “hat trick” when it comes to pulling off another bumper crop this season, with winter plantings set to reach a record, according to a Rabobank Group report.

The planted area is forecast to reach an all-time high of 23.8 million hectares, with growers especially optimistic about prospects for canola — where seeding is up more than 20% on last year. Wheat sowing is expected to climb 1.4%.

With farmers ramping up planting efforts across the nation, favorable seasonal conditions are bolstering the production outlook, with Australia set for another “above-average” grain harvest — the third in a row, the bank said.

While another bumper harvest from Australia won’t hit global markets for many months yet, the prospect of more supplies should offer some relief to a world bereft of wheat, after the war in Ukraine slashed exports from the Black Sea. Extreme weather across other major producing regions has only deepened shortage fears, with Chicago futures up nearly 50% since the start of the year.

Expectations for Australia’s export program are strong. Rabobank put estimates for 2022-23 wheat shipments at 26 million tons, with a “strong export performance into Southeast Asia” on the cards, senior commodities analyst Cheryl Kalisch Gordon said in the note.

Still, it’s too early to tell if the expansion in planting will lead to another year of record production, agricultural analyst Dennis Voznesenski said.

“We have been conservative” in our output estimates, he said. “We’re mindful of the slow planting progress in New South Wales and the corresponding decline in yield potential with late planting, as well as overly-wet growing conditions.”

Output estimates for the 2022-23 season include:

• Wheat 32.5m tons, down 10% on last year
• Barley 11m tons, down 18%
• Canola 5.8m tons, down 9%

Ukraine Says Satellite Images Prove Russia Is Stealing Its Grain

Ukraine said satellite imagery proves that Russia is stealing its grain from occupied regions as the war enters a fourth month.

Images from Maxar Technologies Inc. show grains being loaded on to Russian vessels to be shipped abroad, Ukraine’s Deputy Agriculture Minister Taras Vysotskyi said in an interview with local television channel ICTV. The “looters” are trying to sell it on “gray and black” markets, he said.

Ukraine, one of the world’s largest agricultural producers, has for weeks accused Russia of seizing its grain from occupied territories and trying to sell it abroad. Russia has rejected allegations, and claimed — without evidence — that the European Union has been diverting food shipments from Ukraine.

Vysotskyi said Monday that at least half a million tons of grains have been expropriated from southeastern regions including Kherson, Zaporizhzhia, Luhansk and Donetsk. He repeated accusations that Moscow has tried unsuccessfully to sell cargoes to countries such as Egypt and Lebanon.

CNN reported Sunday that Maxar satellite imagery showed that a Russian freighter full of grain had arrived in the Syrian port of Latakia.

Early Arrival of Monsoon Rains in India Brightens Crop Outlook

The monsoon arrived earlier than normal in India, raising hopes that output of crops like rice and oilseeds will get a boost after a brutal heat wave hit winter-sown wheat and prompted the nation to restrict exports.

The Southwest monsoon has set in over Kerala three days ahead of its normal date, according to the India Meteorological Department on Sunday.

The livelihood of millions of farmers in the country of about 1.4 billion people depends on rains brought by the winds from the Indian Ocean. The farm sector is the main source of income for 60% of its population and accounts for 18% of the economy. The monsoon, which waters more than half of India’s farmland, normally arrives in the southern Kerala state on June 1.

The monsoon is critical to India’s farm output and economic growth at a time when the country, where man-made systems like canals and tube wells irrigate only a part of the land, is battling soaring food prices. The war in Ukraine has pushed up world food costs to a record.

India is forecast to witness a normal rainy season for a fourth year. Showers during the June-September period would provide relief to people, especially in central and northwestern parts, after temperatures at some places hovered near 50 degrees Celsius (122 degrees Fahrenheit) this month, with the risk of sun strokes and heat exhaustion forcing people to stay indoors.

The northern region was the warmest in 122 years in both March and April this year. The extreme weather exacerbated the country’s power crisis, and slashed crop output. A reduction of more than 5% in wheat output estimates and concerns about high prices promoted the government to restrict wheat exports, and limit sugar shipments as a precautionary measure.

India Bans Wheat Exports as Food Security Comes Under Threat

Timely and normal rains are set to boost production outlook for monsoon-sown crops such as rice, soybeans and pulses and help in softening soaring inflation. Bountiful rains would also fill reservoirs, which in turn would brighten prospects for winter crops, usually planted during October and November.

Mexico to Buy 521,000 Tons of Corn to Contain Tortilla Price

Mexico’s food security program Segalmax will buy 521,000 tons of white corn as part of a pact against inflation and famine, according to a govt statement.

Objective to guarantee supply to most vulnerable populations and provide corn to tortilla industry so the basic consumer good doesn’t increase in price

Public policies in Sinaloa have contributed to a corn surplus there, leading to the purchase

Malaysia to Promote Use of Palm Kernel Cake as Chicken Feed

Malaysia will step up efforts to promote the use of palm kernel cakes as animal feed to ensure it has a sustainable supply of chickens in the long run, according to Plantation Industries and Commodities Minister Zuraida Kamaruddin.

• The ministry will also hold discussions with relevant stakeholders to review the country’s export policy on palm kernel cake, she said in a statement on Tuesday
  • Malaysia exports a sizable part of its PKC output to Europe for their cattle industry
• Malaysia will work with relevant agencies, state-linked companies, and state governments on how it could ensure its availability for the country’s poultry industry
  • The ministry will also look into ways to enhance quality of PKC to make it a preferred choice for chicken breeders
• “Past researches have shown that feeding fermented palm kernel cake and high dietary fat to broilers can be a good substitute for the imported feed which almost all commercial chicken farms use today”
• Chickens are being fed less due to high prices of chicken feed, causing livestock to grow slower than normal, which leads to restricted supply of birds and soaring prices of chicken
  • Chicken feed prices have surged to 1,900 ringgit/ton from 500 ringgit in some cases: statement

SOYBEAN/CEPEA: Higher supply in South America and dollar depreciation press down values in BR

The harvesting of the 2021/22 soybean crop is almost over in South America. Thus, supply has been higher than demand, resulting in price drops in Brazil. The dollar depreciation against the Real, which makes the Brazilian product more expensive to importers, is putting even more pressure on domestic quotations.

In Brazil, the harvesting of the 2021/22 soybean crop is ending. According to Conab, 98.1% of the national crop had been harvested by May 21. Activities are still going on in the states of Maranhão (89%), Santa Catarina (98%) and Rio Grande do Sul (90%).

In Argentina, the dry weather is favoring crop activities in the 2021/22 season. On Thursday, 26, the Bolsa de Cereales released a report showing that 89.9% of the national crop had been harvested by May 24, 12.2 percentage points ahead of that in the previous week, with the average productivity higher than that initially forecast. Production is forecast at 42 million tons, according to the Bolsa de Cereales.

As for domestic trades, Brazilian consumers have been cautious when buying soybean, aware of the low volume of the 2021/22 already sold and the possible supply increase in the short-term. Indeed, most cooperatives and cereal companies in central-western and southeastern BR reported the need of room in warehouses to receive the new crop of corn.

In Mato Grosso, 73.37% of the soybean crop has been sold, according to Imea, against 83.46% in the same period last season and 78.59% on the average of the last five years. In southern and southeastern BR, less than 60% have been traded, according to agents consulted by Cepea.

Thus, quotations have dropped in Brazil. Between May 19 and 26, the CEPEA/ESALQ Index Paraná and the ESALQ/BM&FBovespa Paranaguá (PR) both decreased by 1.3%, closing at BRL 188.01 (USD 39.49) per 60-kilo bag and BRL 192.44 (USD 40.42) per 60-kilo bag, respectively, on Thursday. On the average of the regions surveyed by Cepea, prices dropped by 1.6% in the over-the-counter market (paid to farmers) and by 1.7% in the wholesale market (deals between processors). The dollar dropped by a steep 3.1% between May 19 and 26, closing at BRL 4.761 on Thursday, 26.

CORN/CEPEA: Aware of the possibility of a record harvest, purchasers lower demand and prices fade

Corn purchasers have not been interested in closing deals, since the possibility of a record 2nd crop may press down values. Besides, purchasers reported to have stocks.

As for sellers, some agents have been willing to reduce asking prices, either to take advantage of the current price levels before quotations drop as the harvesting advances or to make room in warehouses to receive the new crop. So far, most of the corn from the second crop is expected to be traded through contracts and not sold in the spot market.

In this context, between May 19 and 26, the ESALQ/BM&FBovespa Index for corn (Campinas, SP) decreased by 2.5%, to BRL 86.99 (USD 18.27) per 60-kilo bag on Thursday, 26. On the average of the regions surveyed by Cepea, corn prices dropped by 1.5% in the over-the-counter market (paid to farmers) and by 1.6% in the wholesale market (deals between processors).

PORTS – Brazilian corn farmers are focused on the export parity, as an alternative to negotiate and underpin quotations. With the recent devaluations abroad and the dollar depreciation, corn prices have dropped at ports this week. The American currency dropped by 3% between May 19 and 26, to BRL 4.76 on Thursday. Thus, corn values decreased by 1.7% at the port of Paranaguá (PR), to BRL 92.24/60-kilo bag on Thursday.

As for corn exports, according to Secex, Brazil exported 801 thousand tons of corn in 15 working days, much more than the 13 thousand tons shipped in May 2021. Imports increased too, from 62 thousand tons in May/21 to 85 thousand tons this month.

CROPS – In general, crops are developing well. In Mato Grosso, the only Brazilian state where the harvesting has begun, 1.2% of the crops had been harvested by May 20, according to Imea.

In Paraná, 99% of the first crop of corn had been harvested by May 23, according to Seab/Deral. Agents are now monitoring the second crop, whose conditions are 84% good, 14% average and 2% bad. Production in PR is estimated at 16 million tons, a record for the state.

In Rio Grande do Sul, the harvesting of the first crop of corn has been slow because of rains and the priority of working in soybean crops. According to Emater/RS, 90% of the state area had been harvested by May 26, a slight 1 percentage point ahead of that last week.

WHEAT/CEPEA: Sowing begins in RS; prices continue to rise in BR

Wheat sowing is in progress in Brazil, with activities taking place in Paraná (PR) and beginning in Rio Grande do Sul (RS), the Brazilian state with the highest output in 2021.

In Paraná, 50% of the area estimated for the state has been sown, and the output is expected to be higher than that last year, despite the smaller area. According to Deral/Seab, by May 23, 53% of the area estimated for PR had been sown, and 99% of the crops are in good conditions. The area allocated to wheat crops in PR is expected to shrink by 4% compared to that last season because of the competition with corn; thus, the area with wheat crops is expected to total 1.17 million hectares. Still, the output in PR is forecast at 3.9 million tons, 21% higher.

In Brazil, data from Conab show that, by May 21, 27.5% of wheat crops had been sown. In Goiás, Minas Gerais, Bahia and Mato Grosso do Sul, activities are over; in São Paulo, 62% of the area has been sown, and in Paraná, 43%.

Despite the estimates for the Brazilian wheat crop, the dollar depreciation against the Real and wheat price drops abroad, the domestic quotations are still rising, but not as high as in previous weeks. The American currency dropped by 2.7% between May 20 and 27, to BRL 4.738 on May 27.

Cepea surveys show that, between May 20 and 27, the prices paid to wheat farmers rose by 1.7% in RS, 1.19% in PR and 0.06% in Santa Catarina (SC). In the wholesale market (deals between processors), quotations increased by 1.46% in RS and 1.07% in PR but dropped by 2.08% in São Paulo and 0.3% in SC.

Data from Cepea show that, this month (until the 27th), the monthly averages are still at record levels in the states in southern BR and in SP, considering the price series, which began in 2004. In PR, the average has been higher than BRL 2,000.00/ton (at BRL 2,022.74/ton), and in SP, at BRL 2,006.29/ton.

Malaysia may review palm kernel cake exports to secure chicken feed supply

Malaysian authorities will discuss a possible review of the policy on palm kernel cake exports, which can be used as animal feed, in an effort to stabilise chicken supplies in the country, the commodities ministry said on Tuesday.

Last week, Malaysia said it will halt all chicken exports from June until production and costs stabilise amid soaring prices.

The commodities ministry will “hold discussions with other stakeholders to review our export policy on palm kernel cake in favour of local broilers,” minister Zuraida Kamaruddin said in a statement.

“Right now, a lot of our palm kernel cake is exported for the European cattle industry,” she said.

The ministry will discuss steps to quickly ensure the availability of palm kernel waste as animal feed for the domestic poultry industry, she said.

Chicken feed is typically made up of grain and soybean, which Malaysia imports. But Russia’s invasion of Ukraine and uncertain weather patterns have created a global shortage, Zuraida said.

“As a result, chickens were being fed less, causing the livestock to grow slower than normal, and in the process restricting the supply of the birds,” she said.

Malaysia is the world’s second-largest producer and exporter of palm oil and produces palm kernel cake, which it said can be a substitute for imported feed.

Fertilizer Demand, Prices Weaken as US Farmers Focus on Planting

US urea, phosphate and potash prices face extended downward pressure due to the delayed arrival of typical spring weather, which finally enabled heavy planting. The season’s late start shortened the application window for ammonia and pressured dry fertilizer volume. North American potash inventory reached a six-year high.

Nitrogen, Phosphates Plunge

Fertilizer prices kept falling, led by a sharp decline in Tampa ammonia for June, which declined to $1,000 a metric ton (mt) cost-and-freight, down $425 from May. Slowing spring demand also pushed ammonia prices lower in the Corn Belt, and urea kept sinking at New Orleans (NOLA) and inland, with NOLA barges falling $45 a short ton (st) from last week. The price weakness extended to urea ammonium nitrate (UAN), down $20-$30/st at NOLA, and to phosphates, which continued to drop at NOLA and inland. Phosphate and urea prices were under pressure in the western US and Western Canada, with urea tumbling to $745-$750/st in the Pacific Northwest vs. $900-$970 a few weeks earlier.

Mexico’s Tariff Exemptions on Food Should Be Permanent: BBVA

Mexico should make permanent the decree which eliminated tariffs on dozens of basic food items, BBVA Mexico’s chief economist Carlos Serrano said in a note Friday.

• The temporary trade liberalization measures will have a limited effect on inflation, but it’s a “wise action”: Serrano
• A permanent tariff reduction can substantially improve productivity in the Mexican agriculture sector as it would create incentives for producers to switch to items in which Mexico can be much more competitive on: Serrano
• Makes no sense to insist on the self-sufficiency of corn production as the US is more efficient in producing it than Mexico: Serrano
• Would better to allocate resources to strawberries, avocados, raspberries and other products Mexico has a comparative advantage on

US Crops in Drought Area for Week Ending May 24: USDA

The following table shows the percent of U.S. agricultural production within an area that experienced drought for the week ending May 24, according to the USDA’s weekly drought report.

• Corn area experiencing moderate to intense drought fell a percentage point to 20% in the week
• Drought in wheat areas, including durum, spring and winter varieties, all declined
• Spring wheat crops fell to 26% in drought from 31%; at this time last year 82% of crops were in drought

US Beef Production Falls 5.8% This Week, Pork Down: USDA