TODAY – EXPORT INSPECTIONS
Wheat prices overnight are down 7 1/4 in SRW, down 7 in HRW, down 10 3/4 in HRS; Corn is down 2; Soybeans down 5; Soymeal down $0.28; Soyoil up 0.22.
Markets finished last week with wheat prices down 22 in SRW, down 18 in HRW, down 13 1/2 in HRS; Corn is up 5 1/2; Soybeans up 3 1/4; Soymeal up $1.25; Soyoil down 3.81. For the month to date wheat prices are down 9 1/4 in SRW, down 23 3/4 in HRW, up 1 in HRS; Corn is up 20 1/2; Soybeans up 42 3/4; Soymeal up $22.00; Soyoil down 1.34.
Chinese Ag futures (MAY 22) Soybeans up 27 yuan ; Soymeal up 23; Soyoil down 62; Palm oil down 82; Corn up 34 — Malasyian Palm is down 8. Malaysian palm oil prices overnight were down 8 ringgit (-0.17%) at 4792.
There were changes in registrations (-1 Soyoil). Registration total: 1,885 SRW Wheat contracts; 100 Oats; 0 Corn; 266 Soybeans; 165 Soyoil; 1 Soymeal; 108 HRW Wheat.
Preliminary changes in futures Open Interest as of December 10 were: SRW Wheat down 637 contracts, HRW Wheat down 2,103, Corn up 2,965, Soybeans up 1,535, Soymeal up 2,853, Soyoil up 6,110.
Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Mostly dry Friday. Isolated showers Saturday-Sunday. Scattered showers Monday-Tuesday. Temperatures near to above normal through Tuesday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers north Friday. Scattered showers Saturday-Tuesday. Temperatures near normal through Tuesday.
Argentina Grains & Oilseeds Forecast: Cordoba, Santa Fe, Northern Buenos Aires Forecast: Isolated to scattered showers through Monday. Mostly dry Tuesday. Temperatures near to below normal Friday, near to above normal Saturday, near to below normal Sunday-Tuesday. La Pampa, Southern Buenos Aires Forecast: Isolated to scattered showers through Monday. Mostly dry Tuesday. Temperatures near to below normal through Tuesday.
The player sheet for Dec. 10 had funds: net buyers of 3,500 contracts of SRW wheat, unchanged corn, buyers of 2,500 soybeans, buyers of 7,000 soymeal, and sellers of 4,000 soyoil.
TENDERS
- WHEAT PURCHASE: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) bought a total of 260,312 tonnes of food-quality wheat from the United States and Canada in regular tenders that closed on Thursday.
- WHEAT AND BARLEY TENDER PASSED: A group of importers in the Philippines is believed to have rejected all offers and made no purchase in a tender for up to 300,000 tonnes of wheat and 125,000 tonnes of animal feed barley which closed on Thursday
- FEED WHEAT PURCHASE: South Korea’s Major Feedmill Group (MFG) purchased about 60,000 tonnes of animal feed wheat expected to be sourced from India in a private deal on Thursday without an international tender being issued
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued another international tender to purchase an estimated 22,000 tonnes of rice to be sourced from the United States
PENDING TENDERS
- WHEAT TENDER UPDATE: Bangladesh’s state grains buyer received the lowest price offer assessed at $404.11 a tonne CIF liner out in an international tender to purchase and import 50,000 tonnes of wheat which closed on Dec. 8
- FEED WHEAT AND BARLEY TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) said it will seek 80,000 tonnes of feed wheat and 100,000 tonnes of feed barley to be loaded by Feb. 8 and arrive in Japan by March 10, via a simultaneous buy and sell (SBS) auction that will be held on Dec. 15.
- BARLEY TENDER: Jordan’s state grains buyer issued an international tender to purchase 120,000 tonnes of animal feed barley
- WHEAT TENDER: Algeria’s state grains agency OAIC has issued an international tender to buy milling wheat to be sourced from optional origins
China May Open Grain Market to More Russian Regions: IFX
China may extend grain market access to allow shipments from all Russian regions, Interfax reports, citing comments from Anton Karmazin, deputy head of Russia agriculture watchdog Rosselkhoznadzor.
- An agreement is expected to be signed this year, Karmazin said at Made in Russia export conference; wording has already been agreed
- China currently imports grain from only seven Russian regions, including Siberia and Vladivostok
- Karmazin said the watchdog is also negotiating over export requirements for Russian grain to Indonesia and Vietnam
Russia Wheat Output Seen at 80-81M Tons in 2022: Tass
Russia’s wheat output is expected to be 80-81m tons in 2022 according to preliminary estimates, Tass reported, citing comments by Igor Pavensky, the head of analytical center RusAgroTrans.
- Total grain output could be 126-127m tons, Pavenksy said at an Agroinvestor conference
- Wheat harvest in Russia’s central and Volga regions could grow significantly next year, while harvests in the south could stay at this year’s record levels
- State of crops in the center and the south of the country is among the best in recent years
- Forecast for winter grain crop sowing for 2022 harvest is 18.8m hectares; 1m lower than in 2021
- Says export potential in 2021-2022 season is 33m tons, due to lower harvests and wheat duties
IKAR Sees Russia 2021 Wheat Crop Totaling 75.5M-76.7M Tons
This year’s total grains harvest is seen at 121.7m-122.7m tons, Dmitry Rylko, director general at consultant IKAR in Moscow, said by email.
- Wheat crop seen at 75.5m-76.7m tons, barley at 18.2m tons and corn at 15.3m tons
- NOTE: In late October, IKAR had estimated the wheat crop at 75m-75.6m tons and total grains harvest at 119.5m-121.7m tons
Russian Wheat-Exports Decline 18% Y/y: Agency
Wheat shipments for the 2021-22 season amounted to 19.4m tons as of Dec. 9, down 18% from a year earlier, the Federal Center of Quality and Safety Assurance for Grain and Grain Products said on its website, citing inspections before exports.
- That means wheat exports totaled about 600k tons in the week to Dec. 9, compared to 800k week earlier
- Exports of all grains are at 26.5m tons so far this season
- Barley exports declined 34% y/y
- Corn exports rose 5%
- NOTE: Data are preliminary and include exports to the Eurasian Economic Union, which is a customs union of countries that includes Russia
Coceral Sees EU 2022 Wheat Crop Down Y/y on Lower Balkan Yields
Next year’s wheat harvest in the EU, combined with the U.K., is seen at 139.8m tons, industry group Coceral says in an emailed statement.
- That would be down from 143.2m tons collected this season
- NOTE: The figure excludes durum wheat
- Decrease is “mainly because of a return to average yields in the Balkan region after record high crops have been reached there in 2021”
- French crop also seen falling by about 1m tons y/y, while German crop rises
- Barley production forecast at 59m tons, versus 59.4m tons this year
- Corn production seen at 66.4m tons, versus 66.3m tons
- Rapeseed production estimated at 20m tons, versus 18.5m tons, due to higher plantings in countries including France, Germany, the U.K., Romania and Bulgaria
- Total grains crop seen at 304.5m tons, versus 307.6m tons
SOYBEAN/CEPEA: Weather concerns producers in South Brazil
The volume of rainfall has been irregular and below expectations in South Brazil, and forecasts indicate that this scenario may continue in December. In some areas in Rio Grande do Sul, specifically, the mostly dry weather and high temperatures have been preventing producers to continue sowing activities, bringing concerns about the development of crops already sown.
Cptec (Center for Weather Forecast and Climate Studies) data indicate that rains may remain below the average from December to February in the South. La Niña is likely to increase temperatures in Rio Grande do Sul, causing lack of water in the grain-filling stage. It is worth noting that this is the second consecutive year that producers face unfavorable weather conditions.
Due to the low humidity in the soil, sowing activities are moving at a slow pace in Rio Grande do Sul. According to data from Emater/RS released on December 9, 85% of the area had been planted, for an advance of only 5 percentage points in a week, and slightly more compared to the same period in 2020 (81%).
Maranhão is another Brazilian state that is delayed concerning sowing activities, with 65% of the area planted, according to Conab. In Brazil, data indicate that 91.5% of the total had been sown up to December 4. In Argentina, in turn, rains have been affecting activities. Bolsa de Cereales says that 56.1% of the area had been planted.
PRICES – Sellers are disinterested in trades in the spot market due to unfavorable weather conditions in the South. Purchasers, however, are also away from trades of the 2020/21 crop, expecting to buy batches at lower values in the coming weeks, with the beginning of the new season.
Low liquidity and the devaluation of dollar quotes against Real pressed down quotes at the port and in regions in Paraná. Between Dec. 2 and 9, the ESALQ/BM&FBovespa Index Paranaguá and the CEPEA/ESALQ Index Paraná dropped by 1.4% and 1.5%, respectively, closing at BRL 165.16 (USD 29.60)/bag and at BRL 161.36 (USD 28.92)/bag on Thursday, 9. Dollar quotes dropped by 1.3% in the period, at 5.58 BRL.
On the average of other regions surveyed by Cepea, on the other hand, values continue firm. Both prices paid to soybean farmers (over-the-counter market) and in the wholesale market (deals between processors) increased 0.3% between Dec. 2 and 9.
SUPPLY AND DEMAND – Data released by Conab on December 9 indicate that the area may surpass 40 million hectares and increase 3.7% compared to the season before. Productivity is likely to total 3,539 kilos per hectare, similar to that in the previous crop. As a result, the supply may amount 142.8 million tons, keeping Brazil as the largest producer in the world.
Crushing activities are expected to increase slightly 0.2% in relation to the season before, at 48.5 million tons, due to the lower demand for soybean oil in Brazil. On the other hand, soybean exports are likely to move up 5.7% compared to estimates for 2021, at 90.7 million tons.
CORN/CEPEA: 21/22 production may be a record; prices continue to move up
Although new estimates released this week indicate high production in Brazil and in the world, corn prices continue in an upward trend in both domestic and international markets. In the Brazilian spot market, quotes have been sustained by the unfavorable weather in the South, an important summer crop producer. In the international scenario, prices are moving up due to the firm demand for the product in the US and the improvement in ethanol production.
On the average of the regions surveyed by Cepea, the prices paid to corn farmers (over-the-counter market) rose by 1.8%; in the wholesale market (deals between processors), values increased by 1.4% between December 2 and 9. The ESALQ/BM&FBovespa Index for corn (Campinas, SP) upped 1.5%, to BRL 87.54 (USD 15.69)/60-kilo bag on Thursday, 9.
ESTIMATES – Conab estimates that, concerning the first corn crop, the area may total 4.5 million hectares, 3.7% up compared to the crop before. Production, in turn, is expected to hit 29.06 million tons, for an increase of 17.6% in the same comparison. However, possible losses due to the current dry weather in the South have not been considered yet.
As for the second season, the sowing of the summer crop in the ideal period and high prices this year have been encouraging producers, who are willing to increase the area in 5.7%, which can result in a production of 86.25 million tons, 42% up compared to the 2020/21 second crop. The third crop, in turn, is likely to total 1.85 million tons, 17% up. As a result, the total production in the 2021/22 season may total 117.18 million tons, a record.
Brazilian producers remain concerned with the low volume of rainfall, which has been affecting the summer crop development, mainly in the South.
India’s Palm Oil Imports Slump 22% in November, Association Says
Palm oil imports by the world’s biggest buyer dropped to 539,639 tons in November from 693,319 tons a month earlier, according to the Solvent Extractors’ Association of India.
- India bought 618,468 tons in November 2020
- Soybean oil imports 474,160 tons last month vs 216,920 tons in October
- Sunflower oil purchases totaled 125,024 tons vs 116,900 tons
- Total vegetable oil imports, including non-edible oil, 1.17m tons vs 1.06m tons
- Total edible oil stockpiles at ports and in the pipeline were 1.65m tons on Dec. 1, compared with 1.71m tons at the start of November
- NOTE: India’s 2021-22 Palm Oil Imports Seen Around 8M Tons, SEA Says
- NOTE: Top Buyer India to Import Record Soybean Oil as Premium Shrinks
Winter Crop Area in India Rises 1.9% to 51.33 Million Hectares
The area under winter-sown crops, such as wheat, rapeseed and pulses, as of Dec. 10 climbed from 50.36 million hectares (124 million acres), according to the farm ministry.
Wheat area fell 2.4% to 24.87 million hectares, while the land under rice increased to 1.09 million hectares, up 5% from a year earlier, the ministry said in a statement on Friday.
Brazilian Fertilizer Demand Drops as Farmers Balk at High Prices
Price increases in phosphates and nitrogen are looking less likely in the week ahead as market participants seek stability. The uptrend in fertilizer prices that began a few months ago continues to strain farmers’ production costs. To cope with high prices, many farmers have reduced their use of fertilizer on soil this season by about 10-15%. A gridlock market persists, with buying below regular levels and few deals made, a trend that could force suppliers to rethink prices.
New export sanctions on potash from Belaruskali, which started Dec. 8, and BPC that begins April 22, alarmed the Brazilian market. Plans for 2022’s supply remains unknown and Brazil relies heavily on potash imports, with Belarus representing 18.9% of imports for 2021 year-to-date, behind Canada and Russia.
China, Malaysia in MOU For Production of Palm Oil Biojet Fuels
Malaysia will collaborate with Chinese state-owned enterprise Shanxi Construction Investment Group Co. to explore the production of second-generation biofuels and biojet fuel in the country, according to the Ministry of Plantation Industries and Commodities.
- Shanxi Construction intends to invest in a hydrogenated vegetable oil plant in Johor which has the potential to produce sustainable aviation fuels, or biojet fuel, the ministry said in a statement Monday
- Development project for each plant is expected to bring foreign direct investment worth 3 billion ringgit ($710 million) and create nearly 800 jobs in Malaysia
- Hydrogenated vegetable oils is “the next potential market for palm biodiesel” as there’s increasing demand especially in the EU, said minister Zuraida Kamaruddin. The plant will target these markets
- NOTE: Hydrogenated vegetable oils is a second-generation biofuel where palm oil is cracked and hydrogenated to become hydrocarbon fuel
- The bilateral cooperation will strengthen the relationship between Malaysia and China, which is one of the biggest importers of Malaysian palm oil
China’s Economic Powerhouse of Guangdong Hit by Severe Drought
China’s Guangdong province is grappling with a drought that has prompted the central government to investigate and cities to urge people to conserve water.
Residents of Guangzhou — capital of the largest Chinese province by gross domestic product — should use less water and store supplies, city officials said in a statement Friday.
The Dong River, which supplies nearly a third of the city’s water, was suffering its worst drought since 1963, they added. The river, a tributary of the Pearl River, is also a major source of drinking water for Hong Kong, though there is no sign the former British colony is short on supplies.
Shenzhen — home to Huawei Technologies Co., Tencent Holdings Ltd. and automaker BYD Co. — also urged residents to cut water use last week, Caixin Global reported.
The central government sent a team to Guangdong Nov. 29-Dec. 2 to look into the matter and told officials in the manufacturing hub to secure water supplies for their residents and those in Hong Kong and Macau, the Guangdong Water Resources Department said on Dec. 7.
The province has limited local hydro-power generation after water levels at reservoirs fell one-quarter from previous years, according to a report posted on the department’s website on Nov. 8.
U.S. Beef Production Falls 0.7% This Week, Pork Down: USDA
U.S. federally inspected beef production falls to 559m pounds for the week ending Dec. 11 from 563m in the previous week, according to USDA estimates published on the agency’s website.
- Cattle slaughter down 1.2% from a week ago to 668m head
- Pork production down 1.9% from a week ago, hog slaughter falls 2.1%
- For the year, beef production is 2.4% above last year’s level at this time, while pork is 2.5% below
Summit Sustainable Ingredients Announces Construction of North America’s Largest Wheat Protein Production Facility and Key Executive Hires
ALDEN, Iowa and PHILLIPSBURG, Kan., Dec. 6, 2021 /PRNewswire/ — Summit Ag Investors and its portfolio company Summit Sustainable Ingredients (“Summit Ingredients” or “Summit”) announced the start of construction of a state-of-the-art wheat protein (vital wheat gluten) ingredients facility adjacent to Prairie Horizon, acquired by Summit earlier this year. Summit has engaged strategic partners ICM, Inc. and Todd & Sargent, Inc. as design-builders. The company has also recruited two key executives, Steve Adams as COO, and Steve Snyder as CFO. The project is fully financed through capital commitments from private equity funds managed by Summit Ag Investors.
The ingredients facility will start up Summer of 2023 and will be the largest producer of wheat protein in North America. Presently, this essential ingredient to the food and pet food industries is in short supply due to the significant long-term reliance on imports and current supply-chain challenges. Summit’s plant will be approximately double the production capacity of any existing comparable plant in North America. Commercial discussions with key customers seeking a domestic source of high-quality vital wheat gluten are ongoing.
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