Global Ag News for Dec 20th

TODAY – EXPORT INSPECTIONS

Wheat prices overnight are down 14 1/2 in SRW, down 12 1/4 in HRW, down 13 1/4 in HRS; Corn is down 6; Soybeans down 7; Soymeal up $0.02; Soyoil down 1.18.

Markets finished last week with wheat prices down 28 1/4 in SRW, down 14 3/4 in HRW, down 9 in HRS; Corn is up 2 1/4; Soybeans up 30 3/4; Soymeal up $1.62; Soyoil down 0.59.

For the month to date wheat prices are down 26 3/4 in SRW, down 24 1/2 in HRW, down 3/4 in HRS; Corn is up 19 3/4; Soybeans up 55; Soymeal up $35.60; Soyoil down 2.53.

Chinese Ag futures (MAY 22) Soybeans up 49 yuan ; Soymeal down 6; Soyoil down 42; Palm oil down 96; Corn down 9 — Malasyian Palm is down 113. Malaysian palm oil prices overnight were down 113 ringgit (-2.56%) at 4295.

There were no changes in registrations. Registration total: 1,900 SRW Wheat contracts; 39 Oats; 50 Corn; 244 Soybeans; 143 Soyoil; 0 Soymeal; 92 HRW Wheat.

Preliminary changes in futures Open Interest as of December 17 were: SRW Wheat down 4,358 contracts, HRW Wheat down 1,137, Corn up 7,662, Soybeans down 671, Soymeal up 4,209, Soyoil down 393.

Brazil Grains & Oilseeds Forecast: Rio Grande do Sul and Parana Forecast: Mostly dry through Monday. Isolated showers Tuesday. Temperatures near to above normal through Tuesday. Mato Grosso, MGDS and southern Goias Forecast: Scattered showers through Tuesday. Temperatures near normal through Tuesday.

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

The player sheet for 12/17 had funds: net buyers of 2,000 contracts of  SRW wheat, buyers of 2,500 corn, buyers of 3,500 soybeans, buyers of 4,500 soymeal, and  buyers of 3,500 soyoil.

TENDERS

• SOYBEAN, SOYOIL SALES: The U.S. Department of Agriculture reported that exporters struck deals to sell 132,000 tonnes of U.S. soybeans to China and 33,000 tonnes of U.S. soyoil to India in separate deals.
• WHEAT, BARLEY PURCHASES: Chinese importers made more purchases of French wheat and barley this week following a slide in prices, with around 10 large vessels thought to have been booked
• WHEAT TENDER: The Taiwan Flour Millers’ Association issued an international tender to purchase 110,000 tonnes of grade 1 milling wheat to be sourced from the United States

PENDING TENDERS

• WHEAT TENDER: 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
• 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
• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy 120,000 tonnes of milling wheat, which can be sourced from optional origins
• WHEAT TENDER: Turkey’s state grain board TMO has issued an international tender to purchase about 320,000 tonnes of milling wheat
• FEED BARLEY TENDER: Jordan’s state grains buyer has issued a new international tender to purchase 120,000 tonnes of animal feed barley

China November Ag Imports

General Administration of Customs says on website.

• Nov. corn imports 790,000 Tons, -35.7% Y/y
  • YTD corn imports rose 199.4% y/y to 27.02m tons
• Nov. wheat imports 750,000 tons, -7.2% y/y
  • YTD wheat imports rose 17.8% y/y to 8.83m tons
• Nov. edible palm oil imports 440,000 tons, -6.2% y/y
  • YTD edible palm oil imports rose 4.4% y/y to 4.21m tons
• Nov. pork imports 200,000 tons, -38.7% y/y
  • YTD pork imports fell 10.3% y/y to 3.54m tons
• Nov. beef imports 180,000 tons, +7.5% y/y
  • YTD beef imports rose 11.4% y/y to 2.13m tons

China Bought More Soybeans From Brazil Than U.S. in November

China’s soybean imports from the U.S. fell 40% y/y in November to 3.63m tons, according to Chinese customs data Monday.

• Soy imports from Brazil rose 37% y/y to 3.75m tons in November
• READ: China Buying More Brazil Soy in Sign of Shifting Trade Flows
• NOTE: China Nov. Soybean Imports 8.57m Tons: Customs

CORN

• China imported 719,801 tons of U.S. corn in November, -5.5% y/y
• Purchases from Ukraine were 50,967 tons in November, -79% y/y
• NOTE: China Nov. Corn Imports 790,000 Tons, -35.7% Y/y

China Won’t Depend on Corn Imports, Unlike With Soybeans, Official Says

China’s corn imports, which are set to exceed the quota next year, will come under control in the medium- and long-term as domestic production increases, so corn won’t follow in soybeans’ footsteps, an official at the Ministry of Agriculture and Rural Affairs told Yicai Global.

China’s corn output is likely to strike a balance with demand before long, thanks to supportive policies, said Xi Yinsheng, director of the Ministry’s Macroeconomic Research Office of the Research Center for Rural Economy.

China imported 26.23 million tons of corn in the first 10 months this year, more than three-and-a-half times what it did in the same period last year, according to statistics from the National Bureau of Statistics.

But the country’s corn production is on the rise, boosted by rising prices and government support. The corn planting area expanded 5 percent this year from last year to 43.3 million hectares and output jumped 4.6 percent to 272.6 million tons.

Corn output is likely to grow at an annual rate of 2.4 percent over the next decade to reach 300 million tons by 2025 and 330 million by 2030, Xi said. Demand, meanwhile, will reach 310 million tons by 2025 and 330 million by 2030.

By contrast, the world’s largest soybean consumer imported 83 percent of its soybeans last year and the planting area shrank 14.8 percent this year from last year, making it more difficult for the country to wean itself off imports.

The ministry is advocating replacing corn and soybean in animal feed with cereals, so demand for corn has fallen. Policy changes can improve structural problems in the country’s food supply-demand balance and promote corn production, Xi added.

Argentina to Limit Crop Exports to Balance Local Supply

Argentina’s government will limit exports of crops to bring “equilibrium” to local market supplies.

• Under-Secretariat of Agricultural Markets “will publish the equilibrium volumes to compliment demand in the Argentine market corresponding to products of agricultural origin,” according to resolution 276 published Friday in the Official Gazette
• Regulation indicates equilibrium volume of about 12.5 million tons for the 2021/2022 cycle of wheat: La Nacion
  • Initial figure for wheat in 2022/23 is set at 2m tons, daily says
• Equilibrium volume of corn will be 25m tons until the size of harvest is known: La Nacion

Russia Weighs Increased Tax on Wheat Exports If Price Rises

Russia is considering imposing a higher tax on wheat exports, based on a formula that links the tax rise to increases in the price of the commodity.

Under the formula, the tax will rise if prices reach $375 a ton and again if they hit $400 a ton, according to documents published on the government’s proposed regulations website.

Russia could revise the formula for the tax if there is a significant increase in global prices, Agriculture Minister Dmitry Patrushev said at a government meeting in November. The levy has been in place since mid-year in an effort to slow sales abroad and cool domestic food inflation. Russia also plans to set a grain-export quota again in the first half of next year, he said.

Prices are still trading lower than the level at which the tax would be raised. Russian wheat export price from Black Sea ports was at $335.50 per ton last week.

Russia also plans a wheat export quota of 8 million tons for Feb. 15 through June 30, according to a statement from Economy Ministry, on Friday.

 Russia to Set Wheat-Export Quota at 8M Tons for Feb. 15-June 30

Commission for custom and tariffs approved Russian Agriculture Ministry’s proposal to set wheat and meslin export quota at 8m tons for Feb. 15 through June 30, according to a statement from Economy Ministry, which oversees the commission.

• Quota for other grains, including barley will be set at 3m tons
• NOTE: Meslin is mixture of wheat and rye that is sown and harvested together

Russian Wheat-Exports So Far This Season Decline 16% Y/y: Agency

Wheat shipments for the 2021-22 season amounted to 20.4m tons as of Dec. 16, down 16% 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 1m tons in the week to Dec. 9, compared with 600k tons a week earlier
• Exports of all grains are at 28m tons so far this season
• Barley exports declined 32% y/y
• Corn exports rose 6%

Malaysia Dec. 1-20 Palm Oil Exports -5.08% M/m: Intertek

Malaysia’s palm oil exports fell 5.08% m/m during Dec. 1-20, according to Intertek Testing Services.

PALM OIL PRODUCTION EXPECTED TO RETURN IN EARNEST NEXT YEAR

The production of crude palm oil is expected to return in earnest next year in both Malaysia and Indonesia, OCBC Treasury Research said.

With the Malaysian Palm Oil Board’s (MPOB) palm stocks returning above two million tonnes in the third quarter of 2022, it means prices are expected to remain supported through the first half of 2022, it said in its Commodity Outlook 2022.

“In addition, our expectations of higher soybean prices mean the palm complex is also expected to be lifted higher,” the research house said.

OCBC has forecast palm oil price at RM4,750 per tonne next year.

High Fertilizer Prices Entrenched as Gas Prices Rise in Europe

Inland U.S. ammonia prices remained robust amid extended fall applications and new spring prepay offers, with international prices also ticking up, led by the Black Sea market. New Orleans urea extended its rebound after a brief early December slip, while natural gas prices in Europe rose again on supply constraints and expected cold weather.

India’s Winter Crop Area Rises 2.4% to 55.81 Million Hectares

The area under winter-sown crops, such as wheat, rapeseed and pulses, as of Dec. 17 climbed from 54.5 million hectares, according to the farm ministry.

Wheat area fell 0.9% to 27.77 million hectares, while the land under rice increased to 1.19 million hectares, up 4.2% from a year earlier, the ministry said in a statement on Friday.

SOYBEAN/CEPEA: Dollar appreciation attracts importers to BR, and domestic prices rise

The US dollar appreciation against the Real has increased the interest of international purchasers for the Brazilian soybean. This scenario raised the competition between Brazilian and foreign agents and boosted export premiums, which was passed on to domestic prices.

However, many soybean farmers are currently away from the national spot market, aware of both irregular rainfall in South America and the nearness of the accomplishment of contracts previously purchased.

Between December 9 and 16, the American currency rose by 1.7% against the Real, to BRL 5.6750 on Thursday, 16. The monthly average is at BRL 5.65, the highest, in nominal terms, since the beginning of Plano Real, in 1994.

In the same period, the ESALQ/BM&FBovespa Index Paranaguá and the CEPEA/ESALQ Index Paraná rose by 3.7% and 3.8%, respectively, closing at BRL 171.26 (USD 30.18)/bag and at BRL 167.52 (USD 29.52)/bag on Thursday, 16. This month (until Dec. 16), the averages of these Indexes have been 1.1% higher than that in November, and in a year’s time, the Paranaguá Index increased by 9.7%, and the Paraná Index, by 13.1%, in nominal terms.

CROPS – In Southern Brazil, the lack of rains is concerning farmers about a possible decrease in productivity. According to Emater/RS, 88% of soybean crops had been sown in Rio Grande do Sul by Dec.16, against 89% in the same period last year and 92% on the average of the last five years. In RS, soybean sowing is usually later than in other Brazilian regions, which may limit the damages caused by the current low rainfall if it rains in the following weeks.

On the other hand, in northern and northeastern Brazil, excessive rains are concerning soybean farmers. In Bahia and in Maranhão, precipitation is expected to continue high until the end of the month, according to CPTEC (weather forecast agency). According to data from Conab, 96.6% of the national area allocated to soybean crops had been sown by Dec. 11.

CORN/CEPEA: Prices continue firm in BR; liquidity decreases

Corn prices have been firm in most Brazilian regions surveyed by Cepea, influenced by the disinterest of sellers in trading the cereal – these agents are currently focused on crops development. In this scenario, liquidity is low in Brazil. It is important to mention that, at this time of the year, the trading pace is usually slower, since some transporting companies, warehouses and cereal companies halt activities for the holiday season.

In Campinas (SP), base for the BM&FBovespa Index for corn, prices dropped by a slight 0.2% between Dec. 9 and 16, to BRL 87.39 (USD 15.40)/60-kilo bag on Thursday, 16. Besides the low interest of purchasers, the entry of the corn from central-western and northern BR into São Paulo weakened prices in the market of this state.

Regionally, prices increased, majorly in southern BR, where most summer crops are located – in these areas, summer crops are being damaged by low rainfall. Between Dec. 9 and 16, on the average of the regions surveyed by Cepea, the prices paid to corn farmers (over-the-counter market) rose by 0.9%; in the wholesale market (deals between processors), values increased by 0.8%.

PORTS – Corn prices increased at Brazilian ports in the last days, influenced by international valuations early this week and the dollar appreciation against the Real. Between December 9 and 16, values rose by 0.4% at the port of Paranaguá (PR), to BRL 86.32/bag on Dec. 16. The American currency increased by 1.7%, to BRL 5.675 on Thursday.

Brazilian corn exports resumed increasing but continue below that last season. Higher shipments result from anticipated deals, since the current trading pace is slow, despite valuations at ports.

Between February and December (2020/21 season), Brazil exported 15.87 million tons of corn. Conab estimates Brazilian corn shipments to total 19.2 million tons between February/21 and January/22, which means that, between late December and January, 3 million tons need to be exported.

CROPS – Low rainfall in Rio Grande do Sul, Santa Catarina and Paraná is concerning farmers, while in southeastern and central-western BR, rains are favoring crops development.

In Paraná, crops conditions have worsened, according to data from Seab/Deral. Until Dec. 13, 77% of the crops sown were in good conditions; 20%, in average conditions; and 3%, in bad conditions – against 1% in the previous week.

In Rio Grande do Sul, 91% of the area allocated to the first 2021/22 crop (summer) had been sown by Dec. 16, according to Emater/RS. The dry weather since mid-October has been damaging crops in that state – in some regions, farmers have reported significant losses.

According to Conab, sowing was over in São Paulo and Goiás by Dec. 11. In Minas Gerais and Santa Catarina, 0.5% of the respective areas need to be sown. In Maranhão and Piauí, 20% of crops have been sown.

India Suspends Derivative Contracts in Some Commodities

India’s markets regulator suspends derivative contracts in seven commodities including wheat and crude palm oil, according to a statement issued today.

• No new contract will be launched until further orders, Securities and Exchange Board of India says in the statement
• Derivative contracts in chana and mustard seeds and its derivatives were already suspended, the regulator says, adding that the new rules are applicable for one year
• Other commodities named in the order are: non-basmati grade paddy, soya bean and its derivatives, and moong

U.S. Beef Production Falls 1.4% This Week, Pork Rises: USDA

U.S. federally inspected beef production falls to 551m pounds for the week ending Dec. 18 from 559m in the previous week, according to USDA estimates published on the agency’s website.

• Cattle slaughter down 1.6% from a week ago to 657m head
• Pork production up 3.2% from a week ago, hog slaughter rises 2.9%
• For the year, beef production is 2.4% above last year’s level at this time, while pork is 2.5% below

Future Meat Raises $347 Million to Make Cell-Grown Meat in U.S.

Future Meat Technologies raised $347 million in a Series B round to build a U.S. production facility to make its cell-grown meat products.

The investment was co-led by ADM Ventures, part of agriculture giant Archer-Daniels-Midland Co., and an unnamed global tech investor, according to founder and Chief Executive Officer Yaakov Nahmias. Tyson Foods Inc., the biggest U.S. meat company, also participated. Future Meat, based in Rehovot, Israel, declined to provide a valuation.

Money has been pouring into cultivated meat companies. Good Meat, a subsidiary of Eat Just, raised $267 million this year, while Upside Foods has taken in more than $200 million since 2020.

Future Meat makes chicken, beef and lamb products from cells harvested from animals that have already been slaughtered in accordance with kosher and halal guidelines, Nahmias said.

The company plans to build a 13,000-gallon production facility in the U.S. over the next year or so as it awaits U.S. regulatory approval. It’s scouting Boston and Minneapolis for locations, Nahmias said.