Global Ag News for Aug 19.24

TOP HEADLINES

Canada’s CPKC expands freight embargoes ahead of looming work stoppage

Canadian Pacific Kansas City CP.TO said on Saturday it would halt any new rail shipments originating in Canada, and all new U.S. shipments destined for Canada starting on Tuesday if talks with its Canadian labour union fail to progress.

North American industry groups and shippers are bracing for an unprecedented simultaneous stoppage at both of Canada’s main railway companies that could disrupt the movement of commodities such as coal, potash, crude oil and grains, and manufactured goods ranging from cars to chemicals.

The Teamsters union’s talks with Canadian National Railway and CPKC have deadlocked, and the rail companies say they will start locking out workers on Aug. 22 if they cannot reach a labour deal. The union says it is ready to call a strike for that date.

In an update on Saturday, CPKC said it was taking “prudent steps to prepare for a potential rail service interruption next week.” It said bargaining talks are scheduled to continue on Sunday.

Earlier this week, CPKC had already begun to halt any new shipments of hazardous chemicals or dangerous goods.

Separately, CN Rail said on Friday “there has been no meaningful progress at the bargaining table,” and added that it had also begun a phased and progressive shutdown of its network.

CN Rail said this will culminate in a lockout, unless a deal is reached, or binding arbitration is imposed.

Earlier this week, Canada’s Labour Minister Steven MacKinnon rejected an appeal from CN Rail to initiate binding arbitration between the two sides, and called on the company and the unions to negotiate in good faith.

Industry groups warn that a simultaneous work stoppages at both rail companies could inflict billions of dollars’ worth of economic damage.

It could also impact trade with both the U.S. and Mexico. The CN and CPKC networks connect key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC’s network also extends further south to ports on Mexico’s east and west coasts.

 

FUTURES & WEATHER

Wheat prices overnight are down 4 1/2 in SRW, down 2 1/2 in HRW, down 2 1/4 in HRS; Corn is up 2; Soybeans up 5 1/4; Soymeal up $3.30; Soyoil down 0.03.

Markets finished last week with wheat prices down 11 1/2 in SRW, down 11 in HRW, down 5 1/4 in HRS; Corn is down 7; Soybeans down 23 3/4; Soymeal up $0.80; Soyoil down 1.83.

For the month to date wheat prices are down 4 in SRW, down 13 1/4 in HRW, up 5 3/4 in HRS; Corn is down 5 1/4; Soybeans down 60 1/4; Soymeal down $10.30; Soyoil down 3.68.

Year-To-Date nearby futures are down 16.4% in SRW, down 16.4% in HRW, down 18.2% in HRS; Corn is down 20.8%; Soybeans down 27.1%; Soymeal down 20.6%; Soyoil down 16.6%.

Chinese Ag futures (NOV 24) Soybeans down 6 yuan; Soymeal down 15; Soyoil down 34; Palm oil up 2; Corn up 8 — Malaysian Palm is up 40.

Malaysian palm oil prices overnight were up 40 ringgit (+1.09%) at 3721.

There were changes in registrations (-50 Soyoil). Registration total: 424 SRW Wheat contracts; 6 Oats; 15 Corn; 10 Soybeans; 806 Soyoil; 1 Soymeal; 0 HRW Wheat.

Preliminary changes in futures Open Interest as of August 16 were: SRW Wheat up 3,238 contracts, HRW Wheat up 1,499, Corn up 5,902, Soybeans up 4,764, Soymeal up 526, Soyoil up 3,917.

 

Northern Plains: Some showers went through the region over the weekend, mostly over the drier areas in the region. Scattered showers will be possible every day for the next week, which may bring some unneeded rainfall to mature wheat areas and overly wet corn and soybean areas. Loss of quality and delays to harvest will be possible for wheat.

Central/Southern Plains: Some areas of showers developed over the weekend and a string of heavier rain fell over eastern areas, helping filling corn and soybeans where they occurred. It continued to be very hot south of a stalled boundary, but the boundary will get a push southward this week, eliminating some of the excessive heat, but not all. Some showers may develop this week, but they likely stay off to the north or are very isolated, with soil moisture dropping again this week. Temperatures will start to rise late this week and likely last through the weekend, which may cause stress. Though temperatures are forecast to relax next week as a system moves through, the prospect for precipitation is low and conditions could remain stressful for filling corn and soybeans.

Midwest: A system continued to bring scattered showers to the eastern portions of the region over the weekend. Though the system was a slow-mover, it didn’t bring rain to all areas of the region and some in the east are a bit too dry and corn and soybeans continue to fill. It will be much drier this week although temperatures will be mild. Temperatures will rise this weekend, but a system could follow behind the heat and bring some showers through next week. Models are not consistent on the precipitation forecast. A slight drop in temperatures will be possible with the system as well.

Delta: Some isolated showers moved through the region over the weekend, but many areas stayed dry, a continuation of the hot and dry conditions from recent weeks and stressful for many of the region’s filling soybeans and cotton crops. A couple days of relief are coming to the region early this week, but temperatures should rise again this weekend. Very little precipitation is forecast, continuing the stress.

Canadian Prairies: Scattered showers fell across the region this weekend and some heat returned to Saskatchewan. Disturbances moving through the region will bring additional showers through this week and possibly next week. Maturing wheat and canola could use some dry conditions for harvest. The rain could be heavy in small locations, which could reduce quality and delay harvest.

Brazil: A front moved into the far southern sections of Rio Grande do Sul, producing some showers. The front will be stuck there for the next few days, which will keep shower chances going. That would help wheat in that state and prep soils for full-season corn planting. The front will get pushed a little farther north late this week and weekend with some showers into Mato Grosso do Sul and Parana, but little or none into Central Brazil, which would enjoy some early rain prior to soybean planting which cannot start up until September 1 and will likely wait until wet season rains become consistent later in the month.

Argentina: A system moved into the country this weekend but did not produce much precipitation. The system will linger through midweek and scattered showers will be possible, but the country needs widespread heavy rain for developing wheat and to prep soils for corn planting that begins next month. Cold air moving into the country with the system will lead to more frosts and some freezes, which may be damaging for more advanced wheat in the north.

Europe: A system pushed a cold front into the continent over the weekend, bringing scattered showers from France to Poland down to the Mediterranean. The moisture was favorable for southern areas, especially when dealing with recent heat, but not for northern areas that have been very wet this year. Another system will push through northern areas later this week and another front looks to move into the west this weekend with scattered showers. Temperatures will still be hot in the southeast, but many areas will see more seasonable temperatures this week. Heat may return to more areas this weekend into next week, being stressful in the south where soil moisture is lower.

Black Sea: It was hot and dry over the weekend, as drought continues to increase across eastern Ukraine and southwestern Russia. Other areas in the region have better conditions for filling corn and sunflowers. Limited showers will be possible this week across the west and north, but leave drought areas dry. Temperatures remain hot and stressful as well.

Australia: Scattered showers moved through western and southern areas over the weekend, keeping soil moisture favorable in these areas. A few systems moving through the Southern Ocean will continue to bring showers to these areas this week. Northeastern areas got some needed rain last week, but it will be drier this week. Temperatures will stay warm this week, increasing development of wheat and canola, but possibly drying out areas in the northeast a bit.

The player sheet for Aug. 16 had funds: net buyers of 1,500 contracts of SRW wheat, sellers of 5,500 corn, buyers of 5,000 soybeans, and sellers of 2,500 soymeal.

 

PENDING TENDERS

• WHEAT TENDER: Jordan’s state grain buyer has issued an international tender to buy up to 120,000 metric tons of milling wheat that can be sourced from optional origins.
• BARLEY TENDER: Jordan’s state grains buyer has issued an international tender to purchase up to 120,000 metric tons of animal feed barley.

 

 

TODAY

Ukraine 2024 soybean harvest forecast at a record 5.7 mln T, says ASAP Agri

Ukraine is likely to harvest a record 5.7 million metric tons of soybeans in 2024 thanks to a larger than expected sowing area, the ASAP Agro agriculture consultancy said on Monday.

Ukraine harvested about 5 million tons of soybeans in 2023.

ASAP Agri said it had raised its forecast for the 2024 soybean crop in Ukraine despite drought conditions thanks to increased acreage that the State Statistics Service put at a record 2.63 million hectares.

Exports could exceed 3.1 million tons in the 2024/25 season, the consultancy added.

 

Brazil Farmers Harvest 91.28% Of 2024 Second Corn Crop Versus 77.88% At This Time Last Year – Patria Agronegocios

BRAZIL FARMERS HARVEST 91.28% OF 2024 SECOND CORN CROP VERSUS 77.88% AT THIS TIME LAST YEAR – PATRIA AGRONEGOCIOS

 

Russia’s Wheat Yields Running 22% Below Last Year: Interfax

Russian wheat yields are around 4 tons a hectare, compared to 5.1 tons a hectare last year, Interfax reported, citing data from Russia’s agriculture ministry.

• Russian farmers have harvested 59.8m tons of wheat as of Aug. 14, 3.2m tons less than same time last year: IFX
• 73.5m tons of grain harvested
• That’s 8.2m tons less than the same time last year
• Yields are 3.3 tons a hectare, compared to 3.7 tons a hectare last year
• Quality is better than last year: ministry

 

SOYBEAN/CEPEA: Soy futures operate at the lowest levels since 2020

Futures of the soy complex dropped steeply this week, returning to levels observed in 2020. Soybeans have been traded again below the USD 10 per bushel, which reduced the export parity in Brazil and values in the spot market. Expectations that the global supply may surpass the demand pressed down quotations.

The USDA released a report on August 12 indicating that the world soybean production is likely to change from 395.12 million tons in 2023/24 to 428.72 million tons in 2024/25, both records.

Ending stocks are forecast at the record of 134.3 million tons in 2024/25, 19.5% more than the 112.36 million tons in 2023/24.

In Brazil, 2023/24 ending stocks (by September/24) are estimated at 27.8 million tons, downing 24.4% compared to the season before. This scenario sustained export premiums in Brazil and limited decreases in the domestic market.

Liquidity was low in the Brazilian market because of the fact that soybean growers were resistant to trade. They prefer to store the product left from the 2023/24 crop instead of close deals at current levels.

The ESALQ/BM&FBovespa Index (Paranaguá) dropped 6.4% from August 8-15, closing at BRL 128.99 per 60-kg bag on August 15. The CEPEA/ESALQ Index (Paraná) also decreased 6.4% in the same comparison, to close at BRL 124.43 per 60-kg bag yesterday.

On the average of the regions by Cepea, soybean prices in the over-the-counter market (paid to farmers) dropped 5.5% from August 8-15. In the wholesale market (deals between processors), quotations decreased 5.3%. The US dollar downed 1.7% against Real in the sane comparison, at BRL 5.482 on Aug. 15.

BYPRODUCTS – On the average of regions surveyed by Cepea, soybean meal prices moved down 2.5% from Aug. 8-15. Soy oil quotations dropped 0.2% between Aug. 8 and 15, at BRL 6,341.55 per ton (in São Paulo city with 12% ICMS) on August 15.

 

CORN/CEPEA: Low demand keeps prices down

Corn prices registered new decreases, despite the fact that new estimates indicated production in Brazil (2023/24) and in the world (2024/25) lower than in the current season.

Price drops are linked to the low domestic demand, which keeps the pace of trades slow. Consumers are using the product traded before and close only a few new deals. Sellers, in turn, make distinct decisions, depending on local supply and demand. Therefore, while producers in Mato Grosso are more flexible because of the higher supply, players in São Paulo have been limiting sales, expecting the end of the harvesting.

As for the international demand, it increased slightly in early August, but it is still below that verified last year. Brazilian shipments usually increase in the second semester, especially from August onwards; however, the harvesting is about to start in the United States, boosting the competition between exports from the US and from Brazil.

The ESALQ/BM&FBovespa Index (Campinas, SP) practically stable between August 8 and 15, closing at BRL 59.01 per 60-kilo bag on Aug. 15. On the average of the regions surveyed by Cepea, corn values decreased 0.3% in the wholesale market (deals between processors) and 1.3% in the over-the-counter market (paid to farmers) in the same period.

From February to mid-August, 9 million tons of corn were shipped by Brazil, still lower than the 36 million projected by Conab up to January/25. In order to reach the official estimate, more than 4 million tons need to be exported per month, amount that was reached only in January.

In the first seven producing days of August, Brazilian exports totaled 1.93 million tons, with a daily pace that is 32% smaller than in August/23. At the ports of Paranaguá (PR) and Santos (SP), quotations dropped 0.3% and 3.5% from Aug. 8-15. The US dollar decreased 1.7% in the same comparison, closing at BRL 5.482 on Aug. 15.

Conab indicates that the Brazilian output may total 115.64 million tons in 2023/24, 12.3% less than in 2022/23.

The USDA forecasts both the production and the consumption in the global 2023/24 season at 1.22 and 1.21 billion tons, respectively. As for the 2024/25 crop, the output is expected at 1.21 billion tons, due to lower production in Ukraine and Russia.

Conab indicated that the harvesting of the second crop reached 95.7% of the total until August 11.

 

Egypt Still Implementing Policy of Direct Wheat Purchases

Egypt’s wheat stocks enough for over six months, Supply Minister Sherif Farouk tells reporters.

• Government is still continuing with its policy of direct negotiations with wheat suppliers
• Domestic wheat consumption is about 20m tons/year
• Government has ability to boost wheat stockpile to over nine months

 

Indonesia Revises Rules on Domestic Cooking Oil Program

Indonesia revises rules on cooking oil supply for the local market, which include a change in ceiling prices for packaged cooking oil under the Domestic Market Obligation (DMO) program to 15,700 rupiah a liter from 14,000 rupiah, according to the trade ministry.

• Other changes in the DMO policy are:
  • Monthly volume target lowered to 250,000 tons, from 300,000 tons
• Exporters are required to distribute government-branded cooking oil known as Minyakita as a requirement for obtaining shipment licenses
  • Currently exporters are holding permits to ship 3.7m tons, Moga Simatupang, director general of domestic trade, says in a briefing Monday
  • Policy no longer counts distributing bulk cooking oil and crude palm oil as meeting DMO requirements
• Govt kept DMO to exports ratio at 1:4 and the multiplier factor at 2 for pillow packed Minyakita and 2.25 for bottles and other packaging
  • Ministry to add multiplier factor of up to 1.65 for companies distributing to remote regions and for using state-owned distributors such as Bulog and ID Food

 

Indonesia Seeks Bigger Biodiesel Blend to Reduce Fossil Fuel Use

• Nation wants to expand the mix of palm-based biofuels to 50%
• Plans to set up dedicated areas to grow palm for energy sector

Indonesia is seeking to blend more palm oil with diesel to cut its use of fossil fuels, with the ambitious target raising the risk of tightening supply of the tropical oil.

The nation wants to increase the mix of palm-based biofuels with diesel to 50%, according to the agriculture ministry. The current blend is 35% — known as B35 — and Indonesia plans to expand that to B40 next year, provided trials on trains, ships and mining and agricultural machines are completed by December.

The biggest palm oil producer plans to commission economic and technical studies, conduct road trials and prepare necessary infrastructure to further cut its dependence on fossil fuels, the ministry said in a statement on Sunday. Such a move will also help the Southeast Asian nation reduce its trade deficit and boost farmer income, it added.

Indonesia’s green fuel plan raises the risk of a palm oil shortage and could boost prices, hurting countries like India, which imports about 60% of its vegetable oil needs. Palm oil exports from Indonesia fell about 3% to 32.2 million tons in 2023. Domestic consumption totaled 23.2 million tons, while 10.7 million tons were used to produce biofuels. Production is seen stagnating this year due to aging trees and adverse weather conditions.

The agriculture ministry said it will seek to secure palm oil for biofuels without disrupting its use in food, local industry and exports. The government is working with private companies to develop “degraded” land for palm cultivation exclusively for the energy sector, it said, without elaborating further.

The country needs to increase its biofuel production capacity and improve technology to achieve the expected fuel quality, Andi Nur Alamsyah, chairman for the B50 Working Group, said in the statement. Indonesia will also adjust incentives for the use of biodiesel and amend some regulations before implementing the B50 program.

A higher biofuel blending program poses challenges for automobile makers as vehicle engines need to be modified to run on blended fuels, raising costs for manufacturers. Several countries are going slow on their green fuel initiatives. India, which imports nearly 90% of its oil demand, currently mixes about 16% of ethanol with gasoline, and targets to raise the ratio to 20% by 2026.

Indonesia has been lagging in its targets, but the nation’s biofuel policy is more robust than countries such as Brazil, which is seeking to increase its ethanol blend to 30% from 27.5%.

 

Malaysia to Halt New Palm Plantations to Keep Forests: Bernama

Malaysia pledged to halt new palm oil plantations to preserve its current forest coverage of 54%, according to state media Bernama.

• Palm fruits harvested from deforested areas will be barred from entering palm oil mills, the report cited Johari Abdul Ghani, plantation and commodities minister, as saying
• Factories that accept such fruits will be blocked from exporting or selling their products, he added
• The policy has been emphasized to operators in the palm oil sector

 

US Pork Production Up 5.1% This Week, Beef Rises: USDA

US federally inspected pork production rises to 529m pounds for the week ending Aug. 17 from 503m in the previous week, according to USDA estimates published on the agency’s website.

• Hog slaughter up 5.4% from a week ago to 2.512m head
• Beef production up 2% from a week ago, cattle slaughter rises 1.9%
• For the year, beef production is 1.3% below last year’s level at this time, and pork is 1.5% above

 

Black Sea Nitrogen Fertilizer Price Drops 1.64%

Nitrogen fertilizer, represented by Black Sea urea, fell 1.64% to $300 per metric ton in the week ended Aug. 16, according to Green Markets data compiled by Bloomberg Intelligence.

• Black Sea urea dropped 4% during the last month and was up 17.6% during the last 3 months
• Major Urea nitrogen benchmark prices were mixed
• Shares of Yara International ASA were up in the latest week
• Major UAN nitrogen benchmark prices were mixed
• Major Ammonia nitrogen benchmark prices were unchanged
• Natural gas, which drives producer costs, has decreased 0.7% during the last week and was down 3.6% during the last month
• The price of corn, a driver of fertilizer purchases, was flat during the last week and was down 3.4% during the last month

 

Ammonia Prices Gain as Canadian Rail Strike Looms

Ammonia moved up again in the Midwest, fueled in part by fears of a looming rail strike in Canada. Terminal prices in the Corn Belt firmed to $535-$560 a short ton (st) from last week’s $520-$550, while offers in Oklahoma and Kansas climbed to $505-$515 from $490-$500. New business pushed ammonia prices up in northwest Europe as well, to $550-$560 a metric ton (mt) cost-and-freight vs. the prior $510-$550 amid bullish gas prices. The announcement of a new tender in India saw urea prices gain $10-$15/mt in Brazil, but other international markets were under pressure, with declines reported in Egypt and the Black Sea region.

New Orleans (NOLA) urea, phosphates and potash were generally flat from last week, though monoammonium phosphate (MAP) was up $10/st in the western US and C$25-$30/mt in western Canada.

 

 

 

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