TOP HEADLINES
Corn Ethanol Lobby Urges California to Approve Higher Fuel Blend
- Group decries ‘failure’ to allow 15% ethanol mix known as E15
- Ethanol industry is banking on US E15 expansion to lift demand
A top US ethanol lobby group is targeting California in its fight to expand use of the corn-based biofuel nationwide.
California, a longtime leader in efforts to curb pollution from cars, trucks and other modes of transportation, is “woefully — and inexplicably — behind the rest of nation” in allowing lower-carbon gasoline blends containing 15% ethanol, known as E15, Renewable Fuels Association President Geoff Cooper said in an Oct. 3 letter to the leaders of the California Air Resources Board.
Read More: How Plan to Boost Ethanol Will Reverberate Across US
California released a study last year that RFA said clearly showed the health benefits of shifting to E15. The state, which has ethanol mixed with gasoline capped at 10%, is leaving “massive air quality and climate benefits on the table” by failing to approve E15, the letter said.
The California Air Resources Board didn’t immediately provide a comment on the letter.
FUTURES & WEATHER
Wheat prices overnight are down 7 in SRW, down 6 3/4 in HRW, down 6 3/4 in HRS; Corn is up 1/2; Soybeans up 9 1/2; Soymeal up $5.50; Soyoil up 0.11.
For the week so far wheat prices are up 20 in SRW, up 12 3/4 in HRW, up 9 1/2 in HRS; Corn is up 11 1/4; Soybeans up 7 1/4; Soymeal down $4.00; Soyoil up 1.41.
For the month to date wheat prices are up 20 in SRW, up 12 3/4 in HRW, up 9 1/2 in HRS; Corn is up 11 1/4; Soybeans up 7 1/4; Soymeal down $4.00; Soyoil up 1.41.
Year-To-Date nearby futures are down 29.1% in SRW, down 23.8% in HRW, down 23.4% in HRS; Corn is down 28.1%; Soybeans down 15.6%; Soymeal down 23.5%; Soyoil down 5.8%.
Malaysian palm oil prices overnight were down 2 ringgit (-0.05%) at 3706.
China markets are closed for holiday.
There were changes in registrations (-6 Oats, -6 Soymeal). Registration total: 3,005 SRW Wheat contracts; 735 Oats; 4 Corn; 220 Soybeans; 67 Soyoil; 493 Soymeal; 402 HRW Wheat.
Preliminary changes in futures Open Interest as of October 3 were: SRW Wheat down 7,306 contracts, HRW Wheat up 1,490, Corn down 3,411, Soybeans down 1,780, Soymeal down 631, Soyoil down 5,291.
Northern Plains: Scattered showers continue on Tuesday as a system moves through. Much colder air will move through behind the system and may bring a few showers as well. Frost will be possible late week and weekend that could put an end to any immature crops. The cold will only be temporary as a ridge brings in more warmth next week. Showers will cause some delays to harvest this week, but dryness that follows should allow equipment to roll shortly.
Central/Southern Plains: A front will push through the region Tuesday and Wednesday with widespread showers and thunderstorms and potential for severe weather and heavy rain. Afterward, cooler temperatures will move in, and could potentially produce some frosts late week and weekend across northern areas. The cold will be temporary as temperatures rise next week. Drier weather that follows should allow equipment to move back into the region rather quickly. Soil moisture increases for winter wheat establishment should be favorable as well.
Midwest: A front will move through Tuesday night through Friday with widespread showers. Temperatures will fall dramatically behind the front and there is potential for frost this weekend, especially across the north. Some isolated showers may continue into the weekend in the cooler air over the Great Lakes. Dryness and warmth should return next week. Any fieldwork delays due to rainfall are likely to be short again.
Brazil: Wet season showers continue in central Brazil, though they may be isolated at times. A front will move into southern areas on Tuesday night and bring areas of heavy rain. That front will move into central areas for late in the week, enhancing showers there. Another burst of rain is forecast for southern Brazil this weekend, which may be heavy yet again. Southern areas are dealing with too much rainfall, which has caused flooding and the need to replant early corn in some instances. Other than those issues, increased rainfall is favorable for early establishment.
Argentina: It was dry over the weekend and the region is in need of more rainfall. A front is moving through on Tuesday, but showers are widely scattered and will miss some of the important cropland that is in need. While planting conditions are good, establishment conditions are not. Dry weather that is forecast to follow for the next week is not favorable either. The next system is forecast to move through in the middle of next week.
The player sheet for Oct. 3 had funds: net buyers of 2,000 contracts of SRW wheat, sellers of 2,000 corn, buyers of 3,000 soybeans, sellers of 2,000 soymeal, and sellers of 1,000 soyoil.
TENDERS
- WHEAT SALE: Private exporters reported sales of 220,000 metric tons of U.S. soft red winter wheat to China for delivery in the 2023/24 marketing year, the U.S. Department of Agriculture (USDA) said.
- SOYBEAN SALE: Private exporters reported sales of 265,000 metric tons of U.S. soybeans to China for delivery in the 2023/24 marketing year, the USDA said.
- CORN, BARLEY TENDER: Algerian state agency ONAB has issued international tenders to purchase around 60,000 metric tons of animal feed corn and 30,000 metric tons of feed barley.
- WHEAT TENDER: Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) is seeking to buy a total of 91,234 metric tons of food-quality wheat from the United States, Canada and Australia in a regular tender that will close on Oct. 5.
PENDING TENDERS
- WHEAT TENDER: Bangladesh’s state grains buyer issued an international tender to purchase 50,000 metric tons of milling wheat.
- RICE TENDER: South Korea’s state-backed Agro-Fisheries & Food Trade Corp issued an international tender to purchase an estimated 50,100 metric tons of rice largely from the United States.
TODAY
ETHANOL: US Weekly Production Survey Before EIA Report
Output and stockpile projections for the week ending Sept. 29 are based on seven analyst estimates compiled by Bloomberg.
- Production seen lower than last week at 999k b/d
- Stockpile avg est. 21.943m bbl vs 22.048m a week ago
Ukraine’s Winter-Crop Plantings Reach 3m Hectares, Ahead of 2022
Planting of winter grains and rapeseed reached 2.99m hectares as of Oct. 3, ahead of 2.22m hectares on the same date last year, Agriculture Ministry says on its website.
- The total includes:
- 1.7m hectares of winter wheat, up about 58% versus year ago
- 109,000 hectares of winter barley, up about 14% from year ago
- 1.09m hectares of winter rapeseed, up about 10% from year ago
- The ministry didn’t give a forecast of what total plantings may reach
CORN PRICES RESUME RISING IN BRAZIL IN SEPTEMBER
Although the harvest of the second crop of corn is practically over in Brazil – and despite the current higher supply –, prices increased in the domestic market in September. Late in the month, specifically, the boost came from the absence of many sellers from the market – these agents were aware of the warm international demand, corn valuations abroad and the dollar appreciation, which raise values at ports.
With this change in the behavior of sellers, Brazilian purchasers resumed reporting difficulties to buy corn batches. It is important to mention that, in early Sepember, some farmers were willing to reduce asks because of the lack of room for storage and/or need for cash flow.
International corn valuations were linked to wheat price rises and the absence of sellers in the United States, who consider the current price levels too low. Also, the weather has been unfavorable to crops in the Northern Hemisphere.
PRICES – The ESALQ/BM&FBovespa for corn (Campinas, SP) rose 7.3% between August 31st and September 29th, to BRL 57.47 (USD 11.43) per 60-kg bag on September 29th. In general, the market was warmer in the regions nearer to ports and/or with better logistics.
PORTS – Corn valuations at ports kept liquidity high in late September. On Sept. 28th, prices closed at BRL 64.5/bag in Santos (SP) and at BRL 61.72/bag in Paranaguá (PR), 2.3% and 6.1% higher than on Sept. 21st. Some deals were closed at BRL 65/bag.
CROPS – On the one hand, the dry weather in Brazil favored the end of the second crop harvest, but on the other hand, it limited the progress of sowing the summer crop, concerning agents. By Sept. 24th, 98.2% of the second crop of corn had been harvested in Brazil, according to Conab. And of the summer crop, 18.3% had been sown.
Two More Ships Tracked Heading Toward Ukraine’s Black Sea Ports
Two more ships appeared to be heading to Ukraine’s Black Sea ports, according to ship-tracking data compiled by Bloomberg.
- Maranta and Equator were approaching ports in Greater Odesa
- Ukraine’s infrastructure ministry didn’t respond to a request for comment
- NOTE: Ten other vessels have completed journeys to major Ukrainian ports on the Black Sea without incident in the past few weeks, defying Russia’s threats to target vessels in the area
EU Soft-Wheat Exports Fall 24% in Season Through Oct. 1
The European Union’s soft-wheat exports in the season that began July 1 reached 7.39m tons as of Oct. 1, compared with 9.77m tons in a similar period a year earlier, the European Commission said on its website.
- Leading destinations include Morocco (1.38m tons), Nigeria (761k tons), South Africa (523k tons) and Algeria (503k tons)
- Barley exports are at 1.89m tons, down 20% y/y
- Corn imports are at 4.22m tons, down 43% y/y
U.S. soybean export prospects remain less favorable amid competitions of Brazilian soybeans
In September, the new U.S. season for soybean exports kicked off slowly with only 1.97 million metric tons (MMT) of deliveries reported. The figure increased fractionally from last September, but it was a 43% decrease from the 5-year average for the month. Moreover, the soybean outstanding sales up to 21 September totaled 16.25 MMT, compared to 25.5 MMT for last year’s same period, indicating less favorable prospects for U.S. soybean exports. U.S. soybeanexport prices have dropped by 16% since late July to compete with Brazilian soybeans.
In Brazil, bumper harvest resulted in a huge amount of soybean supplies in South America, offsetting production losses in Argentina. After massive exports during February-September totaling 83.3 MMT (56.1 MMT for China), review of 2022/23 Brazil soybean production and domestic consumption indicates that Brazil could have another 16 MMT of soybeans available for exports for the rest of the season (October-January). The latest Williams line-up report (released on 29 September) showed that 7.76 MMT of soybeans were scheduled to be delivered in October, which would again exceed the record for the month. The fast-shipping pace and adequate supplies increased 2022/23 Brazil soybean exports to 95.6 MMT, 7.1 MMT above the previous record set in the 2020/21 season.
On the other hand, the U.S. soybean sales will likely continue to be pressured by competitions of Brazilian soybeans. U.S. soybean export prospects remain less favorable due to 1) strongly competitive Brazilian soybeans; 2) China’s weak demand outlook given that the country has imported an all-time high amount of soybeans in the first nine months of the year. Disappointing U.S. outstanding sales data confirmed less demand for U.S. soybeans this season. As a result, we lowered 2023/24 U.S. soybean exports to 47. 4 MMT.
Abundant Brazilian corn flooded the markets, U.S. corn export outlooks remain pessimistic – Refinitiv Commodities Research
Thanks to bumper harvest, Brazil corn exports have surged to an all-time high in recent two months (8.7 million metric tons in August and 9.23 million metric tons in September). Accumulated corn exports during March-September totaled 26.38 million metric tons (MMT), up 18% from last year’s same period. Among them, 6.48 MMT (25% of total) were purchased by China. The country used to buy corn primarily from the U.S. and Ukraine, but it began to purchase corn from Brazil since last May when the two countries came to an agreement on imports of Brazilian corn. Japan and Vietnam were the 2nd and 3rd Brazilian corn buyers, accounting for 8% and 6%, respectively. In addition, Mexico, another major buyer of U.S. corn, has imported 1.05 MMT of Brazilian corn, compared to 0.57 MMT for last year’s same period. The latest Williams line-up report (released on 29 September) showed that 7.62 MMT of corn were scheduled to be delivered in October. More shipments may be reported later. The fast shipping pace and adequate supplies increased 2022/23 Brazil corn exports to 57 MMT. As such, Brazil exceeds the U.S. and becomes the largest corn exporter in the world.
Argentia corn exports have improved recently due to the corn dollar scheme that was implemented in July 2023 at a 350 pesos per dollar rate. Refinitiv trade flows tracked 3.66 MMT of corn shipments in August and 3.39 MMT in September. Accumulated exports during the first seven months of the season totaled 16.38 MMT. Argentina Customs reported 14.86 MMT of corn exports during March-August. Recent improvement of corn exports increases 2022/23 Argentina corn exports to 23.89 MMT.
On the contrary, despite largely increased production in 2023/24, U.S. corn export outlooks remain less optimistic amid the absence of Chinese buyers. According to Refinitiv’s supply and demand analysis, 2023/24 U.S. corn supplies will increase about 30 MMT from the previous season. But 2023/24 U.S. corn exports are estimated at 47.7 MMT amid strongly competitive Brazilian corn. USDA projected the U.S. exports at 52.07 MMT in its September WASDE report.
India’s palm imports fall more than a quarter in Sept as stocks surge -dealers
India’s imports of edible oil fell 19% in September from August’s record as refiners curtailed purchases of palm oil by 26% after inventories jumped to a record, five dealers told Reuters.
Lower purchases by the world’s biggest importer of vegetable oils could lead to higher stocks of palm oil in key producers Indonesia and Malaysia, weighing on benchmark futures.
India’s total edible oil imports in September fell to 1.5 million metric tons, including 830,000 tons of palm oil, average estimates from dealers show.
“Edible oil inventories have gone up to all-time high levels because of record imports in July and August,” said Rajesh Patel, managing partner at edible oil trader and broker GGN Research.
“That’s why buyers are taking a pause now.”
Domestic stocks of vegetable oil jumped to 3.7 million tons by Sept. 1 from 2.4 million a year ago, says trade body Solvent Extractors’ Association of India (SEA), which is likely to publish its data on September imports by mid-October.
Sunflower oil imports fell by 15% from a month earlier to stand at 310,000 tons, while soyoil imports edged up 2% to 365,000 tons, dealers estimated.
India buys palm oil mainly from Indonesia, Malaysia and Thailand, while it imports soyoil and sunflower oil from Argentina, Brazil, Russia and Ukraine.
“Drier weather in June and August, coupled with a slow start to planting, raised concerns about domestic oilseeds production,” said Ashwini Bansod, head of commodities research at Phillip Capital India Pvt Ltd.
“This led to higher import demand in July and August ahead of festivals.”
But improved rainfall in September eased concerns about a sharper decline in oilseed output, the analyst added.
August was the driest month on record with a 36% deficit in rainfall, though it revived in September for India to receive 13% more than the normal.
Imports of edible oil could fall further in October as stocks are more than enough to cater to festival season demand, said Patel of GGN Research.
Malaysia palm oil production steady amid the high crop season – Refinitiv Commodities Research
2022/23 MALAYSIA PALM OIL PRODUCTION: 18.4 [17.4–22.9] MILLION TONS, UNCHANGED FROM LAST UPDATE
2022/23 Malaysia palm oil production was maintained at 18.4 million metric tonnes (mt) amid the high crop season, unchanged from last month’s update. We will report the 2023/24 production outlook in the next update.
Rising output in September was underpinned by moderate weather conditions and more foreign workers’ return to estates, despite the upside being capped by incomplete fertilization and ageing trees, according to industry players. Although experiencing the El Niño weather pattern, Malaysia palm oil production is expected to increase in 2024 due to an improved workforce and more matured palms for harvesting, according to the Malaysian Palm Oil Board (MPOB). The dryness impacts brought by El Niño to Malaysian palms have been less severe so far.
The past month’s weather featured a wet and warm weather pattern across major palm oil regions. 30-day rainfall totals were 50-120 mm above normal across Peninsular Malaysia and East Malaysia, while only pockets of areas around Selangor and Sarawak experienced dryness. However, negative impacts from dry weather have been moderate in nature.
According to the short-term weather forecast, wet weather will likely prevail in the northern part of Peninsular Malaysia and Sarawak in the coming 10 days, while the southern part of Peninsular Malaysia and Sabah will likely receive near/below normal rains.
The Niño 3.4 Region Sea Surface Temperature (SST) anomaly in August was 1.3 °C. It is expected that moderate El Niño conditions will persist until December-February. However, it is unlikely that El Niño will strengthen further to a strong event or continue in the long term as 2024 progresses, based on the latest ENSO report by Refinitiv Weather Research. Divided temperatures and generally dry conditions are projected in December-February, potentially posting downside risks for palm oil.
Indonesia palm oil production expected to take a toll next year due to El Niño – Refinitiv Commodities Research
2022/23 INDONESIA PALM OIL PRODUCTION: 50.7 [46.2–62.6] MILLION TONS, UP 1.8% FROM LAST UPDATE
2022/23 Indonesia palm oil production was raised to 50.7 million metric tonnes (mt) on seasonally stronger yields, up 1.8% from last month’s update. We will report the 2023/24 production outlook in the next update.
Despite experiencing stronger production for the 2022/23 season, 2023/24’s output is expected to weaken. Industry players anticipate that El Niño weather patterns will weigh on palm oil production.
The past month’s weather featured a dry and warm weather pattern across key palm oil regions. 30-day rainfall totals across Sumatra, southern Kalimantan and Sulawesi were 20-140 mm below normal. Dryness impacts caused by El Niño have already been felt, with higher hotspots and fire outbreaks reported in key palm oil-producing regions. In contrast, high rains were focused on the eastern Kalimantan, where totals were between 70-170 mm above normal.
According to the short-term weather forecast, dryness is expected to persist across Sumatra, Kalimantan and Sulawesi in the coming 10 days. Prolonged dryness will pose downside risks in yields in the mid/long term.
The Niño 3.4 Region Sea Surface Temperature (SST) anomaly in August was 1.3 °C. It is expected that moderate El Niño conditions will persist until December-February. However, it is unlikely that El Niño will strengthen further to a strong event or continue in the long term as 2024 progresses, based on the latest ENSO report by Refinitiv Weather Research. Divided temperatures and generally dry conditions are projected in December-February, potentially worsening water stress in palm trees.
Russian On-Farm Grain Supplies Fall Back
On-farm stocks of Russian grains have been at record highs since August, but have fallen back as wheat exports climb, says SovEcon in a note. The firm estimates Russian on-farm stocks at 28.8 million metric tons, which is a 9% drop-off from this time last year. “On-farm wheat stocks dipped below record levels amidst active exports and a declined wheat production,” says the firm. SovEcon adds that wheat exports are expected to be 2 million tons higher than the previous year at 48.9 million tons, while production is down 12.6 million tons to 91.6 million tons. CBOT wheat futures are up 1.2% in afternoon trading.
Australian farmers survey finds little more than half expect higher output
A little over half of Australia’s farmers expect the country’s agricultural output to grow over the next decade, according to a survey published on Wednesday, with optimism in short supply among livestock farmers particularly.
Australia is one of the world’s most important agricultural exporters, shipping products including wheat, beef, wool and cotton to global markets.
After widespread flooding last year, the weather has turned hot and dry, damaging some crops and forcing farmers to sell livestock.
A survey of 1,600 farmers by the National Farmers Federation (NFF) and communications agency Seftons pointed to frustration with issues including the pricing power of supermarkets, environmental laws and poor infrastructure.
It echoed a poll by Rabobank last month which found that farmers were worried about falling commodity prices and a return to drought and 51% thought the agricultural economy would worsen over the next year.
The NFF survey found that 55.8% of farmers thought Australian production of food and fibre would increase over the next decade and less than half — 45.6% — thought the future of the family farm was bright.
Some sectors were more optimistic than others. Some 55.8% of fruit and vegetable farmers and 55.4 of sugar growers felt more positive than a year ago but only 26.6 per cent of beef producers and 30% of sheep farmers felt more positive than this time last year.
The NFF said workforce shortages were also slowing farm productivity, with 87.2% of poll respondents saying they would increase their labour force if hiring conditions improved.
“Farmers are feeling frustrated,” the federation quoted its president Fiona Simson as saying.
“They’re being squeezed by a lack of government support on a wide range of fronts — whether that’s the unchecked market power of supply chain players, crumbling rural roads, unnecessary green tape, workplace laws … the list goes on.”
Rhine Water Levels Are Dropping Back Toward This Year’s Low
Water levels at a key chokepoint on the Rhine are expected to drop this week to the lowest since July.
- The barge clearance level at Kaub is forecast at 93 centimeters on Oct. 7
- That’s the lowest since late July, when the level hit this year’s low, data compiled by Bloomberg show
- See forecast here for the Kaub chokepoint from German waterways service
- Falling water levels limit the volume that can be loaded on barges and that can push up barge rates; the rate to Karlsruhe, Germany on the Upper Rhine from the ARA hub has been rising in recent weeks
US Agriculture Sentiment Weakens in September: Purdue Univ.
The Purdue University/CME Group’s agricultural sentiment index fell to 106 points in Sept. from 115 in Aug., according to a survey of 400 agricultural producers.
- This is the second decline in a row after reaching 123 points in July
- Current conditions component declined by 10 points from Aug.
- Future expectations down by 10 points
- “When asked about top concerns for their farming operations in the next 12 months, producers continue to point to higher input prices and rising interest rates as their top two concerns,” according to the report’s authors, James Mintert and Michael Langemeier
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