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Lack of milling wheat may turn millers to feed grade

  • Market: Agriculture
  • 19/05/22

Tight global balance sheet and high prices of milling wheat may push its major consumers to expand their demand to the product that is currently classified as feed wheat, which, in turn, could tighten global corn balance sheet.

With Ukraine's wheat exports significantly lower because of the Russia-Ukraine war, and given India's recent export restrictions on wheat shipments, global milling wheat supply in the 2022-23 marketing year (July-June) could fall short of demand by 10mn t, US agricultural advisory AgResource's president Dan Basse told the GrainCom conference in Geneva yesterday.

A potential solution for large milling wheat-consuming countries may be the use of feed wheat as milling product. Feed wheat can be used as feedstock for flour production, according to market participants, with wheat classified at times as feed grade because of test weight, not contamination or quality measurements.

As a result, more countries could follow Spain in using feed wheat in flour production, which the country started doing because of steep price rises in milling wheat prices, intensified after Russia's invasion of Ukraine on 24 February.

And wheat prices are likely to continue seeing support from unfavourable weather in several major producing and exporting countries, and ongoing logistics issues in Russia — a key exporter enjoying weather conditions beneficial to wheat production.

Prospects of further wheat balance sheet tightening

The US Department of Agriculture (USDA) in its latest World Agricultural Supply and Demand Estimates report forecast the 2022-23 global wheat exports at 204.89mn t — compared with 199.89mn t this marketing season — with imports projected at 201.26mn t. But even this could be an optimistic export estimate, with India's wheat exports likely to see downward revisions in future reports on significantly lower output caused by adverse weather conditions.

The USDA's EU wheat export estimate of 36mn t for 2022-23 could also be revised down, as combined with beginning stocks and production estimated at 13.61mn t and 136.5mn t, respectively, this would leave the bloc with intolerably low ending stocks at 10.61mn t. If there are any downward revisions in production estimates, the EU-27's 2022-23 wheat exports could be closer to 30mn t, or even below this level.

US wheat output and export forecasts for 2022-23 — currently pegged at a respective 47.05mn t and 21.09mn t by the USDA — could also be revised down, with winter wheat crop conditions at record lows after severe drought hit major producing states at the start of 2022.

Stronger demand for feed wheat to tighten corn balance sheet

Upgrading feed wheat quality to milling wheat grade would alleviate the global supply crunch on the wheat market. But it would tighten corn balance sheet — as feed wheat prices rise further and near milling wheat prices, more animal feed producers will switch to corn. Especially this could be the case for southeast and east Asia, where producers have already shown feedstock flexibility by replacing cancelled volumes of Ukrainian corn with shipments of Indian wheat.

But global corn fundamentals are also already tight — especially with new legislation increasing the permitted ethanol percentage in petrol, for example, in the US.

And unlike wheat — of which Ukraine exported 18.2mn t since the beginning of this marketing year until the start of the invasion — the severe limitation of Ukraine's export capacity has already removed a potential 10mn t of corn from the global export supply this marketing season, with only 9mn t projected for export from the country in the next season.


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11/07/24

Brazil ups outlook for 2023-24 crop to 299mn t

Brazil ups outlook for 2023-24 crop to 299mn t

Sao Paulo, 11 July (Argus) — Brazil raised the outlook for its 2023-24 grain and oilseed crops for the third consecutive month in July, driven by favorable weather supporting the second corn crop. National supply company Conab now expects 2023-24 output at 299.3mn metric tonnes (t), up by 1.7mn t from a month ago. But the projection for the current cycle is 6.4pc — or 20.5mn t — below the record 319.8mn t in 2022-23, following the negative effects of the El Nino weather phenomenon over main producing states earlier in the season. The 2023-24 crop is set to yield 3,752 kg/hectare (ha), 7.9pc below the 4,072 kg/ha in the last cycle. That also compares with the 3,739 kg/ha forecast in June. Estimated sowed area expanded by 170,200ha to 79.8mn ha this month, which is a 1mn ha tumble from the prior season's acreage. Corn crop leads monthly gain Conab expects Brazil to produce over 115.9mn t of corn in 2023-24, including the country's first, second and third crops. Estimated volumes rose by 1.8mn t from the previous estimate of 114.1mn t, as the average yield outlook increased to 5,553 kg/ha from 5,478 kg/ha and the projection for planted area was up by 25,000ha to 20.9mn ha. The 2022-23 corn crop produced a record 131.9mn t, with 22.3mn ha sowed and average yields of 5,923 kg/ha. The 2023-24 second corn crop — also known as the winter crop — accounted for most of the upwards revision this month. The production forecast rose to 90mn t from 88.1mn t, but remained below the 2022-23 crop's 102.4mn t record. Expected yields rose to 5,556 kg/ha from 5,478 kg/ha in June. That is also 6.7pc below the prior cycle's yields. As for planted area, the forecast increased by 47,000ha and was maintained at almost 16.2mn ha. The 2022-23 second corn crop was sowed in 17.2mn ha. The summer corn cycle — also known as the first crop — is set to reach almost 23.4mn t, down by nearly 180,000t from a month prior and 3.9mn t below the last season. The estimate for acreage decreased by 23,900ha, but remains at around 4mn ha, approximately 438,000ha below the 2022-23 planted area. Projected yields dropped to 5,852 kg/ha from 5,862 kg/ha, also down from last season's 6,160 kg/ha. The outlook for the third corn crop — sowed exclusively in northern and northeastern states — continues at 2.4mn t, surpassing the prior cycle by 254,800t. Planted area is now set to reach 657,800ha, up by 2,800ha from the prior month's estimate and 632,500ha in 2022-23. The outlook for yields was down to 3,663 kg/ha from 3,670 kg/ha but is 7.5pc up on the year. Soybean output decreases slightly Brazil's 2023-24 soybean crop is set to total approximately 147.3mn t, following a 16,900t reduction from a month ago. That is a 4.7pc drop from the 2022-23 season's record of 154.6mn t, but the cycle remains on track to be the second largest crop in the country's history. The monthly output decrease reflects damage caused by floods in the Rio Grande do Sul state, which reduced its outlook by 540,000t to 19.7mn t. Losses were then mostly offset by an upwards revision in Para state, where higher yields and an increase in expected area rose the output forecast to almost 4.1mn t. National average yields are now estimated at 3,202 kg/ha, down from 3,205 kg/ha in June and 3,507 kg/ha in 2022-23. Conab projects that the 2023-24 soybean crop was sowed at a record of 46mn ha, compared with 44.1mn ha in the prior cycle. Wheat, cotton down Brazil's 2024 wheat production is now set to total almost 9mn t, down by 109,500t on the month and 859,000t above last year's output. Yields are down to 2,917 kg/ha from 2,945 kg/ha, while the expected planted area continues at approximately 3.1mn ha. That compares with 2,331 kg/ha and almost 3.5mn ha in 2023. The monthly downwards revision was driven by a lower outlook in Goias state, which struggled with excessive rainfall in the beginning of the cycle, fungal diseases and most recently water stress during the grain filling stage of crops. The forecast for 2023-24 cotton lint fell by 20,900t and is now at 3.6mn t, which is 462,900t — or 14.6pc — above the prior season's output. The yearly increase is driven by a higher expected acreage of 1.9mn ha, almost 17pc above the 2022-23 season and roughly stable from a month ago. Yields were down to 1,870kg/ha from 1,881kg/ha in June, which is 2pc below the prior season. Corn, soybean exports stable Conab continues to project 2023-24 corn exports to total 33.5mn t, despite an increase in expected production. Volumes remain below the 54.6mn t shipped in the prior cycle. But the outlook of domestic consumption rose to 84.3mn t from almost 84.2mn t a month ago — about 5.7pc above the prior season — led by a record demand from the corn ethanol and animal feed sectors. Soybean exports also continue set to reach 92.4mn t, down from almost 101.9mn t of soybeans exported in the 2022-23 season. By Nathalia Giannetti Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Australia’s Commodity Ag to start WA grain exports


11/07/24
News
11/07/24

Australia’s Commodity Ag to start WA grain exports

Sydney, 11 July (Argus) — Australian agribusiness Commodity Ag will export its first cargo from its Albany port terminal facility this week, boosting export competition in Western Australia against established grain handlers CBH and Bunge. The company intends to export 600,000 t/yr from its Albany port facility, but said its capacity would be constrained by other users of the general-purpose berth. The loading capacity of the mobile shiploader indicated in its ACCC application would be a quarter of CBH's total loading capacity at Albany, according to Southern Ports. Western Australia's bulk grain exports are dominated by CBH — which has port terminals at Geraldton, Kwinana, Esperance and Albany — and Bunge, which has a port terminal at Bunbury. But barriers to entry for smaller port terminal service providers such as Commodity Ag have been reduced by the availability of mobile shiploaders , which allow trucks to unload grain directly in the port and onto a vessel. Commodity Ag's Albany facility will use a 400 t/hr mobile shiploader to load cargoes onto Handymax-sized vessels that are approximately 50,000 deadweight tonnes, according to its March 2023 application to the Australian Competition & Consumer Commission (ACCC) to be an exempt service provider of port terminal services. Commodity Ag has no other cargoes for loading on its shipping stem accessed on 11 July. It became an exempt service provider of port terminal services in May 2023, which means the company is not required to comply with parts 3 to 6 of the Port Terminal Access (Bulk Wheat) Code of Conduct. Part 3 of the code requires a port terminal service provider to not discriminate in favour their own trading business or an exporter that is an associated entity, and not hinder access for another exporter when providing bulk grain port terminal services. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US corn and soybean conditions remain stable


08/07/24
News
08/07/24

US corn and soybean conditions remain stable

Houston, 8 July (Argus) — Both corn crop conditions and soybean conditions improved last week, according to the US Department of Agriculture (USDA). For the week ended 7 July, corn rated good to excellent increased to 68pc compared to 67pc the previous week. Illinois and Iowa conditions improved after receiving equal amounts of precipitation this past week. Soybean conditions rated good to excellent increased to 68pc compared with 67pc last week. Illinois and Iowa conditions exceeded last week's amount with a 2 percentage point increase from Illinois and a 4 percentage point increase from Iowa. US winter wheat was 63pc harvested, an 11 percentage point increase from the five-year average. Kansas, the largest winter wheat producing state, has harvested 92pc of its crop, compared with 72pc for the five-year average. By Trajan Greenwell Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Flooding closes upper Mississippi locks


08/07/24
News
08/07/24

Flooding closes upper Mississippi locks

Houston, 8 July (Argus) — High water levels in the Mississippi River have caused all lock and dams to close between Bellevue, Iowa, and Gladstone, Illinois, according to the US Army Corps of Engineers (Corps). Lock and Dams (L&D) 12-18 are closed as of 8 July, the Corps said. Water levels have reached the top of L&D 12 in Bellevue and L&D 11 in Dubuque, according to the National Weather Service. The outflow at L&D 16 was at 255,000 cubic feet per second (cfs) as of 8 July, about 68pc more than the average of 80,000cfs this time of year, the Corps said. It will be another two weeks until L&D 20 reopens, but L&Ds 11-15 could reopen as early as this weekend, the Corps said. About 15 inches of rain fell in Dubuque over the past week, bringing the expected forecast up to 22.1ft, according to the National Oceanic and Atmospheric Administration. Flooding at Dubuque and other locations along the river are expected to drop from major to moderate levels this week. L&D 19 reopened on 8 July as it fellow flood stage at 16ft, the Corps said. L&Ds 19, 21, and 22 are expected to remain open. The river widens around the locks, allowing for a greater outflow at higher water levels. By Trajan Greenwell Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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RFS updates not coming this year: White House


08/07/24
News
08/07/24

RFS updates not coming this year: White House

New York, 8 July (Argus) — The US Environmental Protection Agency (EPA) will not meet a statutory deadline to finalize new biofuel blending targets this year, the White House has indicated, leaving future policy up to the winner of this year's presidential election. Instead, the agency is targeting March 2025 to propose renewable fuel standard (RFS) obligations for 2026 and December next year to finalize the regulation. EPA is technically supposed to finalize 2026 obligations by November this year. The delay is certain to frustrate biofuel producers who have warned that policy uncertainty is risking planned investments and capacity expansions. A summary of the agency's plan, included in a biannual regulatory agenda released by the White House on 5 June, says the regulation will set volume requirements and accompanying percentage standards for cellulosic biofuels, biomass-based diesel, advanced biofuels, and total renewable fuel. The rule will also include "several regulatory changes to the RFS program intended to improve the program's implementation," the agenda said. The Biden administration has flirted with changes to the RFS before, including a potential credit-generating pathway for electricity from renewable natural gas that powers vehicles. The agenda, though brief and thus not necessarily reflective of all of EPA's plans, makes no mention of prospective blending targets for any year beyond 2026 or of adjustments to existing targets. Clean Fuels Alliance America, which represents biomass-based diesel and sustainable aviation fuel companies and which asked EPA last month to hike its 2024 and 2025 blending obligations, said the "announced timing is disappointing" and "will reverberate throughout the program, creating uncertainty for all stakeholders." The full agenda, which includes timelines for hundreds of regulations from various agencies, also appears to make no reference to expected Treasury Department guidance on a clean fuels tax credit kicking off next year or to a related Department of Agriculture effort to quantify the benefits of "climate-smart" agricultural practices. Timelines for finalizing guidance around other Inflation Reduction Act tax credits are included, conversely. Biofuel production margins have slipped this year, as ample supply of renewable diesel has contributed to price declines for RFS and state low-carbon fuel standard credits. These tradeable credits, which covered sources submit to regulators as proof of compliance, also act as a source of revenue and an incentive to produce low-carbon fuels. Biofuels producers and feedstock suppliers have advocated that the Biden administration act quickly in response by setting new renewable fuel obligations and clear guidance around the 45Z credit. Prolonged uncertainty could prompt more biorefinery closures, these groups argue, risking the administration's climate and clean fuel goals. EPA did not immediately provide comment but said last month that it will factor a recent surge of feedstock imports, including used cooking oil, into its decisions about future RFS volume requirements. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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