After a long fall, wheat prices rallied as Cargill said it would take a further step back from the Russian market by no longer handling the top wheat supplier’s grain at its terminal from July. In addition, Bloomberg News reported that grain trader Viterra, part-owned by Switzerland-based Glencore, was planning to stop grain trading in Russia. Apparently, the last leading grain multinationals left Russia. Later, Cargill clarified it would only stop elevating Russian grain for export but intended to continue shipping grain from Russia. Viterra will also reportedly be doing the same. Meantime, Moscow asserted that although Cargill exports a significant amount of Russian wheat, the company’s decision shouldn’t adversely affect overall Russian grain shipments.

 

Russian fertiliser producer Uralchem said earlier, that company would be interested in buying the Russian assets of Cargill and Viterra if they decide to leave. Meantime, Russia’s state-owned agricultural leasing company Rosagroleasing has placed orders for ocean-going grain carriers, and plans to launch them within two to three years, the firm’s head Pavel Kosov said. At a meeting with Russian Prime Minister Mikhail Mishustin, Kosov said: “Now Rosagroleasing has ordered a project for the construction of 40 and 60 thousand tonne vessels”. 

 

In fact, a serious revision of commodity trends continues in the world, the essence of which was briefly formulated by the head of VTB Andrey Kostin: “Oil will end, but wheat will never.” Kremlin, having usurped oil, has now decided to seize the last thing left for the people - grain. But people seem to like it. Russia needs to sell huge grain stocks but same time farmers need higher prices to cover the costs of production. Instead of lifting export duty, Russian authorities intend to buy more wheat in state reserves. 

 

While the weather conditions look normal across Europe, Refinitiv revised downward its 2023-24 EU common wheat production forecast by 1.7MMT, to 132.2MMT (versus 126.7MMT in the current season). The cut reflected water shortages in southern and southwestern regions of Europe. It’s a time to shift the weather market from the Southern to Northern Hemisphere. However, winter crops entered spring in mostly fair to good conditions, although more precipitation would required to aid further crop development. Near-term forecasts pointed to a cold front across Europe, but average temperatures were not expected to fall below freezing. In western Europe, decent rainfall is expected but there are risks of frosts in France and Germany, with potential damage to crops if severe. The overwintering of winter crops in Ukraine ended satisfactorily. The snow cover has come off the fields, the soil has completely thawed. Fairly high air temperatures contributed to the drying and warming of the upper layers of the soil in the southern regions, which allowed farms to start sowing early spring crops and peas, on which seedlings had already appeared in early sowings. Weather conditions contributed to the replenishment of soil moisture reserves, except for the extreme southern regions of the country, where there was a persistent lack of precipitation. At the same time, significant waterlogging of the soil was noted in many areas of the western regions. As of March 20, the recovery of vegetation was noted in winter crops (wheat, barley, rye) in most of the territory. The state of crops was assessed as mostly good and satisfactory. 

As per MARS, after a predominantly mild winter, winter crops entered spring in fair to good condition in most of Europe, and weather and terrain conditions allowed for a good start to field operations. However, continued dry conditions in southwestern Europe remain of concern. As it is still early in the season, the crop yield forecasts reported in this issue of the Bulletin are – with a few exceptions - based on historical trends. The long-term forecast for the coming months (April, May, and June) points to very likely to extremely likely warmer-than-usual conditions throughout Europe. 

Morocco is currently experiencing alarming drought conditions, which appear to have already compromised the current cereals campaign. A significant lack of precipitation has been observed in all the cereal-producing regions of the country since the beginning of December. Cumulated rainfall for the reporting period is 70 to 100% less than the LTA values (70 to 150 mm). Remote sensing indicators confirm crop failure conditions in the regions of Casablanca-Settat, Marrakech-Safi, Béni Mellal-Khénifra, Souss-Massa, and Oriental. Even in Algeria, seasonal drought conditions markedly hampered crop biomass accumulation during the cereals’ vegetative and flowering periods. Current biomass accumulation levels, in most of the main western (e.g. Tiaret, Tlemcen and Sidi Bel Abbes) and eastern (e.g. Oum El Bouaghi, Constantine and Guelma) agricultural areas are well below the long-term average and below the previous (unfavorable) cereal campaign. Winter crop conditions in Tunisia degraded in comparison with the outlook of February. Cereals in this country are least affected by the seasonal drought of the Maghreb area. However, the precipitation deficit occurred in February and March led to below-average biomass accumulations in most of the regions, with the only exceptions being Zaghouan, Manouba and Nabeul. Yield forecasts have been revised from below to well below the historical trends for most of the Maghreb countries, says MARS. 

Winter wheat areas in northern China are forecast to remain under favorable weather conditions while excessive rains and cloudy skies might bring about some headwinds to winter wheat and rapeseed crops in other regions. 

In the US, cold temperatures pose threats to crops, and while near- to above-normal precipitation is forecast across most of the country, US hard red winter areas in the southwestern Plains are expected to continue facing dry or mostly dry weather.

 

The sowing campaign, which started in Russia at the end of February, is entering an active phase: farmers from 29 subjects of the Federation entered the fields. Back in December, the Ministry of Agriculture, together with the regions, approved the structure of sown areas, which should provide the necessary volume of production both for the domestic market and to maintain the export potential. It’s easy to do when you have 20MMT stocks. The total area under crops during the current harvest will exceed 82 million hectares. 55.2 million hectares are provided for spring crops. More than 600 thousand hectares have already been sown, the dynamics is higher than last year. Under winter crops - 17.7 million hectares and 93% of crops demonstrate good and satisfactory condition. Moscow-based IKAR pegged 2023-24 grain production at 131Mt down from 157.7Mt produced last year including wheat at 86Mt (104.2Mt previous year).

 

Minister of Trade and Integration of Kazakhstan said annual wheat export volume to China could be increased to at least 1Mt, with one train loaded with grains currently on its way to China’s bonded zone as part of a pilot project.

 

Subdued interest from export buyers in Australia facing increased competition from Black Sea cargoes has seen values for feed grain soften this week. Demand from domestic consumers is limited in the prompt market, with traders saying most offers from growers are for the July market, which will put income in the new financial year.

 

In the north, barley continues to hold its premium over wheat as the preferred grain for feedlots, and the sorghum market has weakened on grower selling swamping Chinese demand in the near term. Widespread rain across southern Australia and patchy falls in northern New South Wales and southern Queensland are shoring up prospects for some early winter-crop planting. Seeding for 2023 is underway in WA. Grazing crops and long season canola are being planted in eastern Australia. With the good recent rainfall and abundant subsoil moisture, growers are taking advantage of the early start with the potential El Ninõ lurking in the background for later in the year.

 

Australia’s deputy trade minister, Tim Ayres, met his Chinese counterpart on the sidelines of the Boao Forum for Asia, on tropical Hainan Island, in the latest round of talks to end China’s politically motivated sanctions on $20 billion worth of Australian exports including barley. 

Soybeans settled up, bolstered by continued concerns over production in drought-hit Argentina. The South American country may have to import up to 10 million tonnes of soy this season. That is more than double than in previous years. Soy will come mainly from Paraguay and Brazi. Brazil is harvesting a record crop and will export at least 3 million tonnes of soybean to Argentina, but if international soymeal prices pay off, that volume can reach 5 million tonnes, analysts said. The U.S. Department of Agriculture indeed expects Argentina to remain the world’s biggest soymeal exporter despite the nation’s soy crop and crushing woes.

 

Grain companies in Mato Grosso do Sul are estimating a record export of 1.6 million tonnes of soybeans to Argentina via Porto Murtinho and across the dry border to Concepcion, Paraguay. There are reports of shipments of Brazilian soybeans leaving for Argentina from Santarem, in the state of Para. It is possible that there are shipments from other ports. However, if Brazilian soy premiums continued to fall, Brazilian suppliers will remain competitive against their counterparts to sell to Argentina.

 

Meantime, Argentina’s grains inspectors union said it will launch an indefinite strike over wage demands targeting grains storage facilities. The strike could affect the country’s grain trade. The union said in a statement that the strike would target grain storage facilities rather than ports. The prices of Argentine soybeans have already been duly “beaten” to receive a new edition of the “soybean dollar”. After the announcement of the implementation of the “soybean dollar”, different areas of the Government are already working on the new mechanism. In April it would start with the differential dollar for soybeans for 30 days and then for 90 days for regional economies. This measure is part of a package that Argentina is negotiating with the International Monetary Fund. “It is an export increase program that aims to facilitate the capacity and compliance with the contracts of our exporters in the year of drought, understanding the difficulties suffered by our producers, and the Argentine Central Bank to strengthen itself in terms of reserves,” Massa said in a meeting with the Argentine media at the end of his tour of the US capital, during which he met with the IMF.

Ahead of the USDA monthly fats and oils report, analysts expect, U.S. soybean processors likely crushed 5.272 million short tons, or 175.7 million bushels, of soybeans in February, the most ever for the second month of the year.

 

If the estimate is realized, the crush would be down from the 191.1 million bushels that the USDA reported as processed in January but up from the February 2022 crush of 174.4 million bushels. It would also be the largest February crush on record, topping the 175.3 million bushels processed in February 2020. U.S. soyoil stocks as of Feb. 28 likely declined to 2.339 billion lbs. If realized, the supply would be down from 2.356 billion lbs at the end of January and below stocks totaling 2.566 billion lbs at the end of February 2022.

The USDA is scheduled to release the report on Monday, April 3. A few days before, on March 31, USDA will release the planting intentions report. In a month market will be fed with the first figures of 23/24. Corn rose, testing even larger gains after the USDA confirmed another large export sale to China. Ethanol production reached a daily average of 1.003 million barrels for the week ending March 24, per the latest data from the U.S. Energy Information Administration. While corn rises all the rest of the market falls. Inflation is still on top. Meat is too expensive and the carbon footprint policy is chopping the meat sector and feedstuff trading. There has been a surge in confirmed cases of African swine fever on Chinese pig farms, with analysts predicting that this will reduce output and increase prices.

 

The disease has been a problem in China for a number of years after a wave during 2018 and 2019 killed millions of pigs. In response, Chinese farms improved procedures to reduce the impact of the virus but it still proves problematic, according to a report by Reuters. Usually suffering a spike in infections in the winter, the increase in infections came comparatively late in the season. Analysts at Huachuang Securities said: “Data from swine fever virus testing companies show that the number of positive detections exploded after the new year holiday. The order of magnitude in a single month has reached the level of the whole year of 2022. We guess that the current swine fever infection area in northern production areas may be reaching 50%.”

 

Be careful and listen to the crew’s announcement: our plane is still in the risk zone.