Topic: Rains revive Argentine wheat but some yield damage seen
According to the Buenos Aires Grains Exchange, while rains in early September brought much-needed relief to wheat fields in central Argentina, the damage to yields is expected to be irreversible. Argentine growers planted 6.5 million hectares of wheat to be harvested in December and January; as a result of months of extremely dry weather, Exchange analysts cut their initial sowing estimate of 6.8 million hectares.
Topic: Russian wheat prices continue to rise on strong global benchmarks
In early September, Russian wheat export prices rose again as the Russian market reflected stronger global prices in Chicago. Agriculture consultancy IKAR stated that Russian wheat with 12.5% protein loading for supply in September and from Black Sea ports rose by $5 in the first week of September, standing at $216 a tonne free on board. Sovecon, another Moscow consultancy, noted that Russian farmers sowing winter wheat for next year’s crop were increasingly concerned by the lack of rain. Sovecon went on to state that Russia’s southern regions were expected to harvest small crops of corn and sunflower, which could slow down sales of wheat and barley already harvested by farmers and who would no longer need to free up their storage for corn and sunflower.
Topic: Funds plant bullish CBOT corn, wheat, soybean views
According to Reuters, as of 1 September, investors held net longs across CBOT corn, wheat, soybeans and soybean products, and Kansas city wheat—the likes of which have not been seen since 2015. Reuters writes, “they maintain bearish views in Minneapolis wheat, though they are the most bullish toward combined CBOT grains and oilseeds for the date since 2012.” Data published by the US Commodity Futures Trading Commission noted that money managers “dumped” approximately 136,000 short positions across these seven grains and oilseeds, with the remaining total of 378,580 being the funds’ fewest number of shorts since July 2017. Funds also added about 86,000 gross long positions, the most for a week since March 2018, setting the new number of total longs at 682,851—the highest since August 2018. Hedge funds and other money managers switched to a new long in CBOT corn futures and options of 18,659 contracts in the first week of September. For soybeans in the first week of September, money managers extended their net long in CBOT soybean futures and options to 162,607 contracts from 109,288 contracts a week earlier. Also in the first week of September, investors boosted their net long in soybean meal futures and options to 15,871 contracts from 3,560 a week prior and their net long in soybean oil futures and options to 81,557 contracts from 67,690 a week prior. For wheat in the first week of September, money managers net long in CBOT wheat futures and options rose to 32,469 contracts from 1,517 contracts a week earlier. Minneapolis wheat remains the only grain approached with pessimism by investors.
Topic: Harvest setbacks have French grain growers concerned
Adverse weather conditions and insect damage led to poor harvests this year in France, putting many grain growers and some farms in less fertile regions at risk. A dry spring and summer and extensive insect damage led to a sharp drop in cereal and rapeseed production; a drop in yields in the upcoming sugar beet harvest is also expected. The French government has offered drought relief measures, proposed easing the ban on a type of pesticide used to protect sugar beets, and outlined 1.2 billion euros in support for agriculture in a larger stimulus plan following the COVID-19 crisis. For farms in less productive soils, Sebastian Windsor, head of farming advisory body APCA, warned that “‘if there aren’t rapid support measures there’ll be 15% of farmers who won’t get through this year.’” AGPB, a wheat growers group, expects that more than half of grain farmers will have record negative pre-tax income this year, adding to several years of falling income. The AGPB called for more short-term aid for farmers, including state-backed loans and tax breaks.
Topic: Despite setbacks, Brazil’s corn ethanol sector booms
Despite the collapse in demand for corn ethanol in March and April and record-high corn prices, Brazil’s biofuel sector is booming. Corn ethanol mills have exploded across Brazil’s centre-west grain belt over the past five years. In response, corn harvesting increased from 66.5 million tonnes in 2015-2016 to a projected 102.5 million tonnes in the current 2019-2020 season, according to Conab, the official crop supply company. Conab anticipates that the corn harvest will jump by 12pc to 113 million tonnes for the 2020-2021 season, while corn ethanol industry association Unem projects that the industry’s demand for corn could reach 8.3 million tonnes in the 2021-2020 sugar and ethanol season. Mato Grosso, Brazil’s largest corn-producing state, expanded its current 2019-2020 planted area for corn by 4.4pc to 5.4 million hectares and anticipates outdoing that with a 5pc expansion in area in the 2021-2021 season.
Topic: Chicago soybeans rise above $10/bushel on Chinese demand, corn at 5-month peak
Chicago soybean prices rose above $10 per bushel as Chinese purchasing and a lower estimate for US production boosted prices. Corn jumped to a five-month peak since mid-March, while wheat ticked higher. The USDA reported that US corn and soybean production would be lower than expected due to unfavourable weather in August. Export sales of soybeans to China totalled 1.608 million tonnes at the end of the first week of September, while weekly corn export sales to China were 1.137 million tonnes. Ukraine reported 9.2 million tonnes of grain in the July 2020-June 2021 season compared to 10.3 million tonnes at the same period during the previous season.
Topic: Soybeans at 27-month high on Chinese demand while corn dips
While soybeans were at their highest in September since June 2018 on the back of increased demand from China, corn dipped from a 6-month peak, the fall curbed by Chinese crop losses. The USDA confirmed private sales of 327,000 tonnes of US soybeans to China. China is expected to import larger volumes of corn due to strong demand and domestic crop losses, the latter expected to fall by up 10 million tonnes from the latest government estimates after heavy wind and rains damaged crops in major production areas in the northeastern cornbelt. On the other hand, Brazilian farmers in the north and northeast are expected to expand their soy fields by more than 6% in the 2020-2021 crop season.
Topic: Ministers seek interim subsidy scheme for struggling English farmers
To prevent the collapse of thousands of English farm businesses, the Department of Environment, Food, and Rural Affairs is developing an interim subsidy scheme for English farmers in an attempt to bridge the gap between EU payments and a new environmentally based system. This interim system of environmentally based payments, likely to be called the Sustainable Farming Incentive, is projected to begin its pilot stage in 2021 and rolled out nationally in late 2024. In response to farmers’ concerns that existing plans for future subsidies do not account for food production, the subsidy will likely include payments to help boost productivity. According to George Eustice, environment secretary, this initiative comes from the determination to end EU-style payments, which are “notorious for handing large sums to wealthy landowners.” Research from Defra shows that subsidies make up 61 percent of profit for the average English farm. Almost one-fifth of farms would not meet production costs without subsidy payments. Based on 85,000 English farms that claim EU-style payments, this equals 16,150 farms unable to make ends meet. New-style subsidies will eventually be based on “public money for public goods,” where environmental work like restoring peatland or creating bird habitats will be rewarded. However, these requirements also mean that the distribution of payments among farmers may differ significantly from before.
Topic: Chicago soybeans 28-month high eases while Chinese demand curbs losses
Chicago soybean futures broke a three-session streak of gains; however, Chinese demand limited losses. The USDA reported sales of 210,000 tonnes of US corn to China and 100,000 tonnes of soymeal to unknown destinations. Wheat is being supported by concerns over global supplies, with dryness in Argentina, Europe, and the Black Sea region being a large cause for concern. As a result, large speculators switched to a net long position in CBOT corn futures in the week of 15 September. Non-commercial traders, including hedge funds, increased their net short position in CBOT wheat and raised their net long position in soybeans, the Commodity Futures Trading Commissions’ weekly commitment of traders reported.
Topic: Global agri-food trade doubles in last two decades
According to a new report issued on 24 September by the Food and Agriculture Organization of the United Nations (FAO), global agri-food trade has more than doubled since 1995, amounting to $1.5 trillion in 2018. The FAO also reported that emerging and developing countries’ exports are on the rise and account for over one-third of the world’s total. Driving the rise of global value chains is income growth, lower trade barriers, and technological advancements. FAO Director-General Qu Dongyu stated: “‘Global value chains can make it easier for developing countries to integrate into global markets. As they link our food markets closely, they also provide a mechanism to diffuse best practices to promote sustainable development.’” The report found that on average and in the short term, a 10 percent increase in smallholder farmers’ participation in agriculture’s global value chain could result in an increase of roughly 1.2 percent in labour productivity. Qu Dongyu argued that efforts to include smallholder farmers in modern food value chains should be redoubled, which would require broad policies to create an environment that bolsters smallholders’ participation in global value chains, such as improved rural infrastructure and services, education, and productive technology. The report also emphasised the role agri-food markets can play in encouraging sustainable development, arguing for the promotion and application of voluntary sustainability certification schemes and standards in agriculture. When examining trends and drivers in the evolution of trades and markets, the report noted that while global agri-food trade has doubled since 1995 in real value, its growth rate has slowed since the 2008 financial crisis, which is expected to be impacted further by COVID-19. The report speculated that the pandemic could disrupt the potential of agri-food global value chains in global trade and growth.
Topic: FBN launches free membership and its answer to ag credit markets
Farmers Business Network (FBN) has launched free membership to US, Canadian, and Australian farmers, with existing members receiving a prorated credit for the value of their paid membership and which can be used in the online FBN Direct Store or used towards a Market Advisory Pro Subscription. FBN formerly charged a $700 annual membership fee. FBN currently has nearly 14,000 current members and covers 45 million acres of farmland globally. Its platform offers several services, including a seed finder with access to information on over 1,400 varieties, a “price-transparent” marketplace for chemical and seed inputs, a networking function to help farmers connect to one another, and free access to satellite imagery. While the goal of announcing free membership is for FBN to have a “bigger tent” and to emphasise its promise that its services can increase farm profitability, this announcement means losing as much as $9.8 million in income. FBN has also debuted Gradable, a grain buying and origination platform aimed at providing farmers using sustainability oriented practices with receiving premiums. Gradable is initially focused on carbon abatement, joining a number of other parties (e.g. Cargill, Indigo, Nori) who are advancing ag carbon credit markets as a solution to climate change. In response to debates around whether it is possible to sufficiently measure carbon storage and the many carbon standards being used, FBN co-founder and CEO Amol Deshpande states: “There are a lot of companies flailing around at this and a lot of charlatan behavior in that market. Our goal is work with super credible parties for a data-driven approach rather than the ethereal carbon credit.” Desphande also noted to AgFunder News that FBN will be concentrating on local and rural communities in an upcoming initiative called “FBN 2.0.”
Topic: FBN introduces new integrated platform Gradable
FBN introduced Gradable, a “reimagined grain supply chain that creates value for environmental stewardship.” Gradable operates as part of FBN’s focus on carbon abatement strategies, stating that Gradable pilots have demonstrated 20 percent emissions against national averages. It also aims to align the supply chain to connect its users with consumer-packaged goods companies, biofuel producers, animal feed providers, and other major grain buyers. FBN claims that “the end result of this shared effort is to both accelerate the adoption of regenerative practices and give you the opportunity to maximize your profit potential.”
Topic: BlackRock leads FBN’s $250 million Series F in response to ag marketplace focusing on sustainability
FBN has raised a $250 million Series F round led by funds and accounts managed by asset management giant BlackRock. Participation from other new investors included Baron Capital Group, Balyasny Asset Management, Mandi Ventures, Lupa Systems, and Au Bon Pain and Panera Founder Ron Shaich; existing funders also participated in this round, including DBL Partners, Temasek, GV, funds advised by T. Rose Price, Expanding Capital, and Kleiner Perkins. FBN co-founder and CEO Amol Deshpande has noted that sustainability and social impact experience is a top priority of the syndicate of investors. The new capital will go towards the expansion of its Farmers First FBN Direct range of inputs, featuring biologicals, crop protection, and seed. FBN also plans to invest in its Crop Marketing and Financial Services platform, “which aims to provide the most services for farmers to manage risk and obtain financial services like loans and insurance” and to enter new markets. Among these goals, Desphande notes that the biggest challenge for FBN is the “old guard of agribusiness.” FBN filed a civil complaint that big players like Cargill, Bayer, Corteva, Univar, and BASF have used multiple tactics to keep FBN out of the market, resulting in Canadian antitrust officials launching a probe into these big players in February 2020.