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Articles of Interest- Wednesday, April 17, 2019

Articles of Interest- Wednesday, April 17, 2019

Russian Wheat Sellers Struggle Amid High Origination, Terminal Costs

S&P GLobal – 04/16/2019

High origination costs and expensive terminal fees are pushing Russian wheat sellers looking to originate and sell now to offer at or below cost, market sources said. To originate wheat to port for prompt dates for 12.5% protein wheat is at least $210/mt, while terminal costs can be secured at $16-$17/mt for the most vertically integrated traders, rising up to $20-$22/mt for those with lower supply chain integration. For many sellers, selling at cost on a FOB basis for April or May-loading is roughly $235/mt; offers have been consistently below $230/mt for months now. S&P Global Platts last assessed FOB Handysize Russian 12.5% protein wheat above $230/mt on February 28 at $230.50/mt. Wheat was last assessed at around $235/mt on February 25 at $235.50/mt as wheat plummeted from its 4.5 year high at $247.50/mt set on February 6 on easing supply concerns across various origins. But with the new crop approaching and forecasts suggesting that production levels could be higher than this marketing year’s number of 71.69 million mt, according to the USDA, sellers with exportable surplus available are beginning to discount.

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Uruguay Wheat Output Forecast at Five-Year High

World-Grain – 04/16/2019

Good quality, high yields and strong prices during the 2018-19 marketing year are expected to lead farmers in Uruguay to ramp up their wheat production again in 2019-20, according to an April 9 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA). The USDA forecast wheat production in Uruguay in 2019-20 at 825,000 tonnes, up 11% from 2018-19 and the highest projected output since 2015-16. According to the USDA, area harvested to wheat is projected to increase to 250,000 hectares in the coming year, up from 200,000 in 2018-19 and compared with 197,000 in 2017-18.

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USDA Update on Farm Bill Implementation Progress

USDA – 04/12/2019

U.S. Secretary of Agriculture Sonny Perdue today announced the implementation status of the 2018 Farm Bill. President Trump signed this Farm Bill into law on December 20th, 2018 and the U.S. Department of Agriculture (USDA) promptly began implementation of key programs. USDA held several listening sessions with stakeholders and the public, specific to each agency’s respective mission areas. “At USDA we are implementing the 2018 Farm Bill as quickly as possible. We know the programs that are renewed and updated in this farm bill are critical to farmers, ranchers, and producers as they plan for the future,” said Secretary Sonny Perdue. “Our mission areas have all held several public listening sessions, both formally and informally, to receive stakeholder input. Our goal is to have programs that function best for the people that we serve.

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‘We Can’t Fall Behind on Trade:’ Trump Must Strike a Deal with Japan Now, says US Chamber CEO

CNBC – 04/16/2019

When you stand still on trade, you fall behind. Nowhere is this more apparent for the United States than in Japan, the world’s third largest economy and long a top market for U.S. exports. It’s also why the U.S. just launched negotiations for a trade agreement with Japan.
Like many other countries in the Indo-Pacific region, Japan has been striking new trade deals and tearing down barriers to global commerce. It’s imperative that we act quickly so that our workers, farmers, and companies are not stuck on the outside, looking in. The Trans-Pacific Partnership (TPP) is a case in point. The U.S. led the way in negotiating this 12-country trade pact, but when Washington withdrew in 2017, Japan and the other participating countries chose to implement it without us. The TPP finally entered into force last December. Thanks to the agreement’s tariff cuts, Japan imported 60% more beef from Canada, Australia, and other TPP countries in January than it did the previous year. And since a new EU-Japan trade pact entered into force in February, European farmers and manufacturers are also benefiting from tariff cuts in Japan. However, the rising tide of trade between Japan and its new trade agreement partners has meant lost sales for Americans. U.S. pork exports to Japan, the top export destination, have dropped by 35% so far this year. U.S. wheat and barley sales to Japan are also suffering. The trend extends to manufactured goods as well.

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Planting Delays Not Factored into the Market Yet

Iowa Farmer Today – 04/17/2019

With a mid-April snow storm hitting parts of the Midwest and wet weather forecast behind it, the odds for a delayed planting season continue to increase. The markets are waiting to see exactly how long the wait may be. “Right now the trade in Chicago isn’t too worried about planting,” Todd Jafvert, an ag consultant for Roach Ag Marketing in Perry, Iowa, said. “They know we can put a lot of corn in the ground very quickly. However, it’s in the back of their minds.” He said for the market to see an accelerated move, the conditions of wet soil and cold weather may need to extend into May. “It’s a creeper market,” Jafvert said. “It creeps a little bit each week through the month of April. We would accelerate the move by the middle of May if we are considerably behind our five-year average and the forecast continues to remain cool and wet.”…Egypt recently tendered for wheat, but opted to select shipments from the Black Sea region, despite it being reported that the U.S. had the lowest offer out, he said. The heightened ocean shipping costs led to the U.S. missing out on the sale. “The wheat market is tough,” Jafvert said. “The world is swimming in wheat, and the U.S. has become the residual supplier for other places. Most of the export wheat is coming out of the Black Sea. We may start worrying about spring wheat as far as getting it planted, but the market hasn’t been concerned about that yet.”

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Source: U.S. Wheat Associates