Global feed market: Black Sea corn and fertilizer supply disruptions, feed prices surge

 

May 2022 corn futures on the Chicago Board of Trade (CBOT) settled at around 754.
25 cents per bush on Friday, up 98.
5 cents, or 15%, from a week ago
.
US Gulf No.
2 yellow corn was quoted at 860.
25 cents a bushel, up 110.
25 cents, or 14.
7%, from a week ago
.
June 2022 corn futures on the EURONEXT exchange settled at around €343/tonne, up €74.
75 or 27.
9% from a week ago
.
The FOB spot price of Argentine corn in Shanghe was $343/ton, up $44 or 14.
7% from a week ago
.
The May 2022 corn futures on the Dalian Commodity Exchange closed at about 2,899 yuan/ton, up 59 yuan or 2.
1% from a week ago
.

 

　　International crude oil futures surged more than 25% this week, hitting a 10-year high, as the ongoing conflict between Russia and Ukraine and the US-led West imposed more sanctions on Russia, severely disrupting Russia's energy exports
.
The West Texas Intermediate (WTI) April contract on the New York Mercantile Exchange (NYMEX) closed at $115.
68 a barrel, up 25.
54% from a week ago
.
Brent crude futures for May, the global benchmark, settled at $118.
11 a barrel, up 26.
3% from a week earlier
.
The U.
S.
dollar index closed at 98.
51 on Friday, up 2 percent from a week earlier
.

 

　　Russia-Ukraine conflict intensifies recent global corn supply tensions

 

　　The Russian-Ukrainian conflict crisis has led to the risk of long-term disruption to Black Sea grain exports, and all Black Sea ports in Ukraine have now ceased operations
.
U.
S.
-led Western countries have imposed sanctions on Russia, including cutting off several Russian banks and the SWIFT global financial settlement system, making traders reluctant to buy Russian agricultural products and instead look elsewhere for alternative supplies
.
For example EU corn
.
But the EU itself is also a big buyer of Ukrainian corn, so the Ukrainian outage will also affect EU supplies, meaning buyers may soon have to look elsewhere for supplies
.
News that South Korean feed producers have declared force majeure preventing them from delivering feed to customers underscores the plight of Ukraine's lack of corn exports
.
The U.
S.
may be the only exporter with ample supplies ahead of the new South American corn harvest
.

 

　　Black Sea spring planting prospects raise concerns about medium- and long-term supply prospects

 

　　The ongoing conflict between Russia and Ukraine may affect corn plantings this spring
.
Spring planting in Ukraine will start in April, but the ongoing war means that Ukraine's corn production in 2022/23 will face many challenges and uncertainties
.
S&P Global Platts expects Ukrainian corn production in 2022/23 to be 30 million tons, down 30% year-on-year
.
The biggest problem in corn cultivation is the supply of production materials and rationing
.
Logistics bottlenecks, lack of seeds, fertilizers and fuel, lack of spare parts for farm machinery, and job shortages can all lead to lower-than-expected plantings or delayed plantings
.

 

　　South American corn production lowered

 

　　Even as the outlook for corn exports from the Black Sea region is worrisome, weather in South America's agricultural regions remains poor, threatening the outlook for corn production
.
AgResource Brasil this week lowered Brazil's 2021/22 second-crop corn output to 84.
28 million tons, down from 85.
13 million tons expected a month ago, as the La Niña phenomenon in the central and southern regions will continue, which may lead to the second crop.
Damaged corn
.
Brazil's total corn production in 2021/22 will reach 105.
98 million tons, down from an earlier forecast of 106.
82 million tons
.

 

　　Consultant StoneX forecasts Brazil's first-season corn production in 2021/22 at 25 million tons, down 286,000 tons or 1.
1 percent from its previous forecast, reflecting lower production in the state of Rio Grande do Sul
.
This is the fourth consecutive month that the company has lowered its first-quarter corn production forecast
.
StoneX raised its 2021/22 second-season corn production forecast by 263,000 tons, citing better prospects for production in northern and northeastern Brazil
.
StoneX expects Brazil's total corn production in 2021/22 to be 116.
1 million tons, basically unchanged from its February forecast
.
StoneX expects Brazil to export 40 million tons of corn in 2021/22, much higher than the previous year's 20.
9 million tons; domestic corn consumption is 75.
5 million tons, up from 71.
5 million tons in 2020/21
.

 

　　The Rosario Grain Exchange expects Argentina's corn production in 2021/22 to be less than 48 million tonnes as dry weather damages the corn crop
.
The exchange lowered its corn production forecast for the core region to 12.
8 million tons, down 1.
5 million tons from an earlier forecast
.
Exchange, harvest results confirmed the extent of the impact of bad weather, production losses of at least 33%, corn yields may fall to the lowest level in 10 years
.

 

　　Brazil's corn exports in March 2022 estimated at just 30,000 tons

 

　　Brazil's corn exports in March 2022 are expected to be just 30,000 tonnes, down from 523,340 tonnes in February and down from 2.
29 million tonnes in January, the Brazilian Association of Grain Exporters (ANEC) said
.
Brazil's corn exports in March last year were 115,120 tons
.
Brazil's National Commodities Supply Corporation (CONAB) said that as of Feb.
26, the first-season corn harvest was 23.
3 percent complete, up from 20.
2 percent a week earlier and 0.
3 percent above the 23 percent a year earlier
.

 

　　U.
S.
considers cutting mandatory use of biofuels

 

　　There have been reports that the U.
S.
government is considering waiving the biofuel blending rule, though the White House says it is not seriously considering it yet
.
The U.
S.
Environmental Protection Agency (EPA) annually determines the amount of mandatory biofuel blending in road transportation fuels
.
The U.
S.
government will also issue waivers, which will allow biofuel blenders to reduce the amount of biofuel blended
.
If the U.
S.
government considers waiving blending requirements, it will reduce the demand for soybean oil and corn in the biofuel industry
.
The U.
S.
will use 135.
3 million tons of corn and 5 million tons of soybean oil as biofuels this year, equivalent to 12% and 8% of global demand, respectively
.

 

　　China continues to be the number one buyer of European barley

 

　　According to data from the European Commission, as of February 27, 2022, China has become the number one buyer of barley in the EU, with an import volume of 2.
09 million tons of barley, accounting for 40.
4% of the total.
38.
5%
.

 

　　Fertilizer supply is tight, prices will be high

 

　　Russia is one of the world's largest exporters of all three types of fertilizers (NPK), and Belarus is also a major fertilizer producer
.
With the Russian-Ukrainian conflict leading to disruptions to Russia's fertilizer supply, the global spring planting outlook is facing challenges
.

 

　　Russia's Ministry of Trade and Industry on Friday advised fertilizer producers to suspend exports, while Brazil is working to cut domestic fertilizer use
.

 

　　Fertilizer inventories will be at an all-time low when summer arrives in the northern hemisphere, Tony Weir, chief executive of major fertilizer maker CF Industries Holdings, said Wednesday
.
As the spring planting season in the northern hemisphere is approaching, farmers are eager to sow more crops in order to profit from higher prices as prices for many crops hit record highs in more than a decade
.
But this year, fertilizers are getting harder to buy and more expensive
.

 

　　While U.
S.
and Western sanctions on Russia have yet to reach fertilizer companies, more restrictions could come
.
A disruption to the global fertilizer trade would mean higher costs for farmers around the world at a time when global food prices are at their highest levels in a decade, heralding more food inflation
.

 

　　Fertilizer prices had soared across the board even before the Russian-Ukrainian conflict, in part because of a gas crunch in Europe that forced some producers to reduce or close operations
.
The hurricane that hit the US Gulf region in late August also reduced fertilizer production there
.
In addition, rising freight rates, rising tariffs, extreme weather, and Western sanctions in Belarus have all contributed to a spike in fertilizer prices
.
Belarus accounts for one-fifth of global potash supply
.

 

　　Ken Seitz, the interim chief executive of Nutrien, the world's largest crop nutrient company, said higher prices could cause farmers to start using less fertilizer
.
Chuck Magro, chief executive of Corteva, said supplies of other chemicals such as seeds and pesticides were extremely tight
.

 

　　U.
S.
corn acreage may decline, markets focus on next Wednesday's U.
S.
supply and demand report

 

　　U.
S.
spring insured corn prices were near $5.
90 a bushel, the second-highest price of 2011
.
The current soybean-to-corn price ratio is 2.
43, which means that the 2022 U.
S.
corn acreage may decrease by 1 to 2 percentage points year-on-year
.

 

　　Traders will focus on the March 9 USDA supply and demand report
.
Ukrainian corn exports have been disrupted amid an expected drop in South American corn production, meaning the USDA should raise U.
S.
corn demand and lower ending stocks
.