Infographic: La Nina adds uncertainty to already troubled agriculture market

Flooding in key Punjab and Sindh provinces of Pakistan is likely to hurt the country's rice, cotton, and wheat output in marketing year 2022-23 (July-June), threatening global stockpiles of commodities as supply chains grapple with the disruption caused by the Russia-Ukraine war. Pakistan typically accounts for nearly 10% of global rice exports, according to the US Department of Agriculture. A decline in Pakistan's MY 2022-23 rice output is likely to lead to a severe global supply shortage after India banned broken rice exports Sept. 2. India and Pakistan are major suppliers of rice globally. Pakistan is a net importer of wheat and cotton and may have to look for higher inflows of those commodities in an already tight global market. Pakistan received 192.7 mm average rainfall in August, 243% above average, Pakistan Meteorological Department said in its monthly climate report. Sindh, a leading producer of rice and cotton, received 726% above average showers of 442.8 mm in August, while Punjab and Balochistan received 52% and 590% above average rains. "The rice crop is hit badly in parts of Punjab and Sindh. Even if the water level goes down in the fields, it will take a few weeks to assess the crop condition," a Karachi-based trader said. The USDA in its latest World Agricultural Supply and Demand Estimate report Sept. 12 slashed Pakistan's MY 2022-23 milled rice production estimate by 1.1 million mt year on year to 8.40 million mt. The latest forecast is down 10% on the year. Pakistan usually exports 4 million to 5 million mt rice annually, with the majority of it non-basmati variety. The USDA estimates the country's MY 2022-23 rice exports at 4.6 million mt out of global volumes of 53 million mt. "Rice exports are likely to be lower this year as a significant portion of crop has been washed away due to the flood," a Lahore-based rice exporter said. Pakistan usually ships rice to African and Middle East countries, such as Kenya, Madagascar, Senegal, the UAE, and Saudi Arabia. Cotton output hit Global cotton supplies may come under strain as floods have washed away cotton plantations across Sindh, leading to a potential loss of 2 million bales of crop. About 45% of the crop is damaged in Sindh, traders based in Sindh said. Pakistan's may have to import an additional 200,000 bales of cotton in MY 2022-23, according to the USDA, leading to total imports of 4.8 million bales in the year. The USDA cut Pakistan's MY 2022-23 cotton output by nearly 1 million bales from MY 2021-22 to 5 million bales. Apart from the planted crop loss, floods have destroyed nearly 1 million bales of crop, a trader said. Pakistan's Central Cotton Research Institute has advised farmers to not pick wet cotton and separate the produce of wet pink bollworm cotton. Wheat planting impact Floods have affected soil conditions in Pakistan making it inappropriate for wheat plantation that starts in October. A lack of acreage under wheat might lead to a potential drop in output of about 1 million mt, the USDA said, projecting Pakistan's MY 2022-23 wheat output at 26.4 million mt. The USDA increased its estimates for Pakistan's MY 2022-23 wheat imports to 2.5 million mt, from 2.2 million mt in the previous year. "For wheat ... the impact may be significant for the upcoming plantation season," an agricultural scientist with Pakistan Agricultural Research Council said. "The soil is impacted badly in Punjab and Sindh, which are key producers of rice in Pakistan."

The Indian government has banned exports of broken rice with effect from Sept. 9, according to a notification from Directorate General of Foreign Trade, amid higher food inflation in recent months and lower rice cultivation area on the year due to deficient showers. The recent move comes right after India imposed a 20% export duty on several varieties of rice on Sept. 8. "Export Policy of broken rice is amended from 'free' to 'prohibited,'" the notification read. However, the government has given some exemptions till Sept. 15. According to the notification, exports could continue if cargoes had started to load before the notification or if the rice consignment had been handed over to customs. The government will also approve exports under contracts where vessels have berthed in Indian ports, the notification said. However, some in trade circles are concerned about the impact on orders placed for future shipments. As it appears now, ships that have arrived at Indian ports and received loading might be able to ship, but concerns remain over future trade, a trader based in Singapore said. One supplier told S&P Global Commodity Insights that "every exporter is looking to cover their exposure today" and that there were "no quotes as of today." Traders confirmed that they were struggling to receive quotations amid the uncertainty and upheaval. According to data from the agriculture ministry, Indian farmers have planted kharif paddy across 38.4 million hectares so far in the crop year 2022-23 (July-June), down 6% on the year. India accounts for 40% of the global rice trade, with sales of 5% and 25% broken white rice accounting for a significant portion of exports. In the marketing year 2021-22 (April-March), India had shipped 3.89 million mt of broken rice. During April-June 2022, it exported 1.8 million mt. Platts Indian 100% broken white rice assessment hovered at $320/mt FOB Sept. 8. Platts assessed equivalent 5% broken white rice products in Thailand and Vietnam -- the world's second and third-largest rice exporters -- at premiums of $46/mt and $49/mt, respectively. The policy change has become significant, as India has been facing weather vagaries over the past few months. India banned exports of wheat in May and wheat products like refined flour and whole wheat flour in August amid rising domestic prices as output declined due to severe heat waves.

Indonesia's plan to increase sorghum and corn cultivation over the next two years was expected to increase feed grain availability for domestic livestock farming, but the impact on prices would hinge on the extent on the increase and the yield, market sources said Aug. 8. Coordinating Minister for Economics Affairs Airlangga Hartarto told a media briefing Aug. 4 that the government plans to prepare an additional 115,000 hectares of land in 2023 and another 154,000 hectares in 2024 for sorghum production. Indonesia currently produces about 15,000 mt/year of sorghum across 4,300 hectares, he said. S&P Global Commodity Insights calculates that the additional cultivation could boost production to more than 900,000 mt/year based on the current yield. The sorghum could be used for animal feed or bioethanol production. Airlangga days earlier had announced the government would increase corn production in Papua, West Papua and North Maluku and start a program to distribute higher quality seeds to increase corn production yields to up to 13 mt/hectare. "The corn yield in Indonesia is about 5 to 6 [mt/hectare], it's very low compared to yield in the US," an Indonesia-based source said. The US expects to produce 177 bushels of corn per acre this season, or about 11.9 mt/hectare, the US Department of Agriculture said in its World Agricultural Supply and Demand Estimates report for July. Indonesia's current corn production was estimated at 13 million mt/year, almost 90% of it in Java, Sumatra and Sulawesi, by the USDA. Indonesia does not allow feed grade corn imports or allow feed mills to directly import feed wheat. "It is still too early to determine the timeline and success [for the corn program]. I don't think many farmers or feed millers know about it yet," a poultry producer in Indonesia said. A source who procures raw material for feed millers in Indonesia said: "Historically, Indonesian corn prices were higher than the global prices. Since the start of the Ukraine invasion, domestic prices have started increasing to match the level of higher international prices." Domestic corn prices were currently around Rupiah 4,800-5,000/kg, or $320-$333/mt delivered to feed mills in Jakarta, according to market sources. South American corn for October-December shipments to Vietnam were heard at $330-$336/mt CFR Aug. 8. Ukraine war impact Indonesia's plans come after Russia's invasion of Ukraine halted grains exports from the Black Sea region for more than five months until the corn-carrying bulk vessel Razoni left Odesa Aug. 1. The suspension left major feed-producing countries exposed to high feed grain prices amid tight global supply, prompting policy changes in several countries to increase supply and reduce the price impact in downstream sectors. China, the world's biggest corn importer, has entered discussions with Brazil to bring forward its timeline for Brazilian corn imports as a move toward supply diversification, S&P Global Commodity Insights reported earlier. Brazil is expecting a bumper crop of more than 115 million mt of corn for its current marketing year 2021-22, up from 87 million mt in MY 2020-21. The Philippines has reduced corn import tariffs from 35% to 5% for imports with minimum access volume quotas and to 15% from 50% for imports outside the quota, S&P Global reported earlier.

Biofuel producers who have at times felt overlooked in the wake of the Biden administration's push for vehicle electrification cheered incentives for low-carbon fuels included in a surprise climate investment deal reached by the US Congress. The so-called Inflation Reduction Act of 2022, if passed, would make available $369 billion in energy security and climate change spending over the next decade. The legislation includes funding and key tax credits to boost biofuel production, as part of a deal unveiled late July 27 between Senator Joe Manchin, Democrat-West Virginia, and Senate Majority Leader Chuck Schumer of New York for a party-line budget reconciliation bill. "At long last, we are pleased to see the new Senate bill on climate change, which recognizes the important role renewable fuels like ethanol can play in a lower-carbon future for this nation," Renewable Fuels Association President and CEO Geoff Cooper said in a statement. The bill would make $500 million in grant funding available on a competitive basis for projects aimed at increasing the sale and use of biofuels through infrastructure improvements. Projects that aid with blending, storing, supplying or distributing fuels made from agricultural feedstocks would be eligible, with an eye on getting higher biofuel blends to market. The grants would help cover the costs to install or upgrade fuel dispensers, storage tanks and related equipment needed to dispense higher blends of ethanol and biodiesel. They could also be put toward the construction or retrofitting of distribution systems for ethanol and biodiesel, according to the bill's text. Tax credits The legislation also extends the $1/gal tax credit for biodiesel, renewable diesel and alternative fuels through 2024 and creates a new tax incentive through 2024 for sustainable aviation fuel. S&P Global Commodity Insights viewed the SAF tax credit as potentially helpful to closing SAF's price gap relative to renewable diesel. S&P Global assessed US renewable diesel without credits at $3.31/gal July 28, compared with SAF without credits at $4.06/gal. The average price gap between the fuels in July was around 72 cents/gal, up from a June average of about 61 cents/gal. The Biden administration in September 2021 announced an initiative to cut US aviation emissions by 20% by spurring production of 3 billion gal/year of SAF by 2030. The administration further set a target of meeting all US aviation fuel demand with SAF by 2050, requiring an estimated 35 billion gal/year of the low-carbon fuel. The SAF credit in the Senate deal would be at $1.25/gal plus an additional 1 cent/gal for every percentage point by which the life cycle greenhouse gas emissions reduction of the fuel compared with petroleum-based jet fuel exceeds 50%, granting producers a maximum incentive of $1.75/gal. Lifecycle GHG methodology Leading US bioenergy producers took issue with an earlier version of the SAF tax credit proposed in the draft Build Back Better Act, asserting that it relied on an outdated model for assessing lifecycle carbon emissions to determine program eligibility. Specifically, they argued that that the bulk of the model developed by the International Civil Aviation Organization referenced in the legislation was seven to 15 years old and had not kept pace with innovation in biofuel production. The new tax credit proposal for SAF would rely on the most recent carbon offsetting and reduction scheme for international aviation adopted by the ICAO or any similar methodology that satisfies certain Clean Air Act criteria. The Renewable Fuels Association deemed the new lifecycle GHG methodology an improvement but still imperfect. "Although the GREET model is still not explicitly mentioned for SAF under the provision, the language reverts to the House language and allows for both the ICAO methodology or a 'similar' methodology that meets the requirements of Clean Air Act Section 211," a spokesman said in an email. After 2024, the Senate deal lays out a new clean fuel production credit for 2025 through 2027 that would apply to all low-carbon fuels, starting at 20 cents/gal for on-road transportation and 35 cents/gal for aviation. On-road transportation fuels could receive up to a $1/gal credit while SAF would again be eligible for a maximum credit of $1.75/gal if certain labor requirements are met. Those amounts would be adjusted for inflation each year. RFS Under the bill, the Environmental Protection Agency would receive additional funds to carry out certain tasks tied to its annual obligation to determine the amount of renewable fuel that must be mixed with gasoline and diesel under the Renewable Fuel Standard program. The bill sets $5 million aside for the EPA to develop tests and protocols to gauge the environmental and public health effects of fuels and fuel additives , perform analyses to regularly update regulations and guidance for determining a fuel's lifecycle GHG emissions and to evaluate the impacts of transportation fuels on low-income and disadvantaged communities. Another $10 million would be allocated to the EPA for new grants to industry players and related activities to support investments in advanced biofuels. "For the US to meet its climate goals, we must quickly expand the volume of low-carbon biofuels available across the entire transportation sector – on the ground, in the air, and at sea," Growth Energy CEO Emily Skor said. "These provisions can jumpstart that climate progress, while delivering more savings at the pump, greater long-term energy security, and a welcome economic boon to rural communities."

Ukraine exported about 325,000 mt of wheat in the marketing year 2022-23 (July-June) as of July 29, down 53.2% on the year, the Ministry of Agriculture said in an update July 31. The country's wheat exports are anticipated to decline sharply in the current marketing year as the continued war with Russia has destroyed port logistics, traders said. Russia invaded Ukraine on Feb. 24 and the two countries signed a deal on July 22 to resume Ukrainian wheat shipments from Chernomorsk, Odessa, and Yuzhny. However, trade participants said they were unsure that exports from Ukraine would rise as Russia attacked the Odessa port within a day of signing of the deal and attacked Mykoliav city on July 31. Ukraine had exported slightly more than 18 million mt of wheat in MY 2021-22, according to its agriculture ministry. The Ukrainian Grain Association has projected the country's wheat exports at 10 million mt in MY 2022-23. The US Department of Agriculture has also forecast Ukraine's wheat exports at 10.8 million mt in MY 2022-23. Platts Analytics expects Ukraine to sell 10 million-12 million mt wheat in MY 2022-23. Platts assessed FOB prices of Ukraine's 11.5% protein wheat at $355/mt July 29, unchanged on the day, according to data from S&P Global Commodity Insights. However, export prices have declined nearly 7% on the month as buyers moved to other sources to procure wheat, traders said. Output likely to decline Ukraine's wheat output is also in focus as the war has adversely impacted farmland and destroyed farm equipment. As of July 29, Ukrainian farmers harvested 8 million mt wheat, down 52.7% on the year, according to ministry data. The data showed Ukraine had harvested around 16.9 million mt wheat till the same period last year. The Ukrainian Grain Association has its Ukraine wheat output estimate for MY 2022-23 at 20.8 million mt, 37% below the previous year's level. Ukraine harvested 33 million mt of wheat in MY 2021-22, according to data from Ukraine's agriculture ministry. Ending stocks for the crop will likely be at 10 million mt for MY 2022-23, according to the Ukrainian Grain Association. The USDA, in its July World Agricultural Supply and Demand Estimates report released July 12, pegged Ukraine's wheat harvest at 19.5 million mt in MY 2022-23. Platts Analytics sees Ukraine's wheat production in MY 2022-23 at 20 million-22 million mt.

Commodity markets are on red alert. Economic warning signs are coming in thick and fast with skyrocketing inflation in Europe and the US, rising interest rates and slowing economic growth. Industrial metals are leading the decline lower, with energy and agriculture prices also off their March peaks amid a weakening demand outlook. Russia’s supply side risks and China’s recovery uncertainty will also shape the direction of commodity markets as 2023 looks set for a bumpy year. Click here to see the full-size infographic

The US Environmental Protection Agency would be held to a June 14, 2023, deadline to issue final biofuel blending requirements for 2023, under a proposed consent decree awaiting review by a federal district court. The proposal submitted July 22 to the US District Court for the District of Columbia would settle litigation brought by ethanol group Growth Energy over the agency allegedly "continuing its multiyear trend of disregarding statutory deadlines" and delaying issuance of annual mandates for the Renewable Fuel Standard program. In the settlement agreement, the EPA does not admit to any undecided issues of fact or law but agrees to sign a notice of proposed rulemaking establishing 2023 RFS requirements by Nov. 16 and to sign a final rule on the matter by June 14, 2023. The agreement, which is expected to be approved by the court in the coming weeks, "is an important milestone in setting the pace for growth as we usher in a new era of the RFS," Growth Energy CEO Emily Skor said in a statement July 23. The group filed a complaint with the district court in April as the Clean Air Act calls for the EPA to craft rules establishing renewable volume obligations for the 2023 and later RFS compliance years by "no later than 14 months before" the year for which the RVOs apply ( Growth Energy v. Regan, et al , 1:22–cv–01191). The complaint followed Growth Energy's previous success in getting the EPA to lockdown June 3 as the date it would issue a rule setting the amount of renewable fuel that had to be mixed with gasoline and diesel for the 2020 through 2022 compliance years . 'Irreparable' injuries Like its prior complaint, Growth Energy argued in the April court filing that because the RVOs set by the EPA "directly dictate the level of national demand for renewable fuels," biofuel producers have and continue to suffer economic injury from EPA's delays. Specifically, it may be too late for biofuel producers to adjust their operations to assure output meets RFS compliance requirements by the time the EPA issues the 2023 RVO, the group asserted. "This uncertainty and inability to plan future production directly affects plaintiff's members' bottom lines." And the EPA's practice of retroactively setting RVOs to match actual renewable fuel consumption for the year causes further monetary harm as it lowers biofuel demand "in comparison to what would have been demanded" through timely RFS standards intended to spur growth in renewable fuel use, the group said. "These injuries are irreparable," Growth Energy told the court. "Once an opportunity to plan supply or to sell renewable fuel has passed, it cannot be regained; the transportation fuel will have already been sold and used by the consumer without plaintiff's renewable fuel. And plaintiff cannot obtain compensatory damages from EPA for its unlawful actions." Skor said the new consent decree "ensures the certainty of the 2023 RFS requirements and further underscores Growth Energy's steadfast commitment to keeping the RFS on sound footing now and into the future." Deadline extension The EPA posted notice of the proposed consent decree in the Federal Register May 23 and took comments through June 22 on its plan for settling charges that it had failed to perform its nondiscretionary duties. The agency, through a court filing, said it received four comments, but it along with the Justice Department determined that none of those comments warranted withdrawing the decree or withholding their consent. However, after the comment period, the agency and Growth Energy agreed to extend the initially proposed deadlines for EPA action. The EPA had previously agreed to having a proposed rule ready by Sept. 16 and a final rule issued by April 28, 2023. A joint motion from the EPA and Growth Energy described the consent decree filed to the court with the later deadlines as "substantively fair and in the public interest because it establishes judicially enforceable deadlines by which EPA will complete the rulemaking at issue." "The deadlines reasonably take into account EPA's available resources and competing priorities," the motion added. "Both parties achieve certainty, and this certainty outweighs the possibility that either party might achieve a better result after protracted and costly litigation."

Indonesia's exports of palm oil are expected to be around 1.8 million mt in June and between 2.2 million mt-2.8 million mt in July, market sources told S&P Global Commodity Insights July 22, as demand from buyers stagnated despite lower prices. Nearly two months since Jakarta revoked a complete ban on palm oil exports, the world's largest palm oil producer and exporter continues to struggle with overflowing storage tanks and low farmgate prices as international markets price in higher stocks and low demand. "Key players still vary about how much downside is left in the prices knowing the huge stockpiles available in Indonesia. Due to this, I expect Indonesia's exports to be limited to 1.9 million mt in June and 2.2 million mt in July," Aditya Jeripotula head of research at commodities firm TransGraph Ltd said. Indonesia typically exports between 2.5 million and 2.8 million mt of palm oil in a month. In 2021 it produced 46.9 million mt and exported 34.2 million mt of palm oil products including biodiesel, according to Indonesian Palm Oil Association or Gapki data. However, stocks in the country rose to a record high of 7.23 million mt at end-May, according to the latest Gapki data, after a three-week ban on exports was announced by President Joko Widodo on April 23 to check rising food inflation and cooking oil shortages. Market sources estimate that Indonesia's palm oil stocks could be much higher than that figure, at closer to 10 million mt. June exports should be around 1.85 million mt and July exports should be around 2.8 million mt as prices have corrected a lot and margins are good. Anil Kumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil brokerage said. Storage issues abound In Indonesia, factories are running out of space to store the oil and some palm oil makers are using floating tanks or barges near ports, a Medan, Indonesia-based palm oil analyst told S&P Global. The analyst expects July shipments to reach 2.1 million mt. "The elephant in the room is the rising stockpiles in Indonesia. We are expecting a rather large inflow of cargoes from Indonesia, Lingam Supramaniam, director with vegetable oil brokerage Pelindung Bestari at Port Klang, Malaysia said, adding that about 120,000 mt of Indonesian palm oil will make its way to Malaysia in July and August. In Malaysia, the second largest palm oil producer after Indonesia, crude palm oil futures have nose-dived almost 40% from their April record highs. The third month crude palm oil contract on the Bursa Malaysia Derivatives exchange slid to MR3,720/mt ($835.58) at market close on July 22, down 17.3% since the start of the month. The huge inventory buildup in Indonesia which may touch to 8.5 million mt by end-July and 2 million mt in Malaysia are a big concern for the futures market and pull it below to MR 3000/mt, Abdul Hameed, head of Manzoor Trading Company, a vegetable oil company based in Pakistan said.

Asian sugar traders are anticipating a change in trade flows as the conclusion of an investigation by Vietnam's Ministry of Industry and Trade into the evasion of trade remedies for Thai-origin sugar draws near, sources said July 19. The ministry released a final draft of the investigation July 14, with the final report likely to be released July 21. In the wake of this announcement, several Asian sugar traders expect increased hesitation about trading activity into Vietnam until the final report is released. The Vietnamese government has imposed a 47.64% duty on imported cane sugar from Thailand since June 16, 2021, to protect domestic sugar prices and production. However, Vietnam continues to see a huge import of Thai sugar. Data from the General Department of Vietnam Customs showed that five ASEAN countries -- Cambodia, Indonesia, Laos, Malaysia, and Myanmar -- exported significantly larger volumes of sugar to Vietnam after the anti-dumping duties went into effect. Consequently, the Vietnam Sugar Association urged the Ministry of Industry and Trade to launch a duty evasion investigation on Thai sugar, which commenced in September 2021. The association alleged that Thai sugar was being brought into the country via neighboring ASEAN countries, thereby evading anti-dumping duties. The Ministry of Industry and Trade confirmed these allegations in its final draft conclusion. Additionally, it proposed applying anti-circumvention measures on refineries, sugar factories, and export shipments from the five investigated countries that fail to prove the absence of Thai-origin sugar in their raw materials. Other ASEAN countries to potentially face anti-dumping tariffs Beyond the anti-circumvention measures brought up in the draft conclusion, some market sources also pointed to the possibility of anti-dumping tariffs being extended to other ASEAN countries. "According to my Vietnam sources, it is likely that on July 21 trade restrictions will be placed on sugar from Indonesia, Malaysia, and Cambodia only. The trade flows to Myanmar and Laos are still very strong," said a Singapore-based trade analyst. A Thailand-based sugar trader said, "I believe they will try to protect their sugar industry, so more trade restrictions will not be a surprise." While domestic prices in Vietnam have dropped, they remain within a historically high range. According to market participants, the average domestic price of sugar was 18,300 VND/kg ($750-$800/mt) in June. This is about 50% higher than prices in 2020, which were reported at around 11,000 -13,000 VND/kg ($470-$550/ mt) before Vietnam removed import taxes on ASEAN countries.

Malaysia's palm producers could face lower yields and output in the second half of 2022, as a labor crunch in the plantation sector is set to prolong after Indonesia halted its migrant workers from going to Malaysia from this month, trade sources said. The Indonesian government has reportedly imposed a temporary freeze on Indonesian workers entering Malaysia from July, citing issues on employment terms and worker protection. Malaysian planters faced a shortage of migrant workers to harvest crops during COVID-19 lockdowns and as a result, fell short of their production targets and missed the year's yield estimates. Malaysia recorded a yield from palm oil-yielding fruits, otherwise known as Fresh Fruit Bunches, or FFB, of 6.90 mt/hectare from January-June, compared with 7.16 mt/hectare for the same period last year, according to data from the Malaysian Palm Oil Board. The average crude palm oil yield slid to 1.36 mt/hectare in January-June, from 1.42 mt/hectare in January-June 2021, the MPOB data showed. "Harvesting FFB still needs a lot of manual labor," a Malaysia-based trader said. "If the freeze on hiring is prolonged and the fruits are not being harvested in time, planters will face a loss in production." Production of Malaysian CPO over January-June slipped 1.12% to 8.27 million mt, compared with 8.364 million mt in January-June 2021, the MPOB data showed. Malaysia's total palm oil production is expected at 18.5 million mt this year, according to the Malaysian Palm Oil Association, but trade sources recently said the projection could be much lower if migrant labor does not arrive in time. The lower-than-expected output may provide some support to palm oil prices, which have fallen by more than 30% since the peak in March. Although, the upside is seen limited by threats of increased Indonesian exports since it lifted an export ban in May, traders said.

Russia's agriculture ministry on July 8 set the variable export tax on wheat at Rb5,558.9/mt ($87.88/mt) for the July 13-19 period, as the country's grains traders welcomed a significant reduction in their tax burden. The lower taxes are a result of Russia's switch from a dollar-denominated rate and its adoption of a different mechanism for calculating the tax, which is reset each week. The rate for July 13-19 shipments was up by Rb958.9 from the previous seven-day period, the first time a ruble-denominated rate applied. The ruble rate is equivalent to around 22% of the ministry's trailing average FOB price, whereas wheat exported from Russia June 29-July 5 was taxed at $146.10/mt, or around 36% of that average. Russia's wheat sellers typically price their exports in dollars and procure wheat on the domestic market in rubles. That trade has recently become more complicated as a result of the ruble's volatility and the reduced convertibility of the Russian currency. Russia introduced a fixed duty on wheat exports in February 2021 in response to rising global prices. The country then moved to a variable rate on June 2, 2021. It is published each Friday and enters into force on the Wednesday of the following week. The rate had been set in dollars until June 28, when the Ministry of Economic Development said it would switch to rubles and changed the mechanism it used to calculate the duty. The export duty is calculated as a percentage of the difference between a base price and the average of export prices on an FOB basis during the 60 days preceding the day of calculation. When it was calculated in dollars, the duty was equivalent to 70% of the premium of that average above $200/mt, with even higher rates applied when the average price exceeded thresholds at $375/mt and $400/mt. Under the new ruble-based mechanism, the initial threshold, or base price, for calculating the export duty was set at Rb15,000/mt.

Sugar production in the key Center-South Brazil region is expected to total 2.5 million mt in the second half of June, reflecting a decrease of 13.6% on the year, an S&P Global Commodity Insights survey of 10 analysts showed July 8. During the survey, the cane crush estimate ranged from 41.0 million mt to 46.9 million mt for H2 June. The average estimate was for a total cane crush of 42.6 million mt, a 6.3% fall on the year. Weather in the Center-South was favorable for crushing during H2 June, with less than one day expected lost to rain and about 250-255 mills active as of July 1. "Weather was favorable during H2 June allowing mills to maximize crushing," according to Platts Analytics. "The variables most anticipated by the market in H2 June are the evolution of the ATR, which has been below expectations in the previous fortnights, and the sugar mix after the most recent drop in the price of ethanol." The proportion of cane used for sugar production is expected to be 45.3%, down from 47.6% a year earlier. Brazilian producers took advantage of the recent high price of ethanol during the early stages of the harvest, but now mills are expected to start shifting more of their cane crush toward sugar production. Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 16.23 cents/lb on July 7, according to S&P Global data. The October NY11 sugar futures contract settled July 7 at 18.52 cents/lb, reflecting a 2.29 cents/lb premium to the hydrous ethanol price expressed in raw sugar equivalent ex-CBIOs. Sugar's premium to ethanol production would move closer to 1.40 cents/lb if decarbonization credits were added into the premium calculation. The CBIO, equivalent to 1 mt of CO2 not released into the atmosphere, is an instrument issued by biofuel producers and importers to ensure Brazil attains its decarbonization targets. Recoverable sugar per ton of sugar cane, or ATR, is expected to be 137.3 kg/mt, a decrease of 3.1% on the year. Total ethanol output from sugar cane is expected to be 1.98 billion liters, down 6.0% on the year. Hydrous ethanol output was expected to be 1.24 billion liters, according to the average of the analysts' responses to the survey. This would be a decrease of 0.3% on the year. Anhydrous ethanol output in H2 June was expected to be 737 million liters, 14.2% lower on the year, according to the survey. Industry association UNICA is expected to release its official production figures early next week. CS Brazil Cane Production Data – H2 June 2022 (as of July 1) Category Unit Survey S&P Global UNICA (2021-22) Y-O-Y** var. Vol. y-o-y** Cane crush (million mt) 42.63 41.8 45.48 -6.30% -2.85 ATR (kg/mt cane) 137.34 134.9 141.76 -3.10% -4.42 Sugar output (thousand mt) 2,528 2,450 2,925 -13.60% -396.6 Ethanol total (million ltr) 1,978 1,971 2,105 * -6.00% -126.9 Hydrous output (million ltr) 1,241 1,258 1,245 * -0.30% -4 Anhydrous output (million ltr) 737 713 859 * -14.20% -122 Sugar Mix (%) 45.34 45.6 47.61 -4.80% -2.27 Ethanol Mix (%) 54.66 54.4 52.39 4.30% 2.27 *Corn ethanol included Sources: S&P Global Commodity Insights Pre-Report Survey of Analysts Results, UNICA **Year-on-year change compares S&P Global Commodity Insights Survey against UNICA's figures for 2021-22

Platts, part of S&P Global Commodity Insights, has launched assessments for 2023-vintage D6, D5, D4 and D3 Renewable Identification Numbers (RINs), effective July 1, 2022. Platts Biofuels methodology guide, found here, states that Platts will launch year-ahead RIN assessments on the first working day of July of the prior year. In the absence of proposed 2023 biofuel blending mandates, Platts will calculate the 2023 Renewable Volume Obligation (RVO) using 2022 percentage mandates. The US Environmental Protection Agency mandates the use of biofuels, and hence the RVO calculation is subject to change. Platts may update its RVO formulas at any time when such changes are set forth by the EPA, Platts will inform the market of the changes in the formulas through subscriber notes. The RVO is a calculation that combines RINs prices and weights them based on federal biofuel blending mandates. The 2023 RIN assessments will be published under the following lifetime calendar codes: RD62023 -- Ethanol RIN Cal 2023 RD42023 -- Biodiesel RIN Cal 2023 RD52023 -- Advanced Biofuel RIN Cal 2023 RD32023 -- Cellulosic Biofuel RIN Cal 2023 The assessments will also be published under the following year-ahead rolling codes: RINCY03 -- Ethanol RIN Cal Yr03 BDRCY03 -- Biodiesel RIN Cal Yr03 ABRCY03 -- Advanced Biofuel RIN Cal Yr03 CBRCY03 -- Cellulosic Biofuel RIN Cal Yr03 These assessments will appear in the daily Platts Biofuelscan, Weekly Fuel Ethanol Report and the Weekly Biomass-Based Diesel Report. They will also appear on Platts Biofuels Alert pages 10, 201, 210, 301, and 310, with the RVO price published on page 302. Platts welcomes all feedback and questions to americas_ags@spglobal.com, with a cc to pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

The US Department of Agriculture estimated total US 2022 rice planted area at 2.3 acres, or 948,178 hectares, in its June 30 Acreage report, down 7.5% year on year. Long grain is estimated to account for 1.9 million acres, or 770,926 hectares, down 3.3% year on year, with Arkansas comprising 55% of the total crop and Louisiana comprising 20%. Medium grain planting is estimated to have declined 21% year on year to 417,000 acres, or 168,754 hectares. California is anticipated to represent 62%, with Arkansas comprising 24%. The total planted area in the largest rice producing state -- Arkansas -- is estimated to have dropped 5% year on year to 1.2 million acres, or 465,793 hectares. However, the planted area in the state appeared slightly higher to some, with multiple sources placing the figure closer to 1.1 million acres, or 445,154 hectares, and others saying this figure was also high. Louisiana was the only state to see improved plantings, with the total area up 4.8% year on year at 440,000 acres, or 178,062 hectares. The country's main medium grain producing state -- California-- is set for the smallest crop in over 50 years, with the planted area recorded at 285,000 acres, or 115,335 hectares, down 30% year on year. However, most sources in the state typically view the figure closer to 225,000-250,000 acres, or 91,054-101,171 hectares, with the area severely constrained in 2022 by water allocation curbs. Californian participants are waiting for a commercial satellite report, which is expected to provide a definitive area figure. The USDA also released its June Rice Stocks report, which showed that total US paddy stocks had fallen 9.7% year on year to 57 million cwt, or 2.6 million mt, as of June 1. All states in the South recorded year on year decreases, with Arkansas paddy stocks down 12% year on year (see table) on the back of an already small 2021 crop. Total US paddy stocks as of June 1 ('000 cwt) 2021 2022 Arkansas 36,666 32,357 California 14,204 14,844 Louisiana 4,155 3,834 Mississippi 1,394 1,048 Missouri 3,091 NA Texas 3,143 NA Unallocated NA 4,489 Total 62,653 56,572 Source: USDA However, Californian paddy stocks increased 4.5%, or 640,000 cwt, year on year to 14.8 million cwt, or 673,313 mt. Sources in the state expect the stocks to rise, although the bump fell short of the 1 million cwt, or 45,359 mt, year on year increase expected by some. A Californian miller said mills holding onto stocks was a "no brainer" as the industry anticipates higher prices in the coming months due to a historically small 2022 crop.

The second-corn crop harvest in Brazil continued to progress at a good pace, reaching 20.4% as of June 25, according to data from Conab, Brazil's national agricultural agency. Farmers are running out of storage space in some parts of the country as the corn crop harvest is progressing amid expectations of a record corn crop in Brazil in 2021-22. There are reports of a lack of available warehouses in some municipalities in Mato Grosso, forcing farmers to dump harvested corn in the open, which is raising concerns about the quality of the crop, IMEA, the Mato Grosso Institute of Agricultural Economics, said in a report. Moreover, the corn harvest is expected to move faster this week, private consultancy AgRural said in a note. Brazil's National Institute of Meteorology has indicated in its forecast that Brazil's Center-West region, which accounts for the bulk of the second-corn production, is unlikely to see any significant rains this week. Corn prices are also falling with the increased crop supply in the country. In Mato Grosso, corn prices fell to Real 61.22/60kg bag ($193.86/mt) June 27 from Real 71.07/60kg a week ago. Meanwhile, the logistics cost to transport corn for domestic and export use continues to climb in Brazil. While increasing freight cost is typical for the season, the rise in global energy prices amid a bumper harvest has significantly driven up logistical costs. The freight rate for transporting corn from Sorriso to Santos via road jumped to Real 478.25/mt for the week ended June 23 from Real 454.06/mt in the first week of June and Real 335/mt a year ago, IMEA data showed. Conab forecasts Brazil's total corn production in the marketing year 2021-22 (February 2022-January 2023) at a record 115.22 million mt. The first-corn crop in Brazil is planted September-December and harvested February-May, while the second crop is planted February-March and harvested June-July.