Listen: Electrification and biofuels

China posted strong corn imports for September while November hog futures on the Dalian Exchange have posted a 23.3% increase since end-September to date.

China imported 3.53 million mt corn in September, up 227% year on year, according to the country’s customs data.

The US was the top exporter to China at 3.34 million mt in September. China’s total imports from January to September was at 25 million mt, up 274.5% year on year, the data showed.

Market sources expect imports to be in the 28 million-30 million mt range for 2020-21.

Meanwhile, hog futures have recovered from its low of Yuan 11,480/mt on Sept. 30 to Yuan 14,150/mt on Oct. 20. Since hog futures started trading this year, prices have plunged more than 50% as swine herd repopulation efforts started paying off.

The livestock industry is a major consumer of corn feed.

The Chinese domestic corn harvest is ongoing and reports of fresh purchases have been thin amid a bumper crop.

The Chinese Agriculture Outlook Committee, known as CASDE, forecast domestic corn output at 270.96 million mt for 2021-22 (October-September), up from 260.67 million mt in 2020-21, as previously reported by S&P Global Platts.

The CASDE import forecast is at 20 million mt for 2021-22, while Platts Analytics sees Chinese corn imports to be 21 million-22 million mt based on CASDE production estimates.

Although corn imports forecast for 2021-22 was lower than 2020-21 imports, the possibility of imports rising could not be ruled out as wheat prices in the local market are now trading above corn.

For the first time since November 2020, corn prices in China are now below those of wheat in the local market.

Generally, wheat is more expensive than corn. However, a big supply deficit in the local corn market boosted prices of the product in China in 2021. The government responded by releasing wheat stocks from reserves as a proportion of corn can be replaced with wheat in livestock feed ration.

China sold 27.79 million mt of wheat as of May 6 in the government auctions conducted in 2021, already surpassing the 23.23 million mt sold in the whole of 2020. Corn prices began to cool off as imported corn and wheat entered the market.

However, corn imports in 2021 have remained strong despite the robust substitution in feed ration.

With the price difference between corn and wheat narrowing, use of corn could return to the usual levels.

India’s fuel ethanol consumption is likely to increase by around 1 billion liters year on year to 4 billion liters in marketing year 2021-22 (December-November), Chairman and Managing Director of Bharat Petroleum Corp. Ltd. Arun Kumar Singh said at the India Energy Forum by CERAWeek on Oct. 21.

For MY 2020-21, the use of fuel ethanol is pegged to be around 3 billion liters, Singh said.

According to S&P Global Platts Analytics, India’s fuel ethanol consumption is expected to reach nearly 3 billion liters in 2022 and 3.2 billion liters in 2023. It had projected India’s ethanol consumption at 2.7 billion liters in 2021.

India plans to achieve equal quantity of fuel ethanol production from sugarcane and food grains and has allowed grain-based distilleries to be set up across the country, Singh said.

As part of its drive to achieve a blending target of 20% by 2025, the government had in June this year allowed rice and maize to be used for producing ethanol.

However, it is unlikely that a high volume of ethanol can be derived from grains during the current MY 2021-22, industry participants said.

In MY 2020-21, India is expected to produce around 2.9 billion liters of ethanol from sugarcane and 42 million liters from grains, according to a report from the national thinktank National Institute for Transforming India, or NITI Aayog.

India, which imports around 85% of its fuel needs, has been looking at ways to raise ethanol blending particularly to reduce its reliance on imports and give its agricultural sector a boost.

A successful E-20 program can save the country $4 billion annually, according to a NITI Aayog report.

India is a net importer of ethanol and bought around 722 million liters of the fuel in 2020, mostly from the US, according to latest data from the commerce ministry.

Part of Asia Agriculture Week

November 15, 2021    |    10:00 am – 3:00 pm SGT    |    Online

The global grain trade: constrained supply, growing demand

Grain and oilseed markets prices are remaining supported due to lowered production, inclement weather, negative bias on agriculture yields, and rising demand, especially from China.

China has continued to be a strong importer of Australian wheat despite an ongoing political spat between the countries. Furthermore, wheat consumption is set to rise over the coming years due to increased proportion of wheat in Chinese feed mix, and recovery for the Chinese hog market from African swine fever which gripped the industry in 2020.

Yet will the big grains and oilseeds producers: US, South America, Australia, and India, be able to supply the market given concerns of a second La Nina, domestic food security issues and poor projected yields?

Will a mix of these conditions encourage a further price rally?

Join us to gain key insights on; outlooks for the corn, wheat and soybean markets, dry-bulk shipping and logistics, China’s demand, US soybean feed demand versus biofuels, and how supply tightness will affect Asian demand centers.

Understand what’s driving grains and oilseeds markets, with 5 hours of deep and broad content to help you find solutions to your challenges and understand the opportunities the new planting season can bring.

Grains and Oilseeds Conference is part of Asia Agriculture Week – 4 days of essential information focusing on; Grains and Oilseeds, Sugar, Vegetable Oils and Biofuels, & Rice.

With added networking opportunities, you will be able to virtually meet key decision-makers across the supply chains; growers, producers, refiners, traders, buyers and more, ensuring you stay connected to the community.

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The Italian rice market has been in a state of shock in recent weeks as paddy prices have climbed in response to several factors that have created an almost perfect storm.

While October is typically a month of price softness as the bulk of the harvest arrives on the market, October 2021 has differed in northern Italy. As one broker remarked, “the quantities of paddy rice offered on the market should be higher, the rice mills should not have difficulty in finding the quantities they need and prices should be softer.”

All three have not come to pass this year. As a result, liquidity is drying up at the time of year when it should be peaking. Another broker exasperatedly stated that the situation “is weird, it’s difficult, no one understands.”

Crop changes

To add to the confusion, the 2021 crop is not particularly smaller than the 2020 crop. According to Ente Nazionale Risi, the planted area for this crop only decreased by 0.2% on year to 226,800 hectares.

Instead, the root of the issue lies in low carryover stocks. At the point when the Italian marketing year was coming to a close in early August, ENR data shows that Japonica paddy stocks in farmers’ hands totaled 39,734 mt. While only down by 19% on year, this figure was down by 39% from the same point in 2019 and by a staggering 52% from 2018.

In addition to unusually low stocks, the delay to planting in spring and slow maturation due to occasional cloudy weather and below-average temperatures in late summer also led to a slight delay in the start of harvesting. The pace of harvesting in the final weeks of September was also far below average because of the slow maturation.

These factors have been exacerbated by the increased holding power of farmers. While typically farmers would sell approximately 20% of their crop almost immediately following the harvest due to a lack of storage, farmers are not in a rush to sell this year. Some sources have reported a recent increase in farmers’ storage capacity. Additionally, much of the crop that farmers must sell early on for space reasons has been fulfilled by contracts concluded before the harvest, meaning that paddy available on the spot market is tight.

Varietal shifts

A further point to consider is that while production only saw a minor decrease on year, this masks significant changes among the different varieties.

Due to poor financial returns in the opening months of 2021, round grain planted area declined by 14% on year, according to ENR. However, with European hospitality venues re-opening from lockdowns, demand for sushi rice has increased significantly. “Everybody is asking for round grain,” said one major mill Oct. 22.

Much of the shift away from round grain went towards Indica, with ENR estimating that planted area expanded by 18% on year. However, this has been largely offset by reduced output in Europe’s second-largest rice producer, Spain.

Spanish sources reported earlier this year that planted area in the country’s heartland, Seville, may only total approximately 50% of what is normal. Significantly, the overwhelming majority of production in the region is Indica.

Farmers’ glee, mills’ concerns

Farmers are all too aware of an uncertain future for them in 2022 amid rising fertilizer and fuel costs, with some sources remarking that they are already attempting to factor this into pricing.

Farmers are also paying attention to the global rice market, realizing that the delivered cost of Asian rice in Europe has increased significantly in the past year due to rising freight costs. Whereas freight from most Asian origins to major European ports would typically be around $1,000/TEU, costs today are typically at least tenfold higher.

Mills have entered the new marketing year greeted by low stocks, a delayed harvest, unfavorable production shifts and emboldened farmers who are well aware of their own much more favorable position. As a result, mills have been buying paddy from farmers at almost whatever price is offered to stay running and to fulfill orders. But in doing so, they are validating farmers’ already inflated offers, often leading to further price rises.

One source reported that the situation was so bad that major mills were rumored to be attempting to pre-order paddy from farmers for the 2022 crop. A major mill denied the rumor, stating that it was still “too early” to be concluding deals for the 2022 crop. Nonetheless, it has still played a role in lifting farmers’ already high spirits.

In this context, the outlook for 2022 is very concerning, but also very unclear. Time will tell if the paddy prices farmers are asking for are sustainable in the context of factors such as Spain’s production decrease. In the meantime, farmers will be enjoying the end of the harvest as mills and buyers watch the situation with increasing concern.

Part of Asia Agriculture Week

November 18, 2021    |    10:00 am – 3:00 pm SGT    |    Online

Rice – bucking the trend of price rises

Given global food supply chains have been rocked by the pandemic, agriculture commodities prices have skyrocketed. A key indicator for global food prices, the UN’s Food and Agricultural Organization’s (FAO) Food Price Index, reported that the cost of its basket of agricultural commodities was up by 40% in 2021, yet rice prices have largely fallen. But why, and can this trend continue?

Looking forward there are reduced rice production in some regions, mixed demand and stock outlooks and ongoing supply and logistical issues, so could we see a shift in market dynamics and rice prices soar?

Join Day Four of S&P Global Platts Asia Agriculture Week, to gain key insights on consumption patterns, supply chain bottlenecks, China’s rice export intentions, the future of japonica and long-grain rice, and more!

Understand what’s driving rice markets, with 5 hours of deep and broad content to help you find solutions to your challenges and understand the opportunities the new planting season can bring.

Rice Conference is part of Asia Agriculture Week – 4 days of essential information focusing on; Grains and Oilseeds, Sugar, Vegetable Oils and Biofuels, & Rice.

With added networking opportunities, you will be able to virtually meet key decision-makers across the supply chains; growers, producers, refiners, traders, buyers and more, ensuring you stay connected to the community.

REGISTER NOW