Sugar production in the key Center-South Brazil region is expected to total 1.363 million mt in the first half of October, down 48% on the…
Oct 21, 2021
Sugar production in the key Center-South Brazil region is expected to total 1.363 million mt in the first half of October, down 48% on the year, a survey of 11 analysts by S&P Global Platts showed Oct. 21.
According to the analysts surveyed, the cane crush is estimated to range from 17.1 million mt to 27.7 million mt. The average estimate was for a total cane crush of 22.1 million mt, a 40.3% decrease on the year.
“The cane crush should drastically decrease for this fortnight because a large number of mills have already ended the season combined with a delay in harvesting induced by heavy precipitation in the Center-South,” an analyst at S&P Global Platts Analytics said.
Weather in the Center-South was suboptimal for crushing during H1 October, with an estimated 4.9 day lost to rain.
The proportion of cane used for sugar production is expected to be 42.9%, down from 45.3% a year earlier. Although Brazilian producers were taking advantage of the recent high prices of hydrous and anhydrous ethanol, long-term expectations are for mills to continue to maximize their sugar production, given the increased profitability of sugar production over ethanol production.
Platts assessed hydrous ethanol ex-mill Ribeirao Preto converted into raw sugar equivalent at 18.74 cents/lb on Oct. 21. The October NY11 sugar futures contract settled Oct. 21 at 18.94 cents/lb, providing a 0.20 cent/lb premium to hydrous ethanol in raw sugar equivalent.
Recoverable sugar per ton of sugar cane, or ATR, is expected to be 150.9 kg/mt, a decrease of 8.1% year on year.
Total ethanol output from sugar cane is expected to be 1.19 billion liters, a decrease of 42.7% year on year.
Hydrous ethanol output from cane was expected to be 685 million liters, according to the average of the analysts’ responses to the survey. This would be a decrease of 47.7% year on year. Anhydrous ethanol output from cane in H1 October was expected to be 502 million liters, a decrease of 34.2% year on year, according to the survey.
Total ethanol output from corn is expected to be 139 million liters, an increase of 13.9% year on year. Hydrous ethanol output was expected to be 89 million liters, an increase of 8.7% year on year, and anhydrous ethanol output in H1 October was expected to be 50 million liters, an increase of 25.2% year on year.
Industry association UNICA is expected to release its official production figures in the upcoming days.
Oct 21, 2021
Chinese rice imports over January-August have more than doubled from 1.52 million mt in 2020 to 3.2 million mt in 2021, according to data from Chinese customs.
Over the same period, rice exports — predominantly comprising old crop sales — have remained steady year on year at 1.69 million mt. If this trend continues, the world’s largest producer is on course to become a net rice importer for the first time since 2018.
The reasons for this shift are numerous, stretching beyond rice and into other commodities, while the consequences of it are far reaching and likely to bolster Chinese stocks.
Indian rice has come from representing less than 1% of Chinese rice imports in 2020 to representing 23% so far in 2021, making it the largest supplier of rice to China, according to the US Department of Agriculture, citing Chinese customs data. India was closely followed by Vietnam at 22% and Pakistan and Myanmar at 20% and 18%, respectively.
The shift in Indian market share is undeniably remarkable but is partially explained by the recent focus of Chinese demand. The USDA reported that 97% of rice imports from India over January-August comprised broken rice and that broken rice comprised around half of total imports, whereas milled rice historically reigned supreme.
Indian customs data also shows that 114,581 mt of Indian rice was shipped to China in August. As this rice is unlikely to have reached China that month, it is reasonable to suspect that it will only be recorded in Chinese import figures later this year. It also highlights that there are no immediate signs that China’s taste for Indian broken rice is receding.
This demand for broken rice primarily stems from feed demand as prices of other feed grains, notably corn, have increased. The differentials speak for themselves. S&P Global Platts delivered Corn CFR North East Asia assessment reached a 2021 high of $349/mt in May, while Platts origin assessment of Indian 100% broken white rice was assessed at a 2021 low of $270/mt FOB. While this differential has narrowed to around $50/mt by October, it is clearly still viable for buyers.
The USDA also points to the substantial dip in Asian origin pricing for whole kernel rice as a further reason for the uptick in imports. Taking the benchmark Thai 5% broken white rice as an example, Platts assessment dipped from a 2021 high of $542/mt FOB in February to a 2021 low of $370/mt FOB in August, a drop of almost a third. Similar declines were seen in other origins, notably Vietnam.
Concurrently, because of domestic support, even the price of old crop Chinese paddy is more expensive than most Asian 5% broken white rice varieties on an FOB basis. In recent National Grain Trade Center old crop paddy auctions, the average price has typically been recorded around Yuan 2,500/mt, or $391/mt.
In this context, the Chinese tariff rate quota import tax of 1% allows importers to make substantial profits. One major Singapore-based trader told Platts earlier this year that “having [an] import quota equals good local margins… like, huge.” Referencing importers’ notorious reputation for demanding high quality at low prices, another Singapore-based trader remarked that “that’s why they make big money.”
However, with broken rice prices so favorable, the USDA reported that some traders “[do] not bother applying” for a quota, opting for out-of-quota imports from most favored nations, which still only has a 10% import tariff attached.
In the context of the surge in imports and a dip in domestic prices due to competition, attempts by China’s National Grain Trade Center to release old crop paddy stocks have hit a brick wall. In September 2020, the NGTC sold 1.3 million mt of paddy out of a possible 13 million mt. In contrast, this September the NGTC was only able to sell 22,827 mt out of a possible 7.2 million mt.
Due to China’s Golden Week (Oct. 1-7), only one NGTC paddy auction has been held so far this month. However, only 52 mt was successfully auctioned out of a staggering 1.8 million mt.
Not surprisingly, sources have referred to a “slump in prices” and remarked that “prices are quite soft now” in China, with no signs of this changing as harvesting in the country peaks. Reports of developments to double-cropping rice varieties have come thick and fast in recent months, with the USDA also recently projecting Chinese milled rice output in the 2021-22 marketing year (July-June) at 150 million mt, up 1.1% year on year.
With these developments, it would appear likely there will be more pressure on the Chinese government to find a way to reduce China’s substantial rice stocks other than through the domestic market. While one of these methods would be to facilitate further exports, so far this option does not appear to have been capitalized on.
By August in both 2020 and 2021, exports totaled 1.69 million mt, according to Chinese customs. While not slipping year on year, 2021’s August total was down 18% from 2019’s August total.
The USDA relates this to price: “Chinese rice prices seem to have lost their competitiveness in the global market as international rice prices dropped significantly in 2021.” However, this does not explain why exports dropped so significantly in 2020. Additionally, Chinese old crop rice is still competitive in most markets, according to sources.
In the Mediterranean, the price of Chinese old crop has been reported at around $515-$525/mt CFR Mediterranean ports in recent weeks, far below competition from European suppliers, much to their concern. For West Africa, the price was reported at around $475/mt CFR West African ports. While the spread between China and Asian origins has undeniably narrowed in recent months, Chinese rice still has the edge on most Asian origin white rice markets in the region by approximately $10-$40/mt.
It is possible that some West African buyers have switched back to Thai or Indian rice due to their preference for long grain compared with the Chinese short/medium grain that is typically supplied as the price spread narrowed.
However, it is much more likely that the pace of exports so far this year has been determined by China’s annual export quota — decided early in the year — which decrees how much old crop is available for export through third party suppliers.
Sources have consistently reported that the Chinese government has been conservative in its old crop stock releases in the past two years and it shows. But with the drop in local prices, the continued build-up of stocks in China and the spike in imports this year, an increase in China’s 2022 export quota is looking increasingly logical and possibly necessary.
Aug 17, 2021
Ahead of London International Shipping Week 2021, a six-part S&P Global Platts podcast miniseries looks into the pricing of alternative marine fuels for the global shipping industry. In each episode of Marine Fuels of the Future, Platts editors investigate the current state of the major fuel alternatives, as the shipping sector seeks to reduce its greenhouse gas emissions ahead of stringent caps in 2030 and 2050.
In episode two, we look at biofuels – a diverse energy source derived from vegetable oils and waste matter, rather than from traditional hydrocarbons.
In this episode of the S&P Global Platts Agriculture Focus podcast, the Platts EMEA Agriculture team discusses how the prices of different agricultural commodities, from…
Jul 06, 2021
In this episode of the S&P Global Platts Agriculture Focus podcast, the Platts EMEA Agriculture team discusses how the prices of different agricultural commodities, from wheat, corn and rice, to veg oils, sugar and biodiesel, have fared during the coronavirus pandemic and whether we can expect any knock-on effects in the coming months.
Platts Daily Grains enables confident trading and investment decisions through price assessments, freight prices, market heards, analysis, and news for the grains, oilseeds, vegetable oils,…
Jun 01, 2021
Platts Daily Grains enables confident trading and investment decisions through price assessments, freight prices, market heards, analysis, and news for the grains, oilseeds, vegetable oils, animal feed and protein markets.
World events continue to heavily impact the rapidly evolving grains market. Insight from S&P Global Platts is unbiased, helping you to make confident decisions in these changing times.
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The International Grains Council has raised its estimate for global grain trade by 5 million mt to 421 million mt for the marketing year 2021-22…
Oct 22, 2021
The International Grains Council has raised its estimate for global grain trade by 5 million mt to 421 million mt for the marketing year 2021-22 in its monthly outlook released Oct. 21, from 416 million mt in its September update.
The council also raised its global grain output estimate by 1 million mt from its September projection to 2.290 billion mt for MR 2021-22 due to an uptick in corn production.
It also increased estimates for global grain consumption by 3 million mt to 2.291 billion mt, and for global carryover stocks to 600 million mt, from 599 million mt forecast in September.
For wheat, the trade estimate was raised by 3 million mt to 194 million mt, while the output estimate was kept steady at 781 million mt and the consumption estimate steady at 783 million mt. However, it also reduced the forecast for wheat carryover stocks to 276 million mt from 277 million mt in the September report.
The global corn output estimate for MY 2021-22 was raised slightly to 1.210 million mt from 1.209 million mt September, while the trade estimate was lowered slightly to 178 million mt from 179 million mt, the consumption estimate kept steady at 1.201 billion mt and the carryover stocks estimate raised to 285 million mt from 282 million mt.
For rice, the production estimate was increased slightly to 513 million mt from 512 million mt in September, the trade estimate maintained at 48 million mt, the consumption forecast raised by 1 million mt to 510 million mt and carryover stocks seen steady at 182 million mt.
The forecast for global soybean production was kept steady at 380 million mt, consumption unchanged at 376 million mt, trade lowered slightly to 170 million mt from 171 million mt and carryover stocks raised to 60 million mt from 57 million mt in September.
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…
Oct 21, 2021
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),…
Oct 21, 2021
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…
Nov 15, 2021
November 15, 2021 | 10:00 am – 3:00 pm SGT | Online
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.
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…
Oct 25, 2021
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.”
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.
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 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…
Nov 18, 2021
November 18, 2021 | 10:00 am – 3:00 pm SGT | Online
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.