Infographic: Biofuels ambitions rise along with crude oil volatility

April 17-20, 2023 | Fairmont Grand Hotel Geneva, Switzerland Keeping pace with the Sugar and Biofuels industry with insights from Platts and F.O. Licht Making our way back to Geneva in 2023 with both the Geneva Sugar and Biofuels Conference, we bring together leading Sugar, Biofuels growers, producers, traders and, buyers. Delivering first hand insights into the industry through innovative and interactive event formats, explore unrivalled networking opportunities. REGISTER NOW

Downward pressure in seaborne Ukrainian grain flows through the Black Sea persisted during the week Jan. 9-15, with volumes declining 20% on the week to reach 490,825 mt, the lowest weekly level since mid-August, an analysis of UN's Black Sea Grain Initiative Joint Coordination Centre data by S&P Global Commodity Insights showed Jan. 16. "Usually, grain exports come back by the end of January, beginning February," said a chartering broker pointing to the typical period when new contracts are signed, noting, however, that regional players don't expect a significant improvement in grain flows or tonnage requirements due to the damage inflicted by the Russia-Ukraine war. In recent fixtures, Leda C, 2011 built, 81,526 dwt, was heard fixed to open Port Said Jan. 24 via Ukraine, redelivery Far East at $16,250/day or at $17,000/day and a $550,000 ballast bonus. The UN-brokered Black Sea Grain Initiative, signed last July by Russia, Ukraine and Turkey and renewed in November for another four months starting Nov. 19, enabled the resumption of exports of grains and other foodstuffs from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative grain shipments under the safe passage deal reaching over 17.4 million mt as of Jan. 15, according to JCC data. According to the JCC, the number of inspection teams remains at three, with plans to conduct nine inspections on Jan. 16, four on inbound vessels and five on outbound vessels. "Currently, 30 vessels are waiting for inspection: eight of them waiting to move into Ukrainian ports and 22 loaded with cargo waiting to sail to their global destinations. Seventy-nine applications for participation in the Initiative have been submitted," the JCC said Jan. 15. In addition to the lower volumes observed recently, the average cargo size during the period Jan. 9-15 shrunk 32% on the week to reach 25,833 mt, returning to mid-December levels, JCC data showed. The largest cargo observed during the week Jan. 9-15 was a 70,799 mt shipment of corn headed to China aboard the 83,007 mt dwt, 2006-built Cuma, which departed from the terminals of Yuzhny/Pivdennyi Jan. 13. The share of corn shipments eased to 43% of the total weekly flows during the period Jan. 9-15, in contrast to over 60% the previous week, remaining nevertheless the top grain type exported in terms of volumes, with wheat accounting for less than 20% and sunflower products almost 19%, data from the JCC showed. Barley and soya beans accounted for the rest. According to the JCC data for Jan. 9-15, Europe and Central Asia attracted over 48% of the grain volumes, with 27% of flows destined for East Asia and the Pacific and another 19% on its way to Middle East and North Africa. The remaining volumes were shipped to South Asia among other destinations, JCC data showed. In terms of income, the share of high-income destinations more than doubled on the week to reach above 32% of total grain volumes, according to JCC, with 3% of flows headed to low-income regions, and the majority of the remaining cargoes destined for middle income countries during the week Jan. 9-15. Flows remain subdued According to data from S&P Global Commodities at Sea, Ukrainian grain exports from the three key ports included in the Black Sea Grain Initiative continue to lag their pre-war levels in January, averaging close to 82,000 mt/day for the period Jan. 1-14, some 19% below their five-year January average for the period 2018-22, and almost 37% lower than the average daily levels observed during January 2022. In addition, the age of the vessels operating in the trade has increased significantly, reaching over 17 years during the first half of January 2023, compared with an average age of about 11 years for vessels trading in those ports during the same period over the past five years. Globally, dry bulk freight rates have been suffering on the back of persistent macroeconomic uncertainty and poor expectations for Q1 2023, with the Platts KMAX 9 Index, a weighted average of spot time charter equivalent rates on key Kamsarmax routes across the globe assessed by Platts, last standing at $7,451/d on Jan. 13, having slipped below $10,000/day earlier on Jan. 6 for the first time since November 2020, now trending 62% lower than the $19,684/d average for 2022. Platts is part of S&P Global Commodity Insights

Platts, part of S&P Global Commodity Insights, has decided to launch a new daily assessment for Parboiled Rice 5% STX on a CFR West Africa basis, effective Feb. 20. Platts proposed to launch a CFR West Africa parboiled rice assessment Dec. 14, 2022, available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/121422-platts-proposes-to-launch-parboiled-rice-5-stx-cfr-west-africa-assessment The assessment will be the first delivered rice assessment by a price reporting agency and results from the increasing need for transparent rice pricing information in destination markets. The assessment will reflect prices of parboiled rice that meet the required physical specifications, from any global origin. Assessment Long Grain Parboiled Milled Rice 5% STX CFR West Africa Frequency Daily Bates Close Timestamp 4:30 pm UK time Unit of measurement $/mt Incoterm CFR Destination Cotonou, Benin Arrival at disport 60-90 days from date of assessment Shipment Breakbulk Cargo size 1,000-10,000 mt, normalized to 5,000 mt Packaging 50kg PP bags Max. broken kernels 5% Min. average grain length 5.7mm Max. moisture 14% Max. damaged/discolored 2% Max. red/red streaked 0.25% Max. black/black tip 0.25% Max. foreign matter 0.25% Min. Milling degree Well milled, STX quality All other specifications and clauses should be as per market practice. Delivered prices to other West African ports may be considered in the assessment. Normalization for quality, dimensions, cargo size, packaging, payment terms will reflect current differentials applied in the market, and locational normalization may make use of freight netbacks and freight forwards. Please send all comments, feedback and questions to europe_ags@spglobal.com and 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.

Seaborne Ukrainian grain flows through the Black Sea slumped another 22% on the week to reach 514,848 mt during the Dec. 12-18 period, with the average cargo size shrinking by 26% on the week to 25,742 mt, an analysis of UN's Black Sea Grain Initiative Joint Coordination Centre data by S&P Global Commodity Insights showed Dec. 19. "We'll probably see an improvement by February or March," said a shipbroker, pointing to unfavorable weather, harvest delays, and bombing as the major factors pushing weekly Ukrainian grain seaborne exports to the lowest levels observed since August. The UN-brokered Black Sea Grain Initiative, signed July 22 by Russia, Ukraine and Turkey and renewed earlier in November for another four months starting Nov. 19, enabled the resumption of exports of grains and other foodstuffs from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative grain shipments under the safe passage deal reaching almost 14.2 million mt as of Dec. 18. Declining significantly over the week, the size of the average shipment over Dec. 12-18 reached as low as 25,742 mt, dipping below the August – December weekly average size of 26,336 mt for the first time since early November. The largest cargo observed during week 50 was a 71,400 mt shipment of wheat headed to Indonesia on Star Emerald, 2019-built, 82,063 dwt, vessel which departed from the terminals of Yuzhny/Pivdennyi Dec. 15. Similar to last week, corn shipments dominated the Dec. 12-18 flows, accounting for almost 44% of total cargoes, with wheat accounting for almost 32% and sunflower products close to 22%, with the residual flows being soya beans. Notably, the share of high-income destinations halved to 30% of total shipments over Dec. 12-18, with over 40% heading to upper-middle-income destinations and less than 30% of the shipments reported to be destined for lower-middle-income destinations. Europe and Central Asia continued to attract the lion's share of the Ukrainian seaborne grain exports, reported at 52% of the cargo volumes during the week ended Dec. 18, with nearly 27% heading to East Asia and Pacific and about 11% destined for the Middle East and North Africa. The remaining volumes were shipped to South Asia, JCC data showed. On the back of significant macro-economic headwinds, dry bulk freight rates have remained weak, with the Platts KMAX 9 Index, a weighted average of spot time charter equivalent rates on key Kamsarmax routes assessed by Platts, last standing at $12,811/d on Dec. 16, almost 36% lower than the $19,956/d average for 2022 to date. Focus on successful JCC inspections "Since early November, the JCC has been deploying three joint inspection teams, with the exception of one day," said a JCC spokesperson to S&P Global inquiries. "The UN has requested an increase in team numbers, and the parties have been discussing this as well as how to improve efficiencies in inspections. However, we have not seen an increase yet." "We hope of course that the situation is going to improve but to see an improvement, the number of successful inspections per day needs to increase, which means the number of joint inspection teams needs to increase, too." "So, the backlog is predominantly linked to JCC's inspection capacity although bad weather has also contributed to several delays," the JCC spokesperson concluded. The JCC said late Dec. 18 that "84 vessels are waiting in Turkish territorial waters. Out of those 84, 65 are waiting to move – following inspections – into Ukrainian ports with the capacity to export approximately 2.5 million tons of grain and other food products." Some of the vessels have waited for over a month, with the remaining 19 vessels already loaded with cargo and awaiting outbound inspection. According to the JCC, the number of inspection teams has not increased and remains stable at three per day, with plans to conduct 12 inspections Dec. 19, split equally between inbound and outbound vessels. Platts is part of S&P Global Commodity Insights.

Australia is likely to start the new year with a record wheat crop harvest and dominate short-term Asian demand, while supplies from Argentina and Ukraine are uncertain. Logistical challenges and wheat quality concerns though may compromise Australian exports. The continent is currently harvesting wheat and on track to receive its largest crop in history. The Australian Bureau of Agricultural and Resource Economics and Sciences estimated output at 36.6 million mt, 300,000 mt more than the previous 2021-22 season's (October-September) 36.3 million mt. Yet the third straight La Nina that brought wet conditions and boosted 2022 yields are causing havoc for producers at harvest time. Losses in some acreages are expected due to flooding, farm equipment has sustained damages, and some roads washed away in flash floods. Australia had a record crop in MY 2021-22 due to similar wet conditions but 2022 rains have been heavier. Western Australia's harvest is delayed by a month while in parts of New South Wales, where the worst floods were recorded, harvest may only be complete as late as March 2023, according to RaboResearch agricultural analyst Dennis Voznesenski. Quality of crop in question There remain concerns over the Australian crop quality. The possibility of a decline in supply of high-protein milling wheat could put Asian buyers in a bind. The segregation ratio between milling and feed wheat is expected to remain non-transparent until January 2023, assuming weather holds. Market participants have hoped the intensity of showers will reduce, allowing crops to ripen and soils to dry so the acreage loss could be offset. Australia's Bureau of Meteorology has forecast lowering chances of above-average showers over December-February. "We have more quality issues than in a normal year, but we have much better wheat and more of it than we feared when the rain started," CEO at IKON Commodities Ole Houe said. Some early receivals on East Coast Australia have exhibited better-than-expected protein wheat. This would help provide options to Asian buyers looking for high-protein wheat, as the next available origin is Canada. Black Sea, India flows uncertain Indonesia is the world's largest wheat importer and traditionally Australia's top destination, except during drought years when buyers pivoted to Black Sea wheat. These flows restarted when the Black Sea Grain Initiative was signed in July but shipments have been sporadic. Ukraine's exports to Asia could pick up with the extension of the grains corridor till March 2023 but buyers remain cautious citing reliability of sellers, longer shipment periods, financing limits and execution risks as deterrents. Black Sea suppliers including Ukraine, Bulgaria, Romania and Russia comprised about 20% of the Philippines' feed imports but volumes have also dried up since the war. India, too, exported a significant quantity in MY 2021-22 due to a large surplus. However, future supplies look doubtful, with the country banning exports in May after extreme heat waves clipped output. Australia is looking to fill the gap, especially with a 7% tax advantage to the Philippines. India could see a bumper wheat output in MY 2022-23 due to an increase in plantation. But the government is yet to lift the export ban with domestic prices rising sharply and supply remaining tight. Domestic wheat prices have jumped 33% so far in 2022, way above the government-fixed cap of Rupees 21,250/mt ($257.57/mt). Poor harvest in Argentina A poor wheat output expected in Argentina in MY 2022-23 may also boost Australia's export sales. For MY 2022-23, Argentina's wheat output is seen at 11.8 million mt, down from 23 million mt in MY 2021-22 due to a drop in area and yield amid dry conditions across key growing regions. Export estimates are down 38.7% on the year as a result. Feed wheat competitive to corn Feed wheat prices may compete with corn for substitution with a higher output of feed quality wheat in Australia's crop. Corn supplies for first-half 2023 may face tightness, leaving feed buyers to seek alternatives. Brazil's old-crop corn exports are expected to wind down as the market approaches Q1 2023, making way for soybean exports. Water levels on the US Mississippi River are at historical lows, supporting corn markets, while the lack of rainfall in Argentina has delayed corn planting plans. With wheat restricted from these origins, Australia could be buyers' first stop for both milling-grade and feed-grade wheat for the first few months in 2023. However, importers may seek Canada or Black Sea supplies to meet milling wheat demand if the Australian crop sees further quality downgrades. Southeast Asian demand face challenges Pockets of swine fever outbreaks in Southeast Asia and diminishing purchasing power on weaker currencies have impacted Asian wheat demand in 2022. In Indonesia, flour millers have observed lower growth in 2022 despite lower flour prices. Vietnam feed sales have been slow to recover post the pandemic, and most Asian feed buyers have switched to alternative local substitutes to lower input costs. Global inflation remains a key factor that could put a drag on Asian demand while Australia reaps its largest-ever wheat crop in history.

Ukrainian grain flows retreated in the week ended Dec. 11, plagued by inspection delays, which also saw the weekly average cargo size edging lower. According to S&P Global Commodity Insights' analysis of data from the UN's Black Sea Grain Initiative Joint Coordination Centre, seaborne Ukrainian grain flows through the Black Sea during the period Dec. 5-11 slid 21% week on week to 657,235 mt, with the average cargo size easing to 34,591 mt, down 5% on the week. The UN-brokered Black Sea Grain Initiative, signed July 22 by Russia, Ukraine and Turkey and renewed in November for another four months starting Nov. 19, enabled the resumption of exports of grains and other foodstuffs from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative grain shipments under the safe passage deal reaching almost 13.7 million mt as of Dec. 11. Market sources have been pessimistic regarding the progress made in accelerating flows, with the latest weekly shipments standing almost 9% below average. "Vessels still waiting for up to 30 days. It's all mainly JCC delay rather than port congestion," explained a shipbroker, with sources previously expressing optimism about stronger flows by mid-December. Also easing slightly on the week, average shipment during the period Dec. 5-11 stood at 34,591 mt, almost a third larger than the average weekly cargo size of 26,367 mt since the inception of the safe passage deal, indicating that market participants might feel more comfortable bringing larger assets into the trade. The largest cargo during the week was a 67,100 mt shipment of corn headed to China aboard the 2011-built, 80,310 dwt Aeolian Vision, which departed from Chornomorsk Dec. 8. The JCC said late Dec. 11 that "82 vessels are waiting in Turkish territorial waters. Out of those 82, 59 are waiting to move – following inspection – into Ukrainian ports with the capacity to export approximately 2.2 million tons of grain and other food products." Some of the vessels have waited for over a month, with the remaining 23 vessels already loaded with cargo and awaiting outbound inspection. According to the JCC, the number of inspection teams has not increased and remains stable at three per day, with plans to conduct nine inspections Dec. 12, one on inbound vessels and eight on outbound. The share of shipments destined for high-income regions during the week Dec. 5-11 hovered close to 60% of all cargoes, with almost 35% heading to mid-income destinations and less than 4% of the shipments reported to be destined for low-income destinations. As for cargo types, corn shipments dominated the Dec. 5-11 flows, accounting for almost 49% of total cargoes, with wheat cargoes claiming almost 18%, and rapeseed just above 13%. The remainder comprised sunflower products and other foodstuffs. Europe and Central Asia attracted almost 71% of the cargo volumes during the week ended Dec. 11, with 10% heading to East Asia and Pacific, and about 9% destined for the Middle East and North Africa. The remaining volumes were shipped to South Asia and sub-Saharan Africa, JCC data showed. At the same time, global dry bulk freight prices remain weak, with the Platts KMAX 9 Index, a weighted average of spot time charter equivalent rates on key Kamsarmax routes assessed by Platts, last standing at $13,223/d on Dec. 9, over a third below the $20,109/d average for 2022 to date. Tanker disruption brewing With the introduction of the G7 price cap on Russian seaborne crude Dec. 5, tanker delays have escalated after Turkey issued a notice dated Nov. 16 requiring all ships transiting or entering Turkish waters from Dec. 1 to provide letters confirming that insurance cover will remain in place under any circumstances throughout the duration of the transit or while the ship is in a Turkish port or waters. Consequently, delays for tankers transiting the Turkish Straits have jumped to the highest in almost a year, tightening tonnage availability elsewhere in the Med. Southbound tanker delays to transit the straits were assessed at 10 days on Dec. 9, unchanged from Dec. 7 but up from three days at the start of the month and the highest since Dec. 3, 2021, according to assessments by Platts. If the issue is not resolved this week, Med rates for Suezmax and Aframax vessels are likely to tick higher on the back of a supply shortage in the region. "Discussions are still in progress, but no common ground has been found as yet," a shipping source said. "Any sustained delays will certainly have a positive impact in the Med tanker markets." Platts is part of S&P Global Commodity Insights.

Brazil is on track for a record high soybean harvest in the marketing year 2022-23 (January-December 2023) going by the forecasts of commodity consultancies and government-owned institutions, likely signaling a looming oversupply that will linger until at least mid-2023. The average of estimates by the various organizations has the world's top soy supplier producing a record 152 million mt of soybeans in MY 2022-23, up 20% year on year. S&P Global Commodity Insights projects the Brazilian MY 2022-23 soybean crop at 150 million mt. Soybean basis prices have been trending lower since mid-2022, when analysts and consultancies started projecting the all-time high harvest. Platts, part of S&P Global, assessed SOYBEX FOB Santos for January shipments at $598.49/mt Dec. 9, down $96/mt since June 9, while SOYBEX FOB New Orleans was assessed at $604.71/mt, down $95/mt since June 9. As the weeks go by and the prospect of a record oilseed harvest in Brazil becomes firmer, prices are likely to drop further, commodity analysts said. Substantial back-to-back supplies from the world's top two soybean producers are a recipe for a bearish 2023, they said. The US soybean new crop has been estimated at a decent level of 118 million mt and if Brazil's record harvest projections are factored in, oversupply seems likely. The US Department of Agriculture has estimated the MY 2022-23 US soybean harvest at 118.3 million mt, close to its 5-year average of 118.4 million mt. Brazil and the US together account for 70% of global soybean production. Record acreage Going by the estimates, Brazil's soybeans area has expanded for a consecutive 16th year, which has significantly boosted its production capacity. Brazil's national agricultural agency Conab sees the acreage in MY 2022-23 at 43.2 million hectares (107 million acres), up 4.2% year on year, while others are predicting an even bigger area. Farmers are projected to plant 43.79 million hectares with soybeans this season, an increase of 762,000 hectares from the July forecast and up 1.98 million hectares year on year, according to agribusiness consultancy Datagro. This acreage increase is seen in the key growing regions of the north, northeast and center-west rather than displacing other crops, analysts said. Demand challenge The euphoria over a forecast record Brazilian soybean harvest in MY 2022-23 is likely to be short-lived, some analysts said. Brazil typically consumes 45 million-50 million mt/year of soybeans domestically and exports almost all the rest. "I am not sure the world needs a 100 million mt of beans from Brazil in MY 2022-23," said Kory Melby, consultant with Brazilian Ag Consulting Services. Pete Meyer, head of grain, oilseed, and advanced feedstock analytics at S&P Global Commodity Insights, agreed. It is unlikely the market will digest a supply surge of 150 million mt early next year, Meyer said. However, if the Argentinian crop were to fail, then Brazilian farmers could pitch in and export more, he added. Mirroring the sentiment, commodity consultancy AgRural lists a few factors that will determine Brazil's soybeans trade in MY 2022-23. "That [selling 150 million mt of soybeans] will be a challenge and will depend on a few factors that are not completely defined yet," said Daniele Siqueira, grains market analyst at AgRural. "Right now, I don't see Brazilian soy exports going beyond 90 million-92 million mt in MY 2022-23," she added. "We'll have to see China's demand improving more than what official sources are forecasting," Siqueira said, adding that a failure of the US crop in MY 2023-24 could help Brazil export a higher vulume. The fate of Brazil's impending record soybean harvest depends on multiple variables, especially China's demand. China is the world's largest soybeans consumer, accounting for 60% of global trade, and is forecast to import 98 million mt in MY 2022-23, according to USDA data. It has been Brazil's top export destination for soybeans in recent years. However, not all analysts see 2023 as a lackluster year for Brazilian soybean trades. Raphael Mandarino, general director at AgResource Brasil, said there was a market for Brazil's 150+ million mt soy crop, both domestically and abroad. "We do think Brazil can export an extra 15 million-18 million mt in MY 2022-23," Mandarino said, adding domestic crushing capacity will increase simultaneously with a higher biodiesel mandate next year. AgRural has a similar view of Brazil's domestic consumption of the yellow beans. The domestic market is likely to see higher consumption on the back of an imminent increase in a biodiesel blending mandate to B15 from B10 from April, Siqueira said. However, the increase in crush capacity will result in the need to export more soybean meal, which will be an additional challenge for Brazil, she added.

Argentina is likely to witness below normal rains over the next 15 days, leading to further dryness, while heat will continue to stress crops, space technology provider Maxar said in its daily weather report Nov. 29. Meanwhile, Brazil is likely to see favorable weather conditions for crop planting and growth in the coming days. Wetter weather in Brazil will provide some relief to the corn and soybean crops as rainfall in most parts of the country has been lower than normal for November. Brazil and Argentina ** Overall corn crop conditions in Argentina were far from ideal with only 12% of the crop under excellent or good conditions as of Nov. 23, as against 81% a year ago, the Buenos Aires Grains Exchange said in its weekly crop report Nov. 24. ** The center-west region of Brazil is likely to receive significant rainfall, with Mato Grosso bordering Goias seeing good showers Nov. 29-Dec. 5, according to Brazil's National Institute of Meteorology, or INMET, forecast. ** The other parts of Brazil's center-west region could see moderate precipitation, the INMET forecast said. ** First-season corn planting in Brazil reached 68.6% as of Nov. 26, compared with 75.3% a year ago, according to the national agricultural agency Conab. ** The most significant rainfall deficits were found in southern Mato Grosso, southern Goias, northern Mato grosso do Sul, and western Sao Paulo in Brazil, MAXAR said. ** Platts assessed corn, FOB Santos, for January loading at $299.98/mt Nov. 30, largely steady on the month, S&P Global Commodity Insights data showed. The US ** 34% of winter wheat crop was rated in good-to-excellent condition, against 32% in the previous week. However, this was 10 percentage points below last year's rating and lowest in 20 years, USDA Nov. 29 crop progress report showed. ** According to the National weather service, cold weather is making its way into the Corn Belt as extremely low wind chills are expected in parts of Nebraska, South Dakota, and Iowa. ** US harvested corn as of Nov. 20 was up 3 percentage points from the previous week. This year's harvest progress is 2 percentage points ahead of last year's 94% and 6 percentage points ahead of the five-year average. ** Platts assessed US Corn CIF New Orleans at $309.45/mt Nov. 30, over 9% lower on the month, S&P Global data showed. ** US soybean harvest wrapped up earlier this month as crop yields fluctuated with rainfall patterns in 2022. ** Platts assessed US Soybean CIF New Orleans at $592.49/mt Nov. 30, 1.3% lower on the month, S&P Global data showed. ** US Congress moves to avert massive railroad strike by voting on a bill driving unions to accept the tentative agreement reached earlier this year between railroad owners and their workers as Dec.4 deadline approaches. Australia ** Chances of heavy showers were seen declining across Australia, especially New South Wales, over the next two weeks, Australia's Bureau of Meteorology said. ** Western Australia is unlikely to witness heavy showers during the next two weeks, according to the BOM. ** Showers have delayed wheat harvest across Australia and raised concerns over crop quality given persistent showers, market participants said. ** Australia is likely to harvest a near record 34.5 million mt of wheat in marketing year 2022-23 (October-September), against 36.4 million mt in MY 2021-22, the US Department of Agriculture data showed. ** Platts assessed Australian Premium White wheat at $358/mt Nov. 30, down 7.5% on the month, S&P Global data showed. The EU ** Intensity of rainfall likely to increase over the next week to Dec. 7 across France, Mateo France said. ** Expected showers over France may help grain yields, which were under pressure due to hot and dry conditions, traders said. ** In the week to Dec. 14, showers may turn sporadic in some regions of France, the agency said. ** The European Commission forecast total EU cereal production in MY 2022-23 (July-June) at 270.8 million mt, according to its November update, down from 272.6 million mt a month ago. ** Platts assessed EU wheat with 11% protein content CPT Rouen at $331.5/mt Nov. 30, down 3.63% month on month, S&P Global data showed. This article is part of a global weather watch series from S&P Global Commodity Insights, which is published fortnightly.

The demand for Brazilian corn has never been greater as China prepares to enter the market and disrupt the global trade books for the feed grain, raising buyers' concerns on the impact it could have on prices and supplies. Not too long ago, China’s corn import demand was merely a rounding error on the global corn trade books as the nation fed its livestock industry with domestically farmed corn. China started its rebuild of a hog farming sector decimated by the African Swine Fever pandemic in an environment of an increasingly affluent population hungry for more animal protein. Suddenly, looking inwards for feed corn is no longer possible as the growth for corn demand has outpaced the increase in domestic corn production. Related news: Risk of avian flu outbreak in Asia keeps feed corn demand outlook in check China first looked to the US to provide for its growing corn appetite and subsequently to Ukraine to fill more demand growth, with the two countries being able to meet the Chinese government’s stringent phytosanitary and GMO requirements. This corn procurement strategy worked – until it did not. Motivated by lack of supply options When Russia invaded Ukraine Feb. 24, panic struck the global grain market owing to a supply-side obscurity after flows from a key corn exporter was put on an indefinite halt. It was the case until UN and Turkey brokered a deal for a safe passage for grains out of Ukrainian ports, but volumes were slow. Related news: Black Sea Watch: Grain shipments ease further ahead of safe passage deadline Prolonged war in Ukraine crossing over the harvest season of China’s new crop from August essentially stripped China off more than 8 million mt of corn. Escalating political tensions between Beijing and Washington have also disincentivized Chinese state-owned buyers from extending supply exposure to increasingly pricier US corn supported by domestic ethanol program and fervent export demand. “China cannot afford another trade war with US and this serves as a method to diversify their sources of corn instead of relying heavily on the US,” a Singapore-based grains trader said. As the war in Ukraine continue to drag on, there was a clear need to improve corn supply diversification for the world’s second-largest economy with a 1.4 billion population. Speculations of China considering its stance on importing Brazilian corn got louder until China finally invoked an agreement first tabled eight years ago. “There is no greater appetite for Brazilian corn from China than now,” another trader said. China announced in May that they have concluded key negotiations in a protocol with Brazil to allow imports of Brazilian corn but the timeline remained blurry even to those who trade daily. China waived quarantine requirements on Brazilian corn in July and accelerated phytosanitary approvals for export to commence in 2023, but relaxation of farm controls for corn buoyed confidence in Brazilian authorities to hopefully ship the first bulk cargo by the end of 2022. Alas, a change in government in Brazil after a tightly contested election in October gave Chinese authorities the final push to see this deal. Shortly after Lula da Silva was elected to succeed the incumbent Jair Bolsonaro as president, China’s General Administration of Customs released an updated list of traders, facilities and terminals approved to export corn to China. The reality of exports to China happening has never been clearer until now, and the final door left to be unlocked is the approval on the GMO requirements. As it stands, there are unapproved GMO strains in the hybrid corn seeds used in farming in Brazil waiting to be given the green light by Chinese authorities before they could leave Brazilian shores. Stiff competition for Brazilian corn to begin The prospect of China vying for Brazilian corn is sufficient reason for existing destination markets prepare for a stiff competition going forward. Even as the Black Sea Grain Initiative received a 120-day extension Nov. 17 , supply diversification will remain paramount in the Chinese policymakers’ interests. Would China seek to replace the supply void left by Ukraine or would they also replace more US corn with Brazilian supply? The jury is still out. The data tells the story. Spain, Egypt, Iran, Japan and South Korea took up close to 60% of Brazil’s corn exports in the 2021 calendar year, and more than 50% between January and September. In a demand-driven scenario, China’s involvement in the trade flow will provide massive tailwinds to prices, which would be welcomed by Brazilian farmers. However, US corn could come into the picture to provide a ceiling to prices and participate in more flows to the biggest importers. Brazil is expecting another record corn crop in 2022-23 and this should provide some comfort to key buyers regarding supply, at least for the time being—until we see another major scarcity event in the form of a record La Niña phenomenon in South America or a record Chinese corn crop production failure. Right now, participants are sitting still, waiting for the trade cards to shuffle. Until the first corn vessel begins its voyage from Brazil to China, it is business as usual for buyers and sellers.

When it comes to politics and international relations, China’s President Xi Jinping divides opinions across the globe, but his re-election as the General Secretary of Communist Party for a record third term Oct. 23 shows the strong grip he has over the country. Some say Xi has emerged as the most powerful leader since the Communist Party founder Mao Zedong. So how does a 69-year-old politician garner so much backing when the official retirement age for the country's top job is 68 years? The answer may lie in the narrative the Xi administration spins around food security promises as China struggles with a colossal and ever-growing appetite for grains and oilseeds. It is an open secret that food supply has become a major concern for world’s second largest economy. According to World Economic Forum, China ranked 34th out of 113 countries in the 2021 Global Food Security Index, which measures food affordability, availability, quality and safety, and natural resources and resilience. There is a popular Chinese adage: "To a king, people are heaven; to the people, food is heaven." The communist ruler knows that ensuring food supply holds the key to proper governance in China. As a result, China has become world’s biggest importer of agricultural products in the last few years. It is a major purchaser of soybeans, soybean oil, corn, beef, palm oil and pork. According to the US Department of Agriculture’s economic research report released July 16, China’s rising income and living standards, increasing urbanization, and food safety concerns have fueled its surging agricultural imports in the last two decades. As incomes rose, the average Chinese diet changed to include more meat, dairy and processed foods, while grain consumption declined. In the past 20 years, per capita consumption of poultry meat increased 32%, soybean oil consumption more than quadrupled, and fluid milk intake more than tripled, the USDA said. Need for food security In recent years, China’s astounding growth in commodity consumption has outpaced its domestic supplies, compelling the government to import food commodities in large volumes. The Xi administration acknowledges the dire need to raise agricultural imports to satisfy domestic demand. But all that dependency on imports is leaving China vulnerable in its quest to become a superpower. Let’s take soybeans, for example. China is the world’s biggest importer of the yellow oilseed and processes over 80% of those high-protein beans into animal feed, catering to its vast pork industry. The country consumes roughly 115 million mt/year of raw soybeans. And despite all the technological interventions in local agriculture sector, China barely manages to produce 16 million mt/year of the oilseed. Not surprisingly, it is compelled to import nearly 95 million mt of the expensive beans, mostly from Brazil and the US. Being the world’s largest soy purchaser, China has no choice but to buy the oilseed despite volatile price fluctuations. This heavy dependency on two sources located thousands of miles away doesn’t bode well with China’s strategic goals, a Shanghai-based commodity consultancy said. And Xi knows this very well. In his speech during the 20th National Congress of the Communist Party of China Oct. 16, Xi mentioned “food security” several times. “We must reinforce the foundations for food security on all fronts,” he said. “We will ensure that both Party committees and governments assume responsibility for ensuring food security and that China’s total area of farmland does not fall below the redline of 120 million hectares.” Xi also talked about technological investments in agriculture. “We will work to gradually develop all permanent basic cropland into high-standard cropland,” Xi said. “We will invigorate the seed industry, support the development of agricultural science, technology, and equipment, and refine the mechanisms for ensuring the incomes of grain growers and for compensating major grain-producing areas.” “Food security is a major issue, without which the country could be left vulnerable to foreign factors, such as geopolitical risks,” he added. Over the past few years, the Xi government did introduce strict laws under the guise of food security. It even implemented the Anti-Food Waste Law, but monitoring 1.4 billion citizens just to see who is wasting food seems more of a wishful thinking than a decree. Thorny path ahead According to commodity analysts, China knows that when it comes to crops like soybeans, corn and edible oils, it will not be able to fulfil its domestic demand through local production – not for at least the next 20 years. And even then, it will be a miracle to achieve self-sufficiency given the fact that China’s arable land is very limited amid rapid urbanization and climate change. China’s fast depleting arable land was estimated at 1.28 million sq km by the end of 2019, which accounts for roughly 13% of country’s total area, according to the Ministry of Natural Resources. Not surprisingly, the government is looking at diversifying its import origins to fix short-term scarcities. China has been importing corn primarily from the US and Ukraine. However, supply from these origins have been uncertain due to geopolitical tensions. The altercation with the US over Taiwan and the Russia-Ukraine war have left China to seek Brazilian supply. It's aiming to get Brazilian corn by as early as December. Aside from corn, China is also going to import soybean meal from the Brazil just to reduce its dependency on raw soy imports. How this is going to impact China’s massive crushing industry is perhaps a matter of debate for another time. Looking at the big picture, will China’s food security goals be achieved through import diversification? Maybe not. Is Xi betting on Brazilian supplies to ensure food security? Definitely not. Going by his speeches, the long-term strategy for the Xi administration seems to become self-reliant in agriculture. Supply of grains, soybeans, meat, vegetables, fruits and aquatic products must be guaranteed to the people through the expansion of farmlands across China, Xi said. But here is where another popular Chinese witticism rings a bell: “All the talk doesn’t cook rice.”

The UN-brokered Black Sea safe passage deal, signed July 22 by Russia, Ukraine and Turkey, enabled the resumption of exports of grains and fertilizers from the three key Ukrainian ports -- Chornomorsk, Odesa and Yuzhny/Pivdennyi -- on the Black Sea coast. According to the safe passage agreement, the “initiative will remain in effect for 120 days from the date of signature by all Parties and can be extended automatically for the same period, unless one of the Parties notifies the other of the intent to terminate the initiative, or to modify it.” Previously, Russia said it had suspended its participation in the agreement in late October but has since backtracked, and now market participants are focusing on the Nov. 19 renewal deadline. The Black Sea Grain Initiative framework has enabled nearly 1,000 inbound and outbound voyages and allowed over 10 million mt of grains and foodstuffs to reach the global markets. However, almost half of the cargo volume has ended up in high-income countries. Russia has already complained about the fact that most of the flows are not destined for those countries most vulnerable to food insecurity. Click here to see the full-size infographic

Poultry farmers in Asia are preparing to battle a potential wave of Highly Pathogenic Avian Influenza following reports of outbreaks in South Korea and Japan in the previous weeks. The HPAI cases threaten to put the Asian poultry industry to another stringent test on biosecurity policies and risk damaging feed corn demand. South Korea confirmed its first HPAI cases of the 2022-23 season at a farm in Yecheon in the North Gyeongsang province Oct. 11. Birds in a flock of 9,500 ducks had symptoms of the disease, leading to culling of the flock, according to an official report to the World Organisation of Animal Health. South Korea's Prime Minister Han Duck-soo had earlier announced measures to control HPAI as the agricultural ministry raised the alert level for HPAI to "severe" from "caution" while increasing biosecurity measures on farms. In Japan, HPAI was detected for the first time in 2022 with a total of more than 340,000 layers being culled in farms in Hokkaido and Okayama prefectures, according to the Japanese agricultural ministry's website Oct. 28. These cases follow a spate of HPAI outbreaks reported globally with several countries including France raising their alert levels. However, the Southeast Asian poultry industry remains mostly unscathed currently, with only the Philippines said to have experienced recent struggles with the disease, according to market sources. Indonesia has not reported HPAI outbreaks in the season but falling prices of chicken and eggs have cut the short-term feed demand outlook. "[HPAI is] not a problem now but live bird and egg prices are dropping. We are told to cull the supply of hatching eggs and day-old chicks in order to balance the supply and demand," said an Indonesian poultry farmer. Vietnam and Thailand are similarly unaffected by any HPAI outbreaks in recent times, according to multiple sources in the domestic industry. "The avian flu could further affect the demand narrative [in Southeast Asia]. Thailand and Indonesia have strong biosecurity measures, but it remains to be seen," said a trader. "Southeast Asia will be wary, given the size of the industry, they will step up measures," said another grains trader. Feed corn is a key ingredient for poultry broiler and layer feeds, comprising 50%-60% of the raw materials used in poultry feed formulation. Japan, South Korea and Southeast Asian countries are key destination markets for corn globally. In the marketing year 2022-23 (September-August), Japan is expected to import 15 million mt, South Korea is expected to import 12.5 million mt, and Southeast Asia countries, on top of domestic production, are expected to import 17.5 million mt of corn, according to the US Department of Agriculture's November release of the World Agricultural Supply and Demand Estimates. A severe HPAI outbreak in Asia would further cripple feed corn demand in a market where feed millers and livestock farmers are struggling with narrowing margins amid higher grains prices from tight global supplies, costlier financing and depreciating local currencies. The livestock farming industry is still recovering from the damage of the African Swine Fever and is not entirely out of the woods, with recovery slowed down by fears of another outbreak. Vaccines against ASF are widely anticipated to reach the market in early 2023, alleviating the risks of another reemergence among the hog population and impacting overall demand for feed corn and soybean meal. Platts assessed corn at 332.75/mt Nov. 11 CFR North East Asia, S&P Global Commodity Insights data showed.

Ukrainian grain flows through the Black Sea declined during the week ended Nov. 13, a S&P Global Commodity Insights analysis of UN data showed, with markets still cautious until a clear renewal indication of the safe passage agreement is communicated from stakeholders of the Black Sea Grain Initiative. "The Black Sea is dead as there are almost no orders in the Panamax and Ultramax markets," said a shipbroker, explaining that participants have adopted a wait-and-see approach ahead of the Nov. 19 deadline for Ukrainian grain shipments, while Russian sellers have been less active. Indeed, the UN's Joint Coordination Centre reported that 525,699 mt of grains had been exported during the week ended Nov. 13, nearly 4% lower week on week and almost 55% below the mid-September peak in weekly levels, marking the lowest weekly export volume since mid-August. In addition, uncertainty has weighted on the size of the shipments too, as smaller vessels accounted for the majority of the runs, with the average cargo size for Nov. 7-13 shipments down 27% week on week to hit a three-week low of 25,033 mt, according to JCC data. The JCC reported late Nov. 13 that 61 inbound vessels were waiting to move, following inspection, into Ukrainian ports with the capacity to export approximately 1.5 million mt of grain and other food products; congestion appeared to have eased by nearly 20% over the weekend, with 76 vessels having waited in queue on Nov. 11. However, 10 loaded outbound vessels were still waiting for inspection in Turkish territorial waters as of late Nov. 13, three more than the evening of Nov. 11. Like the previous week, the largest cargo observed during the period Nov. 7-13 was a 62,900 mt shipment of corn departed from Chornomorsk Nov. 11, carried onboard the 75,200 dwt Nestor S destined for China. In terms of cargo types, wheat shipments dominated exports this week, accounting for 176,368 mt, taking the lead from corn flows, which reached 134,150 mt, with the remaining cargoes containing sunflower products, rapeseed and other grains. The proportion of shipments destined for high-income countries increased to 44% during the week ended Nov. 13, up from 41% the previous week, while almost 11% was destined for low-income countries, with the rest heading to mid-income destinations. As for regional destinations, Europe & Central Asia attracted over 41% of the shipments in the week, unchanged week on week, with almost 32% heading to East Asia & Pacific, from more than 41% the previous week, and an additional 26% destined for the Middle East & North Africa, from less than 18% the previous week. Market remains optimistic The UN-brokered Black Sea Grain Initiative, signed July 22 by Russia, Ukraine and Turkey, enabled the resumption of exports of grains and fertilizers from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi from the Black Sea. According to the safe passage agreement, the "initiative will remain in effect for 120 days from the date of signature by all Parties and can be extended automatically for the same period, unless one of the Parties notifies the other of the intent to terminate the initiative, or to modify it." Previously, Russia said it had suspended its participation in the agreement in late October but since backtracked, and now market participants are focusing on the Nov. 19 renewal deadline. "The Black Sea Grain Initiative will be renewed, it's just that traders are not ready to take the risk at the moment," the shipbroker said. "There are too many vessels still waiting for inbound inspection -- some traders have to pay out millions in the compensation for the waiting time before the JCC inspection can be carried out." A ship manager expressed confidence that the safe passage agreement would be extended, "as there is no reason to do otherwise." "Probably Russia will get better conditions in an updated agreement, but we will see," the ship manager said. "At least I can see that cargoes are there in the ports, so shippers seem to be positive as well." Looking ahead, the JCC is planning to maintain steady personnel Nov. 14, deploying three joint inspection teams to carry out the procedures.

Three of the world's biggest wheat importers, Egypt, Algeria and Saudi Arabia all held tenders in the week ending Nov. 11 as volatility grew alongside uncertainty over Russia's willingness to obstruct exports from Ukraine's Black Sea ports. The price of Black Sea wheat hit a 12-month low of $304/mt on Oct. 26 but had jumped $17/mt by Oct. 31 after Russia said shipowners could no longer count on the safety of vessels visiting Pivdennyi, Odessa and Chornomorsk, which together handled most of the country's pre-war grain exports. Within two days, Russia had returned to the terms of the Black Sea Grain Initiative, the agreement that guaranteed the safety of grain and fertilizer shipments from those ports until Nov. 19. Russia's short-lived withdrawal from the agreement was based on a complaint about its implementation. In the final days of October, grain traders had been preoccupied by delays to the inspection process for ships entering the ports, rather than the possibility that Russia might immediately stop all shipments. The UN-brokered agreement was signed in mid-July, and it is now uncertain whether Russia will attempt to block an extension when the initial four-month period of protection ends on Nov. 19. A direct block would likely trigger another spike in prices. Most traders consider that unlikely, but the risk has complicated the calculations for those wishing to take part in the tenders for Egypt, Algeria and Saudi Arabia. In Egypt on Nov. 7, GASC received offers for a total of 1.35 million mt of wheat shipped in the second half of December or first half of January but rejected them all. Then on Nov. 11, traders said the company had bought 280,000 mt of Russian wheat outside the tender process for $363.5/mt CNF, more than $6/mt below the lowest offer in the tender. That was GASC's first purchase since Sept. 1. In Algeria on Nov. 9, traders said OAIC booked around 510,000 mt of wheat for shipment in December at prices around $368/mt CFR Algeria. The company bought twice in October. Saudi Arabia tendered Nov. 11 for 595,000 mt of milling wheat for April-June arrival, but the outcome wasn't immediately known. It last bought on Oct. 21. The fear of greater price volatility in the weeks ahead may be one driver behind the timing of the three tenders. Egypt was also constrained by domestic economic concerns and a $3 billion loan that came through from the International Monetary Fund on Oct. 27. In 2022, global grain prices have experienced their most volatile period in more than a decade. Prior to Russia's invasion of Ukraine, the two countries provided around a third of the wheat and corn that were traded globally. Platts, part of S&P Global Commodity Insights, assessed Russian wheat with 12.5% protein, the region's most widely traded milling grade, at $318/mt on Nov. 10. That is around $130/mt less than the price of milling wheat in the Black Sea at the start of March, when Ukraine's Black Sea ports had just closed and trade finance options for Russia were closing up.

Countries representing over half of global GDP have launched a package of measures at the UN Climate Change Conference in Egypt to speed up decarbonization in power, road transport and steel, scale up low-carbon hydrogen and accelerate a shift to sustainable agriculture. The actions agreed under the "Breakthrough Agenda" established at COP27 in Glasgow in 2021 build on measures agreed at the summit. "Since we launched the Breakthrough Agenda at COP26, the world has changed and we are facing a perilous geopolitical and economic situation," the UK's COP26 President Alok Sharma said in a statement Nov. 11. "That only makes international collaboration more urgent. "Now, it is vital for all to deliver and demonstrate real progress as we move forward. This is integral to achieving the 2030 goal of making clean technology affordable, available and accessible to all." The actions are supported by the G7, European Commission, India, Egypt and Morocco, amongst others. A series of multilateral agreements include actions on: -- Common definitions for low-carbon steel, hydrogen and sustainable batteries. -- Phasing out polluting road vehicles, consistent with the Paris agreement, with "significant" backing for 2040 globally and 2035 in leading markets. -- Ramping up large-scale net-zero emissions industrial plants and hydrogen valleys and cross-border power grids. -- Strengthening financial and technological assistance to developing countries to support energy transitions. Platts, part of S&P Global Commodity Insights, assessed the cost of producing renewable hydrogen via alkaline electrolysis in Europe at Eur15.18/kg ($15.60/kg) Nov. 10 (Netherlands, including capex), based on month-ahead power prices, down from a peak of over Eur30/kg at the end of August. Global passenger electric vehicle sales in September of 915,000 units accounted for 14% of total light duty vehicle sales, according to S&P Global Commodity Insights' monthly EV Essentials report. With data available through nine months, China was on track for year-end EV sales of over 6.7 million vehicles, an annualized global market share of 27.8%. S&P Global projects that by the end of 2022, EV sales in the US alone could approach 750,000 vehicles, with 2023 seeing sales eclipse one million vehicles for the first time ever. Further actions in the cement and buildings sectors are expected to be added to the Breakthrough Agenda in 2023. Coalition of the committed The model seeks to drive climate change mitigation through "coalitions of committed countries," rather than relying on global consensus. "The Breakthrough Agenda provides a practical platform for partnerships between countries and across industries that will be essential to rapidly scale commercially viable solutions for climate progress," UAE Minister of Industry and Advanced Technology and Special Envoy for Climate Change Sultan Ahmed Al Jaber said in the statement. The Breakthrough Agenda was established at COP26 in Glasgow in 2021, by 45 world leaders representing over 70% of global GDP, providing a framework for governments, businesses and civil society to join up and strengthen actions each year in key emitting sectors. The leaders agreed to review progress annually, with the first such review published in September 2022 warning that an "international collaboration gap" threatened to delay net-zero by decades. The COP27 announcement Nov. 11 comes in response to the report's recommendations.