Category Archives: Rice

VIETNAM RICE IMPORTER COMPLAINS OF CONTAMINATION; PHILIPPINES BUYS RICE: Issue 31 April 22, 2013

By Jack Scoville, The Price Futures Group

It was a wild week last week for futures and cash markets and for world events. The world watched Boston, Texas, and lots of other places as things seemed to unravel a little bit.

The importer of Vietnamese rice here in the U.S. has complained of too much iron in the rice. This is yet another contamination problem noted in Asian rice.

The Chinese contamination problems have been widely reported, but the Vietnamese problems are new.

Private importers in Philippines are also buying Vietnamese rice now, and will probably need to test for the iron contamination. (The Digest reported last week that Philippine private importers bought 187,000 metric tons of rice from Vietnam.)

The Philippines paid some pretty fancy prices for a product that is supposed to be dirt cheap in that part of the world and will have a right to insist on good, clean rice.

We will be watching to see how this is handled there. The cry for clean rice could push a little demand here or perhaps to India.

Thailand will be a last resort due to the super high prices there. What Thailand will do with all of this high-priced rice is not known, but it will either go bad or get dumped one way or another so one has to keep watching and waiting on them to make up their minds.

It could also mean that high quality and clean rice in Asia starts to increase in price as there won’t be so much of the good stuff around.

In the United States, Arkansas farmers have been able to start work. At least they have been able to get started in the northern part of the state, and many farmers were about done planting rice by the end of the week.

We understand that farmers in the southern part of the state were not able to work. Either way, this is good news. At least the crop is in, and conditions are called generally good in areas that are planted, even if northern Arkansas producers would like temperatures to be a bit warmer.

BENIGN WEATHER FOR PHILIPPINE RICE FARMERS
By Aaron Cook, Metservice and Metraweather
Metservice.com
Metraweather.com

The next two weeks will hold few surprises for Philippine rice growers, with persistent easterly winds and reliable afternoon and evening shower activity across most of the country.

Although the next two days will be fairly dry, we should see healthy rainfall for Central Luzon, Western Visayas and Mindanao during the second half of this week, as per the seven-day ECMWF rainfall chart below for Monday to Sunday. Temperatures will be slightly above average.

Casting our gaze further west, Thailand and Vietnam will be wet over the next two to three days, picking up widespread falls of 20mm to 40mm before a return to average rain later in the week. Closer to the equator, the ECMWF models favor average to above average rainfall for West Malaysia, Borneo, Sumatra and Java over the next 10 days (in the order of an extra 1mm to 5mm per day).

The global climate is thus far offering few clues to what the Philippines might expect in terms of growing conditions or typhoon activity during the second half of this year.

Climate models from major forecasting centers are all pointing towards neutral ENSO conditions over the next few months and there are not yet any credible hints that an El Nino or La Nina event is any more likely to form than normal from August onwards.

7_day (2)

BUYING AND SELLING PRICES OF RICE FROM THE PHILIPPINES’ NATIONAL FOOD AUTHORITY (In Philippine pesos per kg) As of April 19, 2013

SELLING

buying

PHILIPPINE MINING PROJECTS UNDER THE GUN FROM FALLING GOLD, COPPER PRICES
By Rene Pastor

The future of mining projects in the Philippines is under threat from something that neither the government of President Benigno Aquino nor anti-mining activists can control.

Last week, the price of gold dropped in one session by $140.40 or nearly 10 percent to register its biggest one-day fall in 30 years to trade at $1,360.90 per ounce.
Copper stocks were at their highest level in 10 years as inventories built up and prices slumped due to weaker consumption of the red metal in China, the world’s top consumer of the metal.

The falling price of both gold and copper could well make several fringe mining projects in the Philippines too expensive to develop. Why spend all that money and hassle in the Philippines when the prices of both metals are so weak and the return on your investment likely negligible?

The Tampakan project in the southern Philippines may well be the last project developed for a while, but only because Xstrata has already spent billions of dollars on the project.
The Philippine government has opted to actively support mining, but crashing metal prices may scupper attempts to entice investors grown weary of being treated as political footballs in the country.

PHILIPPINE SUPREME COURT HEARING ON MINING LAW UNCALLED FOR
By Rene Pastor

The decision by the Supreme Court in the Philippines to even entertain petitions against the mining law illustrates what is wrong with the country.

The Supreme Court decided back in 2006 the law is constitutional. That should be the end of it. The Court could easily have said, as they do in other jurisdictions, that this issue has been settled and dismissed the case outright. That is the normal thing to do.

But the Philippines does not do normal. Instead, we relitigate and refile a case to infinity and beyond.

This case is like throwing manure on the ceiling and hoping something sticks, or the court is persuaded to change its mind.

At some point, institutions in the Philippines like the Supreme Court should say unequivocally that we have gone over this law before and it is constitutional. This is one reason investors look at the Philippines and slam its legal system as a breeding ground for systematic corruption. Nothing is ever settled until the price is right, or populist politics steps in.

This is a silly decision by the Supreme Court and they know it. This is a waste of time.

WEATHER DELAYS SPRING PLANTINGS IN U.S.; LARGE CROPS IN BRAZIL, ARGENTINA
By Jack Scoville, The Price Futures Group

It seems calmer to start the week in world events, and perhaps even for world grains markets.

The weather looks to be mostly good for harvesting and shipping in South America. Indications are now that the crops in Brazil might be a little overestimated, with most now talking about soybeans production near 81 million tons instead of 84 million.

Either way, though, the production looks big. Corn production there is now estimated at about 75 million tons due to good winter crop growing conditions. Argentine crop production estimates are holding steady near 50 million tons for soybeans and 25 million tons for corn.

It also looks to be a calmer week for weather, even with one more system likely to move through the U.S. Great Plains and Midwest in the first half of the week.

The new system will move from west to east starting today. No one is forecasting the massive rains that were reported in much of the Midwest last week, but there could be some fairly significant rains that will keep flooding around and farmers out of the fields.

Chicago got a month-and-a-half of rain in one 36-hour period last week, and flooding is still reported in parts of the city and suburbs.

Most parts of the Midwest remain too wet and too cold for any work to get done, even in areas close to the Ohio River. Some work has been done in the Delta south of the Ohio River, and grains and oilseeds planting progress should be seen in the reports that will be released by USDA Monday afternoon.

Even in this area the progress is spotty, and it really depends on where you are for any progress to be noted at all. Some farmers in northern Arkansas, for example, are about done with planting, while some farther to the south in the state have barely gotten underway.

Midwest and Great Plains weather should see one more system pass the region in the first half of the week, but then forecasts call for warmer and drier conditions to develop.

Those along the Red River on the border between Minnesota and the Dakotas are very worried, and should be. The snow in the area will rapidly melt and the flooding could be catastrophic.

Other areas, though, will welcome the warmer and drier weather as it will allow fields to dry and soil temperatures to warm. This includes the Canadian Prairies, where it has been extremely cold as well.

It is possible the new crop futures could shift trends more to down if and when the weather clears. We have seen a lot of buying in new crop corn due to the weather and what cold and wet weather might mean to planted area and yields.

Generally speaking, the later it gets the bigger the chance that corn will pollinate during the hottest part of the summer and this could hurt yields.

Farmers might be forced to switch to varieties with shorter maturing terms and these varieties generally feature somewhat smaller yields. Some farmers might choose to plant more soybeans and less corn.

So weather is getting more important and improved forecasts will be watched this week to see if they change or if in fact the weather does improve.

If so new-crop corn and soybean prices could see increased selling pressure and bull spreads could once again be a feature in both markets. Supplies remain tight in spot markets although supplies down the road look to be much bigger.

PALM OIL OUTLOOK: PRICES SLIP AS DEMAND WEAKENS
By Jack Scoville, The Price Futures Group

Palm oil is trying to work lower amid less demand.

Exports so far this month have been disappointing. They are down 5 percent to 7 percent from last month and show no signs of improving in the short term.

However, super strong canola futures and stronger soybean oil futures have helped support palm oil futures. All in all, though, the short-term trends have been weak.

Palm futures have not put together much of a rally attempt even though seasonal indications show that higher prices can be expected at this time of year due to less production.

The lower production cycle is starting to pass now and that is not good news for bullish traders. Neither is the lower demand that has been seen lately.

Traders will probably shift to a sell rallies type of mindset for now. They will probably get help from Chicago futures as time passes and summer makes its inevitable appearance in the U.S.

Buyers will most likely shift to a hand-to-mouth supply scenario for the next few months, and such moves are probably best for now. We have no real down-side target for now, but a move through 2250 ringgit/ton basis the nearby futures could indicate a test of the lows just below 2100 ringgit again.

MALAYSIAN PALM OIL COUNCIL’S MONTHLY OIL PRODUCTION AND EXPORT FIGURES

1 malaysia

2 exports

3 production

COFFEE, SUGAR AND COCOA OUTLOOK
By Jack Scoville, The Price Futures Group

Coffee appears to be a market trying to form a bottom. This is true in robusta and arabica markets. The robusta remains the stronger demand market, but seems to have prospects of increasing supply.

Vietnam keeps saying it has a small harvest, but keeps exporting strong numbers. We look for this strong export pace to tail off as the country runs out of the previous crop and farmers look to hold the new crop.

Demand has been active, differentials have been strong, and prospects for overall strong prices remain. Robusta remains the weaker demand market, and this is reflected mostly in differentials paid for inferior qualities used by the big commercial roasters.

Differentials for better qualities have been strong, but demand has been minimal and the overall market in Central America and northern South America has been rather quiet. Robusta shows the best signs of moving higher for now, but Arabica is now very cheap on spreads and can move higher as well, especially if stronger roaster demand appears. The demand seems to be out there, but waiting. The buy side might wait too long and need to pay up.

Sugar is caught between big supplies in Brazil and demand for competing products, such as ethanol. It could be that sugar prices are near a bottom as well. Sugar mills are telling observers that they plan to concentrate on ethanol production first as prices are better over in that sector, then return to sugar if and when prices get stronger.

Prices remain depressed due to big supply ideas. For example, the International Sugar Organization (ISO) expects production to outstrip demand by about 6 million tons this year. Increased demand from the ethanol side can reduce this surplus, but the fact remains that there seems to be a lot of sugar around, and that means that upside potential for prices should be very limited.

Cocoa appears to have entered into a long term rally. There have been bad demand and large production ideas around for the last several months.

But the mid crop in western Africa has been not as strong as expected, and ideas are that the coming production year harvested this winter will also be less. Meanwhile, Asian production should be good as weather has been generally favorable for production this year.

But the market concentrates on the Africans, and there are some problems there. The grind data was not quite as bad as expected for Europe and much better than expected in North America, so demand is better than forecast by the trade overall. Charts show that the market is in a bullish trend. Buying interest should be strong on any short-term price weakness.

USDA PACIFIC NORTHWEST WEEKLY GRAINS SUMMARY FOR THE WEEK ENDING April 18, 2013

May wheat futures ended the reporting week on Thursday, April 18, higher, as follows compared to last Thursday’s closes: Chicago five cents higher at 7.0275 and Kansas City five cents higher at 7.4375.

Minneapolis July wheat futures trended 17.75 cents higher at 8.0225. Chicago July corn futures trended 3.75 cents lower at 6.2975 while May soybean futures closed 28.50 cents higher at 14.3050.

Soybean futures moved higher with support from good export demand of tight old crop supplies and forecast of wet, cooler weather over the weekend in parts of the Midwest.

Good export demand for U.S. soft red winter wheat and cold weather in the northern and western U.S. Plains that may cause planting delays and crop damage were supportive factors to the wheat futures during the week.

Corn futures ended the week lower with pressure on Thursday (April 18th) from commercial selling and disappointing corn export sales and shipments.

Earlier during the week, corn futures were supported by commercial buying and rain in the U.S. crop-producing areas. On Monday, grain futures were pressured by the disappointing first quarter GDP growth report for China of 7.7 percent annually, which also pressured gold, crude oil and copper markets.

CASH BIDS FOR WHEAT AND CORN AT PORTLAND AS OF APRIL 18, 2013: USDA

Cash wheat bids for April delivery ended the reporting week on Thursday, April 18, mixed compared to week- ago bids for the same delivery period. Hard red winter wheat bids and dark northern spring wheat bid trended higher, while soft white wheat bids trended lower.

Bids for US 1 Soft White Wheat delivered to Portland in unit trains or barges during April trended 7.25 to 7.75 cents per bushel lower than last Thursday’s noon bids for April delivery. Some exporters were not issuing bids for nearby delivery.

Bids for 11.5 percent protein US 1 Hard Red Winter Wheat for April delivery advanced by five to eight cents per bushel compared to last Thursday’s noon bids for the same time period supported by the higher Kansas City May wheat futures, and a higher basis bid by some exporters.

On Thursday, bids were as follows: April 8.8175-8.8875, mostly 8.8475; May 8.6875-8.8875; June 8.64-8.84; first half July 8.39-8.69, last half July 8.29-8.54 and August New Crop 8.2575-8.3575.

Bids for non-guaranteed 14.0 percent protein US 1 Dark Northern Spring Wheat for April Portland delivery trended 12.75 cents per bushel higher compared with last week’s noon bids for April delivery.

Higher Minneapolis July wheat futures were supportive to the cash bids. All exporters have switched their basis to over the July Minneapolis wheat futures.

Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each one-fourth of a percent of protein up to 16 percent protein and minus four to five cents each one-fourth of a percent of protein down to 13 percent protein.

On Thursday, bids for non-guaranteed 14 percent protein were as follows: April 9.2725-9.3725, mostly 9.3225; May 9.2725-9.3725; June 9.1725-9.3225; July 9.0225-9.1725 and August New Crop 8.8575-9.0575.

Bids for US 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 274.50-276.50, 4.50 to 5.75 per ton lower than last Thursday’s bids of 279.00-282.25.

Lower Chicago May corn futures pressured the cash corn bids. Bids for US 2 Heavy White Oats for April delivery held steady with last Thursday’s noon bids at 270.00.

COLUMBIA, OREGON GRAIN VESSEL UPDATE AS OF APRIL 18, 2013: USDA

There were six grain vessels in Columbia River ports on Thursday, April 18, with three docked compared to 10 last Thursday with five docked.

New confirmed export sales this week were limited to Japan.

Japan purchased 24,330 metric tons (mt) of minimum 14 percent protein dark northern spring wheat for May 21 to June 20 shipment. Japan also purchased 5,330 mt of maximum 10.5 percent protein western white wheat and 18,275 of minimum 11.7 percent protein hard red winter wheat for delivery by July 31.

Outstanding U.S. white wheat export sales as of April 11, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 475.3 thousand MT compared to 572.3 thousand MT on April 4, 2012, and 1073.8 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:
Japan 109.8
Philippines 73.0
South Korea 71.2
Yemen 45.00
Thailand 39.4
Taiwan 20.5
Guatemala 13.1
Nigeria 8.7
Canada 1.6
Malaysia 1.0
Burma 0.7
Sweden 0.5
Hong Kong 0.3
Total unknown 90.5

Accumulated white wheat export shipments as of April 11, 2013, in 1000 mt for the 2012-2013 marketing year, totaled 4124.7 compared to 4764.1 a year ago.

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VIETNAM WINS RICE EXPORT CONTRACT TO PHILIPPINES: Issue 30 April 14, 2013

By Rene Pastor

Vietnam has won a contract to export 187,000 metric tons of rice to the Philippines, the Vietnam Food Association (VFA) announced on the website of the Ministry for Agriculture and Rural Development.

The Philippines is one of the world’s top importers of rice although the government has launched a campaign to make the country self-sufficient in 2013. It is a goal that most rice analysts and traders believe will not be met this year.

The 25 percent broken rice was sold at a price of $459.75 per ton, above the market average of $365, according to the VFA. The rice will be shipped between April and June, the VFA said.

Vietnam will be exporting 2.2 million tons of rice in the second quarter of 2013, the VFA said while adding this includes an estimated 800,000 tons of rice in April alone.
The Philippine government’s National Food Authority (NFA), the body which makes sure rice supplies are stable, said it will be importing 163,000 metric tons of rice as part of trade obligations under the World Trade Organization.

Of the planned rice imports, some 98,000 tons will come from Thailand, one of the world’s top rice exporters, with 25,000 tons each coming from China and India, and the remaining 15,000 tons from Australia, the Philippine government had announced last week.

It seems the purchases from Vietnam will not be undertaken by the NFA and is being carried out by private buyers.

Rice stocks in the Philippines fell to a six-month low at the start of March, with government and commercial warehouses holding barely a month’s supply to feed the country’s nearly 100 million people.

The Agriculture Department said rice inventories as of March 1st, 2013 stood at 1.94 million metric tons, the lowest since Sept. 1, 2012. Since inventories reached 2.78 million tons on November 1st, the level of rice stocks has fallen over 30 percent, government statistics showed.

All the rice imports are being done ahead of the third quarter of 2013, when rice inventories in the Philippines seasonally drop to their lowest level for the year.

The Philippine Commodities Digest believes Manila’s total rice imports in 2013 will eventually reach at least 850,000 tons. U.S. agricultural experts from the USDA feel the imports would hit 1.5 million tons of rice. The experts’ forecast is not official USDA data.

The Philippine government is pinning its hopes on high-yielding seeds and improvements in infrastructure facilities, such as irrigation, to boost rice output in the country. But limits in the acreage planted to rice, historically low yields, and a surge in rice demand brought on by an increasing population may well blunt the government drive for self-sufficiency in rice.

ASIAN HARVEST PRESSURES RICE PRICES, CHINA BUYING SEEN TO SUPPORT MARKET
By Jack Scoville, The Price Futures Group

Rice continues to be a tale of two markets.

The Far East market remains weak. The harvests are starting there and demand is weak for this reason.

Vietnamese prices remain under pressure to work lower and have dropped in the past week. Even so, no one is really buying due to the harvest.

Production is expected to be strong throughout the region. The direction of prices there will depend on China, which has big problems with food safety these days due to the bird flu epidemic. Eleven people have died. Dozens have been made sick.

This is not the only problem there as rice safety has been questioned as well. The water used to produce the rice can be contaminated and there have been problems with it reported in the recent past.

China has been a strong importer of rice, and we don’t know how much they have bought in the world and how much has moved over land where smuggling is easier. But they have bought a lot and it looks like they will continue to buy, and might even buy soon from the U.S.

Chinese demand alone might be enough to keep rice prices in Asia stronger than might be expected given the bearish talk in the region.

Here in the West, the supplies remain tight, and prices have generally been heading higher. Our situation here in the U.S. is one of less and less stocks as demand remains strong.

There probably will be little help from South America as crop estimates from our sources and the official data are dropping. Prices in the West will remain elevated as buyers in this part of the world do not like the quality of rice grown in the East.

There have been imports at times from various countries, but only imports by the U.S. of Asian rice keep happening.

The U.S. imports a percentage of its rice each year. Part of this demand is for the Asian market here. Asians prefer their rice to that grown here, or at least some of them do. We also import aromatic (rice) from Pakistan, India and Thailand.

The Middle East market is interesting right now too. Indian Basmati prices are sky-high due to demand from Iran. Par boiled prices are not nearly as strong, but India seems to show little interest in selling it. They are more excited about exporting wheat.

Pakistan has been exporting, though, and getting some pretty good prices as India is mostly out of the market.

BUYING AND SELLING PRICES OF RICE FROM THE NATIONAL FOOD AUTHORITY (in Philippine pesos per kg) As of April 12, 2013

selling

buying

PROTECTING ITS MINING INDUSTRY, MANILA PURSUES EITI CANDIDACY
By Rene Pastor

It seemed innocuous enough and something the government of President Benigno Aquino should be doing all along.

The Philippine government is working hard to gain membership in the Extractive Industries Transparency Initiative (EITI). The target apparently is to win EITI approval at its next global conference in Sydney, Australia, on May 23 and 24.

It seeks to establish a global standard where those involved in extractive industries — mainly mining – report how much the company pays and a government acknowledges how much its receives. The people of a country can then review the figures.

“The EITI is a coalition of governments, companies, civil society groups, investors and international organizations,” its website says.

The move by Aquino’s government is motivated by two things.

One is good governance and transparency, something that Aquino has made a bedrock of in his administration. The other of course is political calculation.

By joining EITI, the Philippine government will help blunt the efforts of activists opposed to any mining whatsoever in the country.

Effectively, the Philippines can claim that it is responsible in ensuring that extractive industries benefit Filipinos and that it is going to all the trouble of making sure that any revenues can be tracked by independent groups.

EITI of course will not stop corruption in mining.
Come to think of it, international treaties signed by governments are often notable for how many times they are violated.

“We hope that this will also lead to improvements to tax collection processes, as well as enhance the thrust and stability in the extractive industries,” Elisea Gozun, the presidential assistant on climate change, said at a briefing.

It seems ironic that the first country in the region to join EITI is the former East Timor. Indonesia and the Philippines are now trying to play catch-up. Since the Philippine government has opted to actively support mining, it seems prudent it will join EITI even if there is some skepticism about its motives for doing so.

WEATHER PROBLEMS IN U.S., OTHER COUNTRIES MAY SOON SPARK GRAINS COMPLEX
By Jack Scoville, The Price Futures Group

Corn, soybeans and wheat have been under some price pressure in the last few weeks, mostly due to increasing movement of products in South America.

But the situation here in the north needs to be watched and might get bad enough soon to turn the trends in prices to up no matter what is available down south.

We have a developing weather problem here. The fact of the matter is that temperatures have not warmed up and farmers are having trouble getting into the fields to work.

The situation does not look to get better anytime soon as storms move from west to east and the cold weather does not go away.

It is too early to talk of losses in yields or switching from one crop to another, but the days are moving and the talk will start if the weather does not improve soon.

The U.S. and Canada are not the only countries with bad weather right now. It is too dry in Australia, and cold weather is reported in Europe, Russia, and parts of China.

It is not wise to be too bearish on prices just now, and good coverage of needs for the next couple of months is still advised.

Extended coverage of needs might become a necessity soon if things do not change. Especially for corn and wheat.

PHILIPPINE GROWING WEATHER OUTLOOK FROM GOVERNMENT PAGASA FORECASTING AGENCY AS OF APRIL 15, 2013

There are no tropical typhoons threatening the Philippine archipelago or its rice-growing areas as the country is in the middle of its summer season, the government’s Pagasa weather forecasting agency said.

The country will have generally good weather aside from isolated rain showers or thunderstorms.

The dry season in the Philippines normally runs from late November to May of the following year. The rainy season, when an average of 20 typhoons hit the Philippines, normally begins in June.

PALM OIL OUTLOOK: FIRM DEMAND KEEPING VALUES SUPPORTED
By Jack Scoville, The Price Futures Group

Palm oil got some bullish news from MPOB (Malaysia Palm Oil Board), but did not react all that well.

Some of the weakness had to do with ideas that a seasonal increase in production is coming. Some was due to weakness of prices in Chicago and in competing vegetable oils.

But the demand has been better for palm oil than the trade expected. And given the situation here and in the northern half of the world in general, the market might find its legs and hold rather than work lower.

Traders are worried about demand in general, and most specifically from Europe. As noted, the demand has held together rather well.

The down side in prices for palm oil should be rather limited. Speculators have been selling and prices should hold once the selling from them has abated. That could be as soon as this week.

USDA PACIFIC NORTHWEST WEEKLY GRAIN SUMMARY FOR THE WEEK ENDING APRIL 11, 2013

May wheat futures ended the reporting week on Thursday, April 11, higher, as follows compared to last Thursday’s closes: Chicago 3.75 cents higher at 6.9775, Kansas City 17 cents higher at 7.3875 and Minneapolis three cents higher at 7.8950.

Chicago May corn futures trended 21.25 cents higher at 6.5125 while May soybean futures closed 30 cents higher at 14.02.

Grain futures were higher for the week. Supportive factors to the higher wheat futures were continued trade concerns over the dry conditions in the Southern Plains and planting delays due to freezing temperatures and snow in North Dakota, a higher-than-expected inspected-for-export figure for the week ending April 4 of 27.2 million bushels (mb), spillover support from the higher row crop futures on Monday, and historically poor crop condition scores.

Corn futures were supported during the week by potential planting delays due to higher rainfall amounts and potential flooding, spillover support from the higher wheat futures on Monday, strong ethanol margins, higher outside markets on Tuesday, and a bullish USDA supply and demand report.

Export inspections continuing to be higher than what is needed to meet USDA export estimate, tight world pipeline supplies, good crush margins, and a bullish USDA supply and demand report released on Wednesday were supporting factors to the higher soybean futures for the week.

USDA World Supply ending stocks are estimated for 2012/2013 for April are as follows: 178.23 million metric tons (mmt) for wheat, 182.26 mmt for corn and 62.63 mmt for soybeans. U.S. ending stocks are estimated at 731 mb for wheat, 757 mb for corn and 125 mb for soybeans.

CASH BIDS FOR WHEAT AND CORN AT PORTLAND AS OF APRIL 11, 2013: USDA

Cash wheat bids for April delivery ended the reporting week on Thursday, April 11th, mixed compared to week ago bids for the same delivery period. Hard red winter wheat bids trended higher, while dark northern spring wheat and soft white wheat bids were lower.

Bids for US 1 Soft White Wheat delivered to Portland in unit trains or barges during April trended 2.25 to 15 cents per bushel lower than last Thursday’s noon bids for April delivery. Some exporters were not issuing bids for nearby delivery.

Bids for 11.5 percent protein US 1 Hard Red Winter Wheat for April delivery advanced by 17 to 22 cents per bushel compared to last Thursday’s noon bids for the same time period supported by the higher Kansas City May wheat futures, and a higher basis bid by some exporters.

On Thursday, bids were as follows: April 8.7375-8.8375, mostly 8.7775; May 8.6375-8.7875; June 8.5150-8.8150; first half July 8.3650-8.6650, last half July 8.2650-8.4650and August New Crop 8.2375-8.3375.

Bids for non-guaranteed 14.0 percent protein US 1 Dark Northern Spring Wheat for April Portland delivery trended two to 12 cents per bushel lower compared with last week’s noon bids for April delivery. A lower basis bid by most exporters weighed on bids, despite the higher Minneapolis May wheat futures.

Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each 1/4 of a percent of protein up to 16 percent protein and minus four to five cents each 1/4 of a percent of protein down to 13 percent protein.

On Thursday, bids for non-guaranteed 14 percent protein were as follows: April 9.1450-9.2450, mostly 9.2050; May 9.1450-9.2450; June 9.0450-9.1450; July 8.8950-8.9950 and August New Crop 8.7425-8.9425.

Bids for US 2 Yellow Corn delivered to Portland in single rail cars were 276.75-278.00, 7.50 to 7.75 per ton higher than last Thursday’s bids of 269.25-270.25. Bids for US 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 279.00-282.25, 7.50 per ton higher than last Thursday’s bids of 271.50-274.75. Lower Chicago May corn futures pressured the cash corn bids.

COLUMBIA, OREGON GRAIN VESSEL UPDATE AS OF APRIL 11, 2013: USDA

There were 10 grain vessels in Columbia River ports on Thursday, April 11, with five docked compared to seven last Thursday with four docked.

New confirmed export sales this week were to Japan and Taiwan.

Japan purchased the following U.S. wheat in metric tons: 32,877 of minimum 11.7 percent protein hard red winter wheat for May 21-June 20 shipment, and 19,845 of maximum 10.5 percent protein western white wheat and 22,373 of minimum 14 percent protein dark northern spring wheat for delivery by July 31.

Taiwan purchased the following wheat in metric tons for May 15-29 shipment: 10,400 of 9 percent protein western white wheat, 14,180 of 12.5 percent protein hard red winter wheat, and 21,800 of 14.5 percent protein dark northern spring wheat. Taiwan also purchased the following wheat in metric tons for June 1-15 shipment: 13,050 of 12.5 percent protein hard red winter wheat, and 24,550 of 14.5 percent protein dark northern spring wheat.

Outstanding U.S. white wheat export sales as of April 4, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 572.3 thousand MT compared to 653.3 thousand MT on March 28, 2012, and 1263.6 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:
Japan 106.8
Yemen 100.00
Philippines 85.0
South Korea 79.0
Thailand 39.4
Taiwan 10.1
Nigeria 8.7
Burma 1.9
Canada 1.6
Malaysia 1.5
Sweden 0.5
Hong Kong 0.3
Total unknown 137.5.

Accumulated white wheat export shipments as of April 4, 2013, in 1000 MT for the 2012-2013 marketing year, totaled 3971.9 compared to 4539.5 one year ago.

PHILIPPINE RICE STOCKS DROP TO 6-MONTH LOW: Issue 29 April 7, 2013

By Rene Pastor

Rice stocks in the Philippines, one of the world’s key importers of the grain, fell to its lowest level in six months, with government and commercial warehouses holding barely a month’s supply to feed the country’s nearly 100 million people.

The Agriculture Department said rice inventories as of March 1st, 2013 stood at 1.94 million metric tons, the lowest since Sept. 1, 2012. Since inventories reached 2.78 million tons on November 1st, the level of rice stocks has fallen over 30 percent, government statistics showed.

The fall puts in perspective the decision by the National Food Authority (NFA), the government body which makes sure rice supplies are stable, to import 163,000 metric tons of rice.

While Manila has said the purchases are part of obligations under the World Trade Organization to import a total of 183,000 tons of rice in 2013, the shrinking stock level may have also spurred on the decision to bring the rice in at this time.

That leads to the next question: Will the imports be enough, or will more be needed?

Given the strength of rice demand and the need to boost stocks when the typhoon season hits, the wise money should be on more imports, not less.

The Philippines is one of the world’s top consumers of rice as the government of President Benigno Aquino said it is aiming to make the country self-sufficient in the grain this year.

A recent report by the U.S. agriculture attaché in Manila said self-sufficiency in rice by the Philippines will likely remain out of reach. The report is compiled by U.S. agriculture experts at its embassy in Manila and while it is not official U.S. government data, it is considered authoritative by the commodity trading community.

“While the (government) has successfully increased rice production and reduced imports in its drive toward self-sufficiency, the country remains a major importer,” the report prepared by Perfecto Corpuz and William Verzani said.

They said marketing year (August/July) 2012/13 rice imports “are expected to remain at 1.5 million tons, inclusive of unregistered imports, and are forecast to decline to 1.2 million tons in MY 2013/14 due to improved production and the (government’s) import cap.”

“Most experts agree that a low milling rate, high tariffs (35-40 percent) and a thriving economy will keep the Philippines a significant rice importer for the foreseeable future,” the report concluded.

As far as inventories go at this time, rice stocks in government warehouses are good for 17 days of daily consumption while those in commercial warehouses are enough for 15 days.

The Philippines consumes about 35,000 to 36,000 tons of rice per day. Normally, the government should have about two to three months’ worth of stocks on hand.

Of the planned rice imports by the Philippines, some 98,000 tons will come from Thailand, one of the world’s top rice exporters, with 25,000 tons each coming from China and India, and the remaining 15,000 tons from Australia, the government had announced last week.

The imports are also being done ahead of the third quarter of 2013, when rice inventories in the Philippines seasonally drop to their lowest level for the year. Traders believe the imported rice will likely arrive in mid-May or later.

The Philippine Commodities Digest believes Manila’s total rice imports in 2013 will eventually reach at least 850,000 tons. U.S. agricultural experts from the USDA feel the imports would hit 1.5 million tons of rice. The experts’ forecast is not official USDA data.

The Philippine government is pinning its hopes on high-yielding seeds and improvements in infrastructure facilities such as irrigation to boost rice output in the country. But limits in the acreage planted to rice, historically low yields, and a surge in rice demand brought on by an increasing population may well blunt the government drive for self-sufficiency in rice.

RICE PRICES STALL, BUT SUPPLIES STAY TIGHT
By Jack Scoville, The Price Futures Group

Rice seems to have topped out here for now in futures, but the situation in the western half of the world remains tight.

Rice bears got some help with competing crops moving lower in price, but planted area and production still look down for the coming year.

The U.S. Delta in particular has been wet and cold and progress in that region has been minimal.

Texas is about planted and areas of the Delta near the Gulf of Mexico are planted now. Farther north, though, little if any field work has been done. But, producers there have time, so there is not much concern yet.

BUYING AND SELLING PRICES OF RICE FROM THE PHILIPPINES’ NATIONAL FOOD AUTHORITY (in Philippine pesos per kg) As of April 5, 2013

selling

buying

PHILIPPINE WHEAT, CORN IMPORTS SEEN TO DECLINE
By Rene Pastor

Wheat imports by the Philippines, one of the biggest buyers of the U.S. grain, are expected to decline while rising corn production is seen cutting imports by nearly half, a report by the U.S. agriculture attaché said.

With wheat production recovering in Canada and Australia, and increased flour imports from Turkey, the level of “U.S. wheat sales to the Philippines is expected to significantly decline” from the record in 2011/12 of $699 million, the report said. The attaché report is prepared by U.S. agriculture experts at its embassy in Manila. It is not official data from the U.S. Agriculture Department, but it is considered highly by the commodity trading community.

“Total wheat imports for milling and feed are expected to decline from 4.0 million (metric) tons in marketing year 2011/12 to 3.2 million tons in MY 2012/13 due to ample stocks and reduced feed use,” the report said.

Wheat imports by the Philippines are forecast though to rise slightly to 3.4 million tons in MY 2013/14 as inventories recover and milling use increases.

Culinary tradition in the Philippines includes the daily consumption of a small, rounded bread called the ‘pan de sal’ as part of its breakfast fare. The Philippines produces no wheat. The U.S. supplies anywhere from 85 percent to 90 percent of the wheat consumed by Filipinos.

Along with corn, the wheat is used mainly as animal feed for a rapidly expanding livestock and poultry industry.

Philippine corn imports stood at 202,000 tons in MY 2011/12, but they are expected to drop by over half to around 100,000 tons in 202/13 and drop even further to 75,000 tons in MY 2013/14 – relatively insignificant since the grain can be brought in on one Cape transport vessel which has a capacity of 100,000 tons.

Philippine corn production is expected to rise due to “expanded planting of biotech seed varieties and the Philippine government’s investment in infrastructure improvements,” the attaché report said.

Philippine corn production in 2012 reached a record 7.4 million tons.

GRAINS/OILSEEDS GRIND LOWER, CHINA BIRD FLU MAY HIT SOYBEAN/MEAL DEMAND
By Jack Scoville, The Price Futures Group

Prices in futures and in cash markets continued to work lower last week in grains and oilseeds markets around the world. The main driving factor was the USDA quarterly stocks reports that showed bigger-than-expected supplies here in the U.S.

The news reports of a new bird flu outbreak in China gave ideas of weaker demand for soybeans and soybean meal there and also hurt futures.

This week, the USDA releases its monthly supply and demand estimates and the reports are expected to at least partially reflect the increased supplies shown in the quarterly stocks reports, although increased demand estimates should reduce the amount of the increase.

The reports will also include world estimates, and plenty of supplies around the world.

So the general trend has turned here in terms of news. It was not that long ago when everything pointed to tight supplies or even no supplies in the case of soybeans. Now the talk is that there is plenty available.

Charts also reflect the change.

Futures turned sharply lower in response to the stocks reports, and finally started to find some traction near the end of last week.

It is possible that a short-term bounce is coming. But the turn last week left charts with a look that lower prices are coming down the road.

Buyers can extend coverage now before the USDA reports, but should be aware of the change in the sentiment here and also on the charts and many will keep buying interest less than normal.

We don’t blame them. They are finally getting some relief, and should take advantage of it.

But keep an eye on the weather here in the northern half of the world. We all are looking at the potential for big crops in the coming year in the north, including the U.S., Canada, Europe, Russia, and everywhere else it seems.

But very little of it has been planted and the winter crops are proving to be less than stellar, so things could change fast if the weather is not good.

The weather is fine for now, but too wet and cold in many areas of the northern half of the world and initial progress is slow.

The U.S. Agriculture Department (USDA) released its quarterly stocks estimates about two weeks ago.

Hereunder is the USDA quarterly stocks data:

Dec. 1 Mar. 1
USDA Average Range Stocks Stocks
Corn 5.40 5.030 4.916-5.248 8.030 6.023
Soybeans 1.00 0.947 0.912-1.059 1.966 1.374
Wheat 1.23 1.167 1.010-1.238 1.660 1.199

THAI RICE PRICES LITTLE CHANGED, DEMAND SLOW
By Rene Pastor

Thai domestic and export prices for rice were largely unchanged from the previous week, except for parboiled rice, which declined about 1 percent to 2 percent due to a lack of new inquiries, a report by the agriculture attaché at the U.S. embassy in Thailand said. The report by the attaché is not considered an official report by the U.S. Agriculture Department, but it is considered authoritative by the commodity trade.

Thailand is one of the top exporters of rice in the world.
The report said unofficial Thai rice exports, not including fragrant rice, for the period March 25 to 31, 2013 totaled 71,921 metric tons, down 5,280 tons from the prior week, and down 1,624 ton from the four-week moving average of 73,544 tons.

Exports of Thai white and parboiled rice from January 1 through March 31st, 2013, totaled 1,064,342 tons, down 11.7 percent from the 1,204,938 tons over the same period last year, the report said.

PHILIPPINE WEATHER OUTLOOK FROM GOVERNMENT PAGASA FORECASTING AGENCY

There are no tropical typhoons threatening the Philippine archipelago or its rice-growing areas as the country is in the middle of its summer season, the government’s Pagasa weather forecasting agency said

The country will have generally good weather aside from isolated rain showers or thunderstorms, mostly over the central Visayas and southern Mindanao islands, Pagasa said.

The dry season in the Philippines normally runs from late November to May of the following year. The rainy season normally begins in June.

WHEAT STRONG ON CHINESE, RUSSIAN BUYING
By Jack Scoville, The Price Futures Group

Wheat is the one market that has been able to hold strong. News reports of freeze damage to crops helped support prices here, but it was really talk of Chinese and Russian buying interest that made these markets strong.

Wheat needs better weather here in the U.S. and also in Europe and Russia. It is too dry here and too cold in the other two producing regions.

Usually, wheat prices start to move lower as the crops come out of dormancy and start to green up and look good. But crops are in such poor shape here that so far that has not happened.

Wheat is going to be a weather market for a while and buyers should be comfortable with purchase levels. Consider using futures or options to offset potential price risk if a buyer is unable to ensure adequate supplies in the cash market.

PALM OIL OUTLOOK: MALAYSIAN DATA AWAITED, MARKET IN A BAND
By Jack Scoville, The Price Futures Group

Palm oil held last week on news of stronger-than-expected exports from private sources and on ideas that the Malaysia Palm Oil Board (MPOB) this week will show lower stocks.

It is a lower production cycle time for east Asian palm oil producers, and this cycle will play itself out over the next couple of months.

Demand has not been bad considering price weakness in competing vegetable oils.

Futures markets appear to be in a trading range, implying stable prices in east Asian cash markets.

The fundamentals seem to imply stable markets for now as well. The MPOB data this week will probably point the market in the direction of its next price move, but neutral data and a sideways trade seem indicated by analysts at this time.

USDA PACIFIC NORTHWEST WEEKLY GRAIN SUMMARY FOR THE WEEK ENDING APRIL 4, 2013

Cash wheat bids for April delivery ended the reporting week on Thursday, April 4th, were mixed compared to week-ago bids for the same delivery period. Hard red winter wheat bids trended lower, dark northern spring wheat bids trended higher, and bids for soft white wheat were steady to lower.

May wheat futures ended the reporting week on Thursday, April 4th, mixed, as follows compared to last Thursday’s closes: Chicago 6.25 cents higher at 6.94, Kansas City five cents lower at 7.2175 and Minneapolis 6.25 cents higher at 7.8650. Chicago May corn futures trended 65.25 cents lower at 6.30 while May soybean futures closed 32.75 cents lower at 13.72.

Wheat futures were higher for the week, with support coming later in the week from a lower good/excellent crop rating report, potentially crop damaging weather in the U.S. wheat-growing areas, and increasing demand.

Early in the week, wheat futures were pressured by the bearish grain stocks and planting intentions report released on March 28, spillover pressure from the lower corn futures and chart selling.

Corn futures were lower for the week, with the bearish grain stocks and planting intentions report, slow export demand, and a higher U.S. dollar on Tuesday as pressuring factors. Soybean futures were pushed lower this week by spillover pressure from the lower corn and wheat markets on Monday, lower-than-expected inspections-for-export figures, continued shipments from South America, and uncertainty in the feeding industry in China due to the bird flu outbreak.

CASH BIDS FOR WHEAT AND CORN AT PORTLAND AS OF APRIL 4, 2013: USDA

Bids for US 1 Soft White Wheat, delivered by unit trains and barges to Portland during April ended the reporting week on Thursday, April 4th, at 7.95-8.10, mostly 8.0475. Last Thursday’s noon bids were 8.0775-8.10 for April delivery.
There were no white club wheat premiums for nearby delivery for this week or last week.

Bids for US 1 Soft White Wheat delivered during April trended steady to 12.75 cents per bushel lower than last Thursday’s noon bids for April delivery. There were no white club wheat premiums for nearby delivery for this week or last week. Some exporters were not issuing bids for nearby delivery.

Nearby bids for US 1 Soft White wheat began the reporting week on Friday as not available as the grain markets were closed.

On Monday, bids began the reporting week at the weekly high of mostly 8.0550, then fell to mostly 7.9525 on Tuesday, before rising slightly to 7.98 on Wednesday. Today (Thursday), bids ended the week at 8.0475.
There were no new confirmed export sales of white wheat this week.

Forward month bids for soft white wheat were as follows: May and June 7.95-8.10, July 7.95-8.00 and August New Crop 7.35-7.48. One year ago, forward month bids for soft white wheat were as follows:
May 6.95-7.05
June 6.80-6.95
July 6.64-6.85
August New Crop 6.64-6.65

Bids for 11.5 percent protein US 1 Hard Red Winter Wheat for April delivery declined by five cents per bushel compared to last Thursday’s noon bids for the same time period and lined up with the lower Kansas City May wheat futures. On Thursday, bids were as follows:
April 8.5175-8.6675, mostly 8.6175
May 8.4175-8.6675
June 8.3375-8.6375
July not available
August New Crop 8.0525-8.1025

Bids for non-guaranteed 14.0 percent protein US 1 Dark Northern Spring Wheat for April Portland delivery trended 6.25 cents per bushel higher compared with last week’s noon bids for April delivery. Higher Minneapolis May wheat futures supported bids. Protein scales for non-guaranteed 14.0 percent protein were plus zero cents each 1/4 of a percent of protein up to 16 percent protein and minus four to five cents each 1/4 of a percent of protein down to 13 percent protein. On Thursday, bids for non-guaranteed 14 percent protein were as follows:
April 9.1650-9.3650, mostly 9.2950
May 9.1150-9.3150
June 8.9950-9.0450
July not available
August New Crop 8.73-8.83

Bids for US 2 Yellow Corn delivered to Portland in single rail cars were 269.25-270.25, 23.75 to 24.50 per ton lower than last Thursday’s bids of 293.75-294.00. Bids for US 2 Yellow Corn truck delivered to the inland feeding areas of Yakima, Washington, and Hermiston, Oregon were 271.50-274.75, 23.25 to 23.50 per ton lower than last Thursday’s bids of 294.75-298.25. Lower Chicago May corn futures pressured the cash corn bids.

COLUMBIA, OREGON GRAIN VESSEL UPDATE AS OF APRIL 4, 2013: USDA

There were seven grain vessels in Columbia River ports on Thursday, April 4, with four docked compared to ten last Thursday with four docked. There were no new confirmed export sales this week.

Outstanding U.S. white wheat export sales as of March 28, 2013 for the marketing year beginning June 1, 2012 and ending May 31, 2013, totaled 653.3 thousand MT compared to 675.6 thousand MT on March 21, 2012, and 1357.4 thousand MT one year ago.

Outstanding white wheat export sales for the 2012-2013 marketing year were to the following countries in 1000 MT:
Japan 135.8
Philippines 103.0
Yemen 100.00
South Korea 92.7
Thailand 49.5
Nigeria 19.2
Taiwan 10.0
Burma 2.5
Canada 1.3
Malaysia 1.0
Sweden 0.5
Hong Kong 0.3
Total unknown 137.5

Accumulated white wheat export shipments as of March 28, 2013, in 1000 MT for the 2012-2013 marketing year, totaled 3869.3 compared to 4372.0 one year ago.

MANILA WILL NOT BE SELF-SUFFICIENT IN RICE IN 2013: REPORT: Issue 19 Jan 27, 2013

By Rene Pastor

The Philippines, one of the world’s biggest rice importers, will not hit a highly touted government target to become self-sufficient in rice in 2013 because of strong consumption of the staple food of its 95 million people, while damage from typhoon Bopha (Pablo) to its main corn farms on southern Mindanao island will force the country to increase corn imports by 85 percent in 2013.

A report by the U.S. agriculture attaché at the U.S. embassy in Manila said that despite increased rice output, ballooning demand will force the country to import 1.5 million metric tons of rice, the same amount it imported in 2012.

The report added that severe damage from Bopha (Pablo), which hammered Mindanao in December 2012, will force imports of corn, used mainly as livestock feed in the country, to jump 85 percent in 2013 to 185,000 metric tons.

Attaché reports are compiled by U.S. agricultural experts in its embassies even if they are not considered official data issued by the U.S. Agriculture Department. But they are considered as highly reliable by industry experts and the commodity trading community.

The attaché said damage from typhoon Bopha was even more severe than the government has admitted. The Philippine Agriculture Department said 35,000 hectares of corn farms and 28,000 hectares of rice lands on southern Mindanao island were damaged, resulting in corn losses of 77,000 metric tons and 17,000 tons of rice.

“(The USDA attaché) post estimates corn losses as a result of the typhoon at 135,000 tons, almost double the preliminary (Philippine government) estimate,” the report said.

“In addition, an estimated 20,000 tons of milled rice stocks were spoiled due to the typhoon. Rice imports in marketing year 2012/13 (August/July) are expected to remain at 1.5 million tons due to good production, while corn imports were raised by 85,000 tons and expected to reach 185,000 tons during the year,” the attaché report concluded.

Philippine milled rice production in 2012 hit around 11.5 to 12 million tons and Manila has waxed optimistic output could spike higher this year and make it self-sufficient in the cereal.

Philippine rice stocks are also seen in the attaché report as dropping to very low levels, which traders feel could again be a factor in forcing or pressuring Manila to consider rice imports.

“As a matter of government policy, a 90-day national rice buffer stock entering the third quarter of each year should be maintained,” the report said. “At an estimated national daily rice requirement of 34,000 tons, ending rice stocks in marketing year 2012/13 would be sufficient for around 40 days.”

MANILA RICE EXPORT DREAM MAY BE OUT OF REACH
By Rene Pastor

President Benigno Aquino used the platform of the Davos World Economic Forum in Switzerland to declare the Philippines’ drive for self-sufficiency may turn one of the world’s top importers of rice into an exporter of the staple. But he left an out: If Manila fails to hit the target, there’s always bad weather to blame.

“From importing almost two and a half million metric tons of rice in 2010, now, if the weather permits, we are looking at full rice self-sufficiency—and even the possibility of exporting it—by the end of this year,” Aquino said.

The reality is that bad weather is a given in the Philippines. The country gets hit by an average of 20 typhoons a year and most plow into the islands before heading off for Vietnam and China. Early in the typhoon season, the storms would clip the northern islands and then smash into Taiwan or Japan.

Simply put, the odds in the Philippines are on bad weather, not good.

The Philippines is relying on increased investments in irrigation systems and the wider use of GMO rice to boost productivity. Yearly milled rice output by the Philippines is expected to rise beyond 12 million tons and hopefully get to 13 million tons.

Philippine annual milled rice consumption now stands at 13 million tons. With mid-term congressional elections in May and an expanding, more affluent population, the consumption figures can only rise.

“Despite the cutbacks in harvest area and production during the fourth quarter of the year, the significant increment in Luzon was able to offset the output losses due to damages by typhoon Pablo (Bopha) in Mindanao. An increase in palay (unmilled) production is foreseen in the first half of 2013,” the government’s Bureau of Agricultural Statistics said in a report.

The Philippines is also hemmed in by the amount of land it can plant to rice, currently around 4.69 million hectares, and dwarfed considerably when compared to Vietnam’s 7.41 million hectares and Thailand’s 10.25 million hectares.

These numbers are the primary reason why independent analysts and the Digest believe rice imports of around 1.0 to 1.5 million tons are still likely this year. (See previous stories on this issue)

The self-sufficiency mantra adopted by Aquino and his administration has also become a matter of pride and politics.

The Philippine government would want to claim credit for finally achieving self-sufficiency in the staple food of the country’s 95 million people. Politically, that would go down well with Filipino voters going to the polls in May.
The Digest believes the target, even if hit, will not be sustainable given limitations of population and arable land sown. We are not even throwing in the challenges posed by climate change into the mix.


PHILIPPINES, 9TH LARGEST MARKET OF U.S. AGRI PRODUCTS: REPORT

The Philippines, the second most populous country in Southeast Asia, is now the 9th largest market in the world for U.S. agricultural exports as it cracked the top 10 for the first time in 45 years, a report by the U.S. agriculture attaché said.

U.S. agriculture export sales to the Philippines rose 10 percent in 2012 to $2.3 billion and are seen hitting $2.5 billion in 2013, the report said.

Attaché reports are put together by U.S. agriculture experts at its embassies but are not official data from the U.S. Agriculture Department. They are considered as authoritative by the commodity trading community.

“All indications are for continued strong growth in 2013, (with export sales) currently forecast to reach $2.5 billion,” the report prepared by William Verzani and approved by Philip Schull said.

“A thriving economy, a booming food processing sector, a strengthening peso, and dominant market shares in milling wheat (at virtually 100 percent) and soybean meal (at 60 percent compared to 43 percent in 2011) made the Philippines the 9th largest U.S. market in this vibrant sector through October 2012,” the report said.

The top 10 U.S. agricultural exports to Manila in order of value were wheat, soybean meal, dairy products, red meats (fresh, chilled, and frozen), poultry meat, feeds and fodders, snack foods, processed fruits and vegetables, fresh fruits and red meats (prepared and preserved).

“The U.S. continues to the Philippines’ number one supplier of agricultural products,” the attaché report said.

“However, competition has greatly intensified and new challenges have emerged for U.S. exporters due to recent bilateral and regional free trade agreements.”

In wheat, the U.S. is still the primary source of the grain for the country of nearly 100 million people. U.S. wheat is the primary ingredient in the ‘pan de sal’ bread used by millions as part of their breakfast staple.

Australia, which enjoys cheaper shipping costs to Manila, has emerged as a competitor for U.S wheat.

The attaché report said “good sales opportunities” for U.S. agricultural exporters abound “because of the robust Philippine economy, steady growth in the country’s retail, food service and food processing sectors, and consumer familiarity with American brands.”

The Philippines posted the fastest economic growth within the ASEAN region of Southeast Asia through the third quarter of 2012.

Most economists said two factors were fueling the economic growth. They are remittances by the 10 million Filipinos working outside the country and the business outsourcing center inside the nation. The attaché report said the World Bank projected remittances to the Philippines will hit $24 billion in 2012, up 20 percent from the previous year, making the country the world’s third-largest recipient of money sent by overseas workers. The country’s business process outsourcing (BPO) sector expects profits to reach $14 billion in 2012, up 28 percent from the previous year.

GRAINS PULLBACK AFTER USDA-FUELED RALLY MAY BE BRIEF, DEMAND SEEN
By Jack Scoville, The Price Futures Group

It looks like grains and oilseeds futures here in Chicago topped out for the minute. The rally in response to the USDA reports has run its course and prices are now correcting lower. However, this should be just a short-term correction.

The factors that caused USDA to raise demand and cut ending stocks have not gone away. Demand for U.S. grains and soybeans is there, although hard to find for corn on the weekly exports announced by USDA.

But wheat export demand is picking up, and the corn export demand, meager as it is, is more or less in line with USDA projections. Soybeans demand remains well ahead of USDA projections for this time of year.

So there is no reason to expect that prices will go down too much for now. Most eyes are turning south as traders try to gauge what will be coming out of South America and when, as this will have a big effect on the U.S.’s ability to export and hold strong prices together.

The situation is far from great down there. Brazil has had better weather, but it keeps raining in the central and northern sections of the country. Crops there are getting ready to be harvested, and many parts of the Mato Grosso are ready for harvest.

But the rains keep the equipment out of the yields and nothing gets done. Many had anticipated that Brazil could begin to export in February, but this is going to be hard now. It is too hard for the farmers to get the crop harvested, then into condition to be shipped, then on a truck to the port, then through the port system and onto boats for shipment on time now.

There are boats in ports now to take 2.0 million tons of soybeans, and only part of that will be shipped. The wait is now estimated at 45 days. Not to mention corn exports. It is going to be hard for anyone to get anything out of Brazil before March, and the soybeans will flow first even with very strong corn demand there.

The wait for corn is just as long as the wait for soybeans. All this does is keep the window of opportunity open for U.S. exporters for at least another month. it implies that bull spreads should continue to work in corn and especially soybeans. That means you can expect the front months to hold stronger than deferred months in Chicago at least into the spring and summer.

Wheat should continue to see a stronger export sales pace for the next few months as we have it here and most other exporters do not. Our prices are pretty competitive anywhere, and our quality is generally good this year, so the demand should increase over the next few weeks as it
has for the past few weeks.

Meanwhile, crop conditions in the U.S. central and southern Great Plains remain poor. Production potential is going down for us, and will really start to slide if the region does not get some very beneficial precipitation in the next few weeks as the crop starts to come out of dormancy.

That could make things very interesting, even if Europe and Russia come up with good crops. The weather has been mixed there, with some very cold conditions in Europe making for some winterkill potential, but better conditions than last year in Russia.

Conditions are good in the U.S. for the Midwest soft red winter wheat crop. But half the production of U.S. wheat — that is all of the hard red winter wheat crop — is under some pretty severe stress right now, and overall U.S. wheat production will be impacted.

In rice, the Gulf of Mexico region is about out, and this means that the millers better be bought. Demand out of California for medium and short grain has been poor so far this year but is expected to improve as Korea and Japan move to fulfill their quota deals.

Seasonally, it is a time of higher prices for just about all of the grains and oilseeds grown here in the U.S. Buyers should use the price weakness to ensure supplies at least through the first quarter and possibly into the middle of the summer.

PALM OIL OUTLOOK: TRADING SLOW BUT EXPORTS REMAIN STRONG
By Jack Scoville

Palm oil had a slow week last week due in part to some public holidays in top producer Malaysia. Prices traded in a sideways fashion in cash and futures markets last week.
The private sources reported that exports so far this month are behind those of last month, but are still strong at over 1.0 million tons from Malaysia with several days left in the month.

Traders remain cautious about demand as China remains a problem with its new quality standards. However, Chinese officials and buyers are in Malaysia now explaining the new requirements and how to work with them to the exporters, so there is every chance that exports can start again to that important buyer in the near future and perhaps after the Chinese New Year which is coming very soon now.

Production remains very strong in Malaysia and also in No. 2 producer Indonesia right now, so supplies are going to be there for the buyers. This is the good news.

The other good news is that India increased import taxes a couple of weeks ago, but did so for all vegetable oils, so palm oil will continue to enjoy a significant price advantage to that important buyer and the exports will continue to flow to there.

Big supplies and good demand usually mean moderate prices, so we expect palm oil to continue to trade in the current range as the big stocks reported in both Malaysia and Indonesia are reduced.

Prices can start to rally once the stockpiles have been reduced, but this will most likely take some time. Production is reported as strong even though it is usually a time of year when production starts to drop a bit.

Longer term, we hold with our ideas that prices can work higher rather than lower over time and hold to the targets made last week. But this week could see some selling as futures failed in an attempt to move higher last week.

Like the expected action in Chicago, we expect any down moves to be short-lived and not likely to go very far. It could turn out to be a great chance to buy for those short in this market.

For now, we see no reason to extend coverage beyond what is normal for buyers, nor do we see reason for sellers to get real aggressive. Normal purchases and sales paces should be maintained.

PHILIPPINE 2012 CORN OUTPUT AT RECORD, BUT MAY FALL IN 2013: GOV’T

Philippine corn production in calendar 2012 hit a record 7.41 million metric tons, but a string of late typhoons could hit output in 2013, the country’s agriculture department said.

The use of improved seeds, irrigation and fertilizers boosted output by 6.25 percent from the 2011 level of 6.97 million tons, a statement from the Department said.

“Corn production may decline compared to the 2012 level as some areas have yet to recover from damages brought by typhoons,” a report from the Bureau of Agricultural Statistics explained.

With that prospect of lower output in mind, analysts believe the Philippines will likely refrain from exporting corn despite a bumper harvest last year.

Philippine corn growers had asked permission from the government to export from 200,000 to 400,000 tons of corn to take advantage of higher world prices caused by the worst drought in 25 years which hit crops, such as corn, in the U.S. Midwest.

The higher Philippine corn production was caused mainly by an increase in harvested area caused by higher farmgate prices.

Corn harvested area stood at 2.59 million hectares, almost 2 percent up on last year’s 2.54 million hectares. Philippine corn yields increased over 4 percent to 2.86 tons per hectare, from 2.74 tons in 2011.

Corn and rice are staples in the central and southern Philippines. It is also used heavily as livestock feed.

INDONESIA’S BULOG AGENCY SAYS COUNTRY HAS ENOUGH RICE STOCKS

Indonesia’s commodity logistics agency Bulog said the most populous country in Southeast Asia has enough stocks of rice for its 200 million people.

Bulog president and director Sutarto Alimoeso said rice has been stockpiled in anticipation of extreme weather conditions. He said the rice they have stashed away is enough for eight months.
“The ideal rice stocks should be those that would meet a three-month need, but we…are able to meet the need for eight months,” the Bulog official said. He expressed the hope that weather conditions would not become so extreme as to cause difficulties in distributing logistics and preventing drastic price increases.

Indonesia is the third biggest rice producer in the world, according to the research agency International Rice Research Institute. Most of the rice is grown on the main island of Java.

The country is also the 4th most populous in the world and has the most people in Southeast Asia.