Feed Materials Commentary

By Roger Dean

Raw material costs will, increasingly, reflect harvest prospects in the northern hemisphere and, particularly in the case of the UK, the exchange rate of sterling against the US dollar and the Euro. The latest Grain Market Report, (GMR500) published by the

International Grains Council on 27 June, adjusted the forecast for total grain production in 2018-19 by 5 million tonnes to 2,142 million tonnes; this largely reflected upward revisions for maize harvests in South America and South Africa. The main effect of this was to boost the outlook for ending stocks, up by around 2 million tonnes to 619 million tonnes, resulting in a decline, year-on-year, of around 26 million tonnes. As regards prospects for 2019-20, the projection for total world

grain production has been cut by 21 million tonnes to 2,156 million tonnes, largely reflecting a difficult start to the growing season for US maize. Because of revisions for India, the EU and Ukraine, the forecast for wheat production, at a record 769 million tonnes, is 3 million tonnes higher than the previous month’s projection. The 2018-19 world soybean production estimate is projected at a

record 363 million tonnes. Mainly reflecting a reduction in US soybean production, where the weather has been challenging, global soybean output in 2019-20 is provisionally seen as 349 million tonnes, 9 million tonnes lower than the previous month’s estimate and down by 4 per cent on the previous year. In its June 2019 edition of world agricultural production, the United

States Department of Agriculture’s Foreign Agricultural Service (FAS) projected total world wheat production during the 2018-19 harvest year at 731.7 million tonnes, down by 30.2 million tonnes or 3.4 per cent from the preceding harvest year. However, in its second estimate of the 2019- 20 world wheat harvest, FAS projected world wheat output at 780.83 million tonnes, 3.34 million tonnes ahead of its initial May projection and constituting a marginal increase of 0.4 per cent. The largest contributor to this increase, at 1.2 per cent, was India, at 101.2 million tonnes, up 1 per cent both from FAS’s May projection and the previous year’s crop. The area harvested is estimated at 29.8 million hectares, up slightly from last year. Yield is estimated at a record 3.39 tonnes per hectare, up by about 1 per cent from last year. Ideal growing conditions are reported to have boosted yields and led to record production. Wheat production in both Russia and Ukraine is currently boosted

by a million tonnes compared to FAS’s May estimate. In Russia, this reflects wheat yield is forecast at 2.94 tonnes per hectare, up 1 per cent from the May figure and up 8 per cent from last year. Total area remains unchanged at 26.5 million hectares. It should be noted that crop production forecasts for Russia exclude output from Crimea. Wheat production in Ukraine in 2019-20 is forecast at 30.0 million

tonnes, up 3 per cent from FAS’s May estimate and up 20 per cent from last year. Harvested area is forecast at 7.0 million hectares, unchanged from last month and up 4 per cent from last year. Yield is forecast at a record 4.29 tonnes per hectare, up 3 per cent from last month and up 15 per cent from last year. Although there are no changes in the estimate of EU wheat


production in 2019-20, ‘offsetting adjustments’ conceal changes at country level. In particular, extended dryness in the Iberian Peninsula has resulted in the largest EU wheat reduction in Spain, down by 1.1 million tonnes. Conversely, above-average and timely rainfall occurred throughout much of central and eastern Europe, improving soil moisture which had been low since last year. Because of the increased moisture, Romanian wheat is estimated up 700,000 tonnes from last month, while Italian wheat is estimated up by 400,000 tonnes, reflecting ‘beneficial rains’ that have fallen on wheat growing areas of Italy during May. The FAS report on world maize production in 2018-19 set estimated

production at 1,120 million tonnes, 3.9 per cent ahead of the preceding year. FAS’s May estimate of maize production in 2019-20 suggested a further increase of 1.2 per cent but, in June, this was sharply scaled back, largely as the result of major reductions in estimated US maize production. US production was reduced by almost 34.6 million tonnes compared

to May’s estimate, a reduction of 9 per cent. This represented significant decreases in projected plantings and yields for the 2019-20 crop. The USDA in its June World Agricultural Supply and Demand Estimates report forecast the area planted to maize at 89.8 million acres, down 3 million acres from what producers intended to plant as indicated in the Prospective Plantings report, issued at the end of March. Harvested area for maize in 2019 was projected at 82.4 million acres, down 3 million from the May projection but up 0.7 million acres from 2018. The average maize yield in 2019 was projected at 166 bushels per acre, down 10 bushels per acre from the May outlook and down 10.4 bushels per acre from 2018. It would be the lowest maize yield since the 158.1 bushels per acre reported in 2013. USDA reported that ‘Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects’. In its June projection, USDA estimated Brazil’s 2018-19 maize

production at a record 101 million tonnes, unchanged from FAS’s initial, May estimate and up 19 million tonnes or 23 per cent from last year. Yield is estimated at a record 5.77 tonnes per hectare, up 1 per cent from last month’s estimate and up by 17 per cent from last year’s crop which was affected by drought. Production is currently estimated as being 11 per cent higher than the 5-year average. This year’s first-crop maize yields were reduced by dry weather in parts of the south-east and north-east of Brazil; for second-crop maize, however, what FAS describes as ‘bumper yields’ are estimated. Second-crop maize was planted earlier than average and benefited from ‘extensive and extended’ rainfall. Satellite-derived images of major second-crop maize areas indicate a well-developed crop with higher yield prospects in all regions surveyed. Harvest is underway in the major maize growing regions and will continue into September. USDA forecasts the 2019-20 Argentina maize production at 50

million tonnes, up 2 per cent from last month and up 2 per cent from last year. Harvested area is forecast at a record 6.1 million hectares, up nearly 2 per last month and up 3 per cent from last year. Prospects for an increase in the area planted to maize are likely to reflect expectations of higher prices. Yield is forecast at 8.20 tonnes per hectare, up nearly 1 per cent from last month, but down 1 per cent from last year. Depending on moisture and temperature, planting will begin in mid- to late-September. Canadian maize production for 2019-20 is projected at 14 million tonnes, down 1.4 million tonnes from FAS’s May estimate but up 100,000 tonnes from last year. The Canadian harvested area is forecast at 1.4 million hectares, down 100,000 hectares from last month and down 30 thousand hectares from last year. Yield is forecast at 10.00 tonnes per hectare,

Comment section is sponsored by Compound Feed Engineering Ltd

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