Feed Materials Commentary
By Roger Dean
The latest available Grain Market Report published by the International Grains Council on 24 October, projected a total grain harvest – wheat and coarse grains – of 2,157 million tonnes, 2 million tonnes less than in IGC’s September projection but 15 million tonnes more than their currently estimated crop for 2018-19, a 1 per cent increase. Wheat output has been adjusted downwards, including cuts for
Australia and Argentina and increases for the EU and Russia. Outlooks for maize harvests in the EU and Argentina are reduced. The projection for total consumption is down by 2 million tonnes compared to IGC’s September projection, to 2,184 million tonnes, mostly for wheat used as animal feed and maize for industrial use. Taking into account smaller than previously estimated opening inventories, the figure for world grain carryover stocks is reduced by 9 million tonnes to 592 million tonnes, down on 2018-19 by 27 million tonnes. IGC has taken a preliminary look at prospects for 2020-21 and
concluded that, based on early indications from autumn planting in the northern hemisphere, the global all-wheat harvested area is little changed in 2020-21. Seeding has been hampered by overly dry soils in parts of the EU, Russia and Ukraine, and despite some rain recently, more is needed for planting and crop establishment in some areas. With a further downgrade to US crop prospects only partially offset
by increases for other producers, world soybean output in 2019-20 is forecast to be a million tonnes lower than projected in IGC’s September projection at 341 million tonnes, a 5 per cent year-on-year contraction. With consumption projected marginally higher than before, together with a reduced estimate of opening stocks, global inventories are cut by 6 million tonnes to a below-average 32 million tonnes, down by 18 million tonnes year on year, the smallest in six growing seasons. The reduction is linked to the US, where carryover stocks are projected to halve to 11 million tonnes. It is thus likely that price pressures will be experienced most markedly in soybeans, largely as a result of developments in the US. The next issue of the International Grain Council’s Grain Market Report is scheduled for publication on 21 November. The United States Department of Agriculture’s latest Production,
Supply and Distribution (PSD) report, published on 10 October, made small downward adjustments to world output of wheat and maize in 2019- 2020 but more substantial reductions in world soybean output. This was in sharp contrast to the September edition of the PSD report, published on 12 September, which sharply reduced predicted output of wheat and maize while making smaller reductions in output of soybeans. The report estimated world wheat output in 2019-20 at 765.23 million
tonnes, just 302,000 tonnes less than in USDA’s September projection. The most significant reduction in wheat production is projected for Australia, down a million tonnes or 5.3 per cent from USDA’s September
PAGE 14 NOVEMBER/DECEMBER 2019 FEED COMPOUNDER
projection. However, this figure is up by 702,000 tonnes on the 2018-19 outcome. The area harvested to wheat is expected to total 10.7 million hectares, unchanged from September’s projection but up 500,000 hectares or 5 per cent from last year, while yield is forecast at 1.68 tonnes per hectare, 17 per cent below the Australian 5 year average. USDA observe that Australia’s wheat region has experienced ‘a
mixed start’. Sowing operations were facilitated by timely rainfall in May in most wheat cropping regions of Western and South Australia, Victoria, and southern New South Wales. However, the eastern states of Queensland and northern New South Wales received below-normal precipitation for the entire season, resulting in significantly lower yield potential. Nationwide, the wheat crop faces deteriorating conditions heading into spring, reflecting below-average September winter rainfall and soil moisture conditions, corroborated by satellite-derived indices showing poor vegetation conditions in Queensland and New South Wales. Harvest should already be underway. USDA has upgraded its estimated of EU wheat production from 151
million to 152 million tonnes, an increase of 0.7 per cent. While USDA make no specific comment on the increase, it appears to reflect a small reduction in the area planted to wheat with a small increase in yield. USDA has reduced its projection of world maize production in
2019-20 by 864,000 tonnes or one-tenth of 1 per cent. The only country to display an increase is Russia whose total production of maize is projected at 13.5 million tonnes, up by half-a-million tonnes or 3.8 per cent on USDA’s September projection and 18.2 per cent up on last year’s outcome. USDA estimates Russian maize yields at 5.51 tonnes per hectare, up 4 per cent from USDA’s September projection and up 15 per cent from last year’s outcome. Total area is estimated at 2.45 million hectares, unchanged from USDA’s September projection and up 3 per cent from last year. Estimated yield is increased by 4 per cent; this is based on harvest reports from the Ministry of Agriculture. It should be borne in mind that preliminary maize yields from the Ministry of Agriculture are ‘typically higher’ than the final reported yield from the Russian statistical agency Rosstat. Data from the Ministry of Agriculture indicates that the harvest was about 34 per cent complete as of early October.
USDA’s projection of total world soybean production in 2019-20,
down by 2.42 million tonnes or 0.7 per cent on its September projection – a four-year low – incorporates a 2.24 million tonne or 0.7 per cent reduction in the projected US 2019-20 soybean crop. This followed a 1.3 million tonne reduction in September. Against a background of uncertainty about US and Chinese trade policy, the area sown to soybeans in the US (35.45 million hectares in 2018-19) was revised down for 2019-20 to 30.61 million hectares in October, a 13.6 per cent reduction. The preliminary estimate for US soybean yields in 2018-19 of 3.40 tonnes per hectare is 3.16 tonnes for 2019-20, a 7.05 per cent reduction. While USDA has increased its estimate of Argentine and Brazilian
2019-20 end-of-season stocks by 600,000 tonnes and 850,000 tonnes respectively, it has posited a sharp rundown of US end-of-season inventories amounting to a reduction of 4.9 million tonnes or 28 per cent. This tends to confirm the view that price pressures in 2019-20 will be most marked with regard to soybeans, largely as a result of US developments.
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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