Feed
Materials Commentary
By Roger Dean
The Latest Grain Market Report (GMR), published by the International Grains Council (IGC) on 21 November 2019 – IGC does not publish an update in December – increases its forecast of total world grain production in 2019-20 by 5 million tonnes or a shade over 0.2 per cent, to 2,162 million tonnes. This is principally a reflection of an increase in the output of maize. Production of maize worldwide in 2019-20 is currently projected at 1,141.8 million tonnes, as against 1,138.2 million tonnes in IGC’s October projection, with a substantial proportion of the increase attributed to the US maize production in the US is currently projected at 344.7 million tonnes, as against 341.5 million tonnes in IGC’s October projection forecast
At 2,188 million tonnes, up by 1 per cent compared with their 2018-19 estimate, IGC’s projection for total grain consumption is 4 million tonnes higher than the October projection reflecting increased consumption of maize. Changes to maize and barley add around 2 million tonnes to IGC’s grain carryover projection, but world grain inventories are still seen shrinking for the third consecutive year; this could add to pressure on prices in 2020-21.
In this connection, it should be noted that IGC’s harvest projections are currently moving from its 2019-20 harvest year to its 2020-21 successor. The world area sown to wheat for the 2020-21 harvest is projected to expand by 1 per cent to 218 million hectares, compared with 2019-20; however, wet weather is reported to have interrupted autumn fieldwork in parts of the EU, most markedly in the UK and France. Dryness has left recently sown crops in Ukraine ‘poorly established’ ahead of the winter, with a significant drop in area reported; in contrast, the area sown to the wheat harvest in Russia is projected to expand. In the US, seeding is virtually complete with, however, planted area expected to remain close to what IGC describes as ‘historic lows’. IGC has taken on, comparatively recently, reportage of the world soybean situation. Its November projection for world soybean production in 2019-20 of 341 million tonnes is unchanged from its October projection; this compares with the estimated 2018-19 outturn of 359 million tonnes, equivalent to a decline of 5.1 per cent. It is understood that the decline largely reflects a fall in US output, a spin off from the US / China trade dispute. The smallest US harvest in six seasons is only marginally offset by potentially larger outturns elsewhere, including Brazil, resulting in the overall world decline.
Turning to USDA’s Foreign Agriculture Service (FAS), the December 2019 edition of the Production, Supply and Distribution (PSD) report reduces world wheat production in 2019-20 by a marginal 140,000 tonnes.
However, the bulk of the change in predicted wheat production is attributable to two countries. Argentine wheat production, at 19 million tonnes, is reduced by a million tonnes or by 5 per cent. Compared to the previous year of 19.5 million tonnes, Argentine wheat production is predicted to be down by 3 per cent.
The area sown to wheat in Argentine is estimated at 6.4 million hectares, up 1 per cent from last month’s assessment and 5 per cent compared with last year. Yield is estimated at 2.98 tonnes per hectare, down 6 per cent from last month and 7 per cent from last year. Yields are reported to be significantly lower in the central Buenos Aires province due to dryness at the grain fill stage. Western wheat areas are also reported to have yields which are down from the early, higher yields in northern Argentina. In addition, it is reported that much of the wheat crop relied on subsoil moisture during flowering and grain fill. The wheat harvest is underway.
FAS report, unsurprisingly given recent news, that Australian wheat production, at a currently projected 16.1 million tonnes, is expected to be down on its November projection by 1.1 million tonnes or 6.4 per cent. Harvested area is expected to total 10.1 million hectares down by 500,000 hectares or 5 per cent from last month’s projection, but only 0.6 per cent below last year. Yield, however, is forecast at 1.59 tonnes per hectare, a massive 21 per cent below the 5-year average. Following the promising start to the growing season in the south and west, Australia’s wheat prospects have slowly but steadily declined throughout the season. Sowing operations had timely rainfall in May in most of the cropping regions of Western Australia, South Australia, Victoria, and southern New South Wales but, in marked contrast, the eastern states of Queensland and northern New South Wales received below-normal precipitation for the entire season; this resulted in significantly lower yields. In conjunction with the latest information from the Australian Bureau of Agricultural and Resource Economics and Sciences, the area sown to wheat is estimated lower at 10.11 million hectares. Most of the reduction occurred in New South Wales where a significant amount of wheat was cut for hay or grazed-off in early spring. Harvest results indicate wheat yields are lower than previous expectations, reflecting below average rainfall and soil moisture conditions during the critical flowering and grain fill stages. Satellite- derived vegetation indices show poor vegetation conditions, corroborating the low precipitation in Queensland and New South Wales; dry conditions have resulted in accelerated crop development. Harvesting is underway and was reportedly complete by late December.
FAS is predicting world maize production at 1,108.6 million tonnes, compared to 1,102.2 million tonnes in its November projection. Apart from a 600,000 fall in Canadian maize harvesting, the major change is a 6.77 million tonne increase in the Chinese maize crop, an increase of 2.7 per cent. This reflects an increase in the area sown to the crop, from 41 million to 41.28 million hectares and, more significantly, an increase in yields to 6.32 tonnes per hectare compared to the previous month’s projection of 6.2 tonnes.
FAS has increased its estimate of world soybean production from 336.56 million tonnes in its November estimate to 337.5 million tonnes in its December projection, an increase of 915,000 tonnes. Apart from some minor adjustments, the bulk of this increase is attributable to China. The area planted to soybeans has been increased from 9 million hectares to 9.3 million hectares in FAS’s December projection while yields have been adjusted upwards to 1.95 tonnes per hectare from 1.90 tonnes in November.
Overall, a picture of resilient production of the major food and feed crops coupled with growing demand. Prices are set to increase modestly, barring the Feed Materials manager’s nightmare of an unexpected shock to the system.
FEED COMPOUNDER JANUARY/FEBRUARY 2020 PAGE 11
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