Feed Materials Commentary
By Roger Dean
The penultimate issue of the International Grains Council’s (IGC) Grain Market Report (GMR 497) was published on 28 March. This edition of GMR was the first to essay a provisional assessment
of supply prospects during the 2019-2020 marketing year. However, the GMR also made small adjustments to the current, 2018-19 marketing year. The forecast for world wheat and coarse grains production in 2018-19 was raised by 4 million tonnes, compared to IGC’s February assessment, with most of the change being for Argentine and Brazilian maize production. This was subsequently adjusted, in April, to an increase of 3 million tonnes. For 2019-20, March’s provisional production data for all grains was
uprated in April, according to IGC’s significantly upgraded website, by 3 million tonnes to 2,178 million tonnes. IGC is being understandably cautious at this very early stage of the marketing year, increasing its April projection of world wheat production from 759 million tonnes to 762 million tonnes. Production of maize has been uprated to 1,125 million tonnes in IGC’s April projection, an increase of a million tonnes. So far, there is little specific country data for 2019-20. IGC has upgraded its April projection of soybean production in
2019-20 to a ‘record’ 362 million tonnes, an increase of 6 per cent. While the US harvest in 2019-20 may be slightly smaller than in the previous season, with potential increases elsewhere, world soybean production is predicted to be ‘little-changed’ year-on-year, at 361 million tonnes. While the lack of country data in IGC’s projections for 2019-20
is understandable – early season data and upgraded IGC website – pressure exerted on prices by ‘mostly favourable outlooks’ for northern hemisphere winter grains as well as some crops in South America, the IGC Grain and Oilseeds Index (GOI) slumped by 5 per cent to a three- year low. Reflecting ample spot availabilities and ‘broadly favourable’ new crop prospects, the IGC GOI wheat sub-Index fell by 6 per cent compared to March. The IGC GOI maize sub-Index dropped by 6 per cent to a six- month low, reflecting ‘comfortable US supplies and expectations for large South American surpluses. The IGC soybean GOI index declined by 4 per cent from late-March, to its lowest since December 2008, reflecting ‘seasonal harvest pressure and underlying demand constraints’, the latter reflecting the US-China tariff spat. The penultimate edition of the USDA’s Foreign Agriculture Service’s
Production, Supply and Distribution (PSD) bulletin was published on 8 March, with its successor as regards grains and oilseed supplies published on 9 April. It should be remembered that FAS’ focus will be moving from
the 2018-19 marketing year to its successor. However, while there are marginal changes in its latest assessment as regards wheat and soybeans, the changes to USDA’s current assessment for maize are more substantial. Its April assessment raises projected world maize output from March’s projection of 1,101.2 million tonnes to 1,107.4 million tonnes in April.
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The largest contributor to the increase is the European Union,
up from 60.87 million tonnes in USDA’s March projection to 63 million tonnes in April, an increase of 3.5 per cent. The latest projection is up by 896,000 tonnes or 1 per cent from 2017-18. However, it was down 3 per cent from the 5-year average of 64.29 million tonnes. The area planted to maize in the EU is estimated at 8.3 million
hectares, up 0.2 million hectares or 2 per cent from last month, but still down by 100,000 hectares or 1 per cent from last year and down 9 per cent from the 5-year average. Yield is estimated at 7.62 tonnes per hectare which is up 1 per cent from last month, up 3 per cent from last year, and 7 per cent above the 5-year average. FAS reports that drought over much of northern and central Europe
during the summer of 2018 led to below average maize production. Recent harvest data, however, has revealed that less maize was cut for silage than was expected, causing the planted area to be revised upward. In years that were especially dry, such as 2018-19, the area planted to maize is often reduced while some area is cut early for silage to mitigate the effects of drought and the resultant yield losses to forage land. Despite the drought, however, yields in France, Germany, Hungary and Poland were significantly better than anticipated; Romania, meanwhile, enjoyed excellent weather, reaching a record 14 million tonnes. The second largest contributor to the global increase in maize
production was Brazil. Maize production for 2018-19 is estimated at 96 million tonnes, up 1.5 million tonnes or 1.6 per cent from the FAS March projection and up 14 million tonnes or 17.1 per cent from the previous season. Harvested area is estimated at 17.2 million hectares, unchanged
from last month but up 4 per cent from last year. Yield is estimated at 5.58 tonnes per hectare, up 2 per cent from last month and up 13 per cent from last year’s drought-affected crop. Although dry weather in parts of the south-east and north-east reduced first-crop maize yields, second-crop yield prospects remain positive for a crop that has received favourable weather thus far in the season and, in addition, was planted earlier than average. Second crop maize in Brazil is reported to be largely destined for export. There were also significant increases in FAS’ April projections for
Mexico, up by 1.1 million tonnes or 4.3 per cent, and Argentina, up by a million tonnes or 2.2 per cent. This was largely attributable to favourable weather conditions. USDA has made only minor changes to its April projection of
soybean output in 2018-19 with total production increases by 503,000 tonnes compared to its March projection. This is largely attributable to a half-million tonne or 0.4 per cent increase in Brazilian production; production in the two other major producers remaining unchanged from FAS’ March projections. FAS’ April projection constitutes a 5 million tonne reduction from the record 122 million tonne soybean crop harvested in 2017-18, down by 4.1 per cent. The area harvested to soybeans in Brazil is estimated as 36.1 million hectares, unchanged from March’s projection but up 3 per cent from last year. Yield is estimated at 3.24 tonnes per hectare; this was up slightly from March but still 7 per cent below last year’s record. However, while yields were down from last year in drought-affected states, in Rio Grande do Sul favourable weather boosted yields compared to last year’s drought. Currently, FAS report that, nationally more than three-quarters of the 2018-19 Brazilian soybean crop has been harvested.
Comment section is sponsored by Compound Feed Engineering Ltd
www.cfegroup.com
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