Feed Materials Commentary


By Roger Dean


The current issue of this column incorporates the initial assessments of the Northern hemisphere harvest in 2021. There are two principal sources underpinning an assessment of


feed material supply prospects in the coming year. From a UK point of view, the first is the Grain Market Report, compiled by the International Grains Council and includes all grains as well as soybeans, a recently added category. The latest edition of the Grain Market Report was published on 24 August 2021 with the September issue expected to be published towards the end of that month. The second source of data is that published by the Foreign


Agriculture Service, a division of the United States Department of Agriculture (USDA) which includes all agricultural products. This column focusses on wheat, maize and soybeans. Looking at the prospects for the 2021-22 harvest year, the Grain


Market Report is predicting total grain production, including wheat and coarse grains, amounting to 2,283 million tonnes. This assessment is 12 million tonnes less than in the Grain Market Report’s previous assessment, published on 29 July, constituting a marginal reduction. However, it will be noted that, at 2,283 million tonnes, world grain production still would stand at a record high. Looking at individual grains, the Grain Market Report projects world


wheat production in 2021-22 at 782 million tonnes, 6 million tonnes less than in the July assessment but still at a record high. It should be noted that there is no reliable projection of wheats classed as feed wheat and wheat destined for other uses. World maize production is projected at 1,202 million tonnes, an unchanged projection compared to the Grain Market Report’s July assessment. However, maize production is projected to exceed the preceding year’s estimate by 75 million tonnes or 6.6 per cent. In terms of assessing the impact of demand, it should be noted that end of season inventories for total grains stand at 589 million tonnes, compared to 594 million tonnes in the 2020-21 harvest year. A small reduction in wheat inventories is projected in the August edition of the Grain Market Report contrasting to a slight increase in world end of season maize inventories. World production of soybeans is projected at 380 million tonnes,


2 million tonnes less than in the Grain Markets Report’s previous assessment but this still represents a significant increase, based on sizeable projected crops in three of the major producers. World consumption is projected to increase, driven to a significant degree by firmer Chinese demand. Based on the latest edition of the Grain Market Report, there appears to be little evidence of price levels for grains increasing


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significantly in the immediate future. However, there has been a shrinkage in world grain stocks, from 623 million tonnes in 2018-19 to a current estimate of 589 million tonnes. Any further contraction of world grain inventories could lead to a hardening of sentiment as regards the supply and demand balance, including a move to rebuild inventories. It would seem that such pressure would be most marked with respect to maize. Turning to the current USDA assessment of world grain and


soybeans, the FAS observes that since the release of USDA’s first 2021-22 forecast in May, the outlook for global wheat supplies has fallen by nearly 2 per cent. This represents a number of factors, including ‘ice crusting’ in Russia and the drought that has adversely affected the spring wheat crop in North America. Meanwhile, global wheat consumption is nearly unchanged since May as food, seed, and industrial usage remains ‘robust’ although feed use is now modestly lower. As a result, global stocks are cut more than 5 per cent from the initial forecast to the lowest level in five years. Stocks held by the major global exporters are forecast to decline, reflecting tightness in supplies available to the global market. Price-sensitive importers are expected to respond to the reduced supplies by tightening inventories, lowering global trade by nearly 3.5 million tonnes from the initial forecast. Sharp declines for some top exporters are only partially offset by gains for other exporters. Global maize production is down, as cuts to the European Union


and the United States more than offset the impact of larger crops in India, Russia, and Ukraine. Global trade is lower than last month on smaller exportable supplies for the United States and shrinking expectations for Brazil exports over the October 2021-March 2022 period, overshadowing gains for Ukraine and Russia. Global imports are down in conjunction with the smaller exportable supplies. The US season-average farm price is up 15 cents to $5.75 per bushel. The weather in the United States has exerted a malign effect on


export prices with all export quotations moving higher in response to the tighter supply situation, particularly for wheat in the Northern Plains and lifted further by what the FAS described as ‘meagre’ production estimates by the National Agricultural Statistics Service (NASS) for Canada. Some US prices have soared dramatically, reflecting ‘exceptionally poor crop conditions’. World soybean production in 2021-22 is estimated at 384.42


million tonnes, 21.15 million tonnes more than in the preceding season. Substantial increases are projected for the major world soybean producers, including Brazil and the United States. Substantial additional supplies are also projected for Argentina. On the demand side, China continues to be a particularly significant factor. In view of the Chinese Government’s current economic policy direction, Chinese customers appear to be reining in their buying as a contribution to the fight against price inflation. It seems likely that the increases in price that have characterized


major soybean producers will eventually translate into higher prices for major customers and this has obvious implications of the livestock feed sector.


Comment section is sponsored by Compound Feed Engineering Ltd www.cfegroup.com


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