London-based International Grains Council (IGC) and the United States Department of Agriculture (USDA) have released their grain reports. According to the report of IGC, a marginal decline in world total grains production is envisaged in 2018/19, but overall supplies are seen down 1% due to tighter opening stocks. Given sustained consumption growth, grains stocks are predicted to tighten again in 2018/19. And a sixth successive record is predicted for grains trade in 2018/19. USDA’s World Agricultural Production indicated that Russia wheat production for 2018/19 is forecast at 72.0 mmt, against last year’s record 85 mmt crop. Despite the 15-percent drop, production is forecast to be the third highest in the country’s history, and the forecast yield of 2.77 tons per hectare would be second only to last year’s record.
According to IGC report, a 2 million ton month-on-month cut in the estimate of total grains (wheat and coarse grains) production in 2017/18, to 2 billion 91 million, is mainly for maize and is largely owing to a downgrade for Brazil. Historical adjustments to maize stocks (mostly in Iran) contribute to an 8 million ton month-on-month reduction in the world ending stocks figure, however the year-on-year fall of 17 million is only a little bigger than before. The forecast for trade is up by nearly 1 million ton month-on-month, as increases for wheat, barley and sorghum outweigh a lower number for maize.
The projection for total grains production in 2018/19 is raised by 2 million ton month-on-month, to 2 billion 89 million, including increases for wheat, maize and barley, but a decrease for sorghum. The figure for consumption is trimmed, although with reduced opening inventories, the forecast of carryover stocks is lowered by 4 million ton, to 556, down by 47 million year on year. At a new high of 369m t, trade is up by 1m compared with the last GMR.
The 2017/18 world soybean output forecast is cut by 3m t, to 336m (-4% y/y), as an upgrade for Brazil is outweighed by reductions for Argentina, India and Paraguay. Reflecting adjustments for key producers, the 2018/19 global outturn projection is raised slightly, to a peak of 356m t (+4% y/y). Carry-ins are lower m/m but, with uptake marginally reduced, world stocks are seen broadly steady, at 40m t. Major exporters’ reserves could recover modestly y/y as a potentially bigger crop in Argentina allows for inventory accumulation, more than offsetting a likely fall in the USA. The prediction of global import demand is pared by 1m t but, at 156m, would be a record.
As an increased forecast for supplies is matched by a higher figure for total use, world rice stocks in 2017/18 are seen unchanged m/m. The Council’s outlook for production in 2018/19 is down by 3m t, to 490m, on reduced prospects in Asia, principally in China. With global uptake tentatively seen returning to growth, aggregate end-season inventories are predicted slightly lower than before, in part due to a reduced figure for China. The projection for trade in 2018 is lifted to 48m t, up marginally y/y and a fresh record. With falls in maize and soybean export prices offset by a rally in wheat, the IGC Grains and Oilseeds Index (GOI) was virtually unchanged m/m.
Global total grains (wheat and coarse grains) production in 2017/18 was 2% short of the previous year’s record, but heavy stocks at the start of the season saw overall supply rise for the fifth year in succession. Nevertheless, with consumption expected to be at a new high, the first world stocks contraction since 2012/13 is predicted. Trade (Jul/Jun) will be the highest ever, including record shipments of maize and barley.
Total grains production in 2018/19 is projected to be only a little below the season before as a reduced wheat harvest is almost balanced by better outturns of maize, barley and sorghum. However, taking account of reduced opening stocks, total supply is set to decline to a three-year low. Another year of consumption growth is anticipated, with food, feed and industrial uses all expected to expand. The global carryover is therefore seen coming down for a second year, taking inventories to a four-season low. Most of the 47m t drop in stocks is for maize (-43m), mainly in the USA and China. Trade is predicted to set a sixth successive record, including a new peak for maize. Following the ending of China’s anti-dumping investigation into US sorghum imports, world trade in that grain is expected to stay at a high level, although a little lower y/y.
Despite record crops in Brazil and the USA, 2017/18 world soybean output is forecast to fall by 4% y/y, to 336m t. This is almost entirely linked to a plunge in production in Argentina, but with falls, too, in India, Paraguay, Ukraine and Uruguay. With uptake at a fresh high, inventories are expected to drop sharply, to 39m t, albeit still comfortable compared to earlier years. Most of the anticipated contraction stems from a heavy reduction in Argentina, outweighing stock building in the USA. Acreage gains are likely in 2018/19, especially in South America, as production recovers to a peak of 356m t, up by 6% y/y. Nevertheless, due to reduced opening stocks, coupled with another season of record use, carryovers are tentatively placed little-changed y/y, at 40m t. Trade is predicted at a new high as growing demand for protein and vegetable oils underpins larger shipments to Asia. Both Brazil and the USA are likely to increase exports.
The 2017/18 global rice outturn is estimated to be broadly steady y/y as bigger crops in Asia’s key producers, notably China, India and Thailand, compensate for reductions elsewhere. With little change in use expected, stocks are predicted to be stable, as nominal accumulation in China more than offsets a drop in the major exporters. Given the y/y rise in international values, and assuming continued farmer support, 2018/19 rice plantings are expected to rise by 1% y/y as production edges up to a new peak. With modest growth in uptake predicted, carryovers could contract slightly. China’s stocks may tighten marginally on a drop in local output, but would still account for 60% of the world total, while major exporters’ reserves are seen steady y/y due to offsetting changes in India and Thailand. Trade is projected to grow over the next two years on firm demand from African buyers in particular. India is anticipated to be by far the biggest exporter.
RUSSIAN WHEAT YIELD FORECAST SECOND HIGHEST
According to USDA’s report, Russia wheat production for 2018/19 is forecast at 72.0 million metric tons (mmt), against last year’s record 85.0 mmt crop. Despite the 15-percent drop, production is forecast to be the third highest in the country’s history, and the forecast yield of 2.77 tons per hectare would be second only to last year’s record. USDA crop production estimates for Russia exclude estimated output from Crimea. Harvested area is forecast to decrease from 27.3 million hectares (mha) to 26.0 mha. Winter wheat is grown in European Russia (including the Southern, Central, Volga, and North Caucasus Districts) and typically accounts for about half of total wheat area and about 70 percent of production. Spring wheat is grown mainly in the Volga, Ural, and Siberian Districts. Total wheat yield in Russia has been climbing since the 1990’s for a variety of reasons, including an overall improvement in the level of agricultural technology and a rise in the share of winter wheat area compared to lower-yielding spring wheat.
UKRAINE WHEAT PRODUCTION SLOWLY DOWN
Ukraine wheat production for 2018/19 is estimated by USDA at 26.5 million metric tons (mmt), down 0.5 mmt from last year and 0.8 mmt below the record harvest of 2015/16. The USDA production forecast includes estimated output from Crimea. Yield is estimated at 3.96 metric tons per hectare, down 2 percent from last year and 5 percent below the 2016/17 record. Harvested area is estimated at 6.7 million hectares, up slightly from last year.
Thick snow cover protected winter crops from frost damage, but late melting delayed the resumption of vegetative growth in most areas except for south-central Ukraine. However, above-normal temperatures during April compensated for the late start. Winter-crop conditions in late April were generally favorable, and vegetation indices (Normalized Difference Vegetation Index or NDVI) suggest that overall crop vigor at the end of April was better than last year. Several weeks of dry weather and above-normal temperatures, however, have reduced soil moisture in southern Ukraine. The weather during late May and early June will be important in determining potential yield. Harvest typically begins in early July.
CHINA TO INCREASE CORN PRODUCTION
USDA forecasts China’s 2018/19 corn production at 225.0 million metric tons (mmt), up 9.1 mmt or 4 percent from last year and up 3 percent from the 5-year average. Yield is forecast at a record 6.16 metric tons per hectare, up 1 percent from last year. Area is forecast at 36.5 million hectares (mha), up approximately 1.1 mha or 3 percent from last year. The 2018 area is expected to rebound from the two previous seasons. In 2016 and 2017 corn area was significantly below the long-term trend due to changes in agricultural policy and lower market prices. Approximately 90 percent of China’s corn is used for feed, and the reported rebound in feed demand may also result in increased corn production.
BRAZIL CORN PRODUCTION DOWN, SOYBEAN PRODUCTION TO MATCH LAST YEAR’S RECORD
According to USDA, Brazil corn production for 2017/18 is estimated at 87.0 million metric tons (mmt), down 5 mmt or 5 percent from last month, and down 11.5 mmt or 12 percent from last year. Harvested area is estimated at 17.1 million hectares, unchanged from last month but down 3 percent from last year. Yield is estimated at 5.09 metric tons per hectare, down 5 percent from last month and down 9 percent from last year due to drought in southern second-crop corn production areas.
Soybean production for 2018/19 is forecast at 117.0 million metric tons (mmt), equal to last year’s record. Harvested area is forecast at a record 36.5 million hectares (mha), up 1.4 mha or 4 percent from last year. Yield is forecast at 3.21 metric tons per hectare, down 4 percent from last year’s second highest yield on record, but above the 5-year average.