As the saying goes, “There is no year of good or bad harvest in the world,” meaning that weather changes may favor spring-planted corn but not winter wheat, or vice versa. However, this year may see some adjustments to adapt to the current global wheat crop situation.
Under complex weather conditions, forecasters are under certain pressure, mainly due to the drought affecting parts of Russia and Ukraine. There has been little rainfall for several weeks, and some areas have experienced severe frost. Russia’s production forecast has continued to decline from 94 million tons in the mid-1980s to 80.7 million tons. Last year, Russia produced 91.5 million tons, and the year before that, 92 million tons, the world’s leading exporter, exporting 48 million tons in the 2023/4 season and expected to export 54 million tons this year.
Overall, Brazil’s soybean production is uncertain, casting a question mark on the expected 3.5% (130 million ton) growth in global meal production.
A reduction in Russian crop output may lead to a significant drop in export forecasts for the 2024/25 season. The US Department of Agriculture recently forecast that Russian exports would approach a record 52 million tons again.
Now, that number has dropped to 48 million tons, and it may fall further, as it seems that the rainfall is too late to reverse the situation.
Ukraine’s output has also dropped from 23 million tons last year to 21 million tons or less, while the previous output was 33 million tons. The war has caused Ukraine’s export forecast to drop from 18 million tons in 2015 to 13 million tons.
Russia’s production figures are not small, but they have had an impact on the market. Last month, the prices of Chicago and Paris wheat futures markets soared to their highest levels in 10 months.
In Europe, persistent and excessive rainfall in France and Germany has reduced demand for wheat planting areas and may also reduce yields, resulting in a possible reduction of 200-300 million tons to around 1.305 billion tons (including soft and hard wheat).
A similar situation is also troubling the UK, where the corn production is expected to decrease by 300-400 million tons from last year Meanwhile, the Brazilian government announced that it would restrict the use of certain export tax credits, which weighed on the country’s prices and encouraged some shippers to withdraw export offers. Brazil is a major driver of global corn values and has been competing with the United States in recent years to become the world’s largest corn exporter.
In the past two quarters, China’s import volume was 53 million tons. In recent weeks, Argentina has also faced some crop disease issues that may cause the country to lose its earlier predicted 51 million ton harvest.
With panic expected to be a long-term issue, coupled with relatively high soybean yields, some analysts believe that farmers will reduce their corn planting for the next season.
Argentina is the world’s third-largest corn exporter. Recently, corn exports have exceeded 40 million tons. The corn market is also closely monitoring Europe’s corn harvest. In the fourth-largest grain exporter Ukraine, due to insufficient rainfall, reduced planting area, and ongoing logistics problems caused by the war, the projected grain yield this year will drop from last year’s 310 million tons to 2550 / 2770 million tons. Ukraine’s export volume is expected to drop from the current quarter’s forecast of 260 million tons to 245 million tons, while five years ago it was 290 million tons.
In the EU, analysts had previously expected corn yields to rebound further from the drought-hit 2022 crop year’s low point of 520 million tons, potentially rising by 3 million to 4 million tons above last year’s 610 million tons. This is largely dependent on weather drought and warming, with slow-growing crops in Western Europe expected to return to normal in the coming weeks. If successful harvests are achieved, the EU’s corn import volume will be significantly reduced to around 180 million tons.
In other major corn importers, China is expected to increase its corn production by around 30 million tons, but it is believed that its consumption is still growing rapidly enough to outpace this increase and maintain its status as the world’s largest consumer, reducing global corn supplies by about 230 million tons.
Corn production in Mexico was initially expected to rise slightly in the current quarter, but due to some weather issues, it may push up its import volume and compete with China.
Overall, the US Department of Agriculture and the International Grains Council expect global corn production to reach about 1.22 billion tons this season, slightly lower than the previous one, but still one of the better harvests in recent years. However, with consumption slightly rising, carryover stocks for the next season may tighten.
The futures market for long-term contracts seems to highlight a situation where supplies in the future are not as loose, with crude oil prices on the Chicago futures market rising about 4% in the closing session, and prices set to rise nearly 10% by mid-2025.
Post time: Oct-25-2024