OUR BLOG
Biofuel / Business / Business & Strategy / REPORT
Biofuels preparing to take flight
After soaring in the early 2000s only to see more modest growth in recent years, the biofuels industry might be on the verge of flying high again … about 35,000…
Read more
Business / Business & Strategy / US Wheat
Rain improves US Plains wheat conditions
Recent rainfall has quickly changed the direction of winter wheat crop conditions in the US central and southern Plains. Growers hope additional rain in forecasts signals a pattern change to…
Read more
Business / Business & Strategy / REPORT
Renewables, Trade segments boost The Andersons earnings
Strong renewables production and improved results in the Trade segment boosted The Andersons net income attributable to the company to $27 million, equal to 80¢ per share on the common…
Read more
Business / Business & Strategy / REPORT
US grain exports in all forms increase 26%
Exports of US grains in all forms increased by 26% to 109.4 million tonnes in the 2023-24 marketing year, according to data released by the US Department of Agriculture (USDA).…
Read more
Business / Business & Strategy / REPORT
Drought stymies Brazilian grain shipments
A severe drought in northern Brazil has significantly lowered water levels on the Tapajos waterway, halting grain shipments. Brazilian port terminal group Amport, which represents firms such as Cargill and…
Read more
Business / Business & Strategy / REPORT / UKRAINE
Russian missiles strike grain ships
A Russian missile struck a grain vessel docked at the Port of Odesa on Oct. 7, killing one person and injuring five crew members, Reuters reported, citing Ukrainian officials. It was the…
Read more
Business / Business & Strategy / EXPORT / REPORT
India ends non-basmati rice export ban
The Indian government will resume non-basmati white rice exports with a minimum floor price of $490 per tonne, ending a ban that started in July 2023. The government has gradually…
Read more
Business / Business & Strategy / EXPORT / REPORT
Egypt expected to produce more wheat in 2024-25
According to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, Egypt is expected to produce more wheat in 2024-25 as the government encourages an…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Grains and oilseeds powerhouse
The presence of two of the world’s most important agricultural producers and exporters — Brazil and Argentina — makes South America a powerhouse of world grains and oilseeds production and…
Read more
Business / Business & Strategy / REPORT
Brazil’s grain production dips in 2023-24
Grain production in Brazil is estimated at 298.41 million tonnes for the 2023-24 marketing year, a drop of 21.4 million tonnes compared to the previous year, according to Conab, the country’s…
Read more
Business / Business & Strategy / REPORT
US confined space incidents decrease in 2023
According to researchers at Purdue University, the number of documented agricultural confined space incidents in the United States decreased 34% in 2023 compared to the previous year. The total was…
Read more
Business / Business & Strategy / REPORT
Future looks bright for pulses
High in protein and fiber and relatively inexpensive compared to meat, pulses are gaining favor among global consumers. And because of their natural soil-enhancing and greenhouse gas-absorbing properties, pulses also…
Read more
Business / Business & Strategy / REPORT
Dryness stressing Ukraine, Russia crops
As if the Russia/Ukraine war was not enough to deal with, the region has been enduring a very dry summer. Crop stress in the region is peaking for the third time this…
Read more
Business / Business & Strategy / REPORT
Corn futures dip to four-year lows
The bulls seem to have abandoned corn futures and are giving few indications they expect to return anytime soon. On Monday, Aug. 26, the CME Group September and December contracts…
Read more
Business / Business & Strategy / REPORT
Be8 breaks ground on ethanol plant
Be8, a Brazilian renewable energy company, said it has agreed with Praj, an Indian company and global leader in bio-energy, to establish its first ethanol plant in Passo Fundo, Rio…
Read moreBusiness / Business & Strategy / REPORT
Brazil corn production, exports to drop
Brazil expects to harvest 4.6 billion bushels (116.8 million tonnes) from its three corn crops in the 2023-24 season, a drop of 12% from last year’s record harvest, according to…
Read more
Business / Business & Strategy / ORGANIC FOOD
USDA lowers US wheat production estimate
The US Department of Agriculture (USDA) on Aug. 12 lowered its estimate for US all-wheat production this year based on forecasts for lower soft red winter, other spring and durum…
Read more
Business / Business & Strategy / ORGANIC FOOD
Cargill earns two BIG Sustainability Awards
Business Intelligence Group (BIG) has named Cargill the winner of a pair of 2024 BIG Sustainability Awards in recognition of the company’s global efforts within the agriculture and food value…
Read more
Business / Business & Strategy / REPORT
Canada funds work to develop more resilient soybeans
The government of Canada awarded up to C$2.3 million over four years to Performance Plants Inc. (PPI) to develop change-resistant, high-yielding soybeans. The award is through the AgriScience Program–Projects Component,…
Read more
Business / Business & Strategy / REPORT
Canada, Russia wheat production threatened by dryness
A recent insurgence of heat and dryness in western and south-central Canada’s Prairies has raised concern about spring cereal production. The region had one of its best starts to the…
Read more
Grain market review: Coarse grains
The last several weeks have seen a mixed trend for maize (corn), although there was weakness in the United States on planting and yield expectations. The July World Agricultural Supply…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
USDA: largest spring wheat production since 2020
When scouts fan out across North Dakota fields in the third week of July, they will be looking to confirm or moderate expectations of a high-yielding spring wheat crop forecast…
Read moreBusiness / Business & Strategy / REPORT
US wheat, corn, soybean stocks up from 2023
The US Department of Agriculture (USDA) on June 28 said domestic stocks of wheat, corn and soybeans on June 1 were up more than 20% from a year earlier. The…
Read more
Business / Business & Strategy / REPORT
Key US crop areas battle too much, too little rain
Weather typically is the main force affecting agricultural commodity markets, from planting in the spring (or fall for winter wheat) to harvest in the fall (or summer for winter wheat),…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Grain market review: Oilseeds
The prospect of ample supplies, despite weather problems in some producing regions, is pushing oilseeds prices lower. The Foreign Agricultural Service (FAS) of the US Department of Agriculture said on…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
COFCO, GROWMARK enter agreements on grain assets
COFCO International, Ltd. and GROWMARK Inc., on June 20, announced they have entered into definitive agreements regarding grain assets in Illinois. Beijing, China-based COFCO International has agreed to purchase GROWMARK’s…
Read more
Business / Business & Strategy / REPORT
COCERAL increases EU grain outlook
In its latest 2024 European Union/United Kingdom grain crop forecast, released on June 10, COCERAL increased its projection slightly to 296 million tonnes, about 500,000 tonnes higher than the previous…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Turkey bans wheat imports
The Turkish Agriculture Ministry recently announced that it will halt wheat imports from June 21 through mid-October to protect Turkey’s farmers from price decreases and other adverse impacts during this…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Australian winter crop totals expected to increase 9%
Australia’s overall winter crop production is expected to increase 9% to 51.3 million tonnes in 2024-25 and be the fifth highest on record, according to the June report from ABARES.…
Read more
Business / Business & Strategy / REPORT
Bunge, Zen-Noh to buy stake in Brazil terminal
Bunge Global SA and Zen-Noh Group have agreed through a joint venture to purchase 50% of a grain terminal at the Port of Santos from Brazilian rail operator Rumo for…
Read more
Business / Business & Strategy / REPORT
Untimely rains impacting French grains
Recent rains have dampened France’s wheat and barley outlook while slowing maize (corn) planting in the European Union’s largest grains producer, Reuters reported, citing data from farm office FranceAgriMer. A warm,…
Read more
Grain market review: Wheat
As harvests approach, the focus for wheat traders is increasingly on the weather, especially its impact on Russia’s crop with low moisture earlier in the year and continued cold temperatures…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
India’s wheat stocks drop to 16-year low
India’s wheat stocks in government warehouses on May 1 reached their lowest level since 2008 with a 10.3% year-on-year drop, Reuters reported. Two years of low crops resulted in the…
Read more
Business / Business & Strategy / REPORT
US, Russia may hold key for bullish market
A ridge of high pressure evolved recently over the heart of Russia’s grain production region grabbing some attention in the commodity trade. Ridges of high pressure aloft over Russia tend…
Read more
Business / Business & Strategy / REPORT
Larger second crop to boost Argentina’s soy production
Argentina’s soybean production is expected to increase in 2024-25, with a larger planted second soy crop, according to a report from the Foreign Agricultural Service (FAS) of the US Department…
Read more
Business / Business & Strategy / REPORT
New Orleans leads global grain ports
The port region of New Orleans, Louisiana, US, was the world’s No. 1 grain and oilseeds export hub in 2023, leading the two major South American hubs, according to a…
Read more
Business / Business & Strategy / REPORT
Canada may see 5% boost in wheat output
Canada’s grain output in the upcoming marketing year is forecast to increase by nearly 5%, boosted mainly by a surge in wheat production, according to a report from the Foreign…
Read more
Business / Business & Strategy / EXPORT / IMPORT
Argentina investing in new grain port
The Argentine government said it plans to invest approximately $550 million to build a new grain port in the Rosario region. The region is considered a vital agricultural center for…
Read more
Business / Business & Strategy / EXPORT / REPORT
USDA: Corn, wheat acres down; soy up
The US Department of Agriculture’s (USDA) March 28 Prospective Plantings report provided a few surprises along with insight into potential 2024 acreage and crop sizes. This year’s report comes with…
Read moreBusiness / Business & Strategy / REPORT
CoBank: Grain, oilseed prices continue to slide
Grain and oilseed prices continued to slide last quarter under pressure of a strengthening US dollar, arrival of the South American harvest and plentiful domestic inventories, according to a new…
Read more
Business / Business & Strategy / REPORT / UKRAINE
Ukraine to plant more oilseeds.
While Ukrainian farmers are expected to plant more oilseeds, with the exception of sunflowers, production volumes in 2024-25 could be dampened by lower yields. Soybean production area is estimated at…
Read more
Focus on Thailand
Although rice production is holding steady, weather-related challenges are a constant worry for Thailand, which relies heavily on the crop as a food staple and export commodity. More than 60%…
Read more
Business / Business & Strategy / EXPORT / REPORT
Brazil’s corn and wheat crops revised lower.
Due to adverse weather conditions related to El Niño, the Foreign Agricultural Service (FAS) of the US Department of Agriculture has lowered its forecast for corn and wheat production in…
Read more
Business / Business & Strategy / IMPORT / REPORT
Japan’s corn use, imports expected to rise
Corn imports and consumption are forecast to increase in Japan for marketing years 2023-24 and 2024-25 as the country’s poultry layer population recovers from outbreaks of highly pathogenic avian influenza…
Read more
Business / Business & Strategy / REPORT
Grain market review: Coarse grains
Short covering by funds, in the absence of new bearish news, sparked a small-scale recovery in maize (corn) prices, following recent declines. The European Confederation of Maize Production (CEPM) in…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Focus on Saudi Arabia
Saudi Arabia produced nearly double the wheat expected in the 2022-23 marketing year and is on track for similar results in 2023-24 as government purchase prices remain high. Production totaled…
Read more
Business / Business & Strategy / REPORT
Cargill offers canola program in Canada.
With a rising interest in canola as a renewable fuel feedstock, Canadian growers will be able to access new and growing markets through the Cargill Power Canola program, which will…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT / UKRAINE
Discord impacting EU grain, feed industries
Intensifying protests have left the Ukrainian-European Union (EU) border nearly paralyzed, jeopardizing one of the export lifelines of the reeling Ukrainian economy. The rally backed by farmers all over the…
Read more
Business / Business & Strategy / REPORT
Rains boost Australia’s summer crops.
Summer crop prospects for Australia were pronounced “excellent” following well-timed rains in eastern growing areas that boosted expectations for production to 4.3 million tonnes, according to the Australian Bureau of…
Read more
Business / Business & Strategy / EXPORT / IMPORT
Shifting population and income levels shape global ag demand
Changes in population and income levels will shift food demand and placement of corporate assets, Michael Zerr, long-term model lead, Cargill, Minneapolis, Minnesota, US, told attendees at the opening session…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Grain market review: Oilseeds
The popularity of soybeans with US producers, as they plant for 2024-25, has put pressure on prices, particularly following an upward revision to the US Department of Agriculture’s (USDA) planted…
Read more
Business / Business & Strategy / REPORT
Study details Ukraine war’s wheat market impact.
As the second anniversary of Russia’s invasion of Ukraine draws near, a recently published research paper on the long-term impact the war has had on global wheat prices and market…
Read more
Business / Business & Strategy / EXPORT / REPORT
Argentina’s wheat production improves
Wheat production in Argentina for 2023-24 is higher than originally expected as yields improved, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
Read moreBusiness / Business & Strategy / REPORT
Drought lowers Canada’s 2023-24 wheat production.
Despite a larger planted area, Canada’s wheat production in 2023-24 dropped 7% from the previous year to 31.95 million tonnes, according to a report from the Foreign Agricultural Service (FAS)…
Read more
Business / Business & Strategy / EXPORT
High prices reducing India’s corn exports
Corn exports from India have plummeted recently as domestic prices have surged due to strong demand from the country’s poultry and ethanol industries, Reuters reported, citing several exporters. The sources…
Read more
Business / Business & Strategy / REPORT
Black Sea nations ally to clear mines
Turkey, Romania and Bulgaria have signed a memorandum of understanding to find and clear drifting sea mines in the Black Sea to facilitate safe transport of Ukrainian grain exports, Bloomberg…
Read moreBusiness / Business & Strategy / EXPORT / REPORT
Brazil’s soybean production revised to lower.
Although Brazil’s latest soybean production forecast for the 2023-24 marketing year has been revised lower to 158.5 million tonnes, it still would top last year’s record total, if realized, according…
Read more
Business / Business & Strategy / REPORT
Brazil to expand share of global soybean trade
Brazil’s share of global soybean trade could increase to 60.6% by 2033, according to a study released last week by the US Department of Agriculture’s Economic Research Service (ERS).
Read more
Business / Business & Strategy / REPORT / UKRAINE
Geopolitics’ impact on global grain market
When Russia signed an agreement in October to supply China with 70 million tonnes of grain, legumes and oilseeds over the next 12 years, a comment made several years ago…
Read more
Business / Business & Strategy / EXPORT
EU 2023-24 grain output revised lower
Extreme weather conditions across the European Union (EU) has reduced grain production projections for marketing year 2023-24, although output is still anticipated to exceed 2022-23 levels, according to a report…
Read more
Business / Business & Strategy / REPORT
FAO: Global cereal prices decline in November
Due mainly to declines in international corn and wheat prices, the United Nations’ Food and Agriculture Organization’s (FAO) Cereal Price Index for November decreased by 3% from the previous month,…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Ukraine grain exports down sharply from last year
Ukraine’s grain exports are continuing to fall significantly behind the pace a year ago, with 13.4 million tonnes exported so far, compared to 18.3 million tonnes last year, according to…
Read more
Business / Business & Strategy / EXPORT / REPORT
Russia forecasting record grain exports
With nearly 98% of its harvest collected, Russia is forecasting over 65 million tonnes of grain exports during the 2023-24 marketing season, Reuters reported, citing Russian news agency Interfax. Russian…
Read more
Business / Business & Strategy
Brazil crop weather in 2023 is challenging years like 2015
Weather conditions in Brazil so far this spring have been poor in many areas and if a turnaround does not occur soon production may be notably off the trend as…
Read more
Business / Business & Strategy / REPORT
China’s grain feed use on upswing
China’s grain feed and residual use in marketing year 2023-24 is projected to rise slightly to 285 million tonnes, up 2.7% from 282.3 million tonnes in 2022-23, according to a…
Read more
Business / Business & Strategy / REPORT
IGC: World soybean output up 7% year on year
IGC: World soybean output up 7% year on year. The International Grains Council (IGC) in its latest Grain Market Report revised global soybean production higher in marketing year 2023-24 to…
Read more
Business / Business & Strategy / Tax & Home Loan / UKRAINE
Ukraine ‘humanitarian corridor’ exports near 4 million tonnes
Ukraine has exported nearly 4 million tonnes via its “humanitarian corridor” since shipments started in August, Ukrainian President Volodymyr Zelenskiy said on Nov. 14, Reuters reported.
Read more
Business / Business & Strategy / REPORT
USDA lowers corn, wheat area forecast
WASHINGTON, DC, US — The US Department of Agriculture on Nov. 7 projected area planted to soybeans to expand in 2024, but wheat and corn planting areas were forecast to…
Read more
Business / Business & Strategy / IMPORT / REPORT
FAO forecasts record cereal output
Global cereal production this year is forecast to reach a record 2.81 billion tonnes, according to the Food and Agriculture Organization of the United Nations’ latest Cereal Supply and Demand…
Read moreBusiness / Business & Strategy / EXPORT / IMPORT / REPORT
Argentine wheat crop revised lower.
Due to widespread dry conditions, Argentina’s wheat production forecast for the 2023-24 marketing year has been revised lower in the most recent Global Agricultural Information Network report from the US…
Read moreBusiness / Business & Strategy / REPORT
Rabobank: US could still see top corn crop
While the US will not set yield records in corn this season, far better results than initially anticipated could still make it a top-two or top-three crop, according to Rabobank’s…
Read more
Business / Business & Strategy / REPORT / TIPS & GUIDES
Ocean freight rates for US grain dropped in the third quarter.
Ocean freight rates for shipping grain from the US Gulf and Pacific Northwest dropped in the third quarter compared to the previous quarter and from a year ago, according to…
Read moreBusiness / Business & Strategy / REPORT
Bunge marks 100 years in Australia
Bunge Ltd. is marking a century in Australia throughout October, hosting an event with more than 100 local partners at Lake Towerrinning, Moodiarrup, Western Australia, and giving back to the…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Russia signs grain export deal with China.
A Russian export company has signed a deal to export 70 million tonnes of grain, legumes and oilseeds to China, Reuters reported on Oct. 18. The company, EPT, said the…
Read more
Business / Business & Strategy / EXPORT / REPORT
Ukraine says nearly 300,000 tonnes of grain destroyed.
Russia’s attacks on Ukraine’s agricultural infrastructure and ships since July have destroyed nearly 300,000 tonnes of grain, Reuters reported, citing the Ukrainian government. Since Russia quit the Black Sea Grain…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
UN, Russian officials discuss grain exports
Talks aimed at providing Ukraine and Russia “unimpeded access” to global grain and fertilizer markets were held between the United Nations and Russian officials Oct. 9 in Moscow, Reuters reported.…
Read more
Business / Business & Strategy / REPORT
Bunge shareholders vote for Viterra acquisition
Bunge Ltd. shareholders on Oct. 5 voted in favor of the company’s acquisition of Viterra Ltd., approving the issuance of 65,611,831 common shares, par value of 1¢ per share. The…
Read more
Business / Business & Strategy / EXPORT / UKRAINE
More ships using Ukrainian seaports
Three ships left Ukrainian ports on Oct. 1, and five more ships are on their way to ports using a new corridor opened by Ukraine mainly for agricultural exports as…
Read more
Business / Business & Strategy / UKRAINE
Ukraine exports plunge by 51%
Ukraine grain exports from Sept. 1-24 fell by 51% compared with the same period in 2022, Reuters reported, citing data from Ukraine’s agriculture ministry. The war-torn country has seen its grain infrastructure under…
Read moreBusiness / Business & Strategy / REPORT
US HRW wheat exports projected at record low
US Hard Red Winter (HRW) wheat exports are forecast to fall to their lowest level since the US Department of Agriculture (USDA) began tracking such data in 1973, according to…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Poland to extend embargo of Ukraine grain
Poland announced on Sept. 12 that it will not lift its embargo of imports of Ukrainian grain this week as originally planned. Poland Prime Minister Mateusz Morawiecki said resuming imports…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Argentina anticipates rebound in soybean crop
Argentina’s soybean crop is expected to rebound in the 2023-24 crop year to an estimated 50 million tonnes, up from 21 million tonnes last season, according to a Sept. 7…
Read moreBusiness / Business & Strategy / REPORT
Brazil overtakes US as top corn exporter
Brazil will overtake the United States as the world’s top corn exporter in the 2022-23 marketing year and is projected to be the leading exporter in 2023-24 as well, according…
Read more
Business / Business & Strategy / REPORT
Canada enters GM corn dispute
The Canadian government announced on Aug. 25 that it will participate as a third party in the dispute settlement proceedings between the United States and Mexico regarding the use of…
Read more
Business / Business & Strategy / REPORT
Grain market review: Oilseeds
World oilseed prices rose in July after months of falls, with sunflower, notably, rising because of uncertainty over Black Sea shipments and new crop supplies looking tight ahead of harvest.…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT / UKRAINE
Romania to boost Ukrainian grain exports
With additional staff and the completion of EU-funded infrastructure projects, Romania said it could double its monthly transit of Ukrainian grain to its Black Sea port of Constanta to 4…
Read more
Business / Business & Strategy / REPORT
Brazil’s corn, and soybean estimates were revised higher
Brazil’s crop estimating agency, Conab, on Aug. 10 raised its official corn crop estimate for the current marketing year to a record 129.9 million tonnes, up 2.2 million from its…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Cargill revenues rise 7% to $177 billion
Excellent execution” and “customers’ partnerships” helped Cargill deliver an increase in revenues in the fiscal year ended May 31. At $177 billion, revenues were up 7% from fiscal 2022, the…
Read more
Business / Business & Strategy / REPORT / UKRAINE
Russia’s gambit in Ukraine
Russia’s exit from the Black Sea grain deal, followed by barrages of strikes unleashed on ports in Odesa, the Mykolaiv River, and most recently, the Danube River, threatens to plunge…
Read more
Business / Business & Strategy / REPORT
Canada plants more wheat at the expense of other grains
Canada’s wheat area hit its highest level since 2001 as farmers looked to benefit from strong prices and lower input requirements, according to a report from the Foreign Agricultural Service…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Russia hits grain infrastructure on Danube River
Russia has continued its attack on Ukraine’s grain infrastructure, destroying a grain warehouse on the Danube River in a drone attack on July 24, Reuters reported. Since leaving the Black…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Russia Pulls out of Black Sea grain deal
Russia announced on July 17 it was suspending its participation in the Black Sea Grain Initiative which for nearly a year has allowed safe passage of Ukraine grain exports via…
Read more
Business / Business & Strategy / IMPORT
US winter wheat forecast surprises analysts
The US Department of Agriculture (USDA) in its July 12 Crop Production report forecast US 2023 winter wheat production at 1.206 billion bushels, up 6% from the June forecast of…
Read more
Methods in flour mill analysis and adjustment
The following are quotes from a statement “Milling – A Profession” in a 1945 Association of Operative Millers (AOM)Technical Bulletin: “Each year, each month, almost each day the material the…
Read more
Business / Business & Strategy / REPORT
US grain group objects to ultra-processed focus
The term “ultra processed” is ill-defined and not deeply studied and would be of questionable value as a key criterion for dietary guidance, according to The Grain Chain, a grains…
Read more
Business / Business & Strategy / REPORT
Canadian wheat plantings have reached a recent high.
Area planted to wheat in Canada surged to its highest level in more than two decades, one of several crops to see an uptick in planting in 2023, according to…
Read moreBusiness / Business & Strategy / EXPORT / REPORT / UKRAINE
Ukraine convinced Russia will exit grain deal.
Ukraine is nearly certain Russia will leave the Black Sea Grain Initiative as its renewal date approaches because Russia is developing an alternative for its ammonia exports, Reuters reported, citing…
Read more
Business / Business & Strategy / REPORT
Bunge’s turnaround impressive
In a 2021 interview with Sosland Publishing Co. President and Milling & Baking News editor Josh Sosland, Bunge Chief Executive Officer Gregory Heckman hinted that a seismic transaction, like the…
Read more
Business / Business & Strategy / REPORT
Bunge, Viterra agree to $18 billion merger.
Bunge and Viterra announced on June 13 that they have agreed to a merger that will create one of the world’s largest agribusiness firms, moving it closer in size and…
Read more
Business / Business & Strategy / REPORT
Bunge, Viterra reportedly inching closer to deal.
Negotiations of a potential merger between agribusiness giants Bunge Ltd. and Viterra have reached a critical stage as the companies attempt to put the final touches on a deal that…
Read more
Business / Business & Strategy / REPORT / UKRAINE
Wheat prices rise with Ukraine dam breach.
As millions of liters of water poured through a breached dam in southern Ukraine threatening regional villages and water supplies, worries about an escalation of the war between major grain…
Read moreBusiness / Business & Strategy / REPORT
China’s wheat quality is taking a hit from heavy rains ahead of harvest.
Heavy rain just ahead of harvest in China’s central Henan province is increasing wheat prices and raising concerns about quality, Reuters reported. The rain is causing some of the wheat…
Read more
Business / Business & Strategy / REPORT
Converting food waste to feed
Food waste often is considered any food that was not used for its intended purpose and has otherwise been discarded to a landfill. In 2010, the US Department of Agriculture…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Ukraine says it has alternatives if Black Sea Grain Initiative not extended
Ukraine said it has alternate ways of transporting grain if the Black Sea agreement is not extended on May 18, Reuters reported. The agriculture ministry said not extending the agreement,…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Bunge Q1 earnings fall short of last year’s record
First-quarter earnings at Bunge Ltd. fell short of last year’s record results, dragged down in part by sluggish oilseed processing results in Argentina, Asia and Europe, which more than offset…
Read moreBusiness / Business & Strategy / EXPORT / IMPORT
Australian wheat output projected to decline
After three consecutive years of record-setting wheat crops in Australia, production in marketing year 2023-24 is forecast to dip 25% from the previous year to what would still be the…
Read more
Business / Business & Strategy / REPORT
US soft red winter wheat forecast at 405 million bushels
A panel of flour millers and wheat merchandisers on April 25 forecast soft red winter wheat production in the United States in 2023 at 404.923 million bushels, up 68.297 million…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT / UKRAINE
EU plans help for farmers in countries bordering Ukraine
The European Union (EU) is planning a package worth 100 million euros ($109.32 million) to support farmers as countries bordering Ukraine have begun to restrict imports of Ukrainian cereals that…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Bunge to acquire multi-oil refinery
Bunge Ltd., through its Bunge Loders Croklaan joint venture with IOI Corporation Berhad, has entered an agreement to acquire a newly constructed, port-based refinery from Fuji Oil New Orleans, LLC.…
Read more
Business / Business & Strategy / REPORT
US spring wheat plantings at a 50-year low
The US Department of Agriculture’s March 31 Prospective Plantings report brought some surprises but may ultimately yield to weather as the primary final planting factor this spring. The USDA said…
Read more
Business / Business & Strategy / EXPORT / REPORT / UKRAINE
Cargill to stop elevating Russian grain exports.
Citing mounting challenges to its grain export operations in Russia, Cargill will cease elevating Russian grain in the new export season that begins July 1.
Read more
Business / Business & Strategy / EXPORT / IMPORT
Focus on South Korea
With less than a quarter of its land used for agriculture, South Korea relies heavily on imports, particularly wheat and corn, while producing a significant amount of rice.
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Grain market review: Oilseeds
A likely record Brazilian crop, with Argentina’s production problems already factored in, and subdued demand were at the top of the list of factors behind easing oilseeds prices in recent…
Read more
Business & Strategy / EXPORT / IMPORT / REPORT / Tax & Home Loan / TIPS & GUIDES
Bunge joins canola collaboration
Bunge will collaborate with Corteva Agriscience and Chevron U.S.A. Inc., a subsidiary of energy giant Chevron Corp., to introduce proprietary winter canola hybrids that produce plant-based oil with a lower…
Read more
BASF announcement surprises wheat industry
With global wheat supplies tightening due to climate change and the war between Russia and Ukraine, two of the world’s biggest wheat producers and exporters, finding ways to maximize wheat…
Read more
Business / Business & Strategy / IMPORT / REPORT
Kazakhstan’s wheat, barley production improves in 2022-23
Wheat and barley production in Kazakhstan improved in 2022-23, with both experiencing a 39% increase from the previous year, according to a report from the Foreign Agricultural Service of the…
Read more
Business / Business & Strategy / REPORT / UKRAINE
Russia may abolish grain export quota
Russia, the world’s largest wheat exporter, is considering abolishing its grain export quota
Read more
Business / Business & Strategy / ORGANIC FOOD / REPORT
Companies betting on plant-based protein
With 52% of global consumers identifying as flexitarians (incorporating both animal-based and plant-based proteins into their diet), according to a Mintel market research report, oilseeds and legumes processors stand to…
Read more
Business / Business & Strategy / ORGANIC FOOD
Market for organic products must be nurtured
While still accounting for only a modest share of grain-based foods in the United States, the market for organic products has been highly dynamic and must be nurtured and protected.…
Read more
Business / Business & Strategy / REPORT
Brazil expected to produce record grain volumes
Brazil is set to have another record-breaking grain harvest in 2022-23 with wheat production estimated at 9.6 million tonnes and corn production at 125.5 million tonnes, according to a report…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
China corn production on upswing
Corn production in China for 2022-23 is trending higher at 277.2 million tonnes, up 1.7%, or 4.6 million, from last year, and feed mills have resumed mixing more corn amid…
Read more
Business / Business & Strategy / EXPORT / REPORT
French soft wheat exports outside the EU on rise
The forecast for 2022-23 soft wheat exports from France outside the European Union has continued to climb to 10.6 million tonnes, 21% more than last year, on strong demand from…
Read more
Business / Business & Strategy / REPORT / TIPS & GUIDES
U.S. flour production falls to seven-year low in 2019
Wheat flour production by U.S. flour mills in 2019 totaled 422.277 million cwts, down 4.594 million cwts, or 1.1%, from the record 426.871 million cwts in 2018 and the smallest…
Read more
Business / Business & Strategy / EXPORT / IMPORT
India eyes better year for wheat
Higher prices and better weather could help India’s wheat production take a leap forward with farmers planting high-yielding varieties in a wider area, Reuters reported, citing scientists and traders in…
Read more
Business / Business & Strategy / EXPORT / UKRAINE
Ukraine urges faster ship inspections
Ukraine sees faster ship inspections, rather than opening additional ports, as the key to increasing its exports under the Black Sea Grain Initiative, Reuters reported, citing a senior Ukrainian government…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
Grain market review: Coarse grains
Concerns over the world economy and its effect on demand, and spillover from declines in wheat, pushed prices for maize lower in December. Worries over potential problems with shipments through…
Read more
Business & Strategy / Human Resorce / REPORT
National Foods mill on track for commissioning in 2023
National Foods Holdings Ltd., a manufacturer of branded food and feed, is on track to start operations at a new mill in Bulawayo, Zimbabwe, in early 2023, said Todd Moyo,…
Read more
Business / Business & Strategy
Cargill to acquire soybean processor
Expanding its oilseeds network, Cargill has entered a definitive agreement to acquire Owensboro Grain Company, LLC, a fifth-generation family-owned soybean processing facility and refinery located in Owensboro, Kentucky, US.
Read more
Business / Business & Strategy / REPORT / UKRAINE
Satellite images reveal plentiful Ukraine crop
Ukraine farmers in 2022 harvested fewer tonnes of wheat than in the record-setting previous crop year, but close to the recent five-year average volume, according to analysis of satellite imagery…
Read more
Canadian feed company acquires grain processing plant
a manufacturer of nutritional products for animals, has acquired a grain and processing facility in Slemon Park, Price Edward Island, Canada.
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT / UKRAINE
Global grain trade review
The grains market has moved this year from handling an unprecedented worldwide pandemic to dealing with a war involving two of the planet’s biggest exporting nations. At the same time,…
Read more
Business / Business & Strategy / REPORT
China’s soybean imports hit the lowest level since 2014
China’s soybean imports hit their lowest level for any month since 2014 this October, according to customs data, Reuters reported.
Read more
FAO Cereal Price Index rises again
The benchmark for world food commodity prices was broadly stable in October, with rising cereal prices more than offset by declines in quotations for other staples, the Food and Agriculture…
Read more
Business / Business & Strategy / EXPORT / REPORT
Russia suspends participation in grain deal
Despite Russia proclaiming that it has suspended its participation in the United Nations-brokered grain export deal with Ukraine, grain ships continued to exit Ukraine’s Black Sea ports on Oct. 31,…
Read more
Business / Business & Strategy / EXPORT
India says its wheat, rice stocks sufficient
Following a summer of concern, India’s stocks of rice and wheat have been pronounced sufficient, and wheat could be sold by the government to help control domestic prices, if necessary,…
Read more
Business / Business & Strategy / EXPORT / REPORT
Argentine wheat crop projections continue to fall.
Drought-stricken Argentina’s 2022-23 wheat crop projections continue to trend downward as the country’s two major grain exchanges cut their forecasts on Oct. 13, according to Reuters.
Read more
Business / Business & Strategy / EXPORT / IMPORT
FAO sees drop in global grain output
The United Nations’ Food and Agriculture Organization (FAO) projected a further reduction in global grain production in its latest Cereal Supply and Demand Brief, released on Oct. 6. The FAO…
Read more
Business / Business & Strategy / EXPORT / UKRAINE
FAC examines impact of war on global food security
The Food Assistance Committee (FAC) during a meeting on Sept. 30 discussed the impact of Russia’s invasion of Ukraine on global grain markets
Read more
Business / Business & Strategy / EXPORT / REPORT
Ukraine shipments near 5 million tonnes
Nearly 5 million tonnes of agricultural products have been shipped from Ukraine’s Black Sea ports since the United Nations and Turkey brokered a deal on July 22, allowing grain shipments…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
War has taken toll on Ukraine’s grain storage facilities
One out of every six, or about 15%, of Ukrainian crop storage facilities, have been destroyed, damaged or controlled by Russia and its aligned forces since it invaded Ukraine on Feb. 24,…
Read more
Largest convoy yet of grain vessels leaves Ukraine
Ukraine dispatched 13 ships from its ports on Sept. 4 carrying 282,500 tonnes of agricultural products, its biggest convoy of grain vessels so far under an UN-brokered deal, Reuters reported.
Read more
Business / Business & Strategy / EXPORT / REPORT
India denies reports that it plans to import wheat
Although wheat production is forecast to fall to its lowest level in four years, India’s government on Aug. 21 reiterated that it had no plans to import wheat, Reuters reported
Read more
Business / Business & Strategy / EXPORT / UKRAINE
Black Sea Grain Initiative exports top 560,000 tonnes.
More than 560,000 tonnes of grain has been exported from Ukraine’s Black Sea ports since Russia agreed to lift its naval blockade on July 22, according to the Joint Coordination…
Read more
First Ukrainian grain ship headed to Africa
A ship is nearing Ukraine to pick up wheat for Ethiopia, making it the first food delivery to Africa under an UN-brokered plan to deliver grain trapped by Russia’s war,…
Read more
Business / Business & Strategy / EXPORT / IMPORT / REPORT
World’s top wheat-producing countries
In 2022-23, the International Grains Council’s July report anticipates worldwide wheat production to reach 770 million tonnes, down from 781 million tonnes in 2021-22, with 195 million tonnes available for…
Read more
Business / EXPORT / ORGANIC FOOD
Rain hurts Russian winter wheat quality
The quality of Russia’s winter wheat crop, which accounts for nearly three-fourths of the nation’s annual production, has taken a hit following recent rains in several regions with more expected…
Read more
Turkey plans to import more wheat in 2022-23
Turkey plans to import more wheat in 2022-23 to meet domestic food and feed demand, strengthen country stocks and meet stable demand from wheat product producers and exporters, according to…
Read more
First Ukrainian grain ship leaves Odesa under brokered deal
The first ship carrying Ukrainian grain under a deal brokered by Turkey and the United Nations left the port of Odesa on Aug. 1, carrying 26,000 tonnes of corn destined…
Read more
Brazil on pace for record corn production, exports
Corn exports from Brazil have increased by 221% in the first half of 2022 as importers seek to replace Ukrainian corn that isn’t making it to market due to the…
Read more
China expected to import less soybeans
Slower economic growth, high prices and COVID-related restrictions have lowered China’s soybean import expectations for 2021-22, according to a report from the US Department of Agriculture’s Foreign Agricultural Service (FAS)
Read more
Argentina grain exports stymied by trucker protest
Loaded grain trucks were not getting to Argentina’s largest port on June 29 as a truck driver protest against high fuel prices brought the country’s agricultural exports to a near…
Read more
Russia may switch grain export tax to rubles
Russia is considering a gradual switch for state export taxes for grains and sunflower seeds from US dollars to rubles at the behest of commodities traders.
Read more
Grain market review: Wheat
World wheat markets are at their highest price levels since 2008 as reduced supplies, held back by the conflict in Ukraine, a move by India to limit shipments abroad, and…
Read more
Brazil corn production revised upward
Brazil is projected to harvest a larger second corn crop this year as timely rainfall has lessened the severity of drought in the South American country.
Read more
Global Index Ranks 2021 Port Performance In Processing Containers
Global Index Ranks 2021 Port Performance in Processing Containers
Read more
Slow Growth In Organic Food Sales As Pandemic Fades
Slow growth in organic food sales as pandemic fades
Read more
China winter wheat harvest passes halfway mark
China had finished reaping winter wheat on about 11.13 million hectares of farmland by June 6, reaping the crop on more than 667,000 hectares daily for eight consecutive days after…
Read more
Brazil’s soybean production facing fertilizer challenges
Brazil is expected to slow its soybean planting expansion in 2022-23, with just a 0.5% increase year-over-year, down from the 3.8% annual growth rate last year.
Read more
Richardson to build new grain elevator in Alberta
Richardson Pioneer Ltd. plans to build a new high throughput grain elevator in High Level, Alberta, Canada. The new elevator will include 32,000 tonnes of storage space and will be…
Read more
Argentina farmers dealing with uncertainty
The upcoming presidential election and troubling economic conditions have cast a cloud of uncertainty over Argentina grain and oilseed producers entering the 2019-20 crop season, according to an April 11…
Read more
Brazilian corn production on the upswing
Expanded acreage and good weather during the safrinha growing season is expected to increase Brazil’s 2018-19 corn production by 18% over the previous market year. That trend is expected to…
Read moreGET IN TOUCH
A push by “green” energy proponents for a more environmentally friendly airline fuel has led to the development of sustainable aviation fuels (SAF), produced by vegetable oils, ethanol, plant biomass, and waste products. This includes soy-based biodiesel and corn-based ethanol. SAF is blended with conventional fuel at different levels, with limits between 10% to 50% depending on the feedstock and how the fuel is produced. According to the International Civil Aviation Organization, more than 360,000 commercial flights have used SAF at 46 airports, mainly in the United States and Europe.
Global production of SAF is expected to reach over 600 million gallons in 2024, but that is a tiny fraction of the roughly 100 billion gallons of airline fuel projected to be used globally this year, according to a Global Outlook for Air Transportation report. However, proponents of SAF envision exponential growth in the coming years. Three years ago, the Biden administration set production goals of 3 billion gallons of SAF by 2030 in the United States and 35 billion by 2050, a figure that would satisfy 100% of domestic airline fuel demand.
If these goals are realized, it will be a game-changer for corn and soybean producers and the biofuels industry. They received promising news in April when the US Department of Energy updated its model to calculate lifecycle emissions for SAF. Called GREET (greenhouse gases, regulated emissions and energy use in technologies), the model incorporated new data, including updated modelling of key feedstocks and processes used in aviation fuel and indirect emissions and integrated key greenhouse gas emission reduction strategies.
The final draft of GREET is expected soon. Also pending is guidance on the Inflation Reduction Act’s 45Z tax credit, which goes into effect Jan. 1, 2025, and will help farmers and the industries that serve them find new revenue opportunities with the expansion of the SAF market. But as CoBank noted in a recent report, the tax credit alone won’t be enough. Additional long-term government and market incentives will be needed to ramp up SAF output to optimal levels.
Other questions must be addressed: Will the cost of SAF, which is currently about three times higher than petroleum-based fuel, become more affordable? Can enough additional arable land be developed to produce the feedstock needed for SAF? Will cropland expansion incentivized by SAF undermine the potential greenhouse gas emissions reductions from those fuels since studies indicate that converting land to crops releases carbon from the soil while reducing its biomass? And with Donald Trump returning to power, how supportive will his administration be of SAF?
It also raises the question often asked on this editorial page by Morton Sosland, the late editor-in-chief of World Grain, amid the initial biofuels boom: If more grain is diverted for industrial purposes, how will that impact the global food supply and the price of food?
SAF is moving down the proverbial airport runway, but several hurdles must be crossed before it’s cleared for takeoff.
Recent rainfall has quickly changed the direction of winter wheat crop conditions in the US central and southern Plains. Growers hope additional rain in forecasts signals a pattern change to pull those regions out of drought, promote emergence before the hard red winter wheat crop goes dormant, and lessen the burden on spring precipitation to make the crop.
The US Department of Agriculture debuted its aggregate winter wheat conditions ratings in its Oct. 28 Crop Progress report. At 38% in good-to-excellent condition, the crop was worse than 47% a year earlier, worse than analysts expected, and the second lowest in records dating to 1986.
The crop’s first condition ratings “didn’t have any major surprises,” said Justin Gilpin, chief executive officer of Kansas Wheat. “I think everybody knew, considering the emergence number. It’s just so early, and the ground’s been so dry and hard. The wheat in the central part of the US hasn’t really had a chance to be established yet.”
The week ended Nov. 2, which brought cooler, wetter weather to the top hard red winter wheat-producing states of Kansas, Oklahoma, northern Texas, and that state’s Panhandle, eastern Colorado, and Nebraska. The moisture received proved beneficial, and the latest USDA ratings show improved conditions in six of the seven central hard red winter wheat production states. The Department said the portion of the crop rated good-to-excellent as of Nov. 3 was 40% in Kansas (38% a week earlier), 31% in Oklahoma (21%), 24% in Texas (30%), 58% in Colorado (51%), 37% in Nebraska (31%), 35% in South Dakota (44%) and 22% (all good) in Montana (17%).
While the additional moisture appears to have the crop on track for better conditions heading into dormancy, other evidence in the Crop Progress report reminded the trade that much more precipitation was needed. Topsoil moisture supplies are crucial in the early stages of winter wheat to promote emergence before dormancy.
No central winter wheat production state had surplus topsoil moisture as of Nov. 3. Topsoil moisture rated short to very short on that date was 55% in Kansas (78% a week earlier), 68% in Oklahoma (84%), 78% in Texas (92%), 65% in Colorado (63%), 79% in Nebraska (84%), 81% in South Dakota (82%) and 73% in Montana (64%).
The central and southern Plains “needed a pattern change, needed to get a rain, let it soak in, and then forecasts show a chance for another soaking rain,” Gilpin said. “The most important time for wheat obviously is springtime, but to give wheat a fighting chance, you want to get it up and established going into winter. We would have liked to have these rains a couple of weeks ago, but we won’t complain about getting them now. Hopefully, it’s not too late to have the plant still growing, getting some tillers, and getting established going into winter.”
The last couple of Crop Progress releases before the USDA shelves the weekly report until spring could indicate whether the rains spur a jolt of development and growth. Winter wheat emergence by Nov. 3 was 76% in Kansas, 47% in Oklahoma, 52% in Texas, 86% in Colorado, 83% in Nebraska, 70% in South Dakota, and 80% in Montana.
“Things are cooling off pretty fast in Kansas, and the growing season’s coming to a close,” Gilpin said. “I’m not going to complain about moisture, but will this moisture do a lot to cause that development? The plant’s just not growing as fast as we received the rains two weeks ago. I don’t want to sound too pessimistic because we’re getting this moisture perfectly.”
Recent rains also have improved conditions in the Central states where soft red winter wheat is primarily grown. The USDA rated winter wheat in good-to-excellent condition as of Nov. 3 at 61% in Missouri (55% a week earlier), 68% in Illinois (51%), 63% in Indiana (67%), 68% in Ohio (71%) and 64% in Michigan (61%).
Strong renewables production and improved results in the Trade segment boosted The Andersons net income attributable to the company to $27 million, equal to 80¢ per share on the common stock, for the third quarter ended Sept. 30, up from $9.7 million, or 28¢ per share, in the same quarter a year earlier.
“Overall, we are pleased with our third-quarter results given the lower commodity prices and reduced volatility in the ag markets,” said Bill Krueger, president and chief executive officer. “Renewables had a very strong quarter with increased ethanol production and improved yields in a period of good but softening crush margins. Trade results were significantly better than last year and include improved performance in our assets.”
The Trade segment recorded pretax income of $26 million and adjusted pretax income of $23 million for the quarter, which compared with pretax income of $8 million and adjusted pretax income of $5 million in the third quarter of 2023.
The company said that strong elevation margins and space income, primarily related to corn and wheat, helped results. Trade’s growing specialty ingredients business continued to benefit from recent growth investments. The merchandising business remained profitable with well-supplied commodity markets and limited volatility.
Trade’s third-quarter adjusted EBITDA was $38 million, which compared with $21 million in 2023.
The Renewables segment reported pretax income of $53 million and pretax income attributable to the company of $28 million in the third quarter. For the same period in 2023, the segment reported a pretax income of $47 million and pretax income attributable to the company of $26 million.
Margins on ethanol production improved year over year on significantly lower corn basis in the eastern plants, despite a reduction in ethanol board crush margins in the quarter.
Renewable diesel feedstock volumes continue to grow albeit with compressed margins on industry fundamentals. All four plants completed their semi-annual maintenance shutdowns in the third quarter. A favorable ethanol margin environment should continue, supported by exports, higher blending rates and continued lower corn basis levels in the east, The Andersons said.
Renewables had a third-quarter EBITDA of $65 million in 2024, up from $60 million in 2023.
The company continues to explore growth opportunities, including an $85 million investment for a 65% ownership interest in Skyland Grain, LLC, which operates a large grain and agronomy footprint across Southwest Kansas, Eastern Colorado and the Texas and Oklahoma panhandles.
“These assets extend our geographic footprint and support our existing merchandising presence in the region,” Krueger said. “In addition, we announced a significant investment in our leased facility at the port of Houston to improve our current grain export program and add capacity for storing and exporting soybean meal.”
Skyland, based in Ulysses, Kansas, has over 7,000 active co-op members across its grain and agronomy locations.
“We are excited to join forces with The Andersons,” said Pete Goetzmann, CEO of Skyland. “Their asset footprint is a strong complement to ours, offering our producers greater access to the best markets. As a leader in the grain trade with a proven track record, The Andersons merchandising expertise, combined with Skyland’s deep local market knowledge and customer base, creates a powerful synergy that aligns perfectly with our mission of connecting our producers to the world.”
Exports of US grains in all forms increased by 26% to 109.4 million tonnes in the 2023-24 marketing year, according to data released by the US Department of Agriculture (USDA).
The exports, valued at $48 billion, were bolstered by a record 1.75 billion gallons of ethanol sold internationally and a single-market record 23.4 million tonnes shipped to Mexico, said the US Grains Council (USGC).
The new ethanol record does not include an estimated 140.5 million gallons of ethanol exported to Japan in the form of ethyl tert-butyl ether (ETBE).
“We applaud US farmers and producers for their outstanding efforts in increasing exports this marketing year, and especially to ethanol producers who continue their trajectory of outstanding growth to meet global market demands,” said Ryan LeGrand, USGC president and chief executive officer.
Mexico was US agriculture’s top trading partner, purchasing 35,016,923 tonnes of grain in all forms equivalent. Japan moved into second place with 14.1 million tonnes of purchases, over China, which purchased 12 million tonnes.
Colombia skyrocketed into becoming the fourth largest trading partner for US agriculture thanks to a 129.9% with total purchases of 7.9 million tonnes. Canada, South Korea, Taiwan, the European Union, Guatemala and Vietnam rounded out the top 10 markets in 2023-24.
A severe drought in northern Brazil has significantly lowered water levels on the Tapajos waterway, halting grain shipments.
Brazilian port terminal group Amport, which represents firms such as Cargill and Louis Dreyfus, told Reuters that navigation of barge convoys carrying grains in the Tapajos has been halted since Oct. 4, and is expected to resume in November if rains arrive as forecasted.
Tapajos links Brazil’s central and north regions. It is an important corridor to transport grains from agricultural heartlands in states, including Mato Grosso, Brazil’s top soybean producer, to ports in the Amazon region. Amport said companies are waiting for the river to rise by at least 20 centimeters (7.9 inches) to resume navigation safely.
The drought also halted grain shipping in September through the Madeira River, another important grain corridor for Brazil, the world’s largest producer and exporter of soybeans and second largest for corn.
A Russian missile struck a grain vessel docked at the Port of Odesa on Oct. 7, killing one person and injuring five crew members, Reuters reported, citing Ukrainian officials.
It was the second attack on a docked grain ship in Ukraine in as many days, as a vessel at the nearby Port of Pivdennyi carrying 6,000 tonnes of corn was severely damaged by a Russian missile strike on Oct. 6. That ship’s 15 crew members were not injured, Reuters said.
Ukrainian Foreign Minister Andriy Sybiha described the attacks as a “deliberate terrorist tactic.”
“By attacking civilian vessels Russia tries to weaken Ukraine’s economy and put millions around the world at risk of hunger,” Sybiha said in a statement on social media platform X. “We must join forces of all responsible states and organizations to stop the aggressor (to) ensure freedom of navigation in (the) Black Sea and global food security.”
The ship struck at the Port of Odesa was the 21st civilian vessel to be damaged by Russian missile strikes since the war began in February 2022, Reuters reported.
Despite these attacks, Ukraine’s agriculture ministry reported on Oct. 7 that the country has exported 11.2 million tonnes of grain since the 2024-25 marketing year began in July. Ukraine exported only 7.2 million tonnes during the same period a year ago. This year’s updated total includes 6.5 million tonnes of wheat, almost 3 million tonnes of corn and more than 1.4 million tonnes of barley.
The government recently announced a 16.2 million-tonne cap on wheat exports this season to ensure that adequate amounts of the food grain are reserved to meet Ukraine’s consumption needs.
The Indian government will resume non-basmati white rice exports with a minimum floor price of $490 per tonne, ending a ban that started in July 2023.
The government has gradually eased restrictions on premium, aromatic basmati and parboiled varieties in the last several weeks. It eliminated the minimum floor price for basmati rice exports and the previous export tariff of 20% on non-basmati and basmati exports, and the export tariff on parboiled rice was cut in half to 10%.
India’s local rice supplies have increased since the export ban, and a record rice harvest is expected. Earlier this summer, USA Rice said that rice stocks were estimated at 50.5 million tonnes, nearly four times above the government’s annual procurement requirement.
“Global rice prices soared to their highest level in more than 15 years following India’s export ban last year as they cited concerns over domestic supplies despite tens of millions of tonnes in government stocks. We have been waiting for this announcement and have already seen global rice prices dip to stay competitive,” said Bobby Hanks, Louisiana rice miller and USA Rice International Trade Policy Committee chair. “We’ve seen this before where similar action was taken to cause global prices to rocket up only to crash once India released its stocks. The world market is bracing for the cycle to once again repeat itself. While the cycle isn’t new, India is now the largest global rice trader, so its effect will certainly be felt.”
Prior to the export ban last year, there were instances where India’s non-basmati prices were as low as $350 per tonne. However, both the former and the new minimum floor prices in India contrast significantly with US market-driven prices because of India’s heavy subsidies and artificial market factors, USA Rice said.
This move to reopen the export market likely will have a lesser impact than initially expected because, over the last year, the Indian government conducted dozens of government-to-government arrangements for exports to developing countries in the name of “food security and with zero price transparency, USA Rice said.
“India continues to push for permanent protections for their public stockholding schemes in the name of food security to avoid a World Trade Organization dispute, including blocking meaningful progress to the agriculture text earlier this year,” Hanks said. “This erratic behaviour proves that their current scheme continues to promote market-manipulating price support and contributes to global food insecurity for the most vulnerable. One sliver of hope is that the US government can use this data point to hold India accountable at the WTO.”
According to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, Egypt is expected to produce more wheat in 2024-25 as the government encourages an increased planted area and higher yields.
Production is estimated at 9.2 million tonnes, up from 8.87 million a year earlier.
The FAS said that High government procurement prices have also encouraged farmers to plant more wheat.
Wheat imports are estimated at 12.5 million tonnes, up 11.4% from the previous estimate but the same as 2023-24.
“The influx of foreign currency has contributed to a release of shipments held at ports and facilitated imports of essential commodities (including wheat) for both the public and private sectors,” the FAS said. “Moreover, the drop in international wheat prices has also contributed to both the private and public sectors seeking to maximize purchases on reduced prices.”
Egypt is a key wheat flour supplier to many African and Middle Eastern countries. The FAS said it has significantly expanded its wheat flour exports to the region as it continues to increase its milling capacity.
Sudan, Eritrea, Yemen, Somalia, Djibouti, Syria, the West Bank, and Gaza have been the top destinations for Egypt’s flour.
From January to May, Egypt increased its wheat flour exports by 250% compared to last year. The most significant increase was in Djibouti, Sudan, Somalia, the West Bank, and Gaza.
A primary reason is the Houthi attacks on vessels in the Red Sea, the Israel-Hamas crisis, and the crisis in Sudan.
The presence of two of the world’s most important agricultural producers and exporters — Brazil and Argentina — makes South America a powerhouse of world grains and oilseeds production and trade. The two make the region the leader in world soybean production, also producing large crops of maize (corn) and a significant tonnage of wheat.
According to the International Grains Council’s (IGC) projections, South America dominates world soybean production with a forecast 229.8-million-tonne crop in 2024-25, more than half the total global output, up from 216.3 million the year before. Brazil is the main driver, with a projected crop of 161.5 million tonnes, up from 150 million in 2023-24. Argentina’s 51-million-tonne crop, up from 49 million, comes next. Paraguay’s 10.3 million compares with the previous year’s 10.2 million, while Bolivia’s 3.7 million is unchanged. Uruguay’s soybean output is put at 3.1 million tonnes, down from 3.2 million, while “others” are responsible for an unchanged 200,000 tonnes.
South America’s maize (corn) production, set to total 192.5 million tonnes in 2024-25 (183.3 million in 2023-24) is dominated by Argentina at 54 million, down from 55 million, and Brazil at 124.6 million, up from the previous year’s 115.4 million. Paraguay accounts for 5.1 million tonnes of maize output, against 4.3 million in 2023-24, with Colombia at 1.5 million (1.6 million), Venezuela at 1.4 million (1 million) and “others” at 6 million (6.1 million).
Brazil is recovering from the impact of El Niño in 2023-24.
“Despite initially optimistic projections for the 2023-24 harvest, the El Niño has negatively impacted the corn and wheat crops,” the USDA attaché said in a report of April 1. “As a result, Post estimates corn production in MY 2023-24 will decrease to 122 million tonnes.”
The Brasilia-based experts forecast a rise in maize output to 129 million tonnes in marketing year 2024-25, which runs from March 2025 to February 2026, “in line with an expected rise in consumption, especially by the feed and ethanol industries.”
They predict a rise in area, to 22 million hectares from the previous year’s 21.5 million, based on the historical trend.
“While profit margins in the past season have been low for producers, corn is still widely consumed in Brazil and one of the top exporting commodities in the country, which can be planted multiple times per year,” they said.
“This increment is under a scenario of favourable weather conditions, following the alert of the possible end of El Niño, which severely impacted yields this 2023-24 harvest.”
Brazil: soy capital
Brazil is a key global oilseed producer, accounting for almost a quarter of the total global supply, the attaché said in a March 22 report. The attaché forecasts that in 2024-25, Brazil will produce 163.6 million tonnes of soybeans, cottonseed, and peanuts.
“Soybeans are by far the most dominant oilseed, representing nearly 96% of all oilseeds produced in Brazil,” they said.
For soybeans alone, the attaché put 2024-25 production at 157.5 million tonnes on the basis of an average national yield of 3,450 kilograms (kg) per hectare. It estimates the 2023-24 crop at 152.6 million tonnes, 4% below its previous figure of 158.5 million, from December.
“Lower yields outlooks have driven this downward estimate,” it said. “This results from the poor weather conditions across major producing regions, as the Center West.
“With high production costs, low prices, and thin margins, most Brazilian soybean farmers would have little incentive or available capital to sustain area expansion at the same rate as the previous seasons. As producers should have less available capital in 2024, the pace of area conversion (where it is possible), machinery acquisition, and increase of variable costs (e.g. fertilizers, seeds, labor, etc.) should also slow down.
“Amidst declining prices and persistently high production costs and interest rates, Brazilian farmers should opt for cutting back variable costs, which could lead to lower national yields by the end of next (marketing year). Naturally, some farmers will have had regular, or even better-than-anticipated yields during MY 2023-24, allowing them to invest in area expansion,” but “based on available data and interaction with key local stakeholders, Post does not expect that to be the reality of most soybean producers across Brazil.”
The IGC forecasts Brazil’s 2024-25 soybean exports at 100.6 million tonnes, up from 98.8 million in 2023-24. The figure means that Brazil is on course to supply well over half the soybeans traded, with the exports of all soybean producing countries coming to 174.6 million tonnes. US exports in 2024-25 are put at 49.8 million tonnes, while third-place Paraguay is at 6.3 million.
In the report, the attaché put Brazil’s soybean exports at 99 million tonnes in 2024-25, highlighting “sustained international demand from Asia, higher harvested volumes, a favorable exchange rate and higher competitiveness compared to other competitors, as the United States.”
“As Brazilian farmers are able to grow this commodity at a lower price due to lower costs of production, compared to the United States, Brazil is expected to continue supplying China with massive volumes of soybeans,” they commented, also noting that “a more competitive Brazilian reais to US dollars exchange rate should also continue to favor Brazil’s commodities exports, including oilseeds.”
The attaché put 2023-24 exports of soybeans from Brazil at 95 million tonnes, compared with its December 2023 forecast of 100 million.
“The reason for this expected reduction is due to lower estimated production due to poor weather late last year and increased domestic demand driven by higher biofuels mandate,” the attaché said.
The attaché also explained that “while China’s domestic consumption should increase 3% in 2023-24, largely driven by higher crush volumes, its record-high beginning stocks are expected to lead a plateaued growth in imports of less than half percent.”
“Our contacts have reported that Brazil’s exports to China should not be structurally affected by a potential slowdown of the Chinese economy — as volumes should remain at a high level, though growing at slower yearly rates,” they said.
Brazil’s maize exports, according to the IGC, will come to 43.7 million tonnes in 2024-25, down from 52.1 million in 2023-24, meaning that Brazil will be the world’s second largest producer, behind the United States, having held the top spot.
“It should be noted that China has played a huge role in maintaining high corn export values from Brazil,” the attaché said. “In 2023, Brazilian corn exports totaled 55.89 million tonnes, according to the Brazilian Secretariat of Foreign Trade (SECEX),” which “represented a growth of 29.42% compared to the previous year, driven mainly by the increase in production in the 2022-23 harvest and by significant exports to China, which bought 29% of all corn exported by Brazil.
“This value is eight times greater than all the corn imported by China in the 2016-17 harvest. China has become the leading destination for Brazilian grain, surpassing traditional partners such as Japan, which bought 11% of all Brazilian corn, Vietnam (8%), South Korea (6.2%) and Iran (5.8%).
“Brazil’s market share in China’s corn imports has grown exponentially after the country approved Brazilian corn imports in the third quarter of 2022 as part of measures to diversify its suppliers. China imported 16.1 million tonnes of Brazilian corn in 2023, taking a significant share of US corn imports. While Post envisions exports of Brazilian corn to continue at a steady flow, Brazil’s lower availability of corn for export and China’s growing interest in other markets, such as Argentina and Ukraine, should result in lower exports in 2024-25.”
Argentina’s soy output rising
In a May 1 report, the USDA’s Foreign Agricultural Service put Argentina’s 2024-25 soybean production at 51 million tonnes, up 1.5 million from the year before.
“Despite the looming threat of a La Niña year, prospects are good for Argentina’s production to reach the levels initially hoped for,” the attaché said. “Even with a drier year expected ahead, production is forecast up on higher planted second soy crop.”
Soybean planted acreage is forecast to increase to 17.8 million hectares with an increased second soy crop planting due to fears of a dry year and the potential threat of the chicharrita (leafhopper) in corn, they said.
“Soy is considered by many producers to be a safer bet due to its average better returns despite higher production costs,” the FAS said. “Additionally, the chicharrita does not affect soy.”
The IGC forecasts Argentina’s 2024-25 soybean exports at 5.1 million tonnes, up from 4.8 million the year before.
“China was once again the top destination for Argentine whole soybeans with over 85% of exports to date in 2022-23,” the attaché said. “This is expected to continue in the next two years barring any political issues in the bilateral relationship.”
In an annual report dated April 17, the USDA attaché in Argentina put the country’s 2024-25 maize crop at 48 million tonnes on 6 million hectares.
“These are the lowest of the past six years,” the attaché said. “The outbreak of the corn stunt disease in 2023-24 is expected to make many farmers, especially in the central-northern areas, shift to soybeans.”
The IGC puts Argentina’s maize exports in 2024-25 at 34.5 million tonnes, up from 33 million the previous year.
“Owing to occasional heat stress and insect disease pressure, production in Argentina will fall short of earlier predictions,” it said. “Nonetheless, with acreage higher year-on-year and yields seen recovering after drought-induced losses in the season before, total output (including from on-farm uses) is projected to rebound to 55 million tonnes (up 33%).”
The attaché said that the main destinations are projected to be countries in Southeast Asia, South America and the Middle East.
Grain production in Brazil is estimated at 298.41 million tonnes for the 2023-24 marketing year, a drop of 21.4 million tonnes compared to the previous year, according to Conab, the country’s food supply and statistics agency. This would still be the second largest crop in the survey’s history.
In its 12th Grain Harvest Survey for 2023-24 released Sept. 12, Conab said the decrease is mainly due to a lack of regular rainfall at the start of planting, combined with low rainfall during part of the crop cycle in the states of Matopiba, São Paulo and Paraná, and excess moisture recorded in Rio Grande do Sul, especially during the first crop. The states of São Paulo and Paraná, in addition to Mato Grosso do Sul, also saw adverse weather conditions during the development of the second crop.
The sown area is estimated at 79.82 million hectares in 2023-24, an increase of 1.6% or 1.27 million hectares over 2022-23. The average productivity of the crops was 3,739 kilograms/hectare, down 8.2% from 4,072 kg/ha the previous year.
Among the crops affected by adverse weather, soybeans stand out with total production for 2023-24 estimated at 147.38 million tonnes, a reduction of 7.23 million tonnes, or 4.7%, compared to 2022-23. The decrease was attributed to a lack of rain and high temperatures in the areas sown between September and November in the Midwest, Southeast and Matopiba regions, which caused replanting and productivity losses, Conab noted.
“In Mato Grosso alone, the main oilseed producing state, the production was 39.34 million tonnes, a drop of 11.9% compared to the first survey, or 15.7% compared to the last harvest,” Conab said. “In Rio Grande do Sul, excessive rain also harmed the oilseed production.”
Corn suffered similar outcomes, with Conab estimating production of 115.72 million tonnes for 2023-24, a drop of 12% from 2022-23. During the first harvest, high temperatures and irregular rainfall in important producing regions such as Minas Gerais. In the second corn cycle, weather was more favourable in Mato Grosso and Goiás, but in Mato Grosso do Sul, São Paulo and Paraná, dry spells in March and April, combined with high temperatures and pest attacks, compromised production.
Conab estimates that Brazil will export 36 million tonnes of corn between February 2024 and January 2025, 34% less than the estimated amount for the 2022-23 harvest.
In 2023-24, the estimated production of rice is up 5.5% to 10.59 million tonnes, mainly due to a larger cultivated area.
Among the winter crops, planting already has been completed and a reduction of 9.8% in the planted area estimated when compared to the last harvest. For wheat, the main crop cultivated among Brazil’s winter cereals, an estimated 3.1 million hectares has been planted, a drop of nearly 12% compared to the previous year.
According to researchers at Purdue University, the number of documented agricultural confined space incidents in the United States decreased 34% in 2023 compared to the previous year.
The total was also down from the five-year and 10-year average. Purdue University’s Agricultural and Biological Engineering Department has documented and investigated incidents involving grain storage and handling facilities at commercial and on-farm locations since the 1970s.
A total of 55 cases were documented in 2023, including 27 grain entrapments, four falls into or from grain storage structures, five asphyxiations due to deficient oxygen levels of toxic environments, six equipment entanglements that occurred while working inside or around agricultural confined spaces and nine cases involving grain handling facility fires or explosions.
Of the 55 cases, 29 were fatal and 26 were non-fatal.
“Despite the significant resources being devoted to addressing the issue, the frequency and severity of reported cases continues to be a cause for concern,” researchers said.
The number of grain entrapments was down 36% from 2022 and was slightly lower than the five-year average. Of the reported entrapments, 59% resulted in fatality, which is higher than the five-year average. Most of the entrapment incidents occurred in the Midwest.
Nine grain dust explosions were documented in 2023, researchers said. There were no fatalities documented and three of the incidents resulted in non-fatal injuries. The 10-year average for injuries is 9.5 and 1.2 for fatalities.
The explosions occurred at one ethanol plant, one wheat mill, two-grain elevators, two soybean processing facilities, two corn processing facilities, and one corn cob processing plant.
High in protein and fiber and relatively inexpensive compared to meat, pulses are gaining favor among global consumers. And because of their natural soil-enhancing and greenhouse gas-absorbing properties, pulses also rank high among crops from a sustainability standpoint.
In a recent report, Rabobank identified pulses as a crop that “creates opportunities for new and existing market players.” Some of the world’s largest agribusiness companies agree with that assessment.
US-based Columbia Grain International (CGI) has been a major originator and supplier of pulses for the global market for many years. CGI has invested heavily in the pulse sector, and it continues to expand its processing capacity in the northern United States. With analysts predicting a steady rise in demand for pulse products into the next decade, other major US-based companies, such as ADM, Cargill and Bunge, also have expanded their presence in the sector.
The latest company to add pulses to its portfolio is Netherlands-based Louis Dreyfus Co. (LDC), which announced in late August that it has created a business unit dedicated to pulse commercialization. Michael Gelchie, chief executive officer of LDC, said pulses “present geographic and operational synergies with LDC’s existing business activities and, as such, have the potential to contribute significantly to earnings.”
“The decision to establish this new business unit is fully aligned with our strategy to meet evolving nutritional and sustainability expectations for customers, reflected in both global production and demand growth,” he said.
Gelchie said LDC already has a presence in key pulse production hubs such as Australia, Canada and East Africa, as well as major consumption markets such as India, China and the Middle East.
The Rabobank report pointed out that new market players are emerging. On the export side, Russia and Argentina have upped shipments in recent years. Turkey has become a central hub for first-degree processing and distribution of pulses in the Middle East and North Africa, and Egypt is now the world’s largest fava bean importer.
The International Grains Council (IGC) estimates global pulse production will reach 100 million tonnes in 2024, up 30% from 2015, mirroring the increase in pulse trade during that 10-year span. The IGC projects trade to reach 21 million tonnes this year.
Over the years, there has been some debate about whether pulses, which include peas, lentils, fava beans, etc., should be classified as grains. With pulse output and trade trending higher, the IGC weighed in on the debate in 2021, extending its definition of grains to include pulses and thus expanding its market information for the crop.
Despite the many positive trends, pulses must clear a few more hurdles to move out of the “niche” classification and be recognized as a mainstream grain. Vito Martelli, author of the Rabobank report, noted that pulses are not yet considered commodities and there are still barriers to entering the industry.
“Prices are volatile and there is a lack of transparency in the price discovery process,” he said. “In addition, there are few sources of data to provide market insights at the global level.”
But those obstacles can and probably will be overcome, giving pulses an incredibly bright future.
As if the Russia/Ukraine war was not enough to deal with, the region has been enduring a very dry summer. Crop stress in the region is peaking for the third time this growing season with very warm to hot temperatures and limited rain. Soil moisture has never been much more than marginally adequate since spring. Recently, the Balkan countries and western Ukraine have joined in on the dryness just in time for the filling of summer crops, raising the potential for a little more loss in production.
Rainfall since early spring has been below normal in Russia’s southern region along with portions of eastern Ukraine and western Kazakhstan. There have been a few bouts of timely rain, but they did not prove to be enough to seriously improve production for the season. It is already well known that Russia’s winter wheat crop was reduced this year because of this dryness and due, in part, to late-season freezes. Winter wheat, barley and rapeseed were all affected by the strangely dry spring season with the short-term bout of cold.
Since that time, there was a short-term period of improved weather that helped get spring crops planted and off to a “fair” start. However, two important periods of high pressure aloft settled into western Russia resulting in the disruption of timely rainfall and the evolution of warmer-than-usual temperatures. The two periods of dominating ridges of high pressure fell perfectly into a past weather bias in which years that began with El Niño and ended with La Niña resulted in poor production for at least a part of western Russia, Ukraine and sometimes Kazakhstan.
The situation this summer did not seem too bad earlier in the growing season because a few showers managed to pop up just often enough to satisfy early season crop development. The development and dominance of high pressure aloft did bring in periods of warmer-than-usual weather that accelerated drying and induced crop and livestock stress, but the situation never seemed to prevail long enough to induce a “crisis” in production.
Most recently, a third bout of high pressure aloft has evolved, and it has occurred in the traditionally warmest period of summer, resulting in hotter temperatures and less crop toleration of the heat. The heat was more punishing to crop development due to already weakened crop conditions and poor soil moisture. Crop stress with this third round of warm and dry weather has been notably greater, resulting in larger potential yield losses in Russia’s southern region and eastern Ukraine.
The last two bouts of warm and dry weather this summer have expanded the driest area to the north and west with this latest bout of drying having the greatest expansion. Portions of Russia’s central region and the Balkan countries of southeastern Europe are now included in the driest and warmest weather. The situation already had prevailed for about 10 days upon this writing and the forecast was for little to no change through the first full week of September.
If that persistence of heat and dryness verifies, there is little chance that unirrigated corn, soybeans, sorghum, sunseed, sugar beets or potatoes produced in the region will escape some negative impact. For many crops in Russia’s southern region, western Ukraine and the Balkan countries of Europe, the most stressful conditions have come late in the summer, limiting the impact on production cuts, but some loss is anticipated.
The most serious production cuts will come from the eastern half of Ukraine and Russia’s southern region, which is already war torn and might not have produced that well anyway. Because of the war, the impact of dryness in the region may have a low impact on the world supply and demand expectations. This may especially be true with India, China, western and northern Europe and the United States all expected to produce well this summer. Without another important area of world grain and oilseed production suffering from production cuts, the issue in southwestern Asia and southeastern Europe may prove to be inadequate supporting the commodity trade. The market perception is that all is well in the world and grain and oilseed supply.
Looking ahead
So, what about the future? Many traders and analysts are focusing in on Australia, Brazil and Argentina for a sign of change in the supply of grain and oilseeds as we move into 2025. World Weather, Inc. does not foresee a doom and gloom production outlook.
Australia’s winter wheat, barley and canola are well established in most of the south and poised to begin spring growth favorably. Queensland is the only state with a dryness problem, and it has been very warm recently. The outlook is calling for change, though, with rain resuming in mid- to late-September in time to support winter crops and in time for the planting of summer crops.
Argentina is also quite dry in the west-central and northwest. It too is expected to see improved rainfall in the second half of September and October that should provide improving conditions for winter crops and for the planting of early season summer crops.
La Niña is still being touted by some forecasting agencies, though World Weather, Inc. believes it will either not develop or it will be so weak that it will be considered a “non-traditional” event, eliminating concern over Brazil summer rainfall threats and supporting a favorable outlook for 2024-25 production.
The bulls seem to have abandoned corn futures and are giving few indications they expect to return anytime soon.
On Monday, Aug. 26, the CME Group September and December contracts sank to their lowest levels since October 2020, with the spot month down 23% from a year ago and the contract falling 26% since the start of 2024. Analysts continue to point to record yields from this year’s domestic corn crop on top of last year’s record US corn production as major pressuring factors.
Also, global supplies are ample, and a barrage of old crop corn supplies is weighing on the US market as many farmers, who’ve been holding last year’s harvest in hopes prices may eventually firm, have finally succumbed to releasing their stored 2023 corn to make room for the 2024 harvest, which adds even more pressure to the four-year low prices.
Earlier in August, the US Department of Agriculture (USDA) forecast 2024 US corn production at 15.147 billion bushels, down 195 million bushels, or 1.3%, from the prior year’s record-high production. But the average yield for the 2024 crop was forecast at a record-high 183.1 bushels per acre, which is up 5.8 bushels, or 3.3%, from 177.3 bushels in 2023.
Findings from more than 1,600 cornfields sampled during the recent Pro Farmer Midwest crop tour affirmed the USDA’s expectations for a bumper corn crop, with six out of the seven Corn Belt states projected to have above-average corn yields. Scouts on the tour said the corn yield in top-producing Iowa set a record high for the tour records. The USDA earlier this month forecast record yields for Iowa, Illinois and Indiana, but one analyst said the final US corn yield is often lower than the USDA’s August outlook.
Near ideal weather conditions for this year’s crop also has been a pressuring factor on prices. The USDA’s good-to-excellent condition ratings have been above their five-year average throughout the season. And while corn conditions often decline during the typically scorching late summer months, most days in August this year have seen cooler than normal temperatures, which may help develop fatter corn kernels and ultimately boost corn yields.
US wheat futures sinking to fresh contract lows also have contributed to spillover pressure on corn futures. Cheap wheat from the Black Sea region is squashing nearly all competitive opportunities on the global export market. But the USDA indicated there was potential growth for US corn exports. In its August World Agricultural Supply and Demand Estimates report, the Department raised its forecast for 2024-25 corn exports to 2.3 billion bushels, up 75 million bushels from the previous month’s outlook and up 50 million bushels from 2.25 billion bushels estimated in the current marketing year that ends Aug. 31.
Be8, a Brazilian renewable energy company, said it has agreed with Praj, an Indian company and global leader in bio-energy, to establish its first ethanol plant in Passo Fundo, Rio Grande do Sul.
The plant, which will convert wheat into ethanol, will be the first large-scale refinery in Rio Grande do Sul to produce biofuel with grain. The facility, which will have an annual production capacity of 220 million litres, is expected to be operational in 2026 and involves an investment of approximately R$1 billion ($183 million). It will produce 155,000 tonnes per year of distillers’ dried grains with solubles (DDGS) for animal feed and 35,000 tonnes per year of vital gluten, a protein food product, Be8 said.
Praj, one of India’s leading companies in bio-based technologies, engineering and modularized solutions, said its facilities are distinguished by its energy efficiency, capable of guaranteeing a quality product at the lowest operating cost and with experience in grain-based ethanol production.
“This is another very consistent step to guarantee Brazil an innovative investment with the best international know-how for the production of cereal-based ethanol,” said Erasmo Carlos Battistella, president of Be8. “I am very pleased to establish this partnership with Praj and its entire team of experts who, together with Be8 professionals, will reinforce the country’s position as a protagonist in the energy transition.”
Shishir Joshipura, Praj Industries’ chief executive officer, added: “In our pursuit of accelerating the energy transition and decarbonizing mobility, Praj Industries is proud to partner with Be8, a global renewable energy company, to establish a Wheat-Based Low-Carbon Ethanol Plant. Together, we embark on a journey toward a circular economy as a sustainable climate action that drives innovation and progress.”
Brazil expects to harvest 4.6 billion bushels (116.8 million tonnes) from its three corn crops in the 2023-24 season, a drop of 12% from last year’s record harvest, according to the National Supply Company (Conab), the Department of Agricultural and Consumer Economics at the University of Illinois said in its farmdoc daily.
Despite the drop from last season, the harvest would still be the second-best in history.
The expected reduction is mainly due to smaller acreage due to low prices and lower yields in the second crop, which accounts for 75% of national production, according to the farmdoc report.
According to the latest Conab report released on July 11, the total planted area for the first, second, and third crops is expected to fall by 6.3% to 51.5 million acres. Yields have dropped by 6.2% to 88 bushels per acre.
The first crop is expected to be 923 million bushels (23.4 million tonnes), down 14% from the last season. In most states, yields have decreased because of adverse weather caused by El Niño. One exception was the southernmost state of Rio Grande do Sul, which, despite good yields on average, was affected by catastrophic floods at the end of May, when the harvest for the first season ended.
By the second week of July, more than 60% of the harvest of the second crop (winter crop cycle), also known as Sabrina, had been completed. Production is expected to decrease by 12% to 3.543 billion bushels (90 million tonnes).
The outlook for the third corn crop—officially included in Conab projections since the 2018-19 crop season—is 95 million bushels (2.4 million tonnes), surpassing the prior cycle by 12%. The third crop corn planting season has just been completed. Third-crop corn is primarily grown in the northern and Northeastern Brazilian states of Bahia, Sergipe, Alagoas, Pernambuco, and Roraima.
Conab and the US Department of Agriculture (USDA) differ slightly in their projections of corn production in Brazil in the current crop season. The USDA projected the crop would be 4.802 billion bushels (122 million tonnes). Differences in forecasting methods may explain the USDA-Conab divergence, similar to what has been observed in soybean production in Brazil, according to the farmdoc report.
Brazil’s corn exports are expected to drop 38% from January to December to 1.319 billion bushels (33.5 million tonnes). The drop is attributed to weaker demand from China and competition from the United States and Argentina.
Domestic corn consumption is expected to increase 6%. About 50% of domestic usage is for animal feed, and 12% is used by ethanol plants.
According to the Farmdoc report, the number of ethanol plants using corn as a feedstock is increasing, particularly in areas where second crop corn production continues to increase.
The US Department of Agriculture (USDA) on Aug. 12 lowered its estimate for US all-wheat production this year based on forecasts for lower soft red winter, other spring and durum wheat production that more than offset increased hard red winter and white winter wheat forecasts. The Department lowered its forecast for 2024-25 global and US wheat ending stocks.
The USDA forecast 2024 all-wheat US production at 1.982 billion bushels, down 26 million bushels, or 1.2%, from July but up 9% from 2023. US winter wheat production was forecast at 1.361 billion bushels, up 20 million bushels, or 1.4%, from July and up 9% from 2023. Included were forecasts for a 2% increase from July in hard red winter wheat production to 776 million bushels, and a 4% increase in white winter wheat production to 243 million bushels.
The white winter wheat forecast comprised 19.3 million bushels hard white winter and 224 million bushels of soft white winter.
Those increases were more than offset by the USDA lowering from July its forecasts for soft red winter wheat less than 1% to 342 million bushels, dropping its other spring wheat forecast by 6% to 544 million bushels (up 8% from 2023) and reducing the durum wheat forecast by 14% to 76.9 million bushels (up 30% from 2023).
Of the total other spring wheat production, 499 million bushels, or 92%, was projected to be hard red spring wheat.
US winter wheat production was based on an Aug. 1 yield estimate at 53.2 bushels per acre, up 1.2 bushels from July and up 2.6 bushels from 50.6 bushels as the 2023 average yield. Winter wheat area expected to be harvested for grain or seed was estimated at 25.6 million acres, down 1% from the USDA’s June 28 Acreage report, but up 4% from 2023.
US other spring wheat production forecasts were based on Aug. 1 conditions and yields expected to average 52.6 bushels per harvested acre, down ½ a bushel per acre from July but up 6.6 bushels from 2023. If realized, the US other spring wheat average yield would be a record high. The area harvested for grain or seed was expected to total 10.3 million acres, down 5% from June’s Acreage report and down 6% from 2023.
The US all-wheat production forecast matched the low end of a range of pre-report expectations from analysts. The all-winter, hard red winter and soft red winter production forecasts were within the respective ranges. The white winter forecast topped expectations, while the other spring wheat and durum projections fell below analysts’ expectations.
The lower US wheat production forecasts, along with slightly higher domestic use and a steady export projection, was behind a decrease in the forecast for June 1, 2025, carryover. The USDA forecast the 2025 US wheat carryout at 828 million bushels, down 28 million bushels, or 3.3%, from July but up 18% from 702 million bushels this year. The USDA left unchanged from July its forecasts for wheat imports and exports this year at 105 million and 825 million bushels, respectively.
Food use of wheat was raised 2 million bushels, to 964 million bushels, up 3 million bushels, or 0.3%, from 2024. Carryover forecasts were raised 12 million bushels for hard red winter wheat, but lowered for other classes, including hard red spring, down 24 million bushels; white winter, down 2 million bushels; and durum, down 14 million bushels. The expected soft red winter wheat carryout as of June 1, 2025, was left unchanged at 136 million bushels.
The USDA lowered its global wheat ending stocks forecast by 620,000 tonnes from July. If realized, the global carryout would be down 5.74 million tonnes from 262.2 million tonnes in 2023-24. The lower ending stocks came despite increased production forecasts for Ukraine, Kazakhstan and Australia. Those were offset by the lower US production estimate, a decrease in the EU crop forecast and increased world consumption.
Wheat futures were mixed after the release of the reports with Chicago and Kansas City futures down between 5¢ and 9¢ per bushel and the five closest Minneapolis futures up 2¢ to 3¢ per bushel.
Business Intelligence Group (BIG) has named Cargill the winner of a pair of 2024 BIG Sustainability Awards in recognition of the company’s global efforts within the agriculture and food value chains.
Cargill was the recipient of both the Sustainability Leadership Award and Sustainability Initiative of the Year Award for its Hatching Hope program. These BIG awards recognize organizations worldwide that have made sustainability a core part of their business strategy and practices and are having a positive impact on the sustainability of their organization and their industry.
“We are honoured to receive this recognition from BIG, celebrating the work our teams around the world do every day to help nourish the world in a safe, responsible and sustainable way,” said Pilar Cruz, chief sustainability officer, Cargill. “Challenges facing our food system are getting bigger, and the time to solve them is now. That’s why our teams are innovating for the future, partnering with farmers, customers and NGOs to drive change together.”
The Sustainability Leadership Award honoured Cargill for its overall organizational impact. Cargill said it brings together farmers, industry, academics, non-governmental organizations (NGOs), and policymakers to work toward a more sustainable agricultural sector. Technology and innovation, strong partnerships with NGOs and customers, and meaningful investments help Cargill address many of the world’s challenges, from supply chain to climate action and food security.
Hatching Hope, which earned the Sustainability Initiative of the Year Award, was created to improve nutrition and economic livelihoods by reaching 100 million people by 2030 through the production, promotion and consumption of poultry. Hatching Hope was co-founded with Heifer International and is implemented in partnership with TechnoServe.
“At Cargill, they have put sustainability at the heart of everything they do,” said Russ Fordyce, chief executive officer at Business Intelligence Group. “We’re inspired by their dedication and excited to showcase the incredible work they’re accomplishing.”
With 12 unique awards that identify leaders, entrepreneurs, and brands across a vast array of industries, the BIG Awards for Business are designed to shine the spotlight on the unique strengths, achievements, and efforts of companies and their team members.
The government of Canada awarded up to C$2.3 million over four years to Performance Plants Inc. (PPI) to develop change-resistant, high-yielding soybeans.
The award is through the AgriScience Program–Projects Component, an initiative under the Sustainable Canadian Agricultural Partnership.
PPI’s objective is to create soybean varieties that are more heat and drought-tolerant, herbicide-resistant, use water efficiently and sequester carbon into the soil.
PPI continues to further new soybean traits and genome development to ensure they have the best characteristics to withstand harsh climates.
“Soybean is the third largest field crop in Canada, and the foundation to increase its growth acreage and productivity lays squarely on the genetic improvement of the seeds,” said Yafan Huang, chief executive officer of PPI. “We are grateful to have Agriculture and Agri-Food Canada’s further support through its AgriScience Program to complete the development of climate-resilient, high-yielding soybean with enhanced carbon sequestration. Successful introduction of Performance Plants’ validated technologies to this crop will help to secure and grow this important Canadian industry amid increasingly challenging climate conditions.”
PPI received over C$2 million in funding under the previous framework, the Canadian Agricultural Partnership.
PPI is an agricultural biotechnology company incorporated in 1995. The company has developed key technologies to achieve higher and more consistent crop yields through improved heat tolerance, drought tolerance and reduced water requirements.
A recent insurgence of heat and dryness in western and south-central Canada’s Prairies has raised concern about spring cereal production. The region had one of its best starts to the growing season in years, and dryness kicks in while wheat and barley are reproducing, sending some chills up many producers’ spines. The marketplace does not seem overly concerned about the situation, even though some of the spring wheat in Russia is also stressed by heat and dryness.
Most of the world’s wheat production areas 2024 experienced favourable weather this year. The one key exception was Russia and the immediate neighbouring regions in western Kazakhstan and eastern Ukraine, where dryness was a constant battle. Winter wheat production was significantly reduced in these areas because of drought and late-season frost and freezes. Since then, Russia’s dryness has not gone away, but it has helped to mature winter crops and support their harvest.
Recently, there has been some northward expansion of dryness across southern Russia and eastern Ukraine into spring wheat areas of Russia, raising more market concerns about overall production from that nation. Recent weather brought daily high temperatures into the 90s and near 100°F while rainfall was minimal. These conditions have stressed corn, soybeans, and sunseed and begun to impact spring wheat and barley produced from southeastern portions of Russia’s Central Region to the Middle Volga River Basin and southern Ural Mountains region.
The next few weeks will prove to be most interesting for Russia and Ukraine production potential for many crops.
A problem with Russia spring wheat production in 2024 would not likely go over very well this year after reduced winter cereal production. It is not unusual for years in which El Niño events translate to neutral ENSO conditions and then eventually to La Niña that Russian grain and oilseed production is challenged and usually comes up short relative to other years of production. The winter wheat crop has already been reduced, and enough dryness and heat from eastern Ukraine to western Kazakhstan have prevailed in recent weeks to threaten some of the region’s summer crops, such as sunseed, corn, and soybeans.
The recent development of high pressure over western Russia and Ukraine stimulated the heat and dryness noted above, and it has allowed dryness in summer crop areas to expand northward into spring cereal production areas. Any persistence of this pattern could significantly impact Russia’s 2024 grain and oilseed production. An advertised break from the hottest and driest weather is just beginning. A general soaking of rain is unlikely, but cooling is expected, and that should help conserve what is left of the moisture profiled in spring and summer crop areas.
The next few weeks will be most interesting for Russia and Ukraine’s crop production potential. This tendency is even more critical to world trade because Canada’s Prairies are suddenly trending into a drier and warmer weather bias. Crop conditions rated quite favourably in late June and early July are suddenly drying out just as reproduction begins.
The biggest threat to Canada’s production this summer may be canola and spring cereals. The next few weeks will be critically important for Russia and Canada. Any persistence of hot, dry weather will likely hurt production and could help lead to a rebounding futures market after a fantastic sell-off in recent weeks. World Weather, Inc. believes that dryness and heat in both countries will not reach extremes during the balance of the growing season and “some” timely rain will fall to limit the fall in production; however, production is not likely to swing back to the ideal level that was once expected.
Warmer-than-usual temperatures are predicted for crops in Canada, Russia, Ukraine, and Kazakhstan. No prolonged temperature extremes are expected, which should help crops get to the finish line of reproduction without significant losses. Some reduced yield is inevitable for crops in both regions of the world, but the damage done to production should be minor enough to keep the world supply of small grains sufficient to prevent a perceived or actual shortage of small grains.
The reduced production from Canada and Russia should be closely monitored; however, the odds are that Australia and Argentina will have excellent crops in 2024. Australia’s wheat and barley development is off to a good start, and sufficient rain in the next few weeks will raise soil moisture for a quick and aggressive start to the growing season, which resumes in late August and September after crop semi-dormancy.
Argentina’s wheat planting is nearly complete. The nation has trended a little dry in recent weeks, but it has also been more relaxed than usual during much of autumn and winter, which has limited plant moisture demand and conserved soil moisture. Rain should occur in timely intervals during the balance of the winter season, suggesting a well-established wheat and barley crop is likely. The delayed arrival of La Niña and possible weak to non-traditional La Niña influence on the world in the third and fourth quarters of 2024 suggests there is potential for timely rainfall that will support a much larger-than-usual winter cereal crop.
Suppose Australia and Argentina’s production is as good as expected. In that case, the impact of lost production from Canada and Russia might be at least partially countered, limiting the upside potential in future prices unless another large production area of the world comes up with a production issue.
The last several weeks have seen a mixed trend for maize (corn), although there was weakness in the United States on planting and yield expectations. The July World Agricultural Supply and Demand Estimates (WASDE) report from the US Department of Agriculture added more bullish ideas on demand to the factors involved.
In its Grain Market Report of July 18, the International Grain Council (IGC) said its sub-index for maize prices had “firmed in recent weeks, albeit with differing trends across the leading exporters.”
ulled higher by gains in Ukraine and Brazil, average export prices rose by a net 2%, still 12% lower compared to a year ago, the IGC said.
“US maize futures worked lower, the spot September contract dropping by 6%, on bearishly perceived supply side fundamentals,” the IGC said. “News of larger-than-expected plantings and quarterly stocks sparked busy speculative fund selling in late June.
“More recent weakness stemmed from favourable domestic yield prospects, as crops entered the key pollination period under overall adequate soil moisture availabilities.”
The IGC also pointed to a slight decline in up-river prices in Argentina with limited fresh news, while there was “a firmer tone amid tepid grower selling interest” in Brazilian export premiums, “with bottlenecks on river routes to Northern Arc ports reportedly adding to inland transportation costs.”
Barley rose in Europe as “harvest pressure was countered by a disappointing crop quality report,” the IGC noted.
Sorghum followed maize down in the United States, was lower on ample supplies in Argentina, and was also cheaper in Australia on “an absence of fresh demand,” according to the IGC, which reported mixed US prices. In Australia, “a favourable 2024-25 crop outlook” is driving prices lower.
New crop rye in Germany was “underpinned by mixed harvest results,” it said, while “nominal values in Russia firmed.”
The US Grains Council (USGC) commented in its July 18 Market Perspectives publication that “USDA’s July WASDE (World Agricultural Supply and Demand Estimates) update surprised the market with stronger domestic feed demand and increased corn export demand in the 2023-24 marketing year.” It suggested that continuing “strong Mexican corn train demand likely prompted the increase in the export estimates.”
“US cattle on feed numbers and substantial hog feeding numbers are being supportive to corn basis levels in the western corn belt and indicate that feed usage is increasing,” the USGC said.
The USGC said 2024 production remains vulnerable to reduction.
“Last year’s US dryness in May and June prompted the dip in their yields from initial May levels,” the USGC said. “This wasn’t expected this year, but the current yield ideas remain optimistic.”
The European Confederation of Maize Production (CEPM) said in its July 17 Corn Market publication that prices had fallen over the previous week, up to July 12, despite a positive close on Friday following a bullish USDA report for maize.
“In its July report, compared with June, the USDA revised US maize stocks for the 2024-25 marketing year down very slightly (to 53 million tonnes), whereas operators had been expecting a substantial rise linked to the increase in production (5 million tonnes), anticipated as a result of the increase in acreage announced at the end of June,” the CEMP said.
“These lower USDA stock forecasts come from a surprise drop (of 3.7 million tonnes) in stocks for the 2023-24 marketing year as a result of better-than-expected consumption for animal feed and exports,” the Paris-based Confederation said. “Despite this, US stocks remain high, and could increase in August with the first estimate of yields by sampling.”
When scouts fan out across North Dakota fields in the third week of July, they will be looking to confirm or moderate expectations of a high-yielding spring wheat crop forecast this month by the US Department of Agriculture (USDA).
The USDA on July 12 forecast production of spring wheat other than durum in the United States this year at 577.84 million bushels, up 72.94 million bushels, or 14%, from 504.9 million bushels in 2023. The forecast was the Department’s first survey-based estimate of the season for spring wheat. If the forecast holds, the 2024 other spring wheat crop would be the largest since 587.505 million bushels in 2020 and would compare favorably with 493 million bushels as the recent five-year average outturn.
The projection slightly topped pre-report trade expectations but comported with a larger planted acreage, said Erin Nazetta, an agriculture research analyst with Broadview Capital Holdings, St. Louis, Missouri, US.
“At this stage, I don’t necessarily question USDA’s number too much, but, along with higher acreage, it provides a baseline to then really focus on crop conditions, how good the yield potentially could be,” she said.
By class, hard red spring wheat production was forecast at 532.447 million bushels, up 64.379 million bushels, or 14%, from 468.068 million bushels in 2023. The recent five-year average hard red spring wheat outturn was around 453 million bushels. Hard white spring wheat production was forecast at 10.336 million bushels, up 1.591 million bushels, or 18%, from 8.745 million bushels a year ago. Soft white spring wheat production was estimated at 35.057 million bushels, up 6.97 million bushels, or 25%, from 28.087 million bushels in 2023.
The larger crop is aligned with a big improvement in US wheat supplies thanks to a larger hard red winter wheat harvest, and will help the global balance sheet, Nazetta said.
“A larger spring wheat crop is coming in a year when the record crop we saw from Russia last season is not going to be the case this year, so having some cushion to global wheat supplies through a larger US crop will be beneficial to the major exporter balance sheet,” she said. “Fundamentally at the global level, we’re not at a very burdensome level regarding overall wheat supplies. We are in a period of harvest pressure on prices as a lot of the Northern Hemisphere crops are being moved from the fields to export channels, pressuring prices or keeping them depressed with a lower floor from corn values going down. But globally, having a bigger supply from the US is probably what the balance sheet needs this year.”
Other than durum production in 2024, North Dakota spring wheat was forecast at 305.76 million bushels, up 38.040 million bushels, or 14%, from 267.72 million bushels in 2023. It was forecast to be the largest North Dakota crop since 318.01 million bushels in 2018 and the fourth-largest crop for the state in records dating to 1919. The record-large North Dakota spring wheat outturn was 382.2 million bushels in 1992.
The annual Hard Spring Wheat & Durum Tour is planned for July 22-25 by the Wheat Quality Council and its executive vice president, Dave Green.
“It looks to be a big crop, so on the tour, we’ll be looking to confirm that or put a halt to those ideas,” Green said. “The other thing is that wheat industry leadership in the Northern Plains are worried about diseases. When you get wheat wet for too long, and there’s a lot of those areas this year, there’s a lot of talk about ‘have they done enough spraying, is it working, or do we have a lot of these diseases we don’t like to see.’”
He said there were no expectations of excessive weed or pest pressures, noting that grasshoppers, spotted in abundance in some fields on the 2022 and 2023 wheat tours, don’t reproduce as well as in the dry drought years.
On July 12, the USDA also forecasted durum wheat production in the United States in 2024 at 89.288 million bushels, up 29.959 million bushels, or 50%, from 59.329 million bushels in 2023. The durum crop was forecast to be the largest since 103.914 million bushels in 2016 and the second largest since 2010. The recent five-year average durum outturn was around 57 million bushels. The North Dakota durum crop was forecast at 53.36 million bushels, which would be the state’s largest outturn since 58.118 million bushels in 2016 and the second-largest crop since 2010.
“For durum, farmers obviously had an inkling they needed to plant more,” Green said. “And the North Dakota Wheat Commission this week says the tour will see more durum fields than normal. Overall, in the Northern Plains, Montana is the only state that’s closer to normal precipitation. These other states, South Dakota, North Dakota, Minnesota, are really wet compared to Montana.”
The USDA’s review of the July 9 US Drought Monitor indicated that 24% of Montana durum and 26% of Montana spring wheat were growing in drought, compared with 3% and 1%, respectively, in North Dakota.
Nazetta said millers, bakers, and others in the wheat market should monitor global production numbers and the size of the US corn crop.
“The market is seeing the improved conditions, first with the HRW crop and now with the spring crop; things are looking good,” she said. “Beyond wheat, corn, with higher acres and improved crop conditions, lowering the floor price under wheat. Looking at corn and how the overall grain supply is improving with the better US corn crop than was expected only a few months ago. US wheat, for sure, is improved year-over-year. We still need to watch the European crop and the Russian crop, both expected to be smaller year-over-year despite the fact they are big crops and we are going through harvest pressure. The market will try to dial in what the final crop size is going to look like out of the EU and Black Sea regions and how that may impact the overall demand and price environment for US wheat.”
About 45 scouts from across the wheat value chain, plus representatives from the government, academia and the media, are registered to attend the annual spring wheat tour, down 18% from 2023.
“Participation doesn’t always rise or fall based on the potential crop production,” Green said. “It seems that industry expansion and growth tend to give us more people, so when things are good and companies are hiring, we get bigger crowds, but it doesn’t exactly correlate with good crops or bad crops.”
The US Department of Agriculture (USDA) on June 28 said domestic stocks of wheat, corn and soybeans on June 1 were up more than 20% from a year earlier.
The USDA, in its quarterly Grain Stocks report, estimated June 1 old-crop all wheat stocks, which comprise the 2024 carryover, at 702 million bushels, up 23% from June 1, 2023, including 139 million bushels on farms, up 12%, and 563 million bushels off farms, up 27%. March-May indicated disappearance of wheat was 387 million bushels, up 4% from the same period last year.
The June 1 stocks report defines the carryout for the 2023-24 marketing year. That wheat stock estimates were raised from the USDA’s June 12 monthly World Agricultural Supply and Demand Estimates report suggests a smaller feed usage number than the USDA previously articulated, said Bill Lapp, founder and president of Advanced Economic Solutions, Omaha, Nebraska, US.
“Wheat ending stocks were 688 million bushels in the last WASDE, and the actual number now is 702 million bushels,” he said. “If nothing on the other uses changes or imports change, then we end up with a 14 million bushels less feed and residual use, something on the order of 76 million bushels. Another year of relatively small feed and residual use. The USDA was a little bit off in their estimate, and I would say the USDA had a pretty good handle on stocks by class at the end of the previous year.”
Lower-than-expected planted acreage and a downward revision in winter wheat planted acreage was concurrent with an upward revision to harvested acreage projections.
“Kind of a mix there, and it’s a little bit bigger crop than we had previously anticipated,” Lapp said. “If the yields stay the same, we would have had a bigger crop on June 12 based on the acreage update here. And a total of 47.2 million all wheat planted acres was lower than USDA was projecting in June, but the 38.8 million harvested acres is an increase. So far, reports of what has been harvested are generally better than we thought. I would lean in favor of saying we’re going to have a bigger hard red winter wheat crop than USDA said last month. If you’ve got more stocks to begin with and a bigger crop forthcoming, that’s a good argument to say we’ll be over 800 million bushels for 2024-25 ending stocks versus the June estimate of 758 million bushels.”
Durum wheat stocks in the June 28 report were 21.1 million bushels, down 24% from a year ago, including 9.99 million bushels on farms, down 22%, and 11.1 million bushels off farms, down 26%. March-May disappearance of durum was indicated at 15.3 million bushels, up 90% from the same period in 2023.
Corn stocks in all positions on June 1 were estimated at 4.993 billion bushels, up 22% from a year earlier, including 3.026 billion on farms, up 37%, and 1.967 billion off farms, up 4%. Indicated disappearance of corn during the March-May period was 3.36 billion bushels, down 2% compared with 3.29 billion bushels during the same period on 2023.
“That probably means the USDA will have to lower their feed and residual number in the July 12 WASDE by 25 million or 50 million, and that’ll go right to the ending stocks of corn for 2023-24,” Lapp said. “Netting out all the other uses, this gives us an idea of how much, after nine months of the year, we know we’ve fed, and it looks like the USDA forecast may be a freckle heavy.”
Soybean stocks on June 1 were estimated at 970 million bushels, up 22% from June 1, 2023, including 466 million bushels on farms, up 44%, and 504 million bushels off farms, up 6%. March-May soybean disappearance was indicated at 875 million bushels, down 2% from the same period a year earlier.
“With those numbers, supplies are a little bit tighter than the USDA probably had been anticipating,” Lapp said. “I don’t think the residuals get changed for old crop, and we get a little bit smaller new crop, but it depends a lot on what they do with usage. It’s a big goose egg for 2024-25 soybean sales to China so far. We haven’t sold any, and yet the USDA’s got a forecast increase of 125 million bushels, so that’s something to wrestle with that might suggest ending stocks going up from the 455 million USDA currently has projected as of June for the 2024-25 crop year.”
USDA all wheat, corn and soybean stocks were within the range but above the average of analysts’ pre-report expectations.
Weather typically is the main force affecting agricultural commodity markets, from planting in the spring (or fall for winter wheat) to harvest in the fall (or summer for winter wheat), especially during the growing season for all crops.
The most recent examples were from Russia, the world’s largest wheat exporter, and Brazil, the world’s largest soybean and sugar grower and exporter and a major corn export competitor to the United States.
Dry conditions and widespread frost damage in Russia sent US wheat futures soaring in May, only to come crashing down in June as lowered wheat production estimates began to be raised amid indications exports would be fulfilled. Adding pressure was the early and rapidly advancing US winter wheat harvest. A few weeks earlier, flooding in Brazil threatened soybean harvest, and some corn production also supported corn and soybean futures prices, but those, too, have since declined, in part due to strong early-season crop condition ratings for the US corn and soybean crops.
This year’s weather outlook taken in its entirety is expected to be mostly favorable during the summer growing season in the United States and Canada. That was the message delivered by meteorologist Drew Lerner, president and founder of World Weather Inc., Overland Park, Kansas, US, at the annual Sosland Purchasing Seminar in early June. But that doesn’t mean there won’t be some weather “hiccups” along the way, and conditions can change rapidly.
Iowa, the nation’s largest corn growing state and second largest soybean state (after Illinois), went from various levels of dry or drought conditions early in the spring to severe flooding in the northwest (along with southeast South Dakota and southwest Minnesota) in the past week after 4 to 8 inches and as much as 15 inches of rain fell in some areas, per the National Weather Service.
Corn can take an amazing amount of abuse from flood waters, depending on the size of the crop at the time and how long water covers the soil (blocking oxygen to roots can kill plants). Soybeans are less sturdy. Chicago soybean futures traded higher June 24 because of the Upper Midwest flooding and expectations for more, while corn futures price changes were mixed. Yields for both crops likely will be reduced in the region.
Drought.gov said the government’s national integrated drought information system, (also called the Crop Moisture Index), the top third of Iowa was wet to excessively wet and the middle third and western third were abnormally moist to wet as of June 22. Also, abnormally moist to excessively wet as of June 22 were all of Tennessee and Kentucky, the southern half of Missouri, southern portions of Illinois, Indiana and Ohio and all of Pennsylvania and northeast Ohio. That was a concern for the soft red winter wheat growers as rain during harvest or wet conditions can reduce grain quality and increase disease problems.
Meanwhile, parts of Arkansas, Oklahoma and Nebraska and nearly all of Kansas were sweltering under 100°F plus temperatures in late June. That provided for a speedy winter wheat harvest ahead of forecast showers in the southern Plains in early July, but it also raised concerns about the fall row crops.
The US Department of Agriculture (USDA), in its Crop Progress report, said winter wheat was 40% harvested in the 18 major wheat states as of June 23, well ahead of 21% a year earlier and 25% as the 2019-23 average for the date. Both soft red winter and hard red winter states were mostly well ahead of the average pace.
Meanwhile, crop condition ratings slipped in the week ended June 23, with good-to-excellent ratings for spring wheat at 71% compared with 76% a week earlier, corn at 69% (72%) and soybeans at 66% (70%). All three were well above year-ago ratings.
July is the most critical time for corn in the Midwest as the yield-making pollination (silking) phase occurs, with wet but not too hot conditions ideal. Four percent of the crop was in that stage as of June 23. The most critical time for soybeans is August, which is the yield-making pod-setting stage.
The prospect of ample supplies, despite weather problems in some producing regions, is pushing oilseeds prices lower.
The Foreign Agricultural Service (FAS) of the US Department of Agriculture said on June 12 in its Oilseeds: World Markets and Trade report that the US soybean oil price premium compared to other major exporters has declined, and the United States is expected to be a net soybean oil exporter in 2024-25.
The price premium in the past couple of years was driven by higher domestic demand for soybean oil in biofuel production, particularly for increased renewable diesel production headed to the California market,” the FAS said. “Soybean prices for major exporters declined since the last WASDE report on improved US plantings and ample global supply projections. Soybean meal prices also declined following weaker soybean prices and ample supplies from the major meal producers.”
FAS also reported “significant appreciation in South America soybean oil prices, primarily driven by strong domestic demand in Brazil,” while “weather‐related concerns with the European rapeseed crop also boosted vegetable oil prices.”
In its World Agricultural Supply and Demand Estimates report, published June 12, the USDA put global oilseeds production for 2024-25 at 685.8 million tonnes, down 1.3 million from its May forecast of 687.1 million, “mainly on lower rapeseed production for Australia and the European Union.” It put the 2023-24 world oilseed crop at 656.8 million.
“Rapeseed production is lowered for Australia on the lower harvested area while production in the EU is lowered on a reduced yield for France,” the FAS said.
In its monthly Food Price Index, released June 7, the United Nations Food and Agriculture Organization said world vegetable oil prices were down 2.4% in May compared with April but still 7.7% above their May 2023 level. It described the month-on-month fall as “mostly driven by lower palm oil quotations, more than offsetting higher soy, rapeseed and sunflower oil prices.”
The USDA’s Economic Research Service (ERS) detailed rapeseed supply in its June 14 Oil Crops Outlook report.
“The EU rapeseed production is reduced this month by (300,000) tonnes, to 18.8 million tonnes, on lower yield,” it said. “The EU’s rapeseed yield is estimated at 3.21 tonnes per hectare, down 1% from last month. By the end of May, most rapeseed crops were ahead of normal development and entering the pod-filling stage. Dry weather in Hungary and Romania, which began in the middle of January and persisted throughout May, is expected to affect pod fill development.”
The ERS said that excessive rainfall in France and Germany is expected to hinder the yield potential.
“The harvested area is estimated at 5.9 million hectares, unchanged from last month but down 6% from last year,” it said.
Australia’s rapeseed production forecast for MY 2024-25 is reduced by 1 million tonnes to 5.5 million tonnes in lower area, the ERS said
COFCO International, Ltd. and GROWMARK Inc., on June 20, announced they have entered into definitive agreements regarding grain assets in Illinois.
Beijing, China-based COFCO International has agreed to purchase GROWMARK’s minority stake in a transloading facility located in Cahokia. In contrast, GROWMARK has agreed to purchase a Chicago grain warehouse facility, known as the B-House, from COFCO International.
The Cahokia facility is a grain and byproduct trans-loading terminal strategically located on the Mississippi River in the year-round St. Louis Harbor. It has access to all seven of North America’s Class I railroads, supported by over seven miles of private on-site rail track. It is capable of accepting up to four-unit trains (110 cars) at a time. It is a high-speed rail and truck-to-barge loading facility.
The B-House is located on the Calumet River, near downtown Chicago. The facility has a capacity of 11.5 million bushels, provides unparalleled flexibility to move grain through rail, truck, barge, and laker vessels, and facilitates imports and exports via the Great Lakes.
“We plan to continue investing in our US business, and we intend to pursue additional opportunities focused on supporting our US Gulf and Pacific Northwest export strategy,” said Zhijun (Jerry) Shi, chief operating officer of grains and oilseeds, for COFCO International in North America.
Matt Lurkins, GROWMARK’s vice president of grain and strategic relationships, said the acquisition will greatly benefit the Bloomington, Illinois-based cooperative. The cooperative provides agronomy, energy, facility engineering and construction, logistics products and services, as well as grain marketing and risk management services to its nearly 400,000 North American customers.
“GROWMARK is a farmer-owned cooperative,” he said. “That means the farmers growing the grain that gets traded through B-House will now participate in the returns generated from this supply chain link. We are excited to add B-House to our cooperatively owned grain assets portfolio.”
COFCO International, which does business in 36 countries, is the overseas agriculture business platform for COFCO Corp., China’s largest food and agriculture company. In 2023, COFCO International handled over 122 million tonnes of related commodities, with revenues of over $50 billion.
In its latest 2024 European Union/United Kingdom grain crop forecast, released on June 10, COCERAL increased its projection slightly to 296 million tonnes, about 500,000 tonnes higher than the previous projection in March.
If realized, it would still be about 3.2 million tonnes higher than production in 2023, said COCERAL, a European association focusing on agricultural trade.
Record rainfall late last year negatively impacted winter cereal sowing (wheat/barley) in northwestern Europe (France, Germany, UK, Baltics, Poland), while Spain’s production will substantially increase compared to 2023.
Wheat production (excluding durum) is expected to reach 134.5 million tonnes, compared to 134.1 million in the March forecast, which is down from 139.9 million last year. Barley production is projected to be slightly lower, falling to 59.9 million tonnes from 61.2 million in the previous forecast but up from 54.4 million in 2023. Denmark, Finland, and Spain will have better barley crops than in 2023. COCERAL said.
The preliminary EU27+UK corn crop is now seen at 64.8 million tonnes, up from 64.3 million forecasts in March and 1 million tonnes higher than the 2023 output.
The EU-27+UK rapeseed crop is forecast at 19.4 million tonnes, compared to 20.2 million in the previous forecast and down from last year’s 21.4 million tonnes.
The Turkish Agriculture Ministry recently announced that it will halt wheat imports from June 21 through mid-October to protect Turkey’s farmers from price decreases and other adverse impacts during this year’s harvest.
The measures would be implemented to “prevent our producers from being affected by price decreases due to supply density during the harvest period, to meet the raw material supply required for our exports from domestic production, and to ensure market stability in favour of producers,” the ministry said.
This action by one of the world’s largest wheat importers will likely increase price fluctuations in a volatile global market.
The measure will most significantly impact Russia, Turkey’s top wheat supplier. Russia, the world’s leading wheat exporter, expects slightly smaller production and export totals in the 2024-25 marketing year, which has caused wheat prices to surge in recent weeks. However, after Turkey announced its import ban last week, Chicago wheat futures fell 7.5%, their most significant weekly loss since July 2023.
With the wheat harvest just starting in Turkey, the Turkish Statistical Institute’s first forecast for the country’s 2024 crop production projects wheat output was at 21 million tonnes, a 4.5% decrease compared to last year. It projected a 5.4% decrease in overall grain production this year.
The Turkish ministry also noted that flour exports from domestically produced wheat, which had been banned since September 2018, would be allowed. Turkey, perennially the world’s largest flour exporter, typically exports flour made from imported wheat.
Australia’s overall winter crop production is expected to increase 9% to 51.3 million tonnes in 2024-25 and be the fifth highest on record, according to the June report from ABARES.
Wheat production is forecast to increase by 12% to 29.1 million tonnes, while barley production is estimated at 7% to 11.5 million tonnes. Canola production is estimated to drop 5% to 5.4 million tonnes.
Overall planted area for winter crops is expected to remain historically high, increasing slightly to 23.6 million hectares, 6% above the 10-year average.
Conditions in Queensland and northern and central New South Wales have been close to ideal for the start of the winter cropping season. However, rainfall this fall has been lower than average across major cropping regions in western Victoria, South Australia and Western Australia, and soil moisture has remained low.
Australian summer crop production is estimated to fall by 11% to 4.6 million tonnes in 2023–24. While down from last year, the total is 31% above the 10-year average, ABARES said.
“Summer crop prospects improved significantly following better-than-expected seasonal conditions during late spring and summer in Queensland and northern New South Wales,” ABARES said. “Falling production reflects an overall fall in the planted area more than offsetting higher forecast yields.”
Autumn storms and rain across key summer cropping regions have delayed harvesting some summer crops. This has resulted in a fall in grain and lint quality in some unharvested crops but did not significantly affect the production volumes of most later maturing crops.
Higher yields in other areas will likely more than offset any downgrades caused by wet harvest conditions.
Sorghum production is estimated to fall by 16% to 2.2 million tonnes in 2023–24. While this is down year-on-year, it represents a 10% upward revision from the March 2024 Australian Crop Report, and it now sits 38% above the 10-year average.
Bunge Global SA and Zen-Noh Group have agreed through a joint venture to purchase 50% of a grain terminal at the Port of Santos from Brazilian rail operator Rumo for 600 million reais ($115.3 million), Reuters reported, citing a securities filing.
Rumo said in the filing that it had tied up the binding agreement to sell its 50% stake in the XXXIX terminal at Latin America’s largest port. Terminal XXXIX has the capacity to store 135,000 tonnes of grain.
The firms said the deal would be made through a joint venture between US-based Bunge and Zen-Noh Grain Corp., the US subsidiary of Japan’s Zen-Noh Group, with each of the partners holding an equal stake. Brazilian food and fuel processor Caramuru Alimentos, one of the country’s largest grain crushers, will continue to hold the remaining 50% of the terminal.
The closing of the deal remains subject to the usual regulatory approvals, Bunge said.
“With this deal, the companies expect to obtain larger logistical flexibility in a key export corridor in Brazil,” Bunge and Zen-Noh said.
Rumo and supply chain solutions provider DP World also reached an agreement in March tobuild a new port terminalfor grains and fertilizers at the Port of Santos. The project, which will be installed at DP World’s private-use terminal on the port’s left bank, will boost the port’s handling capacity by 9 million tonnes of grains and 3.5 million tonnes of fertilizers, DP World said
Recent rains have dampened France’s wheat and barley outlook while slowing maize (corn) planting in the European Union’s largest grains producer, Reuters reported, citing data from farm office FranceAgriMer.
A warm, sunny stretch earlier in May had helped crops and soil dry out after a damp growing season. Still, recent showers have raised concern that wet conditions may damage maturing wheat and barley while preventing farmers from completing maize planting.
The condition of French soft wheat declined slightly last week to remain at a four-year low. Some 63% of French soft wheat was rated as in good or excellent condition by May 20, down from 64% a week earlier and 93% a year ago, FranceAgriMer said. The rating was the lowest for the time of year since 2020, when French wheat crops were also affected by heavy rain during planting.
The good/excellent score for durum wheat, used in pasta, fell to 64% from 66% the previous week. For barley, the winter barley rating was unchanged on the week at 66%, while the spring barley score fell to 73% from 74%.
Farmers had sown 78% of the expected maize area compared with 73% a week earlier. That was well behind last year’s progress of 93% and a five-year average of 96%.
As harvests approach, wheat traders are increasingly focused on the weather, especially its impact on Russia’s crop, which had low moisture earlier in the year and continued cold temperatures in May. A larger crop than last year is forecast, but with prices in a long-term downtrend, wheat consumption is forecast to outstrip growth.
US Wheat Associates (USW) reported in its May 14 Wheat Letter Blog that “across the Northern Hemisphere, wheat price and crop development are dominating the market discussion.”
“Soon, the first harvests of the 2024-25 crop year will provide more concrete information on supply availability and quality,” USW said. “Until then, weather conditions will play a crucial role in global grain markets as winter wheat enters late growth stages and spring wheat planting progresses.”
Although world wheat prices were trending steadily lower over the last year, shifting weather patterns have prompted a recent reversal, USW noted, pointing to a surge in July Chicago Board of Trade (CBOT) wheat futures since April 18. USW highlighted that “in the past month, varied weather conditions have raised concerns about the Russian wheat production outlook,” with low moisture in the country’s south from mid-March to mid-April and central and southern crop-growing areas suffering from severe frosts in early May.
Helen Plant, senior analyst, Cereals & Oilseeds at the United Kingdom’s Agricultural and Horticultural Development Board (AHDB), discussed the first forecasts for 2024-25 in the World Agricultural Supply and Demand Estimates report in mid-May.
“The initial projections from the USDA show global wheat demand exceeding production by over 4 million tonnes,” she said. “Wheat production is forecast to rise 10.5 tonnes year-on-year due to output recovery for Australia and Kazakhstan, plus rises for the US and Canada. However, this would still not be enough to meet demand, which is up 2 million tonnes, to 802.3 million.
“This includes a Russian wheat crop of 88 million tonnes. This is down 3.5 million tonnes year-on-year but in the same ballpark as the latest IKAR and SovEcon estimates.”
Explaining that the USDA predicts stocks held by major exporting countries (Argentina, Australia, Canada, European Union, Russia, and Ukraine) in 2024-25 will climb 6.9 million tonnes to 31.7 million, Plant stressed that “with global demand rising, it’s important to look at stocks relative to demand. Stocks in these countries at the end of 2024-25 are predicted to equate to just 13.3% of combined domestic and export demand. This is down from an estimated 14.5% at the end of 2023-24 and would be the lowest since 2007-08 (13.1%).”
In its “Grain: World Markets and Trade” report, published May 10, the USDA’s Foreign Agricultural Service (FAS) said, “Global exporter quotes rose over the past month as global exportable supplies become more constrained before the upcoming harvest.”
“Stocks have continued their downward trend, currently at the lowest levels since 2015-16,” the FAS said. “Australian quotes rose $17 per tonne with tight stocks constraining exportable supplies.
“Despite subdued export demand, US quotes rose $14 per tonne as old stocks are declining ahead of the next year’s harvest, which is soon to begin. Russian quotes were up $13 per tonne as expectations for a smaller crop were only partially moderated by ample domestic stocks.”
The FAS continued, “Canadian quotes surged $27 per tonne on robust demand with tightening stocks. EU quotes increased by $16 per tonne, maintaining a fairly consistent price premium over Black Sea competitors.
Finally, the FAS said, “Argentine quotes experienced the largest increase of these countries, up $32 per tonne as exportable supplies tightened.”
Reuters reported that India’s wheat stocks in government warehouses on May 1 reached their lowest level since 2008, with a 10.3% year-on-year drop.
Two years of low crops resulted in the sale of record volumes to boost domestic supplies and lower local prices.
According to the state-run Food Corporation of India, wheat reserves at the start of the month totalled 26 million tonnes, down from 29 million tonnes at the same time a year ago.
Inventories in May were higher than April’s stock of 7.5 million tonnes following new season purchases.
Reuters reported that the government has resisted pressure to encourage imports by cutting or removing the 40% tax on imports or by buying directly from leading suppliers such as Russia. Instead, it has opted to dip into state reserves to sell to bulk consumers, such as flour millers and biscuit makers.
The Food Corporation of India started selling wheat to private players in June 2023 and has sold a little more than 10 million tonnes so far, a record from state reserves.
Recently, a ridge of high pressure evolved over the heart of Russia’s grain production region, grabbing some attention in the commodity trade. Ridges of high pressure aloft over Russia tend to occur in years of El Niño to La Niña transition. Sometimes a similar ridge of high pressure evolves over the central United States impacting the Great Plains, western Corn and Soybean Belt and the southeastern Canada Prairies with drier and warmer-than-usual weather.
Producers and traders who are looking for a market rally are watching these two regions closely.
World demand for grain and oilseeds is likely to have a more significant influence on the market trade, and that seems to have been lacking in recent months. South America’s production this year will ensure that the market supply of grain and oilseeds is sufficient for an average demand year.
The biggest question regarding this year’s commodity futures prices must be the combined influence of agricultural product demand and any production pressure that might evolve. Most of the weather around the world has not been adverse enough to throw market trade into a tizzy, which is why the speculation over summer crop development in the United States, Canada and Russia may be the only potential trigger for at least a short-term market weather rally.
Russia’s Southern region, eastern Ukraine and Kazakhstan have just completed more than six weeks of below-normal precipitation and the second half of that period was also warmer than usual. So far, though, that warm and dry bias has been mostly good for spring planting and for more aggressive winter crop development.
A breakdown in that high-pressure ridge was expected for a little while in late April and early May. That may allow some rain to fall, but the dominating influence on weather patterns in Russia should return the high-pressure ridge later in May and June, when temperatures will be much warmer and the ground will dry quicker.
The return of dry and warm weather later this spring and early summer is anticipated, and its impact will be closely monitored. Recent years of similarity produced a variety of impacts on production with 2010 being the most extreme and 2016 having the least impact. Also, 1988 was a year of interest because of dryness that affected North America at the same time.
Canada’s Prairies have been dealing with drought for a few years with some areas in the southwestern parts of the region reporting drier-than-usual conditions for more than seven years. The impact on summer crop production has been most significant since 2020. Recent weather in Canada’s Prairies has shown signs of a breakdown in the persistent dry pattern. Late spring rainfall is expected to be greatest in the eastern Prairies while the west remains drought stricken. However, during the summer these trends will likely reverse with more rain in the west and less rain in the east, reducing the potential for another drought year in the Prairies, even though drought continues today.
US weather has trended in a pattern that supports a dry and warm late spring and early summer, but a rainy weather pattern that dominated the eastern Midwest in March and early April has the soil in those areas plenty wet. More recently, there has been a trend change shifting the greatest rainfall into the western corn and soybean production areas. Drought is being whittled down in Iowa and neighboring states, and this was expected to continue through the first part of May.
The same weather pattern that changes Canada’s weather this summer will also change the US weather, including a ridge of high pressure over the Great Plains and western Corn Belt. The high-pressure ridge is not expected to be of great magnitude for a long period of time but perhaps long enough to deplete soil moisture and induce a few bouts of hot weather.
There is considerable support for the drier and warmer-biased weather over several weeks this late spring and mostly during the summer in the central United States. The lunar cycle coupled with La Niña and the negative phase of Pacific Decadal oscillation all point toward a period of warmer and drier-biased weather. It is too soon to accurately predict the outcome of all these negative influences, but the current bout of rainy weather is of great interest.
Rainy weather in the United States has been delaying some farming activity and that process will continue into the second half of May. The wet bias will do two things. First, it will further delay planting, and if the delays become significant and are followed by a period of hot, dry weather, late-planted crops may be doomed to be more stressed than usual. The moisture abundance recently has increased soil moisture so that there is greater humidity during the summer and that could help hold the temperatures back for a while and support some feedback thunderstorms that erupt in the Plains and western Corn Belt.
The moisture in the Midwest must be closely monitored, but some cooling is also occurring in the ocean off the West Coast of the United States and in the Gulf of Mexico. If these trends prevail too long, they could contribute to warmer and drier weather during the summer.
Argentina’s soybean production is expected to increase in 2024-25, with a larger planted second soy crop, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA).
Production is estimated at 51 million tonnes, up 1.5 million tonnes from the previous harvest. Soybean planted acreage is forecast to increase to 17.8 million hectares with an increased second soy crop planting due to fears of a dry year and the potential threat of the chicharrita (leafhopper) in corn.
FAS said increased soy acreage will come at the expense of wheat planting and first-crop corn. Wheat planting is expected to decrease due to low prices and low returns. Corn planting is expected to decrease for a similar reason but also fueled by fear of the impact of the chicharrita on yields.
The FAS maintains a production estimate of 49.5 million tonnes for 2023-24, about 500,000 tonnes below the USDA official estimate. While overall, this year’s crop looks good, the FAS said the hot and dry spell in mid-January stunted the potential for a great year.
Crush and exports in 2024-24 are also expected to recover to 40 million tonnes and 7.3 million tonnes, respectively.
Feed and domestic consumption is forecast to go up slightly to 6.3 million tonnes, with a return to normal production levels and a modest increase expected in the poultry industry in the next years.
FAS forecasts that domestic soybean oil for biodiesel use will increase slightly to 2.1 million tonnes as increased crush creates more supply for domestic oil production and global edible oil supply constraints continue to ease, making biodiesel more competitive.
FAS said Argentina is the largest exporter in the world of soy meal and oil, with a huge crush capacity and well-developed industry and export infrastructure, particularly along the Paraná River.
The EU is once again expected to be the top market for Argentina’s soymeal exports, followed by strong buying from Vietnam and Malaysia. Egypt became a large buyer last year, and industry sources expected these purchases to continue into the next year. The FAS forecasts Argentina’s soymeal exports up at 27 million tonnes in 2023-24 and 2024-25 with increase production and crush.
The port region of New Orleans, Louisiana, US, was the world’s No. 1 grain and oilseeds export hub in 2023, leading the two major South American hubs, according to a report published by Argentina’s Rosario Grains Exchange.
The Port of New Orleans Region was listed first with 63.4 million tonnes of grains and oilseeds exported, while Santos Port in Brazil exported 62.3 million tonnes. Argentina’s Rosario port was next with 42.4 million, Belém, Brazil, 38.17 million, and Vancouver, British Columbia, Canada, 26.99 million.
In 2023, the New Orleans region will have shipped more than half of all US agribusiness exports. According to the Exchange, citing US Department of Commerce data, shipments represented more than 60% of US soybeans, 78% of corn and 25% of wheat.
The Exchange noted that the port of Santos is the most important in Latin America by commercial volume. It accounts for about 29% of the Brazilian trade balance, and its main exported products are soybeans, sugar, orange juice, corn, and chemical wood pulp.
After ranking first in 2019, Rosario was second from 2020-22 before severe drought took hold in the country’s main production regions, leading to a collapse of shipped volumes.“At the same time, the phenomenal performance of the port of Santos in Brazil stands out,” the Exchange said. “In just six years, the total volume shipped doubled, going from 31.1 million tonnes in 2018 to 62.3 million tonnes in 2023, hand in hand with an explosion in Brazilian grain production.”
Canada’s grain output in the upcoming marketing year is forecast to increase by nearly 5%, boosted mainly by a surge in wheat production, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
The FAS, which issued the Global Agricultural Information Network report on April 24, forecasts a 5.4% increase in Canadian total wheat production to 33.7 million tonnes in 2024-25, slightly higher than the five-year average. Overall grain production is seen increasing by 4.9% to 61.4 million tonnes compared to the drought-plagued 2023-24 harvest.
The most notable production increase among the various classes of wheat was in durum, where the FAS projects a 36% climb to 5.5 million tonnes on a 5% increase in planted area and a recovery in yields. Spring wheat output is expected to rise by 2% in 2024-25 to 25.2 million tonnes.
With production rebounding, Canadian wheat imports are seen declining by 50,000 tonnes from 600,000 tonnes in 2023-24, which was the second largest intake on record, the report said. Conversely, wheat exports are seen increasing by 5% to 24.7 million tonnes.
Total grain exports are forecast to increase by 3.3% year-over-year, as the wheat outgo offsets lower corn, oat and barley exports.
Notably, corn imports are expected to decline by 30% “on the assumption of improved moisture levels in the Prairie Provinces, increase domestic forage supplies, and improved grazing.”The FAS forecasts slight increases in corn and barley production at 15.4 million and 8.9 million tonnes, respectively.
The Argentine government plans to invest approximately $550 million in building a new grain port in the Rosario region.
The region is considered a vital agricultural center for Argentina, accounting for more than 80% of the country’s agricultural and agro-industrial exports.
Presidential spokesperson Manuel Adorni said construction on the new port began in March. The port will be located in Timbues, on the Parana River, he said.
Bunge, Cargill and Louis Dreyfus are among the companies that operate grain handling facilities along the Rosario port network.
The US Department of Agriculture’s (USDA) March 28 Prospective Plantings report provided a few surprises and insight into potential 2024 acreage and crop sizes. This year’s report comes with mostly favourable weather across key growing areas and commodity prices below those of the past couple of years in many cases.
The USDA said farmers intend to plant 90 million acres of corn in 2024, down 5% from 2023; 86.5 million acres of soybeans, up 3%; and 47.5 million acres of wheat, down 4%. The wheat area includes 34.1 million acres of winter wheat (down 1% from the January estimate and down 7% from 2023), 2.03 million acres of durum (up 22% from last year), and 11.3 million acres of spring wheat other than durum (up 1% from a year ago). Of course, winter wheat is already up and growing.
USDA said. Planting intentions were higher than 2023 for rice, durum, other spring wheat, canola (record high), peanuts, soybeans, cotton and pulses (dry beans, peas and lentils). Fewer acres were expected to be planted in 2024 to barley, corn, oats, grain sorghum, winter wheat, flaxseed, sunflower and sugar beets.
Analysts noted that sharply lower prices from last year for some commodities may have reduced planting intentions (some of which still may change). In its March 8 World Agricultural Supply and Demand Estimates report, the USDA forecasted average prices paid to farmers in 2023-24, down from 2022-23 for all wheat, corn, sorghum, oats, rice, soybeans and cotton, with only barley unchanged.
Corn, soybean, and wheat futures were all at or near three-year lows at some point in recent months due to ample domestic and global supplies.
Compared with pre-report trade expectations compiled by Reuters, the USDA corn number was below the average and near the bottom of the full range of analysts’ projections. Soybeans were close to the average, and all wheat came in above the average. The lower-than-expected winter wheat area was offset by durum and other spring wheat, which were both above the average and the full range of expectations.
Following the report’s release, analysts generally said they were most surprised by the corn forecast and called the soybean number neutral. One noted that the first acres to be pulled from corn will be lower-yielding fields, so the final production number may not be lowered by the same percentage. Yield, in large part, is determined by weather during the growing season, and weather plays a key role.
Weather and soil moisture conditions are much better heading into the spring planting season than a year ago. The largest improvement is for the already planted winter wheat, with 17% growing in areas of drought versus 48% a year ago, according to the USDA’s assessment of the March 26 US Drought Monitor. For other crops (most of which aren’t planted yet), 23% of corn production was in an area of drought (30% a year ago), 21% of soybeans (22%), 1% of peanuts (21%), 1% of rice (4%), 7% of sunflowers (37%), 14% of sorghum (90%), 23% of durum (35%), 25% of spring wheat (35%) and 21% of barley (18%).
If there is an area of concern for drought, it would be the Midwest, west of the Mississippi River (northern Missouri, Minnesota and especially Iowa, the nation’s top corn and second largest soybean-producing state). In addition to Minnesota, several northern-tier states had large areas of drought, including northern Idaho, Montana, North Dakota and Wisconsin.
However, weather forecasts for April called for above-average rainfall across most major US crop areas and above-average temperatures. While the moisture may slow planting progress, the warmer weather will raise soil moisture and soil temperatures and boost early-season conditions.
The USDA, in its April 1 Crop Progress report, said 2% of corn in the 18 major states was planted as of March 31, with Illinois at 1% planted, the only Corn Belt state with seed in the ground. Spring wheat was 1% planted. Winter wheat was rated 56% good-to-excellent versus 28% a year ago.
Grain and oilseed prices continued to slide last quarter under pressure from a strengthening US dollar, the arrival of the South American harvest, and plentiful domestic inventories, according to a new quarterly report from CoBank’s Knowledge Exchange.
The report said corn, grain sorghum, barley, and oats all saw major reductions since last year, while soybeans, cotton, spring wheat, and durum wheat each experienced increases.
But much can happen with weather and markets to shift the balance this spring,” said Tanner Ehmke, lead grain and oilseed economist for CoBank, in the report. “Low water levels on the Mississippi River are already raising concerns of slower grain and oilseed shipments ahead.”
Forecasts for US corn acreage are down 4.9% year-over-year with falling prices and a strong US dollar discouraging planting. Planted acreage for sorghum is down 11%, and combined barley and oat acreage is down 14%.
Corn stocks are ample at 8.35 billion bushels, up 13% year-over-year.
Exports have been strong, particularly to Mexico. Sales commitments are up 19% but will face intense competition from Brazil next quarter as the safrinha corn crop comes to market, Ehmke said.
Soybean acreage increased 3% to 86.5 million acres.
“Strong domestic demand has helped soybeans hold a greater price premium than corn, with soybean crush records large as renewable diesel drives new demand for soybean oil,” Ehmke said.
Soybeans crushed in January exceeded last year’s pace by 2% as new soybean crush capacity comes online.
Export commitments are down 19% due to the languishing Chinese demand and growing competition from a record South American crop.
Ehmke said that spring wheat and durum picked up a surprising amount of acreage in the Prospective Plantings report. Both crops are cheaper to plant than corn.
Total wheat acres are down due to lower winter wheat acres. Winter wheat conditions improved due to moisture linked to El Niño, and yield prospects are also higher.
Ehmke said growing conditions overseas among major exporters are not as favourable. Warm and dry conditions prevail in Ukraine and Russia, and excessive wetness plagues Western Europe.
CoBank’s Jacqui Fatka said the ethanol outlook for 2024 is positive overall as facilities capitalize on lower corn prices and improved margins.
The Environmental Protection Agency will allow eight Midwestern states to use E15 year-round starting in 2025 but will still require waivers this summer.
Fatka said more E15 and E85 blending allows the ethanol industry to remain competitive in an otherwise declining gasoline market.
Renewable diesel provides solid demand for soybean oil and other feedstocks, including animal fats and corn oil.
While Ukrainian farmers are expected to plant more oilseeds, with the exception of sunflowers, lower yields could dampen production volumes in 2024-25.
According to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, the soybean production area is estimated at 2.1 million hectares, an 18% increase, and the rapeseed area is estimated at 1.5 million hectares, a 7% increase. The sunflower seeds production area is about the same, at 5 million hectares.
Sunflower seed production is estimated at 11.5 million tonnes, a decrease of 4% from 2023-24. Soybean production is estimated at 5.1 million tonnes, a 7% increase, and rapeseed at 4 million tonnes, similar to last season.
Ukraine is a major exporter of bulk agricultural commodities and depends on access to ports and sea routes, all of which have suffered since Russia’s invasion in February 2022.
The FAS said that most export bandwidth is dedicated to grains, and oilseed exports fluctuate based on available export capacity.
The FAS said overall oilseed exports are expected to grow in 2024-25 due to larger soybean and rapeseed shipments. Exports are estimated at 300,000 tonnes for sunflower seed, similar to last year, 2.9 million tonnes for soybeans, a 7% increase, and 3.6 million tonnes for rapeseed, an increase of 22%. The EU is expected to be the largest market for oilseeds. Some of these exports will continue to non-EU destinations.
Although rice production is holding steady, weather-related challenges are a constant worry for Thailand, which relies heavily on the crop as a food staple and export commodity.
More than 60% of its agricultural land is allocated for rice farming, which is heavily dependent on water. Farmers typically grow rice twice a year during the wet and dry seasons. According to the Foreign Agricultural Service (FAS) of the US Department of Agriculture, production estimates for 2023-24 call for 19.9 million tonnes of rice, a 5% drop from 2022-23 due to reduced water availability during off-season production.
Exports in 2022-23 are expected to increase 14% from the previous year to 8.8 million tonnes, largely due to India’s export restrictions, and drop slightly in 2023-24 to 8 million tonnes as exportable rice supplies increase in Vietnam and Cambodia.
According to a report from The East-West Center, all growing regions in Thailand are impacted by erratic weather patterns, particularly droughts and floods, that have increased in frequency and intensity.
“Precipitation, which was once predictable and consistent, has been more volatile and less common during the wet season,” the report said. “Floods and droughts are becoming more frequent, lasting longer, and are more intense and damaging.”
For example, in 2022, monsoon weather brought heavy rains and strong winds, resulting in flash floods, landslides and overflowing riverbanks in at least 25 provinces. But in 2023, rainfall was about 10% below average, and widespread drought is predicted for 2024, said The East-West Center.
Overall, agriculture is an important sector in Thailand, employing about 30% of the labour force, according to the United Nations. However, it generated the lowest value added per worker and accounted for 8.81% of the gross domestic product in 2021.
In addition to climate change, the agriculture sector faces other challenges, such as poverty, with 40% of farming households’ income below the poverty line; high debt levels; an aging workforce, small farm size; and lack of diversity in crops, with two-thirds of households growing one crop, the UN said.
The FAS said recovery in the hotel and food service sectors as tourism rebounds following the COVID-19 pandemic is expected to boost demand for feed and feed ingredients. According to the Tourism Authority of Thailand, foreign tourists totalled 25 million in 2023 and are projected to reach 31.5 million in 2024. Economic recovery is continuing, with 1.8% economic growth in 2023 and a projected 4.4% in 2024.
Crop production, exports
With a reduced water supply in off-season rice planting, the FAS lowered its original estimates for rice production in 2023-24 to 19.9 million tonnes. That’s a 5% decline from the estimated production of 20.9 million tonnes in 2022-23. Cumulative rainfall during the rainy season was 18% below normal and water reservoirs in the northern region and central plains had 20% less water compared to last year.
The FAS said that a combination of dry spells and floods damaged 2% of the main crop acreage. Drought and floods reduce the quantity and quality of rice grains by changing their moisture level and dimensions and increasing the harvest of immature and cracked grains, according to The East-West Center report. Input costs also increase as do the incidences of crop failure, resulting in lower farmers’ earnings.
Once the largest rice exporter, Thailand saw its exports fall 37% from 2011 to 2012, dropping to the lowest level since 2000. The decline was blamed on the government’s rice-buying scheme, which pledged to buy rice above market prices. The government struggled to sell its rice, and stockpiles began accumulating.
Exports have not fully recovered, although Thailand has consistently been the second or third largest rice exporter in the world. Total rice exports in 2022-23 are estimated at 8.8 million tonnes, while 2023-24 totals are estimated down at 8 million tonnes, which is still 4% above the five-year average.
The FAS said strong supply and competitive prices boosted demand for Thai rice from January to November 2023. Prices were $50 to $87 per tonne, below Vietnamese prices. White rice exports, which account for 63% of the total, increased by 26% compared to the same period in 2022.
Fragrant rice exports increased by 8%, with top export destinations being the United States, Hong Kong, and China.
“Nonetheless, Thai rice exporters express concerns about the exchange rate volatility and protracted geopolitical conflicts, which impact the trading environment and economics of trading partners,” the FAS said.
The FAS said that corn production in 2023-24 is estimated at 5.4 million tonnes, a 1% increase from 2022-23 due to an acreage expansion of off-season corn due to attractive farm-gate prices. Prices from January to December 2023 were up 4% from the same period last year and well above the five-year average.
Imported corn demand was strong in the first five months of the year due to increased imports of duty-free corn from Burma. Tighter supplies are expected as border trade between Burma and China resumes, and due to the ongoing unrest in Burma, the FAS said.
Soybean imports rebounded in 2022-23 to 3.9 million tonnes and are expected to increase slightly to 4 million tonnes in 2023-24, mainly due to strong demand for poultry and swine feed. Demand for soybeans in the food industry is also expected to grow.
Wheat production is marginal in Thailand because of the climate conditions, lack of seed development and unattractive prices. Wheat imports for 2023-24 are estimated at 3 million tonnes, a drop of 5% from 2022-23 but in line with the five-year average.
The FAS said that wheat imports in the first five months of 2023-24 were up 92% due to the increase in feed wheat and milling wheat import demand. Livestock production is recovering, and feed wheat prices are more competitive than other imported feed grains.
“Industry sources reported that feed mills shifted to feed wheat for poultry and swine feed rations in response to high corn prices, following tight global corn supplies,” the FAS said.
Flour consumption
Milling wheat imports in the first five months of 2023-24 increased 29% to 502,000 tonnes as the tourism sector continued its recovery. Total milling wheat imports for 2023-24 are estimated at 1.3 million tonnes, an increase of 18%. Imports of wheat flour and products also increased to 106,000 tonnes in the year’s first five months.
The FAS said Flour mills continue to purchase wheat despite high import prices. Wheat consumption in 2023-24 is estimated at 2.5 million tonnes, an increase of 9% from last year. Milling wheat consumption accounts for 48% of that total at 1.3 million tonnes.
Instant noodles account for 35% of total milling wheat demand, while bakery products account for 25%.
“Thailand’s reopening for foreign tourists has fueled the growing demand for milling wheat for baking and food processing,” the FAS said.
According to the Washington Grain Commission, Thai millers and bakers are considered some of the most sophisticated and quality-sensitive in Southeast Asia. It imports mostly from the United States for its bakery and biscuit segments and predominantly uses Australian wheat for its noodle flour.
The commission estimated that per capita consumption is about 42 pounds and has seen steady growth for the past 30 years. The average consumption by product area is 35% noodles, 25% bread, Western-style products, 16% biscuits, and 9% confectionery products.
As of 2018, Thailand had 12 wheat milling companies with a daily production capacity of between 250 and 1,500 tonnes. Major flour producers in Thailand include United Flour Mill, Nisshin, Siam Flour Trading Co. Ltd., Thai Flour Mill Industry Co., Bangkok Flour, King Huat Group, and Kerry Flour Mills Ltd.
Due to adverse weather conditions related to El Niño, the Foreign Agricultural Service (FAS) of the US Department of Agriculture has lowered its forecast for corn and wheat production in Brazil in the marketing year 2023-24.
In its Global Agricultural Information Network report, released April 1, the FAS trimmed its corn harvest projection by 2 million tonnes from the previous forecast to 122 million tonnes, down from 135.5 million tonnes in 2022-23. The agency also slashed its projection for Brazil’s corn exports by 13% to 45 million tonnes.
In 2022-23, Brazil became the world’s leading corn exporter, surpassing the United States for the first time with shipments of 54.3 million tonnes.
The report noted that wheat output is also expected to significantly decline year-on-year from a record 10.6 million tonnes to 8.2 million.
“Heavy rainfall has severely impacted crops in the southern region, which is responsible for over 85% of the country’s wheat production,” the FAS said. “As a result, the availability of high-quality wheat in Brazil has been reduced, leading to an increase in imports, although mill agents say they are fully stocked.”
This follows a year in which Brazil exported 2.7 million tonnes of wheat, the second-highest total ever, while importing 4.7 million tonnes, its lowest intake in 31 years.
“For the past two years, Brazil has seen an increase in wheat exports, mainly due to a decline in wheat offered by Argentina,” the FAS explained. “The neighbouring country is Brazil’s leading provider of grain but suffered the past crops with lack of rain, which allowed Brazil to fill in. However, the current season has witnessed a reversal of this trend.”
The report noted that the recent decline in corn prices has affected producers’ planting decisions.
“Given this scenario, many producers are directing part of their crops to more profitable or safer options, such as cotton or sorghum,” the FAS said. “Despite these challenges, the harvest is still impressive and has the potential to become the second largest in history in terms of volume and value exported.”In its initial forecast for the 2024-25 crop year, the FAS sees Brazil’s corn and wheat crops rebounding to 129 million tonnes and 9.8 million tonnes, respectively.
Corn imports and consumption are forecast to increase in Japan for marketing years 2023-24 and 2024-25 as the country’s poultry layer population recovers from outbreaks of highly pathogenic avian influenza (HPAI), and feed demand rises while global prices soften, according to the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
In its Global Agricultural Information Network (GAIN) report, the FAS said it anticipates robust import demand for corn in both marketing years as the country is highly dependent on imported ingredients to produce formula feed.
Total corn consumption is 15.32 million tonnes in 2023-24 and 15.35 million tonnes in 2024-25 due to slight increases in food, seed and industrial (FSI) use. Each marketing year, feed and residual use is pegged at 12 million tonnes. Corn is the primary ingredient for formula feed, accounting for slightly less than 50% of the inputs for the estimated 24 million tonnes of total formula feed production in Japan.
To meet corn demand, Japan is expected to import 15.3 million tonnes in 2023-24 and 15.35 million tonnes the following marketing year. Japan imports corn predominantly from the United States and Brazil and switches between them seasonally based on prices.
Meanwhile, the FAS forecasts food wheat and rice consumption to decrease slightly in 2023-24 and 2024-25 as Japan’s population declines and the shift in age demographics changes consumption trends. Furthermore, inflation fueled by the weak Japanese yen has caused consumers to reduce food purchases.
FSI consumption for wheat in 2024-25 is projected at 5.45 million tonnes, down 0.4% from the 2023-24 estimate. Total demand is seen at 6.1 million tonnes. Production will increase slightly in 2024-25 to 1.16 million tonnes, up slightly from 1.14 million tonnes the previous year.
“While per capita wheat consumption has been stable in recent years, averaging slightly over 30 kilograms per year, it will face a moderate downward trend as the population ages and decreases its carbohydrate intake,” the FAS said.
Rice production is anticipated to fall 1% to 7.2 million tonnes in 2024-25, which continues a trend of the past decade caused primarily by the exit of small-scale farms, declining table rice demand, aging farmers and fewer younger farmers. Rice consumption for 2024-25 is forecast at 7.95 million tonnes, which has been fairly stable in recent years. Imports are expected to reach 685,000 tonnes in 2024-25, down slightly from 688,000 tonnes from a year ago.
In the absence of new bearish news, funds’ short covering sparked a small-scale recovery in maize (corn) prices following recent declines.
The European Confederation of Maize Production (CEPM), in its March 19 Corn Market publication, said, “US maize prices continue to consolidate with a second consecutive week of gains, following ten weeks of continuous declines between early January and Feb. 20. This is due to a more cautious attitude on the part of non-commercial funds, which are covering part of their short positions in the absence of any new bearish element on fundamentals, and ahead of the Brazilian harvest and US plantings.”
CEPM, which is based in southwest France, called the March USDA World Agricultural Supply and Demand Estimates (WASDE) report “rather neutral, with the US balance sheet for the 2023-24 marketing year unchanged from February, whereas operators were expecting a slight drop in stocks (55 million tonnes).”
It also increased the prospect of a decrease in Ukrainian maize production in 2024.
“Like the government, Ukrainian producers expect a drop in maize acreage in favour of soybeans in 2024-25,” CEPM said. “According to the UGA (Ukrainian Grain Association), this is due to cash shortages, difficult access to credit and low prices.”
However, CEPM explained that in a similar context, such forecasts were contradicted last year, with maize acreage in 2023 relatively stable compared to 2022. It also said that the March WASDE report had included a downward revision in Ukrainian production for the current season by 1 million tonnes, to 29.5 million, but with exports revised up by 1.5 million tonnes, to 24.5 million, because of “the good performance of the maritime corridor.”
CEPM’s report included a complaint that the planned extension of EU trade concessions to Ukraine for a year beginning in June did not include a “safeguard mechanism” for grains. A deal between the EU’s Member States and its parliament on the new law, reached on March 20, inserted such a clause. Still, in a joint statement with other sector bodies, the maize sector group described it as “pure window-dressing,” likely to have no practical effect.
The International Grains Council (IGC), in its March 14 Grain Market Report, said maize prices had increased by a net 2%, with modest increases across all origins, after a sharp fall the previous month. The decline, which was “tied to an overall comfortable global supply outlook and USDA’s bearishly interpreted tentative projections for 2024-25,” was subsequently reversed on bouts of speculative and technical short covering, the IGC said.
“While occasional support stemmed from a healthy pace of export sales, traders also noted increasingly strong competition from Ukraine,” the IGC said.
While occasional support stemmed from a healthy pace of export sales, traders also noted increasingly strong competition from Ukraine,” the IGC said.
Firmer prices at Ukrainian ports were “underscored by steady buying interest, including from China, the EU (Spain) and Turkey.” Barley was down by 3% month-on-month, reaching a three-and-a-half-year low, amid declines at most origins, while sorghum was mixed.
The most actively traded US oats futures (May) contract firmed modestly month-on-month, the IGC said, while a rise for Australia reflected currency movements. Prices in Canada were “weighed by subdued demand and spillover pressure from other grain markets.”
Rye prices in Germany fell to the lowest level since May 2020. Cash prices in Russia held broadly steady but remained largely nominal, the IGC said.
Saudi Arabia produced nearly double the wheat expected in the 2022-23 marketing year and is on track for similar results in 2023-24 as government purchase prices remain high.
Production totalled 1.18 million tonnes in 2022-23 and is estimated at 1.2 million tonnes in 2023-24, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA). The government offered a purchase price of $466.70 per tonne.
Still, the nation must import an estimated 4.63 million tonnes of wheat in 2022-23 and 4.8 million tonnes in 2023-24.
Modern Mills Co. was the second of the nation’s four recently privatized milling companies to complete an initial public offering this February. The sector’s privatization started in 2018, with the Saudi Grains Association (SAGO) selling the companies to consortiums of investors in 2020 and 2021.
Privatization is part of a larger plan to raise the private sector’s contributions to the gross domestic product, attract local and international investments and diversify the country’s economy, which is the largest in the Middle East and the 18th largest in the world.
Diversification includes finding non-oil sources of income for the nation, which relies on oil for 87% of its budget revenues. Agriculture made its largest contribution ever to the GDP in 2022, reaching $26.6 billion, an increase of 38% from the previous year.
The country has adopted multiple strategies and programs to promote sustainable agriculture and improve water management to preserve natural and environmental resources. It faces multiple challenges in expanding agriculture production, including a hot and dry climate with low precipitation, sandy soils with low fertility, high incidence of animal disease and pests and water scarcity.
Saudi Arabia is a net food importing country but is self-sufficient in some areas, including fresh milk, table eggs, dates and vegetables. It is a net importer of wheat, barley, corn and rice.
Crop production, consumption
Since 2018, farmers with less than 50 hectares of farmland can voluntarily produce wheat. Before each planting season, farmers choose between wheat or alfalfa and sell their products to the Saudi Ministry of Environment, Water and Agriculture (MEWA). Because farmers could make more growing alfalfa, wheat production stayed below 1 million tonnes for several years.
The FAS said a price of $466.70 per tonne set by the General Food Security Authority (GFSA, formerly SAGO), an agency of MEWA that purchases all locally produced wheat, resulted in a drastic increase in domestic wheat production.
“Analysts indicate wheat farmers significantly increased their profits this past year, and as long as government purchase prices remain high, domestic wheat production is projected to remain near 1.2 million tonnes,” the FAS said.
However, Saudi Arabia must import a significant amount of wheat to meet domestic demand. Currently, GFSA is the exclusive importer of subsidized food-grade wheat. Still, as part of privatizing the import industry, the Saudi Agricultural and Livestock Investment Co. (SALIC) will start taking over wheat purchasing and operation of storage silos. SALIC is the agricultural arm of the Public Investment Fund, which the country’s sovereign wealth fund owns.
In 2023-24, SALIC is expected to supply up to 720,000 tonnes of wheat from Saudi Arabian companies operating farms in foreign countries.
Domestic wheat consumption is estimated at 4.5 million tonnes in 2022-23 and 4.7 million tonnes in 2023-24, with a projected 3% increase annually. Wheat demand has been increasing 5% to 10% per year due to the expanding foodservice sector as hundreds of labor camps are being established throughout Saudi Arabia to build mega projects, resorts and tourist attractions.
In comparison, feed barley consumption dropped more than 18% to 3.8 million tonnes in 2022-23 and is projected to decline another 17% to 3.1 million tonnes in 2023-24. This represents a 56% decline compared to a decade ago when consumption averaged 7 million tonnes, the FAS said.
The FAS attributes the drop to higher prices than other animal feed alternatives, fewer operations as high prices forced 30% of goat and sheep farmers to liquidate their businesses, farmers’ desire for feed options that produce less waste, and increased consumption of processed feed.
Barley imports are estimated at 4.1 million tonnes in 2022-23 and 3 million tonnes in 2023-24, a drop of 28%. Russia is the sole supplier, as Australia returned to the Chinese market. Ukraine has been unable to ship to Saudi Arabia because of the continued war with Russia. Saudi Arabia does not produce feed barley but does produce 25,000 tonnes for human consumption.
“As the local feed processing sector continues to expand and livestock farmers benefit from different feed options, Post anticipates barley imports will continue to decrease,” the FAS said.
The FAS said corn (maize) continues to be an important feed grain for poultry farms and is a key feed grain used by commercial feed processors and the domestic dairy industry. Consumption was estimated at 3.4 million tonnes in 2023-24 and is projected to increase 29% to 4.4 million tonnes in 2023-24.
The FAS expects consumption to continue to increase significantly over the next several years. Saudi Arabia produces 15,000 tonnes of corn per year for human consumption.
Imports are expected to hold steady in 2022-23 at 3.6 million tonnes but increase to 4.8 million tonnes in 2023-24 because of expansions in the Saudi poultry farming sector.
Milling privatization
In 2018, SAGO was approved to sell its flour milling companies as part of the government’s privatization drive, which started under Vision 2030. Two mills were sold in 2020 for a total of $740.5 million, and the last two were sold in 2021 for $800 million.
Together, the companies have a grain storage capacity of 745,000 tonnes, a wheat milling capacity of 15,150 tonnes per day and a feed milling capacity of 2,600 tonnes per day.
Two of the companies have completed an IPO, and a third is expected this year. First Milling Co. went public in May 2023 with a $266 million IPO. Modern Mills is expected to raise between $288 million and $314 million in its IPO launched at the beginning of this year.
Privatization is expected to increase the diversity of flour products in the local market, improve food security, and raise service standards for customers.
The FAS said all Saudi Arabian wheat, imported and produced locally, is used exclusively for human consumption. It is mostly consumed as flatbread or as a local hamburger bun known as a Samoli. Western-style bread, including French baguettes and pizza, is also popular.
Per capita consumption was estimated at 91 kg of wheat flour in 2021-22. While white flour is the bulk of flour consumed in Saudi Arabia, there has been growing demand for whole wheat flour due to its perceived health benefits.
“Saudi Arabia has one of the highest diabetic and obesity rates in the world,” the FAS said. “As a result, the four flour mills currently operating in the Kingdom have increased their whole wheat production in recent years to meet growing demand.”
With a rising interest in canola as a renewable fuel feedstock, Canadian growers can access new and growing markets through the Cargill Power Canola program, which will begin enrollment this month for the 2024 crop year.
Canada’s Clean Fuel Regulations, the US Renewable Fuel Standard and the 2BS voluntary sustainability program in the European Union recognize canola as a low-carbon intensity biofuel feedstock when grown using sustainable practices. Cargill Power Canola provides growers access to these global markets.
To qualify for the programs, canola must be grown on land that is not designated a protected area, forested or wooded, native or biodiverse grassland, a watershed or riparian zone, or home to “at-risk species.” Environment and Climate Change Canada (ECCC) recognizes all Canadian cropland as having met these criteria, so Canadian growers can simply complete the Cargill Power Canola enrollment process to fully register at CargillAg.ca.
“Through the Cargill Power Canola program, Canadian canola growers can maximize the value of their canola and be on the leading edge of growing market opportunities in both Canada and export destinations,” said Gabe Afolayan, softseeds commercial leader for Cargill. “Agriculture has been serving food and fuel markets for decades, and with an unwavering commitment to sustainability, we will continue to support both markets as the global energy transition evolves.”Cargill is a global leader in oilseed processing and currently operates two canola crush facilities in Camrose, Alberta, Canada, and Clavet, Saskatchewan, Canada. Cargill has also recently invested in its canola crush infrastructure in Canada, with its new canola processing facility being built in Regina, Saskatchewan, expected to come online in 2025.
Intensifying protests have left the Ukrainian-European Union (EU) border nearly paralyzed, jeopardizing one of the export lifelines of the reeling Ukrainian economy. However, the rally backed by farmers all over the bloc is increasingly seen as an attempt to revolt against the EU’s environmental policy.
Footage of grain spilled from a truck near the Shehyni-Medyka checkpoint on the Ukraine-Poland border has quickly become viral on social media networks, becoming a symbol of the growing dissent on the economic and, consequently, political front.
Politicians on both sides of the conflict now express fears that the dispute over the Ukrainian grain imports widely covered in media could weigh heavily on the European determination to keep supporting Ukraine in its attempts to resist the invading Russian forces.
“Ukrainian grain on the asphalt is not just a few dramatic shots,” said Ukrainian President Volodymyr Zelensky. “This is a testament to how emotions can become dangerous.”
He warned that the border blockade leads to an “erosion of solidarity” between Ukraine and its Western allies.
European farmers hope the protests will help yield the desired results, though the initiative lacks a unified stance.
In Poland, the agricultural producers emphasize unequal competition with Ukraine, while in France, farmers protest against food imports from non-EU countries in general. However, the common goal is believed to draw the attention of EU decision-makers, who, according to farmers, ignored the sector’s opinion on the revolutionary Green Deal.
Despite a rise in yields in 2023, European grain farmers are seeing their margins dwindle, primarily due to a price drop over the previous several months.
In 2022, European grain prices rallied upward, stemming from fears that Ukrainian grain would not be available on the global market as Russian forces blocked its main export arteries. However, these fears largely subsided during 2023, as did some key agricultural commodities prices.
As a result, wheat in 2024 has sold for half the price it did last year, and farmers participating in the protests are alarmed. The turbulent market conditions occur against a backdrop of EU green reforms that were due to start in 2024 and included, among other things, a cut in fertilizer and pesticide use, which would have been playing heavily on farmers’ minds, said Michael Lee, director of Green Square Agro Consultancy working in the Black Sea region and Eastern Europe.
Farmers’ dissatisfaction has emerged as protests across Europe, including blocking the border with Ukraine, as they look for someone to blame,” Lee explained.
The Farm complements the Green Deal to Fork Strategy, under which the European lawmakers seek a 50% reduction in pesticides, a 20% reduction in fertilizers, and a 50% reduction in antimicrobials for farmed animals in the coming years. In addition, 25% of agricultural land is due to be used for organic farming, and 10% of the land has structural elements with high biodiversity.
“These ambitious targets and objectives will have an impact on how EU farmers will be able to operate, and they will have to adapt to access subsidies,” Lee indicated.
Access to state aid remains vital for European farmers. Agriculture is one of the EU’s main expenses, absorbing €60 billion a year, almost equal to the EU defence spending before Russia invaded Ukraine.
The Ukrainian side admits that the fears expressed by farmers in Eastern Europe over the fierce competition with cheap imported grain are not groundless. Roman Matys, an independent Ukrainian economist, indicated that some ecological requirements European farmers must follow are not applied to Ukrainian imports.
“Our agricultural producers can use cheaper pesticides that have long been banned in the EU,” Matys noted.
Nevertheless, the withdrawal of the preferential trade regime, proposed by the European Commission and due to come into force on June 6, could undermine one of the pillars of the war-torn Ukrainian economy.
Ukrainian Agribusiness Club UCAB reported that in 2023, Ukraine’s exports of agricultural and food products totalled $21.9 billion and accounted for 61% of the country’s total exports of goods, compared to $23.4 billion and 53% of the country’s total exports of goods in 2022. At the same time, the EU’s share in total exports of agri-food products from Ukraine in 2023 was 56.6%, versus 55.1% in 2022, or $12.4 billion, versus $12.9 billion in 2022.
UCAB claimed that “Ukraine may face a macroeconomic crisis and currency devaluation if international financial support does not materialize.”
Summer crop prospects for Australia were pronounced “excellent” following well-timed rains in eastern growing areas that boosted expectations for production to 4.3 million tonnes, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) quarterly report released March 4.
If realized, 2023-24 summer crop production – which includes sorghum, rice and cotton – would still be 17% below last year but 22% above the 10-year average of 3.5 million tonnes, according to ABARES, which raised its outlook by 14% from December.
“Summer crop prospects are excellent following better-than-expected seasonal conditions during late spring and summer in Queensland and northern New South Wales,” ABARES said. “Yield prospects and production are expected to be well above average, though less favourable than the previous two seasons.
“This is mainly because drier conditions during the early planting window of September and October across major dryland summer cropping regions in Queensland and northern New South Wales limited planting opportunities for early sown summer crops.”
The area planted for summer crops is estimated to fall by 14% to 1.3 million hectares in 2023–24. Despite this decline, average—to above-average summer rainfall boosted soil moisture levels for crop establishment and growth and provided favourable planting conditions for later-sown summer crops.
ABARES revised sorghum production to be 38% higher than its December report, at 2 million tonnes. While 24% lower than a year ago, it would be 26% above the 10-year average. The better-than-expected summer rainfall led to higher plantings of later-sown sorghum crops, increased yield potential and boosted overall sorghum production, ABARES said. Production of rice is forecast to rise slightly in 2023–24, up 9% to 555,000 tonnes. Warmer temperatures supplanted the cool start to sowing, but the area planted has been revised down from December to just above the 2022–23 crop, which was impacted by wet conditions.
Changes in population and income levels will shift food demand and placement of corporate assets, Michael Zerr, long-term model lead, Cargill, Minneapolis, Minnesota, US, told attendees at the opening session of the International Sweetener Colloquium on Feb. 26.
When you think 10 years out, it’s not so much about prices as “how does Cargill place assets across the supply chain,” Zerr said. Long-term drivers are population growth and gross domestic product.
Depopulation in China is giving way to growth in India, now the world’s most populous country, Africa and the Mideast, Zerr said.
Food demand shifts as income levels increase, Zerr said. Low-income countries focus on calories. Mid-level income countries eat more meat or protein and less grain. In rich countries, the focus shifts to time, with consumers buying more convenient and variety-rich food.
“India in a way is the new China,” Zerr said.
As India’s population increases and incomes rise, there will be much more demand for food, including protein (dairy and pulses instead of meat for cultural reasons) and sweets, also due to cultural preferences. Daily caloric consumption in India still trails China by about 700 calories. Zerr noted that China is not a big consumer of sweets, unlike India, where there is a “huge culture around sweet products,” which means “massive sugar growth in India.”
The popularity of soybeans with US producers, as they plant for 2024-25, has put pressure on prices, particularly following an upward revision to the US Department of Agriculture’s (USDA) planted area forecast. Big Brazilian and Argentine production at the same time as softening Chinese demand also contributed to the forecast.
In a paper, “Grains and Oilseeds Outlook for 2024,” published Feb. 15 at the Agricultural Outlook Forum 2024, the USDA said: “Soybean area is expected to increase as demand for soybeans in the United States is expected to be driven by stronger demand for domestic crush — largely driven by growth in biofuel use — while exports likely face competition from supplies in South America during the 2024-25 US marketing year.”
In its Feb. 19 Arable Market Report, the UK’s Agricultural and Horticultural Development Board said that “pressure continued on Chicago soybeans futures (May 2024) as the contract ended down 1.2% across the week, closing Friday at $432.15 per tonne.”
“Adding to price pressure was improved South American crop prospects, lacklustre demand and insight into 2024-25 US soybean plantings,” the AHDB explained. “Widespread rains across Argentina’s agricultural region over the last seven days has bolstered the soybean supply outlook.
“Many agricultural consultancies peg this crop at 50 million tonnes or more; the Buenos Aires Grain Exchange estimates the crop at 52.5 million tonnes. Weather throughout the end of January and February has been ideal for growing conditions. This large crop is outweighing some of the crop losses from Brazil.”
At the same time, “demand has been weakening from China as a shrinking pig herd reduces demand for animal feed,” the AHDB said, noting that US soybean export sales for 2023-24 (through Feb. 8) were estimated at 340,800 tonnes up 4% from the previous week, but sales are down 23% from the prior four-week average, and at the low end of trade estimates of 300,000 to 800,000 tonnes.
The AHDB also cited the National Oilseed Processors Association (NOPA) for the January US soybean crush figures at 5.1 million tonnes, explaining that “this is down 4.9% in comparison to December’s record and more than was expected, but the January 2024 figures remain up 3.8% from a year ago.”
Rapeseed performed better, supported by crude oil, but also helped by a report that Ukraine’s combined harvest of grains and oilseeds could fall 15% to 20% in reduced areas.
“With supplies of EU rapeseed anticipated to be lower for the 2024 harvest, this reduction from Ukraine could further tighten the oilseed/vegetable oil market as Ukraine is a large supplier to the EU market,” it said.
The United Nations Food and Agriculture Organization (FAO) said in its Food Price Index, published Feb. 2, that world vegetable oil prices in January 2024 were up by just 0.1% from the previous month but still 12.8% down from the level a year earlier, in January 2023.
“The steadiness in the price index month-on-month reflected the combined effects of higher global palm and sunflower seed oil prices offsetting lower soy and rapeseed oil quotations,” the FAO said. “International palm oil prices increased moderately in January, primarily underpinned by seasonally lower production in major producing countries and concerns over unfavourable weather conditions in Malaysia.
“Meanwhile, world sunflower seed oil quotations increased, driven by increased import demand, particularly from Turkey. By contrast, international soy and rapeseed oil prices declined because of prospects for large supplies from South America and lingering ample availabilities in Europe.”
As the second anniversary of Russia’s invasion of Ukraine draws near, a recently published research paper on the long-term impact the war has had on global wheat prices and market responses paints a relatively optimistic picture.
The study, which was co-authored by researchers from the University of Illinois and Texas Tech University, found that although prices initially spiked in the first several months after the invasion, they have sharply declined since then as other wheat-producing countries have compensated for the reduced output and exports from Ukraine.
William Ridley, assistant professor in the Department of Agriculture and Consumer Economics at Illinois and co-author of the study, said he, like many others, believed in the weeks after the war began that prices would soar and remain relatively high for the foreseeable future. But the prices quickly retreated when it became apparent that other wheat exporters could fill the void. He noted that since the war began 23 months ago, the price of wheat on the global market has only increased by 2%, after surging 27% higher in the opening weeks of the conflict mainly due to speculative buying.
“I think one of the key takeaways from our study is that, yes, there were effects on prices and, yes, there were effects on availability,” Ridley told World Grain. “But at the end of the day, it was not as bad as initially feared. In our work, we show that markets are going to readjust; trade is going to reallocate. When you take Ukraine wheat off the market, other suppliers will step in, and that’s what happened.
“Other exporters, like the US, Australia and Canada, came online (to compensate for Ukraine’s reduced exports), but also after being unable to export much wheat out of the Black Sea ports, that issue has been largely resolved.”
After blockading Ukraine’s exports on the Black Sea during the first five months of the war, Russia agreed to allow grain exports from Ukraine through the Black Sea Grain Initiative, brokered by the United Nations and Turkey. The agreement lasted about a year until Russia withdrew last July and began bombing Ukrainian grain assets at Black Sea ports and on the Danube River. Ukraine has countered by developing a new export corridor on the Black Sea following neighbouring countries’ territorial waters to reach the Bosphorus Strait. Ukrainian ships then entered Ukrainian territorial waters from Romanian waters near the mouth of the Danube River.
For the 2023-24 season, which runs from July through June, the US Department of Agriculture’s Foreign Agricultural Service forecasts an 8% year-on-year increase in corn exports, to 29.2 million tonnes, a 3% increase in wheat exports, to 17.7 million tonnes, a 22% increase in barley exports, to 3.3 million tonnes and a nearly 10-fold increase in rye exports to 170,000 tonnes. However, those totals are well below pre-invasion exports for Ukraine, which traditionally has been a top 10 producer and exporter of wheat and corn.
“Because of the war, we estimate that Ukraine wheat producers have experienced a $1.4 billion loss in producer surplus,” Ridley said.
While much of the focus has been on the war’s impact on Ukrainian grain exports, the report also highlights the country’s wheat farmers’ production difficulties. It said the eastern and southern areas of Ukraine, where much of the country’s wheat production takes place, were the targets of destructive and persistent bombardments by the Russian military in the first months of the invasion. Last June, the destruction of the Khovka Dam in southern Ukraine caused disastrous flooding in Kherson.
“In a war zone, it’s hard to grow and harvest wheat,” Ridley said. “The destruction of that dam has been a major calamity. It is the source for irrigation in that part of the country.”
Throughout the conflict, Russia has been accused of weaponizing food by trying to become an even larger supplier of wheat to countries that have traditionally relied on imports from Ukraine. These countries include Pakistan, which imported 49% of its wheat from Ukraine before the conflict, Lebanon (62%), and Egypt (23%). The co-authors noted that because wheat accounts for around 20% of global caloric intake, “these disruptions have potentially dire implications for food insecurity.”
“I think they wanted to do that, but it wasn’t as effective as they’d hoped,” Ridley said, referring to Russia’s desire to weaponize grain and food. “However, I don’t think they’ve abandoned that as a tool that they’re trying to use to get countries on their side. Some places around the world – particularly in Africa and Southeast Asia – are big wheat importers, and they don’t really care who they buy it from. And if Russia can guarantee a steady supply, Russia will use that as a lever.”
While the study provides insight into the conflict’s influence on the global wheat market to this point, Ridley cautions that there’s no way to know the future impact if the war drags on for years.
“If there’s some sort of protracted stalemate, which at this point looks like the most likely outcome, I think production will remain disrupted in the southeast part of Ukraine,” he said. “Exports are currently getting out, but who knows what the future holds?
“One particularly ominous prospect would be if Russia takes over parts of Ukraine or, God forbid, the whole country. I sense that Russia is trying to corner the market for many commodities, wheat among them. They appear to be looking to expand their market power and ability to manipulate prices and use food as a geopolitical tool in some sense.”
The co-authors said their findings have important implications for international policy towards food and agriculture, as “our results support the notion that military conflicts between countries should, to the extent possible, not be allowed to impede agricultural production and exports in order to ensure that farmers in war-torn countries and consumers globally should not suffer needlessly.”Multilateral policies ensuring a stable supply of food and removing Russia’s ability to exploit hunger and food insecurity as a geopolitical tool could be effective means to combat their war effort,” Ridley said.
Wheat production in Argentina for 2023-24 is higher than originally expected as yields improved, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
Production is estimated at 15.4 million tonnes, 2.6% higher than the USDA official estimate. With harvest nearly finished, damage from the drought during winter 2023 plus late frosts can now be measured, the FAS said.
Wheat production in 2022-23 is estimated at 12 million tonnes, 550,000 tonnes lower than USDA official estimates. Several local traders believe production was even lower, between 10.8 million and 12 million tonnes. A significant volume of unsold wheat has quality issues, and much of it is being mixed with good-quality wheat from the new harvest, the FAS said.
Consumption in 2023-24 is estimated at 6.9 million tonnes, with wheat milling increasing 5%. Domestic wheat flour consumption grew slowly, particularly during periods of high inflation.
“Many consumers are switching from higher-priced food products to less-expensive foods with higher wheat flour content,” the FAS said. “This is assumed to continue through 2024, resulting in an increase in flour consumption, with inflation expected to continue.”
Exports for 2023-24 are estimated at 10.2 million tonnes. This would be a significant rebound from last year, which was the lowest since 2013-14.
Corn (maize) production in 2023-24 is estimated at 57 million tonnes, 2 million tonnes higher than the official USDA estimate.
A dry environment during planting limited the area of early corn in many regions initially, but the current condition of the crop is very good, after the normalization of rains, the FAS said.
The FAS now estimates corn production in 2022-23 at 35 million tonnes, 1 million tonnes higher than USDA official estimates.
Exports in 2023-24 are projected at 41 million tonnes, while exports in 2022-23 are projected at 23.4 million tonnes.
Despite a larger planted area, Canada’s wheat production in 2023-24 dropped 7% from the previous year to 31.95 million tonnes, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA).
The FAS said severely low soil moisture in Alberta and Saskatchewan reduced yields.
Total wheat milled is expected to align with recent years, based on steady supply and demand. Animal feed demand is forecast to be slightly lower than the previous year.
The FAS said that even with solid exports in the first half of 2023-24, total exports are expected to drop 9% year-over-year in lower exportable supplies. Exports of non-durum wheat increased by 11% over the previous year.
China was the largest buyer of non-durum Canadian wheat in the first four months of 2023-24, purchasing 944,400 tonnes, 31% less than the previous year’s time frame. Indonesia was the second largest buyer of non-durum wheat, purchasing 700,600 tonnes, a 48% increase from a year earlier.
Canada and Saudi Arabia restored diplomatic ties in May 2023. The FAS said this led to a rebound in durum wheat exports to Saudi Arabia. Wheat exports to India across the Arabian Sea from Saudi Arabia increased in 2023. Imports have increased 26% over the same period in the previous year on lower domestic supplies. Imports are forecasted to end the marketing year up 5% from 2022 to 23. The FAS said nearly 100% of durum and non-durum wheat imports year-to-date have come from the United States.
Reuters reported that corn exports from India have plummeted recently as domestic prices have surged due to strong demand from the country’s poultry and ethanol industries, citing several exporters.
The sources told Reuters that traditional importers of Indian corn, such as Vietnam, Nepal and Malaysia, have shifted their purchases to South American countries that are offering it at a lower price. They said Indian corn costs about $300 per tonne, compared to $230 per tonne in South American countries.
India, which typically exports between 250,000 to 300,000 tonnes of corn per month, only exported 30,000 tonnes in December, the exporters told Reuters.
Domestic corn production also has played a factor in the increase in prices. India’s government estimates that last summer’s corn production was 22.5 million tonnes, but traders told Reuters that the actual output was much lower and that the winter crop also could be lower than predicted. Earlier this month, the government hiked the procurement price of ethanol made from corn by 8.8%. This move has prompted India’s largest user of corn, the poultry industry, to ask the government to allow duty-free imports of corn, a request that has yet to be granted.
Bloomberg reported that Turkey, Romania and Bulgaria have signed a memorandum of understanding to find and clear drifting sea mines in the Black Sea to facilitate safe transport of Ukrainian grain exports.
Mines drifting into specific areas of the Black Sea as a result of Russia’s invasion of Ukraine will be the focus of the initiative led by Turkey. Russia and Ukraine are both major producers and exporters of grain, and the war increasingly has threatened the safe passage of shipments.
The memorandum of understanding was signed on Jan. 11 in Istanbul, the first major joint action of Black Sea nations since Russian President Vladimir Putin sent forces into Ukraine in February 2022. Turkey brokered a United Nations-backed agreement later that year to ensure the free passage of Ukrainian grain via the Black Sea, but Russia abandoned the deal in July 2023.
Ukraine has since transported nearly 15 million tonnes of cargo, mainly foodstuffs, via its alternative Black Sea corridor that runs along the coastline near Romania and Bulgaria toward Turkey since mid-September. Strong shipments are also needed to clear a larger-than-expected harvest. Ukraine officials expect a harvest of 79 million tonnes of grain and oilseeds in 2023-24, with an exportable surplus of 50 million tonnes. Before Russia invaded Ukraine, Ukraine comprised 9% of global wheat exports, 15% of maize and 44% of sunflower oil.
Although Brazil’s latest soybean production forecast for the 2023-24 marketing year has been revised lower to 158.5 million tonnes, it still would top last year’s record total if realized, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
The previous projection in October was for a crop of 161 million tonnes — 3 million tonnes higher than in 2022-23 — but the FAS said poor weather resulting from El Niño has lowered expectations for this year’s crop.
The FAS said that ” hot and dry weather conditions, low soil moisture levels, and below-average rainfalls during most of October and November have negatively impacted yield outlooks,” the FAS said.
In one of the country’s key soybean-producing regions, Rio Grande do Sul, the FAS said, “heavy rains over the last two months have delayed sowing pace, risking the most recent seeds planted to miss the ideal weather window for proper plant growth.”
Despite a projected reduction of 200,000 hectares in planted area from the October forecast, the FAS foresees a 3% increase over 2022-23 soybean acreage to 44 million hectares. Brazil is by far the world’s largest producer and exporter of soybeans, having surpassed the United States in those categories in recent years. In 2023-24, Brazil is forecast to double the United States’ export total (99 million tonnes, compared to 47 million), with most of the exports expected to go to the world’s biggest importer, China.
Brazil’s share of global soybean trade could increase to 60.6% by 2033, according to a study released last week by the US Department of Agriculture’s Economic Research Service (ERS).
For many years, the United States was the world’s largest soybean exporter, but Brazil exported more soybeans than the US in 2012-13 and has since seen its share of the global soybean trade increase.
The study, which was conducted from the 2017-18 marketing year through 2021-22, compared factors such as production costs, returns and competitiveness that have impacted soybean exports from the two countries.
The study found that total costs per bushel of soybeans in the United States exceeded total costs per bushel of soybeans in Brazil in 2021-22.
“Average national farm-level production costs per acres of soybeans in Brazil were 19.9% below the United States, largely because of lower land and capital costs,” the authors of the study (Constanza Valdes, Jeffery Gillespie and Erik Dohlman) said.
The study noted that improvements in Brazil’s overland transportation infrastructure over the past decade resulted in costs savings per tonne for exporting soybeans from the main producing state, Mato Grosso, through southern ports. Average inland transport costs between 2017-18 and 2021-22 decreased to $77 per tonne, compared with $98 per tonne from 2008-09 to 2012-13.
“Overland transportation improvements in central Brazil to provide access to the northern ports lowered truck rates, resulting in costs savings of $28 per tonne, further improving Brazil’s Mato Grosso’s competitive position,” it said.
Brazilian soybean exports from northern Mato Grosso to Shanghai, China, via the Santarem port represent a savings of $25 per tonne in landed costs, compared with exports via the traditional Santos port in the southern region, the study said.
The study also found that:
- Brazilian producers had higher national average returns per bushel over total costs than the United States in 2021-22 ($4.05 compared to $2.13)
- Average national returns per bushel above operating costs for soybeans were highest for the United States in 2021-22 – 16.4% above Brazil’s returns.
- The Midwest US was the lowest-cost exporter of soybeans. Parana in Brazil was the next lowest-cost exporter, primarily due to its location close to a port and low internal transport costs.
- The Brazilian State of Mato Grosso is competitive with the United States in the export of soybeans despite higher inland transport costs due to lower soybean costs of production.
Brazil, which exports 60% of the soybeans it grows, has become the biggest supplier to China, the world’s largest soybean importer.
For the first 11 months of 2023, total soybean shipments from Brazil into China were 64.97 million tonnes, up 25% from the previous year, according to China’s General Administration of Customs data. Total US imports so far this year are down 8% at 20.36 million tonnes, according to the data.
The customs data showed Brazil shipped 5.2 million tonnes of soybeans to China in November, a 108% increase year-on-year. Attractive prices for the South American nation’s record crop drew Chinese buyers during the month, while drought on the Mississippi River and in the Panama Canal slowed US purchases.The USDA Foreign Agricultural Service projects that Brazilian soybean exports in the 2023-24 marketing year could reach 100 million tonnes, more than double the United States’ expected shipments.
When Russia signed an agreement in October to supply China with 70 million tonnes of grain, legumes and oilseeds over the next 12 years, a comment made several years ago by Stefan Vogel, Rabobank’s global sector strategist for grains and oilseeds, came to mind.
Vogel, in a conversation with World Grain in the fall of 2021, said given the growing political tension between longtime agricultural trade partners China and the United States, it was possible that Russia, which is more politically aligned with China, could benefit from the deepening conflict between the world’s two largest economies. He cited a study examining the potential impact on global grain trading if US-China relations continued deteriorating.
“It could be a situation where you start to see blocs of trade with the US, Australia and Europe in one bloc and Russia and China forming a natural bloc on the other side,” Vogel said. “In that case you could see a future where China would import more wheat from Russia for feed and replace some corn. It is a situation where if there’s further deterioration of the situation, it could also involve countries sympathizing with either the US or China, and the agricultural sector could be heavily impacted by such moves.”
It’s important to note that Vogel’s comments were made five months prior to Russia’s invasion of Ukraine, which now relies heavily on the support of the United States and other NATO nations to defend itself against Russian aggression. The war, which has raged nonstop for nearly two years, has caused deeper divisions between the world’s democratic nations and those with more authoritarian regimes.
Adding fuel to this fire was Hamas’ recent surprise attack on Israel, an action that predictably provoked a massive Israeli counterattack against the Palestinian territory’s de facto governing body. It’s worth noting that Hamas, designated a terrorist group by the United States and EU, reportedly has ties to Iran, an ally of Russia and China. Israel is not a major grain producer or exporter, unlike Russia and Ukraine. But the conflict, which threatens to spread across the Middle East and perhaps beyond, adds more instability to the region’s agricultural trade and is pushing Palestinian refugees into countries already struggling to feed their populations.
Further east, there is the simmering threat of a Chinese invasion of Taiwan. The fear is such an action could lead to a direct conflict between China and the US, a supporter of Taiwan’s independence. Another military conflict involving two of the world’s biggest grain producers and traders would mean even more volatility and instability in an already shaky market.
Noted grain trade analyst Dan Basse, founder and president of AgResource Company, told World Grain that China’s recent massive grain and oilseed purchases have puzzled observers. The big question, he said, is why is China building up its reserves? Some say it is simply linked to the country altering its animal feed diets to include more soybeans and corn. But there is another, more worrisome theory.
“Are they doing it because maybe they’ll invade Taiwan? I have no idea, but their buying is sizable and not in keeping with their macroeconomic outlook today,” Basse said.
While China’s motives for stockpiling large amounts of grain aren’t clear, one thing is for certain: With the stroke of a pen, China and Russia in October made a clear statement that will impact global grain trade flows for the next decade and beyond.
Extreme weather conditions across the European Union (EU) have reduced grain production projections for the marketing year 2023-24, although output is still anticipated to exceed 2022-23 levels, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
Production for the 27 Member States of the EU has been revised to 1.1 million tonnes, lower than the FAS’ previous forecast at 269 million tonnes. However, that still would be an increase over the estimated crop of 267.6 million tonnes in 2022-23.
The EU experienced extraordinary extreme weather conditions ranging from severe drought in Spain to abnormally warm and dry summer conditions in the EU’s eastern grain production areas (Bulgaria and Romania), as well as cooler temperatures combined with summer precipitation in large grain-producing Member States such as France, Germany and Poland,” the FAS said.
The FAS also lowered its projection for EU grain consumption in the current marketing year. The 1.8-million-tonne downward revision puts consumption at 259.5 million tonnes. Lower demand in the feed and residual category are the main reason for the decline, the FAS said, with swine and cattle farmers dealing with shrinking production margins, increasing regulatory hurdles and animal health issues.
Grain imports and exports also are seen falling in 2023-24, the FAS said. Imports are forecast to decline by nearly 1 million tonnes from the previous year, with the Russia-Ukraine war continuing to impact trade.
“A lower import figure reflects an improved crop but also the continuation of the trade regime adopted by Ukraine’s border countries, namely Hungary, Poland, Slovakia and Romania,” the FAS said. “Ukraine will remain a leading supplier due to its competitiveness and despite risks associated with the transit routes.”
EU grain exports in 2023-24 were revised downward by 4.2 million tonnes from the summer forecast to 44.2 million tonnes, as the lower exportable supply in major corn exporting countries, such as Bulgaria and Romania, was not offset by larger French exports, the FAS said. If realized, this year’s export total would 5% lower than a year ago.
Due mainly to declines in international corn and wheat prices, the United Nations’ Food and Agriculture Organization’s (FAO) Cereal Price Index for November decreased by 3% from the previous month, according to a report released on Dec. 8.
The FAO said that international prices of coarse grains dropped by 5.6% in November, led by a sharp fall in corn prices, while wheat prices declined by 2.4%. Its All-Rice Price Index remained stable month-on-month amidst contrasting price movements across different origins and market segments.
However, with lower international cereal quotations offset by higher prices of vegetable oils, the FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally traded food commodities, averaged 120.4 points in November, unchanged from its level in the previous month and 10.7% lower than in November 2022.
In a separate report, the FAO also raised its forecast for this season’s harvests in a new Cereal Supply and Demand Brief. World cereal production in 2023 is pegged at 2.823 billion tonnes, up 0.9% from the previous year and 10.3 million tonnes above the previous record high reached in 2021.
Upward revisions were made for wheat output in the Russian Federation and Turkey and for corn in the United States, while production forecasts were reduced somewhat for Argentina and Brazil. Forecasts for corn production were trimmed for the European Union and Mexico. The FAO expects global rice production in 2023-24 to rise by 0.8% from the previous marketing season.
Looking ahead to the next season, planting of the 2024 winter wheat crop is ongoing in the Northern Hemisphere countries and, reflecting lower crop prices, area growth could be limited, the FAO said. The 2024 coarse grain crop sowing is ongoing in the Southern Hemisphere countries, with slower sowings in Brazil but a rebound in Argentina.
World cereal total utilization in 2023-24 is forecast at 2.813 million tonnes, 1.1% higher than in 2022-23. World cereal stocks by the end of the 2023-24 season are predicted to rise by 2.7% above their opening level and mark a new record high. Based on the latest forecasts, the global cereal stock-to-use ratio would be 30.8% in 2023-24, indicating an overall comfortable supply level, the report said. World trade in cereals in 2023-24 is forecast to contract slightly to 468.4 million tonnes, down 1.8% from the 2022-23 level.
Ukraine’s grain exports continue to fall significantly behind the pace a year ago, with 13.4 million tonnes exported so far, compared to 18.3 million tonnes last year, according to data from the agriculture ministry.
The exports include 5.9 million tonnes of wheat, 6.5 million tonnes of corn and 876,000 tonnes of barley. By this time last year, Ukraine had exported 6.9 million tonnes of wheat, 9.8 million tonnes of corn and 1.48 million tonnes of barley.
Ukraine officials expect a harvest of 79 million tonnes of grain and oilseeds in 2023-24, with an exportable surplus of 50 million tonnes.
Before Russia invaded Ukraine in February 2022, Ukraine made up 9% of global wheat exports, 15% of maize and 44% of sunflower oil.
United Nations officials are trying to revive the Black Sea Grain Initiative, which Russia quit in July, a year after the United Nations and Turkey brokered it. Since then, Ukraine has launched a humanitarian corridor for agricultural exports that has allowed for more than 4 million tonnes of shipment. The route runs along Ukraine’s southwest Black Sea coast in Romanian waters and toward Turkey.
With nearly 98% of its harvest collected, Russia forecasts over 65 million tonnes of grain exports during the 2023-24 marketing season, Reuters reported, citing Russian news agency Interfax.
According to Interfax, Russian Agriculture Minister Dmitry Patrushev said on Nov. 28 that more than 151 million tonnes of grain in bunker weight had been threshed, including almost 99 million tonnes of wheat.
Patrushev said this meant the 2023 harvest would be Russia’s second largest, allowing it to send record volumes of grain to foreign partners. Last year, Russia exported about 60 million tonnes of grain.
Earlier this month, Russia said it started free shipments of grain totalling up to 200,000 tonnes to six African countries. President Vladimir Putin had promised the deliveries during a summit with African leaders in July after Russia withdrew from the Black Sea Grain Initiative. The initiative had allowed for the export of grain following Russia’s February 2022 invasion of Ukraine.
Agritel, the agriculture analytics arm of Argus, said Russian wheat production could reach 90 million tonnes in 2024, a third straight bumper harvest following a favourable autumn sowing season, Reuters reported.
Combined with stocks, the harvest outlook would keep the total Russian wheat supply above 100 million tonnes for a third straight season in 2024-25, Agritel said in a note.
Russia, the world’s biggest wheat exporter, harvested a record crop in 2022, and this year’s production is expected to be its second largest. Agritel, which does not include Crimea and other annexed regions of Ukraine in its Russia forecasts, estimates the 2022 crop at 96.5 million tonnes and 2023 output at 89.6 million tonnes.
The initial projection for next year’s crop included an expected 65.8 million tonnes of winter wheat and 24.2 million tonnes of spring wheat, which is mainly sown in April.
Weather conditions in Brazil so far this spring have been poor in many areas and if a turnaround does not occur soon production may be notably off the trend as it was in 2015-16 and 2020-21. In 2015, El Niño was solely responsible for lower grain and oilseed production. This year is a bit different. World Weather, Inc. forecasters believe that El Niño has certainly had much influence on this year’s adverse weather as it did in 2015-16, but so has the 22-year solar cycle and the lingering atmospheric effects of the Jan. 15, 2022, Hunga Tonga volcanic eruption. Dryness in 2020-21 was much different and mostly the byproduct of La Niña.
El Niño events have a big influence on weather throughout the world. Typically, in South America, the influence starts off with a delay in the onset of monsoonal moisture in the Amazon River Basin. This year’s drier-than-usual bias kicked in after a prolonged drought period that had already depleted water supply and soil moisture throughout the Amazon River Basin. Water levels were already at a critical low long before the rainy season was supposed to begin, and when El Niño came along it prolonged the dryness long enough to set records for low water levels on the Amazon River and many reservoir and lake levels associated with the seasonal rainfall.
Historical weather and atmospheric data have suggested that this particular 22-year solar cycle always had a bad reputation for making weather more extreme. The phenomenon impacts all areas on the planet and in most cases it makes weather anomalies more serious, resulting in greater impacts on agriculture and human life. The association between the 22-year solar cycle and socio-economic trends has been written about multiple times over the past couple of centuries. From a weather perspective, no region has documented the solar cycle better than the United States, where famous drought and extreme weather years like those of the 1930s, 1950s, 1999-2002, 1911-13, the 1970s and the late 1880s can all be tracked back to this cycle. Data from South America has not been studied nearly as much as that of the Northern Hemisphere, but the trend is likely in place there as well and may have contributed greatly to the unusually dry and hot weather of 2023.
Already in the past few weeks the Vegetative Health Index (a satellite interpreted vegetative greenness comparison tool) has shown conditions in Brazil to be worse than those of 2015 in some areas and better in others. The Vegetative Health Index (VHI) determines where crops are unhealthy, under-developed or not planted relative to normal based on previous satellite imagery. The VHI has shown that conditions in northeastern Brazil and the Amazon River Basin may not be as bad as that of 2015, which is interesting because most of the water supply in the basin is at record lows.
Drought-induced stress seen in the VHI over southern Mato Grosso and much of Mato Grosso do Sul can be clearly seen in satellite imagery. Crops in these areas are confirmed to be suffering from too much heat and dryness and the situation is much worse than that of 2015. Recent images from outer space also have suggested that summer crops from southern Minas Gerais through Sáo Paulo to southern Mato Grosso do Sul and northern Parana have been the best in the nation this year, but conditions were even better in those areas during 2015.
Farther to the south, too much rain and flooding frequently has damaged spring and summer crops from Rio Grande do Sul into southern Parana. This, too, is seen in the lower (more stressed) VHI data compared to that of 2015. Overall, the VHI seems to be suggesting worse agriculture conditions in interior southern Brazil this year relative to 2015 while the situation in northern and eastern Mato Grosso, Goias and immediate neighboring areas are also worse than those in 2015. The assessment also has suggested crops farther north in Mato Grosso, Tocantins and Maranhao, Piaui, Bahia and northern Minas Gerais may be better than those of 2015. However, there has been an acceleration in the VHI stress levels in recent weeks. If this trend of adverse weather is not soon stopped the decline in 2023 crop production in Brazil is destined to be worse than that of 2015, which was the most recent year of significant production cuts for soybean and corn.
Another important factor to this year’s adversity in Brazil may be associated with the lingering effects of the January 2022 Hunga Tonga volcanic eruption that brought a 10% increase in moisture to the stratosphere. Scientists have measured and confirmed the increased moisture in the stratosphere, and they also speculated that shortly after the volcano erupted, the event would influence the world’s weather for upwards to five years. In addition to that, the prediction included a statement suggesting one of those five years would include a notable deviation in normal atmospheric warming trends, just like that noted around the world in 2023. There is growing evidence that the unusual warmth occurring worldwide this year is associated with the Hunga Tonga volcano.
Proving the volcano’s influence will be difficult since the 2022 eruption was unprecedented in modern history. The underwater volcano was stronger than Krakatoa in 1883, and particulate matter and moisture associated with the eruption reached 36 miles into the atmosphere.
Brazil’s heatwave this spring, which was noted in Argentina, South Africa, and Australia, is similar to that in North America, Europe, and parts of Asia in the Northern Hemisphere summer of 2023. World Weather, Inc. believes that Brazil’s unusual rainy season and recent heatwave can be largely attributed to El Niño, the 22-year solar cycle and the lingering effects of the Hunga Tonga volcano. Monsoon moisture in both North and South America this year was below average, and the evidence also points to the volcanic eruption, although that has not been proven yet.
Scientists believe it will take a few more years for the influence of the Hunga Tonga volcanic eruption to wash out of the atmosphere. Each of the next few years should progressively move back to a more “normal” trend in atmospheric indices. In the meantime, there is a relatively good potential that Brazil’s weather will not return to normal this spring or summer and a further decline in production and vegetative health should be expected in at least a part of the nation.
China’s grain feed and residual use in the marketing year 2023-24 are projected to rise slightly to 285 million tonnes, up 2.7% from 282.3 million tonnes in 2022-23, according to a Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
FAS Post Beijing anticipates corn production in 2023-24 to edge higher to 280 million tonnes due to a larger planted area at 40.927 million hectares (up 1.9%) and improved yields. Feed and residual demand for corn is expected to be 222 million tonnes in 2023-24, growing 2% from 220 million tonnes year-on-year.
The FAS sees 2023-24 corn imports at 20 million tonnes, 1 million tonnes lower than the June forecast, as alternative domestic and imported grains free from tariff rate quota (TRQ) requirements are available to replace corn in feed; substitution of domestic old stock rice and sprouted wheat as well as imported sorghum and barley for corn will be significant.
“Traders unable to competitively import corn or receive TRQs have an active interest in alternative grains such as domestic sprouted wheat and old stock rice and imported barley and sorghum as replacements for corn in feed rations,” the FAS said. “On the other hand, government-backed offices and trading enterprises will likely continue building corn reserves by buying imported corn when it is priced competitively.”The forecast of milled rice production remains unchanged at 149 million tonnes despite high temperatures and typhoon damage throughout the summer, offset by increased precipitation in arid southern areas that benefited from the extra rain.
The International Grains Council (IGC) revised global soybean production higher in marketing year 2023-24 to a record 395 million tonnes in its latest Grain Market Report.
The increase in output is chiefly linked to bigger crops in South America, the IGC said.
At the same time, global soybean consumption is projected to increase 8% yearly to an all-time high of 386 million tonnes. Carryover stocks are predicted to remain unchanged from the 2022-23 marketing year at 171 million tonnes.
Led by expectations for a bumper corn harvest, the IGC’s forecast for total grains (coarse grains and wheat) in 2023-24 was slightly higher to 2.295 billion tonnes, the second largest behind the 2021-22 crop.
Still, total grains demand is projected to outstrip supply, reaching a record 2.308 billion tonnes. The Council sees a continued slide in carryover stocks at 585 million tonnes, the lowest level in nine years.
The IGC expects the bumper world corn crop to reach 1.223 billion tonnes, up from 1.161 billion the previous year. It said the upgraded outlook for corn was “tied mainly to reports of better-than-expected US yields, as well as an increased wheat figure, reflecting latest updates from Ukraine, Russia and Turkey.”
Global wheat production was revised slightly higher than last month’s estimate but still 2% below last year’s total output of 804 million tonnes. Record-high wheat demand will bring carryover stocks to their lowest level since 2016-17 at 264 million tonnes, the IGC said. The IGC Grains and Oilseeds Price Index increased slightly over the last months at 262 as gains in soybean and rice prices more than compensated for weakness in other grain markets. However, the price index is still nearly 17% lower than a year ago.
Ukraine has exported nearly 4 million tonnes via its “humanitarian corridor” since shipments started in August, Ukrainian President Volodymyr Zelenskiy said on Nov. 14, Reuters reported.
Ukraine launched the corridor for ships headed to African and Asian markets after Russia left the UN-brokered Black Sea Grain Initiative that had allowed for grain shipments following Russia’s February 2022 invasion.
The route runs along Ukraine’s southwest Black Sea coast in Romanian waters and toward Turkey.
“The grain corridor is working,” Zelenskiy said on the Telegram messaging app. “We are now overcoming the four million tonnes mark and maintaining positive dynamics.”
Last week a Russian missile hit a civilian vessel in an Odesa region port. The route continued to operate, but freight prices increased.
“This (attack) is, of course, bad; it affects the cost of freight and the willingness of traders to buy grain from us and work with Ukraine,” Ukrainian Agriculture Minister Mykola Solsky told national television on Nov. 13. “We understand that Odesa region ports need to be protected, everyone is doing it, and the situation is improving every week, and we will still export.”Ukraine’s government expects 79 million tonnes of grain and oilseeds to be harvested in 2023, with an exportable surplus of about 50 million tonnes. The country has been among the world’s top suppliers of wheat, corn, barley and sunflower oil in recent years.
The US Department of Agriculture on Nov. 7 projected area planted to soybeans to expand in 2024, but wheat and corn planting areas were forecast to decline. The forecasts were contained in early-release tables from the USDA Agricultural Projections to 2033 report, which will be issued in February 2024.
The USDA forecast area planted to all wheat for harvest in 2024 at 48 million acres, down 1.2 million acres from 49.6 million acres in 2023. The 2024 forecast compared with 46.4 million acres as the five-year average planted area. The USDA’s first all-wheat planted area estimate was 77.44 million acres in 1919. The planted area has been smaller than 50 million acres since 2016. The record-high all-wheat planted area was 88.3 million acres in 1981. The record-low all-wheat planted area was 44.45 million acres in 2020.
The USDA projected area planted to corn in 2024 at 91 million acres, down 3.9 million acres, or 4%, from 94.9 million acres in 2023. The corn area forecast would be the smallest since 88.6 million acres in 2022 compared with the recent high planted area of 97.3 million in 2012 and the recent five-year average planted area of 91.4 million. The USDA began to estimate corn-planted areas in 1926. The record-high area was 113 million acres in 1932. The record low area of 60.2 million acres was planted in 1983.
The USDA forecast soybean planted area in 2024 at 87 million acres, up 3.4 million acres, or 4%, from 83.6 million acres in 2023. The projection for 2024 compared with the recent five-year average planted area at 83.5 million acres. The record-high soybean area at 90.2 million acres was planted in 2017.
The USDA projected area planted to rice in 2024 at 2.8 million acres, down 97,000 acres, or 3%, from 2.9 million acres in 2023. The 2024 forecast compared with 2.6 million acres as the recent five-year average.
The USDA projected the area planted to oats for harvest in 2024 at 2.6 million acres, the same as in 2023, 2022 and 2021. That compared with the recent high acreage of 3.1 million acres in 2015 and the five-year average of 2.7 million acres.
Global cereal production this year is forecast to reach a record 2.81 billion tonnes, according to the Food and Agriculture Organization of the United Nations’ latest Cereal Supply and Demand Brief released on Nov. 3.
Of note was higher projected coarse grain production in China and most West Africa and lower forecasts for the United States and the European Union. Wheat output forecasts were raised for Iraq and the United States and revised downward for the European Union and Kazakhstan. World rice production in 2023-24 is forecast to increase marginally year-on-year. The new revisions include an upgrade to India’s production, more than offsetting various other revisions, particularly a further downgrade of Indonesian production prospects.
World cereal utilization in 2023-24 is forecast to reach 2.810 million tonnes, with the total utilization of both wheat and coarse grains set to surpass 2022-23 levels, while rice utilization is expected to stagnate at the previous season’s level.
The world cereals stocks-to-use ratio for 2023-24 is forecast to stand at 30.7%, “a comfortable supply situation from a historical perspective” and marginally above the previous year’s level of 30.5%, according to the FAO.
Global trade in cereals in 2023-24 is forecast at 469 million tonnes, a 1.6% contraction from the preceding year.
The FAO also noted in a separate report that persisting and intensifying conflicts aggravate food insecurity, and moderating international food commodity prices are being countered by weak currencies in many low-income countries. A total of 46 countries worldwide, including 33 in Africa, are assessed to need external assistance for food, according to the latest Crop Prospects and Food Situation report, a triannual publication by FAO’s Global Information and Early Warning System (GIEWS).
More than half the residents of the Gaza Strip were estimated to be in acute food insecurity already in 2022, and escalation of the conflict there between Israel and the Hamas organization will increase humanitarian and emergency assistance needs even as access to the affected areas remains an alarming concern, the FAO said, adding that spillover effects from the conflict could worsen food insecurity in Lebanon. While world cereal production is forecast to expand by 0.9% in 2023 from the year before, the pace of growth will be half of that rate for the group of 44 Low-Income Food Deficit Countries (LIFDCs), the report noted.
Due to widespread dry conditions, Argentina’s wheat production forecast for the 2023-24 marketing year has been revised lower in the most recent Global Agricultural Information Network report from the US Department of Agriculture’s Foreign Agricultural Service (FAS).
The FAS dropped its projections for Argentine wheat output by 2 million tonnes from the previous forecast to 14.5 million tonnes. If realized, the total would still be 2 million tonnes higher than the country’s 2022-23 drought-stricken crop. Argentina, typically the largest wheat producer and exporter in South America, is in the midst of a three-year stretch of dry conditions.
Analysts and producers are still evaluating the negative impact of frosts in early October, which could drop production even further,” the FAS said.
The average yield is estimated at 2.6 tonnes per hectare, 13% lower than the average yield of the past decade, the report said.
Wheat exports were also adjusted downward by the FAS to 10 million tonnes, including flour products. Although 1.5 million tonnes lower than the previous estimate, the projected shipments would still be significantly higher than in 2022-23, when only 3.9 million tonnes were exported. Argentina exported 16 million tonnes of wheat in 2021-22.
While the US will not set yield records in corn this season, far better results than initially anticipated could still make it a top-two or top-three crop, according to Rabobank’s North American Agribusiness Review.
In October, the US Department of Agriculture (USDA) lowered yield estimates against the backdrop of media reports indicating that crops coming off the field were better than expected. Rabobank said much about the 2022-23 crop year has been atypical.
Indeed, the USDA’s own field surveys point to record-high ear counts, while farmers surveys were mostly submitted before their ‘surprisingly good’ harvests began in earnest,” the review said. Both “open the door” to late-season upward adjustments in yield.
Increases across all demand categories will mitigate stock buildup, Rabobank said, but early indicates suggest these may be overly optimistic. US corn exports are estimated to increase 22%, equivalent to 10 million tonnes, according to USDA. Sales for the 2023-24 crop are up just 8% through early October.
USDA is projecting a 3.3 million tonnes increase in corn use for ethanol, but the US Department of Energy is projecting a 2% decrease in ethanol output.
Rabobank added that even the modest increase of 1.4 million tonnes in feed demand may be difficult to attain given flat poultry production, modest declines in hog and dairy cow numbers and 5% decline year-on-year in beef cattle on feed.
Compared to corn, there is very little room for soybean yields to surprise to the upside, Rabobank said. Brazil will likely loom large again in the year ahead, it said, with record yields and record production.
Meal prices have found support, with outstanding sales through the first week of October, proceeding at their fastest pace in five years and 50% above a year ago.
“This is driven by sizable increases in purchases from Southeast Asian buyers, but also noteworthy increases from Canada and Ecuador in the Americas,” Rabobank said.
Biomass-based diesel oversupply played a central role in soy oil futures shedding a dime from nearby contracts over the past two months, it said.
“Weak demand and the prospect of an increased rig count in the US suggested there could be further room to fall for crude and vegetable oils, though this picture us now clouded considerably by conflict in the Middel East,” Rabobank said.
Better yields are driving production increases for most classes of wheat, including hard red winter, hard red spring, soft red winter and durum wheat. The exception was white wheat, which showed a decline in yields and area harvested Rabobank said.
US imports are continuing at a record pace, projected to be the fourth largest import volume over the last 20 years.
Ocean freight rates for shipping grain from the US Gulf and Pacific Northwest dropped in the third quarter compared to the previous quarter and from a year ago, according to the Oct. 26 Grain Transportation Report from the US Department of Agriculture (USDA).
Compared to the prior four-year average, the rate for routes from the Gulf and Pacific Northwest to Japan decreased while the rate for routes from the US Gulf to Europe increased.
“Both quarter-to-quarter and year-to-year, ocean freight rates were volatile because of extreme weather, the closure of the Ukraine Black Sea grain corridor and the market’s pessimism about China’s economic recovery,” the USDA said.
On average, ocean freight rates for shipping bulk grain from the Gulf to Japan averaged $50.76 per tonne in the third quarter, a drop of 2% from the previous quarter and a 22% drop from a year ago. It was also down 15% from the four-year average.
From the Pacific Northwest to Japan, rates averaged $27.43 for the third quarter, a drop of 3% from the previous quarter and a decrease of 28% from a year ago. Rates were down 18% from the four-year average.
Rates from the Gulf to Europe were $25.87 per tonne in the third quarter, down 8% from last quarter and 19% from last year. However, rates were up 4% from the four-year average.
Current rates, while below the yearly peaks reached in the week ended Sept. 21, are strong compared to most of the third quarter.
While not certain to continue, the rates have fallen over the last two weeks, the USDA said. Amid lower spot prices, China’s demand to restock iron ore has been strong for the last two months and is expected to persist. Also, a surge in China’s electricity demand and rising domestic coal prices have spurred coal imports for the last two months.
Additionally, China’s corn imports are expected to be high.
“The country’s imports of competitively priced Brazilian corn — as well as large quantities of Ukrainian corn that started to ship in October — are boosting the demand for Panamax vessels,” the USDA said.
Starting Jan. 1, a carbon tax will be charged for all port calls within the European Economic Area (i.e., the European Union, Iceland, Liechtenstein, and Norway).
Research has shown a carbon tax could raise shipping costs by either raising freight rates or increasing transit times, the USDA said.
Finally, the start of the North American harvest season could boost vessel demand and push up rates.
“On the other hand, the market is still hesitant about the global economy’s slow recovery amid high inflation,” the USDA said in the report. “The dry bulk market still has an ample supply of vessels. These factors could soften rates.”
Bunge Ltd. is marking a century in Australia throughout October, hosting an event with more than 100 local partners at Lake Towerrinning, Moodiarrup, and Western Australia and giving back to the communities in which it operates.
Bunge (Australia) Pty. Ltd. was established in Melbourne in 1923, focusing on grain trading in the wheat and barley export markets. A century later, Bunge brings grains and oilseeds from Western Australia to countries in Asia, Africa, South America and Europe. The company operates a port terminal in Bunbury, two storage facilities in Arthur River and Kukerin, and a country head office in Melbourne.
St. Louis, Missouri, US-based Bunge is a world leader in agribusiness, food and ingredients. In recent years, Bunge in Australia has steadily grown and registered a record year in export volumes in 2022. The company continues to grow and is currently developing projects to expand storage capacity in the region. Recently, Bunge completed the construction of a new silo in Bunbury, adding additional capacity.
As part of the anniversary celebrations, Bunge has been organizing volunteering initiatives during October to support local groups focused on addressing hunger and food access. Bunge said it will continue to focus on growing and developing its business in Australia with a strong commitment to sustainability and aiming to leave a positive mark on the communities where it operates. “We are proud to celebrate 100 years in Australia and are grateful to all the growers and business partners we work with to build a reliable, sustainable and transparent supply chain,” said Stephen Bennett, country lead in Australia for Bunge. “We are honored to have served wheat, barley, canola and oat customers worldwide, pioneering solutions for growers to get their grain and oilseeds to the international market in an efficient and cost-effective way to maximize value creation for the rural communities we operate. Bunge’s global network and strong footprint worldwide offer local growers in Western Australia easy access to global markets, and we are always on the lookout to unlock new opportunities for their products.”
Reuters reported that a Russian export company has signed a deal to export 70 million tonnes of grain, legumes and oilseeds to China on Oct. 18.
According to Reuters, the company, EPT, said the contract was for 12 years with a possible extension.
Karen Hovsepyan, the New Land Grain Corridor Initiative leader, told the Tass news agency that the deal is worth nearly $26 billion.
Russia has strengthened ties with China over the past several years, and this week, Russian President Vladimir Putin is visiting China to speak with Chinese President Xi Jinping about trade and other issues.
Russia is coming off a bumper grain harvest in which it exported an estimated 60 million tonnes of grain during the 2022-23 marketing season. With its invasion of Ukraine having reduced Ukrainian grain shipments, Russia has expanded its position as the world’s No. 1 wheat exporter. It exported an estimated 47 million tonnes of wheat in 2022-23 and is forecast to ship a record 50 million tonnes in the current marketing year.
Although China is trying to become more self-sufficient in grains and oilseeds, it is still the biggest importer of those products, particularly soybeans and corn.
Russia’s attacks on Ukraine’s agricultural infrastructure and ships since July have destroyed nearly 300,000 tonnes of grain, Reuters reported, citing the Ukrainian government.
Since Russia quit the Black Sea Grain Initiative in July, its military forces have hit six civilian ships and 150 port and grain facilities during 17 attacks, destroying crops headed for export, Deputy Prime Minister Oleksandr Kubrakov said in a statement.
This is Russia’s attempt to deepen the food crisis in the countries which depend on Ukrainian products,” Kubrakov said.
The damage to Ukrainian ports reduced the country’s grain export potential by 40%, Kubrakov said.
Russia invaded Ukraine on Feb. 22, 2022, and during the first five months of the conflict, established a blockade to prevent Ukraine from exporting grain on the Black Sea. Russia agreed to suspend the blockade in July 2022 when it signed a deal brokered by the United Nations and the Turkish government, allowing grain exports to resume.
Russia quit the agreement this past July, saying its demand that sanctions be lifted on its grain and fertilizer exports had not been met. After reinstating the blockade, Russia began bombing Ukrainian grain assets in Black Sea ports and along the Danube River.
As of Oct. 3, Ukraine had exported 6.82 million tonnes of grain so far in the 2023-24 July-June season, down 24% from 8.99 million tonnes at the same time a year ago when the Black Sea Grain deal was in effect, according to the Ministry of Agrarian Policy and Food. Ukraine is expected to harvest 79 million tonnes of grain and oilseed in 2023, with 2023-24 exportable surplus totals of about 50 million tonnes.
Ukraine is among the world’s largest wheat, corn, barley and sunflower oil exporters, reigniting concerns of a global food shortage, particularly in underdeveloped nations heavily reliant on Black Sea grain.
Kubrakov said 21 grain-loaded vessels have already used a new “humanitarian” grain corridor in the Black Sea that Ukraine established in August. The Russian Defense Ministry could not immediately be reached for comment.
Talks aimed at providing Ukraine and Russia “unimpeded access” to global grain and fertilizer markets were held between the United Nations and Russian officials Oct. 9 in Moscow, Reuters reported.
UN spokesperson Stephane Dujarric said top UN trade official Rebeca Grynspan was in Moscow and UN aid chief Martin Griffiths joined the talks virtually.
General Antonio Guterres “continues in his determination to facilitate the unimpeded access to global markets for food products and fertilizers from both Ukraine and the Russian Federation,” Dujarric said. Grynspan and Griffiths’ consultations with Russia “are taking place with this goal in mind.”
Russia’s February 2022 invasion of Ukraine and subsequent blockade of the country’s Black Sea ports has been blamed for a worsening global food crisis. Ukraine and Russia are major grain exporters, while Russia is also a significant supplier of fertilizer.
The Black Sea Grain Initiative, brokered by the UN and Turkey with Russia and Ukraine, began in July 2022 and had helped bring some 33 million tonnes of Ukrainian grain — including wheat, corn, barley and sunflower oil — to world markets before its demise. Russia quit the deal this past July over complaints its own wheat and fertilizer shipments were impeded by Western economic sanctions.
To convince Russia to agree to the Black Sea deal last year, UN officials have said they would help facilitate Russian exports.
Guterres sent Russia’s Foreign Minister Sergei Lavrov a letter in August outlining measures that the UN could help to improve Russia’s grain and fertilizer exports in a bid to convince Moscow to return to a deal.Since pulling out of the grain deal, Russia reinstated its blockade of Ukraine’s Black Sea ports, although Ukraine recentlyhas begun shipping grainon a route that hugs the country’s coast. Russia also has stepped up its attacks on grain infrastructure at Ukraine’s Black Sea ports and on the Danube River over the last two months.
Bunge Ltd. shareholders on Oct. 5 voted in favour of the company’s acquisition of Viterra Ltd., approving the issuance of 65,611,831 common shares, a par value of 1¢ per share. The shareholders also voted to move the company’s global agribusiness place of incorporation from Bermuda to Switzerland. Bunge’s operational headquarters will remain in St. Louis.
“We appreciate our shareholders’ vote of confidence in our strategy to position Bunge as a premier global agribusiness solutions company through the merger with Viterra,” said Gregory A. Heckman, chief executive officer of Bunge. “Our team is focused on effectively running our operations while also planning for a successful integration. We are committed to creating an innovative global agribusiness company well-positioned to meet the demands of increasingly complex markets and better serve farmers and end-customers. The merger with Viterra is expected to close in mid-2024, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.
Three ships left Ukrainian ports on Oct. 1, and five more ships are on their way to ports using a new corridor opened by Ukraine mainly for agricultural exports as an alternative to the Black Sea Grain Initiative quit by Russia, Reuters reported.
“Five new vessels are waiting to be loaded in Ukrainian ports,” Ukraine Deputy Prime Minister Oleksandr Kubrakov said on the X social media platform. “Bulk carriers OLGA, IDA, DANNY BOY, FORZA DORIA, NEW LEGACY are going to export almost 120,000 tonnes of Ukrainian grain to Africa and Europe.
Kubrakov also said that three bulk carriers – Azara, Ying Hao 01 and Eneida – left Ukrainian ports earlier on Oct. 1 using the “temporary corridor established by the Ukrainian Navy” and carrying 127,000 tonnes of agricultural products and iron ore.
The three cargo vessels are the latest to sail since Ukraine set up a temporary “humanitarian corridor” after Russia quit a deal allowing safe passage for Ukraine’s exports. The corridor hugs the western coastline near Romania and Bulgaria. After it invaded Ukraine in February 2022, Russia closed off the Black Sea ports of one of the world’s biggest grain suppliers. The ports were reopened in July 2022 under a deal brokered by the United Nations and Turkey that was extended several times before Russia ended its participation in July. The initiative had allowed for the export of 33 million tonnes of grain.
Ukraine grain exports from Sept. 1-24 fell by 51% compared with the same period in 2022, Reuters reported, citing data from Ukraine’s agriculture ministry.
The war-torn country has seen its grain infrastructure under attack by Russia since it withdrew from the Black Sea Grain Initiative on July 17. It exported 1.57 million tonnes of grain during the first 24 days of September, down from 3.21 million tonnes the previous year.
Since pulling out of the grain deal, Russia reinstated its blockade of Ukraine’s Black Sea ports, although Ukraine recently has begun shipping grain on a route that hugs the country’s coast. Russia also has stepped up its attacks on grain infrastructure at Ukraine’s Black Sea ports and on the Danube River over the last two months.
Ukraine’s overall grain exports for the 2023-24 marketing year, which began on July 1, is 6.2 million tonnes, down from 7.5 million during the same period the previous season, Reuters reported. The total so far this season includes 3 million tonnes of wheat, 2.5 million tonnes of corn and 590,000 tonnes of barley.
Ukraine is projected to produce 50.5 million tonnes of corn and wheat in 2023-24, according to the US Department of Agriculture’s Foreign Agricultural Service, down from 56.5 the previous marketing year and 75 million tonnes in 2021-22. Wheat and corn exports for the current year are forecast at a combined 30.5 million tonnes, down from 45.1 million in 2022-23.
US Hard Red Winter (HRW) wheat exports are forecast to fall to their lowest level since the US Department of Agriculture (USDA) began tracking such data in 1973, according to a recent report from the Economic Research Service (ERS).
In its monthly Wheat Outlook Report, released on Sept. 14, the ERS projected HRW exports to decline to 155 million tonnes, revised downward by 10 million tonnes from its August projection.
“HRW supplies have seen a long-term downturn in US acreage as corn and soy have gained acreage in many locations,” the ERS said. “At the same time, international wheat competition has surged, resulting in exports of this class being less competitive on the global market.”
Historically, HRW has been the leading class of US wheat exports, but this marketing year it is forecast as the third largest behind Hard Red Spring (HRS) and White Wheat. The report noted that HRS and White wheat production is down year-over-year due to lower yields, but the drought has not affected those classes to the same extent as HRW.
All-wheat exports for the United States in 2023-24 are projected at 700 million bushels, unchanged from the previous monthly estimate.
The ERS said US wheat exports “continue to be priced uncompetitively on the global market, resulting in a slow sales pace.” Total US export commitments as of Aug. 31 were at 7.9 million tonnes, down 21% from the same time a year ago.
The agency noted that because US HRW prices are elevated this year due to drought, wheat has been imported from the European Union at some US ports. According to ERS methodology, 75% of the imports from the EU are counted as HRS and 25% as Soft Red Winter.
“However, market sources indicate that the imported wheat from Europe is functionally most similar to HRW,” the ERS said. In June, it was reported that some US flour mills were importing EU wheat because it was cheaper to bring it across the Atlantic Ocean instead of from the US Great Plains.
Poland announced on Sept. 12 that it will not lift its embargo on imports of Ukrainian grain this week as originally planned.
Poland Prime Minister Mateusz Morawiecki said resuming imports would hurt Polish farmers.
Poland will not allow Ukraine grain to flood us,” Morawiecki said on social media platform X, formerly known as Twitter. “Regardless of the decisions of the clerks in Brussels (Belgium), we will not open our borders.”
Morawiecki was referring to an upcoming meeting of the European Union Parliament where the issue will be discussed. If Poland were to go against the EU’s decision on the matter, it would violate the bloc’s common trade rules.
Cheaper Ukraine grain flooded the Polish market after Russia invaded Ukraine on Feb. 22, 2022. Last year, the EU established solidarity lanes to facilitate grain exports from war-torn Ukraine, which had its ports blocked. Huge flows of cheap Ukrainian grain ended up in central European countries, affecting grain prices for local farmers. Hungary, Slovakia, Romania and Bulgaria also have imposed embargoes on Ukraine’s agricultural products to protect their farmers.
Although Poland has staunchly supported Ukraine with humanitarian and military assistance against Russia’s invasion, which is in its 20th month, it imposed the embargo in April after its farmers protested that the imports were depressing domestic grain prices. The embargo was scheduled to end on Sept. 15.
Ukraine has said it will make an appeal to the World Trade Organization if the embargoes are not lifted.
Argentina’s soybean crop is expected to rebound in the 2023-24 crop year to an estimated 50 million tonnes, up from 21 million tonnes last season, according to a Sept. 7 report from the Buenos Aires grain exchange.
The country is a top exporter of processed soybeans and also a major corn and wheat supplier. A historic drought sharply reduced production last season. Corn production is forecast at 55 million tonnes, up from 34 million tonnes in 2022-23 while wheat production is estimated at 16.5 million tonnes, up from 12.2 million tonnes
Brazil will overtake the United States as the world’s top corn exporter in the 2022-23 marketing year and is projected to be the leading exporter in 2023-24, according to statistics from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
The only other year in which Brazil topped the United States in corn exports was in 2012-13 when a severe drought impacted US corn production.
The FAS estimates Brazil’s 2022-23 exports at 56 million tonnes, compared to only 41 million tonnes in shipments for the United States. In the current marketing year, which began Sept. 1, FAS forecasts Brazilian corn exports at 55 million tonnes, with the United States close behind at 52 million.
According to a Reuters report, Brazil’s breakthrough is attributed to a bumper harvest and improvement in transportation logistics such as the consolidation of northern export routes.
The country’s growing ties with China, which recently increased the number of Brazilian corn exporters approved to ship corn, also are playing a role in the increase. Until recently, the United States had been the largest supplier of corn to China, along with Ukraine, which has seen its exports decline due to the war with Russia.
The US corn industry also is being affected by a trade dispute with Mexico, its largest buyer, over a proposed ban of imports of genetically modified corn from the United States used for human consumption. Mexico amended its original decree, which banned all GM corn from the United States, to allow imports targeted for feed and industrial uses. The United States has requested a dispute settlement panel under the North American trade pact, the United States-Mexico-Canada Agreement.
The Canadian government announced on Aug. 25 that it will participate as a third party in the dispute settlement proceedings between the United States and Mexico regarding the use of genetically modified corn in tortillas and dough.
In a statement released on the Canadian government’s website, Lawrence MacAuley, minister of agriculture and food, and Mary Ng, minister of export promotion, international trade and economic development, said Canada sides with the United States regarding its stance on the issue.
Canada shares the concerns of the United States that Mexico is not compliant with the science and risk analysis obligations under CUSMA’s Sanitary and Phytosanitary Measures Chapter,” the ministers said. “Canada believes that the measures taken by Mexico are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market.
“Canada will continue to ensure stability and resilience for Canadian farmers and the agricultural sector for years to come.”
On Feb. 13, Mexico issued a presidential decree that banned the use of genetically engineered corn in tortillas and dough and states an intent to gradually substitute the use of biotechnology corn in all products for human consumption and animal feed.
Tortillas are mostly made with white corn, most of which is domestic production. The country imports about $5 billion in corn from the United States each year, mostly yellow GM corn for livestock feed.
Earlier this week, Mexico announced that it will not make any additional changes to its decree on genetically modified (GM) corn ahead of a dispute settlement panel requested by the United States.
On August 17, the United States requested the formation of a dispute panel with the Mexican government under the Sanitary and Phytosanitary Measures Chapter of the United States-Mexico-Canada Agreement (USMCA) to address its complaint that Mexico’s ban on genetically modified corn violates the free-trade deal.
World oilseed prices rose in July after months of falls, with sunflower, notably, rising because of uncertainty over Black Sea shipments and new crop supplies looking tight ahead of harvest.
Improving crop conditions in the first half of August in the United States triggered new declines, although it remains to be seen what impact the heatwave in the US Midwest in late August will have on the soybean crop. On Aug. 21, soybean futures on the Chicago Board of Trade rose to their highest level since July as excessive heat warnings were issued in many of the country’s key production areas.
The International Grains Council, in its Grain Market Report of Aug. 17, said that during the previous month “chiefly pulled lower by declines in the United States (and Argentina), average international soybean values, as measured by the IGC GOI sub-Index, retreated by 5%.”
“Chicago soybean futures dropped by up to 11% as improved Midwest weather conditions pressured,” the London, England-based organization said. “This outweighed support, at times, from tightening availabilities and signs of an uptick in international demand for new crop supplies, as evidenced by a raft of sales to China and other destinations.
“Technical activity was also influential, while soy product price trends were mixed, with steadiness in soy oil contrasting with a downturn in soy meal. Although basis levels were firmer, US Gulf spot export quotations were 8% lower at US$538 fob.”
Nominal Up River quotations in Argentina generally tracked movements in US values, falling by 7% month-on-month, the IGC noted. However, prices in Brazil (Paranagua) were down by a relatively marginal 1%, at $518 fob, as export premiums strengthened markedly amid solid local and international demand, as well as currency movements.
Concerning rapeseed, the Council reported that “despite worries surrounding 2023-24 crop prospects in Canada, ICE canola futures declined by 6% (month-on-month) on profit taking, with losses in soybeans a bearish influence, while fob prices (Vancouver) also fell.”
In Australia, fob quotations (Kwinana) softened by $31, to $545, the IGC said.
In its Food Price Index, published on Aug. 8, the United Nations Food and Agriculture Organization (FAO) said world vegetable oil prices were up by 12.1% in July compared with June, the first increase after seven months of consecutive declines.
“This pronounced increase in July was driven by higher world quotations across sunflower, palm, soy, and rapeseed oils,” the FAO said. “International sunflower oil prices rebounded by more than 15% month-on-month, primarily underpinned by renewed uncertainties surrounding the exportable supplies out of the Black Sea region after the decision taken by the Russian Federation to terminate the implementation of the Black Sea Grain Initiative. World palm oil prices also rose markedly, reflecting prospects of subdued production growth in leading producing countries.”
As for soy and rapeseed oils, international prices increased on continuing concerns over the production outlooks of soybeans in the United States and rapeseed in Canada, respectively, the FAO said.
“Rising world crude oil quotations also lent support to vegetable oil prices,” the FAO said.
The USDA Economic Research Service (ERS) said in its Aug. 15 Oil Crops Outlook that “world rapeseed production for marketing year (MY) 2023-24 is projected at 86.1 million tonnes, 1.35 million tonnes lower than the previous forecast due to lower-than-expected output in Canada, Russia and Uruguay. This reduction is partially offset by higher rapeseed production in Belarus and Ukraine.”
The MY 2023-24 global sunflower seed production forecast is raised by 1.1 million tonnes to 55.8 million tonnes, it added.
“Higher production in Ukraine and Russia more than offset the lower sunflower seed crops in the European Union (EU), Kazakhstan, Turkey, and China,” the ERS said.
With additional staff and the completion of EU-funded infrastructure projects, Romania said it could double its monthly transit of Ukrainian grain to its Black Sea port of Constanta to 4 million tonnes in coming months, particularly via the Danube River, Reuters reported, citing Romania’s minister of transport.
Ukraine is one of the world’s top grain exporters, and Russia has been attacking its agricultural and port infrastructure after refusing to extend the Black Sea Grain Initiative brokered by the United Nations and Turkey. The initiative had allowed for the safe passage of 33 million tonnes of grains and other foodstuffs from Ukrainian ports after Russia’s February 2022 invasion had halted exports. The recent attacks have included Ukraine’s inland Danube ports of Reni and Izmail.
Before Russia pulled out of the safe passage corridor, the Danube ports accounted for about 25% of Ukraine’s grain exports. Grain is loaded onto barges, shipped downriver through territorial waters of European Union and NATO-member Romania, and onwards from Romania’s flagship Black Sea port of Constanta.
By hiring more staff to ease the passage of vessels into the Danube’s Sulina canal and by finalizing connecting infrastructure projects — many of them EU-funded — Romania could increase the transit capacity, Romanian Transport Minister Sorin Grindeanu told reporters after a meeting with representatives of the EU, the United States, Moldova and Ukraine in the Danube town of Galati.
“I have underlined the importance of Romanian rail, road and naval transport routes to maintain a constant flow for Ukrainian exports,” Grindeanu said. “It was a good meeting that will lead us through the agreed measures to raise grain transit capacity from over 2 million tonnes per month at present to almost 4 million tonnes in the coming months.”
Grindeanu said Romania’s Danube administration agency will have 60 pilots to take ships in and out of the Sulina Canal by the end of August. An EU-funded project to make sailing possible at night on Sulina likely will be completed in October. When all these investments are made and the number of pilots increases, the Romanian ports of Galati and Braila will be used alongside Reni and Izmail, Grindeanu added.
Brazil’s crop estimating agency, Conab, on Aug. 10 raised its official corn crop estimate for the current marketing year to a record 129.9 million tonnes, up 2.2 million from its previous estimate. The upward revision is due to safrinha corn production being higher than previously forecast.
Conab also raised its 2022-23 corn exports forecast to 50 million tonnes, an increase of 2 million from its prior outlook.
The agency also increased its estimate for soybean production by 100,000 tonnes to a record 154.6 million. Conab kept its 2022-23 soybean export forecast at 95.6 million tonnes.
Brazil is projected to be the world’s leading soybean producer and exporter in 2023-24 and also is projected to lead the world in corn exports while ranking third in output, according to the most recent estimates from the Foreign Agricultural Service of the US Department of Agriculture.
Excellent execution” and “customers partnerships” helped Cargill deliver an increase in revenues in the fiscal year ended May 31. At $177 billion, revenues were up 7% from fiscal 2022, the company noted in its annual report.
Cargill said the rise in revenue in part reflected the benefit of several investments undertaken in 2023, including a new joint venture with Wayne-Sanderson Farms, which the company said positions it for growth in North American poultry. Additionally, Cargill acquired Owensboro Grain Co., which will expand the company’s oilseed crush capacity to meeting rising demand. The company also completed its acquisition of Croda’s bio-based performance technologies business, a transaction Cargill said will expand its portfolio of nature-based solutions for industrial manufacturers.
Beyond revenue growth, Cargill said it is working to support a resilient food system and find solutions to rising food insecurity that has emerged since the war in Ukraine began last year. The company also said it is embracing the opportunity to drive solutions that pertain to climate change.
“We’re reformulating how we fuel the fleets that move the world’s grain, investing in farmers who are regenerating the soil our crops depend on, accelerating efforts to eliminate deforestation, and enabling our customers to achieve their sustainability goals through our supply chains,” Brian Sikes, president and chief executive officer, noted in the annual report. “We’re reporting our progress and holding ourselves accountable to achieve results.”
Russia’s exit from the Black Sea grain deal, followed by barrages of strikes unleashed on ports in Odesa, the Mykolaiv River, and most recently, the Danube River, threatens to plunge the Ukrainian grain industry into chaos.
In chess, a gambit occurs when a player gives up material to attempt to achieve some subsequent positional advantage. By pulling out of the deal two weeks ago, Russia might have suffered certain reputational losses, and the pledges made by Russian President Vladimir Putin during the summit in Moscow to provide African countries with grain-free of charge should cost millions of dollars to the country’s treasury. However, the potential benefits of the Russian strategy may justify the sacrifices.
Even when the grain deal was operational, Russia has been putting much effort into pushing Ukraine from its key grain export markets, Andriy Dykun, head of the Ukrainian Agri Council, explained. Vessels spent significant time waiting for inspections in the Port of Istanbul, forcing charterers to terminate the contracts and buyers to refuse to accept the cargo, he added.
Last year, a lack of Ukrainian grain on the global market triggered a 20% jump in global grain prices, endangering consumers in Asia and Africa and fueling food inflation across the globe. There are signs that the new blockade of the Ukrainian grain exports by sea will lead to similar consequences, said Dykun.
“By closing exports from Ukraine, Russia provokes a threat of world hunger and establishes a situation when many countries see the dependence on its supplies tightening,” Dykun said, expressing an opinion that the gradual replacement of Ukrainian grain with Russian grain over the past year perfectly fits that logic. “From the first days, the grain initiative was simply a way for Russia to manipulate the world powers.”
It is hard to say to what extent the Russian complaints about the Black Sea grain deal were justified.
Russia said that the West has failed to fulfill its promises made as part of the Black Sea Grain Initiative, namely, reinstating the SWIFT banking facility so Russian grain and fertilizer traders can get paid, said Mike Lee, director of Green Square Agro Consulting, specializing in Black Sea grain market intelligence.
The list of demands also includes allowing Russian vessels shipping insurance and access to ports; allowing the import of agricultural machinery and spare parts into Russia; and opening the Togliatti-Odesa ammonia pipeline, which Russia uses to export 2.5 million tonnes of ammonia annually.
“However, given that Russian grain and fertilizer exports are thought to be at record levels, though this information is never fully transparent, they appear to have circumnavigated the payment and shipping problems caused by sanctions,” Lee said.
A section of the Togliatti-Odesa pipeline in Ukraine’s Kharkiv region was damaged, with both sides blaming each other, but, presumably, the pipeline could be fixed relatively quickly if all parties agree, he added.
That leaves the seemingly innocuous issue of agricultural machinery and spare parts.
“It’s difficult to assess the impact of a shortage of spare parts,” Lee said. “My experience waiting for a combined spare part to be delivered to a stationary combine in the middle of harvest is that it can be critical, certainly enough for Russia to include it in their list of demands. This might be less of an innocuous demand than we first thought.”
After quitting the grain deal, Russia declared that the northwestern Black Sea was temporarily dangerous again. The following days saw constant attacks on Odesa, Mykolaiv, and several ports along the Danube River with missile and kamikaze drones, some of which, as reported by Ukrainian officials, hit the targets only 200 meters away from the border with Romania, a NATO member.
Russia said it aimed at military infrastructure, while the Ukrainian president’s office published the footage of destroyed grain storage, calculating 60,000 tonnes of grain were lost in the Odesa seaport alone. These attacks promise to paralyze the Ukrainian grain export by sea and river.
“Unfortunately, attacks on the grain infrastructure make sense,” said Svitlana Lytvyn, an analyst with the Ukrainian Club of agricultural business UCAB. “Partial destruction of the grain infrastructure of seaports will not allow to restore full-fledged export shipments quickly.”
In June 2023, Ukraine exported 2 million tonnes of grain through the Danube River ports, nearly as much as through its largest Odesa seaport. The lack of agricultural export by sea and river jeopardizes the entire Ukrainian budget, Dykun said.
“Agriculture is the backbone the Ukrainian economy has been relying on this year,” he added.
As the Ukrainian ports are under constant attacks, and shipping in the Black Sea is risky, Ukrainian market players doubt foreign ships would dare export grain from the country. The United States fears that the Kremlin may be preparing a false flag operation in the Black Sea, US State Department spokesperson Matthew Miller said at a briefing on July 24. In light of this, insurance costs for ships calling the Ukrainian ports would be insanely high.
“The question now is, will Russia attack the railways exporting grain through the western borders?” Lee said, pointing out to one of the few options Ukraine has left to take its grain to foreign customers.
The Ukrainian grain industry has no easy way out of the current predicament. Ukrainian press outlets reported, citing the presidential representative in the Verkhovna Rada, Fyodor Venislavsky, that Kyiv insists that grain transportation must go through the territorial waters of Romania and Bulgaria under the escort of NATO convoys.
In the 1980s, during the Iran-Iraq War, the US Navy carried out Operation Earnest Will, when tankers carrying oil, primarily from Kuwait, were accompanied by American ships. However, the passage of warships through the Black Sea straits is strictly regulated by international law, so it is unclear how the same scheme could be applied to Ukrainian grain exports.
“It remains to be seen if NATO and the West will negotiate at the barrel of a gun,” Lee said.
The lack of export chokes the Ukrainian grain industry, as farmers find it extremely difficult to make ends meet.
“The inability to generate revenue from exports has direct implications for the future of the agricultural market, as it means no money for fertilizers, seeds, equipment, and labour costs for the next season,” Dykun said. “Without the sea corridor, farmers will have even fewer opportunities to fund their operations.”
Ukraine can export up to 5 million tonnes of grain per month via alternative routes: up to 3 million tonnes through the Danube ports, 1.2 million tonnes by rail, and 800,000 tonnes by road.
The success of the Russian strategy could ruin more Ukrainian farms, causing much pain to the national economy.
Ukrainian farmers already have been hit by low ex-works prices, often below the cost of production, Lee said, adding that overall, total grain and oilseed cropping only dropped by less than 2%. But if ex-works prices continue to remain low and are likely to do so under the current situation, then he expected farmers to plant less of all crops.
For now, Ukrainian farmers remain optimistic and keep running business as usual whenever possible, even though they have only a vague understanding of where they are going to store grain and how to sell it when the autumn harvest begins.
In 2023, Ukraine anticipates harvesting 62 million tonnes of grains and oilseeds, 11% less than the previous year. The main reason for the decline is a change in the structure of crops, as farmers sow more oilseeds as they are easier to export, Lytvyn explained.
“Many Ukrainian farmers curtailed operations, as there are many factors that prevent them from continuing to work on the land,” Dykun said, admitting there are no concrete figures indicating how many farms were closed since the beginning of the hostilities.
“Currently, more than 400 enterprises out of 1,100 members of the All-Ukrainian Agrarian Council, for example, are currently under occupation or in the de-occupied territories and are yet to be restored,” Dykun said. “And these are only our members, farmers with a land bank of 1,000 to 3,000 hectares. In general, there are many small farms in Ukraine that have ceased to exist because of the destroyed cities, the occupation, and the inability to recover.
“Many farmers currently serve in the Ukrainian Armed Forces and defend every inch of Ukrainian land.”
Further turbulence in Ukrainian agriculture could deprive the already reeling national budget of billions of dollars of tax income in 2023. Russia used a powerful tool of attrition, and it remains to be seen whether Ukraine and its Western allies would find a reasonable way to parry this blow.
Canada’s wheat area hit its highest level since 2001 as farmers looked to benefit from strong prices and lower input requirements, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
The total planted area for 2023 was 10.9 million hectares, an increase of 6.4% from 2022. The increase came at the expense of oats, rye, mixed grains and lentils, the FAS said.
Wheat area expansion was led by spring wheat with an increase of 8% to a total of 2.4 million hectares. Winter wheat increased 20% to 572,000 hectares.
Total production for 2023-24 is estimated at 35.8 million tonnes, up from 33.8 million tonnes last year.
Imports are expected to fall marginally in 2023-24 based on an expected larger volume of domestic wheat supply and the assumption that flour and wheat products will be produced in Canada, the FAS said.
In 2022-23, imports are expected to increase 20% to 477,000 tonnes while wheat imports for animal feed are forecast to fall more than 50% to 72,000 tonnes.
Most Canadian imports are wheat products and flour due to Canada’s restrictive varietal registration system, the FAS said. Year-to-date 88% of imports are wheat products or flour, representing the largest share in at least two decades.
Exports in 2023-24 are expected to grow on increased domestic supplies and expected production challenges elsewhere.
“The downside risks to this forecast include the potential for drought conditions that lower domestic wheat production,” the FAS said, also noting that forecasts in the report do not fully reflect recent trade disruptions at Black Sea ports.
Exports of both spring wheat and durum year-to-date so far in 2022-23 already have exceeded total exports in 2021-22, due to larger exportable supplies and the fluid movement of grain.
Russia has continued its attack on Ukraine’s grain infrastructure, destroying a grain warehouse on the Danube River in a drone attack on July 24, Reuters reported.
Since leaving the Black Sea Grain Initiative on July 17, Russia has targeted ports in Odesa, Mykolaiv and Chornomorsk, damaging grain terminals, port infrastructure and grain.
Exports from three inland ports along the Danube River have grown in importance after the end of the grain initiative. In the past year, Ukraine has increased grain shipments on this route from a few hundred thousand tonnes to 2 million annually, according to the Ukrainian Grain Association, which noted that there is potential to double that figure.
Reni-Odesa, a news website, cited a local official as saying three-grain warehouses had been destroyed in the Danube port city of Reni during a drone attack, Reuters said.
Global traders said any interruptions of inland traffic could hit international grain supplies. Another said without the Black Sea corridor and the attacks on alternative routes it “will be hard to take Ukrainian grains out of the country.”
The grain initiative was brokered in July 2022 by Turkey and the United Nations, after Russia’s invasion in February 2022 had stopped exports, causing price inflation and food insecurity. Russia in recent weeks had threatened to not extend the deal unless a series of demands, including the removal of obstacles to Russian grain and fertilizer exports, were met. Ukraine is a leading exporter of wheat, corn, barley and sunflower oil.
Russia announced on July 17 it was suspending its participation in the Black Sea Grain Initiative which for nearly a year has allowed safe passage of Ukraine grain exports via the Black Sea in the midst of a war between the two countries.
The deal, which was brokered by the United Nations and Turkey, was set to expire at 5 p.m. today. The last shipments from Ukraine departed from the Port of Odesa on July 16.
Russia invaded Ukraine on Feb. 24, 2022, and during the first five months of the conflict blockaded Ukrainian ports which prevented Ukraine, a leading exporter of wheat, corn and sunflower oil, from making shipments via the Black Sea. Grain prices during that period soared to near-record highs and food insecurity, especially in developing countries, reached critical levels. An agreement was reached on July 27, 2022, to resume Ukrainian grain exports and the deal was extended several times until Russia announced on Monday that it was suspending its participation.
Kremlin spokesman Dmitry Peskov told reporters on Monday that the Black Sea agreements are no longer valid.
“Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated,” he said.
Russia in recent weeks had threatened to not extend the deal unless a series of demands, including the removal of obstacles to Russian grain and fertilizer exports, were met. The United Nations has proposed reconnecting a Russian agricultural bank to the SWIFT international payment system in exchange for Russia extending the Black Sea Grain Initiative, according to a Reuters report. Sources told Reuters that UN Secretary-General Antonia Guterres proposed that Rosselkhozbank be reconnected to the network, which was cut off by the European Union in June 2022 following Russia’s February invasion of Ukraine.
More than 33 million tonnes of grain and other foodstuffs have been shipped from Ukrainian ports since the blockade was lifted a year ago, according to the United Nations.
When news of the suspended agreement broke in the early morning hours of July 17, Chicago Board of Trade wheat futures rose sharply to $6.86 a bushel in a matter of minutes, having closed at $6.61 on July 14. However, the price dropped steeply just before the market opened and fell to $6.55 a half-hour after the market opened, nearly a 1% decline.
Stephen Nicholson, Rabobank’s senior global strategist for Grains and Oilseeds, told World Grain that the market’s sharp decline just before the market opened was perhaps due to buyers expecting it to happen and anticipating Russia will resume the deal quickly.
“The market has been anticipating this for quite some time, so it doesn’t come as a surprise,” he said. “Also keep in mind that buyers have been anticipating this as well, so they either stocked up or made sure their alternative supply channels are functioning well. In addition, Russia has been slowing inspections for several months, so limited vessels have been coming out of the Black Sea anyway and vessel owners have been removing ships from the Black Sea over the last several weeks in anticipation of the agreement being canceled.
“However, that will only last so long until buyers will have to come back to the market and if global wheat supplies tighten due to production issues, we could very well see this market snap back.”
If the suspension of the agreement is prolonged, it remains to be seen to what extent Ukraine can maximize its ability to export grain through other means. Since the invasion in February 2022, Ukraine has increased its ability to ship grain from three inland ports on the Danube River. In the past year, Ukraine has increased grain shipments on this route from a few hundred thousand tonnes to 2 million annually, according to the Ukrainian Grain Association, which noted that there is potential to double that figure.
The country has also made efforts to boost its grain shipments by truck and rail through Europe.
However, Vladyslava Magalestska, former deputy minister of food and agriculture for Ukraine, told World Grain that even with the improvements made on the Danube River, it can’t replace the volume of grain that is shipped via the Black Sea.
“It’s a quite small amount compared to the southern ports,” she said. “It’s not enough.”
The announcement of the withdrawal came just hours after a blast knocked out Russia’s bridge to Crimea in what Moscow called a strike by Ukrainian sea drones. Russia said two civilians were killed on the road bridge, a major artery for Russian troops fighting in Ukraine. However, Russian officials said there was no link between the attack and its decision to suspend the grain deal.
While it is unclear whether Russia would now attack ships carrying agricultural and food products leaving Ukraine’s southern ports, war risk insurance premiums, which are renewed every seven days, will likely rise.
The US Department of Agriculture (USDA) in its July 12 Crop Production report forecast US 2023 winter wheat production at 1.206 billion bushels, up 6% from the June forecast of 1.136 billion bushels and up 103 million bushels, or 9%, from 1.104 billion bushels in 2022.
The USDA forecast production of spring wheat other than durum at 479 million bushels, down 3.6 million bushels, or 0.7%, from 482.2 million bushels in 2022. Durum production in 2023 was forecast at 54 million bushels, down 9.9 million bushels, or 16%, from 64 million bushels in 2022. It was the USDA’s first other spring wheat and durum estimates of the season.
US all-wheat production was forecast at 1.739 billion bushels, up 89.2 million bushels, or 5%, from 1.650 million bushels in 2022.
The US all wheat number slightly topped the range of analysts’ pre-report trade expectations of 1.637 billion to 1.730 billion bushels. The other spring wheat number was close to the average trade expectation of 477 million bushels, and the winter wheat production forecast was above analysts’ pre-report expectations that ranged from 1.1 billion to 1.187 billion bushels.
The USDA forecast winter wheat yield at 46.9 bushels per acre based on conditions as of July 1, up 2 bushels from 44.9 bushels in June but down 0.1 bushels from 47 bushels in 2022. Harvested area was forecast at 25.7 million acres, unchanged from the June Acreage report but up 9.6% from 23.5 million acres a year ago.
Production of hard red winter wheat was forecast at 577 million bushels, up 10% from 525 million bushels forecast in June and up 9% from 531 million bushels in 2022. Soft red winter wheat production was forecast at 422 million bushels, up 5% from 402 million bushels in June and up 25% from 337 million bushels last year. Soft white winter wheat production was forecast at 196 million bushels, down 1.7% from 199 million bushels in June and down 13% from 226 million bushels last year. Hard white winter was forecast at 11 million bushels, up 11% from June and up 7% from 11 million bushels harvested in 2022.
“The big news in wheat was the hard red winter number — shock-and-awe for USDA to increase it that much,” said Bill Lapp, founder and president of Advanced Economic Solutions, Omaha, Nebraska, US. “The average trade guess was 532 million bushels, so the number was way above what anybody anticipated. We had a broad-based increase in yields, including Kansas, Oklahoma and Texas. Big increases in Colorado and Nebraska with the rainfall. Montana yield up 5 bushels an acre, although that’s not yet certain, and then a little bit of an offset in South Dakota.”
Despite the increases in winter wheat production, “it’s still a tight situation,” Lapp said. “Ending stocks are forecast by the USDA to decline at the end of 2023-24. That seems reasonable.
We can’t afford to have any export demand coming at us. Even though we’ve gone 500 days of war in the Black Sea without any effect on our US exports here, the threat still looms. It’s probably gone from a 1-in-2 chance last May to a 1-in-20 chance today, but it still looms in the market, and if we have something adverse happen there and it raises world prices, tightens world stocks and ultimately leads to more exports of US wheat, that would be a bullish signal to the market.”
The USDA forecast spring wheat other than durum yield at 45.2 bushels per acre, down 1 bushel from 46.2 bushels in 2022. Harvested area was forecast at 10.6 million acres, unchanged from the June Acreage report but down 1% from 2022.
Production of hard red spring wheat was forecast at 441 million bushels, down 1.2% from 446 million bushels a year earlier. Durum yield was forecast at 37.9 bushels per acre, down 2.6 bushels from 40.5 bushels in 2022. Harvested area was forecast at 1.4 million acres, unchanged from the June Acreage report but down 9.7% from 1.6 million acres in 2022. “We still have to finish the crop up north and still have to be a little bit paranoid about what the spring wheat crop is going to ultimately become,” Lapp said. “The immediate need for protein was probably reduced by the crop production report because we’ve got more supplies of hard winter wheat and generally, or at least anecdotally, hard wheat protein levels are very elevated this year, so there are more supplies. Those are of high protein, so the need and the reliance on the spring wheat crop is not as great as it might have otherwise been.
The following are quotes from a statement “Milling – A Profession” in a 1945 Association of Operative Millers (AOM)Technical Bulletin:
“Each year, each month, almost each day the material the miller uses will have its variation. In handling this efficiently, how important is ‘the human factor’ — that ‘individual touch’ of the competent miller. We observed mills (that are) splendidly constructed and filled with the most efficient equipment. But the milling engineer wants his mill to be operated by a miller whose ‘touch’ he knows, and who will bring individual ideas and personal thought to bear upon its problems as they rise.”
The above statement holds true today, even with the significant developments in mill construction and technology since the middle of the 20th century. The hands-on adjustment of the system by the miller is still needed to optimize results even with the latest developments in equipment construction, electronics, automation, wheat, and end products analysis.
Mill systems also differ in their flowsheet, and multiple variations in equipment characteristics such as roll corrugations, sieves, and air systems, just to mention a few. The following are two suggested methods that give the miller advanced tools to analyze and optimize results from a given milling system. The methods were applied successfully in numerous commercial flour mills, of different vintage, around the world. The methods are based on testing, analysis, and creating objective adjustment targets. They could be useful in facing continuous fluctuations in the raw materials, environmental changes, and requirements to supply customers with uniform products.
To overcome the above variation in the mill, the professional miller is continuously challenged by the need to optimize yield and quality. Liu et. al. (1992), showed that besides wheat cost and production cost, flour extraction is the main contributor to the Internal Rate of Return (IRR) of the milling operation.
Mill analysis
Mill analysis is an issue that should be performed systematically for each milling unit. Farrell and Ward (1965) and Posner and Hibbs (2005) suggested the use of the Distribution Table (DT) method to analyze a flow sheet and the stock in an operational mill. It is one of the most useful tools in examining your mill flow.
Gwirtz (2019) described the procedures for setting up a DT for an existing or planned flow sheet using a Microsoft Excel spreadsheet. In Figure 1, the sequence list of stages on the left and on the top are the same, and when noting the flow of one stock from one stage to the next, a stepwise line is created.
In the final optimized DT, the filter stages should be positioned at the end of the DT. Materials to the filters from the purifiers should include just small bran particles. Materials from the pneumatic system to the filters, if optimally adjusted, should include only flour dust, which is high in protein content.
The initial marking of stocks can give an indication if a ring-around exists in the flow sheet and if some material is located on the left side of the stepwise. It must be avoided to prevent negatively affecting the flour quality as well as impacting the mill balance and therefore creating unwanted clogging.
To collect the samples of the stocks under the sifter sections, the miller starts at the end of the stepwise line and keeps sampling back to the first break, section by section. In the DT, each of the stocks collected, weighed, and corrected to kilograms per hour should be marked in the appropriate cell of the Excel spreadsheet. The sum of material from each stock should be approximately the amount of product sent to this stock. This indicates accuracy in the sample collection process.
Each stock should be checked for ash and corrected to dry, or certain moisture basis. Each cell should also show the granulation range of the stock by indicating the aperture of the sieve through which it went through, and on which it was over tailed.
Information about the materials granulation helps the miller in the process of sieves aperture adjustments. Wingfield (1974) pointed out that some changes in the mill, in relation to ash and flow, require a depth understanding and a closer look at things that are creating these deviations. With this perspective in mind, we suggested that at the bottom of the DT a table must be added in order to describe a summary of the main information obtained in each of the DT columns, such as percentage of material based on B1.
In the optimal DT, there’s a gradual decline in the total product flowing to each stage in a group (group of stages, namely breaks, reductions and middlings), and a gradual increase in cumulative ash (in stages in the above groups) toward the right end of the table. The arrangement of stocks in the DT should be used also for the layout table of all mill materials. This will allow the evaluation of the quality characteristics of the different materials flowing to each stage in the milling system.
Break release optimization
Break Release Optimization is an issue already discussed by professional millers as expressed by Jackson (1944). To a large degree, the adjustment of rolls is a subjective process based on feel and sight of the professional miller. Gwirtz (2002) showed the variability effect of human sampling on results. Today, there are different ways and ranges of suggestions regarding suggested break release adjustments used by mills around the world.
Peterson (1949) stated that the release of the first three breaks in the mill could give a good indication about the expected total flour yield, as the stocks from the first three breaks are distributed one way or another throughout the whole system. The current suggested method of optimization determination of a break release factor that is a calculated number based on the ratio of cumulative releases materials in the first three breaks and their cumulative ash values.
Figure 2 shows an Excel spreadsheet of a commercial mill break release factor (8.9). The higher the factor, the better the release settings. Data shown in the sample table in Figure 2 should be copied to an Excel spreadsheet to set up the data insertion and required calculations for the commercial mill. The collection of the material below the roller mill must be carried out with product on the right and left sides separately.
After sieving, the break release adjustment should be a maximum of 1 percentage point different for each material sieved. The sieve aperture used for the laboratory sifter should be the one closest to the opening of the industrial plansifter compartment. This sieved material must be checked for ash content (in this case on a dry basis, or on moisture basis that is defined as standard). The break release factor would be a subjective target for each milling unit, as usually determined by the head miller when defining the best adjustment for a particular wheat or wheat mix.
It is suggested that the information related to wheat characteristics and the final product’s qualities also be added to the Excel table.
Conclusion
Utilizing an analysis method of a wheat milling system by the usage of the distribution table can be beneficial to millers. Using an Excel spreadsheet provides most of the milling technology information of a milling system to the operative miller to make decisions.
The other issue experienced in optimization in adjusting multiple commercial mills is the concept of “Break Release Factor.” This approach allows the operative miller to follow and target the best adjustment for the first three breaks based on qualitative and quantitative aspects of the process.
The term “ultra-processed” is ill-defined and not deeply studied and would be of questionable value as a key criterion for dietary guidance, according to The Grain Chain, a grains industry coalition.
The group’s views on ultra-processed foods were included in a lengthy letter sent to the US Department of Health and Human Services (HHS) in response to a request for comments in connection with the first meetings of the 2025 Dietary Guidelines Advisory Committee. The Dietary Guidelines for Americans are published every five years jointly by the HHS and the US Department of Agriculture (USDA). The comment period began Jan. 18 this year and continues until Oct. 1, 2024.
o date, the DGAC has conducted two meetings — Feb. 9-10 and May 10. At first, a draft list of scientific questions was reviewed by the group.
The 17-page letter includes responses to a variety of questions posed by subcommittees of the DGAC dealing with a range of subjects associated with the healthfulness of foods. Among topics addressed in the questions was the connection between various food categories and health conditions such as obesity, cardiovascular disease, type 2 diabetes, different cancers and mental health together with a series of questions about dietary patterns during pregnancy and early childhood and current patterns and of food and nutrient intakes.
The Grain Chain voiced serious misgivings about a question looking at the relationship between how much ultra-processed foods are consumed and “growth, body composition, and risk of obesity.”
“The Grain Chain and its members express concern about the emphasis on ‘ultra-processed’ foods currently being explored by the DGAC and the Departments,” the group said. “For grains, whether wheat, rice, corn, or other grains, some form of processing is necessary to make the nutrients available and digestible. First, there is no widely accepted definition of ‘ultra-processed foods.’ Additionally, much of the scientific research focused on this topic consists mainly of observational research with varying definitions of ultra-processed foods. There is a lack of randomized controlled trials (RCTs) to determine a cause-and-effect relationship between ultra-processed foods and disease risk or outcomes.”
Remaining focused on the lack of a definition for ultra-processed foods and the lack of an expert on food processing or food manufacturing on the DGAC, the Grain Chain said reservations among guidelines’ committee members were evident about the use of the NOVA system for classifying foods that are supposedly ultra-processed. The group suggested these reservations were justified and that the NOVA system, which groups food based on “their hypothesized level of processing” is not the most appropriate or evidence-based approach to promoting nutrition and public health.
“In addition, NOVA does not consider the nutrient content, nutritional value, or health benefits of a food product,” the letter continued. “For example, ‘ultra-processed foods’ as described by NOVA Category 4 are not automatically high in fat, salt, sugar, or other food additives.”
Meanwhile, The Grain Chain made the case that the benefits of food processing should be considered by the DGAC and the Departments. Grains are a case in point.
“Food processing has led to beneficial nutrients being included in foods like dietary fibre, vitamins and minerals, as well as beneficial attributes that can reduce food waste and increase shelf life,” the letter said. “Enrichment and fortification of refined grains have made significant, long-lasting contributions to improve the health of Americans. With the addition of folic acid to the enrichment formula in grains in 1998, there has been a decrease in neural tube birth defects by one-third. Would this process of adding a vital nutrient then classify food as ‘ultra-processed’ causing potentially unintended consequences of decreased consumption of enriched grain foods, and possibly decreased intake of folic acid? This could result in negative and detrimental nutrition and public health implications, not only for folic acid but for the other nutrients that grains provide, many of which are under-consumed.”
Recommendations around the term “ultra-processed foods” could negatively impact public health and could undermine cultural and traditional food preferences.
“For example, the act of making bread or pasta is a time-honoured, authentic tradition which has been done for thousands of years,” the groups said. “During the COVID-19 pandemic, consumers found comfort in not only consuming grain foods like pasta and bread but in making them as well.”
The Grain Chain suggested the groups either jettison the subject or study it more deeply before incorporating comments about “ultra-processed foods” into its guidance.
“We strongly discourage any DGAC or DGA recommendation related to this question that uses the NOVA classification system as a key aspect for dietary guidance,” the letter said. “If the Departments are interested in pursuing this topic further, we recommend they convene a group of nutrition scientists and researchers, with expertise in food processing and manufacturing, separate from the DGAC and DGA development process, similar to how they are addressing alcohol and sustainability.”
Other highlights from the Grain Chain letter, included comments between dietary patterns consumed and:
Whole grains intake: Calling grains an “integral part” of a healthy diet and MyPlate recommendations, the groups cautioned that USDA Economic Research Service data show poor trends in whole grains consumption. Statistics gathered by the ERS indicated that the intake of whole grains between 1998 and 2018 rose only to 0.43 ounces per 1,000 calories, versus 0.4 ounces in 1998. The groups said the data highlight the value of further emphasis to increase whole grain consumption.
Relationship between intake and obesity: The group cited a 2019 perspective published in Advances in Nutrition showing a lack of meta-analyses measuring the connection between refined grains intake and body weight or adiposity. In three systematic reviews, no clear or consistent relationship was established between refined grain intake and BMI.
Cardiovascular disease risk: The group said consumption of grains has been found to reduce the risk of cardiovascular disease (CVD). Whole grains consumption at levels up to 7.5 servings per day “reduced the risk of CVD, coronary heart disease and stroke.” More recent publications “highlight a similar correlation of refined grains and the impact on cardiovascular health.”
Type 2 diabetes risk: The Grain Chain emphasized the rising prevalence of type 2 diabetes, affecting almost 10% of the US population and accounting for 25% of US health care costs. The letter called dietary fibre “one of the best nutrients to help control blood sugar, reduce the risk of prediabetes and type 2 diabetes,” noting fibre is found in a range of grain-based foods. Regarding enriched grains, the letter highlighted a 2022 article in Mayo Clinic Proceedings in which the author said dietary pattern research has not assessed the risk associated with “each particular food group (like refined grain) within each dietary pattern.”
Cancer risks: The Grain Chain said that Both whole and refined grains have been found to reduce the risk of cancer. In the case of breast cancer, a 2018 meta-analysis showed intermediate to high intake of whole grains “were associated with a modest reduction of breast cancer risk.” Better established has been the impact of whole grain consumption on the reduced risk of colon and colorectal cancer.
Dietary patterns consumed and the risk of depression and cognitive problems: “The Grain Chain said it was pleased to see the DGAC and the Departments more “closely examine food groups and dietary patterns and the impact on mood and mental health.” The groups said studies measuring the association between whole grain intake and cognition were inconclusive. However, some of the studies suggested higher intake levels of whole grains were linked to “better outcomes for mood and depression and better anxiety-related scores.”
In an analysis of food and beverage intake together with intakes of food groups and nutrients, the Grain Chain described grains as “nutrient dense” and a leading source of under-consumed nutrients, including dietary fibre, iron and foliate, while remaining an important source of other B vitamins. Citing 2009-12 NHANES (National Health and Nutrition Examination Survey) data, the letter said grain foods account for 14% of caloric intake but 23% of dietary fibre, 34% of dietary folate, 30% of iron and 14% of magnesium — “showcasing how grains help in meeting shortfall ingredients.”
The group continued, “Similarly, bread, rolls and tortillas, and ready-to-eat cereals supplied meaningful contributions of shortfall nutrients, including dietary fibre, folate, and iron, while concurrently providing minimal amounts of nutrients to limit.”
Members of the Grain Chain include the American Bakers Association, AIB International, the Cereal & Grains Association, the Independent Bakers Association, the National Association of Wheat Growers, National Wheat, the North American Millers’ Association, the National Pasta Association, the Retail Bakers of America and USA Rice.
Area planted to wheat in Canada surged to its highest level in more than two decades, one of several crops to see an uptick in planting in 2023, according to the June 2023 field crop survey from Statistics Canada released June 28.
In addition to wheat, other crops with notable increases in plantings in 2023 included canola, barley, corn for grain and soybeans. Statistics Canada said fewer acres were planted for oats, lentils and dry peas.
Favourable conditions across Western Canada allowed producers to complete seeding in a timely manner,” Statistics Canada said. “In Alberta, seeding was nearly complete by the end of May, just ahead of the average, owing to warm and dry conditions. Planting in Saskatchewan and Manitoba was slightly behind the 5- and 10-year averages because of excess moisture in some areas.
“In Eastern Canada, seeding progressed well due to favourable field conditions. Producers in Ontario and Quebec had completed most seeding by mid-May due to near-normal temperatures and dry conditions, aside from parts of eastern Ontario and western Quebec. Seeding also progressed well in Atlantic Canada, where precipitation was below normal during planting.”
Statistics Canada said 26.9 million acres of wheat were planted in 2023, up 6.7% from 2022. The increase was led by the spring wheat area, which posted an 8% increase in plantings to 19.5 million acres, followed by durum wheat, up 0.5% to 6 million acres. The agency said winter wheat grown mostly in Eastern Canada increased 20% to 1.4 million acres in 2023.
“The increase in the total wheat area may be attributable to favourable prices and strong global demand,” Statistics Canada said.
Area planted to soybeans also increased in 2023, climbing 6.8% to 5.6 million acres, Statistics Canada said. The agency said farmers in Manitoba increased their soybean plantings by nearly 41% in 2023 to 1.6 million acres, a move reflective of record yields in 2022. Meanwhile, plantings in Ontario, where more than half of Canada’s soybeans are grown, slipped 5.4% in 2023 to 2.9 million acres, Statistics Canada said.
Canadian farmers also planted more corn for grain in 2023, up 5.5% from 2022 to 3.8 million acres, and increased acreage planted to barley by 3.9%, to 7.3 million acres, the agency said.
Plantings of oats plummeted nearly 36% to 2.5 million acres, the lowest oat acreage on record.
“Producers may have opted to seed less area with oats because of high national supply that resulted from strong production in 2022,” Statistics Canada said.
Ukraine is nearly certain Russia will leave the Black Sea Grain Initiative as its renewal date approaches because Russia is developing an alternative for its ammonia exports, Reuters reported, citing a senior Ukrainian diplomat.
The United Nations and Turkey brokered the Black Sea deal in separate agreements with Russia and Ukraine in July 2022 to alleviate a global food crisis worsened by Russia’s Feb. 24, 2022, invasion of Ukraine.
The deal has allowed for the safe passage of ships carrying 32.2 million tonnes of grain and other agricultural products from three Ukrainian ports, according to the UN, and is credited with settling grain commodity markets. Ukraine has also been exporting grain via its small Danube River ports as well as through its western border with the European Union.
Russia has threatened not to extend the agreement beyond July 18 unless a series of demands, including the removal of obstacles to Russian grain and fertilizer exports, are met. The Black Sea export deal also allows for the safe export of Russian ammonia, which is used in nitrate fertilizer, but none has been shipped under the initiative.
Russia has been pushing for the resumption of ammonia shipments via a pipeline through Ukraine to the Black Sea port of Odesa, which has lain idle since last year and was damaged by an explosion earlier this month.
Olha Trofimtseva, Ukraine’s foreign ministry ambassador at large, said Russian ammonia producer Uralchem had found an alternative route and did not need to export ammonia via Odesa.
“The grain corridor. 99.9% that Russia will leave it in July,” Trofimtseva said on the Telegram messaging app on June 21, according to Reuters.
In May, Dmitry Konyaev, chief executive officer of Uralchem, said that a specialized ammonia terminal whose first construction stage is due to be completed on the Taman Peninsula in Russia by the end of this year could be a substitute for the Odesa pipeline.
In a 2021 interview with Sosland Publishing Co. President and Milling & Baking News editor Josh Sosland, Bunge Chief Executive Officer Gregory Heckman hinted that a seismic transaction, like the company’s recent acquisition of significant grain trader Viterra, could be on the horizon.
The company, he said, was transitioning from a reorganizing and rebuilding phase to an era of expansion and growth.
“We’ve earned the right to grow,” Heckman said. “We’ve put the performance together several quarters in a row for the last year and a half, and now we start to look at growth.”
The following year, Bunge entered partnerships with oil producer Chevron to crush oilseeds for renewable diesel and seed maker Corteva to tailor crops for biofuel feedstocks. But the St. Louis, Missouri, US-based company’s boldest move was announced on June 13 of this year with the acquisition of Glencore-backed Viterra, another top agribusiness company with assets in 37 countries. Already the world’s largest soybean processor, Bunge is positioned to expand its global footprint by adding Viterra’s numerous grain and oilseed origination and processing assets worldwide.
Bunge has been the smallest of the so-called “ABCD” global agribusiness giants (ADM, Bunge, Cargill, and Louis Dreyfus) for many years. However, with this merger expected to gain regulatory approval in mid-2024, Bunge would push past Louis Dreyfus, based on 2022 revenue, and closer to Cargill and ADM. Cargill posted sales of $165 billion last year, ADM $102 billion, Bunge/Viterra $67 billion, and Louis Dreyfus $59 billion.
When Heckman joined Bunge in 2019, it was a financially underperforming company that, in recent years, had been a takeover target of several competitors, including ADM and Glencore. Bunge managed to fend off those bids and remain independent. It then hired Heckman, and the rest, as they say, is history.
Soon after being hired, Heckman went on a global “listening tour,” where he met with the company’s regional leaders. Heckman said he saw the need to change the company’s management and operation structure, make it more centralized, and create a series of divestitures. 2019 Bunge transferred its Brazilian sugar and bioenergy assets to a joint venture with BP. During the next three years, it ended its investment in a renewable energy company in Iowa, sold 35 US grain elevators to Zen-Noh Grain Corp., sold a rice mill in California, and sold a refinery in the Netherlands.
Having shed those assets, Bunge turned its focus to business segments where it saw a path toward satisfactory returns. The company continued to post stellar quarterly earnings and accumulate significant cash reserves, enabling it to make critical acquisitions when the opportunity and timing were right.
The acquisition of Viterra, which has grain origination assets in North America, South America, Australia, and Europe, was significant not only for Bunge but the international grain industry as the ABCD companies, which already controlled an estimated 90% of the global grain trade before the announced merger, will increase their market share even more.
The dramatic turnaround at Bunge, which is only four years, put itself in a position to be the hunter rather than the hunted. It is one of the global grain industry’s most captivating developments in recent memory. It will be fascinating to see what other moves this agile, innovative, and ascending company makes in the coming years.
Bunge and Viterra announced on June 13 that they have agreed to a merger that will create one of the world’s largest agribusiness firms, moving it closer in size and scope to leading agribusiness giants Cargill and ADM.
As part of the $18 billion deal, which was unanimously approved by both companies’ board of directors, Viterra shareholders will receive about 65.6 million shares of Bunge stock, carrying a value of about $6.2 billion, and approximately $2 billion in cash. Bunge also will assume $9.8 billion of Viterra’s debt.
If the merger is approved by regulators, Bunge’s annual revenues will move closer to US agribusiness rival ADM, which reported sales of nearly $102 billion in 2022. Bunge and Viterra’s combined sales were more than $67 billion last year.
Following the close of the transaction, which is expected to take place in 2024, the combined company will operate as Bunge, led by Gregory Heckman, Bunge’s chief executive officer, and John Neppl, Bunge’s chief financial officer. David Mattiske, CEO of Viterra, will join the Bunge executive leadership team in the role of co-chief operating officer. The company’s headquarters will be in St. Louis, Missouri, US, while Viterra’s current headquarters in Rotterdam, Netherlands, will be an important commercial location in the combined company’s future.
Heckman, who took over as CEO of Bunge in 2019 at a time when the company was struggling as a takeover target with sagging profits, said the merger “significantly accelerates Bunge’s strategy, building on our fundamental purpose to connect farmers to consumers to deliver essential food, feed and fuel to the world.”
“Our highly complementary asset footprints will create a network that connects the world’s largest production regions to areas of fastest growing consumption, enhancing the geographical balance and adaptability of our global value chains and benefiting farmers and end-customers,” Heckman said. “With a diversified global mix of earnings across processing, handling and merchandising, and value-added products, we will increase the resiliency of our cash flow generation.
“We have great respect for the team at Viterra, which shares our commitment to excellence, and believe this combination will offer great opportunities for employees of both companies. Together, we will be positioned to increase our operational efficiency while innovating to address the pressing needs of food security, efficiency for end-customers, market access for farmers, and sustainable food, feed, and renewable fuel production.”
Viterra, which has been owned by Switzerland-based commodity trading giant Glencore PLC since 2012, operates a network of agricultural storage, processing, and transport assets in 37 countries. Bunge is a world leader in soybean processing and a leading supplier of specialty plant-based oils and fats, operating approximately 300 facilities in more than 40 countries.
Viterra reported its most successful year ever in 2022, with a record EBITDA of $2.65 billion, noting record production in its main export regions among the reasons for its strong performance.
Mattiske said the combined companies will “play a leading role in the agriculture industry’s future, developing fully traceable, sustainable supply chains and moving toward carbon-neutral operations while creating a strong growth platform for our combined business.”
“This further enables us to offer innovative solutions and open additional pathways for our customers,” he said. “We will create value for stakeholders across our network as we build on our shared purpose to connect producers and consumers around the world. We look forward to joining the Bunge team as we enter this next chapter, creating new opportunities for our people.”
Bunge said merging with Viterra augments its existing footprint with significant grain and softened handling capacity while expanding origination capabilities in key regions and crops where Bunge is underrepresented. The combined company will be diversified across the key export origins and major crush destinations.
Bunge will increase its already leading position as a soybean and corn exporter in South America, as Viterra currently ranks among Brazil’s largest exporters of those crops.
The deal will dramatically increase Bunge’s grain storage and handling capacity in Australia, a leading wheat, barley, and canola producer, and exporter. Viterra has 55 South Australia and Western Victoria storage sites and six bulk grain export terminals.
In Ukraine, the world’s top sunflower producer and largest supplier of sunflower oil, the merged companies would have three oilseed processing plants in the southern and eastern parts of the country.
The deal also will positively impact Bunge’s North American footprint. Viterra recently acquired US-based grain company Gavilon for its grain origination, storage, and food ingredients business. Heckman was CEO of Gavilon from 2008 to 2015.
Ironically, in early 2017, Viterra, then known as Glencore Agriculture, attempted a takeover of Bunge, which was then valued at $11 billion. The attempted takeover was rebuffed. Bunge is now worth more than $14 billion.
Shares of Bunge rose 39¢ to $94.18 by mid-day June 13.
Negotiations of a potential merger between agribusiness giants Bunge Ltd. and Viterra have reached a critical stage as the companies attempt to put the final touches on a deal that would combine two of the world’s largest agricultural traders, Reuters reported on June 8, citing sources familiar with the matter.
The sources told Reuters that Bunge, whose market value is about $14 billion, would pay for most of the deal with stock as well as cash and debt financing from banks. According to the sources, the combined company would be led by Gregory Heckman, chief executive officer of Bunge. Bunge, based in St. Louis, Missouri, US, is a world leader in soybean processing and a leading supplier of specialty plant-based oils and fats, operating approximately 300 facilities in more than 40 countries.
If the negotiations are successful, Viterra, which is owned by Switzerland-based commodity trading giant Glencore PLC, could sign off on the deal as early as this weekend, the sources told Reuters. Viterra, based in Rotterdam, Netherlands, operates a network of agricultural storage, processing, and transport assets in 37 countries.
Viterra reported its most successful year ever in 2022, with a record EBITDA of $2.65 billion, noting record production in its main export regions among the reasons for its strong performance. Viterra recently acquired another US-based grain company, Gavilon, for its grain origination, storage, and food ingredients business.
The discussions between Bunge and Viterra were first reported on May 25.
This is not the first time that merger rumors about the companies have surfaced. In 2017, Glencore made a takeover approach for Bunge that ultimately failed. A year later, The Wall Street Journal reported that ADM approached Bunge about a possible takeover bid, suggesting that a bidding war between ADM and Glencore could ensue, but Bunge, which at the time was struggling with sagging profits and considered vulnerable, ultimately chose to remain an independent company.
A few months later, Bunge hired Heckman as its CEO, and during the past four years, the company’s financial performance has rebounded significantly. The company, which in 2017 was valued at $11 billion, has an estimated value of $14 billion today.
If the companies agree to the merger, Bunge’s annual revenues will move closer to US agribusiness rival ADM, which reported sales of nearly $102 billion in 2022. Bunge and Viterra’s combined sales were more than $67 billion last year.
Bunge’s stock price rose sharply when the discussions between the companies were first reported, peaking at $95 per share on June 7. It closed at $91 per share on June 8.
If an agreement is reached, it would be scrutinized by antitrust regulators before being finalized.
Viterra declined to comment on the merger rumors when reached by World Grain, while Bunge did not respond to a request for comment.
As millions of liters of water poured through a breached dam in southern Ukraine, threatening regional villages and water supplies, worries about an escalation of the war between major grain exporters Russia and Ukraine sent Chicago wheat up 2% to a three-week high on Tuesday, Reuters reported.
The Russian-controlled Nova Kakhovka dam on the Dnipro River provides water to a swathe of southern Ukraine’s agricultural land, including the Russian-occupied Crimean peninsula, as well as cooling the Russian-held Zaporizhzhia nuclear plant.
The vast reservoir behind it is one of the main geographic features of southern Ukraine, 240 kilometers (150 miles) long and up to 23 kilometers (14 miles) wide. Russia and Ukraine accused each other of blowing up the dam. Neither side has offered public evidence of who was to blame.
The dam’s collapse has added to supply worries in wheat as dry weather grips part of Europe and Russia that had fueled gains in US and European futures on June 5.
“This morning, prices are sharply up again in response to the escalating situation in Ukraine, particularly the blowing up of the Kakhovka dam,” brokerage Copenhagen Merchants said in a note, according to Reuters.
The most-active wheat contract Wv1 on the Chicago Board of Trade (CBOT) was up 2.8% at $6.41¼ a bushel at 0831 GMT, after touching its highest since May 17. CBOT corn Cv1 was up 1% at $6.03½ a bushel, while soybeans Sv1 gained 0.3% to $13.54½ a bushel.
The US Department of Agriculture (USDA) rated 64% of the US corn crop in good-to-excellent condition in its weekly crop progress report on June 5, down five percentage points from a week ago and below the lowest in a range of estimates in a Reuters poll.
After the market closed on June 5, the USDA rated 62% of the soybean crop as good-to-excellent in its first 2023 condition ratings for the oilseed, below most trade expectations.
“Dryness in the US is lifting corn and soybean prices, even though it is a bit early as the crop has just been planted,” a Singapore-based trader told Reuters.
Forecasts projecting showers around mid-June in the Midwest and tepid export demand for US supplies were keeping corn and soy futures in check, according to traders who spoke with Reuters.
Heavy rain just ahead of harvest in China’s central Henan province is increasing wheat prices and raising concerns about quality, Reuters reported.
According to videos on social media and a local grain dealer, the rain is causing some of the wheat to sprout or become affected by blight.
China is expected to harvest a crop that officials estimate will be at least as large as last year’s. The outlook and a surge in imports pushed prices to a one-year low and attracted demand from animal feed producers.
But now videos are showing water lying in fields and blackened kernels of wheat, a sign of blight, Reuters said.
Wheat that is infected by Fusarium head blight cannot be fed to animals.
According to China’s Meteorological Administration, more rain is forecast for this weekend in western Henan.
Food waste is often considered any food not used for its intended purpose and has otherwise been discarded in a landfill. In 2010, the US Department of Agriculture (USDA) estimated that the amount of food waste accumulated in the United States accounted for 30% to 40% of all food produced annually, equaling approximately 133 billion pounds or $161 billion worth. This food waste contributes to greenhouse gas emissions as well as using resources that could have been used elsewhere, such as freshwater, labor, and oil. A 2009 study calculated that the amount of food waste generated had increased almost 50% from 1974 to 2003. To counteract this surge, the EPA and USDA developed an initiative to reduce waste in half by 2030. This initiative included a Food Waste Recovery Hierarchy outlining alternative uses for food waste that diverts it from landfills. One of the alternatives, preferably either reducing the source or donating it to food banks or shelters, is to convert it to animal feed. To begin approaching this problem, we must acknowledge that there are several steps along the food supply chain before it is acquired by the end consumer. The supply chain allows food to spoil or become damaged at several points, such as manufacturing, transportation, or just sitting on the shelf at the grocery store for too long. Therefore, we must look at reducing waste at multiple stages.
Based on a report by the Food Waste Reduction Alliance (2014) and a study by Dou et al. (2016), the percentage of food waste converted into animal feed decreases as it moves further down the supply chain. The manufacturing or processing sector converts 80% of its food waste to animal feed, while only about 5% is discarded to a landfill. This is evident in diets that feed mills mix every day by using soybean meal, bakery meal, dried distiller’s grains from ethanol production, brewers’ grains from the brewery process, and multiple ingredients from the meat and rendering processes such as tallow and meat, bone, and feather meals to name just a few.
However, when we consider the retail and restaurant sectors, only 12% and 1% of their total waste are converted to animal feed, while 45% and 97% are sent to landfills, respectively. This leaves a large opportunity to divert that food wastes away from disposal areas and upcycle it for greater use.
Nutritional characteristics of food waste
To understand the handling characteristics and nutritional properties of food waste, a preliminary study was conducted at Kansas State University, collecting food waste from a student dining center over the course of six weeks (Beckman et al., unpublished). This waste included any food that could not be reheated, repurposed, or donated to a local food pantry, mainly from the buffet line.
Examples of this would be salad bar fixings, pasta, scrambled eggs, desserts, and hamburger patties. They found that food waste contains as high as 70% moisture content. This poses a problem as it creates an ideal environment for rapid spoilage, mold, and bacterial growth.
On the other hand, the average ether extract content was 25%, and crude protein was 21% on a dry matter basis. Fat and protein are two of the most expensive nutrient components when formulating diets. Food waste provides more fat than conventional feedstuffs such as ground corn and soybean meal, and its crude protein is greater than corn and about half of soybean meal. Oftentimes fiber is considered a negative aspect when feeding monogastric species, and co-product ingredients typically are associated with higher concentrations of fiber. However, this food waste only contained 7% neutral detergent fiber on a dry matter basis, which is less than reported values for corn and soybean meal.
Beckman et al. also measured the nutritional value of discarded kitchen scraps. These were inedible remnants of recipe ingredients such as pepper stems, onion peels, and melon rinds. This form of food waste had 15% more moisture and more than double the amount of neutral detergent fiber than the aforementioned waste while having lower concentrations of ether extract, crude protein, and metabolizable energy. This nutrient profile suggests kitchen scraps might be more ideal for ruminant species than monogastric species.
Concerns
There can be multiple concerns when considering using food waste in diets. Most notable are the potential nutrient variability and the federal ban on feeding any mammalian protein products back to ruminant animals. The Food and Drug Administration passed the Modernization Act of 1997, banning the use of mammalian protein products to be fed back to ruminant animals in an effort to avoid bovine spongiform encephalopathy, also known as mad cow disease. With the large range of potential food that could constitute food waste, it would be very difficult to ensure that there was no trace of mammalian product present.
However, there are exemptions to this law. One of them being food that was intended for human consumption. This is because of the extensive food safety precautions set in place to certify a safe food supply for consumers as well as cooking and further processing. On the other hand, there is no guarantee that food waste does not come into contact with uncooked mammalian products. Additionally, producers and feed mills may not want to take on the risk for fear of disease or public opinion.
To consider using food waste for animal feed, moisture removal and processing of the food waste must be considered to determine if it can be considered an economically valuable option.
The other eminent concern is the variability in nutrient content. A study conducted at Kansas State University wanted to test the amount of variability by determining metabolizable energy and amino acid digestibility trials with broilers (Beckman et al., unpublished). Food waste nutrient availability was determined by feeding weekly collections of food waste to test if there were differences by time period.
All food waste collections were mixed with soybean meal and dry-extruded at a minimum of 284℃. This process created a kill step for any bacterial concern while simultaneously reducing the moisture content to allow the food waste to be shelf stable. Of the four time periods that were collected, they found that the first week of food waste had a greater protein digestibility of all amino acids than the second week. Additionally, the third- and fourth-week food waste collections were intermediate to the first and second weeks.
Lysine digestibility of the four-week-long collection periods ranged from 70.68% to 77.08% digestible, while methionine ranged from 67.42% to 76.48% digestible. Metabolizable energy was also determined in the same four-week-long collection periods, ranging from 2,259 to 3,295 kcal/kg. The third week had a greater metabolizable energy content than weeks one and two, with week four being intermediate. This shows that variability may not be as much as initially thought and that if enough food waste is composited together and monitored for nutrient content, it could create a reliable feedstuff. When comparing these thermally processed food waste products to soybean meal, they had a similar protein digestibility and energy content.
Previous research also has been conducted to determine the value of different collection streams when fed to pigs. Pigs fed food waste specifically sourced from a supermarket had a greater methionine and tryptophan digestibility compared to soybean meal, while lysine digestibility was similar to soybean meal (Fung et al., 2019). Recycling energy and nutrients from various food waste sources into swine feeding programs is constrained by the high variability and lack of data on the digestibility of energy and nutrients.
Therefore, the objectives of this study were to evaluate the digestibility of energy, amino acids, and phosphorus in thermally dried food waste sources fed to growing pigs and to compare in vivo determined digestibility values with those obtained from in vitro digestibility procedures and published prediction equations to determine the accuracy of using these nutritional evaluation methods. Pigs (n = 36; initial body weight = 16.37 ± 1.9 kg). Additionally, digestible and metabolizable energy digestibility were 5,071 and 4,922 kcal/kg on a dry matter basis, respectively, compared to corn, which only contains 3,928 and 3,875 kcal/kg, respectively.
Other forms of food waste also were determined for protein and energy digestibility in the study. One of those forms was fish waste, which contained greater energy content than corn and improved protein digestibility compared to reported values of fish meal. The last form of food waste analyzed was fruit and vegetable waste. This form of waste contained a significantly less amount of energy and decreased protein digestibility.
Ukraine said it has alternate ways of transporting grain if the Black Sea agreement is not extended on May 18, Reuters reported.
The agriculture ministry said not extending the agreement, as Russia has threatened, would not be an “apocalyptic scenario.”
The Black Sea Grain Initiative was brokered last July by the United Nations and Turkey after Russia’s invasion last February blockaded Ukrainian Black Sea ports. Russia has said it won’t extend the deal unless its demands are met to remove obstacles for its own grain and fertilizer exports.
“We do not envisage any apocalyptic scenario due to a million circumstances,” Agriculture Minister Mykola Solsky was quoted by his ministry as saying late on May 8. “Ukrainian farmers and Ukrainian traders have shown that they can do a lot, and a lot of (export) routes can be laid.”
The United Nations said that so far, nearly 30 million tonnes of grain and foodstuffs had been exported from Ukraine under the Black Sea deal, including nearly 600,000 tonnes of grain in World Food Programme vessels for aid operations in Afghanistan, Ethiopia, Kenya, Somalia, and Yemen.
Ukraine also exports grain via Danube River ports and has said previously that what is known as the Danube Cluster offers a viable alternative export route.
First-quarter earnings at Bunge Ltd. fell short of last year’s record results, dragged down in part by sluggish oilseed processing results in Argentina, Asia and Europe, which more than offset strong crush margins in North America and Brazil.
Bunge net income in the first quarter ended March 31 was $632 million, equal to $4.15 per share on the common stock, down 8.2% from $688 million, or $4.48 per share, in the first quarter of fiscal 2022. Sales totaled $15.33 billion, down 3.5% from $15.88 billion a year ago.
n an adjusted basis, earnings per share were $3.26 in the first quarter of fiscal 2023, down from $4.26 in the same period a year ago. Bunge reaffirmed its full-year adjusted EPS of at least $11, reflecting “first-quarter results and the current margin environment and forward curves.”
Following the release of the financials, shares of Bunge dipped as low as $90.04, down 1.3% from the previous day’s close of $91.15 and down 5.5% from the open on May 3.
“While the volatility in the quarter was less than we experienced last year, we’re still in a highly dynamic operating environment,” Gregory A. Heckman, chief executive officer, said during a May 3 conference call with analysts.
“Our focus is on continuing to invest in strengthening our business so that we can provide customers from farmers to end consumers with solutions to some of the most pressing challenges facing them not only today, but as we look ahead,” Heckman said. “The work we have done to improve and integrate our operational, commercial and risk management approach has enabled us to effectively manage through supply disruptions, severe weather impacts the lingering effects of the pandemic and the volatility in financial markets.”
He added that while many of the factors that drove extreme volatility during the first quarter of fiscal 2022 are still in place, markets have stabilized somewhat. As a result, Bunge’s first-quarter numbers “reflect performance that was among the best in first quarters in Bunge’s history, although down from prior year’s record results,” he said.
During the first quarter of fiscal 2023, segment EBIT within Agribusiness totaled $705 million, up narrowly from $699 million in the same period a year ago. Adjusted segment EBIT, though, was $512 million in the first quarter of fiscal 2023, down more than 18% from $627 million in the same period a year ago. Sales decreased 3.4% to $10.85 billion from $11.23 billion, while volumes fell to 18.39 million tonnes from 20.07 million tonnes a year ago.
“Agribusiness started the year off well,” said John W. Neppl, executive vice president and chief financial officer. “However, results were down from last year’s particularly strong performance. In Processing, lower results in the quarter were primarily driven by soy crush. Improved performances in North America and Brazil, which benefited from strong protein and oil demand and reduced Argentine exports were more than offset by lower results in Argentina, Europe and Asia. In Merchandising, results were lower in the quarter as margins declined from last year’s levels, which were impacted by market disruptions due to tight supplies and the war in Ukraine.”
In the Refined and Specialty Oils segment, EBIT was $233 million, up 35% from $173 million a year ago. Adjusted segment EBIT, meanwhile, was $234 million, up from $180 million a year ago. Sales were $3.89 billion, down 2.3% from $3.98 billion, while volumes were 2.15 million tonnes, down from 2.3 million tonnes.
Neppl said all regions performed well, with notable year-over-year improvements in North America and South America, both of which benefited from strong food and renewable fuel demand.
Milling segment EBIT totaled $9 million, down sharply from $50 million a year ago. Adjusted segment EBIT was $10 million, down from $51 million. Sales also were lower, falling to $515 million from $603 million. Volume decreased to 821,000 tonnes from 1.16 million tonnes.
“Lower results were driven by South America where the small Argentine wheat crop negatively impacted our local upstream merchandising,” Neppl said. “This was partially offset by stronger structural margins in our milling operations in Brazil. Results in the US were down slightly. Segment results in the prior year benefited from very strong South American origination margins during a period of high market volatility. The increase in corporate expenses in the quarter was largely driven by growth-related initiatives, offset partly by an increase in other results primarily related to Bunge Ventures.”
Looking ahead to the rest of fiscal 2023, Neppl said full-year results in Agribusiness are forecast to be down from last year with slightly higher results in Processing expected to be more than offset by lower results in Merchandising. Full-year results in Refined and Specialty Oils are expected to be up from Bunge’s prior forecast but still below last year’s record performance. Milling, meanwhile, is forecast to be down in the full year, reflecting a more challenging than expected first quarter, he said.
After three consecutive years of record-setting wheat crops in Australia, production in marketing year 2023-24 is forecast to dip 25% from the previous year to what would still be the fourth-largest total over the last 10 years, according to a Global Agricultural Information Network report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
“Favorable conditions around the time of winter grain planting across most production areas of Australia bodes well for the establishment and early growth of wheat and barley in 2023-24,” the FAS said. “However, with predicted dry conditions in the coming months, production is expected to be down from the last three years of bumper winter crops.”
The FAS sees wheat production declining to 29 million tonnes from the record 39.2 million tonnes estimated in 2022-23, mainly because of the prediction of drier weather and a retreat in prices.
Wheat harvested area is projected to decline by 2% in 2022-23 to 12.8 million hectares, which would still be the second largest planting over the last 10 years and 8% above the previous 10-year average, the report said.
“The last two years of exceptional rains and excellent commodity prices had resulted in farmers planting practically every available hectare to winter crops,” the FAS said. “This included using areas that were earmarked for fallow and many foregoing their crop rotation plans to optimize planted areas of winter crops, mainly wheat, barley and canola.
“This, combined with wheat prices falling by 18% from the recent peak in June 2022 and back toward longer-term average levels, is resulting in farmers deciding to reduce their planted area of wheat, and even more so of barley and canola.”
With a smaller expected wheat crop, the FAS forecasts a 7-million-tonne decline in exports to 23 million tonnes. Despite the 23% anticipated decline, it would still be the fifth-largest wheat export total on record.
The report noted that China is by far the largest export destination for Australian wheat, accounting for 26% of shipments (3.2 million tonnes) so far in 2022-23.
There was also good news recently regarding China and the Australian barley industry. Australia announced on April 11 that it has taken steps to attempt to reopen the Chinese market to Australian barley, which essentially has been banned by China for the past three years after its government imposed an 80% import tariff in 2020.
According to multiple media reports, the Australian government recently reached an agreement with China that Australian Foreign Minister Penny Wong said, “creates a pathway for resolution of the dispute over Australian barley.” She said China had agreed to review its duties on the grain over three or four months, and Australia temporarily will suspend its World Trade Organization dispute over the matter during that review period. The FAS projects Australia’s barley output in 2023-24 to decline by 29% to 10 million tonnes following three straight years of record-setting production.
A panel of flour millers and wheat merchandisers on April 25 forecast soft red winter wheat production in the United States in 2023 at 404.923 million bushels, up 68.297 million bushels, or 20%, from 336.626 million bushels in 2022.
The soft red winter wheat crop as projected would be the largest dating back to the 2014 crop year, when 454.531 million bushels were harvested, and the second largest since a recent production peak of 568.481 million bushels in 2013.
The panel, speaking at the 2023 spring conference of the North American Millers’ Association (NAMA), indicated production would be up in the Central, Midwest, Southeast and Mid-Atlantic states, which together more than offset a decline in the South and Southwest states.
The panellists also forecast the soft white winter wheat crop, produced largely in the Pacific Northwest, at 223.906 million bushels, down 1.353 million bushels, or 1%, from 225.259 million bushels in 2022. The panel, led by Carl Schwinke, Siemer Milling Co., Teutopolis, Illinois, US, comprised Jay McAllister, The Mennel Milling Co., Fostoria, Ohio, US; Andrew Rutter, Bartlett, a Savage Company, Kansas City, Missouri, US; Mark Rossol, The Andersons Inc., Maumee, Ohio, US; and Patrick Deppa, a senior wheat merchant with Ardent Mills, Denver, Colorado, US
The European Union (EU) is planning a package worth 100 million euros ($109.32 million) to support farmers as countries bordering Ukraine have begun to restrict imports of Ukrainian cereals that they say have depressed their domestic market prices, Reuters reported, citing a European Commission spokesperson.
Pressure has been mounting to work out an EU-wide solution after Poland, Hungary, and Slovakia announced bans on some agricultural and food imports from Ukraine while allowing transit to third-party countries. Additional Eastern Europeans also consider action.
The commission, which oversees trade policy in the 27-nation EU, has insisted that nations not take unilateral action, saying it is “crucial to coordinate and align all decisions within the EU.” The EU has been helping facilitate agricultural exports for Ukraine, which has been at war since Russia’s invasion in February 2022.
The commission will take what it described as “preventative measures” for certain categories of grain and oilseeds, particularly wheat, maize, sunflower seeds and rapeseed.
Under EU rules, the European Union also may limit the import of products into the whole or part of the bloc, while still allowing transit.
European Trade Commissioner Valdis Dombrovskis will discuss the plans with ministers from the affected countries — Bulgaria, Hungary, Poland, Romania and Slovakia — as well as with Ukrainian counterparts in a meeting scheduled for today.
Bunge Ltd., through its Bunge Loders Croklaan joint venture with IOI Corporation Berhad, has entered an agreement to acquire a newly constructed, port-based refinery from Fuji Oil New Orleans, LLC. The refinery is located in IMTT’s (International-Matex Tank Terminals) Avondale Terminal, Louisiana.
The financial terms of the agreement were not disclosed.
According to Bunge, the facility has multi-oil refining capabilities and will enable the St. Louis-based company to expand its existing customer base. It also will provide Bunge with “a scalable, complementary port-based footprint capable of connecting North American food, feed and fuel customers to global markets,” the company said.
Bunge expects to serve customers with the newly acquired capacity starting in the second quarter of 2023. Moving forward, Bunge said it plans to significantly expand the facility’s current capacity, creating new jobs.
“This acquisition delivers on our long-term strategy to expand our value-added oils business by accelerating reach across North America,” said Aaron Buettner, president of Food Solutions at Bunge. “This facility will connect with our existing footprint and enable Bunge to better serve our customers.”
Brett Caplice, vice president of refined and specialty oils in North America at Bunge, added, “We are excited for the opportunity to continue to expand and grow, working alongside great local partners such as IMTT, with who Bunge has had an 80-year partnership with storing and shipping vegetable oils in the Gulf.”
Founded in 1987, Fuji Oil New Orleans produces ingredients for the commercial food industry. The company broke ground on the processing facility in Avondale in late 2018 and completed construction in August 2021.
Australia announced on April 11 that it had taken steps to attempt to reopen the Chinese market to Australian barley, which essentially has been banned by China for the past three years after its government imposed an 80% import tariff in 2020.
According to multiple media reports, the Australian government recently reached an agreement with China that Australian Foreign Minister Penny Wong said “creates a pathway for resolution of the dispute over Australian barley.” She said China had agreed to review its duties on the grain over three or four months. During that review period, Australia will temporarily suspend its World Trade Organization dispute over the matter.
The dispute began in May 2020 when Australia called for an independent investigation into the origins of and the Chinese government’s response to the COVID-19 pandemic, which originated in Wuhan, China, in late 2019 and spread worldwide, causing millions of deaths and wrecking the global economy.
The import tariff essentially cut off the market of what had been Australia’s biggest barley customer. In the years leading up to the dispute, China had purchased more than $1 billion of barley annually from Australia.
Grains Australia said it welcomed the Australian government’s efforts to re-establish barley trade with China.
“Grains Australia applauds the efforts of industry organizations and government stakeholders to progress access to this premium-paying market for Australian barley growers,” said Richard Simonaitis, chief executive officer of Grains Australia. “This development is a win for consumers and customers in China and our Australian growers. The Australian grains industry has invested in maintaining relationships with customers in China, and we look forward to barley trade re-commencing over the coming months.”
Pat O’Shannassy, CEO of Grain Trade Australia, said the announcement was an important step forward in seeking a resolution to this issue and congratulated both the Australian and Chinese governments for their work to reach the agreement.
“China was historically a very important export market for barley from Australia over many decades, with very strong customer relationships and considerable cooperation between industry partners in plant breeding and technical support to meet China’s needs,” O’Shannassy said. “Our barley exports to China peaked at 6.3 million tonnes in 2016-17 before falling to negligible levels once the duties were imposed in 2020, so we very much hope this process over the next few months will enable our trade relationships to see exports resume.”
Since imposing the tariff, China has turned to Canada, France and Argentina for most of its barley imports.
The US Department of Agriculture’s March 31 Prospective Plantings report brought some surprises but may ultimately yield to weather as the primary final planting factor this spring.
The USDA said farmers intend to plant 91.996 million acres to corn in 2023, up 4% from last year, 87.505 million acres to soybeans, up 0.1%, and 49.855 million acres to all wheat, up 9%, including winter wheat, up 13%, durum, up 9% and spring wheat other than durum, down 2.4%. Area planted to cotton, which often can be planted to soybeans instead, was forecast down 18% from 2022.
The USDA’s corn, all wheat, winter wheat and durum forecasts were above the average of pre-report trade expectations while soybeans and spring wheat other than durum were below the average. The general “feel” of the report from analysts was that most forecasts had a bullish tone for corn, soybeans and wheat.
“The numbers themselves, I wouldn’t say it was a shocker of a report, but most certainly a bullish lean that participants weren’t anticipating,” said Brian Harris, owner of Global Risk Management. “People are shifting focus to short-term weather forecasts, and the OPEC production announcement has put a bullish tint back into the markets.”
The Organization of Petroleum Exporting Countries over the weekend of April 1-2 announced a surprise cut in crude oil production, sending crude oil prices higher and lending bullish support to soybeans (biodiesel) and corn (ethanol).
Steve Freed, vice president of grain research, ADM Investor Services, called the USDA report bullish for corn (especially nearby) and bullish for soybeans (especially new crop), noting there are “plenty of nearby beans in Brazil.” He noted that US weather and commodity funds’ net short position in wheat futures both were bullish for wheat.
Brazil is harvesting a forecast record-large soybean crop, which will keep export markets supplied nearby, but the small gain in US planted soybean area indicates tighter supplies in the 2023-24 marketing year as the world (mainly China) turns to the United States for supplies between Brazil’s harvests.
Robert Bresnahan, president of Trillateral, Inc., called the report bullish for new-crop corn, bullish for new crop soybeans and neutral for new-crop winter wheat, with weather especially a factor in the latter.
The greatest surprise in the report perhaps was the planted area for spring wheat other than durum, projected at 10.57 million acres, down 265,000 acres, or 2.4%, from 2022 and the lowest since 1972 if realized. Expected planted area in the top three other spring wheat states of North Dakota, Montana and Minnesota was down a combined 270,000 acres, partially offset by an increase of 40,000 acres in Idaho.
It should be noted that final planted area can change in the coming weeks. Forecasts in the Prospective Plantings report are based on probability surveys of about 73,000 farm operators during the first two weeks of March before any seeds are in the ground in most major growing states.
Since fertilizer, crop rotation and other agronomic factors along with pricing ideas mostly are set by the time the surveys are conducted, weather becomes the primary force that can change final planted area.
“What’s going to be important for the markets now is how weather plays out and if we do see some switching from corn to soybeans, a function of this big snowpack across a lot of the northern tier — a potential for flooding to wash out earlier corn planting,” Harris said. “The problem with that is the farmer just loves to plant corn and the technology is so good these days that if it’s not a significant issue for the northern tier then we can get all of that crop in a very short time.”
Weather delays typically are most significant for corn, which has the longest growing season. Farmers in the Upper Midwest and northern parts of the Corn Belt are dealing with cold, wet conditions. Many in the South, where planting has been underway for some time, also are facing wet conditions.
The report also revised the area planted to winter wheat, which was initially estimated in the USDA’s Jan. 12 Winter Wheat and Canola Seedings report. Winter wheat planted for harvest in 2023 was estimated at 37.505 million acres, up 13% from 2022, up 2% from the January estimate and the highest since 2015, “as growers look to capitalize on strong prices,” the USDA said. But again, weather comes into play.
The heart of the hard red winter wheat growing region, including Kansas and the surrounding states or areas of Nebraska, eastern Colorado and the Oklahoma and Texas panhandles, are in the grip of drought. In its assessment of the March 28 US Drought Monitor, the USDA said winter wheat production in drought areas were 100% in Nebraska, 91% in Kansas, 88% in Colorado and 73% in Texas (Oklahoma isn’t included in the Drought Monitor), with 47% of Kansas wheat area in exceptional drought, the most severe rating.
Citing mounting challenges to its grain export operations in Russia, Cargill will cease elevating Russian grain in the new export season that begins July 1.
In response to Russia’s Feb. 24, 2022, invasion of Ukraine, Cargill had already scaled back its business activities and stopped new investments in Russia, operating only essential food and feed facilities. The Minneapolis, Minnesota, US-based company has been one of the largest non-Russian exporters of Russian wheat.
However, as grain export-related challenges continue to mount, Cargill will stop elevating Russian grain for export in July 2023 after the completion of the 2022-2023 season,” Cargill said in a statement to World Grain. “Cargill intends to continue shipping grain from Russia to destination markets in line with our purpose to nourish the world. Cargill’s other essential food and feed activities, including starches and sweeteners, oils and fats, and animal feed are not impacted by these changes.”
Russia’s agriculture ministry said in a comment to Reuters that the development would not affect the volume of the country’s domestic grain shipments, regardless of who manages the grain export assets. Russia is the largest supplier of wheat to global markets, with its 33 million tonnes accounting for about 17% of the total in 2021, according to the US Department of Agriculture.
With less than a quarter of its land used for agriculture, South Korea relies heavily on imports, particularly wheat and corn, while producing a significant amount of rice.
Two-thirds of the nation is mountains and hills, so production agriculture is characterized by small family farms cultivating rice, with barley as the second most important crop. According to the World Bank, agriculture makes a small contribution to the country’s gross domestic product at 1.8% and employs only 4.8% of the active population. Production of rice, South Korea’s dominant crop, is estimated at 3.76 million tonnes for 2022-23, a slight decrease from the previous year due to government incentives to reduce planted acreage. The nation is expected to import 4.2 million tonnes of wheat, a slight decrease from the previous year, while corn imports are forecast to increase to 11.9 million tonnes. Because of its limited size and insufficient natural resources, the nation has focused on technology development and innovation to promote growth. As a result, it experienced one of the largest economic transformations in the last 60 years, moving from a mostly rural agricultural nation into an urban, industrialized country.
The primary industries include textile, steel, car manufacturing, shipbuilding and electronics. It is also the world’s largest producer of semiconductors. With the COVID-19 pandemic, the economy dropped 0.9% in 2020 before rebounding to growth of 4.1% in 2021 and 2.6% in 2022. According to the International Monetary Fund, GDP growth is expected to reach 2% in 2023.
Disposable incomes are growing, and the demand for products that offer convenience is growing. South Korea is one of the world’s largest net agro-food importers, with more than half of those imports destined for further processing within the country.
Trade represented 80% of GDP in 2022, according to the World Bank, and South Korea is the world’s seventh-largest exporter of goods and tenth-largest importer. South Korea has free trade agreements with at least 57 countries, representing more than 70% of the global economy.
Wheat imports
South Korea produces a small amount of wheat and is dependent on imports. Since 2000, its self-sufficiency rate for wheat has been less than 1%. Wheat was the first grain to be influenced by market opening, and eliminating the wheat procurement program in 1984 caused a significant fall in production.
Production fluctuated from less than 10,000 tonnes in 1990 to about 30,000 tonnes in the late 2000s. In 2022-23, production is estimated at 30,000 tonnes, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, up slightly from 2021-22 but significantly improved from 2020-21.
The government provides incentives to domestic wheat growers, including purchasing, breeding and marketing programs. The target for self-sufficiency in milling wheat consumption is 5% by 2025, the FAS said, increasing to 10% by 2030.
Imports for 2022-23 (including flour and pasta imports on a wheat equivalent basis) are forecast at 4.2 million tonnes, down from the estimated 4.8 million tonnes in 2021-22. Feed wheat imports are expected to move toward the previous five-year average to 1.4 million tonnes while milling wheat imports are expected to increase slightly to 2.8 million tonnes. This increase is due to stepped-up demand for food processing, such as instant noodles.
Feed wheat import estimates will depend on the availability and price of feed wheat compared with feed corn.
Flour imports for 2021-22 are estimated at 21,000 tonnes (wheat equivalent), an increase of 31% from the previous year, the FAS said, due to increased demand for imported flour in the bakery sector. France is the leading supplier, followed by Italy, the United States and Turkey. Pasta imports are expected to increase 2% to 181,000 tonnes, reflecting consumer demand.
Flour exports are expected to hold steady at around 60,000 tonnes while pasta exports are expected to continue expanding to 361,000 tonnes due to the growing popularity of Korean instant noodles.
The website of the Korea Flour Millers Industry Association (KOFMIA) names seven large milling companies. They are Deahan Flour Mills, Daesan Flour Mills, Samyang Corp., Korea Flour Mills, CJ CheilJedang, Samhwa Flour Mills and Young Nam Flour Mills.
Rice production
Rice production in 2022-23 is estimated at 3.76 million tonnes (milled basis), down from 3.85 million tonnes in the previous marketing year, the FAS said. The government is encouraging a 5.1% reduction in planted rice acreage to reduce over-production and support domestic prices.
“Given the continuously aging population in agricultural production areas, lower mechanization rates for alternative crops like wheat and soybeans, and the prevalence of specialized rice production equipment, it will be difficult to significantly increase the production of alternative crops to replace rice production,” the FAS said.
Consumption estimates for 2021-22 are 6.1% lower than the previous year as table rice consumption continues to drop. However, the forecast for processing consumption increased 1.6% in 2022-23, mainly driven by the cooked rice category.
“Due to the changing composition of household types in Korea, there is an increasing demand for processing rice used in ready-to-eat products, particularly from single-person and dual-income households with a preference for convenient homestyle meals,” the FAS said.
Domestic rice prices dropped substantially in 2022 following a high level of production and flat consumption. The wholesale price of rice in calendar year 2022 was 15% lower compared to the previous year, the FAS said, the lowest since October 2019. The government purchased a record-high 820,000 tonnes of the 2022 crop after public pressure from farmer groups demanding the purchases to support market prices.
Ending stocks for 2022-23 are estimated at 1.45 million tonnes, up 16.4% from the previous year. This is the highest level since 2016-17 when stocks reached 2 million tonnes. That year the government also made significant purchases to reduce stock levels.
Corn imports
Like wheat, corn production in South Korea is also minimal, accounting for less than 1% of total consumption. Planted area for 2022-23 is expected to remain unchanged, with production forecast at 79,000 tonnes.
Consumption is expected to increase slightly to 12 million tonnes, with 9.6 million tonnes for feed purposes and 2.4 million tonnes for food, seed and industrial purposes. Feed corn consumption is expected to increase due to anticipated recovery of availability from Ukraine, the FAS said.
“Compound feed production is forecast to reach 21.3 million tonnes in 2022-23 as livestock inventories expand to meet increased consumer demand for meat products,” the FAS said. Imports for 2022-23 are estimated at 11.9 million tonnes, up slightly from an estimate of 11.3 million tonnes in the previous year. While feed corn imports are forecast to increase 7% to 9.6 million tonnes, the war in Ukraine will have a negative impact, the FAS said, since Ukraine has been a leading supplier to South Korea.
With less than a quarter of its land used for agriculture, South Korea relies heavily on imports, particularly wheat and corn, while producing a significant amount of rice. Two-thirds of the nation is mountains and hills, so production agriculture is characterized by small family farms cultivating rice, with barley as the second most important crop. According to the World Bank, agriculture makes a small contribution to the country’s gross domestic product at 1.8% and employs only 4.8% of the active population
Production of rice, South Korea’s dominant crop, is estimated at 3.76 million tonnes for 2022-23, a slight decrease from the previous year due to government incentives to reduce planted acreage. The nation is expected to import 4.2 million tonnes of wheat, a slight decrease from the previous year, while corn imports are forecast to increase to 11.9 million tonnes.
Because of its limited size and insufficient natural resources, the nation has focused on technology development and innovation to promote growth. As a result, it experienced one of the largest economic transformations in the last 60 years, moving from a mostly rural agricultural nation into an urban, industrialized country.
The primary industries include textile, steel, car manufacturing, shipbuilding and electronics. It is also the world’s largest producer of semiconductors. With the COVID-19 pandemic, the economy dropped 0.9% in 2020 before rebounding to a growth of 4.1% in 2021 and 2.6% in 2022. According to the International Monetary Fund, GDP growth is expected to reach 2% in 2023.
Disposable incomes are growing, and the demand for products that offer convenience is growing. South Korea is one of the world’s largest net agro-food importers, with more than half of those imports destined for further processing within the country.
Trade represented 80% of GDP in 2022, according to the World Bank, and South Korea is the world’s seventh-largest exporter of goods and tenth-largest importer. South Korea has free trade agreements with at least 57 countries, representing more than 70% of the global economy.
Wheat imports
South Korea produces a small amount of wheat and is dependent on imports. Since 2000, its self-sufficiency rate for wheat has been less than 1%. Wheat was the first grain to be influenced by market opening, and eliminating the wheat procurement program in 1984 caused a significant fall in production.
Production fluctuated from less than 10,000 tonnes in 1990 to about 30,000 tonnes in the late 2000s. In 2022-23, production is estimated at 30,000 tonnes, according to a report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture, up slightly from 2021-22 but significantly improved from 2020-21.
The government provides incentives to domestic wheat growers, including purchasing, breeding and marketing programs. The target for self-sufficiency in milling wheat consumption is 5% by 2025, the FAS said, increasing to 10% by 2030.
Imports for 2022-23 (including flour and pasta imports on a wheat equivalent basis) are forecast at 4.2 million tonnes, down from the estimated 4.8 million tonnes in 2021-22. Feed wheat imports are expected to move toward the previous five-year average of 1.4 million tonnes, while milling wheat imports are expected to increase slightly to 2.8 million tonnes. This increase is due to stepped-up demand for food processing, such as instant noodles.
Feed wheat import estimates will depend on the availability and price of feed wheat compared with feed corn.
Flour imports for 2021-22 are estimated at 21,000 tonnes (wheat equivalent), an increase of 31% from the previous year, the FAS said, due to increased demand for imported flour in the bakery sector. France is the leading supplier, followed by Italy, the United States and Turkey. Pasta imports are expected to increase 2% to 181,000 tonnes, reflecting consumer demand.
Flour exports are expected to hold steady at around 60,000 tonnes, while pasta exports are expected to continue expanding to 361,000 tonnes due to the growing popularity of Korean instant noodles.
The Korea Flour Millers Industry Association (KOFMIA) website names seven large milling companies. They are Deahan Flour Mills, Daesan Flour Mills, Samyang Corp., Korea Flour Mills, CJ CheilJedang, Samhwa Flour Mills and Young Nam Flour Mills.
Rice production
The FAS said that rice production in 2022-23 is estimated at 3.76 million tonnes (milled basis), down from 3.85 million tonnes in the previous marketing year. The government is encouraging a 5.1% reduction in planted rice acreage to reduce over-production and support domestic prices.
“Given the continuously aging population in agricultural production areas, lower mechanization rates for alternative crops like wheat and soybeans, and the prevalence of specialized rice production equipment, it will be difficult to significantly increase the production of alternative crops to replace rice production,” the FAS said.
Consumption estimates for 2021-22 are 6.1% lower than the previous year as table rice consumption continues to drop. However, the forecast for processing consumption increased by 1.6% in 2022-23, mainly driven by the cooked rice category.
“Due to the changing composition of household types in Korea, there is an increasing demand for processing rice used in ready-to-eat products, particularly from single-person and dual-income households with a preference for convenient homestyle meals,” the FAS said.
Domestic rice prices dropped substantially in 2022 following high production and flat consumption. The wholesale price of rice in the calendar year 2022 was 15% lower compared to the previous year; the FAS said, the lowest since October 2019. The government purchased a record-high 820,000 tonnes of the 2022 crop after public pressure from farmer groups demanding the purchases to support market prices.
Ending stocks for 2022-23 are estimated at 1.45 million tonnes, up 16.4% from the previous year. This is the highest level since 2016-17, when stocks reached 2 million tonnes. That year the government also made significant purchases to reduce stock levels.
Corn imports
Like wheat, corn production in South Korea is also minimal, accounting for less than 1% of total consumption. Planted area for 2022-23 is expected to remain unchanged, with production forecast at 79,000 tonnes.
Consumption is expected to increase slightly to 12 million tonnes, with 9.6 million tonnes for feed purposes and 2.4 million tonnes for food, seed and industrial purposes. The FAS said that feed corn consumption is expected to increase due to the anticipated recovery of availability from Ukraine.
“Compound feed production is forecast to reach 21.3 million tonnes in 2022-23 as livestock inventories expand to meet increased consumer demand for meat products,” the FAS said. Imports for 2022-23 are estimated at 11.9 million tonnes, up slightly from an estimate of 11.3 million tonnes in the previous year. While feed corn imports are forecast to increase by 7% to 9.6 million tonnes, the war in Ukraine will have a negative impact, the FAS said, since Ukraine has been a leading supplier to South Korea.
.
A likely record Brazilian crop, with Argentina’s production problems already factored in, and subdued demand was at the top of the list of factors behind easing oilseeds prices in recent weeks.
The International Grains Council (IGC), in its Grain Market Report of March 16, said that its subindex for soybean prices had fallen by around 3% over the preceding month, “stemming from softer quotations at all origins.”
There were a number of competing factors behind a net 2% month-on-month fall in Chicago spot futures, the IGC said.
“Although expectations for a steep fall in (soybean) production in Argentina were initially supportive, this was countered by pressure from threshing of what is set to be a record Brazilian crop,” the report said. “Adding to bearish sentiment was seasonally slower international demand for US supplies and weaker markets for soya products. More recently, renewed economic and financial market worries were a negative influence.”
The IGC put US Gulf export values at $586 fob, down 2% on the month.
A month-on-month fall of nearly 5%, to $535 fob, in Brazilian export quotations (Paranagua) was “chiefly linked to the progressing harvest and an uptick in grower sales,” the IGC said. “While Up River fob prices in Argentina were also a touch lower, offers were termed nominal amid dwindling crop prospects and thin farmer sales.”
“The main reasons for pressure across the week was from the ongoing Brazilian harvest and much of Argentina’s soybean drought damage already being priced in the week before.” – AHDB
For rapeseed the IGC reported that Canadian ICE canola futures were down by 9% month-on-month “as subdued offshore demand and technical selling weighed, while fob values (Vancouver) fell, by $65, to $599.”
The IGC noted that ample supplies in Australia pressured prices, with fob Kwinana values down by $98 to $637.
Reporting on the oilseeds market on March 13, the British Agricultural and Horticultural Development Board (AHDB) explained that there had been a “week of pressure” in oilseeds the previous week, with Chicago May 2023 futures down about 1%.
“The main reasons for pressure across the week was from the ongoing Brazilian harvest and much of Argentina’s soybean drought damage already being priced in the week before (from the week commencing Feb. 27),” AHDB said. “The Brazilian soybean harvest is now estimated at 48.9% complete, but this is back from 60.5% at the same point last year.”
AHDB added, “we are approaching the point where origin will switch from US to South American for global demand.”
At the same time, AHDB noted “widespread pressure in rapeseed markets across the week,” with falls in the Paris futures as well as in delivered prices in England.
“ICE Canadian canola futures were down 6% from heavy selling by speculative funds,” AHDB said. The British organization added that Australia’s ABARES (the Australian Bureau of Agricultural and Resource Economics and Sciences) had announced in early March that Australia’s canola crop for 2022-23 was now estimated at 8.3 million tonnes, up 1 million tonnes from the last estimate, with the La Niña weather event leading to record yields.
In its Food Price Index report, published on March 3, the United Nations Food and Agriculture Organization (FAO) said vegetable oil prices were down by 3.2% in February compared with January, reaching their lowest level since the start of 2021.
“The continued weakness of the index was driven by lower world prices across the palm, soy, sunflower seed and rapeseed oils,” the FAO said. “International palm oil prices dropped for the third consecutive month in February, chiefly weighed by lingering sluggish global import demand, despite seasonally lower production from major growing regions in Southeast Asia.”
Bunge will collaborate with Corteva Agriscience and Chevron U.S.A. Inc., a subsidiary of energy giant Chevron Corp., to introduce proprietary winter canola hybrids that produce plant-based oil with a lower carbon profile, driven by opportunities in the renewable fuels sector.
The companies said the goal is to increase the availability of vegetable oil feedstocks primarily for the growing domestic renewable fuels market. The companies plan to introduce the winter canola crop into the southern United States with an intention of creating a new revenue opportunity for farmers with a sustainable crop rotation.
Rotational cover crops play a key role in our strategy to continue to develop next-generation lower carbon feedstocks,” said Gregory A. Heckman, chief executive officer of Bunge. “As a leader in oilseed processing, we are pleased to work together with Corteva and Chevron to bring this crop innovation to farmers and process it into sustainable solutions for consumers. This is another step in our commitment to creating clear paths to support the decarbonization of the industry.”
The proprietary winter canola hybrids from Corteva can be used in a double crop system, following soybeans or cotton. Bunge Chevron Ag Renewables, the joint venture between Bunge and Chevron, plans to contract with farmers to purchase the harvested winter canola crop and use the oil to produce renewable fuel.
In addition to providing farmers with a new income opportunity, adding winter canola to a rotation provides a cover crop that can enhance soil health by holding more nutrients, water, and carbon in the soil. A pilot program is expected to be conducted in the 2022-23 growing season to fine-tune best management practices.
“We’re pleased to work with Bunge and Chevron to bring a new option in the southern US that will deliver solutions for farmers to increase productivity and sustainability on their acres, as well as contribute to the need for renewable and less carbon-intensive fuel options,” said Chuck Magro, chief executive officer, Corteva Agriscience, a global seed, crop protection, and digital products and services firm.
The companies plan to continue to explore opportunities to sustainably improve farming options and produce lower-carbon renewable fuels.“Chevron is committed to advancing a lower-carbon energy future, and we recognize renewable fuels like biodiesel and renewable diesel are a solution to do that,” said Kevin Lucke, president of Chevron Renewable Energy Group. “Feedstock innovation is a critical element of the growth of the renewable fuels industry, and innovative solutions like double-crop winter canola not only benefit the lower-carbon future but also benefit farmers, consumers and the environment.”
With global wheat supplies tightening due to climate change and the war between Russia and Ukraine, two of the world’s biggest wheat producers and exporters, finding ways to maximize wheat yields and produce seed that is resistant to drought and disease has never been more important.
That’s why BASF’s announcement on Feb. 28 that it would cease its activities in hybrid wheat seed development in North America was met with shock and disappointment by US and Canadian wheat growers and processors.
BASF Plant Science, a subsidiary of the Germany-based chemical company BASF, in recent years had been working to develop hybrid wheat seeds in various parts of the world, including North America. But BASF last month said it would be cutting 2,600 jobs due to rising costs and weak earnings, including its North American hybrid wheat developers. However, it noted that it would continue its development programs in Europe and other countries.
In a letter to stakeholders, BASF said, “despite the tremendous efforts of our team of experts, the results of our North American trials have not achieved the development goals we set to meet the needs of growers in Canada and the United States.”
Although it lagged behind China-based rival Syngenta in terms of getting the seed to market, BASF was seen a key player in the effort to develop hybrid wheat seed. The announcement caught BASF’s stakeholders and even its competitors off guard.
Jane DeMarchi, president of the North American Millers’ Association (NAMA), told World Grain that the unexpected news was disappointing to NAMA members “who welcome any investment in wheat research and variety development.”
“Hybrid wheat represents a technological breakthrough for wheat,” she said. “Potentially, it can offer higher yields and better stability and disease resistance, among other things. It is a complicated technology in the sense that creating this seed economically has been a barrier. It’s been tried several times in the US, but companies have struggled to figure out how to do it economically.”
DeMarchi added that those in the BASF hybrid program were “very active participants in the Wheat Quality Council in terms of giving the millers and growers an opportunity to preview and test their varieties.”
“That’s so important for the wheat value chain and we urge any private company investing in wheat development to participate in that testing program,” she said. “They were really doing all the right things. They had terrific people in their program, and I think everybody is sad for those folks.”
Steve Mercer, a spokesperson with US Wheat Associates, said national wheat organizations were aware of the BASF announcement and look forward to learning more from the company about the decision to stop hybrid wheat development work in the United States.
The good news for those in the wheat value chain is that Syngenta remains in the North America marketplace and is closer to having a commercially viable product than its competitors.
Paul Morano, head of North American cereals for Syngenta, told World Grain that the competition with BASF and other companies working to develop hybrid wheat varieties, such as Bayer and Corteva, helped drive the sector forward.
“It sounds ridiculous to say this, but we’d prefer someone else be in that market, too, because it gives you people you can bounce things off of and gives confidence to the market that this is a viable product. We believe strongly that it is,” Morano said.
Although Syngenta is the clear leader in the race to develop and market a hybrid wheat seed in North America, Morano noted that producing a quality seed that is affordable for farmers and profitable for the seed company takes many years of trial and error and considerable patience. Syngenta has been working on developing hybrid wheat since 2010, and some of its researchers have for much longer than that.
Syngenta launched its hybrid wheat product last year into the marketplace, making very small quantities of seed available through its dealers in the Dakotas and Minnesota. This year, he said about 5,000 acres of Syngenta hybrid spring wheat has been planted in that region, and the plan is to expand the program on a much larger scale to the hard red winter wheat growers in the US Plains states in the coming years.
Morano explained that hybrid wheat development involves “sterilizing” the female plants and then pollinating them using fertile male plants. This process allows breeders to choose the best traits from the male and female plants to produce a seed that compares favourably to conventional varieties, except for cost. It also is seen by some as a safer alternative to genetically modified wheat seed, which is also being experimented with as an alternative to conventional varieties.
But Morano, a former wheat farmer from eastern Kansas who has worked for Syngenta for 20 years, stressed that controlled cross-pollination is difficult to execute.
“When you have to rely on pollen floating through the air from another source to get 100% pollination, the timing of all those things makes it extremely difficult,” he said. “That’s why it takes a while. Roundup Ready (genetically modified) soybeans took the market by storm in two years. This is not that type of product. It involves a much longer process.”
He said Syngenta’s success in the conventional wheat seed market in North America — it holds a 40% market share in conventional hard red spring wheat in the US Northern Plains and 30% market share of the hard red winter wheat market in the United States — has helped provide funding for its hybrid program.
Morano estimated that it might take 20 years to get to the point where 30% to 40% of the roughly 40 million acres of wheat in the United States are hybrid varieties. To achieve that goal, he said hybrid varieties would have to feature “minimally 10% to 12% better yield than conventional wheat” to make it cost-effective for the producer.
“We’re at the cusp of that,” he said. “We can make that. Hybrid wheat is very consistent in terms of yield. It doesn’t vary. When it gets stressed, it responds in a positive manner. Obviously, to get to where we want to get to, we need to be competitive with other crops. We’re not going to go into central Iowa and take away corn and soybean acres. But if you look at a place like North Dakota, which now grows a lot of soybeans and corn, can we be competitive on that acre on a rotational basis? We think we can.”
BASF said it plans to continue its hybrid wheat seed development program in Europe, where wheat is viewed as a higher-value grain. Syngenta and Bayer also have development programs in that market.
Morano said Europe is a very attractive market for hybrid wheat developers because it is the predominant grain crop, used much more in animal feed than in the United States, and most of the wheat grown on the continent is higher-yielding soft wheat. In the United States, lower-yielding hard wheat is the dominant variety.
“It is the leading crop in Europe,” Morano said. “You don’t have to stand behind the corn and soybean guys over there (like in the United States). The wheat yields there are, for the most part, so much higher than in the US. The yields are much more like we see in the Pacific Northwest. They’re growing 100- to 150-bushel-per-acre wheat day in and day out.”
While hybrid wheat varieties are coveted by growers for their potential to produce consistently higher yields and their drought- and disease-resistant traits, those further down the wheat value chain, including millers and bakers, are most interested in wheat quality that allows them to produce superior flour and baked foods.
“We work with flour millers a lot,” he said. “We give them samples and do our own quality testing as we have for years on our conventional wheat. These hybrids coming out now have been through six or seven different types of quality testing every year. We’re finding that the quality of the end product hasn’t gone down at all, and we’ve seen little bits of improvement in quality.
“This is every bit as good as the conventional wheat varieties that are out there today. We have seen no dips in quality. There are no red-flag issues. They are saying it mills and bakes just like anything else we have on the market.”
Wheat and barley production in Kazakhstan improved in 2022-23, with both experiencing a 39% increase from the previous year, according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
Wheat production is estimated at 16.4 million tonnes, the highest since 2017-18, with improved weather and precipitation. Barley production is estimated at 3.3 million tonnes.
Kazakhstan exported 3.7 million tonnes of wheat in 2022-23, a 31% increase from the previous year. Uzbekistan, Afghanistan, and Tajikistan remained the top three Kazakhstani wheat and wheat flour buyers.
Based on the increase in wheat production and strong demand from traditional export markets, the USDA estimates wheat and wheat flour exports for 2022-23 to be 9.5 million tonnes, which is a 7% increase from the previous year.
The USDA estimates barley exports to be 900,000 tonnes, doubling last year’s export volume. This estimated increase is due to higher production and trader expectations that they will regain market share to Iran, Uzbekistan and China.
Entering its second year of the war, Ukraine’s grain exports have tumbled to 31.8 million tonnes, down 27% so far for the 2022-23 season, as Russia’s invasion grinds down agricultural production and infrastructure that previously contributed substantially to world markets, Reuters reported, citing Feb. 27 agricultural ministry data.
The volume so far in the July to June season included about 11.2 million tonnes of wheat, 18 million tonnes of corn and about 2 million tonnes of barley. Exports at the same stage of the previous season were almost 43.5 million tonnes. The ministry said grain exports so far in February had reached 4.7 million tonnes as of Feb. 27, down from 5.04 million tonnes in the same period last year.
After an almost six-month blockade caused by Russia’s Feb. 24, 2022, invasion of Ukraine, three Ukrainian Black Sea ports were unblocked at the end of July by the Black Sea Grain Initiative, a deal between Russia and Ukraine and brokered by the United Nations and Turkey.
However, Ukraine has been adamant in accusing Russia of delaying inspections of ships carrying Ukrainian agricultural goods, leading to reduced shipments and financial losses. Ukraine appealed this month to the UN and Turkey to press Russia to bring inspections up to speed.
A major global grain grower and exporter, Ukraine’s grain output will likely drop to about 54 million tonnes in clean weight in the 2022 calendar year, down from a record 86 million tonnes in 2021.
Russia, the world’s largest wheat exporter, is considering abolishing its grain export quota..
Russia, which usually sets up grain export quotas from mid-February through the end of June to ensure its domestic needs, has produced its largest grain crop ever in 2022 at an estimated 150 million tonnes, including more than 90 million tonnes of wheat, which also would be a record.
Russia, which has been at war with Ukraine after invading the neighboring country in late February, has had trouble exporting its grain crop, in part due to sanctions imposed by NATO countries in response to the invasion.
“The harvest is big, so, in principle, probably, yes, there are no prerequisites to impose any quantitative restrictions at the moment,” Viktoria Abramchenko, Russia’s deputy prime minister, told Interfax.
With 52% of global consumers identifying as flexitarians (incorporating both animal-based and plant-based proteins into their diet), according to a Mintel market research report, oilseeds and legume processors stand to benefit from this shift toward alternative protein sources. Of those consumers, nearly two-thirds are defining their eating styles as “trying to consume more plant-based foods,” leading to expanded protein options and fueling overall demand for plant-based proteins.
A recent series of investments made by the three largest US agribusiness companies indicates they’re increasingly confident in the future of plant-based proteins. ADM, Bunge and Cargill (known as the ABCs of agribusiness) during the past two years have announced mergers, joint ventures, greenfield construction projects, and acquisitions and expansions of existing processing facilities as they position themselves to meet burgeoning consumer demand for plant-based protein for both food and feed uses.
The companies agree that the demand growth for plant-based protein will not be a short-lived fad like, for example, the low-carbohydrate Atkins Diet in the early 2000s, but a long-lasting evolution in how people consume protein.
“The global transition to plant-forward eating is more than a trend; it’s a lifestyle,” Allyson Fish, ADM’s president of Global Plant and Alternative Proteins, told World Grain.
Mark Stavro, senior director of global marketing and product management for Bunge, cited several reasons why interest in plant-based protein has surged and likely will have staying power. Not only is it viewed by many as a healthier alternative to meat-based protein, it also is seen as better for environmental sustainability, an issue that is of great importance to younger generations.
“In Generation Z, which is people 25 years old and below, the proportion of vegan diets and vegetarianism is very high,” Stavro told World Grain. “Looking at how different this generation is from other generations, whether it’s baby boomers, Generation X or millennials, their interest and dedication to sustainability and the environment is much higher. At the same time, they’re very open to trying different foods, and that’s one of the top drivers for plant-based eating. With all of those factors together, I believe plant-based eating when that generation reaches 30 to 35 years will be a fundamental piece of how they live.”
Kaleb Belzer, Bunge’s vice president and general manager, protein ingredients, told World Grain that double-digit growth for plant-based protein products is taking place in a number of developed economies in Europe, including Germany, the Netherlands and the United Kingdom, as well as the United States.
“Curiously, Brazil is another place that’s seeing significant growth,” Belzer said, noting that JBS, the world’s largest meat company, is investing in a plant protein product called Incrivel (Incredible) soy-based burgers that is popular among Brazilians. “Surprisingly, the proportion of vegetarians or vegans in Brazil compared to the US is double or more than double.
“Asia is another growth area for a lot of different reasons. Food-grade soybeans for tofu or SPC isolates are in high demand.”
Ironically, one of the biggest consumers of plant-based protein is the meat industry. The beef industry uses plant protein as an extender in its products, while demand is higher than ever in the growing poultry, pork and aquaculture industries.
“Overall, when we look at future growth, for us it’s not making a huge bet on plant-based meat,” Belzer said. “That’s not what we’re doing. What we’re saying is what are feed compounder meat producing customers requiring? They require functional plant-based concentrates for their feed applications. And what are the big (consumer packaged goods) companies requiring? They require sophisticated plant-based proteins for food applications and pet food applications.”
He noted that while demand for poultry, pork and fish is on the rise, beef consumption has leveled off in recent years in the United States.
“In 2000, when the US population was about 287 million, about 27 billion pounds of beef was consumed,” Belzer said. “By 2022, we added another 50 million people, but the total disappearance of beef was exactly the same. It’s partly a function of price and partly a function of people’s perspective of meat and health implications.”
Bunge enters the arena
Unlike ADM, which has been involved in the plant protein business for more than 75 years and processes over 30 plant-based ingredients sources, Bunge only recently has added plant-based protein to its portfolio and almost exclusively uses soybeans as its raw material.
Gregory Heckman, who became Bunge’s chief executive officer in 2018 and has lifted the company from a takeover target to a highly profitable enterprise, told industry analysts in 2021 that plant-based protein would be a priority for Bunge moving forward.
“We’re already enjoying that growth the last few years with our specialty lipids business as we provide a lot of the products that give the mouthfeel and the bite and the taste in those plant protein-based products that people love,” Heckman said. “And now we’re working with our customers backwards and to be a supplier of the plant protein. And that’s something you’ll see us develop over the next couple of years. That won’t be an overnight flip the switch, but we’re excited about that demand that is in place, and our customers are asking us to get involved. We’ve been a commodity supplier there before, and now it’s time to be a value-added supplier.”
Belzer said the company’s vast soybean processing capacity puts it in a great position to make an impact in plant-based proteins.
“We decided we should be playing in this space because Bunge is the world’s largest oilseed processor by volume,” Belzer told World Grain.
While Bunge has increased soybean processing capacity at several of its facilities in recent years to meet the growing demand for plant-based proteins and other soy products, its first move was to invest $10 million at its Creative Solutions Center to address product quality and taste issues for its customers.
More recently, Bunge announced it was investing $550 million to build a fully integrated soy protein concentrate and texture soybean concentrate facility adjacent to its soybean processing plant in Morristown, Indiana, US.
The facility is expected to add significant scale, efficiencies and non-GMO capability to the company’s existing US-based conventional SPC and TSPC operation in Bellevue, Ohio, US.
While other companies are more aggressively pursuing the use of non-soy raw materials to produce plant-based protein, Belzer said Bunge has remained committed to soybeans as its primary feedstock for plant-based protein production.
“What we’ve seen is the winning formulations and applications are soy-based because it can deliver in the areas of price, taste, quality and functionality,” he said.
“Players that bill themselves as soy-free are struggling a little bit to be relevant with consumers because they can’t hit the sweet spot of taste and price. If you don’t have a good-tasting product, nobody is going to eat it no matter how committed they are to flexitarianism. If you can’t hit a price point that allows you to indulge in a product occasionally, you’re not going to win either.”
ADM’s expansion strategy
With a long history in the plant-based protein space, ADM has accelerated its commitment to the sector with a series of investments and acquisitions.
In 2021, ADM acquired Sojaprotein, a leading European provider of non-GMO human nutrition protein solutions. That was followed in 2022 with a $300 million investment to significantly expand protein production in Decatur, Illinois, US, as well as opening a new Protein Innovation Center in Decatur, which will include labs, test kitchens and pilot-scale production capabilities to drive innovation.
Fish told World Grain the facility will give the company “greater ability to collaborate with our customers in developing custom solutions that will meet the needs of consumers in the near future and beyond.”
“We are particularly focused on expanding our capabilities in Europe to meet the escalating demand for plant-based and alternative offerings,” Fish said. “The EU market is currently the largest for meat alternative products, with an anticipated CAGR of 11.8% between 2021 and 2027.”
ADM also recently partnered with Benson Hill, a US-based food technology company. Fish said the partnership intends to “scale availability of ultra-high protein, non-GMO soy ingredients that can require less processing and deliver considerable water and carbon sustainability benefits.”
Cargill’s bet on pea-based protein
Like ADM, Cargill has decades of experience in the plant-based protein sector and uses a wide variety of raw materials, including oilseeds and legumes, in the production process.
Puris Proteins, a joint venture between Cargill and Puris, in 2021 opened a facility in Dawson, Minnesota, US, that more than doubled production of pea-based protein. It enables the companies to supply roughly half of North America’s pea protein.
“Our investment allows Cargill, along with our partner Puris, to remain at the forefront of the plant-based protein revolution by meeting the growing demand for great tasting, sustainable and label-friendly pea protein for both current and prospective customers in North America and across the world,” said Mike Wagner, managing director for Cargill’s Starches, Sweeteners and Texturizers business in North America.
Former Cargill Chairman and CEO David MacLennan, who retired on Dec. 31, 2022, predicted that the plant-based protein sector would flourish in the coming years at the expense of the beef industry.
“Our analysis is that in three to four years, plant-based will be perhaps 10% of the market,” MacLennan said during a speech at the 2021 NGFA Convention. “We’re a large beef producer, which is a big part of our portfolio. So, there’s some cannibalization that will occur.”
While still accounting for only a modest share of grain-based foods in the United States, the market for organic products has been highly dynamic and must be nurtured and protected. Amid costly episodes of fraud over the last decade and longer, the need for the US Department of Agriculture to strengthen the National Organic Program (NOP) had become apparent.
A final rule published in the Federal Register in January — “National Organic Program, Strengthening Organic Enforcement” — highlights tension between the value of steps to boost confidence that products so labeled are organic with a need to ensure regulations are not excessively onerous for growers, processors or food manufacturers.
The USDA said the market for organic products is growing, but data suggest the category is no runaway train. Gains in the wheat market have been hard fought.
Organic wheat accounts for a minuscule share of total wheat production. The 2021 Certified Organic Survey published by the USDA in December 2022 showed 12.5 million bushels of organic wheat were harvested in 2021, down from 14.2 million bushels in 2019. Harvested area fell sharply, to 377,000 acres from 451,000. The comparison likely was skewed by overall wheat production problems in the 2021 growing season. Organic wheat accounted for 0.76% of all US wheat production in 2021, a modest increase from 0.73% in 2019. While the growth in US production has not been rapid, several leading grain-based foods companies have invested heavily in their ability to serve the market for organic foods.
US sales of organic products reached $21 billion in 2021, according to the USDA, which warned that federal investigations had uncovered episodes of fake organic grain and oilseed claims leading to tens of millions of dollars in fraudulent sales. Because there is no way to definitively prove grains are organic, fraudulent schemes may go undetected for years. For instance, Randall J. Constant, a grower who lived in Chillicothe, Missouri, US, from 2010 to 2017 led a criminal ring that totaled at least $142 million in fraudulent grains sales. Similar episodes were cited by the USDA involving producers in Nebraska, North Dakota and Minnesota, as well as imported grains.
In addition to depressing the value of organic products and disadvantaging producers of organic grains and oilseeds, the prevalence of fraud poses a risk of undermining reputations up and down the organic supply chain, including certifications, principally the one offered by the USDA. Consumers may be reluctant to pay premium prices for organic products if they don’t have confidence in the integrity of the claims.
Key elements in the USDA regulation updates include steps to “reduce the types of uncertified entities in the organic supply chain that operate without USDA oversight — including importers, certain brokers, and traders of organic products” and a requirement for the use of NOP Import Certificates for all organic products entering the United States.
While the latter requirement addresses a major concern over the veracity of organic claims regarding grain products imported into the United States from all over the world, it also raises fears among millers and others who rely on robust trade in organic grains, especially across North America. Canada in 2020 grew organic wheat on 450,000 acres, the same as in the United States in 2019.
The USDA said comments in response to its initial rulemaking included several citing difficulties the Import Certificate requirements would cause for high-volume, high-frequency imports, especially those from Canada and Mexico. The Department granted a request giving certifying agents the authority to determine whether it will issue an NOP Import Certificate for a specific shipment, or for a specific timeframe (e.g., weekly, monthly, season).
Even if organic wheat production remains modest, observers of the baking industry have witnessed the power of Dave’s Killer Bread, an organic product line, to inject energy into the grain-based foods market. The need to build confidence in the organic market while making the organic supply chain more, not less, efficient, is only increasing.
Brazil is set to have another record-breaking grain harvest in 2022-23, with wheat production estimated at 9.6 million tonnes and corn production at 125.5 million tonnes, according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
If weather conditions remain favourable, Brazil’s wheat harvest will reach an all-time high.
“This increase in production is justified by the improvement of existing agricultural production systems, with wheat in crop rotation, better use of areas that were traditionally idle in winter, and investment in technologies, including new resistant cultivars adapted to different climates and diseases,” the USDA said.
If Brazil continues to see wheat production grow by 10% per year, it could reach 20 million tonnes of production by 2030.
“With domestic consumption estimated at 12 million to 14 million tonnes, Brazil would shift from an importer to an exporter of wheat to the world,” the USDA said.
Brazil is currently the 10th largest global wheat importer, with more than 90% of its imports coming in tax-free from its Mercosur neighbors, Argentina, Uruguay and Paraguay.
For 2022-23, imports are estimated at 5.6 million tonnes on a wheat grain equivalent basis. Exports are estimated at 3.5 million tonnes.
Corn planted area is estimated at 22.5 million hectares, an increase of 3.7% from last season. The USDA said that high demand for corn domestically and internationally has increased sowing.
Exports are estimated at 46.5 million tonnes, as Brazil has picked up different markets. The USDA said that China started importing Brazilian corn in November and is already the 11th largest importer. Some analysts believe China could import 18 million tonnes of corn from Brazil in 2023.
Corn production in China for 2022-23 is trending higher at 277.2 million tonnes, up 1.7%, or 4.6 million, from last year, and feed mills have resumed mixing more corn amid higher wheat and sorghum prices, according to a Global Agricultural Information Network report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture.
Corn production was revised slightly by the USDA based on National Bureau of Statistics data indicating a better harvest in the North China Plain, which offset smaller yields in the northeast.
Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives. At the same time, Brazilian corn is now available and priced competitively with domestic corn.
China’s 2022-23 grains for feed and residual use is forecast to remain stable at 279.1 million tonnes, down 1.2 million tonnes from 2021-22, while the forecast for overall feed production should increase slightly.
“Feed mills report more corn in rations each month since July 2022,” FAS Post Beijing noted. “Compound feed was estimated an average 35% corn in the first 11 months of 2022, 4% higher than 2021, but still dramatically lower than the more traditional 50% to 55% in 2019 and earlier.”
The FAS noted that wheat production in 2022-23 was adjusted to 137.7 million tonnes, up 0.6%, or 800,000 tonnes, from last year, owing to better yields. Wheat imports are forecast at 9.5 million tonnes, unchanged from the USDA’s January estimate and down only slightly from 9.568 million tonnes in 2021-22. China reportedly has aggressively purchased Australian and French wheat at cheap prices.
Sorghum imports in 2022-23 are forecast at 5.6 million tonnes, down significantly from 2021-22’s 10.99 million tonnes with a smaller US crop and high prices the main culprits.
Rice imports forecast for 2022-23 have been lowered to 5.2 million tonnes, 300,000 tonnes lower than the the FAS September estimate on lower Indian and Pakistan rice output and India’s broken rice export ban that was issued in September.
The forecast for 2022-23 soft wheat exports from France outside the European Union has continued to climb to 10.6 million tonnes, 21% more than last year, on strong demand from North Africa, Reuters reported, citing farm office FranceAgriMer.
France, the EU’s biggest producer of wheat, in December had been expected to ship 10.3 million tonnes of the grain, which had been an increase of 300,000 tonnes from the previous month, according to FranceAgriMer.
“What is clear is that demand is still significant from the Maghreb, particularly Morocco,” Paul Le Bideau, deputy head of FranceAgriMer’s grains unit, told reporters.
The competitiveness of French wheat in North African markets had been helped by rising insurance costs for shipping supplies from Russia, the world’s biggest wheat exporter, Le Bideau noted.
Market participants consulted by FranceAgriMer had estimates for French non-EU soft wheat exports ranging between 10 million and 11 million tonnes, he said, adding there was still much uncertainty over the impact of Russia’s ongoing war in Ukraine.
FranceAgriMer trimmed its outlook for soft wheat exports within the EU to 6.64 million tonnes from 6.73 million. It reduced its projection of French soft wheat stocks at the end of the 2022-23 season on June 30 to 2.33 million tonnes, from 2.55 million projected in December.
For barley, the office raised its 2022-23 ending stocks outlook to 1.97 million tonnes from 1.85 million previously on reduced expectations for feed use and exports due to uncompetitive barley prices.
For maize, forecast stocks at the end of 2022-23 were raised slightly, to 2.3 million tonnes from 2.23 million, as a reduced outlook for intra-EU exports and upward revisions to harvest supply and imports outweighed an increased forecast for feed use.
Wheat flour production by U.S. flour mills in 2019 totaled 422.277 million cwts, down 4.594 million cwts, or 1.1%, from the record 426.871 million cwts in 2018 and the smallest aggregate in seven years, according to the National Agricultural Statistics Service (NASS) of the U.S. Department of Agriculture.
Production in 2019 was down 4.122 million cwts, or 1%, from 426.399 million in 2017, the third largest year. Production of 422.277 million cwts in 2019 ranked seventh in annual total production and was only slightly greater than 2000, which was eighth, at 421.270 million cwts.
The 24-hour capacity of U.S. flour mills for the fourth quarter was estimated at 1,649,750 cwts, down from the record 1,674,210 in the third quarter but up from 1,642,331 a year ago.
Based on the NASS data, mills operated at an average of 83.2% of six-day capacity in 2019, down from 84.7% in the prior year. It was the lowest in recent years. Calculating utilization rates based on fourth-quarter capacity, 2019 grind was 83.4%, down from 84.3% in 2018.
Wheat grind in 2019 totalled 912.609 million, down 0.6% from 918.373 million in 2018. The high was 944.868 million in 2000. Millfeed production in 2019 aggregated 6,485,291 tons, a gain of 0.4% over 6,458,017 in 2018. The record was 7,374,115 in 2000.
NASS statistics have been published for 22 consecutive quarters and five years (2015-19). While 2015-19 data were compiled by NASS, only the third and fourth quarters of 2014 came from NASS. January-June data of that year originated from a North American Millers’ Association panel of the largest U.S. mills and were subsequently interpolated by Milling & Baking News, a sister publication of World Grain, to make the data comparable with earlier statistics compiled by the U.S. Census Bureau.
NASS also estimated 2019 semolina output at 31.532 million cwts, down 1.3% from 31.951 million in 2018. It was 31.799 million in 2017. Production fell well short of 32.930 million cwts in 2011, as interpolated by Milling & Baking News but also was smaller than 32.747 million cwts in 2010 and 32.804 million in 2007 when the Census still issued annual data.
Flour production ex-semolina in 2019 was estimated at 390.745 million cwts, down 1.1% from a record 394.920 million in 2018.
According to NASS, October-December flour output totalled 107.920 million cwts, up 1% from 106.828 million in the third quarter and up 0.2% from 107.718 million a year ago. Mills operated at 85% of capacity in the fourth quarter, up from 82.9% in the third quarter but down slightly from 85.2% a year ago.
Higher prices and better weather could help India’s wheat production take a leap forward with farmers planting high-yielding varieties in a wider area, Reuters reported, citing scientists and traders in the world’s second-largest grower of the grain.
India suffered a historic heat wave last year during a crucial time for wheat development that stunted production. Higher wheat output in 2023 could encourage India to consider lifting a ban on exports of the staple and help ease concerns over persistently high inflation in food prices.
“This year production could rise to 112 million tonnes because of the higher area and favorable weather,” Gyanendra Singh, director at the Indian Institute of Wheat and Barley Research, told Reuters.
India, also the world’s second-biggest consumer of wheat, banned exports in May 2022 after a sharp, sudden rise in temperatures clipped output, even as exports picked up to meet the global shortfall triggered by Russia’s invasion of Ukraine on Feb. 24.
India’s wheat output fell to 106.84 million tonnes in 2022 from 109.59 million tonnes a year earlier, the government estimates. The US Department of Agriculture’s Foreign Agricultural Service has pegged production at 100 million tonnes, while traders estimated output fell to as low as 95 million tonnes.
This year, the weather in key wheat-producing states has been favorable with temperatures hovering below normal levels, said Singh, and farmers have planted newer high-yielding wheat varieties that are expected to be more resilient in the face of climate change.Farmers have plantedwheat on 33.22 million hectares since Oct. 1, when the current sowing season began, up nearly 1% from a year earlier. India plants wheat in October and November and harvests starting in March.
Ukraine sees faster ship inspections, rather than opening additional ports, as the key to increasing its exports under the Black Sea Grain Initiative, Reuters reported, citing a senior Ukrainian government official.
A major wheat, corn and sunflower oil producer, Ukraine has been unable to reach its export potential since Russia invaded the country on Feb. 24 and began blockading its seaports. Three leading Black Sea ports were freed up in July under a deal brokered by the United Nations and Turkey and signed by Ukraine and Russia. Under the deal, all ships are inspected by joint teams in the Bosphorus.
Ukraine exported about 7 million tonnes of agricultural products in September and October and 6 million tonnes in November, but shipments fell to less than 4 million tonnes in December. Ukraine attributed the drop to a slowdown of inspections, which it blamed on Russia. Russia has denied slowing down the process.
“Ukraine focuses on normalizing inspections rather than opening new ports,” the senior Ukrainian official told Reuters. Referring to a port that is not part of the deal, the official said: “Why open the port of Mykolaiv if at the current rate of exports we can close half of the ports of Odesa, which are already open?”Ukraine’s infrastructure ministry said 94 vessels were waiting for inspection in the Bosphorus, including 69 empty vessels for loading and 25 that had already been loaded with agricultural products. Vessels are waiting for an average of more than a month, the ministry said.
Concerns over the world economy and its effect on demand, and spillover from wheat declines, pushed maize prices lower in December. Worries over potential problems with shipments through the Black Sea are still in traders’ minds, while China’s COVID problems remain a threat to demand.
The European Confederation of Maize Production (CEPM) reported in its Corn Market publication of Dec 14 that maize for March 2023 delivery in Chicago had “lost some ground” in the week of Dec 9.
“Non-commercial funds continue to reduce their net long positions by adding short positions and closing long positions,” CEPM said, explaining that forecasts of a record Australian wheat crop added to the pressure on grain prices.
“Markets also continue to worry about the health situation in China as the government announced further easing its anti-COVID policy,” CEPM added.
CEPM described December’s World Agricultural Supply and Demand Estimates report as “rather neutral for the market.” It highlighted a 2-million-tonne reduction in the report’s forecast for US exports, bringing them down to 53 million, “leading to a slight decrease in the pressure on American stocks,” which the USDA projected at 32 million tonnes, a 2-million-tonne rise that CEPM described as “beyond operators’ expectations.”
Changes, compared to the same report a month earlier, at the global level, include a 7-million-tonne cut in production to 1.162 billion tonnes, with consumption reduced by 5 million tonnes to 1.17 billion and stocks down 2 million at 298 million tonnes, changes that the southwest France-based organization called “in line with operators’ expectations.”
The most recent IGC Grain Market Report, published on Nov 17, said the London-based international organization’s maize sub-index was down by 3% month-on-month because of a drop in US values.
“US maize futures dipped by 2% m/m, pressured mainly by concerns about export demand and spillover from wheat,” the IGC said.
“Owing to improving Mississippi River logistics, nearby fob basis offers retreated sharply, with export prices falling by $27 m/m, to $331 fob (Gulf),” the IGC said. “While concerns about poor competitiveness still featured, the premium to equivalent offers in Brazil (Paranagua) halved over the past month, now seen at around $33.”
The IGC’s barley index was up by 5%, “largely due to an advance in Argentina,” the IGC said, but noted that “amid slack international demand, markets were mostly nominal.”
“Cash feed barley prices in the EU (France) eased on sluggish export interest and spillover from wheat,” the IGC added. “However, because of offsetting movements in currency markets, US dollar-denominated fob quotations rose by $8 to $307 (fob Rouen). With unfavourable weather adversely affecting 2022-23 production prospects, prices in Argentina advanced by $45, to $365 fob (Up River).”
For sorghum, US Gulf export values fell marginally to $366 fob as losses in maize futures outweighed higher basis levels, the IGC said. The agency added that “in Australia, prices climbed by $25, to $320 (Brisbane) on tight supplies, steady demand and currency movements,” while “at $291, quotations in Argentina (Up River) were up by $6 on firmer basis levels.”
The IGC also reported that “with movements mainly influenced by neighbouring markets and technical considerations, US oats futures gained 6% month-on-month, and export quotations in Canada firmed by $47, to $347 fob (Vancouver) amid limited grower selling.
For rye, the IGC reported that “with exchange rate movements compensating for a drop in local prices, dollar-denominated milling rye values in the EU (Germany) were flat m/m, at $282 fob.” Prices at inland terminals in Russia were also steady, quoted at $155,” the IGC said.
National Foods Holdings Ltd., a manufacturer of branded food and feed, is on track to start operations at a new mill in Bulawayo, Zimbabwe, in early 2023, said Todd Moyo, chairman of the company.
“The installation of the new mill at our Bulawayo site has commenced, and the mill remains on track for commissioning in early 2023,” Moyo noted in the company’s 2022 annual report. “The new mill will increase wheat milling capacity by around 2,000 tonnes per month.
“The prospects for the current winter wheat crop look encouraging, which is a most welcome development as it will reduce import dependency. National Foods continues to play a major role in supporting the local contracted wheat crop.”
Moyo said volumes in the company’s flour unit fell 1.9% in 2022 compared with the previous year, primarily reflecting a slowdown in the most recent quarter as “price increases driven by higher international wheat prices and the reduced availability of local wheat dampened demand.”
Meanwhile, volume momentum in the maize unit picked up in the year’s second half but still wasn’t enough to prevent a 2.3% year-over-year decline. Moyo said the comparison was partly affected by an excellent harvest in 2021 and erratic rainfall and unseasonal winter rains in 2022.
“It is anticipated that imports will be needed to fill the gap before the 2022-2023 harvest, and the Group has already started on a maize importation program,” he said. “Ordinarily, our expectation would have been for improved volumes in the year ahead following the lower harvest, but the opening of the borders to imports of the finished product will likely see volumes remaining flat in the year ahead.”
Overall, operating profit in 2022 surged 301% to 14.74 billion ZWL ($40.7 million), while revenue increased 33% to 128.4 billion ZWL ($354.8 million).
Expanding its oilseeds network, Cargill has entered a definitive agreement to acquire Owensboro Grain Company, LLC, a fifth-generation family-owned soybean processing facility and refinery located in Owensboro, Kentucky, US.
The deal’s terms announced on Nov. 28, were not disclosed. The transaction, approved by the boards of directors of Cargill and Owensboro Grain Company, is subject to regulatory approvals and other customary closing conditions and is expected to close in early 2023.
Owensboro Grain Company enhances Cargill’s efforts to modernize and increase capacity across its North American oilseeds network to support growing demand driven by food, feed and renewable fuel markets.
“We are pleased to welcome Owensboro Grain Company into our Cargill family,” said Leonardo Aguiar, president of North American Agricultural Supply Chain at Cargill. “Our two companies have tremendous operational histories, similar heritages as grain merchants, and values, including an unwavering commitment to prioritizing people ― making this a tremendous fit.
“Additionally, this is a significant milestone in Cargill’s journey to create a connected and modernized grain experience for our customers.”
Owensboro Grain Company was founded in 1906 as a small grain merchant and today operates a fully integrated soy processing facility, producing soy products, including protein meal and hull pellets for animal feeds, crude and degummed oil, lecithin, various blends of refined vegetable oil for human consumption, biodiesel, glycerin, and industrial waxes. Sourcing from multiple states, the company crushes more than 100,000 bushels of soybeans daily.“Cargill can capitalize on growth opportunities in the industry, such as renewable energy. The acquisition will ensure that Owensboro Grain Company, its employees, farmers, customers and the community are best positioned for the future,” said Helen Cornell, president and chief executive officer of Owensboro Grain Company. “We are excited to transfer ownership to another multi-generational family-held enterprise with global access to markets and capabilities to ensure the future growth of our business.”
Ukraine farmers in 2022 harvested fewer tonnes of wheat than in the record-setting previous crop year but close to the recent five-year average volume, according to the analysis of satellite imagery by NASA Harvest.
That imagery has eased concerns about how much wheat and barley was harvested in war-torn Ukraine, one of the top global suppliers, but spotlighted how much grain is inaccessible in fields due to war in the Black Sea region. Calculations show 26.6 million tonnes of wheat were harvested this year in Ukraine, down 19% from a record 33 million tonnes in 2021, but comparable to 27.9 million tonnes as the average of the recent five crop years, NASA Harvest said.
An estimated 22% of the wheat was in the eastern part of Ukraine and unavailable for export due to war according to satellite maps showing the distribution of unharvested wheat in August 2022 that were compared with the front line of fighting as reported by the Institute for the Study of War and the American Enterprise Institute’s Critical Threats Project.
“Satellite data enables us to provide rapid agricultural assessments that are critical for markets and food security,” said Inbal Becker-Reshef, director of the NASA Harvest program. “Knowing the actual production level in Ukraine contributes to lowered uncertainty and price volatility in food markets. This is a growing focus for the Harvest team, and we’re developing and launching a new agricultural rapid response center that will focus on that.”
Analyzing satellite data is one of the only safe, reliable ways to track crop progress in a war zone due to the risks on the ground. Satellite observations and modelling from the commercial satellite company Planet, NASA, and the European Space Agency are used to assess the planting, growth, and harvest of key commodity crops. In satellite images, unharvested wheat fields are seen as dark brown compared with light brown areas signalling leftover plant debris after cutting wheat.
At the same time, Ukrainian officials could monitor the harvest in traditional ways.
“The actual data we are gradually receiving directly from the fields in the territories controlled by Ukraine is very close to the estimates obtained in cooperation with NASA,” said Denys Palamarchuk of the Ministry of Agrarian Policy and Food of Ukraine.
The analysis indicates 94% of Ukraine’s winter crop was harvested, including 88% of winter crops in areas currently under Russian control in the wake of that country’s military extending its incursion into Ukraine beginning in February 2022. Some global commodity analysts in late summer had cautioned 20% to 30% of the country’s crop might be left in the fields.
A United Nations-backed humanitarian grain corridor from Black Sea ports has allowed approximately 5.4 million tonnes of grain to be shipped from Ukraine since its inception, the Ukraine Ministry of Agrarian Policy and Food said in November. About 5.8 million tonnes of wheat harvested from areas not under Ukrainian control is worth at least $1 billion, NASA Harvest said.
A NASA Harvest adviser and Institute for Food Policy Research senior research fellow, Joseph Glauber, said easing demand for global wheat and increased supplies helped stabilize global wheat prices over the summer.“But this doesn’t mean the food crisis is over,” he said. “International food prices remain high by historical standards, markets remain tight, and high price volatility continues — especially for wheat.
Brazil’s corn production in the marketing year 2022-23 is forecast to reach a record 126 million tonnes based on the growing demand and price for corn in both the domestic and international market, according to a Global Agricultural Information Network report from the US Department of Agriculture’s Foreign Agricultural Service (FAS).
The projected corn output is nearly 9% higher than the estimated 116 million tonnes in 2021-22. The FAS maintained the forecast of the planted area at 22.5 million hectares, nearly 4% higher than the harvested area of this current season.
“Although the increase in demand for corn both in domestic and international markets and rising prices have encouraged the planting of this grain, ongoing elevations in production costs have led some producers to switch to more profitable crops, such as soybeans, resulting in a more conservative forecast for the coming season,” FAS said.
FAS increased the forecast for corn exports in 2022-23 to 47 million tonnes, up 2.5 million tonnes from the previous year.
According to a USDA report, Brazil could export as much as 5 million tonnes of corn to China alone in 2023, making it a key supplier to the world’s most populous country and the United States. China will import about 18 million tonnes of corn in the upcoming marketing year.
According to the FAS, Brazil is also poised for a record year in wheat production, with a harvest of 9.4 million tonnes forecast, up 21% from the 2021-22 crop.
SLEMON PARK, PRINCE EDWARD ISLAND, CANADA — ADDiCAN, a manufacturer of animal nutritional products, has acquired a grain and processing facility in Slemon Park, Price Edward Island, Canada.
The facility will be the company’s second manufacturing plant in Canada and will expand ADDiCAN’s manufacturing and bulk handling capabilities for the North American and international markets.
The purchase includes feed ingredients, grains, seeds cleaning and sorting, 500,000 bushels of grain handling facility space and more than 50,000 square feet of storage space.
The company said it plans to double staff at the new manufacturing facility.
“ADDiCAN has expanded to match the reach and scale of our global work,” the company said. “The new ADDiCAN additional facility is close to the port and capable of shipping bulk and containerized animal nutrition products to its customers worldwide
The grains market has moved this year from handling an unprecedented worldwide pandemic to dealing with a war involving two of the planet’s biggest exporting nations. At the same time, as always, the fundamentals of supply and demand continue to exert their influence.
Speaking on the virtual platform Zoom to journalists on Oct. 3, Arnaud Petit, executive director of the International Grains Council (IGC), explained that “the crisis in the Black Sea region is reverberating differently on the grains markets.”
“When we talk about the crisis in the Black Sea … on rice, wheat, on maize, we have a different situation, mainly because the fundamentals are different,” he said. “We have this opportunity maybe in maize and soybeans for the harvest in South America to alleviate the pressure on those markets.”
Petit stressed the important role that is being played by the exchange rate movement, with the dollar assuming its longstanding safe-haven status against the background of the war and rising sharply.
“That is the main development we have seen from July, and which might have an impact on the demand side in terms of rationalization of the demand side for net importer countries,” he said. “We are not necessarily looking for a very positive trend of trade, bearing in mind … uncertainty, both economic and demand, and in that way political decisions which can be taken by one country, and another might change the forecast quickly in terms of trade.”
He pointed out that some net importers respond to supply uncertainty by “moving from a strategy of just in time to just in case.” As well, importers were “even looking for not necessarily the cheapest origin but trying to diversify, which might also develop a new trade trend,” he noted.
Alexander Karavaytsev, the senior economist with the IGC, pointed to “geopolitical tensions in the Black Sea and some macroeconomic factors, which, (along with) fear of impending recession, have been pressuring markets in recent months.” But he explained that “before that, in late May, we saw prices that were their highest level in at least 22 years,” a range of dates that goes back to the point at which the IGC started compiling its index of grains quotations.
“That was mainly due to escalating tensions in the Black Sea,” Karavaytsev said.
“Since late May we have seen some decline,” he added, with the proviso that they are still “at a relatively elevated level.”
“Looking specifically at the wheat market, prices have declined since May,” he said. “If we look at the key exporters, the spread has been widening.”
“The general decline in the market has been linked to some seasonal pressure because harvests have been advancing in the Northern Hemisphere,” he said, particularly noting rising estimates for Russian production, although it is “very difficult to see how much that origin can export.”
The resumption of shipments from Ukraine’s Black Sea ports, under the UN-brokered Black Sea Grain Initiative, “has also pressured markets, but that was more a psychological effect rather than a real effect on fundamentals because in the initial weeks we have seen those shipments mainly focused on maize, but we now see wheat shipments rise as the harvest has been complete.”
Improving conditions for planting in the Northern Hemisphere besides parts of the United States and Canada, along with the surging dollar added to the downward pressure, although the IGC expert pointed out that uncertainty over the future of exports from the Black Sea has triggered a recent upturn.
Russian President Vladimir Putin called the deal into question in a speech in September. The Russian leader repeatedly has attempted to blame food shortages on western sanctions, rather than on Russia’s invasion of Ukraine, something that the EU, in particular, rejects vehemently.
Karavaytsev also highlighted downward impetus on prices from excellent Australian grains production prospects.
Impact of strengthening dollar
Rises in the dollar value, more pronounced against some currencies than others, have wiped out declines for certain countries.
“Turkey, Sri Lanka and Ghana at the top of the list have depreciated very sharply,” he explained, discussing a slide showing the biggest currency falls year on year. “That has been adding to prices since May 2021.”
He pointed out that the US dollar index is trading at around a 20-year high. For Ghana, that meant prices in local currency went up by around 70%. Overall, the effect of a dollar increase of 30% was an 8% rise in the wheat price index.
“It influences all the markets,” he said. “It is not only about supply and yield of supply and flat dollar prices, but also about the dollar.”
The IGC’s latest forecast, at the time of this writing in mid-October, is for 2022-23 wheat production at 792 million tonnes, a year-on-year rise of 1.3% and a record, based on a record average yield of 3.5 tonnes hectare. Trade is expected to be down by 2% at 192.8 million tonnes.
Tighter maize situation
Looking at maize prices, Miriam Morath, an economic analyst with the IGC, identified tightening supply and demand, and uncertainty surrounding grain export flows from the Black Sea, as well as bearish global fundamentals as key drivers.
Prices had declined from earlier record levels, “but nonetheless they remain higher than a year ago and also much higher than the five-year average,” she said.
Maize output is expected to be down 4% in 2022-23, at 1.168 billion tonnes, but despite the sharp fall the crop would still be the second largest on record, while Morath pointed out that lower feed use will lead to a 2% drop in demand, “but it could nonetheless be the second highest year on record,” she said. “The impact of high energy costs and inflation on not only consumers but also livestock producers remain uncertain.”
She also said that further tightening of the balance sheet is expected to happen as inventories drop to their lowest levels since 2012-13.
“This includes a large figure in Ukraine at the moment,” she said. In its September Grain Market Report, the IGC put cumulative carryovers in the major exporters — Argentina, Brazil, Ukraine, United States — are placed at “a smaller-than-average 50 million tonnes (down 10%), which includes a notional 8.9 million (up 30%) in Ukraine.”
A contraction in world trade, expected down 4% to 172.3 million tonnes, “is mainly due to China,” Morath said, pointing out that the country’s economy was hit by COVID restrictions kept in place for much longer than elsewhere, and that despite the Black Sea trade initiative, supplies from Ukraine were less available.
The IGC forecasts a 16% year-on-year reduction in Chinese imports of maize, to 19 million tonnes.
“The EU is the key actor,” she said, noting that if shipments are as forecast, the EU, with imports now forecast at 20.5 million tonnes, compared to the previous year’s 17.8 million, will be the largest importer in 2022-23.
As for maize, barley prices are coming down, she said, noting that the “key buyers, China and Saudi Arabia, are not coming back into the market.” Because of the tightness in the maize market, she expected some barley in the EU to be shifted into feed use. Russia has had a good crop, but there is uncertainty over the export potential, while Ukraine’s exports had lacked the previous year’s pace.
World barley production in 2022-23 is forecast at 148.8 million tonnes, up 2% on the year, but just below the five-year average. Consumption during the year is seen fractionally up at 149.9 million tonnes, with the trade forecast down 4% at 30.8 million.
Diana Sarungbam, market analyst with the IGC, noted a forecast significant decline in US sorghum production, expected to lead to a 2.9% drop in the total crop, to 60 million tonnes.
“Globally for sorghum, feed use could decline,” she said, but forecast that use for food, mainly in sub-Saharan Africa would rise. Food use of sorghum is forecast 9.9% higher at 31.1 million tonnes, while that for feed is seen down 1.8% at 23.7 million. Trade in sorghum is expected to fall 20% year-on-year to 9.8 million tonnes.
Bigger oilseed crops expected
Darren Cooper, senior economist with the IGC, covered soybeans and oilseeds. He started by explaining that in December 2021, when it was clear there were going to be production problems in South America, mainly Brazil, there was “a degree of panic in the market.” However, although the market remained volatile, the US crop, which is “going to be a good one,” helped push prices lower, while, “as more supplies are getting out of Ukraine — that’s had a particularly bearish effect on oilseeds.”The IGC is forecasting a recovery in the soybean crop in 2022-23 by 9.8%, giving total output of 387 million tonnes. Trade is expected to increase by around 10 million tonnes, to 165.4 million, just short of the 2019-20 record. Rapeseed output is expected to rise by 11.9% in 2022-23, reaching 82.3 million tonnes, while trade in the crop is forecast at 17.7 million tonnes, up from 14.6 million the year before. The world’s sunflower seed crop is forecast at 9.8 million tonnes, compared to 11 million in 2021-22. The main driver is a sharp fall, from 16.4 million tonnes in 2021-22 to 10.5 million in 2022-23, with rises elsewhere not enough to compensate.
China’s soybean imports hit their lowest level for any month since 2014 this October, according to customs data, Reuters reported.
Imports for the month reached 4.14 million tonnes, a drop of 19% from a year earlier. Buyers cut purchases due to high global prices and poor crush margins.
Imports for the first ten months of the year were 73.18 million tonnes, down 7.4% from last year.
Global soybean prices hit a decade-high in June, with bad weather hurting production in Brazil, which is China’s top supplier, Reuters said.
High prices and lack of demand from the livestock sector eroded crushing profits. China is short on supplies now that hog profits have recovered and boosted demand for soymeal. Those prices reached record levels in recent weeks due to the tight supply.
The benchmark for world food commodity prices was broadly stable in October, with rising cereal prices more than offset by declines in quotations for other staples, the Food and Agriculture Organization of the United Nations (FAO) reported on Nov. 4.
The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of commonly traded food commodities, averaged 135.9 points during the month of October, negligibly below its level in September. With the latest update, the index stood 14.9% down from its all-time high recorded in March 2022, while it remained 2% above its level in October 2021.
The FAO Cereal Price Index increased 3% during the month. World wheat prices rose by 3.2%, mostly reflecting uncertainties related to the Black Sea Grain Initiative and a downward revision for supplies in the United States. International prices of coarse grains increased by 3.5%, with maize prices rising even more due to lower production prospects in the United States and the European Union, along with dry planting conditions in Argentina and uncertainty about exports from Ukraine. International rice prices increased by 1%.
The FAO Vegetable Oil Price Index declined by 1.6% in October and stood nearly 20% below its year-earlier level. Rising international quotations for sunflower seed oil were more than offset by lower world prices of palm, soy and rapeseed oils.
In an updated Cereal Supply and Demand Brief released on November 4, FAO lowered its forecast for world cereal production in 2022 to 2.764 billion tonnes, a 1.8% decline from 2021. While global wheat production is now forecast at 783.8 million tonnes in 2022, an all-time high, worldwide coarse grains output is expected to drop 2.8% to 1 467 million tonnes. World rice production is forecast at 512.6 million tonnes, down 2.4% from the 2021 all-time high, but still an overall average crop.
World cereal utilization in 2022-23 is now forecast to decline to 2.778 billion tonnes, 0.7% below the 2021-22 level. Likewise, world cereal stocks at the end of seasons in 2023 are forecast to contract by 2.0% from their opening levels, down to 841 million tonnes.
Based on those forecasts, the world cereal stocks-to-use ratio is foreseen to decline to 29.4% in 2022/23 from 30.9% in the previous year.
World trade in cereals in 2022-23 is predicted to register a 2.2% contraction to 469 million tonnes.
Despite Russia proclaiming that it has suspended its participation in the United Nations-brokered grain export deal with Ukraine, grain ships continued to exit Ukraine’s Black Sea ports on Oct. 31, according to various media reports.
Russia announced its withdrawal from the agreement on Oct. 29 after it claimed that Ukraine, “with the participation of United Kingdom experts,” executed drone attacks on the Crimean city of Sevastopol, including several Russian warships. Ukraine officials have denied any connection to the attack.
The grain export deal, which was brokered by the United Nations and Turkey in late July, has allowed the shipment of more than 9 million tonnes of grain and other food exports during the past three months. Before the deal, Russia, which invaded Ukraine on Feb. 24, had used a naval blockade to prevent the ships from leaving the Black Sea ports.
If the blockade is reinstated, it will worsen an already growing food insecurity crisis in many of the world’s poorest countries that depend on grain imports from the Black Sea region to feed their people. They are not only hurt by the shortage of grain imports but the increase in prices that are the result of global supply. During the five months that Russia prevented grain from being exported from Ukraine, global grain prices reached near-record highs but declined after the grain export deal was reached in late July.
Wheat futures on the Chicago Board of Trade jumped 6% on Monday to $8.79 a bushel. Corn futures were up 2.64% to $6.98 a bushel.
The grain export deal was set to expire on Nov. 19, but efforts were already underway to extend the agreement.
Negotiators from Turkey and the United Nations said they are working to bring Russia back into the agreement. Despite Russia’s position, ships continued to move in and out of the corridor on Oct. 31, with 12 vessels outbound and four inbound, according to the United Nations’ Joint Coordination Center for the initiative.
“The secretary-general is deeply concerned about the ongoing situation regarding the Black Sea Grain Initiative,” said Stéphane Dujarric, spokesman for Antonio Guterres, the secretary-general of the United Nations. “The secretary-general continues to engage in intense contacts aiming at the end of the Russian suspension of its participation in the Black Sea Grain Initiative. The same engagement also aims at the renewal and full implementation of the initiative to facilitate exports of food and fertilizer from Ukraine, as well as removing the remaining obstacles to the exports of Russian food and fertilizer.”
Although the grain deal has enabled Ukraine to export more than 9 million tonnes of grains and other food products during the last three months, the war has taken an enormous toll on its ability to export and produce grain. A perennial top-five exporter of wheat and corn, Ukraine is projected to produce only 20.5 million tonnes of wheat in the 2022-23 marketing year, according to the US Department of Agriculture’s Foreign Agricultural Service (FAS), which would be the smallest crop in 10 years. It is forecast to export 11 million tonnes, which will be revised downward if Russia reinstates its naval blockade. If realized, it would be the lowest wheat export total since 2013-14. Its corn export totals are also expected to be significantly lower in 2022-23.
Global ending stocks of total grains (wheat and coarse grains) are projected to tighten for the sixth consecutive year, according to the latest International Grains Council (IGC) grain market report released on Oct. 20. The IGC sees endings stocks for the 2022-23 marketing year at 584 million tonnes, a 3% drop from last year’s total.
Following a summer of concern, India’s stocks of rice and wheat have been pronounced sufficient, and wheat could be sold by the government to help control domestic prices if necessary, Reuters reported, citing the Ministry of Consumer Affairs, Food and Public Distribution.
At an Oct. 17 news conference, Sudhanshu Pandey, the most senior civil servant at the ministry, said the country has enough stocks of wheat and rice to meet its obligations and would “intervene if needed” by selling wheat on the open market to temper food inflation, according to Reuters.
Food inflation accounts for nearly 40% of the consumer price index basket in India. Pandey said the rates of vegetable and cereal staples have risen only at a moderate pace, and the steps initiated by the government have helped keep a lid on grain prices.
India, which had produced three straight bumper wheat crops before this year, had announced in the spring that it planned to increase exports to help ease global supply concerns following Russia’s Feb. 24 invasion of Ukraine. The government reversed course several weeks later after it became apparent that this year’s intense heat wave and drought would severely hamper production.
India is the world’s second largest producer of wheat with 106.8 million tonnes expected to be harvested in the 2022-23 marketing year, according to the International Grains Council (IGC), but with 1.4 billion people, it is also the second biggest consumer at 104.5 million tonnes.
Close on the heels of the ban on overseas wheat sales, India restricted rice exports as scant rains in the country’s east affected the planting of the water-thirsty crop. The IGC sees India’s rice production in 2022-23 at 125.9 million tonnes and consumption at 109.5 million tonnes. At the beginning of the next fiscal year on April 1, India’s wheat stocks at state warehouses are expected at 11.3 million tonnes, and rice stocks are seen at 23.7 million tonnes, Pandey said.
Drought-stricken Argentina’s 2022-23 wheat crop projections continue to trend downward as the country’s two major grain exchanges cut their forecasts on Oct. 13, according to Reuters.
According to Reuters, the biggest wheat producer and exporter in South America is now expected to harvest a 16-million-tonne crop, 500,000 tonnes lower than the Rosario Grains Exchange’s previous forecast.
The report also noted that a separate 2022-23 wheat crop estimate from the Buenos Aires Grains Exchange forecasted a harvest of 16.5 million tonnes, down from the exchange’s prior forecast of 17.5 million tonnes.
The Foreign Agricultural Service of the US Department of Agriculture is projecting a crop of 17.5 million tonnes, which would still be Argentina’s smallest wheat harvest since 2015-16.
Government officials were scheduled to meet with Argentine wheat millers and exporters this week to discuss worries over the wheat crop and potential shortages in the domestic market.
Brazil, which is the largest importer of Argentine wheat, has enjoyed good weather and may not be as dependent on imports in 2022-23.
According to Conab, Brazil is projected to produce a record crop of 9.4 million tonnes, which is 22% higher than last year’s output.
The United Nations’ Food and Agriculture Organization (FAO) projected a further reduction in global grain production in its latest Cereal Supply and Demand Brief, released on Oct. 6. The FAO pegged output in 2022 at 2.768 billion tonnes, a 1.7% decline from last year’s crop.
World coarse grain output is forecast at 1.468 billion tonnes, down 2.8% year-on-year, due largely to adverse crop conditions in the United States. World rice production is forecast at 512.8 million tonnes, down 2.4% from its all-time high reached in 2021, but still an above-average crop. Downward revision to rice output since September reflects summer dryness and high temperatures in China and flooding in Pakistan.
The FAO raised in September its global wheat production forecast to 787.2 million tonnes, up 1% from the previous year and on track to reach a record high, due to better-than-expected yields in the European Union and the Russian Federation.
World grain utilization in the 2022-23 marketing year (July to June) is now forecast to decline by 0.5% from the previous season to 2.784 billion tonnes, with the reduction mostly reflecting reduced feed use.
World grain stocks at the close of the 2023 season are forecast to contract by 1.6% below their opening levels, down to 848 million tonnes. The world grain stocks-to-use ratio is expected to drop to 29.7% in 2022-23 from 31% in the previous year but would still be relatively high from a historical perspective.
World trade in grains is predicted to decline by 2.4% in 2022-23 from the preceding marketing season, with foreseen contractions in trade of all major grains.
Among other factors, the consequences of the war in Ukraine and the strength of the United States dollar are seen contributing to this decline, the FAO said.
In a separate report, the FAO said its gauge for world food commodity prices declined for the sixth straight month but noted that its Cereal Price Index rose 1.5% from August to September.
International wheat prices rebounded by 2.2%, linked to concerns regarding dry crop conditions in Argentina and the United States, a fast pace of exports from the European Union amid high internal demand and heightened uncertainty about the Black Sea Grain Initiative’s continuation beyond November.
World maize prices were mostly stable, as a strong US dollar countered pressure from a tighter supply outlook linked to downgraded production prospects in the US and the European Union.
The FAO All-Rice Price Index rose by 2.2%, largely in response to export policy changes in India.
The Food Assistance Committee (FAC) during a meeting on Sept. 30 discussed the impact of Russia’s invasion of Ukraine on global grain markets.
“All members present except one overwhelmingly expressed concern about the direct effects of Russia’s invasion of Ukraine on global food security,” the FAC said. “These are exacerbating a situation that was already dire, taking hunger to unprecedented levels and affecting, in particular, the most vulnerable countries and populations.”
The session, held in a hybrid format, included representatives from Australia, Denmark, the European Union, Finland, France, Japan, Korea (Republic of), Luxembourg, Russia, Slovenia, Spain, Switzerland and the United States.
The majority of committee members condemned Russia’s attempts to blame other countries for the current food crisis.
The International Grains Council (IGC) Secretariat updated the FAC on the latest developments in grains and oilseeds markets, which included the impact of the Black Sea Grain Initiative and the resumption of seaborne shipments from Ukraine. In addition, the Secretariat also provided an update on 2022-23 crop prospects and highlighted some key drivers of demand, as well as developments in freight and currency markets. Furthermore, the Secretariat highlighted some potential risk factors, including restrictive export polices, the ENSO weather system developments and elevated fertilizer prices.
The FAC voiced strong support for the Black Sea Grain Initiative, which already has moved more than 5 million tonnes of grains and oilseeds from Ukrainian ports to world markets and highlighted that this essential initiative should continue without interruption.
“In response to the global food crisis, FAC members are standing firmly by countries in need, stepping-up their humanitarian food assistance, multiplying advocacy efforts and taking measures to stabilize markets and prices,” the FAC said.
The FAC reviewed the global situation regarding hunger, malnutrition and current food emergencies against the backdrop of recent developments, including the supply and demand outlook for global grains, rice and oilseeds markets. In its most recent grain market report, the IGC forecast total world grain ending stocks will fall to an eight-year low in 2022-23, despite production being the second highest on record.
Nearly 5 million tonnes of agricultural products have been shipped from Ukraine’s Black Sea ports since the United Nations and Turkey brokered a deal on July 22, allowing grain shipments to restart following a five-month Russian blockade, Reuters reported.
As of Sept. 24, a total of 211 ships carrying agricultural products had embarked from Ukraine’s southern ports, according to Reuters. Another eight ships carrying 131,300 tonnes of agricultural products were scheduled to leave the ports on Sept. 25.
During the period of the blockade, grain and food prices soared worldwide as Ukraine, one of the world’s top wheat and corn producers and exporters, was unable to make shipments by sea.
Prior to Russia’s invasion of Ukraine on Feb. 24, Ukraine exported up to 6 million tonnes of grain per month.
The latest wheat forecast for Brazil, a record 10.935 million tonnes, has the nation poised to reverse its status as a net importer of the crop in the coming years, Reuters reported, citing an estimate by agribusiness consultancy Safras & Mercado.
The updated projection represents an increase from the 10.5 million tonnes previously expected. The adjustment accounts for the likely rise in output in the states of Parana, São Paulo, Goias, Bahia and in the Federal District. If projections are confirmed, Brazil’s wheat production this year will be 41% higher than the 7.745 million tonnes in 2021, which was already a record, Safras said.
The country remains a net importer of wheat and buys most of it from neighbouring Argentina, but that may soon change. In 2021-22, Brazil was estimated by the US Department of Agriculture (USDA) to have imported 6.5 million tonnes of wheat.
The development of new wheat varieties has allowed Brazilian farmers to cultivate wheat plants adapted to tropical conditions. This has boosted production in the hotter, drier center of the South American country, where growers traditionally plant corn and soybeans.
Brazil, among the world’s top corn and soybean producers and exporters, now appears on track to produce all the wheat it needs in the space of 10 years or less, as the government has projected. The USDA estimates Brazil’s wheat consumption reached 11.75 million tonnes in 2021-22.
One out of every six, or about 15%, of Ukrainian crop storage facilities, have been destroyed, damaged or controlled by Russia and its aligned forces since it invaded Ukraine on Feb. 24, according to the Conflict Observatory, an American non-governmental organization.
The Conflict Observatory, which establishes its conclusions through analysis of satellite imagery, said 344-grain facilities in Ukraine were studied, and 75 of them were classified as damaged.
Under international law, the deliberate and indiscriminate destruction of infrastructure where crops are stored can be considered a war crime, as well as a crime against humanity, the organization said.
Following the release of an independent assessment of the devastating impact of Russia’s war on food storage sites in Ukraine, the US Department of State, which supports the activities of the Conflict Observatory, on Sept. 15 called for further investigation through appropriate mechanisms.
“The United States will continue to firmly stand with Ukraine as it defends its freedom, for the sake of its own people and of people across the globe who rely on the harvests from Ukraine’s farmlands,” the agency said. “Our support for Ukraine remains unwavering.”
It added that Russian President Vladimir Putin’s “unjustified war against Ukraine puts millions around the globe at risk of increasing food insecurity. The Kremlin’s full-scale invasion of Ukraine, one of the world’s largest exporters of food, has led to the damage or outright destruction of many of Ukraine’s arterial roads, railways, ports, and food storage facilities that are essential to getting its agricultural goods to international markets. These actions guarantee that the pain of this war will also be felt by the world’s most vulnerable populations.”
In addition to limiting exports from Ukraine and destroying grain storage infrastructure, Russia’s invasion has led to decreased grain production in Ukraine.
The Foreign Agricultural Service of the US Department of Agriculture is projecting Ukraine’s 2022-23 wheat harvest to reach 19.5 million tonnes, well below last year’s output of 33 million tonnes.
Ukraine’s agricultural ministry recently estimated that winter wheat planting could decline from 4.6 million hectares in the 2021-22 season to 3.8 million hectares this year.
France plans to work with Romania to increase Ukrainian grain exports to developing countries, Reuters reported.
Romania is the EU’s second largest wheat exporter and largest corn exporter and has been one of the alternative routes to export grain from Ukraine.
Ukrainian grain had been trapped since Russia’s invasion in February, increasing food prices and raising fear of shortages.
The agreement, which French transport minister Clement Beaune said he would sign, would allow Ukraine to export more grains toward Europe and developing countries, especially those in the Mediterranean.
The draft agreement calls for increasing efficiency at the port of Galati, equipping border points in northern Romania, maximizing the use of grain containers stationed in the port of Constanta and increasing the capacity there and in the Sulina canal, Reuters reported.
It also calls for a medium-term strategy on the access of the corridor between Romania and Ukraine and provides pilings to optimize ship traffic. France will provide funding for the initial technical expertise and work with Bucharest to identify future financing.
Ukraine dispatched 13 ships from its ports on Sept. 4 carrying 282,500 tonnes of agricultural products, its biggest convoy of grain vessels so far under an UN-brokered deal, Reuters reported.
The cargo, which was loaded at the Black Sea ports of Odesa, Chornomorsk and Pivdennyi, is headed to eight countries. The ports had been blockaded by Russia’s invasion until a July 22 deal brokered by the UN and Turkey.
Since then 86 ships have left Ukrainian ports, carrying 2 million tonnes of agricultural products to 19 countries.
Ukraine hopes to export 60 million tonnes of grain in eight to nine months, presidential economic adviser Oleh Ustenko said in July. Those exports could take up to 24 months if ports do not function properly,
Ukraine has exported more than 1 million tonnes of grain since Russia lifted its naval blockade of Ukraine’s Black Sea ports on July 22, the United Nations said.
Amir Abdulla, UN coordinator for the Black Sea Grain Initiative, said on Aug. 27 that dozens of grain shipments have taken place over the last month.
“As the world grapples with food insecurity and high prices, the importance of this Initiative is clear,” he said. “As increased volumes of Ukraine’s agricultural production are now heading to market by sea, confidence has grown in the food and shipping industries, driving down prices and reducing risk.
He recalled that while the agreement between Russia and Ukraine, which was brokered by the UN and Turkey, covers commercial operations for the resumption of exports, the World Food Programme (WFP) also has been able to restart purchasing Ukrainian wheat for its humanitarian operations in countries such as Ethiopia and Yemen.
“These are all important first steps but much more needs to be done,” he stressed. “Across the world, high prices in fuel and fertilizer, climate change and conflict are placing immense pressure on farmers and consumers alike and driving millions more into poverty and hunger.”
Abdulla praised the achievement of exporting 1 million tonnes of grain in a month’s time but said much more grain needs to be exported to make room for the country’s newly harvested grain.
“Equally important and urgent is the export of fertilizer, including ammonia, under this Initiative, so that farmers across the world can continue food production for next year at an affordable cost,” Abdulla said.
Ukraine, a top-five producer and exporter of wheat and corn, was unable to ship grain from its Black Sea ports for five months after Russian forces invaded the country on Feb. 24.
The USDA Foreign Agricultural Service projects 12.5 million tonnes of corn exports and 11 million tonnes of wheat shipments in the 2022-23 marketing year, well below Ukraine’s export total in peak seasons.
Although wheat production is forecast to fall to its lowest level in four years, India’s government on Aug. 21 reiterated that it had no plans to import wheat, Reuters reported.
The announcement followed reports from several media outlets that India, which has seen its current crop damaged by severe drought, was planning to import wheat.
India has a 40% tariff on imported wheat.
India’s Department of Food and Public Distribution said on twitter: “There is no such plan to import wheat into India. Country has sufficient stocks to meet our domestic requirements and Food Corporation of India has enough stock for public distribution.”
Although local wheat prices reached a record $305 per tonnes on Aug. 19, Egypt’s supply minister, Aly Moselhy, said on Aug. 22 that India’s agreement to export 180 million tonnes of wheat to Egypt still stands, Reuters said.
India, which had produced three straight bumper wheat crops prior to this year, announced in the spring that it planned to increase exports to help ease global supply concerns, only to reverse course several weeks later after it became apparent that this year’s drought would severely hamper production.
India has repeatedly said the export ban imposed on May 14 does not apply to the agreement it reached with Egypt.
The world’s second largest wheat producer, India’s wheat output in the 2022-23 marketing year is forecast at 103 million tonnes by the Foreign Agricultural Service of the US Department of Agriculture, which would be the smallest crop since the 2018-19 season.
More than 560,000 tonnes of grain has been exported from Ukraine’s Black Sea ports since Russia agreed to lift its naval blockade on July 22, according to the Joint Coordination Centre (JCC).
The JCC, which was inaugurated in Istanbul, Turkey, on July 27 following the Black Sea Grain Initiative launched by the Russian Federation, Turkey, Ukraine and the United Nations, said the grain was carried on 21 outbound vessels between Aug. 1 and Aug. 15.
The shipments have included 451,481 tonnes of corn, 50,300 tonnes of sunflower meal, 41,622 tonnes of wheat, 11,000 tonnes of soybeans, 6,000 tonnes of sunflower oil, and 2,914 tonnes of sunflower seed, according to the JCC.
The destinations of Ukrainian exports so far include Turkey (26%), Iran (22%), Republic of Korea (22%) and China (8%), according to the JCC.
The JCC said it has conducted 27 inspections through its joint inspection teams on inbound and outbound vessels. All ships inspected so far were cleared, it said.
Ukraine, one of the world’s largest grain exporters, had been unable to export grain through its Black Sea ports for five months following Russia’s invasion on Feb. 24. It is estimated that Ukraine has more than 20 million tonnes of grain in storage at its Black Sea port terminals, with additional grain being brought in from the new harvest.
A ship is nearing Ukraine to pick up wheat for Ethiopia, making it the first food delivery to Africa under an UN-brokered plan to deliver grain trapped by Russia’s war, the Associated Press reported.
Grain has been piling up in Ukraine for months because of a Russian blockade and fighting that started in February. As a result, food prices have skyrocketed and led to hunger in Africa, the Middle East and parts of Asia.
Several grain ships have left Ukrainian ports the last several days but most were animal feed destined for Turkey or Western Europe.
European Council President Charles Michel announced on Aug. 12 that the first shipment by the UN’s World Food Programme of humanitarian aid for Africa would soon load and depart.
MarineTraffic, a tracking website, showed the ship headed toward southern Ukraine, AP said.
Michel said the ship would bring grain to Ethiopia, saying “cooperation of all involved actors is key” to alleviating food shortages and hunger around the world.
The Brave Commander was expected to carry more than 23,000 tonnes, according to Ukraine’s Infrastructure Ministry — a small fraction of the 20 million tonnes of grain that has languished in Ukraine. The ship was expected to dock in Horn of Africa nation of Djibouti, Ethiopia, along with neighboring Somalia and Kenya.
Thousands of people across the region have died from hunger or illness this year. Forecasts for the coming weeks indicate that for the first time, a fifth straight rainy season will fail to materialize, AP said.
The World Food Program said this first ship is an “important step” in getting Ukrainian grain out of the country to the worst-affected countries.
In 2022-23, the International Grains Council’s July report anticipates worldwide wheat production to reach 770 million tonnes, down from 781 million tonnes in 2021-22, with 195 million tonnes available for trade.
Most wheat production comes from a handful of countries and even fewer are major exporters, according to the Food and Agriculture Organization (FAO) of the United Nations. Here’s a look at the top 10 wheat-producing countries worldwide, based on total yield in tonnes from 2000-2020 with 2022-23 production and consumption projections.
1- China 2.4 Billion Tonnes
2-India 1.8 Billion Tonnes
3- Russia 1.2 Billion Tonnes
4- the United States 1.2 Billion Tonnes
5- France 767 Million Tonnes
6- Canada 571 Million Tonnes
7- Germany 491 Million Tonnes
8- Pakistan 482 Million Tonnes
9- Australia 456 Million Tonnes
10- Ukraine 433 Million Tonnes
The quality of Russia’s winter wheat crop, which accounts for nearly three-fourths of the nation’s annual production, has taken a hit following recent rains in several regions with more expected this week, Reuters reported, citing Russia-focused agriculture consultancy Sovecon.
“There was too much rain for winter wheat at this stage, which hits the quality — as farmers typically say, ‘gluten and protein have been washed away,’” Sovecon said. “However, it is improving the set-up for spring crops, including spring wheat.”
Russia is the world’s largest wheat exporter, mainly to Africa and the Middle East, where food security has become a major concern this year amid high global prices and Russia’s Feb. 24 invasion of Ukraine.
Winter wheat, sown in autumn for harvesting in summer, typically accounts for 70% of Russia’s crop. It brings a higher yield than the spring planted crop and is less vulnerable to adverse weather.
As of July 27, farmers in Russia had harvested 33 million tonnes of wheat from 7.6 million hectares. The average yield of 4.37 tonnes per hectare is close to the record high of 2017 when it was at 4.44 tonnes per hectare at the same percentage of the harvested area, Sovecon said.
Harvest data for the current season has not yet been published by Russia’s agriculture ministry.
Turkey plans to import more wheat in 2022-23 to meet domestic food and feed demand, strengthen country stocks and meet stable demand from wheat product producers and exporters, according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
Imports are forecast at 10.25 million tonnes, up from 9.4 million tonnes in 2021-22. Main suppliers included Russia with 6.3 million tonnes, Ukraine with 2 million tonnes, Moldova with 400,000 tonnes and Brazil with 125,000 tonnes.
“Difficulties in Black Sea grain exports due to shipping effects from the Russia-Ukraine war in the last quarter of the 2021-22 marketing year caused total wheat imports to be slightly lower than the annual estimation,” the USDA said.
Total wheat exports from Turkey for 2022-23, including wheat products, are forecast at 6.75 million tonnes, similar to 2021-22, assuming the government does not implement any export limitations on wheat products.
Turkey’s president announced grain intervention prices on June 5 that are more than double the previous year. The Ministry of Agriculture and Forestry will also make an additional premium payment to farmers who sell their products by Sept. 1.
Besides the grain prices, which more than doubled in a year, according to the Turkish Statistical Institution, overall yearly inflation increased nearly 79%, and the producers price index rose 138% while food and non-alcoholic beverages prices increased 94% and agricultural inputs increased 124%.
During 2021-22, the Turkish Grain Board (TMO) purchased imported wheat and sold it to local millers at a significant discount below domestic and international prices. TMO announced that it will continue this flour regulation program for bread bakeries in the new marketing year.
The total wheat production forecast is increased slightly to 17.25 million tonnes for 2022-23 from an original forecast of 17 million tonnes in April because of better weather conditions between April and June in almost all regions except Southeastern Anatolia.
Better yields compared to last year due to improved weather conditions mostly offset production losses from the reduction in area harvested and reduced fertilizer and chemical use, the USDA said.
The first ship carrying Ukrainian grain under a deal brokered by Turkey and the United Nations left the port of Odesa on Aug. 1, carrying 26,000 tonnes of corn destined for Lebanon, The Associated Press reported.
The food security of millions of people is at stake as more than 20 million tonnes of grain sit in Ukrainian silos at the Black Sea port of Odesa and ships are stranded due to the Russian blockade that began with its invasion of Ukraine on Feb. 24. Russia and Ukraine signed separate agreements on July 22 with Turkey and the UN clearing the way for Ukraine to export grain and other agricultural goods while allowing Russia to export grain and fertilizers.
“The first grain ship since Russian aggression has left port,” said Ukraine’s Minister of Infrastructure Oleksandr Kubrakov on Twitter, posting a video of the long vessel sounding its horn as it slowly headed out to sea.
Posting separately on Facebook, Kubrakov said Ukraine is the fourth-largest corn exporter in the world, “so the possibility of exporting it via ports is a colossal success in ensuring global food security.”
In Moscow, according to The Associated Press, Kremlin spokesman Dmitry Peskov hailed the ship’s departure as “very positive,” saying it would help test the “efficiency of the mechanisms that were agreed during the talks in Istanbul.”
Turkey’s defense minister, Hulusi Akar, said the Razoni was expected to dock Aug. 2 in Istanbul at the entrance of the Bosporus, where joint teams of Russian, Ukrainian, Turkish and U.N. officials would board it for inspections.
The Sierra Leone-flagged cargo ship Razoni left Odesa carrying corn for Lebanon, a tiny Mediterranean nation of 6 million people that is battling increased food scarcity amid soaring prices. A 2020 explosion at its main port in Beirut shattered its capital city and destroyed grain silos there, a part of which collapsed following a weekslong fire on July 31.
Lebanon mostly imports wheat from Ukraine but also buys its corn to make cooking oil and to produce animal feed. On July 26, Lebanon’s government approved using a $150 million World Bank loan to pay for wheat imports and stabilize domestic bread prices.
The Turkish defense ministry said other ships would also depart Ukraine’s ports through the safe corridors in line with deals signed in Istanbul on July 22 but did not elaborate.
Ukraine’s infrastructure ministry said that 16 more ships, all blocked since the beginning of Russia’s full-scale invasion of Ukraine on Feb. 24, were waiting their turn in the ports of Odesa.
As part of the deal, officials from Russia and Ukraine agreed there would be no attacks on ships moving through the Black Sea to Turkey’s Bosphorus Strait and on to markets.
A Joint Coordination Centre (JCC) for Ukrainian grain exports was opened July 27. The JCC will monitor the movement of commercial vessels to ensure compliance with the initiative; focus on exporting bulk commercial grain and related food commodities only; ensure the on-site control and monitoring of cargo from Ukrainian ports; and report on shipments facilitated through the initiative.
Ukraine is a major grain exporter, last year supplying 11% of the world’s wheat exports, 12% of corn exports and 43% of sunflower oil exports. Since Russia invaded Ukraine on Feb. 24, a naval blockade has prevented Ukraine from shipping grain out of its southern ports. The country has made a valiant effort to ship as much grain as possible via railways, roadways and rivers, but that has accounted for only a small percentage of its potential export total.
With one of the world’s biggest grain exporters on the sideline, global grain and food prices have soared during the last five months as has food insecurity, particularly in developing countries that are highly dependent on grain from the Black Sea region.
Corn exports from Brazil have increased by 221% in the first half of 2022 as importers seek to replace Ukrainian corn that isn’t making it to market due to the ongoing war with Russia, according to a report from Reuters.
The report cited Paranagua Port Authority statistics showing that 1.9 million tonnes of corn were exported from ports in Brazil’s Parana state from January to June, compared with 591,538 tonnes during the same period in 2021.
Brazilian farmers are completing harvest of their winter corn crop, which accounts for the majority of the country’s annual corn production.
Brazil is projected to obliterate previous corn production and export records in the 2022-23 marketing year, according to the Foreign Agricultural Service of the US Department of Agriculture. The FAS forecasts production to reach 126 million tonnes, up from last year’s record crop of 116 million tonnes, while exports are projected at 47 million tonnes, up from 44.5 million tonnes in 2021-22.
Meanwhile, war-torn Ukraine, the fourth largest grain exporter in the world, is projected to produce 25 million tonnes of corn (down from 42 million last year) and export just 9 million tonnes after exporting 24 million in 2021-22.
Slower economic growth, high prices and COVID-related restrictions have lowered China’s soybean import expectations for 2021-22, according to a report from the US Department of Agriculture’s Foreign Agricultural Service (FAS).
Imports are estimated at 94 million tonnes for 2021-22 and 98 million tonnes for 2022-23. While soybean meal and vegetable oil demand is expected to improve in 2022-23, higher domestic production will cut into imports, FAS said.
Soybean production for 2022-23 is forecast higher to 18.4 million tonnes on an expanded planted area that is supported by high prices and government incentives. Planted area is forecast at 9.35 million hectares, an 11% increase.
The expansion comes from farmers switching from corn, and to a lesser extent rice, to soybeans and a growth in the adoption of corn and soybean intercropping.
Total oilseeds for crushing in 2022-23 is forecast at 131.7 million tonnes, up from an estimated 127.5 million tonnes in 2021-22. Demand recovery is expected for protein meals in the feed sector. Soybean meal consumption accounts for about 76% of total protein meals for feed use.
“Additionally, higher vegetable oil prices, greater soybean food use consumption, and lower availability of sunflower seed meal in 2022-23, is expected to increase demand for soybeans for crushing,” FAS said.
Vegetable oil for food use is forecast to rise 6.2% in 2022-23, to 35.9 million tonnes. According to the National Bureau of Statistics (NBS), total sales of grain, vegetable oils and food in the first five months of 2022 were up 10% from the previous year. However, due to COVID-related restrictions in several provinces and municipalities, food service revenue in the first four months of 2022 declined 5.1% year-on-year, dropping 22.7% in April, which was the peak of the Shanghai region lockdown.
Food sector vegetable oil consumption has dropped as ongoing COVID-related restrictions have led to postponement or cancellation of most conference, seminars, banquets and other activities that draw large crowds.
Loaded grain trucks were not getting to Argentina’s largest port on June 29 as a truck driver protest against high fuel prices brought the country’s agricultural exports to a near standstill, Reuters reported.
The provincial Road Safety Agency said truck owner guilds protesting high diesel prices and shortages prevented the passage of loaded trucks on different roads in the province of Santa Fe, home to port city Rosario, the gateway for around 80% of Argentine agricultural exports.
On June 29, Rosario terminals on the Parana River received 889 grain trucks, 76% fewer than a year ago, the Rosario Grains Exchange said. More than 80% of grains bound for export are transported by trucks in Argentina.
Argentina is the world’s top exporter of processed soybean oil and meal, the no. 2 exporter of corn, as well as a major global supplier of wheat and beef.
“As of (June 29), we are missing more than 400,000 tonnes (of merchandise), so we are close to running out of grains,” Gustavo Idigoras, the head of the grain exporters and crushers chamber in Buenos Aires, told Reuters.
Over the weekend, the country’s transport minister, Alexis Guerrera, said that the diesel shortage should be resolved within 15 to 20 days with the arrival of ships carrying fuel imports.
Russia is considering a gradual switch for state export taxes for grains and sunflower seeds from US dollars to rubles at the behest of commodities traders, Reuters reported, citing the Interfax news agency.
Two industry sources told Reuters that traders had been asking the government to change the mechanism for the wheat export tax, set by Russia’s agriculture ministry at $142, which at the current exchange rate would be 7,568.61 rubles, per tonne, for June 22-28, but there was no agreement among officials.
Russia, the world’s largest wheat exporter and a major supplier of sunflower seeds, is facing a raft of US and European sanctions following Moscow’s decision to send troops into Ukraine on Feb. 24. The war in Ukraine has sent grain prices worldwide skyrocketing and threatened food security in underdeveloped nations, particularly those that rely on the Black Sea nations for their grain.
Russia’s grain exports have been constrained as the new marketing season starts on July 1 amid a high export tax, strong ruble, problems with freight and lack of forward sales caused by the sanctions, though transactions for food, agricultural products and medical supplies are exempted.
“Government ministries are discussing modernization of the grain and sunflower seeds’ tax mechanism to preserve profitability and investment attractiveness of the Russian farmers,” a government source said, according to Interfax. “It is a matter of giving a certain discount to the export duty, taking into account the risks of declining profitability of production. This will not affect the domestic prices but will support exports.”
World wheat markets are at their highest price levels since 2008 as reduced supplies, held back by the conflict in Ukraine, a move by India to limit shipments abroad, and the weather — notably a heat wave affecting western Europe a few weeks ahead of harvesting — tighten the market amid strong demand.
According to the United Nations Food and Agriculture Organization (FAO), which published its Cereal Price Index on June 6, international wheat prices rose for a fourth consecutive month, up 5.6% in May, to average 56.2% above their value last year and only 11% below the record high reached in March 2008.
“The steep increase in wheat prices was in response to an export ban announced by India amidst concerns over crop conditions in several leading exporting countries, as well as reduced production prospects in Ukraine because of the warm weather,” the Rome, Italy-based UN body said.
In its World Agricultural Supply and Demand Estimates report, published June 10, the US Department of Agriculture (USDA) said that “the global wheat outlook for 2022-23 is for lower supplies, reduced consumption, fractionally lower trade, and slightly lower ending stocks.”
The USDA had cut its forecast for supplies by 1.7 million tonnes to 1.052.8 billion as lower India production more than offsets an increase for Russia.
“India’s production is lowered 2.5 million tonnes to 106 million as extreme temperatures in March and April reduced yields during grain fill,” the USDA said. “Russia’s production is raised 1 million tonnes to 81 million with all of the increase in winter wheat on generally favorable weather conditions to date.”
The USDA cut its projection for world wheat consumption in 2022-23 by 1.5 million tonnes to 786 million, “mainly on lower feed and residual use for India and less food, seed, and industrial use for Sri Lanka and Argentina.”
“Projected 2022-23 global trade is decreased 300,000 tonnes, to 204.6 million, as lower exports from India are not completely offset by higher exports from Russia and Uzbekistan,” the USDA said. “India’s exports are reduced 2 million tonnes, to 6.5 million, as the government intends to restrict exports to some destinations to ensure sufficient domestic supplies. Russia’s exports are raised 1 million tonnes, to 40 million, which would be the second largest on record.”
The USDA also noted that Russia’s supplies are projected higher for 2022-23 and its export prices are “more competitive than most other exporters.”
In its May 19 Grain Market Report, the International Grains Council (IGC) said wheat export prices rallied during the previous month, with its index for prices at its highest level since March 2008.
“Against the backdrop of hostilities in Ukraine, global supply worries were fueled by unfavorable cropping weather in some major exporters, including the United States, Canada, Argentina and parts of the European Union, while India’s decision to curb wheat exports propelled markets even higher recently,” the IGC said. “North American markets were especially strong, as adverse crop weather compromised production prospects in the US and Canada. Nonetheless, continued slow export interest helped to anchor US futures prices.”
EU export quotations (France) initially eased as traders eyed waning old crop demand and competition from Russia and India, the IGC said.
“However, more recent impetus for price gains stemmed from mounting concerns about intensifying dryness in some regions, notably in France,” the IGC said. “Nearby export quotations in Russia firmed as shipments continued despite logistical and payment difficulties. However, values remained poorly defined, especially for new crop positions.”
SÃO PAULO, BRAZIL — Brazil is projected to harvest a larger second corn crop this year as timely rainfall has lessened the severity of drought in the South American country, according to Reuters, which cited an Agroconsult report released on June 21.
Agroconsult’s latest projection sees this year’s second corn crop at 89.3 million tonnes, up from its forecast of 87.6 million in May.
The second corn crop, which is planted after soybeans are harvested in the same areas, will account for nearly 80% of the country’s total production, forecast by Agroconsult at 114.8 million tonnes.
It also made an upward revision in Brazilian corn exports, from 37 million tonnes to 43 million.
This would be welcome news to corn importers as Ukraine, one of the world’s top exporters, struggles to ship corn due to Russia’s blockade of Ukrainian ports.
Reuters also noted that Agroconsult raised its estimate for Brazil’s soybean crop to 126.9 million tonnes from 124.6 million.
On May 25, the World Bank and S&P Global Market Intelligence released the second edition of their jointly produced annual Container Port Performance Index for 2021. Listed in descending order of efficiency, the worldwide port rankings were based on the time spent by vessels in port exchanging container cargos, and averages were weighted by call size and vessel size.
In the ranking of 370 ports worldwide, the ports of Long Beach and Los Angeles took the last two spots—369 and 370, respectively. (In 2020, out of 351 ports, Los Angeles had ranked 337 and Long Beach, 341.) The index’s performance metrics showed large variances in port efficiency, which often related to differences in infrastructure spending.
According to the index report, the large queue of ships on the U.S. West Coast in 2021 stemmed from such factors as pandemic-induced labor issues at the ports, slow chassis turns, lack of container staging space, slow rail service, and containers out of position in the network. According to the report, these issues were common among the least efficient ports.
Missouri DOT Seeks Input on Its Transportation Improvement Program
The Missouri Department of Transportation (MoDOT) is inviting public comments on which projects (for fiscal years 2023 to 2027) from its Statewide Transportation Improvement Program (STIP) should receive funding. Possible projects include replacement of load-posted bridges; technology to improve the flow of freight; addition of new truck parking facilities; and geometric improvements to interchanges and ramps.
Snapshots by Sector
Export Sales
For the week ending May 19, unshipped balances of wheat, corn, and soybeans for marketing year 2021/22 totaled 25.8 million metric tons (mmt), up 2 percent from the same time last year and down 8 percent from the previous week.
Net corn export sales were 0.152 mmt, down 63 percent from the previous week. Net soybean export sales were 0.277 mmt, down 63 percent from the previous week. Net weekly wheat export sales were −0.002 mmt, down significantly from the previous week.
Rail
U.S. Class I railroads originated 21,797 grain carloads during the week ending May 21. This was a 1-percent decrease from the previous week, 14 percent fewer than last year, and 7 percent lower than the 3-year average.
Average June shuttle secondary railcar bids/offers (per car) were $1,700 above tariff for the week ending May 26. This was $444 more than last week and $1,981 more than this week last year.
Barge
For the week ending May 28, barged grain movements totaled 947,300 tons. This was 33 percent higher than the previous week and 10 percent higher than the same period last year.
For the week ending May 28, 594 grain barges moved down river—145 more barges than the previous week. There were 475 grain barges unloaded in the New Orleans region, 39 percent fewer than last week.
Ocean
For the week ending May 26, 26 oceangoing grain vessels were loaded in the Gulf—21 percent fewer than the same period last year. Within the next 10 days (starting May 27), 36 vessels were expected to be loaded—5 percent fewer than the same period last year.
As of May 26, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $81.50. This was 1 percent less than the previous week. The rate from the Pacific Northwest to Japan was $47.00 per mt, unchanged from the previous week.
After surging nearly 13% during the eat-at-home early days of the pandemic, sales of organic food rose by less than 2% in 2021, as Americans abandoned pantry loading, said the Organic Trade Association (OTA) on Thursday. Sales of organic food totaled $57.5 billion last year, a $1 billion increase from 2020.
It was the slowest growth rate in more than a decade for organic, ordinarily one of the most dynamic segments of the food sector. The pandemic upended the food industry in 2020, driving consumers to the grocery store while shutting down restaurants and schools. Shoppers combated shortages by buying extra food when they could. There was a boom in home baking.
“Like every other industry, organic has been through many twists and turns over the last few years, but the industry’s resilience and creativity has kept us going strong,” said OTA chief executive Tom Chapman. “When pandemic purchasing habits and supply shortages began to ease in 2021, we saw the strongest performance from categories that were able to remain flexible, despite the shifting landscape.”
In releasing its annual report on the organic industry, the OTA said that in 2021, shoppers — instead of hoarding food as they had during the pandemic — returned to the familiar routine of buying food as they needed it. Food sales increased 1.8% from 2020, and nonfood sales were up 7%.
Fruits and vegetables, the largest sector for organic food, notched sales of $21 billion, up 4.5%. Fresh produce sales surged 6%, and dried beans, fruits, and vegetables rose 6.5%. Overall, 15% of U.S. fruit and vegetable sales last year were organic, said the OTA.
Processors are putting more packaging on organic produce because some shoppers believe it reduces the risk that there is coronavirus on their purchases. “It is yet unclear if this trend will continue, however, as organic food shoppers historically have preferred less packaging and plastic use,” said the OTA.
After soaring in 2020, sales of organic dairy and eggs retreated in 2021, as supply scares became less frequent, said the trade group. Tight supplies of organic feed contributed to higher prices and lower total sales, it said, although sales were still 11% larger than in 2019.
Sales of organic meat rose 2.5%, to nearly $2 billion. Organic poultry was the top performer in the category, up 4.7%, to more than $1 billion.
Sales of packaged and prepared food dropped 5%, “representing a shift away from pantry loading and toward more measured purchasing patterns,” said the OTA. Canned soups, nut butters, and pasta sauce, which rode the escalator of consumer demand in 2020, saw the largest decreases in 2021. However, baby food sales were up 11%, to $1.2 billion.
Snack sales, which fell in 2020, rebounded in 2021 as offices, schools, and stores reopened. Coffee sales also boomed, rising more than 5% “as Americans increasingly transitioned into hybrid and work-from-home models.”
With $2.3 billion in sales, textiles generated 40% of revenue for nonfood organic products, a category that also includes dietary supplements and personal care products.
BEIJING, CHINA — China has gathered 55% of its winter wheat crop as of June 6, passing the halfway mark two days ahead of last year, the Ministry of Agriculture and Rural Affairs said.
The harvest has proceeded smoothly amid fears that COVID-19 work restrictions would hinder the effort and in the shadow of Russia’s ongoing invasion of Ukraine, which has sparked concerns about global wheat shortages and led to record prices.
China had finished reaping winter wheat on about 11.13 million hectares of farmland by June 6, said the ministry. China has been reaping the crop on more than 667,000 hectares daily for eight consecutive days after large-scale machine harvesting began on May 28.
The agriculture ministry said wheat harvests in Sichuan and Hubei provinces are almost done, while in northern provinces — including Shaanxi, Shandong, Shanxi and Hebei — activity is nearing its peak. Traditionally, the summer harvest spans from May to late June, with grain output in the period taking up about a quarter of the annual total.
China, the world’s No. 1 wheat producer, has made grain self-sufficiency a top priority as part of its most recent five-year plan. China allocated 5 billion yuan ($787.75 million) in total from its central finance system to stabilize winter wheat output this crop year after the government expressed fears heavy rainfall had significantly reduced planted acreage.
The Foreign Agricultural Service of the US Department of Agriculture noted in its April report that late planting due to flooding had been limited to one key wheat production region, and China was projected to harvest 133 million tonnes in marketing year 2022-23, down only slightly from 136.95 million tonnes in 2021-22. The country is expected to import an additional 9 million tonnes in 2022-23.
Brazil is expected to slow its soybean planting expansion in 2022-23, with just a 0.5% increase year-over-year, down from the 3.8% annual growth rate last year, according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
Soybean planted area is estimated at 42.5 million hectares, compared with 40.7 million hectares in 2021-22.
Production is expected to recover from the previous year but growers now face new challenges in fertilizer cost and availability because of the war in Ukraine.
Production for 2022-23 is estimated at 141 million tonnes, based on a yield of 3.53 tonnes per hectare. The yield forecast is an increase of 1% year-over-year, and assumes normal weather conditions and lower fertilizer use, the USDA said.
Brazil relies on imports of inputs for soybean production, including fertilizers. Soybeans use 40% of the country’s total supply of fertilizers, with 85% of that being imported.
Over the last several months fertilizer supply has been disrupted by the COVID-19 pandemic, protectionist trade measures and geopolitical tensions. The Russian invasion of Ukraine substantially increased the risk of fertilizer supply chain disruptions, the USDA said.
Russia is a leading global supplier of fertilizers, and Brazil sources about a quarter of its fertilizers from Russia.
In the Center-West region of Brazil, it is estimated farmers could reduce fertilizers by 15% with just a 5% reduction in yield. In a scenario with less fertilizer but optimal weather, yields could be normal, the USDA said.
The USDA estimates 48.5 million tonnes of soybeans will be destined for processing in 2022-23, an increase of a little over 2%.
The forecast expansion is in line with the five-year average growth rate.
Soybean meal production is estimated at 37.5 million tonnes, up from the estimated 36.85 million tonnes in 2021-22. Domestic soymeal consumption is forecast to increase around 1% in the current and next seasons.
Soy oil production is forecast at 9.8 million tonnes. Domestic oil consumption is expected to increase to 8.1 million tonnes, up from 8 million tonnes in the current season.
Soybean exports in 2022-23 are forecast at 87 million tonnes, 10 million tonnes higher than in the current market year. The forecast is based on available supplies and a favorable exchange rate.
The USDA does not expect a severe downturn in demand for soybeans connected with the Russia-Ukraine war.
“In China and Europe — key soybean importers — despite economic uncertainty, meat consumption is not expected to suffer a dramatic downturn,” the USDA said. “China is expected to remain the top importer of Brazilian soybeans.”
Richardson Pioneer Ltd. plans to build a new high throughput grain elevator in High Level, Alberta, Canada.
The new elevator will include 32,000 tonnes of storage space and will be capable of loading 135 cars through a loop track design. The facility will replace the existing Richardson Pioneer 6,500 tonne wooden crib elevator currently located in High Level.
“The High Level area, with its solid and loyal customer base, is an important market for us,” said Darwin Sobkow, executive vice-president of operations at Richardson. “The construction of this new facility, along with the recently acquired crop input business in La Crete, shows our long-term commitment to the area and ensures we will be able to meet our customers’ growing needs.”
Construction is underway and is expected to be complete by the fall of 2020. Once operational, the new facility will work closely with Richardson Pioneer’s La Crete crop inputs business, which was acquired from AgLand Seed and Chemical Limited in February.
The facility will be serviced by Canadian National Railway (CN) and Richardson said it is grateful for their support of the project and commitment to the marketplace.
“Richardson has an ongoing, aggressive commitment to further investment in Canadian agriculture,” Sobkow said. “We will continue to enhance our business and pursue new growth opportunities to meet the needs of our customers at home and in world markets.”
According to Sosland Publishing Company’s 2019 Grain & Milling Annual, Richardson International Ltd. has 71 grain storage facilities with a total grain storage capacity of 95.7 million bushels.
Richardson Pioneer is a division of Richardson International, a Canadian agribusiness. A global company in agriculture and food processing, Richardson is a worldwide handler and merchandiser of all major Canadian-grown grains and oilseeds and is a vertically-integrated processor and manufacturer of oats and canola-based products. Richardson has more than 2,600 employees across Canada, the United States and the U.K.
The upcoming presidential election and troubling economic conditions have cast a cloud of uncertainty over Argentina grain and oilseed producers entering the 2019-20 crop season, according to an April 11 Global Agricultural Information Network report from the U.S. Department of Agriculture (USDA).
The report noted that during the 2018-19 marketing year, producers experienced a sudden increase in inflation, massive devaluation of the Argentine peso, and an increase in export taxes by three to six percentage points.
“As a result, producers are anxious to see how the economic and political situation will evolve in the next few months as they attempt to adjust their planting and marketing intentions to best mitigate risk,” the USDA said. “Producers indicate that if this economic decline continues and/or the likelihood of a candidate unfriendly to the agriculture sector becomes more likely, they may shift more to soybeans, leading to a net rise in crop area over the 2019-20 season.”
As it stands now, the USDA is forecasting soybean planted area to decline by 1% to 17.8 million hectares due to greater area competition from corn. At present, corn margins for next season are expected to be greater than those from first crop soybeans, leading to a minor reduction in soybean area.
Based on an expected average yield of 3 tonnes per hectare, the USDA forecasts soybean production to decline by 3% to 53 million tonnes.
Argentina’s soybean exports are forecast to increase by 4% in 2019-20 to 12.5 million tonnes due to greater exportable supplies and current trade conditions that are delivering higher returns for soybean exports in comparison to soybean products, the USDA said.
Expanded acreage and good weather during the safrinha growing season is expected to increase Brazil’s 2018-19 corn production by 18% over the previous market year. That trend is expected to continue into the next year, according to an April 8 Global Agricultural Information Network (GAIN) report from the Foreign Agricultural Service of the U.S. Department of Agriculture (USDA).
Total production is estimated at 95 million tonnes in 2018-19 and 97.5 million tonnes in 2019-20.
“For the MY 2018-19 season, farmers are expected to invest more to try to maximize yields, take advantage of the currently high domestic corn prices, and claw back some losses from a disappointing soy season,” the USDA said.
Corn area is forecast at 17.5 million hectares for 2018-19, 5% higher than the previous year. A further expansion is expected in the next crop year to 18 million hectares.
Increased soybean acreage has hurt first-crop corn planting numbers, but at the same time has resulted in rapid growth in safrinha corn area, the USDA said.
“The state of Mato Grosso is Brazil’s largest corn producer, responsible for roughly one-third of total Brazilian production in MY 2017-18, almost entirely from second-crop corn planted after the soybean harvest,” the agency said.
Safrinha corn is now accounting for the majority of the nation’s corn production, amounting to 66% in 2017-18 and an estimated 72% in 2018-19.
“This has become a problem for poultry and swine producers, who traditionally have relied on first-crop corn grown in southern Brazil as a large part of feed rations,” the USDA said.
Safrinha corn is grown far from poultry and swine operations, and the infrastructure is lacking to move it to from the center-west. Livestock operators in southern Brazil are turning to corn imports for feed rations, the USDA noted.
Corn exports are forecast at 30 million tonnes in 2018-19, an increase of 20%.
“The large expected crop will likely push prices lower after the harvest begins in June, making Brazilian corn even more competitive on the international market,” the USDA said. “However, infrastructure challenges and new taxes may constrain the corn export potential this season.”