Summer droughts continue into autumn
by Rebecca Sherratt, Features Editor, Milling and Grain
A particularly dry summer has been exhibited throughout the northern hemisphere and much of the southern hemisphere. This has affected global agricultural commodity values and yields, particularly in both South America and the Black Sea regions. Autumn is expected to see increased rainfall in some countries, but droughts and dry conditions may persist, putting pressure on farmers. As a result of this, the UK is expected to maintain its solid position in the global wheat market. UK harvest reports show their harvest to be almost complete, with estimates of national spring barley yields seeing between a 1-6% increase. Wheat, winter barley, oats and winter oilseed are all expected to see varying drops in yields, ranging from between 6-23% drops, but this should not cause any considerable changes to the UK's current market position.
On a global scale, this seasons wheat production is expected to reach 763.4 million tonnes (mt), approximately 1.2mt higher than the previous season. Major export declines by leading countries have been offset by increased production in Russia, Canada and Australia. Total wheat production in Canada has reached a 5.6% increase compared to last season, with a total production of 34.10mt. This primarily consists of winter wheat and durum production figures. The US is expected to harvest 49.69mt of spring wheat this harvest. In addition, US exports are expected to again rise as China continue to purchase extensive agricultural commodities, following their trade deal earlier in the year. In Ukraine, the dry weather led to wheat production figures reaching 25.1mt, a small drop from the previous harvesting year where Ukraine produced 19.17mt. Ukrainian growers note that winter wheat sowing for 2021 has yet to begin, due to severe droughts.
In contrast to much of the northern hemisphere, Australia has seen growth in wheat exports, owing to increased rainfall. Production is estimated to reach 28.5mt this season, which is expected to cater to Asian and North African demand. Rainfall will continue throughout October, but farmers will be watchful as there remains a risk of flooding.
This season, the estimate for global maize production is forecast at 1160mt, a 39mt increase compared to the previous season. Similar to wheat production, the northern hemisphere has been subject to dryness and reduced yield, whilst the southern hemisphere has seen increased production figures.
The seasonal changes as summer ends are resulting in farmers closely monitoring maize, the values of which will be subject to weather conditions. US farmers have expressed their desire to increase both maize and soyabean acreage, with the goal of better returns in the 2021/22 harvesting season. This season, the US are expected to produce 378.47mt of maize. This figure is a reduction on earlier estimates, following the derecho storm that wreaked havoc on Iowa in early August. Despite the complications of the storm, the US maize harvest is still expected to be the second largest on record. China's increased export purchases have also been exhibited with maize, with 996mt of maize scheduled for export in the current harvest season.
The European Association Coceral has also revised the EU's maize forecast for 2020, reducing from the total maize production figure of 64.6mt predicted in August, down to 62.8mt. France was hit especially hard by their current weather patterns, soft wheat exports decreasing by a significant 51%, production reaching a total of 6.60mt compared to last season's 13.46mt. Similar situations can also be seen in Italy and Romania. The vast majority of EU agricultural commodities saw decreased production due to extended periods of dryness. This season, the EU's wheat production is estimated to reach 129.30mt.
Brazilian maize hit a new record this season, with production figures exceeding 102.5mt, an estimated 39mt of which will be exported to China. Both Brazil and Argentina may be subject to dry conditions over the next few months, as a result of La Niña and decreased temperatures.
Soyabean and rapeseed
The soyabean market continues to prosper, following China's increased market demand in recent weeks. South America is expected to increase supply of soyabeans to ensure stable supplies. As a result of increased US soyabean production, prices of UK and French rapeseed have seen sharp decreases. Pressured prices could increase, depending upon the success of the US soyabean harvest. Despite this, the dry weather may result in US soyabean yield being a smaller figure than originally estimated.
In a bid to stimulate export revenue, Argentina announced a decrease in soyabean taxes on October 1st. This was met with mixed opinions, as some consider this proposal will lead to minimal profits. The country's 2020/21 soyabean harvest is expected to reach 50mt, remaining at roughly the same figure as the previous harvest year.
Brazil's 2020/21 harvest is expected to reach 133mt, compared to the previous harvest season of 126mt. Although yields have decreased, increased acreage has resulted in this forecast increase.
Canadian rapeseed production is estimated to reach 19.5mt this harvest year, up 3% from August 2020 forecasts and down 2% from the five-year average. Similar to Brazil's soybean harvest, this is a result of increased acreage, rather than increased yield. Australia has also experienced increased rapeseed production due to steady rainfall.