When the United States Department of Agriculture (USDA) released its preliminary estimates for the 2019/20 global grains and oilseeds production, the sentiment in the agricultural market was that there will be large food supplies.
Rise in global maize production initially expected
The agency estimated a 1% annual uptick in 2019/20 global maize production to 1,1 billion tons. The countries to be responsible for this improvement included the United States, Argentina, Canada, Brazil and India.
The 2019/20 global soybean production was estimated at 356 million tons, down by 2% from the previous season, but still higher than the average long-term production. The United States, Brazil, Argentina and Paraguay were amongst the countries expected to produce a large share of the anticipated harvest.
But this picture is likely to change in this month’s update, which will be released on 11 June 2019, owing to slow progress in plantings in the United States. This is on the back of wet weather conditions in the country’s farm belt.
Slow planting progress
To illustrate this slow planting progress, consider the week of 26 May 2019 when United States’ farmers had planted 58% of the intended hectares for maize, compared to 90% in the corresponding period last year, or average five-year progress.
As a result of wet weather conditions, the crop-growing conditions have also been poor. About 32% of the maize crop had emerged in the week of 26 May 2019, compared to 69% in the corresponding week last year or the five-year average.
Soya beans have also been experiencing similar conditions, with only 29% of the intended area for 2019/20 hectares planted in the week of 26 May 2019, which is way behind last year’s pace of 74% in the same period, and five-year average progress of 66% in the same week. In the areas planted, the crop emergence has been poor, with only 11% of the crop out in the week of 26 May 2019, compared to 44% in the corresponding week in 2018, and a five-year average pace of 35%.
Higher rainfall leads to further delays
Parts of the United States recently still experienced similar conditions of higher rainfall, which points to a possibility of further delays in plantings. What’s more, there are now rising fears of potential yield losses as the optimal planting window has narrowed. This reinforces our view that global maize and soya bean production estimates could be revised downward when the USDA releases its production forecast update next week. – Wandile Sihlobo, Agbiz
Wandile Sihlobo, head of economic and agribusiness intelligence at Agbiz, shares highlights in his update on agricultural commodity markets. Click here for the full report on agri markets for the major commodities.
Markets brought to you by Standard Bank.