The US Department of Agriculture (USDA) will release its World Agricultural Supply and Demand Estimates report soon, which will give a sense of the status of global grains and oilseeds supplies for the 2019/20 season. While the primary focus of the data is grains and oilseeds, the implications on sub-sectors such as livestock (meat and dairy) which utilises it, and thereafter global food price inflation, will also be revealed.

Previous USDA report paints disappointing picture

Last month the USDA had tentatively placed 2019/20 global maize production at 1,1 million tons, down 2% from the previous season, owing to expectations of a poor harvest in parts of the US, Argentina and Ukraine, among other countries. This meant that ending stocks for the season would be 298 million tons, down 9% year-on-year.

Soya bean production prospects also painted a similar picture, with the 2019/20 harvest set to fall by 4% year-on-year to 347 million tons. This was primarily underpinned by expectations of poor yields in parts of the US and Argentina. This subsequently meant that global soya bean stocks would fall by 7% from the 2018/19 season to 104 million tons.

Global impact of USDA report

The impact has been reflected in the prices, which are elevated somewhat from levels seen last year. The FAO Cereal Price Index averaged 168,6 points in July 2019, up 4% from its level in the corresponding month last year.

While today’s data will present a global picture of grains and oilseeds, the key focus will be on the US figures. Also, unlike the previous months, the US crop is at its advanced stages of development, which means the USDA will present a more reliable forecast of the harvest. On 4 August 2019, approximately 78% of the US maize crop was at the silking stage of growth, compared to 95% in the corresponding week in 2018, and a five-year average of 93%. In some areas the crop had already started to mature, as 23% of it was already doughing.

With that said, the effects of excessive moisture at the start of the season and subsequent late plantings are still apparent in crops in most parts of the US. Roughly 57% of the crop was rated good/excellent on 4 August 2019, compared to 71% in the corresponding period last year. This suggests that the yields could be well below last year’s levels in some areas.

As with maize, soya bean growing conditions are also at an advanced stage. On 4 August 2019, about 72% of the crop was blooming, compared to 91% in the same week last year, and a five-year average of 87%. Moreover, some fields have matured with the data showing that 37% of the US soya bean crop was setting pods. The effects of the bad start of the season may, however, lead to poor yields in some areas. Nearly 54% of US soya beans was rated good/excellent, compared to 67% in the same period last year.

No notable revisions are foreseen

The consequence the USDA’s data will have on global maize and soya bean prices could spill over to the South African market, and thereafter food prices or animal feed prices. Overall, Agbiz does not expect notable revisions to the data we presented above, as production conditions have not changed much since last month. – 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.

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