If the US maize crop was at an advanced stage of growth, the latest US Department of Agriculture (USDA) report would have convinced us that the supplies will be in better shape than initially feared.

US maize production estimation increased

The agency has lifted its estimate for US maize production by 1% from June 2019 to 352 million tons. This improvement, coupled with an uptick of the Black Sea’s production estimates led to a 1% increase in the 2019/20 global maize production estimate to 1,1 billion tons. This would, however, still be 2% less than the 2018/19 harvest.

But the crop is not yet at an advanced stage of development, and the production estimates could change notably in next month’s update report. On 07 July 2019, only 8% of the US maize crop was at the silking stage of growth, compared to 34% in the corresponding week in 2018, and a five-year average of 22%. This is a result of late plantings in most parts of the US due to excessive wet weather conditions in the past few weeks.

The excessive rains did not only slow plantings but also increased a chance of poor yields in the US. On this end, we continue to monitor the developments through the USDA’s weekly crop conditions report. On Sunday, 7 July 2019, only 57% of the US maize was rated as being in good or excellent growing conditions, compared with 75% in the corresponding period in 2018. This alone tells us that the US maize crop is not in good condition.

Soyabean production estimate

As we pointed out in our note last week, for South African maize farmers and maize-users, developments in the US market are important and have strong influences on our local market, which is generally linked to the global agricultural markets.

The other crop that we are viewing from the same lens as maize is soyabeans. But, unlike maize, the US soyabean production estimate was revised down by 7% from June 2019 to 104 million tons. This contributed to an overall 2% month-on-month decline in global soyabean production, estimate to 347 million tons. Moreover, global soyabean production is 4% lower than the 2018/19 season. It is not only the US that is contributing to the decline in global soyabean harvest, but also Argentina owing to the expectations of poor yields.

Similar to maize, we cannot take the soyabean production numbers as an absolute indication of what is likely to transpire at the end of the season because the crop is still at its early stages of growth. This is also due to a late start of the season on the back of excessive moisture. In the week of 7 July 2019, the US soyabean crop hadn’t even completely emerged. About 90% of soyabeans had emerged compared to 100% on 7 July 2018. Of the crop that had emerged, only 10% of it was blooming compared to 44% on 7 July 2019. In terms of crop-growing conditions, data from the USDA shows that 53% of the soyabean crop was rated good or excellent, compared to 71% in the corresponding period in 2018.

Impact on global soyabean supplies

While South Africa is not a major importer of soyabeans, developments in the global soyabean market do influence the local market and prices of soyabean by-products. The most notable one is soyabean oilcake, of which South Africa imports on average about half a million tons a year. Over the coming weeks, we will closely monitor the crop-growing conditions in the US maize and soyabean fields in order to ascertain the impact on global supplies. To this end, an important report to keep an eye on is the USDA’s August 2019 issue of the World Agricultural Supply and Demand Estimates report which will be released on 12 August 2019.

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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