Large grain supplies expected in the global market
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.As per usual on a Tuesday, Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa, Agbiz, provides a weekly insert to OFM News' The Agri Hour, on the South African agricultural markets. This past week, the United States Department of Agriculture (USDA) released the World Agricultural Supply and Demand Estimates data, and it is arguably among the most anticipated data releases in global agricultural markets. Sihlobo says the agency reinforced the message painted by the International Grains Council (IGC) last month, that includes expectations of large supplies in the global market. This message also allays the fears of countries that had placed export bans fearing for a global shortage of grain commodities.
The USDA forecasts the 2020/21 global production for maize at 1.2 billion tonnes, which is an increase of about 6% on a year-year ( y/y) basis. He says this will mainly be underpinned by an expected expansion in area plantings and higher yields in America, Mexico, Canada, Brazil and the European Union (EU). The planting of this crop has begun in the northern hemisphere and progressed with minimal interruptions, albeit with the additional coronavirus-related precautions on farms.
He says the USDA forecasts a 1% y/y increase in 2020/21 wheat production to a new high of 768 million tonnes. The improvement is expected in Australia, India and Russia boosted by an increase in area planted and expected higher yields. This will compensate for a potential production reduction in the EU, Ukraine, America and North Africa.
Wheat-importing countries such as South Africa also stand to benefit with such an outlook, assuming there are no further restrictions on exports imposed as the data shows that there should be no global supply concerns, says Sihlobo. South Africa’s 2020/21 wheat production season recently commenced and the outlook is not encouraging. Plantings are set to fall by 8% y/y to 495 000 hectares, mainly in the Free State.
The USDA forecasts the 2020/21 global production for maize at 1.2 billion tonnes, which is an increase of about 6% on a year-year ( y/y) basis. He says this will mainly be underpinned by an expected expansion in area plantings and higher yields in America, Mexico, Canada, Brazil and the European Union (EU). The planting of this crop has begun in the northern hemisphere and progressed with minimal interruptions, albeit with the additional coronavirus-related precautions on farms.
He says the USDA forecasts a 1% y/y increase in 2020/21 wheat production to a new high of 768 million tonnes. The improvement is expected in Australia, India and Russia boosted by an increase in area planted and expected higher yields. This will compensate for a potential production reduction in the EU, Ukraine, America and North Africa.
Wheat-importing countries such as South Africa also stand to benefit with such an outlook, assuming there are no further restrictions on exports imposed as the data shows that there should be no global supply concerns, says Sihlobo. South Africa’s 2020/21 wheat production season recently commenced and the outlook is not encouraging. Plantings are set to fall by 8% y/y to 495 000 hectares, mainly in the Free State.
