World agri estimates 2012 February – 692 mt of wheat, 462 mt of rice

The World Agricultural Supply and Demand Estimates (WASDE) for 2012 February have been released by the United States Department of Agriculture (USDA, through its Economic Research Service of the Foreign Agricultural Service).

Here are the important numbers: total wheat production 692.88 mt, total wheat exports 140.25 mt (of which 26.54 mt is US, the former Soviet Union countries (12) is 35.21 mt); total coarse grains production 1,142.19 mt (coarse grains include corn, sorghum, barley, oats, rye, millet, and mixed grains), total coarse grains exports is 119.81 mt; total world corn production is 864.11 mt; total world rice production is 462.75 mt.

Families queue for food at a feeding point in BadBado IDP camp in Mogadishu, Somalia. Photo: IRIN / Kate Holt

Here is what WASDE has said about global wheat, coarse grains and rice:

Wheat – Global wheat supplies for 2011-12 are projected 2.1 million tons higher with larger beginning stocks in Kazakhstan and increased production for India, Kazakhstan, and Morocco. Kazakhstan beginning stocks are raised 0.6 million tons with reduced domestic consumption for 2010-11. India production for 2011-12 is increased 0.9 million tons reflecting the latest government revisions, which increased yields for the crop that was harvested last spring. Kazakhstan production is raised 0.2 million tons based on the recent official estimate. Production for Morocco is raised 0.2 million tons also on official revisions to estimated yields in a crop that was harvested several months ago.

Global trade is raised slightly for 2011-12 with world imports increased 0.7 million tons. Small increases in imports are made for Saudi Arabia, Mexico, Chile, and Ethiopia. Export reductions for Ukraine, Canada, and India are more than offset by increases for Russia, the United States, Argentina, and Brazil. Global wheat consumption is reduced 1.0 million tons mostly reflecting a 1.6-million-ton reduction in India food use. Partly offsetting are small increases in food use for Australia, Chile, Ethiopia, and Kazakhstan. Global wheat feeding is nearly unchanged with a 1.0-million-ton reduction for Kazakhstan offset by increases for Ukraine, Saudi Arabia, Canada, and Mexico. Global ending stocks for 2011-12 are raised 3.1 million tons to a record 213.1 million. As projected, 2011-12 global wheat stocks would be 2.4 million tons higher than the previous record in 1999-2000.

A woman peels cassava in a village close to the northern Zambian town of Mpulungu. Photo: IRIN / Guy Oliver

Coarse grain – Global coarse grain supplies for 2011-12 are projected 3.1 million tons lower mostly reflecting reduced corn production prospects in Argentina and, to a lesser extent, Paraguay. Argentina corn production is lowered 4.0 million tons to 22 million as field reports confirm that high temperatures and extensive dryness during pollination in late December and early January resulted in irreversible damage to early corn in the central growing region. Late planted corn, which has been on the increase in recent years, will help offset some of the earlier losses, but additional rainfall is needed to stabilize production prospects. Corn production is lowered 0.4 million tons for adjacent Paraguay where hot, dry weather also reduced area and yields. Partly offsetting are small corn production increases for EU-27 and the Philippines. Global barley production is raised with Argentina production up 0.7 million tons on higher reported area and yields for the crop that was harvested during late 2011.

[You can get the data file here, and the pdf report here.]

Global coarse grain trade for 2011-12 is raised with higher corn imports for EU-27 and higher barley imports for Saudi Arabia, EU-27, and Jordan. Partly offsetting is a reduction in corn imports for Canada. Higher corn exports for a number of countries offset a 4.5-million-ton reduction for Argentina. Along with the projected increase for the United States, corn exports are raised 2.0 million tons for Ukraine, 0.5 million tons each for Brazil and EU-27, and 0.2 million tons for Russia. Barley exports are lowered 1.0 million tons for Ukraine, but raised 0.7 million tons for Russia, 0.5 million tons for Argentina, and 0.3 million tons each for Canada, EU-27, and Kazakhstan.

Global coarse grain consumption for 2011-12 is raised slightly with higher barley feeding in Ukraine and Jordan and higher corn feeding in Argentina and Ukraine. Corn feeding, however, is lowered for Canada and barley feeding is lowered for Kazakhstan and Saudi Arabia. Saudi Arabia is expected to rebuild stocks as world barley production has rebounded from a 40-year low in 2010-11. Global coarse grain ending stocks for 2011-12 are lowered, with a 2.8-million-ton reduction in corn stocks and a 0.6-million-ton reduction in barley stocks. At the projected 125.4 million tons, global corn ending stocks would be the lowest since 2006-07.

A woman tends to her goods while at a morning market in Kathmandu. Agriculture accounts for about 75 percent of the nation's workforce. Photo: IRIN / David Longstreath

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Rice – Global 2011-12 projections of rice production, consumption, trade and ending stocks are raised from last month. The increase in the global rice production forecast is due mostly to increases for India and the Philippines, which are partially offset by reductions for Brazil, Egypt, Argentina, and the United States. The U.S. rice crop (milled equivalent basis) is lowered slightly resulting entirely from the decrease in the average milling yield. India’s rice crop is forecast at a record 102 million tons, up 2 million from last month due to an increase in both harvested area and yield. According to the U.S. agricultural counselor in New Delhi, favorable 2011 monsoon rains coupled with overall good weather conditions in the major rice producing areas supported higher kharif rice acreage and productivity.

The Brazil rice crop is lowered 340,000 tons due to the effects of drought in Rio Grande do Sul, an important rice producing State. Global exports are raised by 1.4 million tons, primarily due to an increase for India and Egypt, which are partially offset by reductions for Thailand, Vietnam, and the United States. Forecast India exports are raised 2 million tons to a record 6.5 million tons, while exports for Thailand and Vietnam are lowered 500,000 and 200,000 tons, respectively. Forecast imports are sharply raised for Egypt based on information from the agricultural counselor in Cairo. Global ending stocks are up slightly from last month to 100.1 million tons mainly due to an increase for the Philippines.

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Agricultural supply and demand estimates show impact of US heatwave

The heatwave of mid-2011 is reflected in the latest World Agricultural Demand and Supply Estimates (WASDE), from the US Department of Agriculture, for 2011 September. The numbers and the accompanying commentary show just how badly this year’s scorching temperatures and insufficient rainfall has affected the outlook for corn, soybeans and cotton, as Worldcrops has observed.

Worldcrops has said that the most serious supply-demand tightness of these three agricommodities will be felt in corn, with a stocks-to-use ratio by the end of August 2012 now put at 5.3%. The national average yield in the US is forecast to be 148.1 bushels/acre, 4.9 bushels less than last month’s report and a massive 16.6 bushels below the record set in 2009-2010. Nevertheless this would still be the third biggest crop ever.

The USDA has slashed projected corn use for 2011-2012 by 100 million bushels – but only cut expected corn-for-ethanol usage by a meagre 50 million bushels. By August next year the US ending stocks will be, according to the report, 672 million bushels. That’s a drop in the bucket and by rights – and barring a global macroeconomic disaster – we ought to see $8/bushel corn futures sooner rather than later. Not least because the later the corn matures in the ground, the greater the risk of early frost damage.

We turn to the WASDE 2011 September commentary direct:

Wheat – Global wheat supplies for 2011-12 are projected 7.6 million tons higher mostly on larger beginning stocks in Canada and increased production for Canada, EU-27, and Ukraine. Beginning stocks for Canada are raised 1.3 million tons and production is raised 2.5 million tons, both reflecting the latest estimates from Statistics Canada. EU-27 production is raised 2.3 million tons with increases for Germany, Romania, France, Spain, and Bulgaria as harvest reports and revisions to official estimates continue to indicate higher yields. Production for Ukraine is raised 1.0 million tons based on the latest harvest reports. Other smaller production changes include 0.2-million-ton increases for both Brazil and Morocco, and a 0.2-million-ton reduction for Uzbekistan.

World wheat trade is raised slightly for 2011-12 with increased imports projected for the United States and Uzbekistan. Global exports are also raised as higher expected shipments from Canada and EU-27 more than offset reductions for the United States and Turkey. Global wheat consumption is increased 1.9 million tons with higher expected wheat feeding in Canada, China, Morocco, and Turkey more than offsetting a reduction for Russia. World wheat ending stocks for 2011-12 are projected 5.7 million tons higher at 194.6 million. At this level, global stocks would be up from 2010-11 and the second largest in the past decade.

Conversion Factors
1 metric ton = 45.9296 bushels
1 metric ton = 19.68 cwt
1 cwt is a hundredweight of 112 pounds or 45.35 kilogram

Coarse grain – U.S. feed grain supplies for 2011-12 are projected lower this month with reduced corn production as summer heat and dryness continue to be reflected in survey-based yield forecasts. Corn production for 2011-12 is forecast 417 million bushels lower with expected yields down from last month across most of the Corn Belt. The national average corn yield is forecast at 148.1 bushels per acre, down 4.9 bushels from August and 16.6 bushels below the 2009-10 record. As forecast, this year’s yield would be the lowest since 2005-06. Despite the lower yield, production is forecast to be the third highest ever with the second highest planted area since 1944. Total corn supplies for 2011-12 are lowered 442 million bushels with a 20-million-bushel reduction in carryin and a 5-million-bushel reduction in expected imports. Beginning stocks for 2011-12 drop with small increases in 2010-11 exports and use for sweeteners reflecting the latest available data. lmports for 2011-12 are reduced with the smaller forecast corn crop in Canada. Supplies for 2011-12 are projected to be the lowest since 2006-07.

USDA corn stocks-to-use ratio. Graphic: Worldcrops

Total corn use for 2011-12 is projected 400 million bushels lower with tighter supplies. Projected feed and residual use is reduced 200 million bushels mostly reflecting lower expected residual disappearance with the smaller forecast crop. Corn use for ethanol is projected 100 million bushels lower with higher expected corn prices and continued weakening in the outlook for U.S. gasoline consumption as forecast by the Energy Information Administration. Corn exports for 2011-12 are projected 100 million bushels lower with increased supplies and exports expected from Ukraine, Argentina, and Brazil. U.S. ending stocks are projected 42 million bushels lower at 672 million. The stocks-to-use ratio is projected at 5.3 percent, compared with last month’s projection of 5.4 percent. The season-average farm price is projected 30 cents per bushel higher on both ends of the range to a record $6.50 to $7.50 per bushel.

Global coarse grain supplies for 2011-12 are projected 3.1 million tons lower with larger barley, sorghum, millet, and oats supplies only partly offsetting the reduction for corn driven by the U.S. changes. Global corn supplies are reduced 4.5 million tons as increases in foreign beginning stocks and production partly offset the reduction in U.S. supplies. Projected global corn production for 2011-12 is lowered 5.9 million tons as a 4.8-million-ton increase in expected foreign output is outweighed by the 10.6-million-ton U.S. reduction. Brazil and Argentina production for 2011-12 are raised 4.0 million tons and 1.5 million tons, respectively, on higher expected area with rising returns for corn in both countries. Ukraine corn production is raised 1.5 million tons based on indications for higher yields. Production is raised 1.0 million tons for EU-27 with higher expected yields in France and several countries in Eastern Europe. Production is lowered 1.0 million tons for Canada based on the latest Statistics Canada estimates. Production is also lowered 2.1 million tons for Egypt as lack of government restrictions on planting resulted in a sharp shift in acreage away from corn and into rice.

Global coarse grain trade for 2011-12 is raised slightly with increased foreign trade in barley and corn more than offsetting the reduction in U.S. corn shipments. Barley imports are raised for Saudi Arabia and Syria with larger shipments expected from Ukraine and Russia. Corn exports are raised for Ukraine, Argentina, Brazil, and EU-27. Corn exports are lowered for Canada and Paraguay. Global corn consumption for 2011-12 is lowered 7.3 million tons, mostly reflecting lower expected use in the United States. Foreign corn feeding and consumption are nearly unchanged. World corn ending stocks are projected up 2.9 million tons with increases in South America, Ukraine, and EU-27 more than offsetting the reduction projected for the United States.

Rice – All rice beginning stocks for 2011-12 are lowered 2.7 million cwt from last month to 48.4 million (rough-equivalent basis) based on USDA’s Rice Stocks report released on August 26. The import projection is raised 1.0 million cwt to 19.0 million as it is expected that more long-grain rice will be imported due to tighter domestic supplies.

Exports for 2011-12 are projected at 93.0 million cwt, down 4.0 million cwt from last month, and down 18.6 million from the revised 2010-11 estimate. Long-grain exports are lowered 5.0 million cwt from last month to 61.0 million, and combined medium- and short-grain exports are raised 1.0 million to 32.0 million. The decrease in the export projection is due mostly to a much tighter supply situation, but additionally to an expected increase in competition from South American exporters in Western Hemisphere long-grain markets. Long-grain exports to Iraq are also expected to be lower. Increased competition principally from Egypt is expected to reduce medium-grain exports to Libya. All rice ending stocks for 2011-12 are projected at 38.3 million cwt, up 5.1 million from last month, but down 10.1 million from the revised 2010-11 stocks.

Projected global 2011-12 rice supply and use are increased from last month. Global rice production is projected at a record 458.4 million tons, up 2.1 million tons from last month, primarily due to larger expected crops in Brazil, China, the Philippines, and the United States. China’s 2011-12 rice crop is increased 1.0 million tons to 139.0 million, due mainly to an increase in the early rice crop. Brazil’s rice crop is raised nearly a million tons due to both an increase in area and expected yield. The recent surge in global prices accounts for the increase in planted area in Brazil from last month’s forecast. Global 2011-12 trade is nearly unchanged from last month. Global consumption is raised 0.7 million tons from a month ago due mostly to China. Global ending stocks for 2011-12 are projected at 98.7 million tons, up 0.7 million from last month, and the largest stocks since 2002-03. Stocks are raised for Brazil, China, the Philippines, and the United States.

Worldcrops has said that for soybeans. Ending stocks by end-August 2012 are put at 165 million bushels, 29 million higher than the August report but still tight. The US will have a reduced capacity to export soybeans and the futures price in our opinion will climb inexorably to $15/bushel and go significantly higher, if the weather outlook for the all-important South American soybean crop is unfavourable later this year. All in all this report has nothing which will astonish the markets immediately but lays the foundation for a significant bull-run in corn and, to a lesser extent, soybean futures in the coming months.

Six months of peak for the FAO food index

Since 2011 January, the FAO food price index components have recorded some of their highest monthly readings. Sugar touched a peak in January (420.2) and February (418.2), oils reached highs in February (279.3) and January (277.7), cereals reached highs in April (265.4) and May (261.3), meat touched a peak in June (180.4) and in April (180.4).

The consolidated food price index has been within 6 points (2.5%) of the February peak (237.7) for all the months of 2011. In June 2011 the index is less than 4 points off the February peak.

FAO’s Food Price Index rose one percent to 234 points in June 2011 – 39 percent higher than in June 2010 and four percent below its all-time high of 238 points in February of this year. The FAO Cereal Price index averaged 259 points in June, down one percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the Russian Federation’s export ban contributed to the price drop.

However the maize market remained tight because of low 2010 supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world’s largest rice exporter. The FAO Sugar Price Index rose 14 percent from May to June, reaching 359 points, 15 percent below its January record. Production in Brazil, the world’s biggest sugar producer, is forecast to fall below last year’s level. The FAO Dairy price Index averaged 232 points in June, virtually unchanged from 231 points in May. The FAO Meat Price Index averaged 180, marginally up from May with poultry meat rising three percent and climbing to a new record, while pig meat prices declined somewhat.

Following two consecutive revisions to the US crops and planting prospects for 2011, FAO’s latest forecast for world cereal production in 2011/2012 stands at nearly 2 313 million tonnes, 3.3 percent higher than last year and 11 million tonnes above FAO’s last forecast on 22 June. World cereal utilization in 2011/2012 is forecast to grow 1.4 percent from 2010/2011, reaching 2 307 million tonnes, just five million tonnes under forecast production. World cereal stocks at the close of the crop season in 2012 are now expected to stand  six million tonnes above their opening levels.  While wheat and rice inventories are expected to become more comfortable, coarse grains stocks, especially maize, would remain tight.

The FAO Food Price Index (FFPI) averaged 234 points in June 2011, 1 percent higher than in May and 39 percent higher than in June 2010. The FFPI hit its all time high of 238 points in February. A strong rise in international sugar prices was behind much of the increase in the June value of the index. International dairy prices rose slightly in June, while meat prices were stable. Of all the major cereals, prices of wheat fell most and rice increased. Among the oils and fats, prices of soybean oil were steady but palm oil weakened.

[Detailed data available from FAO here.]

The FAO Cereal Price Index averaged 259 points in June, down 1 percent from May but 71 percent higher than in June 2010. Improved weather conditions in Europe and the announced lifting of the export ban by the Russian Federation (from July) depressed wheat prices. However, maize markets were supported by tight old crop (2010) supplies and continued wet conditions in the United States. Prices of rice were mostly up in June, reflecting strong import demand and uncertainty over export prices in Thailand, the world largest rice exporter.

The FAO Oils/Fats Price Index averaged 257 points in June, down marginally from May. Continued production uncertainties and expectation of stronger world import demand sustained soybean oil prices. By contrast, palm oil prices eased further, reflecting improved supply prospects and ample export availabilities in Southeast Asia. The FAO Dairy Price Index averaged 232 points in June, virtually unchanged from 231 points in May. This was the result of diverging price movements, with prices of skim milk powder and casein up by 5 percent, whole milk powder down by 3 percent, while prices of butter and cheese remained stable.

The FAO Meat Price Index averaged 180 points, marginally up from May. Poultry meat prices experienced a 3 percent rise, breaking a new record, while pig meat prices declined somewhat. Prices of bovine and ovine meat were subject to modest increases, from already high levels. The FAO Sugar Price Index averaged 359 points in June, up 14 percent from May and only 15 percent below its January record. The price strength reflects  dynamic short-term demand against tight exportable availabilities, notably in Brazil, the world’s largest sugar producer where production is forecast to fall below last year’s level.

Foodgrain outlook, 2011 March – the prices effect now visible

The World Agricultural Supply and Demand Estimates (WASDE), the monthly forecast of the United States Department of Agriculture (Farm Service Agency, Economic Research Service, Foreign Agricultural Service) was released on 2011 March 10.

Highlights and main points for the major crop groups are:

Wheat – Global 2010-11 wheat supplies are projected 1.9 million tons higher reflecting higher production. Argentina production is raised 1.0 million tons based on higher reported yields. Australia production is raised 1.0 million tons with higher yields in Western Australia where wheat quality was not hurt by harvest rains as in the east. Other production changes include a 0.5-million-ton reduction for EU-27 with a smaller crop reported for Denmark and a 0.6-million-ton increase for Saudi Arabia on an upward revision to area.

Global wheat trade is projected lower partly reflecting reduced import prospects for a number of smaller markets as high prices trim demand. The largest import reduction, however, is for Russia where imports are lowered 1.5 million tons. Despite last year’s drought, Russia appears to be meeting its wheat needs as the government’s export ban helps maintain supplies for domestic users. With lower imports by Russia, Ukraine exports are lowered 1.5 million tons. Ukraine’s export restrictions have also disrupted trade with non-FSU countries. Exports are lowered 0.5 million tons for EU-27 on tighter supplies and the rising value of the Euro. Although exports are unchanged for the Australia October-September marketing year, exports are raised 1.0 million tons for the 2010-11 July-June international trade year increasing expected competition for U.S. wheat exports over the next few months.

Global 2010-11 wheat consumption is projected lower with the biggest change being a 1.5-million-ton reduction in expected wheat feeding for Russia. With increased global production and reduced usage, world ending stocks for 2010-11 are projected 4.1 million tons higher.

Rice – Global 2010-11 projections of rice production, consumption, and exports are lowered from a month ago, and ending stocks are raised. The decrease in the global production forecast, still a record at 451.5 million tons, is due entirely to a decrease in the rice crop in India, which is partially offset by increases for Argentina and Brazil. India’s rice crop is forecast at 94.5 million tons, down 500,000 tons from last month due to an expected decrease in average yield. Drier than normal weather in the eastern and northern rice growing regions is expected to lower Rabi yields. The increases in Argentina and Brazil are due to an expected increase in harvested area.

Global consumption is lowered 5.3 million tons to 447.0 million, still a record, primarily due to reductions in India (-4.0 million) and China (-0.5 million). Conversely, global ending stocks are raised 4.9 million tons to 98.8 million attributed mostly to increases for India, China, Bangladesh, and Burma. India’s 2010-11 ending stocks are raised 3.6 million tons to 21.6 million based on recently received information on government-held stocks. China’s 2010-11 ending stocks are raised nearly 1.0 million tons based on information from the Agricultural Counselor in Beijing. Global 2010-11 exports are lowered nearly 0.5 million tons, due mostly to reductions in Burma, China, and India.

Coarse Grains – Global coarse grain supplies for 2010-11 are projected 2.5 million tons lower this month with lower corn beginning stocks and reduced corn, barley, sorghum, and oats production. Global corn beginning stocks are lowered 0.6 million tons with upward revisions to Brazil exports and India feeding in 2009-10.

Global 2010-11 corn production is reduced 0.5 million tons as lower production in Mexico and India is partially offset by higher production in Brazil. Brazil corn production for 2010-11 is raised 2.0 million tons reflecting higher reported area and yields in the summer crop and expectations for increased area for the winter crop with government planting dates extended for crop insurance and loan programs. Mexico corn production is reduced 2.0 million tons as the unusual early February freeze destroyed standing corn crops across much of the northwest winter corn region, which normally accounts for about one-fourth of the country’s total corn production. Replanting is expected to offset some of the loss, but seasonally high temperatures in the coming months limit the growing season window.

Global 2010-11 sorghum and barley production are each lowered 0.5 million tons and oats production is lowered 0.3 million tons. Lower sorghum output for India more than offsets an increase for Australia. Lower barley and oats output for Australia account for most of the reduction in world production for these coarse grains.

Global 2010-11 coarse grain imports are raised this month as increases for corn and sorghum more than offset a reduction for barley. Corn imports are raised 1.1 million tons for Mexico with the lower production outlook. Corn imports are raised 1.0 million tons for EU-27 on stronger expected feeding. A 0.5-million-ton reduction for Russia corn imports is partly offsetting. Sorghum imports are raised for EU-27 and barley imports are lowered for Russia, Saudi Arabia, and China. Increased corn feeding in EU-27 is more than offset by reductions in feeding in Russia and lower food, seed, and industrial use in India and Mexico. Projected global corn ending stocks are raised slightly.

Food production and grain trade, Jan 2011

The International Grains Council (IGC) has released its Grain Market Report for 2011 January. The IGC said that world grains supplies are forecast to tighten in 2010-11 but the outlook is little changed from two months ago. World production is expected to decline by 3.8%, to 1,726m. tons: the wheat estimate is lifted on better than expected southern hemisphere crops but the maize total is cut.

A serious drought has developed in eastern China over the past few months. Total precipitation has been scarce since October 2010, with some locations on the North China Plain receiving less than 10 percent of normal precipitation through December 2011. A lack of snow cover has deprived the dormant winter wheat crop of valuable moisture and protection from frigid temperatures and winds. Seasonably dry and cold weather is expected to continue for the next two weeks. USDA's WASDE said the impact of the drought has been mitigated by the widespread availability of water for irrigation, but crop stress could become serious if the drought continues after the winter wheat emerges from dormancy in February/March 2011.

By far the biggest fall in grains output was in drought-affected Russia, with big reductions too in the EU, the US, Kazakhstan and Ukraine. A further rise in world grains consumption is forecast in 2010-11, to 1,787m. tons. However, at 1.4%, the rise is flatter than in recent years. The expansion in industrial use has slowed markedly, especially in the US ethanol sector, although recent use there has been higher than anticipated. Total feed use will only rise moderately this year.

The forecast fall of 62m. tons in global carryover stocks mirrors the reduction in the major grain exporters, with big declines in Canada, the EU, Russia and the US. World trade in grains is expected to rise by 2m. tons, to 242m., only marginally more than before, with bigger imports by the EU and Russia expected to outweigh reductions in Near East and Far East Asia. Because of the fall of 29m. tons in Black Sea shipments, exports by Argentina, Australia, the EU and the US are expected to climb steeply.

IGC said that international grain and oilseed prices advanced strongly in December and again in January, with some values at their highest for two years. However, export prices remained below the peaks recorded early in 2008. While there has been little fundamental change in the overall supply and demand balance in the past two months, markets were driven higher by concerns about supplies of quality milling wheat and the tightening outlook for maize and soyabeans.

The influence of other commodities, including crude oil, also featured regularly on the major exchanges. For wheat, reports that the extremely wet conditions in eastern Australia would render at least one-third of the country’s large wheat crop unfit for flour milling were especially bullish. More recently, better prospects for US exports and a winter wheat acreage report showing a smaller than expected rise in Hard Red Winter wheat plantings further triggered buying.

USDA Crop Explorer, south India rice coverage, 2011 forecast

IGC said that China was among several recent customers for Australian feed grade wheat. For maize, there were worries about a reduced official US carryover forecast as well as about whether plantings for the next crop would be sufficient to prevent stocks falling further in 2011-12. The impact of dryness, attributed to the La Niña event, on Argentina’s upcoming harvest added to the market’s nervousness. Similarly, despite quite ample current stocks, US soyabean prices moved higher, initially because of continued heavy demand from China but more recently due to a lower official US supply estimate and strength in crude oil. Rice export prices also increased, but while Thai values in late-December climbed to a ten-month peak, they subsequently fell back as the main crop harvest advanced. After mostly declining since June, ocean freight rates for grains firmed slightly in recent months, despite a further slide in the Capesize sector.

The US Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) for 2011 January has said that global 2010-11 wheat supplies are raised slightly this month as increased beginning stocks are mostly offset by lower foreign production. Beginning stocks for Argentina are up 0.9 million tons with upward revisions to 2008-09 and 2009-10 production estimates. Argentina production is also raised 0.5 million tons for 2010-11 as harvest results indicate higher-than-expected yields. Production in Brazil is raised 0.4 million tons as favorably dry harvest weather boosted yields for the 2010-11 crop. EU-27 production is raised 0.3 million tons based on the latest official estimates for Poland. More than offsetting these increases are reductions for Kazakhstan and Australia. Kazakhstan production is lowered 1.3 million tons based on the latest government reports. Australia production is lowered 0.5 million tons as heavy late-December rains and flooding further increased crop losses in Queensland.

According to WASDE 2011 January, world wheat imports and exports for 2010-11 are both raised slightly. South Korea imports are raised 0.4 million tons, mostly offsetting an expected reduction in corn imports. Imports are also raised 0.2 million tons each for Thailand and Vietnam based on the pace of shipments to date and the increased availability of feed quality wheat in Australia. Imports are lowered 0.5 million tons for EU-27 based on the slow pace of import licenses to date. Major shifts among exporters are projected as importers focus on U.S. supplies to meet their milling needs. Australia exports are reduced 1.5 million tons as quality problems limit export opportunities. Kazakhstan exports are reduced 1.0 million tons with lower supplies. While Argentina marketing-year (December-November) exports are raised 0.5 million tons, exports during the remainder of the July-June world trade year are expected to be lower based on the slow pace of government export licensing.

Global 2010-11 wheat consumption is projected 1.2 million tons lower, mostly reflecting reduced wheat feeding in EU-27, the United States, and Kazakhstan. Food use is also lowered for EU-27 and Pakistan. Partly offsetting are increases in feed use in South Korea, Thailand, and Vietnam, and higher expected residual loss in Australia with the rain-damaged crop. Global ending stocks are raised 1.3 million tons with increases for EU-27, Argentina, and Australia, more than offsetting the U.S. reduction.

WASDE 2011 January said that global 2010-11 rice production, consumption, trade and ending stocks are lowered slightly from a month ago. The decrease in global rice production is due primarily to a smaller crop in Egypt, which is down 0.5 million tons (-14%) to 3.1 million. Egypt’s area harvested in 2010-11 is reduced 19 percent from a month ago and is down 30 percent from the previous year. A reduction in the Egyptian government’s support of producer prices has discouraged farmers from planting rice. Additionally, the Egyptian government has imposed water restrictions thus reducing irrigation water availability. Furthermore, government restrictions have reduced exports. Global imports are increased slightly due primarily to increases for Indonesia and Turkey, but partially offset by a reduction for Egypt. Global exports are increased slightly due mostly to an increase for Thailand, partially offset by a decrease for Egypt. World ending stocks are projected at 94.4 million tons, down 0.4 million from last month and last year.

Food production and grain trade, May 2010

Vendors in Mapusa, Goa. The middle basket contains 'nachne', local millet

This is to be a monthly posting from now on. It will for a start draw on three main sources of global analysis: the Food and Agriculture Organisation (FAO), the International Grains Council, and the US Department of Agriculture Economic Research Service. Extracts from the three major sources run below, but this is to be placed in global context by the food production and supply situation in two of our neighbours in South Asia, Nepal and Afghanistan. There is hunger and displacement in Pakistan and Sri Lanka too, and I’ll update this posting with relevant reports. Also contrast the global views with the announcement from the US Department of Agriculture, which comes at the end of the list of extracts.

[1] “Nominal prices, in US dollar terms, of staple food commodities, mainly rice and wheat, have generally declined from the 2008 peak but remain significantly above their pre-2008 food-crisis levels in several countries. The price impact on overall food consumption of the vulnerable population is still expected to be substantial. Prices of rice have been increasing in India since the second half of 2008 and currently are above their levels of a year ago 5 percent in Chennai to 42 percent in Patna.”
“Retail prices of rice have also been rising since late 2009 in Bangladesh, the Philippines, Pakistan and Myanmar. In exporting countries such as Thailand and Viet Nam, rice prices (in local currencies) have declined since January 2010 due to strong international demand. Prices of wheat in India and Pakistan have also been rising steadily since October 2008. Recent increases are attributed to concerns over the unfavourable harvests of the current 2010 Rabi season. In Afghanistan, prices of wheat have been coming down since the 2009 bumper harvest in the country.” From FAO Crop Prospects and Food Situation May 2010

[2] “The forecast of world wheat production is increased by 2m. tons, to 660m. (676m.). World wheat consumption is forecast to grow by 1%, to a record 654m. tons, unchanged from last month. The forecast of global stocks is raised by 2m. tons, to a nine-year high of 201m. (195m.), with much of the increase in China and India.”
“World rice production in 2009/10 is estimated to decline for the first time in seven years, by 1%, to 442m. tons, mostly reflecting a reduced main crop in India. At 442m. tons, rice consumption will expand by 1%, in line with the global population trend. Inventories in China are expected to rise, but those in India and the five leading exporters are forecast to decrease. World trade in calendar 2010 is projected to recover by 5%, to 29.9m. tons, underpinned by larger shipments to Far East Asian markets.” From International Grains Council Grain Market Report 2010 May

FAO rice retail prices

[3] “Global wheat supplies for 2010/11 are projected 2 percent higher with larger year-to-year beginning stocks more than offsetting lower expected production. Global 2010/11 wheat production is projected at 672.2 million tons, down 1 percent from 2009/10 and the third largest production on record if realized. Larger projected production in EU-27, South America, and the Middle East is more than offset by expected declines in FSU-12, North Africa, South Asia, China, Canada, and Australia.”
“Global coarse grain production for 2010/11 is projected at a record 1,129.8 million tons, up 2 percent from 2009/10. Most of the 27.4-million-ton increase in coarse grains production results from higher projected foreign corn production, up 19.9 million tons from 2009/10. Higher expected foreign corn area and rising yields combine with higher U.S. area to boost global corn production to a record 835.0 million tons, up 26.5 million from 2009/10. Corn production is projected higher year-to-year for China, Mexico, India, Russia, EU-27, Ukraine, and Canada.”
“Global 2010/11 rice production is projected at a record 459.7 million tons, up 17.6 million or 4 percent from 2009/10. World disappearance (consumption and residual) is projected at a record 453.4 million tons, up 10.9 million or 2 percent. Large crops are projected for most of Asia including record or near-record crops in Bangladesh, Burma, Cambodia, India, Indonesia, the Philippines, Thailand, and Vietnam. Additionally, large crops are forecast for the U.S., EU-27, and Nigeria.” From US Department of Agriculture, World Agricultural Supply and Demand Estimates, 11 May 2010

In Nepal, food supplies are running low in the western hills. An IRIN report from Kathmandu (21 May 2010) says: “Food security for more than 600,000 people in the western hills of Nepal is set to deteriorate, aid agencies warn. With already low agricultural production in the more food-insecure areas, inflation is exacerbating matters further. “A lot of villagers are opting for more desperate coping mechanisms,” Richard Ragan, country representative for the World Food Programme (WFP), told IRIN in Kathmandu. Many villagers are already reducing the number of meals they eat each day, cutting portions, or migrating to urban areas or India for work, he said. ‘In a desperate attempt to buy food, families are even selling their livestock and household assets and the out-migration [to Nepali cities and India] has increased already by 40 percent,’ Ragan said.”

Gulmohur trees in bloom, May in Maharashtra

In Afghanistan, farmers face a tough choice: wheat, fruit or saffron? An IRIN report from Kabul (20 May 2010) says: “Pointing to his flourishing wheat field in the western Afghan province of Herat, Abdullah says he regrets cultivating the crop. Wheat is very cheap,” he told IRIN, adding that he would hardly make 50,000 Afghanis (about US$1,050) from his two hectares. “I won’t be able to feed my family properly with this income.” Several farmers contacted by IRIN in Helmand, Kandahar and Balkh provinces had similar sentiments. Wheat is considered a strategic crop and a staple food, but imports are always required, even when there is a bumper harvest. About seven million (over 24 percent of the country’s estimated 27 million population) are food-insecure and many others are highly vulnerable to food price fluctuations, according to aid agencies.”

Here is the announcement from the US Department of Agriculture: “US farmers, ranchers and producers are poised to achieve $104.5 billion in sales – an $8 billion increase over last year and the second highest level in history.

• The trade surplus in agriculture is now forecast to reach $28 billion, the second highest ever achieved.
• The report comes on the heels of an historic six-month pace by U.S. agricultural exports, which shattered records with $59 billion in sales in the first half of the fiscal year and generated a 14 percent increase over the same period last year.
• U.S. agricultural exports to China grew by nearly $3 billion during the first half of the fiscal year to $10.6 billion, making China the United States’ top market for this period. In total, exports to Asia have reached record highs, led by strong increases in China and Southeast Asia. Other outstanding country and regional customers include the European Union, Turkey, and North Africa.”