Agricultural analysts worldwide are turning their attention to the southern hemisphere, where the 2022/2023 summer crop season commences this month.
Global forecasters such as the International Grains Council (IGC) and US department of agriculture will also increasingly incorporate more information about the underlying developments at farms in their analysis. This on-the-ground insight will help improve their forecasts compared with the past few months, when they relied on historical production figures.
The IGC has released its updated view of the 2022/2023 summer grains and oilseeds production. The data painted a broadly optimistic picture, with the 2022/2023 global grains and oilseeds production estimated at 2.26-billion tonnes. This harvest is only 1% lower than the 2021/2022 season but still the second-largest crop on record.
Notably, production conditions differ among various crops. For example, the 2022/2023 global maize production is estimated at 1.17-billion tonnes, down 4% year on year. This decline is due to an expected smaller crop in the US, Ukraine, EU and India.
The US and the EU experienced drought and heatwaves during the summer, damaging crops in some regions. Meanwhile, India received heavy rains in the past few months, leading to poor yields in some areas. Ukraine is still at war with Russia, which has reduced activity in the fields.
The decline in the harvest in these countries overshadows the relatively good crops in China, Brazil, Russia, Argentina and SA. The IGC forecasts SA’s 2022/2023 maize harvest at 15.7-million tonnes, unchanged from its previous season estimate.
This expected decline in global maize production comes while consumption is also falling slightly. Consequently, 2022/2023 global maize stocks were estimated at 258-million tonnes, down 8% year on year. Such data will probably keep global maize prices at elevated levels in the coming months, though lower than in the months after Russia’s invasion of Ukraine.
Positive outlook for South Africa’s grains and oilseeds in 2021/22 season
Large yields
Thus, the global consumer and the livestock industry may not receive much relief on maize prices as some might have expected. Still, these are early days; there will be revisions as the season unfolds.
The 2022/2023 global wheat harvest is estimated at a new high of 792-million tonnes, up 1% year on year. This improvement is supported by expected large yields in Russia, the US, Canada, Kazakhstan, China, Turkey and the UK. This helped overshadow the expected decline in the harvest in the EU, Australia, Ukraine, Argentina and India.
Except for Ukraine, the forecast wheat production decline in other countries is primarily due to poor weather conditions.
Still, while consumption is stable at 784-million tonnes, higher production will boost the stocks. The IGC forecasts 2022/2023 global wheat stocks at 286-million tonnes, up 3% year on year. The increase in stocks should add mild downward pressure on prices, benefiting wheat-importing countries such as SA.
Regarding soya beans, the 2022/2023 global harvest is estimated at 386-million tonnes, up 9% year on year. The anticipated large harvest in Brazil, Argentina, China, Paraguay, Canada, Russia and Ukraine compensates for the expected decline in the US, India and Uruguay. These deviations in crop expectations are a function of weather and area plantings variations. The 2022/2023 global soya beans stock estimate is 54-million tonnes, up 16% year on year. Such an improvement in stocks should help keep global soya beans prices in check for the foreseeable future and thus benefit the livestock industry.
Overall, the 2022/2023 global grains and oilseeds season presents an encouraging picture of supplies. These forecasts will probably be sufficient to provide relief from the levels the grains and oilseeds prices were at in the weeks after the start of the Russia-Ukraine war. Production levels still suggest prices are unlikely to return to their pre-Covid and pre-war levels soon.
• Sihlobo is chief economist at the Agricultural Business Chamber of SA and senior fellow in Stellenbosch University’s department of agricultural economics.
