Beneficial rainfall as the calendar flipped to a new year improved a still-dire moisture situation in some areas where winter wheat is grown.
The US Department of Agriculture, in its analysis of the Jan. 3 US Drought Monitor, estimated 64% of winter wheat production was within areas experiencing drought, down from 69% in the Department’s appraisal of the Dec. 27 Drought Monitor. Comparing the maps accompanying the reports, it becomes apparent most of the improvement was in the southern and western areas of the soft red winter wheat growing region.
Standing out in the comparison among major winter wheat areas was the tri-state area where Missouri, Illinois and Kentucky converge along the western stretch of the Ohio River. Southern Illinois and southeastern Missouri were in moderate drought in late 2022, but by Jan. 3 were only moderately dry, with some sections of both states and most of western Kentucky no longer indicating drought. Eastern Arkansas along the Mississippi River, considered a minor crop area for soft red winter wheat, improved from moderate drought to abnormally dry in the week.
Significant portions of Indiana, Michigan and Ohio remain in drought. In the latter state, drought was affecting the northwest third of the state, which includes its major production area for winter wheat. But those areas were only in moderate drought, the first of four categories of increasing dryness.
By comparison, hard red winter wheat production areas of the US Plains were in far worse shape than soft wheat areas, with little improvement apparent in the latest week. The overwhelming majority of hard red production areas were in some stage of drought. Exceptions were minor and major crop areas of northeast Texas, a sizable portion of northcentral Kansas split evenly between major and minor crop areas, and minor crop areas of central South Dakota and southern Montana.
The most extensive moisture shortage was seen in the top hard red winter wheat production state of Kansas. The northeastern portion of the state was abnormally dry or in moderate drought. But three-quarters of the state, including the major wheat-growing area in the west, was in extreme or exceptional drought, mostly the latter. Extreme drought areas bled down into Oklahoma where most of the land was in extreme or severe drought. Eastern Texas was in good shape, but the western half, including the panhandle, was in moderate to severe drought with areas of extreme drought. Eastern Colorado’s primary growing areas were mostly in drought, albeit to a lesser extent than Kansas.
To the north, Nebraska was entirely in drought. The southwest, southern panhandle and northeast quadrant were in extreme drought, and the rest of the state was in moderate to severe stages. Wheat areas of South Dakota and Montana were in relatively better shape, ranging from no water shortage in southern Montana to patches of severe drought in southern South Dakota. That was reflected in the USDA pegging the spring wheat areas in drought at 67%, and durum wheat area 80% in drought, both unchanged from the previous week.
Ukraine has harvested 93% of its expected 2022 grain crop as of Jan. 6, but area and production are down significantly from 2021 as war continues to take its toll on agriculture following Russia’s invasion, Reuters reported, citing a statement from the agriculture ministry.
Global body forecasts second-largest grains and oilseeds crops yet
Ukrainian farms have harvested 49.5 million tonnes of grain from 10.7 million hectares of crops, with the grain yield averaging 4.64 tonnes per hectare. The government has said Ukraine could harvest about 51 million tonnes of grain this year, down from a record 86 million tonnes in 2021, because of the loss of land to Russian forces and lower yields.
The ministry said farmers had completed the 2022 wheat and barley harvests, threshing 20.2 million tonnes and 5.8 million tonnes respectively. The total grain volume also included 22.1 million tonnes of corn, harvested from 81% of the expected area with a yield of 6.48 tonnes per hectare.
In 2021, Ukraine harvested 32.2 million tonnes of wheat and 9.4 million tonnes of barley. The ministry has said a fall in output in 2022 was caused by hostilities in the country’s eastern, northern and southern regions due to Russia’s invasion, which began on Feb. 24.
Ukraine sowed more than 6 million hectares of winter wheat for the 2022 harvest, but a large area was occupied after Russia’s invasion, and only 4.9 million hectares were harvested in Ukrainian-controlled territory. Farmers also harvested 10.5 million tonnes of sunflower seeds from 99% of the planted area, and 9 million tonnes of sugar beet from 99% of the area.
Ukraine has been among the world’s leading exporters of wheat, barley and corn and the top supplier of sunflower oil in recent years.
China’s soybean imports will slow down and eventually decline through 2030 as a result of slower livestock production growth, continuous improvement in farming practices and widespread adoption of low soymeal inclusion rate in feed formulas, according to a recent Rabobank study.
China is the world’s largest soybean importer, accounting for over 60% of global trade, with soybean imports mainly driven by crushing for feed production. Therefore, future imports primarily will be influenced by the outlook for feed demand and the soymeal inclusion rate in feed rations.
“We expect that Chinese feed consumption will maintain low-single-digit growth,” said Lief Chiang, senior analyst, Grains and Oilseeds, Rabobank. “However, the inclusion rate of soymeal in feed rations is projected to drop, as the Chinese government is launching a soymeal reduction campaign aimed at lowering the dependence on imported soybeans to ensure food security.”
The reduction of soymeal inclusion in feed also will create opportunities for startups to develop new technologies and novel ingredients, the report said.
“In a low-soymeal inclusion scenario, extra use of amino acids will be necessary to meet the nutritional needs of animals,” said Chenjun Pan, senior analyst, Animal Protein, Rabobank.
Chinese amino acid players will benefit, but rising domestic demand might compromise producers’ ability to export and prompt foreign buyers to diversify their supply chains.
Low soymeal inclusion formulas also will bring opportunities to other feed ingredient manufacturers, the report said. For example, enzyme application will rise along with rising use of alternative protein meals, as alternative protein meals require more enzymes to improve nutrient absorption and reduce anti-nutritional factors. Additionally, there are a number of startups focusing on novel feed protein sources, such as insect and microbial proteins.
In the long run, these novel proteins will make positive contributions toward saving natural resources and reducing carbon emissions, the Rabobank researchers said. However, as most of them are still in the development stage, there is high uncertainty about the timeline to achieve commercial viability in China.
The projected slowdown and eventual reduction in China’s soybean imports will have profound impacts on the entire global supply chain and reshape global trade flows. It will challenge all participants along the chain, including growers, trade merchants, soybean crushers, livestock farmers, feed mills, and feed ingredient manufacturers, Chiang said.
“While China will remain the largest importer, additional growth will shift from China to other regions and mainly be driven by emerging economies in the Middle East, Southeast Asia, and South Asia,” Chiang said. “Merchants will need to realign their business for new destination markets and increase infrastructure investment in these regions.”
Moreover, global soymeal trade volume is projected to increase at a fast pace. Driven by rising biofuel demand, the United States and Brazil are expected to expand their crushing capacities and process more beans domestically, keeping more soy oil for local use and exporting increasing volumes of soymeal. This will benefit integrated merchants, especially those with crushing plants in the Americas.
While soymeal inclusion in feed is the largest determinant of China’s soybean imports, other variables also may impact soybean import projections.
“Rising domestic soybean productionand direct soymeal imports would further lower the import forecast, while state stock buying would lift import quantities in some years,” Chiang said. “The government puts a high emphasis on food security, so it might encourage imports or conduct stock buying to replenish state reserves as a buffer against various risks like adverse weather, supply chain disruptions, geopolitical tensions, natural disasters, etc. Complex economic relationships might also lead to state purchases to balance trade accounts. Though additional government procurement will temporarily increase import projections in some years, the impact would be short term.”
