The global grain harvest in 2023 could be at the level of the record-breaking 2021, FAO (the UN Food and Agriculture Organization) predicts.
According to its review, the estimate of the global harvest for this year in September compared to July (the review was not released in August) was reduced by 4 million tons. Despite this, the global harvest may be 0.9% higher than last year’s and amount to 2 billion 815 million tons, which corresponds to the record figure for 2021.
Thus, the forecast of wheat harvest was reduced by 2.2 million tons to 781.1 million tons. “It is expected that global wheat production will decrease by 2.6% compared to last year, but, nevertheless, it will be the second highest figure in the history of observations,” the review says. The largest decline was in production in Canada and the EU due to dry weather. The wheat harvest forecast in China has been lowered due to heavy rains in a number of key grain-producing regions. This decrease was partially offset by an increase in the forecast in the United States, India and Ukraine, “as indicated by the latest data provided by the governments of these countries on a more abundant harvest than previously expected.”
The forecast of feed grain harvest was lowered by 1.3 million tons to 1 billion 511 million tons, which is mainly due to a decrease in barley and oat harvests. However, this figure is 2.7% higher than last year. Thus, the estimate of barley harvest has been reduced by 2.9 million tons to 143.8 million tons (5.6% lower than last year). The oat harvest will be the lowest in 11 years – 23.1 million tons.
At the same time, corn production may reach a record high of 1 billion 215 million tons. The forecast has been raised by 3.6 million tons, mainly due to “richer than expected harvests in Brazil and Ukraine.” This will more than compensate for the lower forecast for corn harvest in the US and EU.
The FAO estimates this year’s rice harvest at 523.2 million tons. This is 500 thousand tons lower than the July forecast, but 1.1% higher than the harvest last season.
The U.S. Department of Agriculture (USDA) has improved its forecast for Ukraine’s wheat harvest in the recently started 2023/24 marketing year (MY) from 21 million tons to 22.5 million tons, and for corn from 27.5 million tons to 28 million tons due to larger than expected planted areas and the second-highest yields on record.
In its September forecast, the agency also raised its wheat export estimates from 11 million tons to 11.5 million tons, while corn exports remained unchanged at 19.5 million tons.
The USDA raised its domestic consumption forecast for wheat from 8.1 million tons to 8.8 million tons, while maintaining its forecast for corn at 5.5 million tons, and at the same time raising its carryover forecast to 4.43 million tons from 3.89 million tons.
In general, the global wheat harvest forecast for 2023/24 MY has been lowered by 56 mln tonnes to 787.3 mln tonnes, which is 3.25 mln tonnes less than last year, due to the decrease in production in Australia, Canada, Argentina and the EU, which will not be compensated by the increased production of Ukraine.
The forecast of world wheat trade was also downgraded by 2.1 million tons to 207.3 million tons compared to 219.9 million tons last year due to the decline in production in the above countries, which is only partially offset by the growth of activity in Russia and Kazakhstan.
The USDA noted that such annual decline in the world wheat supplies is the first since 2018/19 MY. The agency also expects the reduction of the global carry-over stocks by 7 mln tonnes to 258.6 mln tonnes, which will be the lowest level since 2015/16 MY.
The Ukrainian Grain Association (UZA) has updated its estimate of the potential harvest in 2023, increasing it by another 3.7m tons to 80.5m tons of grains and oilseeds, up from last year’s figures of 73.8m tons of grains and oilseeds, the association’s press service said.
The increase in this year’s crop forecast is due to favorable weather conditions and better crop yields than expected, although almost 2 million hectares were sown less than last year,” the UZA said.
According to the report, the wheat crop estimate for 2023 improved from 20.2 million tons to 22 million tons (2022 was 20.2 million tons and 2021 was a record 33 million tons). Potential wheat exports in MY 2023/2024 could be around 16 million tons, given the 4.4 million tons of carryover at the beginning of the season.
Barley crop estimate for 2023 is also raised from 5.2 million tons to 5.8 million tons (10.1 million tons in 2021 and 5.8 million tons in 2022), and potential 2023/2024 MY exports are expected to be 3 million tons. Corn crop expectations for the new season have improved slightly further, from 26.9 to 28 million tons (37.6 million tons in 2021 and 27.3 million tons in 2022), while exports could be around 22 million tons.
The sunflower harvest in 2023 is expected to be 13.9 million tons (16.9 million tons in 2021 and 11.1 million tons in 2022), with potential exports of 0.5 million tons. Sunflower processing for oil could reach 13.2 million tons.
UZA estimates the 2023 rapeseed harvest at 4.1 million tons, with exports in MY 2023/2024 expected at 4 million tons; soybeans at 4.8 million tons, with potential exports at 3.3 million tons.
According to the forecast, exports from Ukraine in the new 2023/2024 season could potentially reach almost 49 million tons. Last season, which ended June 30, 2023, UZA estimated exports reached 58 million tons.
The UZA noted that exporting such volumes in the new season will be possible if Ukraine is able to export through its Black Sea ports and if the logistics of alternative routes, including the Danube route, improve and become cheaper.
“The world has already seen that exporting grain through Ukrainian ports and ensuring the safety of navigation in the Black Sea is the only way to quickly and efficiently deliver Ukrainian grain to countries that are in dire need of it,” the industry association explained.
UZA noted that in the conditions of Russia’s blocking of navigation in the Black Sea and its attacks on port infrastructure it continues to work with the European Commission to compensate European carriers for transportation of Ukrainian grain from the border to European ports. This initiative was supported by the European association COCERAL, which has also approached the European Commission. This will allow Ukrainian producers to keep a part of the price, which they are forced to spend now on more expensive logistics, the association believes.
In addition, the problem of increasing the capacity of the Sulinsky Canal on the Danube to ensure its round-the-clock operation and increase the number of pilots is being solved. Work is underway together with the U.S. and the EU to create anchorages in Romanian territorial waters for reloading Ukrainian grain from barges to larger vessels such as Handysize and Panamax, which will make logistics across the Danube more efficient, the UZA said.
“Obstacles to grain exports from Ukraine negatively affect the availability of grain on the world market. According to the US intelligence in a report to the US Congress, Russia’s invasion of Ukraine has caused deep disruptions in global food supplies, raising prices and increasing the risk of food insecurity in poor countries in the Middle East and North Africa,” the business association recalled.
UZA emphasized that rising prices also lead to higher food inflation in developed countries. “In case it is impossible to export products, Ukrainian farmers may reorient their production and give up growing grain, which will further aggravate the crisis in the global food market in the medium term,” the industry association summarized.
The current forecast of rapeseed harvest in Ukraine will be a record and will reach a maximum of 4.2 million tons due to expanded sown areas and high yields, the export potential of the market and its processed products will also reach a maximum, according to the analytical agency Ukragroconsult.
“The key to achieving such results is not only a large harvest and the launch of new processing facilities, but also the solution of logistical issues,” the report says.
According to analysts, in July, the export statistics showed a rather active start of the season, which is important in the absence of a grain corridor. Logistics has shifted to the Danube ports and land routes through the western borders.
Due to the constant attacks on the port infrastructure, the September contracts are focused on the road and rail logistics of rapeseed, experts said, citing information from market participants.
The analytical agency pointed to the change in the geography of exports of rapeseed and its products. Now the sales of Ukrainian rapeseed are focused not so much on the European Union, but on the UK, Switzerland and Bangladesh. The situation is similar with rapeseed oil, which is exported mainly to China and Malaysia instead of the EU market. At the same time, 95% of rapeseed meal goes to the EU market, while the remaining 5% goes to Vietnam.
As of August 22, 2023, Ukraine exported about 500 thsd tonnes of rapeseed and more than 58 thsd tonnes of rapeseed oil, analysts say, adding that current export figures allow us to consider optimistic scenarios.
Ukrainian flour millers are increasingly reporting low quality of the new harvest wheat, in some regions the total share of grade 2 and 3 wheat will not exceed 10% of total production, APK-Inform news agency reported.
According to the report, the majority of processors in communication with the agency’s experts noted that they mainly receive offers of wheat with low protein content – up to 11%, a small share – at the level of 11-12% and only a few offers with protein content at the level of 13%.
“Some processors predict that in some regions of the country the total share of wheat of 2nd and 3rd class this year will not exceed 10% of the total production,” the analysts said.
According to them, the current situation with the quality of wheat provides significant support to prices. This week, most Ukrainian millers continued to gradually increase their purchase prices for milling wheat.
As of August 23, the demand prices for wheat of the 2nd and 3rd grades were mostly fixed in the range of 5700-6700 UAH/ton and 5500-6500 UAH/ton CPT, respectively, which is 100-200 UAH/ton higher than at the end of last week, but most buyers raised the minimum and close to them prices, experts explained.
Agrarians continue to restrain the sales of high-quality grains, which provides additional support to prices, APK-Inform summarized.
As reported, Ukraine has already harvested 27 mln tonnes of wheat with record yields, but analysts point out that due to weather conditions, 60% of the crop will be sold as fodder, which is twice as much as last year.
The U.S. Department of Agriculture (USDA) in its August forecast improved the forecast of wheat harvest in Ukraine in the beginning of the 2023/24 marketing year (MY) from 17.5 million tons to 21 million tons, corn – from 25 million tons to 27.5 million tons due to larger than expected planted areas and the second highest yield in history.
At the same time, the document notes, due to the discontinuation of the Black Sea Grain Initiative, the export forecast was kept unchanged at 10.5 million tons and 19.5 million tons, respectively.
As a result, USDA for wheat raised the forecast for domestic consumption from 7.1 million tons to 8.1 million tons, and transitional residues at the end of MY – from 1.59 million tons to 4.13 million tons, while for corn, the entire crop growth forecast is balanced by an increase in expected transitional residues – from 1.89 million tons to 3.89 million tons.
Overall, the U.S. agency increased its forecast for this year’s feed grain harvest in Ukraine from 31.47 million tons to 33.97 million tons, estimating their exports at 21.37 million tons and raising the forecast for transitional residues from 2.27 million tons to 4.77 million tons.
In the update, USDA estimated last MY 2022/23 wheat crop, the same as a month ago, at 21.5 million tons vs. 33.01 million tons a year earlier, and exports at 16.8 million tons vs. 18.84 million tons, respectively, while reducing transitional residues from 5.27 million tons to 1.65 million tons.
The USDA sees the feed grain harvest falling to 33.93 million tons from 53.51 million tons in MY 2021/22, while exports fell to just 30.80 million tons from 32.93 million tons due to a reduction in transitional residues from 8.69 million tons to 2.15 million tons.
Including the corn crop, last MY’s harvest fell to 27 million tons from 42.13 million tons a year earlier, while exports rose to 28 million tons from 26.98 million tons, also due to a reduction in transitional residue from 7.59 million tons to 1.39 million tons.
USDA’s new forecast for the global wheat crop in MY 2023/24 is projected to reach 793.4 million tons, down 3.3 million tons from the previous forecast. Total wheat exports are forecast at 209.4 million tons, 2.23 million tons less than previously expected. Analysts projected final world wheat stocks at the end of MY at 265.6 million tons, 0.92 million tons less than the previous forecast.
For corn, the estimate for this year’s world harvest was lowered by almost 11 million tons to 1 billion 213.5 million tons, while exports were lowered by 2.07 million tons to 196.19 million tons.
The U.S. Department of Agriculture lowered its forecast for U.S. wheat production by 0.13 million tons to 47.2 million tons. Exports are expected at 19.05 million tons (-0.68 million tons).
Corn harvest is down 5.71 million tons to 398.82 million tons and exports are down 1.27 million tons to 58.65 million tons.
In the EU, USDA worsened its wheat crop estimate by 3 million tons to 135 million tons, keeping exports at 38.5 million tons.
For coarse grains, the EU crop forecast has been worsened by 6.85 million tons to 136.45 million tons and exports by 2.21 million tons to 10.59 million tons, with the estimated corn crop now down 3.7 million tons to 59.7 million tons and exports down 0.9 million tons to 4.1 million tons.
For Russia, the forecast for wheat exports at the same crop estimate of 85 million tons is increased by 0.5 million tons to 48 million tons, and coarse grains is kept at 8.91 million tons with the crop estimate lowered by 2.85 million tons to 39.4 million tons. Including corn, exports are still expected at the level of 4.2 million tons with a decrease in the harvest by 1.7 million tons – to 14.6 million tons.
