Commodities outlook: Winter kill fears in the US, uncertainty persists over maize yields in South America, progress in soybean harvest
Global wheat futures rose last week, because of worries about the impact of cold weather on winter wheat crops in the US - there is still a focus on potential winter kill there - and a lower crop forecast for Russia, says a market review from AHDB.
SovEcon took 1.5Mt off its 2021 Russian wheat crop forecast, citing the impact of the Russian export tax on farmers’ decisions and unfavorable weather as the rationale behind that move. At 76.2Mt, the latest forecast is 9.7Mt smaller than the 2020 crop, finds the AHDB analysts.
In terms of maize, the market is waiting on South American area and yield results to confirm the crop size. A larger US maize area could boost global supplies next season, but this is expected to be mostly absorbed by higher demand, said the UK grain and oilseed market specialists.
Maize futures fell on Thursday [February 18] after the US Department of Agriculture (USDA) estimated the 2021 area at 37.2Mha at its annual Outlook Forum, 0.5Mha more than the 2020 area. “This could mean a bigger 2021 crop.”
Uncertainty persists over maize yields in South America, especially Argentina. January rain was 30% above average, boosting soil moisture and crop conditions. However, this month, rainfall is expected to be half the normal level, according to the AHDB review.
South American soybean harvest pace
Ongoing tight US stocks for the 2021/22 marketing year offer support in soybean markets, they said. “However, this is tempered by South American harvest progression."
Reports last week put the harvest of soybeans in Brazil at 10.1% complete, up from 3.6% the week prior, they noted.
Sources told S&P Global Platts, however, that the sluggish pace of Mato Grosso's soybean harvest is expected to continue holding back Brazil's overall national harvest progress.
Higher maize and soybean planting for 2021-22 forecast in the US
Meanwhile a USDA report, released on Friday, February 19, forecast that the production of US maize [corn] and soybean is likely to rise on the year in the 2021-22 marketing year (September-August).
The USDA’s Grains and Oilseeds Outlook finds that current new crop soybean futures prices relative to maize, supported by strong Chinese demand and the tightest stocks-to-use ratio since 2013-14 are expected to boost soybean plantings.
Higher maize prices are also expected to encourage planting, according to the report.
The area under maize is seen rising by 1.2m acres to 92m acres in 2021-22, with soybean planting increasing to 90m acres, up 6.9 million acres on the year.
Expectations of return to a normal weather is also supporting higher yield estimates. The USDA has estimated US 2021-22 corn yield at 179.5 bushels per acre - up 4.4% from 2020-21, while soybean yield is seen at 50.8 bushels per acre, up 1.2% on year.
