High Contrast
Commodities Update
The two articles below are a conflicting.
Large world wheat stocks should have a depressing impact on prices – that is not happening as the price of wheat has lifted on speculator activity since just before Christmas. The 2nd update relates to the poor weather conditions in South America, which are lifting soya prices.
Since before Christmas conventional wheat has lifted by over £12/tonne, and conventional soya by over £33. This will mean that whilst we have been bringing feed prices down month on month through to January, that February feed prices will see a very significant turnaround – unfortunately.
I know that this will cause considerable concern to customers who are already being squeezed too hard by the supply chain that is already not reflecting producers costs, but this is an unavoidable situation at the moment.
When the speculators do leave the market, particularly for wheat and maize, that will mean that fundamentals will rule the market, and prices will come down, but until then…..
World wheat stocks ‘to hit record’ in 2012-13 – Agrimoney
World wheat stocks are to edge higher still to a record next season despite a marginally lower harvest, Canadian officials said, while saying their domestic harvest would buck the downward production trend.
Canada’s farm ministry, AAFC, forecast that carry-out stocks of wheat in 2012-13 would “rise slightly to 211m tonnes”.
While an increase of just some 1m tonnes year on year, this looks likely enough to break the record 210.7m tonnes set in 1999-2000, on US Department of Agriculture estimates.
The forecast factors in a small decrease, to 690m tonnes, in the world harvest and an unquantified rise in consumption.
And it would mean lower wheat values, AAFC said, forecasting that the average wheat price Canadian farmers receive could fall by more than 10% in 2012-13 for both conventional varieties and the durum type used in making pasta.
Canola records
The ministry gave no reason for its expectation of lower world wheat production in 2012-13, although the Ukraine crop has got off to a notably poor start, and some observers foresee Australian output falling back after two exceptional seasons, thanks to rains bought by the La Nina weather pattern.
Canada’s own wheat crop, including durum, will rise by more than 1.2m tonnes to 26.5m tonnes, assuming that the country does not, for a third successive spring, suffer wet conditions which have forced farmers to leave millions of acres unsown.
“For 2012-13, the areas seeded to all crops are forecast to rise largely due the expected decline in area in summerfallow, assuming that a major portion of the area which was too wet to seed in western Canada in 2011 will be seeded,” the ministry said.
For canola, extra area will take plantings to a record 8.0m hectares, more than sown with non-durum wheat, and sufficient to take the harvest to an all-time high of 15.0m tonnes.
The rapeseed variant is supported in farmers’ affections “by historically strong prices and expected attractive yields,” AAFC said, forecasting that prices will remain “well above” their five-year average, if lower than in 2011-12.
Dryness threat
However, for Canada to fulfil its promise in 2012 will mean overcoming a potential hangover from the dry autumn which speeded last year’s harvests.
Crop forecaster Gail Martell has warned that the “incredibly dry conditions late last summer” which helped the harvest “greatly depleted field moisture”.
“The period from August through October was particularly dry in the Canadian prairies. Crop production next season may be in jeopardy from dry field conditions.”
South America drought affecting maize output, fears for soybean production
Farmers in Brazil and Argentina, the world’s second-largest grain exporter, are currently suffering from drought linked to the El Nina weather phenomenon, which last year condemned the state of Texas to the worst single-year drought in recorded history.
Argentinian corn
Farmers in the affected countries have been forced to decide either to sow new crops, which risk being killed off by frosts in March and April, or keep going with those already in the ground, which, for the most part, have been severely damaged by an ongoing lack of rain and temperatures rising towards 40C.
The weather in Argentina and parts of Brazil has already affected maize production. Brazilian forecasters last week said that an estimated 11 million metric tonnes of maize may have been lost in the two countries as a result of the heat and drought. The adverse weather is forecast to lower Argentina’s maize production to 6 tonnes per hectare, down from 6.9 tonnes.
A heatwave is expected over the next week, with temperatures peaking around Sunday, though meteorologists have said a cold front may bring storms to the country next week. However, they said rains will be unevenly distributed. Farmers in Argentina have said they need upwards of 100mm of rain to revive their crops.
Although soybeans have been affected by the drought, their plight is nowhere near as bad as that of maize crops. Brazil and Argentina are the world’s second and third largest soybean exporters respectively. However, only 40 per cent of the soybean growing areas in Argentina have received the minimum rainfall necessary for production.
Drought also affecting Mexico
The La Nina is also having an effect in Paraguay and Mexico, where parts of the country are in the grip of their worst ever droughts. Experts have said the damage could result in a 1-2 million tonne drop in the Mexican maize crop, compared to last year’s 24.5 million tonnes.
The Mexican government has said it is spending millions of dollars on helping communities in the affected Northern states, which are experiencing water scarcity. The government also said it was relocating corn crops from the Northern states to South-Eastern states. Meteorologists in Mexico have warned that the drought could persist until June. This year’s drought follows very little rainfall in the North of Mexico in 2011.