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Taking stock of global grains and oilseeds supplies

In Agbiz, membership covers almost all key agricultural subsectors.

And thus, we try to make this introductory section of the weekly note as general as possible so that it can speak to the entire value chain. But at times, crucial data in certain commodities compel us to focus on one specific area. Today is one of those days for field crops (grains and oilseeds) and livestock as a user of the aforementioned commodities.
In the evening, when the US Department of Agriculture (USDA) releases its World Agricultural Supply and Demand Estimates report, we will get a sense of the status of global grains and oilseeds supplies for the 2019/20 season. While the data will primarily be for grains and oilseeds, there will be implications on subsectors such as livestock sectors (meat and dairy) which utilizes it, and thereafter global food price inflation.
Last month the USDA had tentatively placed 2019/20 global maize production at 1.1 billion tonnes, down by 2% from the previous season, owing to expectations of a poor harvest in parts of the US and Argentina and Ukraine, amongst other countries. This meant that the ending stocks for the season would be at 298 million tonnes, down by 9% year on year.
Soybean production prospects also painted a similar picture, with the 2019/20 harvest set to fall by 4% year-on-year to 347 million tonnes. This was primarily underpinned by expectations of poor yields in parts of the US and Argentina. This subsequently meant that global soybean stocks would fall by 7% from the 2018/19 season to 104 million tonnes.
The impact of all this has been reflected in the prices, which are elevated somewhat from levels seen last year. The FAO Cereal Price Index averaged 168.6 points in July 2019, up by 4% from its level in the corresponding month last year.
While today’s data will present a global picture of grains and oilseeds, the key focus will be on the US figures. Also, unlike the previous months, the US crop is at its advanced stages of development, which means the USDA will present a more reliable forecast of the harvest. On 04 August 2019, about 78% of the US maize crop was at the silking stage of growth, compared to 95% in the corresponding week in 2018, and a five-year average of 93%. The crop in some areas had already started to mature1, as 23% of it was already doughing. 
With that said, the effects of excessive moisture at the start of the season and thereafter late plantings are still apparent on crops in most parts of the US. About 57% of the crop was rated good/excellent on 04 August 2019, compared to 71% in the corresponding period last year. This suggests that the yields could be well below last year’s levels in some areas.
Soybeans growing conditions are also as advanced as maize. On 04 August 2019, about 72% of the crop was blooming, compared to 91% in the same week last year, and a five-year average of 87%. Moreover, some fields have matured as shown by the data that 37% of the US soybean were setting pods on 04 August 2019. The effects of the bad start of the season will, however, possibly lead to poor yields in some areas. About 54% of the US soybeans was rated good/excellent on 04 August 2019, compared to 67% in the same period last year.
This was specifically the case in North Dakota, North Carolina, Kentucky, Missouri, Texas, Tennessee and Kansas
This refers to maize stage of development when the kernel's milky inner fluid begins changing to a "doughy" consistency as starch accumulation continues in the endosperm.

For a South African, the consequence the USDA’s data will have on global maize and soybean prices could spill over to our local market, and thereafter food prices or animal feed prices. Overall, we don’t expect notable revisions from the data we presented above as production conditions haven’t changed much since last month. Zimbabwe’s maize supplies strained Zimbabwe’s maize fortunes are not in good shape because of the drought which delayed plantings at the start of the 2019 season, and when it finally rained, it became rather excessive, as was witnessed during Cyclone Idai at the start of the year.

The impact of unfavourable weather conditions is reflected in the poor maize harvest, which is estimated at 800 000 tonnes, down by 53% from the previous year. The hardships emanating from this, and broader though economic conditions are being felt across the country.
We have previously indicated that Zimbabwe will need to import about a million tonnes of maize in order to fulfil its annual needs. We had feared that the country’s maize needs could add pressure to South Africa’s maize supplies. But so far, Zimbabwe has not imported any maize from South Africa within the 2019/20 marketing year which started in May 2019. But providing commentary on Zimbabwe’s maize weekly or monthly import activity from other origins is hard because of the dearth of information about the maize supplies from the local authorities.
Also, Zimbabwe’s state-owned Grain Marketing Board has been designated as a sole buyer of maize from local farmers. It is unclear if this policy will influence private businesses’ purchase of maize from other countries, and the lack of official data makes it hard to assess maize purchases progress at this point.
The World Food Programme (WFP) has indicated that it will boost its humanitarian aid to Zimbabwe through to April 2020.4 This means that a share of potential maize imports into the country could be facilitated by the WFP. In such a scenario, South Africa, Zambia and Mexico could be the potential sources of white maize. Aside from white maize, there are a number of countries that can potentially supply yellow maize to Zimbabwe, with the most likely ones being Brazil, Argentina, Ukraine and the United States.

Zimbabwe needs to import at least a million tonnes of maize in 2019/20 season. This is a quiet week on the domestic agricultural data front, with only two important data points.
On Wednesday, SAGIS will release the grain producer deliveries data. While the data will present producer deliveries data for the week of 09 August 2019, it essentially gives us an indication of the summer grains and oilseeds harvest thus far. And will mainly be an affirmation that the harvesting process for all summer crops is nearing completion.
On Thursday, we will get the weekly grain trade data for the week of 09 August 2019. In terms of maize, the first thirteen weeks’ exports of the 2019/20 marketing year amounted to 268 572 tonnes. We expect South Africa to remain a net exporter of maize this year, although the volume will most likely fall by half from the previous year to about 1.1 million tonnes. This is under the assumption that domestic maize production could amount to 10.9 million tonnes. At the same time, we expect imports of about 450 000 tonnes, all yellow maize, mainly for the coastal provinces of the country. This is up from an estimated 171 500 tonnes in the 2018/19 marketing year. The country has thus far imported 131 399 tonnes of yellow maize, all from Argentina.
In terms of wheat, South Africa remains a net importer, although the recovery in the country’s 2018/19 domestic wheat production will lead to a decline in imports this season.
South Africa’s 2018/19 wheat imports could fall by 36% from the previous season to about 1.4 million tonnes. So far, the country has imported about 68% of the seasonal forecast. The leading suppliers have been Germany, Russia, Lithuania and Canada amongst others.


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