GLOBAL AGRICULTURAL OUTLOOK FOR THE COMING DECADE

Aug 01, 2019

OTTAWA – The world population is projected to reach 8.5-billion by 2030, compared to 7.3-billion currently. Consequently, the global demand for agricultural products is anticipated to increase by 15 per cent over the coming decade. On the other hand, the agricultural productivity is expected to increase faster over the same period leading to prices of major agricultural products to remain lower or at their current level. The agricultural techno- logical innovation leads to yield enhancements, higher production intensity and higher output despite agricultural land use that remains globally constant. Otherwise, the carbon intensity is projected to decline because of the pressures on agriculture to reduce the carbon footprint. The direct greenhouse gas emissions from agriculture are expected to grow by 0.5 per cent annually in the coming decade, compared to 0.7 per cent in the past 10 years. However, some uncertainties are present about the risks facing agriculture, such as the spread of plants and animal diseases, disruptions from trade tensions, resistance to antimicrobial, extreme climatic events, and the regulatory responses to new techniques in plant breeding. This outlook was published recently in the annual report of the Organization for Economic Co-operation and Development (OECD) and the United Nations’ Food and Agriculture Organization (FAO). The projections by commodity presented here were extracted from the published report.

Cereals

The global production of cereals is expected to increase by 1.2 per cent per year, due to yield improvement, to reach 3,053-million tonnes in 2028. Maize production is projected to increase the most (+181-million tonnes), followed by wheat (+86-million tonnes), rice (+66-million tonnes), and other coarse grains (+35-million tonnes). The industrial use of cereals as biofuels or starch is anticipated to have a modest increase.

World trade in cereals is projected to increase by 20.3 per cent to reach 503-million tonnes by 2028. For wheat, the Russian Federation has become the top exporter of wheat since 2016, surpassing the European Union. The world wheat price is expected to decline slightly from USD 241/tonne in 2018 to USD 238/tonne in 2028. For maize, the United States will remain the lead exporter. The world maize price is projected to increase from USD 160/tonne in 2018 to USD 186/tonne in 2028.

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Agricultural Market Update: Grain Prices, Crop Conditions, and Weather Impacts

Welcome back to our channel where we provide comprehensive updates on the latest trends and changes in the agricultural sector. This week, we're looking at significant movements in grain prices, crop conditions, and the effects of weather patterns. Let's dive into the details:

Grain Price Decline Grain prices have fallen to their lowest levels since 2020, with December corn down 4.3% and November soybeans losing 3.1%. This decline is partly due to the beneficial moisture brought by Hurricane Beryl to the Midwest, which has improved crop conditions significantly. The USDA reported that corn and soybean crops are in their best condition in four years, contributing to the downward pressure on prices.

Record Short Positions and Market Sentiment Fund traders have increased their net short positions in the corn market to a record level, with a net short of 347,000 contracts of corn. This reflects a bearish sentiment in the market, further influencing grain price dynamics. Similar selling trends were observed in soybeans and SRW wheat, indicating broad market caution.

Weather Impact and Forecast Hurricane Beryl has brought significant rainfall across Arkansas, Missouri, western Tennessee, western Kentucky, and southern Illinois, with more expected over Missouri, Illinois, and Indiana in the coming days. Despite this, the market is currently more focused on the moisture benefits rather than potential heat risks forecasted in the 6-10 and 8-14 day periods.

US Crop Conditions Corn and soybean conditions have shown slight improvements last week, with corn rated 68% good to excellent and soybeans at 68%. These are among the best ratings for this time of year since 2020, suggesting robust crop health that could continue to influence grain prices.

Winter Wheat Harvest and Spring Wheat Conditions The US winter wheat harvest is progressing well, ahead of schedule with significant portions already harvested in Kansas and Texas. Spring wheat conditions are also favorable, with 75% rated good to excellent, although there have been some declines in states like Idaho, South Dakota, and Washington. Brazil's Corn Harvest and US Exports Brazil's second corn crop harvest is advancing rapidly due to favorable hot and dry conditions, with 63% of the crop already harvested. Meanwhile, US corn shipments saw a substantial increase last week, indicating strong export demand, which contrasts with the recent drop in domestic grain prices.

Ongoing Developments Lastly, the USDA reported a flash sale of corn, with significant quantities sold to unknown destinations, scheduled for delivery over the next two marketing years. This could signal ongoing international demand for US corn despite lower prices.

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