Detailed data from the International Grains Council highlights significant shifts in wheat, maize, barley, and soybean production across key regions, with potential ramifications for the global grain market. The decline in milling wheat quality from regions like northern Europe, the Baltics, and China could result in a larger portion of this year’s wheat being redirected to the feed industry, boosting feed wheat supplies.

In the 23/24 season, the feed industry faces a transformative landscape, as highlighted by the London-based International Grains Council’s (IGC) recent briefing in late September. Extracting key insights from a broader dataset, our emphasis zeroes in on shifts in crops crucial to feed production. While wheat, a staple in many feed formulations, is expected to see a significant decline with countries like Australia is expected to register a major 36% dip, the soybean segment — another feed cornerstone — beams with Argentina marking a dramatic 102% YoY hike. On the maize front, buoyed mainly by Argentina and the EU, prospects appear positive. Barley, another essential in feed mixes, navigates production headwinds, though countries like Morocco offer rays of hope with substantial upticks.

DIVERSE DYNAMICS IN GLOBAL WHEAT PRODUCTION

The International Grains Council’s press briefing on 29 September 2023 highlights a significant shift in wheat production across key global regions. Aggregate data reveals a 3% year-on-year decline in global wheat production, a decrease of 21.2 million tons, totaling 783.5 million tons. This decline is especially pronounced among major exporters, who are forecasted to see a 6% YoY drop, equating to a 25.6 million ton reduction. In contrast, countries not categorized as major exporters, labeled as “Others”, are projected to grow by 1%. Notably, several major exporting countries, including Australia, are expected to experience reductions; Australia’s decrease is especially sharp at 36%. Kazakhstan, Canada, Russia, and the UK are also expected to see significant declines ranging between 5% and 21%. Conversely, countries such as Morocco, Iraq, Argentina, and the USA have shown production increases. Furthermore, Russia, despite an anticipated 8% YoY decrease, is still projected to produce a substantial 87.4 million tons.

Diving deeper into specific takeaways, the production from major exporters is at its lowest in four years, with an observed decrease of 28 million tons year-on-year. This decline is 7 million tons greater than the forecast from June’s Council Session. These figures have been impacted by reduced forecasts from several key players, including Canada, the EU, Argentina, Australia, the US, and Kazakhstan. However, Ukraine and Russia have seen upgraded projections.

Regarding crop quality, the northern hemisphere has suffered due to environmental conditions and external factors. The EU’s reduced fertilizer use, combined with inclement late-summer weather, has impacted protein content in northern Europe and the Baltics. Similarly, Russia and Kazakhstan are grappling with wheat quality issues due to wet weather conditions. Ukraine’s milling wheat share may see a significant drop. Durum wheat production is also facing challenges, with anticipated smaller yields in the EU, North America, and North Africa, though Turkey might provide some relief.

A crucial point for the feed industry is the evident reduction in milling wheat quality from regions such as northern Europe, the Baltics, and China. This means a significant portion of this year’s production may be more suited for feed, leading to an increased supply of feed wheat in the market.

MAIZE MARKET EXPERIENCES MAJOR GROWTH AMID YIELD HURDLES

The International Grains Council’s data on maize production for the 23/24 season paints an overall optimistic picture, with global production figures rising by 60.2 million tons, marking a 5% increase year-on-year. The world’s total production now stands at an impressive 1,222.4 million tons. Exporters seem to be the most significant contributors to this growth, recording a robust 10% YoY increase, whereas the “Others” showed a modest 1% uptick. Notably, Argentina, an important player in the maize industry but having struggled with La Nina-related droughts in recent seasons, will likely experience an exceptional growth rate of 49%, reaffirming its position as a major contributor to the global maize market. The EU and the USA are also projected to exhibit strong performances, with the latter is anticipated to near a record in its maize production at 384.4 million tons, a 10% YoY growth. This achievement is especially significant considering the fluctuations observed throughout the summer.

However, declines are expected in a few regions: South Africa’s production down by 9%, Russia by 6%, India by 5%, Mexico by 4%, and Brazil by 1%. The US, despite its anticipated high output, is still seeing stagnant yield growth, struggling to surpass the 11.1 t/ha mark. In contrast, the USDA’s weather-adjusted yield model suggests a potential of reaching 11.4 t/ha, which could have added an additional 17 million tons to the production. Ukraine’s crop outlook is more positive than anticipated, projected to reach 28 million tons. This growth is attributed to larger acreage than initially thought, combined with favorable weather conditions boosting yields. However, there’s potential for harvest delays, as farmers may choose, as they did last year, to let crops dry down naturally in the field instead of opting for costly mechanical drying. The southern hemisphere’s production is crucial, with Brazil, Argentina, and South Africa collectively accounting for 17% of the world’s maize production, a slight rise from the 5-year average of 15%. Given that planting is just commencing, weather patterns in the coming months will play a decisive role in determining final output figures.

BARLEY LANDSCAPE SHIFTS WITH EXPORTER DROPS AND REGIONAL UPSWINGS

The 23/24 global barley production figures from the International Grains Council reveal some intriguing dynamics in the industry. There’s a pronounced downward trajectory in the overall production, with a 6% YoY decrease, translating to a 10 million-ton reduction in total volume, standing at 143.8 million tons.

A closer look at the figures indicates that the major exporters are expected to bear the brunt of this decline. Exporters are forecasted to witness a drop of 10%, which is equivalent to a substantial 11.2 million tons. Conversely, other producers might fare relatively better, registering a modest increase of 3%, amounting to an additional 1.2 million tons.

Regionally, several countries are like to manifest significant contractions in their barley production. Australia, a key producer, is forecasted to face a 30% YoY decline, which amounts to a reduction of 4.2 million tons. Canada and Kazakhstan, other notable barley-growing countries, also reflect considerable downturns of 21% and 12%, respectively. The EU, which constitutes a significant chunk of the global barley production, has also seen a slump of 6%, accounting for a 2.9 million ton drop.

However, not all is bleak in the barley sector. Several countries are projected to showcase impressive growth, defying the overarching downward trend. Morocco stands out with a staggering 96% YoY increase, equating to an additional 0.6 million tons. Iraq and India are also anticipated to post significant gains of 50% and 23% respectively.

While a myriad of factors might be influencing these shifts, climatic changes, water scarcity, evolving agricultural practices, global trade tensions, and market dynamics play critical roles. As barley remains a key ingredient in various industries, notably the brewing sector, these shifts can have far-reaching economic implications. Stakeholders across the barley value chain, from farmers to end-consumers, need to brace themselves for potential price volatilities and supply chain disruptions.

SOYBEAN WAVE RISES WITH ARGENTINA’S LEAD AMID KEY PRODUCER SETBACKS

The global soybean market is set to witness a surge in production, with projections pointing towards a record high. The cumulative global production is pegged at 396.0 million tons, marking a robust 7.8% YoY increase, which translates to an addition of 28.5 million tons.

Breaking down these figures, the upward trajectory is predominantly driven by several countries expecting significant increases in their yield. Notably, Argentina, which is recovering from a season marred by significant drought damage and now benefiting from the wetter conditions associated with El Nino, is anticipated to emerge as the star performer. The country is set to post a striking 102% YoY increase, representing a substantial addition of 22.3 million tons, taking its total production to 44.0 million tons. This considerable resurgence in Argentine output significantly boosts the global soybean numbers.

Brazil, a leading player in the soybean market, contributes to the forecasted uptick with a 3% YoY increase, adding another 5.0 million tons, taking its total to 160.0 million tons. Other noteworthy contributors to the rise include Paraguay, Ukraine, and the EU-27, with growth rates of 11%, 11%, and 15% respectively.

However, it’s not an all-green picture. The USA, a dominant force in the soybean market, is projected to face a downturn, registering an anticipated 3% YoY decrease. This results in an expected drop of 3.5 million tons, pulling the total down to 112.8 million tons. India too mirrors this decline, with a 4% YoY reduction, leading to a 0.6 million-ton contraction.

In essence, while the global soybean production landscape presents a largely positive outlook, reductions in production from key contributors like the USA and India warrant attention. While Argentina’s resurgence offers a balancing act, Brazil, as the dominant exporter, continues to significantly influence the market. If Brazil’s production meets expectations, major shifts in trade dynamics might remain limited. Nonetheless, market stakeholders should remain vigilant to nuances in pricing structures and minor trade adjustments.