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Agribusiness News July 2023 – Cereals

3 July 2023

FAO: Wheat production off 2022 peak

Global wheat production, stocks, and trade (Fig 1) are all forecast to fall in 2023/24 from their 2022/23 record high levels. Nevertheless, with significant carryover stocks from last season and nearly stagnant total utilization, world wheat supplies are set to remain unchallenged.  Global wheat markets are expected to tighten slightly in 2023/24 but should remain adequately supplied. Total wheat output in 2023 is pegged at 777 million tonnes, representing a 3.0 percent fall from the all-time high reached in 2022. The bulk of the foreseen decline is expected to occur in the Russian Federation and Australia, following record-high outputs in both countries in 2022, while smaller declines are anticipated in several other leading producers, including Ukraine.

Markets rebound on U.S dryness

At the end of last week, we saw a real acceleration of prices to the upside driven by reports confirming downgrades to maize and spring wheat crops, primarily in the USA.

UK prices continue their rebound, (Fig.2) up 15% in the last 4 weeks and now trading at a three-month high (Nov 23 UK feed wheat: £211/t on 26th June). EU wheat prices are following the buoyant US market and other supportive elements. Australian wheat areas are expected to dry out in early July which could add to concerns over global weather hotspots.  Reports that India’s production will be much lower than government estimates will be watched closely, as well. If true, it could turn India, like China, into a net importer later this year, tightening the global balance sheet and becoming a new bullish factor. Drought conditions in Canadian spring areas are getting some market attention, especially after the 9% drop in US spring crop condition ratings earlier this week and downgrades to Russia’s spring wheat crop, representing 35% of the total production.

The UK malting barley market has been the biggest riser of all over recent weeks with significant premiums quoted on high-N brewing contracts. However, with the onset of an optimistic harvest in France and recent rains here, the rally may well be running out of steam. Sellers of winter barley for export continue to face aggressively priced barley of Black Sea origin.

Footnote: Farm level emissions and nitrogen 2021-22

Utilising the Farm Business Survey data and Agrecalc, the Scottish Government has published a new experimental set of statistics on emissions and nitrogen usage at farm level. Based on commercial sized farms in the Farm Business Survey, this new and experimental data provides greenhouse gas emission estimates and nitrogen for a range of farm types.  The new estimates show that for the average Scottish farm greenhouse gas emissions have remained stable over the last three years, and that the nitrogen balance (the amount of nitrogen that might be lost to the environment) was lower in 2021 than the first estimate made in 2019.  For further details please see online here.


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