Reuters quoted grain supply data and crop forecasts as exports fell short and crops from other major crop producers fell short of initial expectations, prompting a resumption of exports from Ukraine. Nonetheless, global grain inventories are heading towards their tightest in years.
Severe weather in key agricultural regions from the United States to France to China has reduced grain yields and stocks, raising the risk of famine in some of the world’s poorest countries.
Importers, food manufacturers and ranchers say crop availability will improve after war-torn Ukraine resumes shipments from Black Sea ports this summer and U.S. farmers plant large crops. The United States, the world’s largest corn producer, is now expected to have the smallest corn harvest in three years.
The drought will also hit European crops and threaten the next planting season in South America. By the end of the 2022/23 crop year, global corn buffer stocks will be down 28% from five years ago and will only be consumed for 80 days, the lowest level since 2010/11, Reuters reported.
That would be less than the corn supply the world had in 2012, when the last global food crisis sparked unrest.
The World Bank has pledged him $30 billion to address food shortages exacerbated by the war, and US President Joe Biden last week said he would pledge $3 billion to address global food insecurity.
Half a million Somali children are facing the worst famine of this century as severe drought hits the Horn of Africa, according to the United Nations. Thousands of miles away in the United States, South Dakota corn farmer Mark Gross expects some fields to yield as little as 20 bushels per acre this fall.
The weather remained very dry in the spring, Gross said, after which two Derecho-his storms blew devastating 100 mph wind gusts across Hutchinson County and the fields in the southeastern part of the state.
“It’s going to be like 2012,” Gross said. “Nobody wants to admit it, but it’s true.”
The shortage of grain stocks reflects the impact of climate change on crop production and increasing global demand for corn-based livestock that is depleting grain. The International Grains Council said on Thursday that inventories of all grains harvested around the world will reach an eight-year low by the end of this year.
Bad weather could further reduce global stocks, especially if the current dry weather in South America shifts the harvest cycle to the Southern Hemisphere and into the main growing season.
Harvest forecasts for Argentina, the world’s third-largest corn exporter, have already been curtailed by dry weather.
In the Mayenne region of northwestern France, a major grain-producing country in the European Union, farmer Dominique Defay said some corn was sparse and was preparing for a 35% lower than average harvest.
He wanted at least 135 bushels per acre. He may only get about 90 bushels after France suffers its worst drought since 1958.
“These are plants that have very little water,” said Defay.
Across France he averaged less than 1 cm of rain in July. The tributaries dried up as successive heat waves and wildfires devastated the landscape.
EU production is expected to hit his 15-year low, and the fall has led him to see the EU increase imports from Ukraine by about 30% year-on-year, and in 2022/23 he will 10.4 million tonnes, Das told his Strategy Grains consulting firm.
An increase in European import demand does not make sense for places like the drought-hit Horn of Africa.
Ukrainian corn and wheat exports have surged since a UN-brokered deal with Russia to reopen shipments from ports that had been closed since the start of the war. However, it remains to be seen how much Ukraine will be able to export, especially if the war is prolonged. “It’s kind of a false hope that Ukraine will fill the current supply and demand gap,” said Gary Blumenthal, director of Washington-based agricultural consultancy World Perspectives.
According to official estimates, Ukraine is expected to harvest 25-27 million tons of maize in 2022, up from 42.1 million tons in 2021 after the Russian invasion.
War-related sanctions means Russia is also struggling with record-breaking wheat production and expected wheat exports.
Meanwhile, Chinese farmers grapple with crop-threatening drought and India limits rice exports due to bad weather.
Agri-financial firm Rabobank said the next US wheat harvest was also in jeopardy and would be planted to dust this fall if no rains. Rabobank said this was “a prescription for another tough harvest year and strong price support”.
Taking into account U.S. wheat stocks to consumption, the ratio reflecting stocks is likely to be the lowest in nine years in 2022/23, according to government data from Reuters. It is expected to reach its lowest level in a year.
Analysts and the government say importers are eyeing South America, where Brazilian farmers expect a bountiful crop of corn and soybeans in 2023 after drought ruined some of last season’s crops. Farmers are hoping for better weather for their ongoing soybean plantations.
However, in Argentina, just-beginning plantings for the 2022/2023 maize crop are expected to drop 7% from last season to 8 million hectares (20 million acres) due to a known drought problem.
The Argentine government has also capped exports of crops grown in the coming weeks to an initial 10 million tonnes, compared to his 36 million tonnes for the 2021/22 maize season. “If this were a race, the farmer with the engine problem would start at the bottom,” exchange chief agronomist Christian Russo told Reuters. “The situation is very complicated, the most complicated season of the century.”
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Sources: Rabobank, Reuters, Poultrysite