16 September 2008

12 minute read

Australia: Estimated Wheat Production Decreased

Australia wheat production for 2008/09 is forecast at 22.0 million tons, down 3.0 million or 12 percent from last month, but up 9.0 million or 69 percent from last year. Area is estimated at 14.0 million hectares, unchanged from last month but up 1.7 million or 13 percent from last year. Seasonal weather conditions have been variable across the major cropping regions of Australia. Since major sowing operations commenced in May, periods of dryness have affected significant areas of the Australia wheat producing states at varying times. In the two largest wheat Approved by the World Agricultural Outlook Board

producing states of New South Wales (30%) and Western Australia (37%), an unusually dry August reduced potential yield. In the southern producing states of Victoria (12%) and South Australia (17%) conditions have been marginally better but more rains are needed to maintain crop prospects. September precipitation is critical in determining Australia wheat yield. The maximum value of the normalized difference vegetation index (NDVI) for the entire season occurs during September in most growing areas and corresponds to the wheat crop at the flowering and reproductive stage. An historical analysis of satellite-derived September vegetation indices and Australia wheat yield reveal strong correlations (r-square 0.80 to 0.82) for the major wheat producing states of New South Wales, Victoria, South Australia and West Australia. Assuming normal crop development through September, the NDVI model indicates yield at 1.57 tons per hectare. Australia’s five year average wheat yield is about 1.5 tons per hectare. (For more information, contact Dath Mita at 202-720-1071)

MODIS satellite imagery over the eastern Australia wheat belt extending from Queensland, New South Wales and Victoria. In this scene, the 2008 current conditions of the wheat belt are compared to 2005 (a more typical season). As of early September, vegetation condition in the wheat area is noticeably lower than in 2005.

Kazakhstan: Estimated Wheat Output Down Nearly 30 Percent from Last Year

The USDA estimates Kazakhstan wheat production for 2008/09 at 12.7 million tons, down 0.8 million or 6 percent from last month and down 3.9 million or 23 percent from last year. Area is estimated at 13.3 million hectares against 12.8 million last year. The grain harvest was about 60 percent complete as of September 4, and preliminary yield data indicate sharp yield decreases in all three major wheat-production territories of north-central Kazakhstan: Kostanai, Akmola, and North Kazakhstan. The reduction in yield is attributed chiefly to persistent dryness, especially in Akmola where yield is likely to drop by about 35 percent from last year. Note, however, that the year-to-year decreases are exaggerated somewhat by last year’s unusually high harvest, and that estimated wheat production for 2008/09 is actually 0.2 million tons above the 5-year average. (For more information, contact Mark Lindeman at 202-690-0143.)

Ukraine Wheat and Barley: Production Soars But Quality Drops

The USDA estimates Ukraine wheat production for 2008/09 at 24.5 million tons, up 2.5 million or 11 percent from last month and up 10.6 million or 76 percent from last year. Area is estimated at 7.0 million hectares, up 1.1 million from last year. Barley output is estimated at 12.5 million tons, up 0.5 million or 4 percent from last month and up 6.5 million or 108 percent from last year, when severe drought slashed yields of early spring crops. Estimated barley area is unchanged from last year at 4.1 million hectares. Harvest-progress reports from the Ministry of Agriculture cite year-to-year yield increases of approximately 50 percent for wheat and 100 percent for barley as of late August. Furthermore, the threat of significant flood-related harvest losses in western Ukraine never materialized: 99 percent of the sown area of both wheat and barley was harvested.

The abundant rain that boosted yield also contributed to a reduction in grain quality. Usually, but not always, wheat quality is lower in years of high yield, and a shortage of suitable grain storage facilities for this year’s wheat crop – the highest in nearly 20 years – will likely exacerbate the problem. According to preliminary data from the Ministry of Agricultural Policy of Ukraine, the share of food-quality wheat (which typically consists of 1st- through 3rd-class wheat) dropped from 40 percent in 2007/08 to 11 percent this year, while the share of 6th class wheat increased from 20 to 54 percent. (For more information, contact Mark Lindeman at 202- 690-0143.)

European Union Wheat: Record Area and Record Production

The USDA estimates European Union (EU) wheat production for 2008/09 at a record 147.2 million tons, up 4.0 million or 3 percent from last month and up 27.8 million or 23 percent from last year. Area is estimated at a record 26.7 million hectares, boosted by the EU’s decision to suspend the set-aside requirement for 2008/09 and by the high market price of wheat at planting. Yield is forecast at 5.51 tons per hectare, compared to 4.83 tons per hectare last year and the five-year average of 5.05 tons per hectare. Winter wheat in southeast Europe benefited from both above-normal spring rainfall and dry harvest weather. A prolonged, wet harvest is now complete in both France and Germany and output was higher than expected, particularly in Germany where dryness had been a serious concern. Poland’s wheat crop also dodged a drought-related yield reduction. Currently, the areas of greatest uncertainty for wheat are the United Kingdom and Ireland, where persistent rainfall has delayed harvest and much of the crop remains uncut. Quality has declined in northern Europe and likely will continue dropping because of the wet weather that has soaked the region during harvest. (For more information, please contact Bryan Purcell at 202-690-0138.)

Russia: Estimated Wheat Production for 2008/09 Continues to Climb

The USDA estimates Russia wheat production for 2008/09 at 60.0 million tons, up 3.0 million or 5 percent from last month and up 10.6 million or 21 percent from last year. The month-to-month increase in estimated production is based on harvest progress reports from the State Statistical Committee indicating remarkably high yields in European Russia. The estimated yield of 2.26 tons per hectare exceeds the previous record (set in 1990) by 10 percent. Total wheat area is estimated at 26.6 million hectares against 24.5 million last year. Winter wheat is grown in European Russia and typically comprises about 40 percent of Russia’s total wheat area and 60 percent of production, although the share of winter wheat is likely to be higher than average this season due to a year-to-year increase in planted area combined with outstanding yields.

Localized dryness has reduced yields in parts of the Siberian and Ural Districts, which account for a large share of Russia’s spring wheat production. Drought was most severe in the Altai territory of western Siberia, which typically accounts for nearly 15 percent of the country’s spring wheat output. The Siberian harvest was roughly 40 percent complete as of September 9. Russia’s barley crop benefited as well from the favorable weather in European Russia.

Production for 2008/09 is estimated at 21.0 million tons, up 3.0 million from last month and up 5.4 million from last year. Area is estimated at 9.6 million hectares, down 0.2 million from last year, and yield is estimated at a record 2.19 tons per hectare. With harvest about 80 percent complete, reports indicate a 34-percent year-to-year increase in yield, including an astonishing 57-percent jump in the Central District, which produces 25 to 30 percent of Russia’s barley. (For more information, contact Mark Lindeman at 202-690-0143.)

Argentina: Wheat Area Limited by Dry Conditions

The USDA forecasts Argentine wheat production for 2008/2009 at 12.5 million tons, down 3.5 million tons or 22 percent from last year and down 1 million tons or 7 percent from last month. Area is estimated at 4.5 million hectares, down 1.18 million hectares from last year and down 0.2 million hectares from last month, and the lowest level in 12 years. Due to the low estimated area, forecast production is also the lowest in 12 years. Yield is forecast at 2.78 tons per hectare, compared to the record high of 2.90 tons per hectare seen in 2005/2006 and the five-year average of 2.75 tons per hectare. Continued dry conditions this winter has not only hindered wheat planting but has now placed about one-third of the crop at jeopardy during the sensitive early stages of crop emergence and early growth. Temperatures were above normal during much of the winter, but recent cold weather may have resulted in frost damage in many parts of the wheat growing area, especially in late-planted fields. (For more information, please call Denise McWilliams at 202-720-0107.)

Europe Corn: Balkan Crop Suffers From Dryness

The USDA estimates European Union corn production for 2008/09 at 58.1 million tons, 0.5 million lower than last month but 10.8 million or 22.9 percent higher than last year. Area is estimated at 8.7 million hectares, up nominally from last month but up 0.4 million or 4 percent from last year. Yield is estimated at 6.65 tons per hectare, compared to 6.73 tons per hectare last month and 5.65 tons per hectare last year. Estimated production was decreased significantly in the Balkan countries because summer dryness significantly reduced potential yield. Total August precipitation was particularly low across southeast Europe, drawing down soil moisture levels. Romania’s corn crop was lowered 0.7 million tons from last month to 7.5 million tons. Bulgaria was lowered 0.2 million tons to 1.2 million tons, and Greece was lowered 0.1 million tons to 1.5 million tons. Serbia, a Balkan country but a non-member of the EU, also experienced dryness, and estimated corn output was lowered 0.5 million from last month to 6.0 million tons. Meanwhile, a larger-than-expected crop in Germany helped mitigate the Balkan corn losses.

USDA estimates German production at 4.9 million tons, up 1.1 million from last year, and area at 0.5 million hectares, based on official statistics indicating record production and area. Area increased significantly in 2008/09 due largely to the EU’s late autumn announcement of suspending the set-aside requirement, making further winter wheat planting in Germany nearly impossible, thereby forcing farmers to increase spring-sown crops, particularly corn. (For more information, please contact Bryan Purcell at 202-690-0138.)

China Corn: Record Production in 2008/09 Due to Higher Yield

China’s 2008/09 corn production is estimated at a record 156.0 million tons, up 3.0 million or 2 percent from last month and up 4.2 million or 3 percent from last year as higher estimated yield offset lower planted area. Corn area is estimated at 27.8 million hectares, unchanged from last month but down 0.2 million from last year. Farmers shifted from corn to soybeans in 2008 in response to higher relative profits for soybeans after the poor 2007/08 soybean harvest. The estimated yield of 5.61 tons per hectare is up 3.5 percent from last year and above the previous record set in 2006/07.

Very good growing conditions were reported in nearly every corn-producing province this season. Bumper crops are expected on the North China Plain, which experienced beneficial rainfall, seasonable temperatures, few extreme weather events, and only minor flooding/lodging problems in 2008. Record yield and production are expected in Northeast China, where drought conditions cut yields in 2007/08. Officials in Jilin, Liaoning, and Inner Mongolia reported that the crop benefited from timely and abundant rainfall this year, while a recent crop survey in Heilongjiang revealed generally favorable growing conditions and higher yields than last year despite below-normal rainfall in August. (For more information, contact Paulette Sandene at (202) 690-0133).

Mexico: Favorable Weather Boosts Estimated Corn Output

The USDA forecasts Mexican corn production for 2008/09 at 24.0 million tons, up 6 percent from last year. The year-to-year increase is attributed to higher forecast yields, a slight increase in harvested area, and ideal weather. According to the U.S. agricultural attaché in Mexico, farmers are using better seed varieties and higher sowing density to improve yields. In addition, the country is receiving normal to above-normal monsoon rains. Last year, the country was impacted by numerous tropical storms and hurricanes which caused substantial agricultural damage. (For more information contact, Arnella Trent at 202-720-0881)

China Soybeans: Higher Area and Production Expected in 2008/09

China’s 2008/09 soybean production is estimated at 16.5 million tons, up 0.5 million or 3 percent from last month and up 3.0 million or 22 percent from last year’s drought-reduced crop. Soybean area is estimated at 9.4 million hectares, unchanged from last month but up 0.7 million or 8 percent from last year. High returns after the disappointing 2007/08 harvest and government policies that encouraged oilseed production led to the increase in planted area. The estimated yield of 1.76 tons per hectare is up 13 percent from last year and above the 5-year average of 1.68 tons per hectare.

Heilongjiang is China’s most important soybean growing province, accounting for 37 to 40 percent of China’s total soybean output. A recent crop survey in Heilongjiang revealed significantly higher planted area, very good growing conditions, and higher prospective yields than last year despite a significant rainfall deficit in August in parts of the province. Other important soybean growing provinces in northern and central China experienced generally favorable weather throughout the season, and normal yields are expected in these areas. (For more information, contact Paulette Sandene at (202) 690-0133).

Argentina: Soybean Area Forecast to Increase Again in 2008/2009

The USDA forecasts Argentine soybean production for 2008/2009 at a record 50.5 million tons, up 1.0 million or 2 percent from last month and up 4 million or 9 percent from last year. Area is estimated at a record 18.0 million hectares, up 0.3 million from last month and up 1.63 million from last year. Yield is forecast at 2.80 tons per hectare, compared to the 2.99 tons-per-hectare record high in 2006/2007 and the five-year average of 2.71 tons per hectare. Incentive to plant continues to escalate due in part to increasing fertilizer prices, higher seed costs, and greater fuel expenses which favors soybeans over alternative crops. Continued dry weather in many areas of

Argentina has also limited wheat planting and stimulated farmers to plan for first-crop soybeans in the spring. Planting full-season soybeans, as compared to second-crop soybeans following wheat, can boost yield up to 20 percent, implying an expected yield for soybeans in the new production year of 2.80 metric tons per hectare. (For more information, please call Denise McWilliams at 202-720-0107.)

Argentina: Corn Area Forecast to Decrease for 2008/09

The USDA forecasts Argentine corn production for 2008/2009 at 19.0 million tons, down 1.5 million tons or 7 percent from last year and down 3.0 million or 14 percent from last month. Area is estimated at 2.70 million hectares, down 0.30 million hectares from last month and down 0.51 million from last year. Yield is forecast at 7.04 tons per hectare, compared to the record high 8.04 tons per hectare in 2006/2007 and the five-year average of 6.96 tons per hectare. Several factors are likely to contribute to the forecast reduction in planted area: high export taxes during the first half of 2008, halts on corn exports, and higher input costs. Some seed orders are already being refused delivery by farmers as they consider switching some area from corn to oilseed crops. High production costs as well as market and harvest uncertainties have caused farmers in Argentina to consider planting crops requiring less fertilizer, pesticides, and labor than corn. In areas where dairies are located, farmers will plant enough corn to satisfy feed demands, but limited incentive to increase production beyond local demand will likely limit corn area for 2008/09.

Further Reading

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You can view the full report by clicking here.

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Further information on World Agricultural Supply and Demand can be found in the USDA World Agricultural Outlook Board Report by clicking here.