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World wheat area to grow in 2020, despite EU, Ukraine setbacks

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World wheat area for the 2020 harvest will grow, modestly, despite a “significant drop” in Ukraine thanks to dryness, and setbacks to French and UK plantings from persistent rains, the International Grains Council said.

 

The intergovernmental group, which last month said that it expected global wheat area for 2020-21 to be “little changed”, refined its forecast on Thursday to a 1% gain year on year, to 218m hectares.

 

The forecast for an area increase came despite an observation that “wet weather interrupted autumn fieldwork in parts of the European Union, most notably in the UK and France”, preventing many farmers from completing sowings.

 

Indeed, as of last week, market estimates for UK winter wheat sowings were of completion of some 50%, although weather has turned drier this week, seen heralding fresh fieldwork.

 

Origin Enterprises, owner of the Agrii agronomy chain, on Wednesday estimated total UK winter cereal and rapeseed plantings ending down 25% year on year.

 

On Monday, influential analysis group Strategie Grains, citing sowings delays “in the UK and, to a lesser extent, France”, lowered its forecast for 2020 EU soft wheat area by 200,000 hectares to 23.7m hectares, putting a marginal decline on the cards year on year.

 

‘Poorly established’

Furthermore, the IGC noted that in Ukraine, “dryness has left recently sown crops… poorly established ahead of the winter, with a significant drop in area reported”.

 

Ukraine farm ministry data last week showed domestic winter wheat sowing area shrinking to about 5.9m hectares for the 2020 harvest year from 6.1m hectares a year before.

 

Refinitiv earlier this month estimated Ukraine all-wheat area for the 2020 harvest at 6.13m hectares, reflecting “low wheat prices and dry soils”, and an area it said was the lowest since 2012.

 

Ukraine’s 2020 wheat output was seen falling by some 5% year on year to 23.9m tonnes.

 

This forecast is well below a 26.9m-tonne estimate last week from S&P Global Platts, although analyst Victoria Sinitsyna added that it had been “really dry across Ukraine and south western Russia”, which had left the crop with a “high” vulnerability to freeze damage in a harsh winter.

 

Russian expansion

However, the IGC highlighted a better outlook for Russia, where “the area for harvest [in 2020] is projected to expand”.

 

This tallies with observations from other observers, including S&P Global Platts, which has forecast a Russian harvest next year of 79.3m tonnes, which would be the second largest ever.

 

According to SovEcon, Russian farmers had seeded a record 18.1m hectares of winter crops as of Friday, up 500,000 hectares year on year.

 

This was “likely to convert into a record area under winter wheat”, given that this accounts for some 90% of all winter crop sowings.

 

“Despite the recent dryness crops conditions are generally good thanks to some rains and warm temperatures which helped crops to develop before the winter,” SovEcon added.

 

US corn upgrade

The IGC’s comments came as it raised by 5m tonnes to 2.162bn tonnes its estimate for the 2019-20 global production of grains – including wheat and coarse grains such as barley, corn and oats, but not factoring in rice.

 

The upgrade reflected an increase of 5m tonnes to 1.103bn tonnes in output of corn, led by a 3m-tonne upgrade to 345m tonnes (13.58bn bushels) in the estimate for US production.

 

Nonetheless, that estimate remains below the 13.661bn bushels at which the US Department of Agriculture pegs this year’s US corn harvest.

 

The IGC also noted that, “with figures boosted from before for the EU and Ukraine, the global barley outturn is now estimated to be a record”.

 

The council raised its forecast for global grain carryout stocks from 2019-20 by 2m tonnes to 594m tonnes, although this still represents a fall of 26m tonnes year on year, and indeed a third successive season of decline.

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