New grain: export forecasts in Ukraine and in the world

How much grain will the main producing countries, including Ukraine, collect and send to foreign markets? Analysts at Barva Invest talk about what is happening with grain export forecasts, and what factors affect grain exports in Ukraine and around the world.

Corn

The USA. For the 2021/2022 season, the US Department of Agriculture (USDA) made the only change – it lowered the forecast for the use of corn for fodder (-25 million bushels, or 635 thousand tons). This automatically reduced the entry stocks for the 2022/2023 season, which now stand at 38.4 million tonnes.

In general, the 2022/2023 balance has also undergone other changes. Thus, the USDA expectedly corrected the forecast of sown areas (and areas before harvesting) to the values ​​reported on June 30 – 36.4 million hectares and 33.2 million hectares, respectively. Such data was quite expected by market participants. The crop yield has not changed either – usually, the first changes occur in August.

As such, due largely to expected values, total US corn supply in the 2022/2023 season will be larger than the USDA forecast in the last report. As far as demand is concerned, the USDA has not made any changes. Therefore, ending balances rose by 70 million bushels (1.8 million tons), which is not a strong factor for price movement.

Other countries. The forecast for the current season in Brazil (2021/2022) has remained the same. The harvest is expected at the level of 116 million tons (a record), the export potential is 44.5 million tons.

There were no changes in Argentina either.

As for Ukraine, the USDA raised its export forecast for the current season from 23 to 24 million tons. Our forecast remains at the level of 23.5 million tons, so, in general, we agree with the figure. However, the fulfillment of such a forecast will depend on the activity of European traders and the situation with our logistics. Now activity has noticeably fallen: the holiday season has begun in the EU.

As for the USDA forecast for the 2022/2023 season, the balance remained unchanged – the ministry keeps a crop forecast of 25 million tons, exports – 9 million tons. Our crop forecast remains at 25.4 million tonnes. But we must once again recall that the USDA, for some reason, keeps an extremely high forecast for domestic consumption of 12.2 million tons for the 2021/2022 season, and 10.7 million tons for 2022/2023.

In general, they did not add market problems to the report and force them to rewrite the balance sheets. Most of the data (even the changed ones) were more or less expected. However, trading on the stock exchange continued to move downward, observed since the opening of the main session (16:30).

Now the important part, outside of the WASDE report. There are unconfirmed reports that Brazil may make the first delivery of corn to China before the end of this year. So far there have been no official comments from the Brazilian ministry. But the movement towards a meeting between China and Brazil has been going on for a long time.

The second important (and also price-cutting) news was the announcement of a 4-party meeting of “military delegations from the ministries of defense of Turkey, the russian federation and Ukraine, as well as the UN delegation, which will negotiate the safe export of grain stored in Ukrainian ports to international markets by sea. way.” It seems that now this, as well as the fall in oil prices, are the main factors of pressure on world prices for grains and oilseeds.

Wheat

When it comes to the 2022/2023 season, the July USDA WASDE report is primarily characterized by a decrease in global supply, but at the same time, an increase in global exports and consumption.

Crop estimates for the EU, Argentina and Ukraine have been revised down, partly offset by larger crops in Canada, the US and russia. For the EU, the crop estimate was immediately reduced by 2 million tons (to 134.1 million tons), due to dry weather conditions in Spain, Italy and Germany.

Meanwhile, for Ukraine, the forecast for the wheat harvest was reduced to 19.5 million tons (-2 million tons compared to the previous report), but we recall that we continue to work with the figure of 16.5 million tons. The Canadian harvest forecast has been increased by 1Mt to 34Mt based on data from StatCan (large acreage with market expectations).

Special attention should be paid to such an indicator as “world consumption”: it was reduced by 1.8 million tons (to 748.2 million tons), to a greater extent, due to a decrease in the use of wheat in the EU and Ukraine for fodder.

The main changes in transitional stocks in the US and the world were close to the expectations of market participants. Accordingly, the upside potential for Chicago wheat remains limited and a slight upward correction is possible, considering the overall picture in the world.