14 August 2008

11 minute read

Argentina: Dry Weather Hampers Sowing Campaign for Wheat

The USDA forecasts Argentina wheat production for 2008/09 at 13.5 million tons, down 1.0 million from last month and down 2.5 million from last year. Area is estimated at 4.7 million hectares, down 0.4 million from last month and down 1.0 million from last year. Yield is forecast at 2.87 tons per hectare, up slightly from last year’s 2.82 tons per hectare. Dry planting conditions have caused sowing delays for winter wheat throughout much of Cordoba, Santa Fe, Chaco, Entre Rios and northern Buenos Aires, and will likely result in reduced area for 2008/09. The optimum planting windows for winter wheat typically extends from May through mid-July. Similarly dry conditions is limiting planting and may reduce yields in the spring wheat region farther north. High export taxes in effect during the first half of 2008 is discouraging the planting of wheat and encouraging farmers to plant oilseeds instead. The recent dissolution of the controversial Resolution 125 moving-scale grain tax has lowered wheat export tariffs to 20 percent, but the reprieve may have occurred too late to have a significant effect on wheat area. (For more information, contact Denise McWilliams at 202-720-0107.)

Approved by the World Agricultural Outlook Board

India: Wheat Production at Record Levels

India's 2008/09 wheat production is estimated at 78.4 million tons, up 1.6 million or 2 percent from last month, and up 2.6 million or 3 percent from last year. The area estimate is 28.0 million hectares, up 0.3 million or 1 percent from last month, but unchanged from last year. Yield is estimated at a record 2.8 tons per hectare, up 3 percent from last year. Favorable weather conditions, particularly cool temperatures during the growing period, are primarily responsible for the reported record output this year. The 2008/09 India wheat crop was sown during November 2007 and harvested by May 2008. (For more information, contact Dath Mita at 202- 720-1071.)

Russia: Bumper Wheat Crop Forecast for 2008/09

The USDA estimates Russia wheat production for 2008/09 at 57.0 million tons, up 3.0 million or 6 percent from last month and up 7.6 million or 15 percent from last year. The month-to-month increase in estimated production is based chiefly on an increase in estimated area from preliminary data from the State Statistical Committee. Total wheat area is estimated at 26.1 million hectares, up 0.6 million from last month and up 1.6 million from last year. Yield is estimated at a record 2.18 tons per hectare, surpassing the previous record (achieved in 1990) by 6 percent. Winter wheat 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. The Southern District accounts for roughly two-thirds of the winter wheat output, and virtually all of the country’s winter wheat is grown in European Russia. The wheat harvest in European Russia was roughly half complete by the end of July with yields in the Southern District up substantially from last year. In the main spring wheat region, which includes the Siberian, Ural, and Volga districts, yield and production are likely to decrease from last year due to excessive dryness in the Altai territory of western Siberia. Altai is Russia’s largest spring wheat producer and typically accounts for nearly 15 percent of the country’s spring wheat output. Harvest will begin in late August. (For more information, contact Mark Lindeman at 202-690-0143.)

Kazakhstan: Localized Dryness Reduces Wheat Yield Prospects

The USDA estimates Kazakhstan wheat production for 2008/09 at 13.5 million tons, down 0.5 million or 4 percent from last month and down 3.1 million or 19 percent from last year. Area is estimated at 13.0 million hectares against 12.8 million last year. Dryness in north-central Kazakhstan is likely to reduce yield substantially compared to last year’s bumper crop, but the forecast yield of 1.04 tons per hectare matches the average of the past five years. Satellitederived vegetative indices indicate below-normal crop conditions in Akmola and North Kazakhstan territories but more favorable conditions in Kostanai. These three territories account for about 80 percent of the country’s wheat output. The harvest of spring wheat typically begins in late August. (For more information, contact Mark Lindeman at 202-690-0143.)

EU-27: Bumper Wheat Crop Being Harvested In Europe

Wheat production in the European Union (EU-27) is estimated at 143.2 million tons, up 1.5 million or 1 percent from last month, and up 23.9 million or 20 percent from last year. Harvested area is estimated at 26.6 million hectares, unchanged from last month, but up 8 percent from last year. This year’s wheat crop, currently in the final stages of harvesting, is estimated to be second only to the 2004/05 record harvest of 146.9 million tons. High prices and the elimination of the set-aside restriction for 2008/09 encouraged producers to increase wheat area. Meanwhile, above-average precipitation throughout the growing season maintained high soil moisture levels and contributed to high yields. The biggest year-to-year increases in production are being achieved in southeastern Europe, where precipitation has been very favorable. Hungary’s 2008/09 crop is estimated at 5.2 million tons (4.0 last year), Romania’s is estimated at 7.0 (3.0) million, and Bulgaria’s is estimated at 3.7 (2.3) million. Heavy summer rains in some areas of northern and central Europe, however, have delayed harvest and reduced quality. (For more information, contact Bryan Purcell at 202-690-0138.)

Ukraine: Outstanding Yields Reported for Wheat and Barley

The USDA estimates Ukraine wheat production for 2008/09 at 22.0 million tons, up 1.0 million or 5 percent from last month and up 8.1 million or 58 percent from last year. Area is estimated at 6.7 million hectares, down 0.1 million from last month due to the likelihood of flood-related damage to cropland in western Ukraine. Barley output is estimated at 12.0 million tons, up 1.5 million or 14 percent from last month and up 6.0 million or 100 percent from last year. Estimated area is unchanged from last year at 4.1 million hectares. The enormous year-to-year jump in output for both crops is attributed chiefly to remarkably improved weather compared to last year, when persistent and excessive dryness severely affected yield, especially for spring barley. As of August 4, with harvest approximately 80 percent complete, reported wheat yield is up 48 percent for wheat and 106 percent for barley compared to the same date last year. (For more information, contact Mark Lindeman at 202-690-0143.)

Afghanistan: Severe Drought Significantly Reduces Wheat Production

The USDA estimates 2008/09 Afghanistan wheat production at 1.5 million tons, down 1.0 million from last month and down 2.3 million or 61 percent from last year. Harvested area is estimated at 1.6 million hectares, down 0.6 million from last month. Well-below-normal rainfall and winter snowfall across the majority of Afghanistan during late 2007 and early 2008 have led to the worst drought conditions in the past 10 years. Based on field reports from Afghanistan, drought conditions were severe enough to cause widespread failure of the rainfed wheat crop in many areas of the country. Rainfed wheat production typically accounts for about 30 percent of total production. Even more critical, however, was the severely depleted irrigation supply in the spring owing to a much-reduced winter snowpack. Irrigated wheat production accounts for roughly 70 percent of total output, and is nearly totally reliant on snowmelt and the resulting surface water flow through mountain streams and rivers. Irrigated wheat acreage was likely reduced in 2008/09 as a consequence of much reduced snowpack in the central Hindu Kush mountain range, and irrigated crop yields would have been negatively impacted as well. Wheat harvest generally occurs between May and September, with the rainfed crop being the earliest to mature. Given the intensification of the drought in recent months, even the later-maturing irrigated summer grain crops are threatened. Seasonal rainfall typically declines after April, so only crops with access to adequate irrigation supplies will survive to produce near-normal yields this year. Reductions in winter grain production are expected to be substantial enough to have serious ramifications in the domestic food and feed grain market during the 2008/09 marketing year. In recognition of the severity of the grain production shortfall, the government of Afghanistan and the United Nations issued an emergency appeal in July to the world community to donate $400 million to cover sizable wheat import and food aid needs for approximately 4.5 million affected Afghans, as well as to prepare for the next winter cropping season beginning in October. (For more information, contact Michael Shean at 202-720-7366.)

Argentina: Soybean Area to Increase in 2008/2009

The dry weather in northern Argentina that prevented winter wheat planting is a factor in increasing soybean area by an estimated 0.6 million hectares this month, to a record 17.7 million hectares. With this added area going into full-season soybeans rather than second-crop beans following wheat, production is expected to increase by over 3 percent to 49.5 million tons. Fullseason soybeans can yield up to 20 percent more than second-crop soybeans in Argentina, which is supportive of overall yield. Trend yields suggest a potential yield of 2.8 tons per hectare for the coming year if currently dry northern areas receive beneficial rainfall. Reducing the slidingscale tariffs that were imposed on soybeans earlier this year (from 46.6 to 35 percent) has provided incentive to plant more soybeans, along with recent news that the Argentine government will suspend plans to raise grain export taxes. Area could increase even further with the conversion of pasture to soybeans. A new AE Biofuels soy biodiesel plant in Rosario, with an extraction capacity of 75 million gallons, is slated to open in late 2009 and will likely provide even more incentive to push soybean planting in Argentina next year. (For more information, contact Denise McWilliams at 202-720-0107.)

Brazil: Soybean Planting Intentions Reach 22.0 Million Hectares

Brazil soybean area for 2008/09 is forecast at 22.0 million hectares, down 0.5 million from last month but up 0.7 million or 3 percent from last year. Production is forecast at a record 62.5 million tons, down 1.5 million or 2 percent from last month but up 1.5 million tons from last year. Yield is forecast at 2.84 tons per hectare, down 1 percent from last year’s record and slightly above the 15-year trend of 2.82 tons per hectare. Two months ago, industry sources thought Brazil soybean area would increase by 5 to 10 percent from last year, but now only a moderate increase of 1 to 3 percent is expected. Several factors could hamper a rapid soybean expansion, especially in central Brazil, including: rising production and transport costs; large debts carried over from rapid area expansion during 2000-2003; less credit availability; fewer 2008/09 forward sales expected due to large financial losses from 2007/08 forward contracts; more stringent environmental restrictions to prevent agricultural expansion into the Amazon forest; and competition from other crops such as sugarcane and corn. Planting intention surveys from several southern cooperatives report modest soybean and corn area increases for the upcoming season. Other industry sources also indicate slight soybean area growth in all states, although no state is expected to significantly increase area. Planting will begin when irrigated soybeans are planted on September 16th, immediately following the end of the 90-day Free Host Period (June 15- September 15). The Free Host Period has been implemented in many states as a method to reduce the spread of soybean rust spores. (For more information, contact Curt Reynolds at 202-690-0134.)

Argentina: Corn Area and Production Decline

The USDA forecasts Argentina corn production for 2008/09 at 22.0 million tons, down 1.5 million from last month. Farmers in Argentina are expected to reduce planted area this year owing to high input costs as well as the recent export tariff conflict. Area is forecast at 3.0 million hectares, down 0.1 million from last month and last year. Yield is forecast to drop slightly to 7.33 tons per hectare due to expected lower fertilizer use. In recent weeks, corn export taxes were decreased to 23 percent. A short lived increase in the export tax rate, along with fertilizer price increases of around 20 percent have caused Argentine farmers not to put additional ground to corn production. Argentina corn production reached a record 22.5 million tons from 2.8 million hectares in 2006/20007. (For more information, contact Denise McWilliams at 202-720-0107.)

EU-27: Large Corn Crop Forecast Following Favorable Weather

Corn production in the European Union (EU-27) is forecast at 58.6 million tons, up 1.1 million or 2.0 percent from last month, and up 11.3 million from last year. Harvested area is forecast at 8.7 million hectares, down 0.1 million from last month, but up 0.4 million from last year. A combination of positive factors is expected to result in a bumper corn crop this season, with yield estimated at 6.73 tons per hectare, third highest on record. Grain prices were near record highs at planting. The EU’s Common Agricultural Policy (CAP) was modified late last year to eliminate the mandatory 10-percent set-aside requirement in 2008/09, increasing allowable grain area. Furthermore, spring and summer weather has been very favorable across almost the entire continent, in sharp contrast to last year when high temperatures and severe dryness greatly reduced yields. This season’s rainfall totals have been adequate to above-average in almost all regions. The only notable exceptions this season were winter drought in Spain, which ended with heavy spring rainfall recharging reservoirs, and April and May dryness in eastern Germany and western Poland. Large production increases are forecast for southeastern Europe after one of the lowest harvests on record last year. Corn is not irrigated in this region and yields are highly variable. Hungary is estimated to produce 8.4 million tons, up 4.4 million from last year, and 25 percent above the five-year average. Romania’s crop is forecast at 8.2 million tons, up 4.3 million from last year. Bulgaria’s corn production is forecast at 1.4 million, 18 percent above average and nearly 350 percent above last year’s crop. In irrigated western Europe, France’s 2008/09 crop is estimated at 14.0 million tons (against 14.3 million last year), Italy’s output is forecast at 10.0 (9.5) million, Germany is expected to produce 4.3 (3.8) million, and Spain is forecast to produce 3.4 (3.5) million. (For more information, contact Bryan Purcell at 202-690- 0138.)

Further Reading

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