Record Crops Forecast for 2013-14

Last Friday brought the release of this month’s all important World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA). The estimates were particularly important on this occasion because they included the USDA’s initial assessment of what we could expect for the upcoming 2013-14 season (from 1^st July 2013 to 30^th June 2014) given “average weather, trends and yields” (average being the optimum word here).

For wheat, global production for the 2013-14 season is forecast at 701M/T – 45M/T higher than the 2012-13 season and a new world production record. Massive increases are forecast for Russia, the Ukraine and major importers in the Middle East and North Africa. The EU (particularly Germany and Poland) is also forecast a notable rebound from this season’s crop.

On the other hand, ‘persistent drought and spring freezes’ are believed to have caused severe damage to next season’s US winter wheat crop. Total production for the 2013-14 season is forecast at 56M/T, 6M/T lower than this season’s ‘generally poor’ output.

For maize corn, global production for the 2013-14 season is forecast at 965M/T – 108M/T higher than the 2012-13 season and also a new world production record. The US is expected to account for the majority of this record crop with an 85M/T increase on this season expected (taken the total forecast amount to 360M/T).

The estimates have already been criticised for their ‘overly optimistic attitude’, ‘premature nature’ and of course their use of ‘average weather patterns’. But as with last month’s forecasts from the International Grains Council (IGC), these numbers represent the potential of next season’s output; and their currently appears to be serious potential for some seriously big tonnages.

Following on from the release of the above, new crop feed wheat values have begun to drift slightly lower. £180/T ex-farm is still a realistic offer for November collection, whilst harvest movement would make somewhere in the early £170’s/T ex-farm.

New crop feed barley is valued around £15-20T less, whilst select new crop spring malting varieties would make somewhere in the region of £200/T ex-farm (with limited tonnage available, please contact the office for more information).

Values appear to have held fairly well given the arrival of this month’s WASDE. Persistent rainfall across the southern plains in America is hampering the timely planting of this ‘360M/T’ maize corn crop, whilst freezing temperatures across northern Europe are causing some concern for spring sown plants; a combination which appears to be upholding values.

Meanwhile, OSR values have continued to decline this week. Last Friday’s USDA estimates suggested a global output of 491M/T for oilseeds and although soybeans account for the majority of this it has added pressure to our equivalent OSR prices. Old crop OSR for spot collection is currently valued somewhere in the early £370’s/T ex-farm, whilst harvest collection would make £340/T ex-farm.