Ukrainian flag is covered with grains in this picture illustration taken May 9, 2022. REUTERS/Dado Ill., May 11 (Reuters) - The U.S. Department of Agriculture on Thursday will publish its first official supply and demand outlooks for the upcoming 2022-23 marketing year, and it will contain several important numbers given the precarious situation of global grain markets.

Potential revisions to current-year estimates cannot be overlooked, either, as those already reflect tighter-than-usual supplies. This guide will help navigate some of the primary topics. USDA’s outlooks are due on Thursday at 12 p.m. EDT (1600 GMT).

With Russian occupation of Ukraine still ongoing, there are many uncertainties about future supplies in Ukraine, the No. 4 exporter of corn and wheat. The country’s ministry has said spring grain area would fall 20% on the year, but many analysts find that optimistic.

Further, it is unclear whether crops can be harvested, transported and exported, or even stored since some infrastructure has been destroyed. Ukrainian farmers last fall boosted winter wheat area for 2022-23 by nearly 9% and more than 90% of crops were in good condition by February.

There were reports on Tuesday that Russian military may have struck the port of Odesa, Ukraine’s busiest for grain exports. If true, that could be long-term limiting for exports. Ukraine vowed last week to increase export capacity via the western border, but shipments would still be well below normal. read more

Both old- and new-crop Ukraine corn and wheat production and export outlooks should be watched closely on Thursday. As of last month, USDA estimated Ukraine’s 2021-22 wheat exports at 19 million tonnes and corn at 23 million, down from 24 million and 33.5 million in February, respectively.

Top supplier Russia may be expecting a record wheat crop in 2022-23, though global sanctions for the war in Ukraine are theoretically supposed to lighten Russia’s exports by making transactions more difficult. But some predict the country could match its export record in 2022-23 of 41 million tonnes.

Russia has continued exporting over the last couple of months. USDA had 2021-22 Russian exports at 35 million tonnes in February before the invasion, and 33 million was last month’s estimate. Russia’s record wheat harvest was 85.4 million tonnes in 2020-21.

Exportable world wheat supplies were already light before the Ukraine crisis, particularly with last year’s crop losses in North America. India stepped in, expected to export a record 8.5 million tonnes in 2021-22, more than twice the previous year’s volume.

A blazing hot March might have damaged its 2022-23 wheat crop, which was set for a sixth consecutive record prior to the weather woes, and that could limit its export potential over the next year. India harvested near 110 million tonnes last year, though some industry estimates for the current crop are below that.

USDA’s attache last month placed the 2022-23 wheat crop at 110 million tonnes.

USDA’s National Agricultural Statistics Service will be making its first survey-based U.S. winter wheat crop outlook. Only 29% of the crop was considered good or excellent as of Sunday, and years with similar ratings featured yields mostly 20% to 30% below the long-term trend, though that may not be settled this early.

Analysts are looking for a winter wheat crop of 1.239 billion bushels, down 3% on the year despite plantings rising 1.7%. Hard red winter wheat is seen down nearly 9% as conditions in those states are the worst.

Top soybean importer China’s demand has recently slipped due to poor crush margins and negative hog profits, though hog margins are expected to improve later this year. China’s new-crop U.S. soybean purchases are tied for an all-time high, a positive early sign for a return in demand.

However, there are some uncertainties over Chinese demand and its economy in general due to recent COVID-related lockdowns in its major cities. China’s currency on Monday hit a 19-month low against the dollar due to slower productivity in April.

USDA has pegged 2021-22 Chinese soybean imports at 91 million tonnes, a three-year low and down from nearly 100 million in the prior year, and analysts will look for a rebound in 2022-23.

China is also expected to continue importing corn in 2022-23, but to what degree is unknown. USDA estimated 2021-22 imports at 23 million tonnes last month, and USDA’s attache last month pegged 2022-23 at 20 million.

Brazil’s second corn crop got off to a good start this year, but weather has been very dry in recent weeks, especially in top producer Mato Grosso. Analysts see Brazil’s 2021-22 corn crop at 114.12 million tonnes versus 116 million last month. Record production was 102 million in 2019-20.

Other industry estimates are lower than that, some in the sub-110 million-tonne range. Brazil is the No. 2 corn exporter and was expected to substantially bounce back this year after last year’s poor harvest.

Karen Braun is a market analyst for Reuters. Views expressed above are her own.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Source: Reuters

Powered by NewsAPI.org