Canola and Soy output forecast bullish amid tightening grain market

GLOBAL— The latest report from the International Grains Council (IGC) indicates a tightening of global grain markets, mainly due to projected declines in corn and wheat, but Canola and Soy show promise.

Total grains production for 2022/23 is forecast to fall by 2% to 2,252Mt, potentially the first contraction in five seasons, mainly to reflect drought stress in the EU, including for wheat, barley and corn (maize).

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In the US however, despite weather complications and minor pest and disease challenges, the 2022 US Northern Plains spring wheat crop is thriving and poised for large yields. 

With a plunge in South American production only partly offset by gains elsewhere, global soybean output fell sharply in 2021/22, by 18m tons year on year (y/y), with consumption and import demand also set to retreat.

Linked to a sharp fall in exporters’ reserves, global soy inventories were significantly tighter, said the Council.

Record soy production anticipated 

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Tentatively assuming larger southern hemisphere soy harvests, the report predicts world soybean production will hit 386m tons for 2022/23 – that would be an increase of 10% y/y.

A recovery in both soy uptake and trade is also anticipated, led by gains in Asia, while carryovers could accumulate, including in key suppliers, said the IGC.

However, according to a recent report by CRM Agri, the recent hot and dry weather in central US states is taking its toll and has ended increasing crop confidence in soybeans,

“Looking ahead, forecasts for the majority of soybean producing regions remain mixed, due to projected rainfalls and above average temperatures offsetting each other…Amid new crop supply confidence coming under pressure, US soybean demand remains relatively minimal, offsetting the otherwise bullish outlook.”

Despite the recent heatwave that spread up through central US states and into Canada, Canola crop production confidence remains high, said the UK analysts.        

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According to the Australian Oilseeds Federation (AOF) July Crop Report. Australian canola production is expected to exceed the five-year average of 3.7 million tonnes (Mt) with its second-biggest crop on record of 5.5Mt,

Market uncertainty continues to influence grain purchases

The war between Russia and Ukraine has caused the global grain market to rally sharply, first surging toward record prices at the start of the war and then dropping sharply on rumors that the two countries would sign an agreement allowing Ukraine to ship grain out of its southern ports, which had been blockaded by the Russians since the start of the war in February.

Amid the market uncertainty created by this situation, Indonesia is now expected to import more wheat in 2022-23 as millers attempt to secure more stock according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).

In tandem with the war, global inflation has worsened the situation faced by Lebanon, and nearly half of the tiny Mediterranean nation’s 6 million people have been left without adequate food.

Struggling to cope with food security amid an economic crisis and tight global wheat supplies, lawmakers in Lebanon voted July 26 to use a US$150 million World Bank loan to pay for wheat imports into the cash-strapped country and help stabilize bread prices.

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