Winter weather in the US adds worries for cereals

The United States Department of Agriculture’s Crop Progress report, published last week, showed conditions deteriorated in Kansas, Oklahoma and Texas following freezing temperatures in April.

Winter extended unusually in the United States, there were more than 30 cm of snow in western Iowa, a major grain states in the country. When there is no snow, it’s rain preventing farmers from sowing. Having sowed only 5% of corn in may had not happened in the United States for nearly thirty years.

“We’ve been concerned by some extraordinarily cold morning temperatures,” said Todd Hultman, a grains analyst at DTN. “The USDA report just added confirmation that people are expecting damage from those conditions.”

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Sustainable supply-chain at risk: the US drought example

Weekly drought figures released  by the US Drought Monitor show the situation continues to be a problem with approximately 50% of continental US now suffering from a moderate drought or worse.

Despite recent precipitation bringing welcome relief and downgrading of the drought status in some parts of the country, the long term picture shows challenges remain.

Changing weather patterns and increasing likelihood of extreme weather events are pushing sustainable supply chain management up the agenda for many companies. The US drought is just one of many examples of how changing weather patterns can create clear and present supply chain risks.

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Corn posts biggest-ever two-day decline on big supply

Chicago corn prices experienced their biggest two-day drop on record, tumbling 12.6 percent, or 93 cents, as larger-than-expected U.S. stockpiles weighed on the market, causing hedge funds to sell heavily.

Pressured by corn, Chicago wheat fell to its lowest nearby price in nine months, and soybeans hit a nearly three-month low.

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A record wheat production expected in 2013

After falling 5.74% between the 2011/12 and the 2012/13 season to 656 Mt according to the International Grain Council, the world wheat production should bounce back. In 2013/14, the harvested areas should be at their highest level in four years, while a rise in yields would stimulate the production by 4%.

These estimates are similar to those of the Food and Agriculture Organization of the United Nations (FAO), published earlier this month. In 2013, global wheat production (690 Mt according to FAO, +4.3%) should be driven by the European Union (138 Mt), where the acreage should increase thanks to high prices.

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Worldbank commodity forecast for 2013 – Infographics

Following our article on Commodity Outlook – Forecast 2013, this is a graphical representation of the World Bank report for 2013.

Wheat: American soils victims of the consequences of drought

Despite the rain from November to January, the American cultures should still undergo a major water deficit in 2013. The drought of 2012, the worst in the last fifty years, has resulted in the soil drying out which is difficult for the farmers to manage.

According to the Palmer Drought Index, 56% of the U.S. are still in drought at the end of February, mainly in the High Plains region. Kansas, the largest producer of wheat in the United States, but also Nebraska, Oklahoma and South Dakota are in extreme drought according to the latest report from the U.S. Drought Monitor.

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Wheat production 2013-2014

The International Grains Council (IGC) presented at the end of last week its first forecast for wheat production for 2013~2014 as part of his Grain Market Report. It forecasts a global harvest of 682.2 million tons, up 4%, or 26 million tonnes, compared to 2012.

The increase in volumes mainly reflects a poor 2012-2013 harvest marked by droughts in several major producing countries. 2013-2014 harvest would not quite reach the level of 2011-2012, which was set at 696 million tonnes.

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Corn outlook – Forecast 2013 – USA and Brazil

In 2012, corn prices skyrocketed, demand remained high, making the 2012 crop the most valuable ever produced. What will happen next? Will the drought that impacted several countries and especially the United States continue in 2013?

USDA forecasts more corn in the US in 2013

The US corn production could reach 366.6 million tonnes 2013-2014, the U.S. Department of Agriculture believes. This is 53 million tons more than in 2012-2013. The USDA revised its long-term forecast model to include the 2012 drought in its 25-year average. Forecasters expect the area sown for all types of cereals to be 102.6 million hectares in 2013-2014, but to decline over the next three years for corn. Specifically for corn, the USDA expects 38.78 million hectares in 2013, and 36.3 million hectares in 2014 (vs. 39 million hectares in 2012).

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How climate change impacts commodity prices

I came across this interesting discussion of the Great Climate Disconnect courtesy of General Electric.

GE has asked the members of its Citizenship Advisory Panel to reflect on trends and key challenges for sustainable development in 2013. This first post by Nick Robins tackles the gap between climate change risk and ambition.

The year ahead will be dominated by growing tension between ever-stronger evidence of climate change and the inadequacy of the global policy response. Drought in the USA in 2012 highlighted the vulnerability of commodity prices to intensified weather risk, and 2013 is set to be another year of above-average global temperatures. But global greenhouse gas emissions are continuing to rise, putting the world on track for overshooting the 2ºC “safe” target and ending up in a 4ºC world.

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Wheat: Global production forecast down

In its report published on November 29th, Grain Market Report, the International Grains Council (IGC) forecasted a wheat production of 654 million tonnes for 2012-2013 against 695 million for the previous season. In July, the estimate for wheat production was 665 million tonnes.

The grains supply and demand forecasts for 2012/13 have been revised slightly as harvests have been completed in some countries, but the outlook is largely unchanged. Total grains production is expected to fall by 5% year-on-year, and despite a contraction in consumption for the first time in 14 years, stocks are set to fall by 45m t to 324m.

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