Droughts and war in Ukraine push grain inventories to decade lows

The world is heading for the lowest grain inventories in years despite the resumption of exports from Ukraine, as shipments are relatively small and harvests from other major agricultural producers are smaller than initially expected, according to forecast data from harvest and grain supply.

Bad weather in the world’s major agricultural regions, from the United States to France to China, is slashing grain harvests and reducing stocks, raising the risk of famine in some of the world’s poorest nations.

Importers, food manufacturers, ranchers and farmers all expected grain availability to improve after war-torn Ukraine resumed some shipments from Black Sea ports and after Americans planted large crops.

But the United States, the world’s top corn producer, is now set to harvest its smallest corn crop in three years.

The drought has also hit European crops and is threatening the upcoming planting season in Argentina.

By the end of the 2022/23 crop, corn stocks will be enough for just 80 days of consumption, down 28% from five years ago and the lowest level since 2010/11, according to data compiled to Reuters by the International Council of Grains, an intergovernmental organization.

That would represent fewer days of corn stockpiles than the world had in 2012, when the latest global food crisis sparked protests.

More unfavorable weather could further reduce global stocks, particularly if the current dry climate in South America continues into the main growing season as the crop cycle shifts to the southern hemisphere.

Crop forecasts in Argentina, the world’s third largest corn exporter, are already being reduced due to dry weather.

European Union output is expected to hit a 15-year low, a decline that will prompt the bloc to increase imports from Ukraine in 2022/23 by around 30% year-on-year to 10.4 million tonnes, the EU said. Strategie Grains consultancy.

Ukraine’s corn and wheat exports have surged since a UN-brokered deal with Russia allowed shipments to resume from ports that had been blocked since the start of the war.

But it remains to be seen how much Ukraine can export, especially if the war drags on.

Ukraine is expected to harvest 25 to 27 million tonnes of maize in 2022, down from 42.1 million tonnes in 2021 after Russia’s invasion, according to official estimates.

south american hope

Meanwhile, farmers in China have struggled with drought, which threatens crops, and India limits rice exports due to bad weather.

Agricultural bank Rabobank said the United States’ next wheat crop is also at risk and will be planted in powder this fall unless the rains fall.

This is “a recipe for another difficult year of agricultural production and strong price support,” Rabobank said.

Importers are eyeing South America, where Brazilian farmers are expected to produce record corn and soybean crops in 2023, according to analysts and the government.

Farmers are hoping for better weather for the soy plantations that are under way after drought spoiled part of the past crop.

In Argentina, however, the Rosario Grain Exchange predicts that newly started plantings for the 2022/2023 corn crop will fall 7% compared to the past crop to 8 million hectares due to a family problem – drought.

The Argentine government has also capped the export of the crop, which will be planted in the coming weeks, at an initial 10 million tonnes, compared to 36 million tonnes in the 2021/22 corn crop.

“If this were a race, farmers are starting in last position with engine problems,” Cristian Russo, the exchange’s chief agronomist, told Reuters.

“The situation is extremely complex, the most complex season we’ve had this century so far.”