North American Crop Prospects
- Monday, April 14, 2003
This analysis featured in the April 14, 2003 issue of the HGCA's MI Prospect, Volume 5, Number 21
Prospects for 2003 North American grain and oilseed crops, based on current conditions, are for an improved, although not historically large, wheat harvest. This could enable the US and Canada to regain export markets lost this year. It is too early to make any definitive projections on spring seeded coarse grain and oilseed output.
US winter wheat crops are now coming out dormancy and the first estimates of spring seeding intentions are published. This allows the first tentative indicators of prospects for the North American harvests to be made. In recent years the US and Canada have typically accounted for two thirds of world trade in coarse grain and almost 50 percent of world wheat trade. And, while this year's experience may have highlighted a long-term trend in global grain markets, it will be some years before this year's situation will be considered normal.
Wheat
Winter wheat accounts for about 75 percent of total US wheat output, is grown quite widely throughout the country, but most production is in a region stretching from Texas to Montana, west of the corn belt and east of the Rocky Mountains. The states of Texas, Oklahoma and Kansas typically account for about 40 percent of production. Canadian winter wheat production is of limited significance. Most spring wheat is grown relatively close to, and on both sides of, the 49th parallel border between the US and the Canadian Prairies.
The 2003 US winter wheat acreage is up six percent at 17.9M hectares. While the surge in US price last summer undoubtedly encouraged farmers to increase acreage, this is not, in an historic context, a large area (see Graph). Ten years ago anything less than 20 million hectares would have been regarded as small.
continueChart 1
Source: USDA
continued
The March 31, and first, USDA weekly crop progress report has provided an early indication of 2003 winter wheat yield prospects. Fifty-one percent of the crop was reported to be in good to excellent condition, with only 14 percent in poor or very poor condition. A year ago only 31 percent was reported in good to excellent condition, while 35 percent was in poor or very poor condition.
Although the crop is clearly much improved on that of last year at this time, a good to excellent rating in the 60 percent range has been typical, the last two years apart, at this stage. And the US winter wheat crop is currently almost certainly benefiting from some good rains during late March in important producing regions.
Beneficial as those rains were, they do not appear to have replenished soil moisture deficits over a sizable area of the US Midwest. But in the southern portion of the US winter wheat belt moisture conditions do appear to be better than at this time last year.
With the normal caveat of typical crop development conditions over the next two months, it is evident that the US winter wheat harvest will be larger than that of the last two years, but it is not likely to be a large in an historic perspective. A 2003 US winter crop of between 40M and 45 M tonnes, while substantially above this year's output of 31M tonnes, would, after allowance for domestic requirements, only enable the US to recapture export markets lost this year.
In contrast to the winter crop, the area seeded to spring wheat in the US is expected to decline. The USDA's prospective plantings' report indicated farmers plan to reduce durum and other spring wheat acreage by 2.6 and 7.4 percent, respectively. This would be the smallest US spring wheat area since 1988. A significant decline in perspective wheat area where it is dry is responsible for this cut back. A full recovery in US spring wheat production cannot be anticipated.
Canada's Seeding Intention report is not published until late April. With very short supplies of almost all crops for any use, this year's report is awaited with particular interest. It is evident that soil moisture conditions vary considerably across the Canadian Prairies. Farmers, faced with the option of seeding what will do best in their particular situation and the prospect, at least for the 2003-04 season, of all crops finding ready markets, are in aggregate unlikely to increase significantly the area seeded to any particular crop at the expense of any other crop.
Whilst more snow was received in the drought areas since Christmas this year than last, this will not relieve soil moisture deficits. Under these conditions and unless rain is both timely and above average, Canadian yields in aggregate will at best be average. Earlier in the year both Agriculture Canada and the Canadian Wheat Board made projections based on economic factors rather than surveys for a 2003 Canadian wheat crop slightly more than 25M tonnes. A crop of this size will be needed to allow Canada to re-supply its traditional overseas customers.
Coarse Grains and Oilseeds
The USDA Prospective Plantings' survey report indicated a maize area of 32M hectares, about the same as in 2002 (see table). Based on continued strong demand for maize, particularly from US processors, and the lowest stock levels in ten years, an area about 400,000 hectares larger than this had been anticipated.
US Prospective Plantings
----------------------------------------------------------
Actual Actual Actual Prospect Change
2000 2001 2002 2003 02actual
mln.hct mln.hct mln.hct mln.hct percent
----------------------------------------------------------
Corn 32.2 30.7 32.0 32.0 -0.0
Soybeans 30.1 30.0 29.8 29.6 -0.8
All Wheat 25.3 24.1 24.4 25.0 2.2
Durum 1.6 1.2 1.2 1.1 -2.6
Spring Wheat 6.2 6.3 6.4 5.9 -7.4
Oats 1.8 1.8 2.0 2.0 -3.5
Barley 2.4 2.0 2.1 2.2 6.0
Sunflowers 1.1 1.1 1.0 1.0 -2.6
Canola 0.6 0.6 0.6 0.5 -14.4
----------------------------------------------------------
Source: USDA March 31, 2003
Conversely the prospective US soybean area was expected to fall as land was switched to maize. It was, in fact, up by 0.2 percent. For soybeans, continued growth in south American output was seen as continuing to limit US prospects, even though US soybean stocks are also at low levels.
In some spring cropping areas moisture conditions are currently less favourable than a year ago. It is, however, too soon to interpret much from this beyond the opportunity for land to be worked earlier than usual. Prior to seeding last year the concern in the maize belt was over conditions being too wet for timely seeding. By July yield potential was being lost because of poor moisture conditions.
Canadian coarse grain and oilseed crop prospects are of minor significance because of the relatively small output involved. And they are, without any indication of seeding intentions, even less certain. The greatest interest in the Canadian situation is in malting barley prospects. As both quantity and quality of the harvest will be critical, clear indications of prospects will not emerge until combines begin to roll. What is evident, however, is that it will be late in the year before new crop Canadian malt and malting barley will be a factor in the international market.
Price Implications
While some recovery in North American grain output can be expected in 2003, this is unlikely, particularly for wheat, to result in much more than a recovery in international market share lost this year. If the newly emerging exporters are unable to sustain the levels of exports they gained this year, this may not have an unduly adverse impact on prices.
David Walker 01603 705153
David Walker
phone: 01603 705153
top of page