USDA supply and demand report focuses on impact of Russian-Ukrainian war on production and trade

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Highlights and Analysis from the USDA Supply and Demand Report (WASDE), including Grains and Livestock


March 11, 2022

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The USDA in a special note said, “Russia’s recent military action in Ukraine has significantly increased the uncertainty of agricultural supply and demand conditions in the region and globally. The March WASDE represents a first assessment of the short-term impacts resulting from this action.

Other highlights:

  • War to reduce wheat exports from Ukraine and Russia by 12%. The Russian invasion of Ukraine will reduce the countries’ wheat exports by a total of 12%, the USDA said in an initial assessment of the short-term impact of the war. Countries from Europe to Asia and Africa will import slightly less wheat in the coming months in the face of rising prices and reduced supplies from the Black Sea region, he said. he declares.
  • But: US ending inventories down 100 million. drank. from last month to 1.44 billion. drank. The USDA has increased the use of corn for ethanol by 25 million. drank. and increased exports by 75 million. bu., “Reflecting expectations of a sharp drop in exports from Ukraine”. Global ending stocks were reduced by 1.25 million. tons (49 million bushels). USDA price 2021-22: $5.65, up 20 cents from last month; up $1.21 from 2020-21.
  • Soy: US ending inventories down 40 million. drank. from last month to 285 million. drank. The USDA increased its exports by 40 million. drank. due to reduced production and deliveries in South America. USDA price 2021-22: $13.25, up 25 cents from February; up $2.45 from 2020-21.
  • Wheat: US ending inventories unexpectedly up 5 million. drank. from last month to 653 million. drank. The USDA cut forecast exports by 10 million bushels, despite Black Sea shipping issues. Global ending stocks increased by 3.3 million. tonnes (121 million bushels) as higher stocks in Russia and Ukraine are only partially offset by declines in Turkey, India and the EU. USDA price 2021-22: $7.50, up 20 cents from February; up $2.45 from 2020-21.
  • Livestock, poultry and dairy products: The forecast for 2022 for total red meat and poultry production has been lowered slightly from last month, as the expected increase in beef and turkey production is more than offset by lower projections for pork and broiler chickens. The beef production forecast is raised from the previous month due to increased slaughter of both fed and unfed cattle. Pork production is reduced on a slower slaughter rate and slightly lighter carcass weights. Pork imports increased due to strong domestic prices, while exports were reduced due to increased competition in a number of Asian markets. Hog prices rose based on year-to-date prices and expected strength in demand. Broiler production is reduced due to lower slaughter to date and a slower than expected hatch recovery. Turkey production forecasts are based on year-to-date hatchery data. Egg production forecasts are reduced due to slower expected production growth in the first half. Broiler export forecasts are reduced as higher prices reduce export opportunities. The turkey export forecast is reduced from last month, mainly due to recent findings of highly pathogenic avian influenza which led to import restrictions by Mexico. The milk production forecast for 2022 is lowered from last month, due to lower dairy cow numbers and slower milk growth per cow. The fat-based import forecast is lowered due to lower expected imports of cheese and fat-based products, while exports are reduced due to lower shipments of whole milk powder and whey.

Comments from grain/livestock industry sources:

  • The war in Ukraine has severely hampered navigation in the Black Sea, with far-reaching consequences for international transport and global supply chains, the the wall street journal reports. Dozens of cargo ships are stuck in the Ukrainian port of Mykolaiv, marine trackers said. The result is the closure of the world’s second largest grain exporting region. Ukraine accounts for 16% of world corn exports and, together with Russia, 30% of wheat exports. World wheat prices have jumped more than 55% since the week before the invasion.
  • Ukraine has banned exports of certain basic products. Ukraine’s government has banned exports of rye, barley, buckwheat, millet, sugar, salt and meat until the end of this year, according to a cabinet resolution issued on Wednesday. The main absentees from the export ban are corn, wheat and sunflower oil.
  • Sources say if the war drags on, countries that rely on affordable wheat exports from Ukraine could face shortages from July, International Grains Council director Arnaud Petit said. This could create food insecurity and push more people into poverty in places like Egypt and Lebanon, where diets are dominated by government-subsidized bread.
  • Ukraine and Russia also combine for 75% of global sunflower oil exports, accounting for 10% of all cooking oils, IHS Markit said. Ukraine supplies the EU with just under 60% of its maize and almost half of a key component of cereals needed to feed livestock. Russia, which supplies the EU with 40% of its natural gas needs, is also a major supplier of fertilizers, wheat and other basic products.
  • Other unknowns include whether Ukraine can plant its crops (wheat, corn, sunseed, barley in particular) and if so, how much. Some analysts are cutting production levels by 50%, for now. This means more potential exports for the United States. Consider that Ukraine’s planting window is about the same as the US, so there’s still time. From a timing issue, wheat in Ukraine should be healthy now; barley planting would start in about 30 days, maize in 30-45 days.
  • Most grain analysts see a tight situation for global corn, soybeans and wheat in the United States continuing into the 2023-24 season.
  • World food prices have reached a record high. Global food prices, as measured by the Food and Agriculture Organization of the United Nations (FAO), rose 3.9% in February to a record high and were up 24.1% higher than those of the previous year. Only sugar prices have fallen. Most of the impacts of the Russian-Ukrainian crisis will not be reflected until next month.
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