Given how tight the global commodities market is, the United States Department of Agriculture’s (USDA’s) first outlook on the 2022/23 global grains, oilseeds and cotton marketing year was even more eagerly anticipated than normal.

For those just finished, or still in the process of, planting their 2022/23 winter crop, it was good news as the USDA’s May World Agricultural Supply and Demand Estimates (WASDE) supports an ongoing high price environment, says Rabobank senior commodities analyst Cheryl Kalisch Gordon.

“The outlook shows 2022/23 may be the first year since 2012/13 in which the world consumes less grain than the previous year – due to high prices and low supply. The USDA forecasts a drop of only 0.1 per cent, but that compares to average annual growth of 2.1 per cent over the past decade,” she said.

“However, even if less grain is consumed globally in 2022/23, this won’t prevent stocks falling to their lowest level since 2015/16, according to the USDA supply outlook.”

Ukraine’s grain and oilseeds (G&O) production in 2022/23 is forecast to be 40 per cent down from last year’s very strong production and its G&O exports to be down 45 per cent compared with typical export volumes in recent years, Dr Kalisch Gordon said.

Globally, the USDA expects another reduction in wheat stocks over the course of 2022/23, taking them to their lowest levels in six years. “This is bullish for wheat, especially in the short-term, given this comes in below the average of trade expectations for ending stocks for the next year, and is supportive of global wheat pricing remaining elevated over the course of 2022/23,” she said.

Equally, it paves the way for ongoing exaggerated volatility in pricing in response to new developments in global wheat supply and demand – and this has rung true in the wake of India’s recently announced wheat export ban, Dr Kalish Gordon said.

“An expected year-on-year fall of three per cent in global corn production – and steady consumption – is expected to eat into global corn stocks by about one per cent, meaning the global coarse grain market, including for barley and sorghum, will also remain supported. This outlook should keep prices strong and the US would need to pull off a record corn yield for material price pressure – but that’s something we’ll only know by September or October, she said.

The USDA expects global oilseed production for 2022/23 to be 647.1 million tonnes, up 50.3 million tonnes from 2021/22, when production was markedly lower due to drought-affected South American soybean and Canadian canola crops. Dr Kalisch Gordon said the USDA’s forecast should underpin some softening, though not a lot, in global oilseed prices, including those for canola.

“However the market will be closely watching the USDA’s forecast for Ukrainian and Canadian canola production and its expectations for the US soybean crush, so that softening is in no way guaranteed just yet. This is especially so because the USDA forecast for Brazilian soybean production is based on trend production given that the crop is still so far from even being planted,” she said.

“The USDA forecasts cotton ending stocks to fall again in 2022/23, but by just one per cent, compared with 2021/22’s drop of five per cent and the nine per cent drop of 2020/21. This is supportive of cotton pricing in 2022/23.”

“With no signs of market’s loosening soon”, Dr Kalisch Gordon said, “we can expect extra strong anticipation of each monthly WASDE update, and associated market volatility, for the foreseeable future”.

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