The following content was provided by meteorologist Gail Martell of MartellCropProjections.com:
China Corn Consumption Fueled by Feed Sector
Strong Chinese demand for corn is not going away. China corn consumption was pegged at 189 million metric tons in 2011-12, in the USDA November Supply-Demand report, and 7.4% higher than last season. Corn usage in the feed sector used to fatten hogs and chickens comprises the largest amount of domestic consumption and 70% of total disappearance.
Research shows there is a close correlation between increased pork production and the number of the China urban dwellers, whose per capita meat consumption is far greater than that of their rural peers.
The 189 million metric tons of projected corn consumption in 2011-12 is an enormous increase from 10 years ago, 54% higher, using USDA estimates. The food, seed and ethanol disappearance of corn would be 96% greater than a decade ago.
Corn versus Soybeans
Soybeans compete with corn in Northeast China. It would appear corn is winning the battle, gaining acres at the expense of soybeans. The soybean crop growing area this season was down 7.3%, lowering production to only 14 million metric tons and the the second lowest in a decade. USDA last week reported Chinese purchases of U.S. soybeans.
Ukraine Winter Grains in Tough Shape
Drought is worsening in the Ukraine grain belt as winter wheat and rapeseed slip into dormancy in November. The Ukraine weather agency warned last month that 30% of grains may not survive the winter, because of poor crop establishment from incredibly dry conditions. Large swaths of the grain belt received only 30-40% of normal precipitation during the fall planting season. There is reason to believe Ukraine drought may be correlated with La Nina.
The November 1 – 15 vegetation image confirmed poor growth in winter crops, especially in southern Ukraine which is a key winter wheat area. Cold temperatures have not done any good. The weather has been persistently colder than normal during the past 4-5 weeks, further retarding crop development. Recently grain belt temperatures have been in the mid 30s F stopping growth all together.
Ample Australia Wheat For Export Despite Weather Damage
Unseasonably hot weather has damaged wheat in southeastern Australia over the past month in Victoria and southern New South Wales. Afternoon highs have frequently reached 90 F , which is 10-12 F above normal. Soaking rains finally brought relief to southeastern wheat in early November with 1 to 1.25 inches, but heat quickly resumed. Production in New South Wales was anticipated to be near 7.53 million metric tons but may actually turn out worse. If kernel shriveling occurred in grain-filling wheat, the crop yield would be damaged. Last year, the second top wheat state made a record harvest of 10.7 million metric tons.
Western Australia the top wheat state anticipates a record harvest this season near 9 million metric tons, but excessive rainfall has threatened crop quality while also delaying the harvest. The rainfall surplus generated from mid October to mid November was 3 to 5 inches and 4 to 5 times normal. It seems likely a portion of the bumper harvest may be down-graded to feed quality.
Reductions in the Australia wheat harvest from adverse weather may not affect exports, due to higher than expected wheat inventories from last year’s harvest. ABARE the official government agency has upgraded the 2010-11 harvest to 26.3 million metric tons compared to the 26 million metric tons given earlier.