Miller Magazine Issue:114 June 2019

94 MARKET ANALYSIS JUNE 2019 rities need to overcome economic uncertainty. But not only trade war making China’s demand weaker. African Swine Fever is predicted to kill half of China’s pigs & more than a quarter of the world’s herd. How will ASF impact U.S. sales to China? Despite China’s dwind- ling herd numbers, high tariffs could still limit trade. China faced food inflation. Chicken wholesale prices +57%, egg futures +38%, pork wholesale prices +41% YoY in Jan-April. Prices are high, but as China lost pigs they don’t need to feed them. In a few month after ASF will stopped –yes, but not now. These days China needs to buy meat. Main question – who will be a supplier: EU, USA or LatAm? “I summarize the situation with Chi- na as a lot of unknowns,” said USMEF Chief Executive Officer Dan Halstrom. “One thing is certain: that ASF is impacting their herds. You can debate the numbers, but the numbers are big. So yes, there will be an impact, but what does that mean to the U.S. is not so clear. “Today we sit here with 62 percent duties on pork, and we’re at 37 percent duties on beef,” he added. “Without a doubt that’s impacting our ability to expand business into Chi- na.” China’s Ag ministry calls the armyworm situation “severe” and the task “urgent” to prevent grain output loss. Crucial to keep armyworm out of heavy corn regi- ons in the North. China says it is making progress on an ASF vaccine, but some scientists are skeptical. In general China food crisis could be more dangerous than trade war. EUROPEAN UNION As for Platts expectations, EU wheat exports to date at 18.4 MMT v 18.6 MMT in 17/18 Top 3 buyers: Algeria (4.9 MMT, up 24%), Saudi, Egypt EU Corn imports to date at 21.5 MMT v 15.6 MMT in 17/18 Top 3 sellers: Ukraine (13.9 MMT, up 95%), Brazil, Canada EU commission raised 2019/20 EU wheat production to 143.8 MMT vs 141.3 MMT last month.The new COCE- RAL Crop Forecast has been published these days. They foresee the 2019 EU total grain crop at 301 million ton- nes. This is slightly up from the previous of 298.5 MMT and significantly up YtY crop of 281.0 MMT of grains. Wheat production is seen at 140.3 MMT vs 139.8 MMT in March report and well above the 127.4 MMT last season. After a dry period in the beginning of spring, growing conditions have stabilized. The EU’s barley production forecast for 2019 stands at 59.0 MMT, down from 59.4 MMT previously, but up from 56.1 MMT last year. The EU’s corn crop forecast has been revised up from 61.0 MMT to 62.9 MMT (last year: 60.9 MMT) mainly due to a much higher than previously expected acreage in Germany and Romania. The rapeseed production forecast for the EU has been reduced from 18.6 MMT to 17.9 MMT due to a sharp reduction in the French crop. BLACK SEA REGION Planting almost finished, weather condition was per- fect. Ukrainian Grain Association updated forecast for country’s 2019/2020 MY; • Total production 94.7 MMT and export 56.9 MMT • Barley production – 8.4 MMT, export – 4.9 MMT • Corn production – 32.2 MMT, export – 26 MMT • Wheat production – 26.7 MMT, export – 19 MMT. As of May 16, Ukrainian agricultural enterprises planted spring grains and pulses throughout the areas of 6.3 mln ha, or 87% of the forecast. USDA forecast is 29 MMT for wheat production and 33 MMT for corn with 27 MMT exports. Also they expects 9 MMT of barley production in Ukraine. Another market driver is Russian wheat production. Analyst still see big gap between their forecasting: Rus- sian AgMin at 72-75 MMT; USDA 77 MMT; Agritel 78.8 MMT; FAO 79 MMT, IGC 79.5 MMT; IKAR at 81 MMT; Informa 82 MMT; ProZerno at 82.3 MMT; SovEcon at 83.4 MMT. USA The key player and newsmaker for last month and for the next one also. There are only one reason: weat- her. Flooding and rains catch farmers in the fields just in planting time. Crop pace two time slowest than it should be, and it could be the USA lost up to 1bbu of corn crop. Crop progress on this afternoon’s report is expected at 63-65% for corn vs. 49% last week and 91% average. This is the main numbers because wheat is much better and soybeans firstly has longer planting window and secondly overproducer anyway. Trump promised financial aid to farmers who lost mo- ney in trade war. According the last crop progress re- port, NASS shows only 58% of corn area planted, but avg number is 90%. Soybeans crop progress is just 29% vs 66% avg, but there is enough time for be faster later. Anyway, we should be ready for green screen.