With northern hemisphere grain and oilseed crops largely harvested, and the Black Sea Grain Initiative extended for another 120 days, grain market attention is shifting to growing conditions in the southern hemisphere, the Agricultural Market Information System (AMIS) December 2022 Market Monitor highlighted.

According to the Agricultural Market Information System (AMIS) December 2022 Market Monitor, La Niña has had varying impacts on yields in key producing regions in the southern hemisphere. Argentina has experienced prolonged droughts, caused by the third consecutive year of La Niña. As a result, wheat production prospects are sharply lower than last year.

By contrast, La Niña has resulted in abnormally wet conditions in Australia, driving higher-than-average wheat yield prospects. For rice, in Southeast Asia, wet-season rice harvesting is at its peak in northern countries while Indonesia is wrapping up dry-season rice harvesting.

The Monitor also indicated that planting progress for South American maize and soybeans are on pace, but it is still too early to tell whether yields will return to more normal levels after last year's drought-reduced production.

In December, the global wheat production forecast for 2022 decreased month-over-month since November, from 783.8 million to 781.1 million tonnes (0.34 percent), largely based on a downward revision in prospects in Argentina, although prospects are still 0.4 percent above 2021 levels, marking a record high. In December, production prospects for maize remained slightly lower month-over-month since November, from 1,167.5 million tonnes to 1,163.6 million tonnes, with global production forecast to fall 4 percent below 2021 output, largely driven by downward revisions in Ukraine, reflecting war-related disruptions. In November, production forecasts for rice remained virtually unchanged, at 512.8 million tonnes, with small upward revisions in a few countries. Rice production in 2022 is still expected to fall 2.4 percent below the 2021 record high. Soybean production forecasts increased slightly month-on-month in December, from 392.4 million tonnes to 394.6 million tonnes, with higher forecasts for Brazil and the United States, whereas the drought in Argentina may decrease yields.

The December 2022 Market Monitor also examines the potential impact of speculation on commodity price volatility. Speculation is defined in the context of agricultural commodity markets as the buying and selling of futures contracts with the objective of making a profit rather than reducing risks related to the physical exchange of the commodity. Speculative activities such as “trend following,” buying when the price of commodity futures goes up and selling when the prices go down, may cause futures prices to regularly overshoot or undershoot the level of the underlying cash price. There are also serious concerns about manipulation during delivery of futures contracts (called a “corner”). In such cases, an entity attempts to purchase a large number of futures contracts for a particular commodity, inflating the price and ultimately looking to sell and make a huge profit. As such, delivery manipulation is a form of speculation that can severely affect markets, breaking the very core function of commodity futures as a risk management tool. Price volatility caused by speculation can increase food insecurity risks, especially for lowincome countries, destabilizing markets and decreasing the affordability of imported agricultural products.

SUMMARIES BY CROP

Wheat

In Australia, conditions are exceptional in most areas, despite ongoing flooding in parts of eastern Australia. Harvesting is well underway in northern and western cropping regions. In Argentina, yields are poor in most areas due do drought as harvesting is wrapping up in the north and beginning in the main producing areas, many plots have been used as forage. In the EU, conditions are generally favourable, albeit with delayed sowing in the southern countries due to low soil moisture levels. In the UK, conditions are favourable. In Türkiye, sowing is wrapping up under dry conditions in the west. In Ukraine, conditions are generally favourable, albeit with persistent dryness in Odessa and disruptions/security concerns in the southern and eastern regions due to the ongoing war. In the Russian Federation, sowing is wrapping up under generally favourable conditions except for dryness in the southern Caucasus. In China, winter wheat is under favourable conditions with ample soil moisture. In India, sowing is beginning in the northern and central states. In the US, dry conditions across the Great Plains from South Dakota to Texas continues to be a concern going into winter. In Canada, winter wheat sowing is complete and under favourable conditions going into winter dormancy.

Maize

In the US, harvesting is wrapping up in the north under exceptional conditions in Michigan and Wisconsin. In Canada, harvesting is wrapping up under exceptional conditions in Ontario. In Mexico, harvesting is ongoing for the spring-summer season (larger season) under favourable conditions. In the EU, harvesting is wrapping up with below-average yields across most of western and southern Europe due to droughts and heatwaves. In Ukraine, harvesting slowly continues with just over half the crop collected so far, so many crops will likely be harvested in during the winter or early spring. In India, sowing of the Rabi crop is beginning under favourable conditions. In Brazil, sowing of the spring-planted crop (smaller) is continuing under favourable conditions with a slight reduction in the total sown area expected compared to last year. In Argentina, sowing of the early-planted crop (typically larger season) continues at a slow pace due to dryness. Recent rains have improved conditions in some areas, but much of the intended sown area will likely shift to the later-planted crop (typically smaller season) in hopes of better soil moisture conditions. In South Africa, ample rainfall since mid-October has supported sowing and early development.

Rice

In China, harvesting is wrapping up for late rice under mixed conditions due to persistent extreme heat and dry weather during the fertility period in the Yangtze River Basin. In India, harvesting of the Kharif crop is wrapping up in the southern and eastern states, while sowing is beginning for the Rabi crop. In Indonesia, harvesting of dry-season rice is wrapping up while the sowing of wet-season rice continues, albeit at a slower pace than last year. In Viet Nam, harvesting of wet-season rice is ongoing in the north. In the south, harvesting continues for the other wet-season rice (autumn-winter rice and seasonal rice), while sowing of dry-season rice begins in the Mekong Delta. In Thailand, harvesting of wet-season rice is ongoing under mixed conditions due to flooding in October that caused extensive damage in the Northeastern region. In the Philippines, wet-season rice is harvesting under mixed conditions as the passage of multiple tropical cyclones caused severe damage to crops in parts of Luzon and some parts of Visayas and Mindanao. In Brazil, sowing is wrapping up with a reduction in the total sown area.

Soybeans

In Canada, harvesting is wrapping up under exceptional conditions in Ontario, Manitoba, and Quebec. In Ukraine, harvesting is wrapping up under generally favourable conditions outside of the occupied territories. In India, harvesting is wrapping up in the major producing states under favourable conditions. In Brazil, sowing is progressing under favourable conditions despite earlier delays due to adverse weather. An increase in total sown area is expected compared to last year. In Argentina, sowing is beginning in the main producing areas of Buenos Aires, Entre Ríos, Santa Fe and Córdoba, as recent rains improved soil moisture conditions. However, the lack of surface soil moisture might impact the sowing progress, with southern Santa Fe and northern Buenos Aires being the most affected regions.