THE October US Department of Agriculture World Agricultural Supply and Demand Estimates Report dealt a blow to the wheat market with a sharp lift in the size of this year’s global wheat crop.
Compared to the September report, global wheat production was up 6.34 million tonnes, with increases for Russia (one million tonnes), the EU (2.17 million tonnes), India (2.38 million tonnes), and smaller increases for Canada and North Africa.
The Australian production estimate was lowered by one million tonnes to 21.5 million tonnes.
Global consumption was raised by 2.09 million tonnes, but opening stocks were lifted by 750,000t, and closing stock estimates are now 4.99 million tonnes above the September estimate.
Global stocks are now set to be 268.13 million tonnes, with a stocks to use ratio of 36.25 million tonnes.
Stocks are up 11.55 million tonnes on last year, and the stocks to use ratio is now at its highest level since 1998-99.
The world remains awash with wheat, and that won’t change until Russia has another drought.
On the production side, this year’s global crop has been put at 751.19 million tonnes, which is still 2.96 million tonnes below last year’s record crop. We had expected a much sharper pull back this year, but the massive crop in Russia had put paid to that.
The Russian crop is estimated at 82 million tonnes, up 9.47 million tonnes on last year’s record crop. Russia now dominates the world wheat market, with projected exports of 32.5 million tonnes.
This out strips the EU at 28.5 million tonnes and the US at 26.54 million tonnes.
The Canadians are expected to export 21 million tonnes, with Australia at 18 million tonnes.
Here in Australia, our dry season has slashed this year’s crop from 33.5 million tonnes to 21.5 million tonnes. Our ending stock numbers will fall from 6.73 million tonnes last year, to 3.38 million tonnes.
Internal prices continue to be supported by these tighter stock levels in eastern Australia, and for growers in NSW and Queensland, will mask the weakness in international markets.
For growers in Western Australia and South Australia, who are exposed in full to the global wheat market, we are facing another year of depressed harvest prices.
With a smaller crop though, and more competition between exporters meeting shipping deadlines and domestic endusers, basis levels should be a little higher than during last harvest, delivering higher prices off the header this year.