USDA Raises World Wheat Estimates But Does Not Comment on Russian Rumors
By Casey Chumrau, US Wheat Associates, Market Analyst
There will be even more wheat produced and traded around the world in 2014/15, according to USDA. While it did not make substantial changes to U.S. or Russian estimates, USDA did add another 2.32 million metric tons (MMT) of global wheat production over last month’s estimates in its monthly World Agricultural Supply and Demand Estimates (WASDE) report released Dec. 10.
World Production Increased. Overall, USDA upped its world production estimate to 722 MMT, 7.41 MMT larger than last year’s record crop. Slight decreases in both beginning stocks and global consumption did not offset the production increase, resulting in a 2.0 MMT increase in estimated ending stocks of 195 MMT.
A 1.8 MMT increase in estimated Canadian production accounted for most of the global increase. USDA matched the Canadian government’s current projection of 29.3 MMT, which would still fall well short of last year’s record 37.5 MMT. Cool, wet weather there did not affect yields as drastically as expected but greatly diminished quality. Statistics Canada reports high quality durum is in particularly short supply.
USDA also adjusted production in Kazakhstan to match official governmental statistics, up 500,000 MT to 12.5 MMT. USDA left its projection for Australian production unchanged at 24.0 MMT despite serious drought conditions that prompted the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) to lower its official estimate to 23.2 MMT this month.
World Trade Estimates Also Up. USDA increased expected world trade by 3.12 MMT to 158 MMT, which would be 5 percent lower than last year but exceed the five-year average of 147 MMT. EU’s export forecast increased 1.0 MMT from last month to 29.0 MMT based on the pace of shipments so far this year. Canadian exports should reach an estimated 22.5 MMT, up 500,000 metric tons from last month due to the larger crop size. USDA increased projected exports from Kazakhstan and Ukraine to 5.8 MMT and 10.3 MMT, respectively.
Russian Rumors. The WASDE update did not reflect growing rumors that the Russian government will curb wheat exports to protect domestic supply. Instead, USDA decreased its Russian export projection by 500,000 MT to 22.0 MMT, citing increased competition. Russia’s 2014/15 grain exports are at a record pace, lifted by two consecutive bumper crops and a plummeting ruble. However, the government could still restrict exports. Government officials, traders and news media have discussed the possibility that the Russian government might implement tariffs, tighten export rules or halt issuing phytosanitary certificates to customers. As a result, Russian exporters recently dropped prices in an effort to push sales ahead of any such restrictions.