A Mid-Year Look at World Wheat Supply
By Casey Chumrau, USW Market Analyst
A massive cold weather system traversed most of U.S. wheat country this week, sending temperatures well below 0˚F (-18˚C) in many areas. While there is potential for damage to winter wheat in some smaller areas, the market remained focused on an abundant world wheat supply.
For the United States, USDA will release estimates on U.S. winter wheat seedings on Friday, Jan. 10. Ahead of that report, find below a mid-year look of current expectations for 2013/14 production in the world’s other major wheat exporters.
Argentina. After receiving better information from field workers, the Argentine Agriculture Ministry increased its official production forecast in December from 8.5 million metric tons (MMT) to 9.0 MMT. If realized, it would be 500,000 metric tons lower than last year and well below the five-year average of 13.0 MMT. In the meantime, several large Brazilian mills signaled that Argentina failed to deliver on wheat contracts in December and they may have to source wheat from other origins. The Argentine government regulates exports in order to protect domestic wheat prices and has limited or prevented exports for much of the last year. This low production estimate increases the likelihood that Argentina’s exportable wheat supply will continue to be limited.
Australia. Favorable late season weather in Australia sent yields soaring and helped farmers achieve the third largest wheat crop on record. High yields combined with larger harvested area put total Australian output at 26.2 MMT, according to the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES). Above average rainfall in August and September negatively affected the crop’s overall quality and protein levels are below average.
Canada. Canadian wheat production of 37.5 MMT in 2013/14 shattered the previous production record of 31.9 MMT set in 1991/92. An 11 percent increase in seeded area and a stunning 46 percent yield improvement over 2012/13 to a record 52.8 bu/acre (3.59 MT/Ha) helped production to exceed early forecasts. Overall, the quality of the Canadian crop was slightly above average, but average protein levels were slightly below normal, as is typical with a large crop. There has been some discussion of storage and logistics problems in moving the inland wheat to the ports. Due to the late harvest in 2013, Canadian winter wheat seeded area for the 2014/15 harvest fell 5 percent from the previous year to 0.86 million hectares. Winter wheat accounts for only 10 to15 percent of total Canadian wheat area.
Black Sea. As expected, Black Sea production rebounded significantly in 2013/14 after severe winter weather and drought devastated last year’s crop. In Russia, rain initially delayed harvest but unseasonable warm weather in late October and November provided excellent harvest conditions and boosted yields. USDA estimates put Russian production at 51.5 MMT, up 37 percent from 2012/13 and just below the five-year average of 52.2 MMT. Improved soil moisture helped lift yields in Kazakhstan and push production to 15.5 MMT, a 58 percent increase over last year and above the five-year average of 14.4 MMT. However, heavy rains at harvest lowered the average quality. Ukraine’s larger harvested area and improved yields helped increase production 40 percent year over year to 22.0 MMT, which exceeds the five-year average of 20.3 MMT, according to USDA. The International Grains Council (IGC) reports lower planted area in Russia and Ukraine for the 2014/15 winter wheat crop because of wet conditions and planting delays. However, the unseasonably warm weather in both countries allowed for excellent plant growth before the onset of winter temperatures.
European Union. Larger crops in most European Union (EU) wheat producing countries, including the two largest France and Germany, helped the EU increase production by 8 percent compared to last year with 143 MMT, according to Strategie Grains. It would be above the five-year average of 140 MMT and the best output since the record crop of 152 MMT in 2008/09. In December, Strategie Grains released its preliminary forecast for 2014/15 wheat production based on planting intentions and other field-based information. Conditions were very good at the end of 2013 for winter wheat development even though conditions remain dry in the Iberian Peninsula and rain delayed planting in France and Italy. Rapid growth before dormancy does leave plants more susceptible to damage if temperatures drop before receiving adequate snowfall. However, there is no such temperature change in the forecast. Strategie Grains projects higher expected planted area of 26.6 million hectares, compared to 25.7 million hectares last year, which will help total EU production improve to an estimated 146 MMT in 2014/15.