By Stephanie Bryant-Erdmann, USWheat Associates, Market Analyst
With the 2015/16 harvest wrapped up in the Northern hemisphere, it is a good time to take stock of the global situation and look ahead to 2016/17. In its October World Agriculture Supply and Demand Estimate (WASDE), USDA projected the 2015/16 global wheat crop will reach a record 733 million metric tons (MMT), up 1 percent from the previous record of 725 MMT set last year. An increase in total output for half of the major exporters is expected and for the other half, a decrease.
2015/16 Northern Hemisphere Harvest. USDA estimates the 2015/16 U.S. wheat production increased 700,000 metric tons (MT) from last year to 55.8 MMT, but fell 3 percent below the 5-year average of 57.8 MMT. The slight increase in production resulted from an increase in harvested acres to 47.1 million acres (19.1 million hectares) this year, up 2 percent from 2014/15 and 1 percent above the 5-year average. This increase offset lower planted area and average yields similar to those seen last year. As of Sept. 30, USDA estimates total planted area for the crop harvested in 2015 was 54.6 million acres (22.1 million hectares), down 4 percent from the prior year and 1 percent below the 5-year average. USDA predicts 2015/16 U.S. yields to average 43.6 bu/ac (2.93 MT per hectare) similar to 2014/15 yields, but 4 percent below the 5-year average.
Despite a dry autumn, the Black Sea region — responsible for roughly 14 percent of total global production — produced its third consecutive bumper crop in 2015/16 thanks to timely spring rains and favorable weather conditions throughout most of the growing season. The Russian Agricultural Ministry estimates Russian production reached 63.8 MMT, the largest in 6 years and up 4 percent from last year despite dry conditions in several key wheat-growing regions. Russian exports slowed this summer due to the implementation of a wheat export tax that was reduced on Oct. 1. In Ukraine, spring rains improved yields, but reduced overall quality of the crop. According to the Ukrainian Agriculture Ministry, Ukrainian wheat production was similar to last year’s crop — reaching 24 MMT — but only 40 percent will be of milling quality, down from 54 percent in 2014/15. The Kazakhstan Agriculture Ministry estimates wheat production reached 14.7 MMT, up from 12.9 MMT last year.
According to analyst group Strategie Grains, the European Union (EU) produced 150 MMT of wheat, down 3 percent from last year, but still accounting for 21 percent of global wheat production. However, this year’s crop has few of the quality issues that plagued the 2014/15 crop, with an estimated 72 percent of the crop expected to be of milling quality, up from 60 percent last year and up from the 3-year average of 68 percent. France, the EU’s top wheat producer, produced 40.2 MMT of wheat, up from 37.5 MMT last year.
In its Oct. 22 report, Agriculture and Agri-Food Canada reported a 10 percent decrease in Canadian wheat production to an estimated 28.8 MMT due to a decrease in planted area and droughts in Saskatchewan and Alberta. If realized, production would be slightly ahead of the 5-year average of 28.5 MMT and account for 4 percent of global wheat production. Canadian wheat supply decreased 17 percent year-over-year due to the lower production and lower beginning stocks. While 2015/16 Canadian durum quality improved this year, Canadian wheat export market share will decrease to an estimated 12 percent, due to the decrease in supply compared to 15 percent in 2014/15.
2015/16 Southern Hemisphere Harvest. While the Southern hemisphere accounts for only 7 percent of global wheat production, the hemisphere’s two major exporters, Australia and Argentina, are responsible for 19 percent of global wheat exports.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) decreased their estimate of Australian wheat production to 24.0 MMT from 25.3 MMT in their October report due to the El Niño currently affecting the country. According to the International Grains Council (IGC), planted acres of 34.1 million acres (13.8 million hectares) is stable and any fluctuation in production will be due to changes in yield. The country is in the early stages of harvest, and weather will still determine the final yield potential and quality with New South Wales, Australia’s largest wheat producing state, forecast to receive up to 7.87 inches (200 mm) of rain this week.
Argentine wheat production will drop to an estimated 9.5 MMT in 2015/16, 19 percent lower than last year’s 11.8 MMT, according to the Buenos Aires Grain Exchange. According to IGC, wheat planted acres in Argentina fell 28 percent year-over-year due to higher input costs, limited credit availability and unattractive prices. Harvest will start in a few weeks, and weather will still determine the final yield potential and quality.
2016/17 Crop Planting Progress. Winter wheat planting is underway in the Northern hemisphere, and the markets are closely watching the weather in the world’s largest production areas. According to USDA’s Nov. 2 weekly crop progress report, winter wheat planting in the United States is 88 percent complete, which is 90 percent behind the 5-year average on the same date with 72 percent emergence. USDA estimates 49 percent of the crop is in good or excellent condition, compared to 59 percent last year, while 39 percent is fair and 12 percent is in poor or very poor condition, up from 7 percent last year.
Parts of Ukraine’s wheat producing region are experiencing the driest fall in 50 years, according to a Nov. 2 Reuters report. The drought may negatively affect the country’s wheat production, which accounted for 4 percent of global wheat production in 2015/16 by USDA’s estimates. As of Oct. 27, the Agriculture Ministry of Ukraine estimates Ukrainian farmers will plant 15.3 million acres (6.2 million hectares) of winter wheat for 2016/17, down 1.73 million acres (700,000 hectares) from the prior year. According to UkraAgroConsult, a Black Sea agricultural consultancy, winter wheat planting is 81 percent complete, 15 percentage points behind the 2015/16 pace of 96 percent on the same date.
IGC reports Russian farmers are expected to plant winter wheat on 633 million acres (256 million hectares) in 2016/17, up 1 percent from 2015/16 levels due to increases in domestic prices. Key wheat producing areas had low sub-soil moisture at planting, but recent rains should improve prospects across much of the country. As of Oct. 27, UkraAgroConsult estimates Russian winter grains sowing at 91 percent complete, a little behind the 2015/16 pace.