On Tuesday night the USDA raised its forecast for the global wheat crop by 10.92 Mmt from 705.17 Mmt to a record 716.09 Mmt predominantly due to increases out of the Black Sea region with Russian wheat production being raised from 53 Mmt to 59 Mmt due to above average yields this year of around 3.66 t/ha (vs last yr at 3.04), with Ukraine production similarly also increased by 1 Mmt to 22 Mmt due to improved yields of about 20% yoy giving an average of 5.6 t/ha. China’s wheat production was also increased by 2 Mmt to 126 Mmt.
This increase in global production was met with an accompanying increase in global consumption but only by 6.87 Mmt taking total global use from 699.92 Mmt to 706.79 Mmt, mainly due to expectations of increased feed usage. A large component of the increased feed usage was for the EU which is raised by 2.5 Mmt, due to major rainfall events last month during harvest which has contributed to significant downgrades to quality through the main wheat growing countries of France & Germany.
Consequently global ending stocks were increased by 3.42 MmT from 189.54 MmT to a 3 year high of 192.96 Mmt with the global stocks to use ratio increasing by 0.2% from 27.1% to 27.3% highlighting the global production – consumption equation weighing more heavily on the production side currently.
Similarly with corn, the USDA raised global corn production estimates up by 4.43 Mmt to 985.39 Mmt mainly on the back of increased production out of the US (of 4.37 Mmt) and the EU (of 1.4 Mmt) with similar increases in global consumption due to higher corn use in the US. Also higher corn imports through Turkey, Saudi Arabia, Taiwan & Algeria will lead to an anticipated decrease in global ending stocks of 0.23 Mmt to 187.82 Mmt giving a slight decrease in the world stocks to use ratio of 0.1% down to 19.4%.
Soybeans was the exception with the USDA forecasting global production to be down by 0.1 Mmt to 304.69 Mmt (notwithstanding an increase to US bean production on the back of a record yield forecast of 45.4 bu/ac) but with an increase to global ending stocks of 0.31 Mmt to 85.62 Mmt with an accompanying increase to the global stocks to use ratio of 0.1% to 30.2%.
The weekly USDA crop progress report earlier this week indicated that the overall rating for the 3 key crops were largely unchanged and endorsed the continuing bearish sentiment. The US winter wheat harvest is now 95% complete with the spring wheat crop conditions unchanged at 70% good-to-excellent and corn’s crop conditions unchanged at 73% good-to-excellent with beans down slightly to 70% good-to-excellent but still close to their best rating in 20 years of 72% good-to-excellent.
Information courtesy of the USDA Reports.