The size of the Argentine crop is an important factor in anticipating the level of exports its government might allow. The Argentinean government carefully controls the domestic wheat supply and only issues export permits when there is no risk of pushing domestic prices too high.

Currently, USDA estimates Argentine exports at 4.5 MMT and domestic consumption at 6.0 MMT. If the actual production output is closer to the export estimate of 8.5 MMT, permits may be limited.

Last year’s crop of 9.5 MMT was the lowest in nearly 20 years, followed by the lowest exports in 35 years. U.S. wheat farmers are watching the situation closely because U.S. exports have increased significantly to some of Argentina’s largest customers, especially Brazil, and the trend could continue with another disappointing year in Argentina.

For Australia, the other major South Hemisphere wheat exporter, USDA increased production estimates 1.0 MMT to 26.5 MMT.

After severely dry conditions limited the crop size last year, timely and adequate rainfall is helping this year’s crop to exceed early expectations. If realized, production would be 18 percent larger than last year’s crop and the third largest of all time.

There have been no reports of the quality issues that plagued the record crop in 2011/12. The optimistic outlook for Australia’s output has helped pressure world wheat prices recently.

USDA left projections mostly unchanged for the rest of the major wheat exporters, but still pushed the global production forecast to a record 711 MMT. USDA also increased record-setting world consumption by just 1.0 MMT to 704 MMT.

The result is larger carryover stocks into 2014/15 of 183 MMT, up 4.3 MMT from last month’s projection and 4 percent greater than last year, but still 7 percent below the five-year average of 189 MMT.

Overall, USDA’s December WASDE report was quite bearish for wheat. The already ample supply of world wheat keeps growing, sending prices lower and creating excellent buying opportunities for customers.

The United States is in great position to maintain the fast pace of exports seen so far this year. U.S. wheat farmers harvested another high quality crop, unlike some major competitors, proving once again that the United States is the world’s most reliable supplier year after year.