What is in this article?:
- World wheat crop could hit record levels
- Weather caused variations in quality
• The world wheat supply forecast remains the single most important factor in risk management and wheat buyers should continue to pay close attention to it.
Weather caused variations in quality
The extreme weather left some regional variations in quality, including lower protein wheat in some areas, but overall quality should meet average standards. Harvest is almost complete in France, the EU’s largest wheat producer, where analyst Agritel estimates a harvest of 37.0 MMT will be up 4 percent from last year and the largest in nine years.
Production is also higher in Germany, where the Farm Cooperatives Association forecasts a 9 percent harvest increase to 24.4 MMT.
The Black Sea production rollercoaster will likely swing higher this year after harsh winter weather and severe drought in 2011/12 devastated last year’s wheat crops.
Although the weather has not been ideal this year, particularly in Russia (the region’s largest wheat producer), the 2013/14 crop will be significantly larger than last year.
Rain has slowed harvest and brought potential damage to yield and crop quality, prompting the Russian Institute for Agricultural Market Studies (IKAR) to downgrade its overall grain production forecast this week, which includes 51.9 MMT of wheat. According to USDA, Russia produced 37.7 MMT last year and 52.2 MMT on average the last five years.
In Ukraine, where the majority of the crop is winter wheat, harvest concluded about three weeks ahead of normal. The agricultural ministry estimates winter wheat output increased 27 percent from last year to 20.0 MMT.
USDA projects total Ukraine production to reach 21.5 MMT, a 36 percent increase and above the five-year average of 20.3 MMT. Timely moisture in Kazakhstan improved crop conditions and increased potential yields so USDA increased its estimated Kazak production this month by 2.5 MMT to 17.0 MMT. That compares to 9.84 MMT last year and would be well above the five-year average of 14.4 MMT.
The Australian Bureau of Agriculture and Resource Economics currently forecasts 2013/14 wheat production at 25.4 MMT, up 15 percent from last year and above the five-year average of 24.5 MMT. The majority of Australia’s exportable wheat crop grows in the west where timely July rains dramatically improved crop conditions following the driest June on record.
Analysts said the recent rains could increase yield potential by 20 percent and help boost production in the western region by 25 percent over last year. Australian yields still depend on good weather during the approaching spring and early summer before harvest.
Argentine wheat production has faced several significant challenges the last few years. Government policies limiting exports reduced economic opportunities and prompted farmers to grow crops with a more predictable profit.
However, a seemingly farmer-friendly revision in the country’s agricultural regulations encouraged farmers to plant more wheat this year. The Rosario Grains Exchange projects a 20 percent increase in planted area to 9.5 million acres (3.8 million hectares).
Planting concluded at the end of July with much improved soil moisture compared to the previous year. USDA projects a 20 percent increase in Argentina’s total wheat production to 12.0 MMT. Although an increase from 2012/13, it would still fall below the five-year average of 13.1 MMT.
As in Australia, the crop still has a long way to go to meet these expectations.
Overall, at this early stage in the marketing year, it is unknown how overall supply factors will turn out and influence the wheat market. USW representatives around the world stand ready to discuss market issues and opportunities for U.S. wheat customers.
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