The U.S. Department of Agriculture (USDA) has adjusted its world wheat production and ending stocks forecasts in its monthly World Agricultural Supply and Demand Estimates (WASDE) report.
The new ending stocks estimate now stands at just 1.3 million metric tons (MMT) more than last year despite a 30 MMT increase in production, thanks to increased demand mainly for feed wheat.
USDA’s 2011/2012 global production estimate increased 6.0 MMT in September to 678 MMT. If realized, production will be 4.6 percent more than last year and the third largest crop on record.
Most of the increase comes with a sharp production rebound in the Black Sea region following an unusually short 2010/11 crop. Russia, Kazakhstan and Ukraine account for 26 MMT of the 30 MMT increase.
The latest production estimate this year of 94 MMT for those three countries is 11 percent above their combined five-year average. Canadian production estimates increased 2.5 MMT in September to 24 MMT, contributing 9 MMT to the bump in world production, USDA noted.
Among the world’s major wheat suppliers, these production increases help offset forecasted production declines of 12.5 MMT in Argentina and 3.6 MMT in the United States.
With increased production, the September total world supply (beginning stocks plus production) forecast is up 7.7 MMT to 872 MMT, three percent greater than last year.
Yet the consumption forecast is at a record level for the fourth year in a row. It now stands at 677 MMT or three percent higher than last year.
A 13 percent increase in feed wheat usage is the largest contributor to increased demand, up 15 MMT this year to 130 MMT.
The reason is USDA lowered its ending corn stocks again in September. With the corn stocks-to-use ration at its lowest level since 1995/1996, corn prices remain historically high and that is driving up demand for feed wheat.
Influenced by so much day-to-day news about potential production problems in this year’s wheat crop, trade analysts had predicted USDA would drop its 2011/12 global ending stocks estimate from 189 MMT in August. Instead, USDA raised its forecast by 5.7 MMT to 194.6 MMT.
If realized, ending stocks will be one percent more than last year and 18 percent more than the five-year average.
U.S. Wheat Associates updates its Supply and Demand Report every month with the latest USDA estimates.
Go to http://www.uswheat.org/reportsto view the new report.
The full WASDE is available at http://www.usda.gov/oce/commodity/wasde/.