In its latest World Agricultural Supply and Demand Estimates (WASDE), the U.S. Department of Agriculture (USDA) forecast global wheat supplies at a level larger than industry analysts had anticipated.
Increased production numbers, paired with decreased world demand, resulted in higher than expected total supply and ending stocks.
Estimated total world supply (production plus beginning stocks) increased to 877 million metric tons (MMT), 5.4 MMT greater than the September forecast and 27.0 MMT greater than last year.
Kazakhstan’s production forecast increased 3 MMT to 19 MMT, substantially greater than last year’s uncommonly low 9.7 MMT.
The European Union and Canada both showed slightly higher production forecasts, increasing 540,000 metric tons (MT) to 136 MMT and 200,000 MT to 24.2 MMT, respectively.
The Australian production estimate increased 1.0 MMT to match last year’s level of 26 MMT. Australia’s beginning stock estimate increased 3.2 MMT as a reflection of current forecasts from its government, contributing to a 2.3 MMT increase in world beginning stocks.
In contrast to other major exporters, U.S. production numbers decreased again this month as harvest reports confirmed lower hard red spring and durum production due to weather and flooding that delayed both planting and harvest. The updated U.S. production estimate is 54.7 MMT, down 4.86 MMT from last month and nine percent below last year’s production of 60.1 MMT.
The total world trade estimate increased 3.4 MMT this month to 135 MMT. Australia and Russia show the largest increase of 2 MMT each to 19 MMT and 18.0 MMT, respectively.
While not considered in the October WASDE, recent news reports implied that the Russian government is considering imposing export duties if domestic wheat and flour prices continue to rise.
An estimated 1 MMT export increase by Kazakhstan offset a 1 MMT decrease from the Ukraine.
The Canadian export forecast increased 1 MMT to 18 MMT, in line with the latest StatsCanada estimates due to good spring wheat and durum harvests.
In contrast, the U.S. export forecast decreased 1.4 MMT to 26.5 MMT, down 25 percent from last year’s strong performance of 34.1 MMT.
After a significant increase last month in response to tight corn supplies, the world feed use estimate decreased 4.6 MMT this month to 126 MMT, still an 11 percent increase over last year’s feed usage.
If realized, the considerable rise in feed wheat demand will help set a record for total consumption for the fourth year in a row.
The total wheat use estimate is 674 MMT, down 2.43 MMT from September but 21.1 MMT greater than last year. Estimated ending stocks increased 7.78 MMT to 202 MMT, a four percent increase from last year’s estimate of 195 MMT.
U.S. Wheat Associates (USW) updates its Supply and Demand Report every month with the latest USDA estimates. Click here to review the new report.