Four months into the marketing year and with U.S. spring crop harvest entering its final stages, the U.S. Department of Agriculture (USDA) made minimal changes to the World Agricultural Supply and Demand Estimates (WASDE) report in its monthly release Sept. 12.
With very few changes elsewhere, eyes remain on Russia as industry players try to determine what falling production estimates will mean for the rest of the world market.
The largest change was a 4.10 million metric tons (MMT) decrease in estimated 2012/13 global wheat production. The new estimate of 659 MMT would be 5 percent below last year’s record 695 MMT but just 1 percent below the five-year average.
A 1.0 MMT increase to 199 MMT in carry in stocks slightly offset the production decline and put total world supply at 857 MMT, compared to 893 MMT in 2011/12.
Estimated global demand declined 2.59 MMT to 681 MMT, including a 2.0 MMT reduction in wheat used for feed. Estimated feed use of 132 MMT is significantly lower than the record 144 MMT fed in 2011/12 when corn and wheat prices were near parity.
The only significant country-specific changes in WASDE for wheat this month were for Russia, which accounted for most of the global production decrease. USDA lowered estimated Russian wheat production by 4.0 MMT to 39.0 MMT.
The revised estimate matched indications by Russian officials and private analysts last week that Russian production will likely fall short of the 41.5 MMT produced in 2010/11, which led Russia to impose a year-long export ban.
USDA left Russian exports unchanged at 8.0 MMT, but lowered estimated consumption by 1.70 MMT to 35.5 MMT.
Russian officials said higher wheat prices have depressed domestic demand. Officials also indicated the Russian government would import wheat, if needed, to protect domestic supply.
USDA increased estimated Russian imports from 200,000 MT to 500,000 MT, which would be the most since 2006/07 when imports reached 928,000 MT. USDA puts Russian carry out stocks at 6.44 MMT, down from 8.47 MMT last month and 40 percent lower than the five-year average.
The balance sheet for the rest of the major wheat exporters remained mostly unchanged.
The only exception is estimated wheat exports from Ukraine decreased 2.0 MMT to 4.0 MMT. USDA did increase its estimate for Ukraine production by 500,000 MT, but that pushed the total production estimate up to 15.5 MMT, a level that is 30 percent less than last year and 22 percent below the five-year average. According to reports out of Ukraine, the government has reached an agreement to cut off exports at 4.0 MMT.
U.S. wheat export estimates did not change, but the by-class export estimates shifted some. Estimated hard red winter (HRW) exports decreased 650,000 MT to 15.7 MMT, while expected hard red spring (HRS) exports jumped 410,000 MT to 6.53 MMT and estimated white wheat exports increased 270,000 MT to 4.62 MMT. Total expected U.S. exports remained at 32.7 MMT.