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Despite being just the first stab at calling 2023-24 production figures, the USDA’s outlooks for global wheat balances called for marginally higher production, increased demand and tighter ending stocks.
Small adjustments also marked the 2022-23 projections, with Ukraine’s production trimmed slightly along with North African output – all of which should have teed up tighter incoming stocks for the new marketing year.
But, with the USDA postulating a drop in 2022-23 domestic feed demand in its World Agriculture Supply and Demand Estimates (Wasde), the old crop is expected to sign off with a 266.28 million tonnes cushion, up 1.23 million tonnes on last month’s outlook.
Analysts were surprised by the higher-than-expected view on new crop ending stocks – pegged at 264.3 million tonnes and some 7 million tonnes above where analysts polled by Fastmarkets Agriculture ahead of the release had put it, but US production figures rattled investors and set Chicago futures running.
Lower US yields, only moderately higher production despite markedly higher acreage and increased demand outlooks meant the US balance tightened into the new marketing year with ending stocks forecast at 556 million bushels (15.4 million tonnes).
Year-on-year US production is expected to creep higher by just 9 million bushels (245,000 tonnes), increasing by half a percent to 1.66 billion bushels (45.1 million tonnes) despite harvested acreage rising 4.5% to 37.1 million acres, and planted acreage jumping 9% year-on-year.
Key to that anomaly was “above-average abandonment in Texas, Oklahoma, and Kansas,” the USDA noted, as bad weather again left its mark on projections and sent the ending stock figure to a 16-year low.
Outside the US, the rest of the world’s projections showed a return to form for many of the 2022-23 over- and under-performers.
While it’s still early days, the expectation is the move from La Niña to El Niño could help restore Argentina’s production prowess to something approaching the norm.
The USDA called for a 19.5 million tonnes output in the new marketing year but also took a moment to further reduce the old crop by 350,000 tonnes to 12.55 million tonnes.
Argentina’s recovery will likely come at the expense of Australia, where outlooks were reduced from this year’s 39 million tonnes monster to a still sizeable 29 million tonnes.
Russia and Ukraine, still locked in their conflict, had production outlooks sharply reduced, with Russia dropping to 81.5 million tonnes and Ukraine to 16.5 million tonnes.
More worryingly perhaps for Ukraine, the country’s export outlook was pared back to 10 million tonnes – a 29% reduction versus the 21% reduction in production estimates for the country amid ongoing difficulties with the grain corridor and EU neighbors.
Russia’s production represented an 11% reduction year-on-year, although the USDA steadfastly maintained its 92 million tonnes outlook for the current marketing year and never embraced the 100 million tonnes plus estimates delivered by local and government forecasters.
Nonetheless, with Russian stock levels likely bursting, the export outlook for 2023-24 ticked higher, with the 45.5 million tonnes estimate a likely record if realized.
That contrasted with the current marketing year, where the USDA reeled back its Russian export forecast, shaving 500,000 tonnes off to land at 44.5 million tonnes.
Chinese and Indian production was also forecast substantially higher than this year’s forecasts at 140 million and 110 million, respectively, while the European Union also jumped to 139 million tonnes, adding around 13 million tonnes of production across all three zones.
But the lower starting stock levels, stable global production and a marked dip in exports were enough to overpower a drop in global domestic use, to leave ending stocks at 264.3 million tonnes – down 0.7% on the previous year’s figure.
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