World wheat production seen lower, but to outpace consumption

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Photo courtesy - Asian Development Bank

Global wheat production in 2016/17 forecast at 727 million metric tons (MMT) is 7.1 MMT lower than last year’s record, the United States Department of Agriculture said in its latest world supply and demand report, but will outpace consumption for the fourth straight year.

The EU, Morocco, Turkey, and Ukraine have sizeable production cuts, but these are partly offset by larger crops in Argentina and Russia, the report said, adding that global consumption is projected up fractionally as steady growth in food use more than offsets lower wheat feeding.

Global trade is down very slightly from the 2015/16 record. The EU is forecast to be the world’s largest exporter for the fourth straight year. Global stocks are projected to an all-time high, driven primarily by China.

Production among the major exporting countries of Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, and the United States is down a net 2.4 MMT, while projected gains in Argentina, Australia, Canada, and Russia’s wheat production are not enough to offset declines in the EU, Kazakhstan, Ukraine, and the United States.

In the EU, although area harvested is projected to rise, yields are expected to dip. Farmers in Argentina are projected to produce more wheat as elimination of export policy restrictions incentivizes increased planting. Production in

Canada is expected to rise marginally as increased winter wheat offsets reduced spring wheat area. Russia’s wheat crop is expected to be the second largest on record. Production in Ukraine is expected to drop from last year, but recent favorable weather conditions have boosted crop potential. U.S. production is projected lower than last year as a sharp reduction in area more than offsets above-average yields.

Ethiopia and South Africa’s production is projected to significantly recover from last year’s drought affected crop. China’s wheat production is nearly unchanged from 2015/16, adding to the country’s already burdensome supplies. Morocco, on the other hand, is suffering from a drought and its crop is projected at a 9-year low, the report said.

Global consumption is up 0.5 percent as greater food, seed and industrial use (FSI), up 1.1 percent, is more than offset by a 2.3 percent drop in feed use, it added.

Forecast for 2016/17

2016/17 global ending stocks are projected to reach a new record of 257 million tons, up 14.4 million tons from last year. China’s burgeoning stocks now account for a whopping 46 percent of global stocks and are expected up 21.7 million tons from last year. Projected ending stocks, less China, are actually down year-toyear

Global trade is forecast down nearly 2 percent from the 2015/16 record, but remains sizeable at 163.5 million tons.

The EU and Thailand are expected to reduce imports of feed-quality wheat as global exportable supplies of feed-quality wheat tighten and relatively lower-priced domestic coarse grains replace imported wheat in feed rations.

The Philippines, on the other hand, is projected to import more feed-quality wheat as domestic corn supplies tighten. Ethiopia, Iran, Mexico, and Tunisia will likely lower imports due to improved domestic production. The United States is projected to increase imports as a result of a smaller expected crop.

  • Algeria is down 600,000 tons from 8.1 million to 7.5 million. The government continues to build domestic stocks in order to take advantage of low international prices.
  • Egypt is unchanged at 12.0 million tons.
  • Ethiopia is down 1.1 million tons from 3.1 million to 2.0 million.
  • EU is down 1.0 million tons from 6.5 million to 5.5 million.
  • Iran is down 1.8 million tons from 3.3 million to 1.5 million based on a larger crop and the implementation of an import duty, which is likely to restrict imports.
  • Mexico is down 200,000 tons from 4.4 million to 4.2 million.
  • Morocco is up 1.5 million tons from 4.0 million to a record 5.5 million. Morocco’s wheat crop suffered from a drought, raising import demand to a record.
  • Philippines is up 500,000 tons from 4.3 million to 4.8 million.
  • Saudi Arabia is up 500,000 tons from 3.0 million to 3.5 million. Saudi Arabia is projected to import a larger quantity in order to meet growing food consumption. Its domestic wheat production was phased out and the country depends solely on imports to meet growing demand.
  • Thailand is down 900,000 tons from 4.5 million to 3.6 million. Tunisia is down 300,000 tons from 2.0 million to 1.7 million tons.
  • The United States is up 300,000 tons from 3.2 million to 3.5 million as a result of lower expected domestic production.

With global trade declining fractionally and global supplies projected at a record in 2016/17, competition for global market share is expected to intensify. U.S. exports are expected to rebound slightly from their 44-year low, the report said, adding that Canada and Argentina’s supplies are expected to tighten during the Northern Hemisphere summer and fall months until new crops come to market. This will give the United States an opportunity to increase market share.

  • Argentina is unchanged at 8.5 million tons, although new supplies are not expected to hit the market until the second half of the trade year.
  • Australia is up 500,000 tons from 16.5 million to 17.0 million tons due to a slightly larger expected crop.
  • Canada is down 2.5 million tons from 22.5 million to 20.0 million tons. Although the crop is projected slightly higher, tight carry-in stocks will limit export volume.
  • EU is up 2.0 million tons from 32.5 million to 34.5 million. An appreciable upturn in exports to a near record is projected, supported by a large supplies and a sizeable crop.
  • Kazakhstan is down 500,000 tons from 7.5 million to 7.0 million tons because of a smaller expected crop.
  • Russia is unchanged at a record 24.5 million tons.
  • Ukraine is down 4.0 million tons from 15.5 million to 11.5 million tons because of a smaller crop.
  • The United States is up 2.7 million tons from 21.3 million to 24.0 million tons.

 

 

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