Wheat crop prospects down globally
The USDA says that exporter stocks of wheat are now forecast to drop year-to-year by 12 MMT (16%), whereas, just a few months ago, these stocks were forecast to expand modestly. Deteriorating crop prospects in several major exporting countries, particularly Canada, Kazakhstan, and Russia, along with strong global import demand, have contributed to that reversal. Tightening supplies are already causing prices in the United States and the EU to rise.
“However, the drawdown of exporter stocks is expected to partially mitigate the current production shortfall,” says the USDA forecast. “The United States is the exception, with expansion currently forecast in production, exports and ending stocks. As supplies for high protein wheat shrink in other exporting countries, the United States is well positioned to take advantage of any further tightening of supplies and/or stronger global import demand. With planting just getting underway, the Southern Hemisphere producers, Australia and Argentina, are the wildcards in the supply picture since they typically hold relatively little stocks.”
International prices of wheat and maize increased by 19% and 12% in the first two weeks of July reflecting concerns about deterioration of global wheat prospects, particularly in some main exporter countries. By contrast, rice prices continued to decline given abundant supplies. By mid-July export prices of maize are higher than a year ago, said FAO’s July assessment of the world food situation.
“The worst drought in four decades has adversely affected this year’s wheat production in the Russian Federation, the fourth world exporter of wheat. Emergency has been declared in 16 regions and an output reduction of 20-25 percent is forecast. However, due to high carryover of stocks from the previous seasons, exports are expected to remain at about last year’s level. In Kazakhstan, wheat production is anticipated some 20 percent less than the record level of 2009. Exports are expected to decline, which may affect neighbouring wheat deficit countries in Central Asia. By contrast, excessive rains in Ukraine are delaying harvest of wheat and lowering quality of the crop. Elsewhere, wheat production is forecast to decline by 20 percent in Canada but prospects are satisfactory in Europe, the largest producing region, and very good in the United States. Overall, the global wheat production is anticipated lower than earlier forecast but supply should remain adequate in the 2010/11 marketing year reflecting large stocks.”
Delayed monsoon rains rise concern for main 2010 rice crop in parts of South-east Asia. Serious damage to paddy seedlings is reported in Lao People’s Democratic Republic. Late main season rains are delaying sowing in Viet Nam and some parts in Thailand. More precipitation is needed soon to avoid plantings reduction. By contrast, favourable monsoon rains in India and Bangladesh benefited the wet season paddy crops currently being planted. Rice and wheat crops from the 2010 winter season, already harvested, were good in most countries despite rainfall deficits during the growing period.