USDA sees wheat supply concerns easing

Global wheat fundamentals in the 2021-22 marketing year are expected to be more relaxed than earlier estimates, with higher beginning stocks and production offsetting stronger consumption, the US Department of Agriculture (USDA) said.

The global wheat output projection for the 2021-22 marketing year ending 30 June 2022 has been revised up to 780.3mn t from the 776.9mn t expected last month, according to USDA's latest World Agricultural Supply and Demand Estimates (Wasde) report. This is still nearly 12mn t below USDA projections in July, but around 5mn t above actual 2020-21 production.

The USDA also revised up beginning wheat stocks globally to 292.6mn t from the 288.8mn t estimated last month, citing higher-than-expected stocks in Canada and the EU. With higher output expectations, this means the USDA projects 2021-22 wheat supply at 1,072.8mn t, which is 7.1mn t above its forecast in August.

The biggest upward revisions were to Australian and Indian output, with the former now expected to hit 31.5mn t, against 30mn t projected last month and the third highest to date, reflecting favourable weather. Indian production is revised up to 109.5mn t from 108mn t.

China and the EU are also expected to produce more wheat than previously anticipated in August. Estimates for Russia and Ukraine are unchanged.

Canada's projection falls by 1mn t to 23mn t, and Argentina's by 500,000t to 20mn t — reflecting drought conditions in both cases.

The global wheat consumption estimate rises by 3mn t to 789.6mn t, driven by higher feed and domestic demand in China.

On the trade front, the USDA now expects higher imports into China and stronger exports from Australia and India. Canada is the only major wheat producer to see its export projection cut, with Russian, Ukrainian, US, EU and Argentinian projections unchanged.

Higher supply offsetting stronger demand also implies that global wheat stocks by the end of 2021-22 could now reach 283.2mn t, up from the 279mn t expected in August under USDA estimates.

By Bilal Muftuoglu