USDA fails to revise production forecasts

The US Department of Agriculture (USDA) in the January World Agricultural Supply and Demand Estimates (Wasde) report did not revise its forecast of Russian and Australian wheat production and exports despite both countries reporting record harvests.

The USDA left its projection of Australian wheat exports in 2022-23 at 27.5mn t, in line with an unchanged projection of output at 36.6mn t. This was despite continued reports of record-breaking harvest volumes by operators, favourable harvesting conditions and firm expectations of a new record volume threshed.

In contrast, Argus' agriculture analytics division Agritel expects Australia's production at 40.3mn t as the harvest nears completion. That said, even with a bumper crop, logistical constrains may prevent some of the extra volumes reaching the global wheat market.

The USDA also left its projection of Russian wheat exports in 2022-23 unchanged at 43mn t, in line with no revisions for production at 91mn t. This is significantly lower than other estimates, including the 96.43mn t Agritel forecast.

In contrast, the USDA did revise EU-27 wheat output and export projections up by 400,000t and 500,000t, respectively, to 134.7mn t and 36.5mn t. The upwards revision contrasts with Agritel's expectations for the bloc's wheat exports at 34mn t.

Production and export forecasts for the US, Argentina and Canada are also unchanged from December's Wasde report.

On the importer side, demand for both southeast Asia and the Middle East — as defined by the USDA — is forecast lower, by 200,000t and 500,000t, respectively.

Wasde forecast revisions are often cautious, market participants said, but the January report has diverged from market expectations more substantially than previous releases on the wheat complex.

By Anna Sneidermane