January 20, 2012

Global wheat surplus may pressure prices

Wheat growers in the US have reportedly sowed the most winter wheat in three years just as the global wheat stock has reached the biggest volume in a decade.

"About 41.02 million acres, an area bigger than Illinois, were sown from September to November, 0.9% more than a year earlier," according to the average of 16 analyst estimates compiled by Bloomberg. "That will add to world inventories set to rise 4% to 207.7 million tonnes, the most since 2000, the survey showed. Winter wheat makes up 74% of the US crop, and the government gives its first estimate tomorrow," Bloomberg reported.

World wheat production in 2011/2012 is projected up 2.5 million tonnes this month to 691.5 million, up 1% from the previous record in 2009/2010, according to the Wheat Outlook released from the USDA's Economic Research Service this week.

Spurring global wheat production has been Russia, which saw a 35% increase in wheat in 2011 compared to 2010. In addition, Ukraine increased its output by 31% as Canada increased its supply by 9% and Australia by 1.5% to a record. India harvested its biggest crop ever as well. 

In anticipation of the spring season, the crop condition in most of the Midwest wheat growing states is better than last year. Nearly all Central and Southern Plains states are reporting higher percentages for the good to excellent rating compared to this time last year.

Wheat production is projected to be up in several countries of the Former Soviet Union as well as Brazil. Russia is projected up 200,000 to 56.2 million for its preliminary crop production data. It is also up 800,000 tonnes in Brazil.