February 28, 2007

 

Grain World 2007: World wheat output to climb in 2007/08

 

 

Rising acreage in major wheat-producing countries combined with good growing conditions should result in world wheat output climbing in 2007-08, an analyst said Monday at the Canadian Wheat Board's (CWB) annual Grain World conference.

 

Jason Newton, a CWB wheat market analyst, projected world wheat production in 2007/08 at just over 600 million tonnes, which would represent a 35 million tonne jump over the previous year.

 

"The key to the wheat market will be corn," he said, noting that wheat prices will be taking their cue from that commodity.

 

Newton forecast that there will be a move to more lower-quality wheats in 2007/08 as a return to more normal weather patterns are experienced in the major wheat-producing countries.

 

Another factor that could still determine wheat output, however, will be the level of investment from managed money accounts, Newton said. In 2006, money under management in managed futures totalled US$170 billion compared to around US$130 billion in 2005.

 

Wheat area in the European Union was forecast by Newton at about 23 million hectares, which would be slightly higher than the 2006/07 level of around 22.0 million.

 

Wheat acreage in the US was seen climbing 3.5 million acres in 2007/08 to around the 59.0 million acre level.

 

Part of the jump in US wheat output will be associated with the fact that there are fewer drought-affected winter wheat growing regions heading into the new crop year, Newton said.

 

Wheat seeded area in Russia, Ukraine and Kazakhstan was seen jumping 2.0 million hectares in 2007/08 to around the 44.0 million hectare level, Newton projected.

 

World wheat trade in 2007/08 (July-June) was pegged by Newton to come in at 105.5 million tonnes, compared with 106.4 million in 2006/07. Declines in wheat exports from Canada, Argentina and Australia along with the Russia/Ukraine region were associated with the drop.

 

Wheat exports from the US in 2007/08 were forecast at 27.8 million tonnes, compared with 23.7 million in 2006/07, Newton said. EU wheat exports were seen coming in at 16.0 million tonnes compared with 14.0 million the previous year.

 

Wheat exports from Canada, meanwhile, were seen declining to 16.5 million tonnes in 2007/08 from 19.5 million in 2006/07 as wheat competes with canola for acreage in Western Canada.

 

Argentine wheat exports were forecast to decline to 8.5 million tonnes from 10.98 million in 2006/07 while Russia/Ukraine shipments drop to 11.5 million tonnes from 13.2 million in 2006/07. Australian wheat exports were seen coming in at 10.3 million tonnes in 2007-08 compared with 10.8 million in 2006-07, according to Newton.

 

Canadian wheat production in 2007/08, excluding durum, was estimated by Newton at 18.0 million tonnes, which would compare with close to 24.0 million in 2006/07.