December 10, 2013

World wheat harvest to drop in 2014

Despite a rise in sowings, world wheat harvest is expected to decline in 2014, according to a forecast by International Grains Council (IGC).

In its first estimate for global wheat output in 2013-14, IGC forecast a 1.6% decline. With the council pegging this season's crop at 698 million tonnes, the figure implies a harvest of about 686 million tonnes next year, which would rank as the fourth biggest ever, behind those of 2011 and 2009 as well.

The forecast of a fall in output comes despite expectations of a rise in plantings, with the council expecting a rise of 1.4% to 222.9 million hectares in harvested area next year.

"While the global area was expected to rise, yields were likely to return to more average levels from the excellent results seen in 2013-14," IGC analysts said.

IGC forecast that grains output overall remains on a rising trend, and expected to increase by an average of 1.6% a year during an outlook period extending to 2018-19. A rise at that rate would bring production, pegged at 1.946 billion tonnes for 2013-14, above two billion tonnes in two seasons' time.

However, consumption will rise more or less in line with output, meaning that the increased harvest will not allow a build-up in stocks.

The councils said that firm demand growth was also anticipated and, while the absolute level of stocks was likely to rise, the ratio of stocks to use was projected to fall slightly to 18% by the end of 2018-19. That is lower than stocks-to-use ratio, a key pricing metric, of 20% expected for this season, implying upward pressure on prices during the next five years.

Winter crops sown for the 2014 harvest have yet to brave the winter, which can cause significant losses, and is currently in focus in the US where cold weather is causing some "spotty winterkill" in north western areas, according to weather service, MDA.

In Canada and Kazakhstan, spring sowings predominate, meaning crops for the 2014 harvest are still months from being planted.

Informa Economics has pegged next year's world wheat crop at 702.5 million tonnes, a drop of less than 1% on-year, on its forecasts.