December 12, 2011
USDA sees highest level global wheat crop
As farmers around the world respond to a prolonged stretch of high grain prices, the USDA projected the wheat and corn output worldwide to be at record level.
Increased production in places such as Argentina and Russia is making global export markets more competitive, with the USDA in its monthly crop report Friday (Dec 9) lowering its US export forecasts for soy and wheat.
While keeping US corn exports unchanged, the agency said global corn production will hit a record high of 867.5 million tonnes in the current crop year, easing concerns over tight supplies. Fuelling the outlook was a 4% rise in the projected size of China's corn crop.
"Producers are responding to sustained higher prices over the past few years," said Doug Bergman, an analyst with RCM Asset Management.
Corn futures are near a one-year low after hitting a record high of nearly US$8 a bushel in June, while wheat futures are in danger of falling to their lowest level since July 2010, before a drought in Russia fuelled a major rally in prices.
In Friday's report, the USDA cut its forecast for US wheat exports by 5% to 925 million bushels. The USDA also raised its forecast for end-of-season US wheat inventories to 878 million bushels, up 6% from last month. Also, the agency projects record world production of 689 million tonnes for the crop year, which ends May 31.
"Larger supplies in several major exporting countries and relatively strong domestic prices, supported by the tight domestic corn supply and use situation, are expected to limit opportunities for US wheat in world trade," the USDA said.
The USDA cut forecast US soy exports to 1.3 billion bushels in the 2011-12 marketing year, a 25 million-bushel drop from its November forecast. The decrease reflects "the slow pace of shipments and outstanding sales through November, and strong export competition from South America," the agency said.
Brazil, the USDA said Friday, is now expected to export 38.5 million tonnes of soy in 2011-12, up from last month's prediction of 38 million tonnes.
Lower US exports combined with an expected 10-million-bushel drop in the soy crush this year resulted in projected end-of-season US soy inventories of 230 million bushels, up 18% from last month's forecast.
The USDA left its forecast for corn exports unchanged at 1.6 billion bushels, but did raise its prediction for ending stocks by five million bushels. Domestic demand for the grain is slightly lower than expected, the agency said.
"Corn food, seed, and industrial use are lowered five million bushels with early marketing-year corn use for sweeteners down slightly year on year," the USDA said.