December 21, 2012

THE USDA has raised international wheat stocks forecast by 2.8 million tonnes and stocks are now set to reach 176.95 million tonnes at the end of the 2012/13 period.

The increase to wheat stocks follows higher production and lower demand forecasts. Production was increased to 655 million tonnes, mainly on the back of higher Chinese production, with increases also for Australia and Canada. These more than offset smaller EU and Brazilian crops. Total world use is forecast down by 1.2 million tonnes to 674 million tonnes. The latest estimate of ending stocks equates to 26.3% of annual consumption, a sizeable increase from 25.8% last month.

Last week's report also saw few alterations to the South American corn and soy crop estimates and tighter US soy stocks.

Ahead of the report much of the industry's focus was on the South American corn and soy crops where planting is underway. With rain continuing to disrupt planting in Argentina, there is growing confidence that some land intended for corn will shift to the later planted soy.

The Brazilian corn crop estimate was left unchanged also from November at 70 million tonnes. South American soy production numbers were left mainly unchanged including Brazil at 81 million tonnes.

Globally, a larger Chinese crop was the main reason for a 9.4 million tonnes increase to global corn production to 849 million tonnes - now 33 million tonnes below 2011/12 production. However, an increase of consumption (again mainly in China) leaves global end-season stock forecasts largely unchanged. Chinese import demand also remained the same.

Significantly, USDA is also reporting that global soy production was slightly higher - up 0.12 million tonnes from November to 268 million tonnes. Canadian production was revised upwards, offsetting a downgrade in EU-27 and Paraguayan production; the Brazilian and Argentine crop forecasts were unchanged from last month. Global demand for soy beans was also largely unchanged.

In the US, soy stocks continued to tighten following a small increase to the domestic crush figure.