December 29, 2011

USDA reports bearish outlook for world wheat

The USDA reported a bearish outlook for wheat in its world agricultural supply and demand estimates for December 2011.

The report shows that global wheat production up to a record 689 million tonnes due to higher production in Australia, Argentina and Canada. Global supplies are up 9.3 million tonnes to 889 million tonnes with improving production estimates in the southern hemisphere.

Global wheat ending stocks are also up 5.9 million tonnes to 209 million tonnes, the largest in 12 years. Larger world supplies of wheat and competitive prices relative to corn boosted prospects for 2011-2012 world wheat trade, the USDA said.

The agency's trade forecast is up 1.4 million tonnes, anticipating that Asian countries and Mexico will import more wheat for feed. ABARES, the Australian Bureau of Agricultural and Resource Economics and Sciences, recently reported it expects relatively low wheat protein levels this year. While USDA did not cite that specifically, it did increase the Australian and Argentine export forecast based on increased feed wheat demand.

It also lowered US export forecasts for hard red winter (HRW), soft red winter (SRW) and white wheat by 1.36 million tonnes. US grain handlers told US Wheat Associates (USW) the white wheat export reduction surprised them because the soft white (SW) sales pace remains strong.

Export forecasts for US hard red spring (HRS) and durum did not change this month. In fact, MGEX HRS futures prices for December, March and May closed up a bit along with March and May KCBOT HRW futures on the day USDA issued the December WASDE.