Agricultural News
USDA Says Global Wheat Stocks Are Being Sharply Reduced Due to Extreme Drought in Europe
Thu, 12 Aug 2010 7:47:21 CDT
The USDA issued Crop Production and Supply Demand Reports on Thursday morning.
In the Supply Demand report, the biggest changes was in the wheat stocks- and much of that was in the global numbers. The USDA analysts lowered the expected size of the Russian wheat crop by a whopping eight million metric tons- and that drop, plus other drops in neighboring countries that were once the Soviet Union resulted in a higher expectation for US wheat prices. US wheat prices for the balance of this crop year are raised fifty cents per bushel on both ends of the range given by the report- $ 4.70 to $5.50 per bushel.
Here's what the report said specifically about US wheat stocks and outlook:
U.S. wheat ending stocks for 2010/11 are lowered this month as higher expected exports more than offset an increase in forecast production and lower projected feed and residual use. Production is forecast 49 million bushels higher mostly reflecting higher yields for durum and other spring wheat, especially in the Northern Plains. Winter wheat production is also raised slightly as higher yields in the Northern Plains and Pacific Northwest more than offset reductions in the eastern Corn Belt. Feed and residual use is lowered 10 million bushels as rising values have priced wheat out of feed rations. Exports are projected 200 million bushels higher with declines in foreign production, particularly in the FSU-12, reducing global supplies and making U.S. wheat competitive in key Middle East and North Africa markets. U.S. ending stocks are projected 141 million bushels lower from last month, and down 21 million from 2009/10. The 2010/11 season-average farm price is projected at $4.70 to $5.50 per bushel, up 50 cents on both ends of the range.
The Global wheat outlook-
Global wheat supplies for 2010/11 are reduced sharply with world production lowered 15.3 million tons, mostly on reductions for FSU-12 and EU-27 countries. Production for Russia is lowered 8.0 million tons as continued extreme drought and record heat during July and early August have further reduced summer crop prospects. Kazakhstan production is lowered 2.5 million tons reflecting the same adverse weather conditions as in Russia. Ukraine production is lowered 3.0 million tons as heavy summer rains damaged maturing crops and hampered harvesting in western and southern growing areas. Harvest results also support indications that producers reduced input use in response to limits on available capital. EU-27 production is lowered 4.3 million tons with yields reduced for northwestern Europe on untimely heat and dryness. Yields are lowered for southeastern Europe as heavy rains from the same weather pattern that affected Ukraine reduced output. Production is also lowered for Algeria, Brazil, Uruguay, Belarus, and Croatia. Partially offsetting are increases for India, the United States, Australia, and Uzbekistan.
World wheat imports and exports are reduced sharply as tighter supplies and higher prices reduce projected global consumption. Imports are projected 5.7 million tons lower as higher prices reduce demand in a number of countries. Exports are lowered 12.0 million tons for Russia partly reflecting the recent announcement banning exports through December. Also limiting Russia export prospects is higher expected wheat feeding with drought-reduced forage and coarse grain crops and policy goals aimed at increasing domestic meat production. Exports for Kazakhstan and Ukraine are lowered 2.0 million tons each with sharply lower production. Higher exports from other countries partly offset FSU-12 declines. Exports are raised 1.2 million tons for China, 1.0 million tons each for Australia and EU- 27, and 0.9 million tons for Turkey. The 5.4-million-ton increase projected for U.S. exports is expected to offset the largest share of the decline from FSU-12. Global ending stocks are projected 12.3 million tons lower. At 174.8 million tons, world stocks are projected 49.9 million tons higher than in 2007/08 when prices soared to record levels.
Other crops will be seeing increase in stock levels- based on the guidance of this report. Click here to read the full report from the Economic Research Service of USDA.
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