The USDA WASDE report released on Tuesday (11th December) has increased the forecast of global wheat stocks by 2.8Mt and they are now set to be 176.95Mt at the end of the 2012/13 season. This is a 2 percent increase from November forecasts, but represents a slight dip on 2011 levels.

Nevertheless, the estimate is above many analysts' expectations, according to the latest Reuters poll.

The increase to stocks follows higher production and lower demand forecasts. Production was increased by 3.7Mt to 655Mt, 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 1.2Mt to 674Mt (698Mt 2011/12). The latest estimate of ending stocks equates to 26.3 percent of annual consumption, a sizeable increase from 25.8 percent last month.

Oilseeds largely unchanged

The report also saw few alterations to the South American maize and soyabean crop estimates and tighter US soyabean stocks, despite fears that wet weather in the south of the continent could yet affect crops. Ahead of the report much of the industry's focus was on the South American maize and soyabean crops where planting is underway, though rain in Argentina in particular is disrupting planting and wheat harvesting.

Helen Plant, AHDB /HGCA Analyst commented on Tuesday, "The latest report from the USDA now forecasts the Argentine maize crop at 27.5Mt, a reduction of 0.5Mt compared to November's report due to a smaller planted area." She predicted that some land intended for maize could shift to later planted soybeans instead.

Ms plant added, "While this would still be an increase of 6.5Mt from last season's drought affected crop, the world is looking to South America to provide a boost to tight global feed grain supplies."

The Brazilian maize crop estimate was left unchanged also from November at 70Mt. South American soyabean production numbers were left mainly unchanged including Brazil at 81Mt.

Globally, a larger Chinese crop was the main reason for a 9.4Mt increase to global maize production to 849Mt - now 33Mt below 2011/12 production. However, an increase of consumption (again mainly in China) leaves global end-season stock forecasts largely unchanged at 118Mt. Chinese import demand was also unchanged at 2Mt.

Global soyabean production was slightly higher - up 0.12Mt from November to 268Mt. 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 soyabeans was also largely unchanged at 261Mt, with ending stocks slightly (0.1Mt) lower at 59.9Mt, but still up from last year’s 56.0Mt.

In the US, soyabean stocks continued to tighten following a small increase to the domestic crush figure. Although soy production was less affected that had been anticipated by the US drought, end-season stocks are now forecast at 3.5Mt, equivalent to just 4.3 percent of annual domestic and export demand, down from 4.6 percent in November and 5.4 percent in 2011/12.

The next USDA release is due on 11th January 2013. It will give the first official estimates for the US winter wheat area planted for harvest 2013 and quarterly stocks information.