The US Department of Agriculture Wheat Outlook, released on Tuesday (14th August), revealed higher production and increased imports into the country had bolstered supplies in the country. However, commentators have warned that overall production shortfalls in other global regions may see wheat prices rising to new heights this season.

U.S. wheat supplies for 2012/13 are up 54 million bushels (1.5 million tonnes), on higher production forecasts and an increase in projected imports. Production is forecast at 44 million bushels (1.2million tonnes) higher. Nevertheless, USDA analysts acknowledged that, “Tighter foreign wheat supplies and sharply higher corn prices [may] raise price prospects for the remainder of the marketing year.”

The USDA report revealed, “Despite reduced wheat production prospects, and sharply higher world wheat prices, foreign wheat use for 2012/13 is projected up, with more wheat being used for feed.” However, this will have an impact on world wheat stocks; stocks are now set to fall in all major exporters except the United States and Argentina.

Although Australian wheat may suffer under drought, the likelihood of which is increasing in the country’s Eastern regions, currently, USDA said competition between exporters is being driven by a massive cut to Russia’s production, which will affect exports.  

Worldwide, wheat prices remain high, spurred on, according to the USDA, “by skyrocketing corn prices,” which are expected to increase both wheat trade and prices this month. Wheat production is predicted to fall by 2.3 million tonnes globally this month, as a 3.4 million tonne projected drop in production around the world will absorb the United States’ 1.1 million tonne increase.

In Russia and Kazakhstan, production has dropped respectively by 5.4 and 1.8 million tonnes on last month, according to the USDA. Output is now expected to be 39m for Russia and 10m for Kazakhstan. The entire global region has been stricken with inclement conditions, beginning with above average winterkill in a number of districts at the start of the year, which gave way to heat and drought in July.    

Russian analysts SovEcon said last week that grain reserves of agricultural organisations in the region were at their lowest since 2006; wheat stocks have been hit especially hard, standing 30 per cent lower than at the same time last year, their lowest level since 2003.

 
A SovEcon spokesperson said, “Our experts note that the sharp decline in the availability of grain, mainly wheat, happened this year on the back of [an] early harvest... However, a significant increase in sales of grain farms that were 1.6 times higher than last year, resulted in reduction of stocks from farmers to historically low levels.”