Global wheat production

Wheat faces production downgrades across globe’

Weather woes for the grains markets do not end with the US drought on lower corn and soybean supply, with some rather widespread production downgrades taking place in wheat, said Barclays in a report

Commodity Online,

4 August, 2012

Indeed, the USDA’s July WASDE report reflects rather geographically widespread downgrades to wheat production across key exporter states such as the Black Sea producers and Canada. In particular, Black Sea (Russia, Kazakhstan, and Ukraine) supply estimates are being lowered on dry weather.

The USDA’s July WASDE estimated Russian production at 49mn tonnes (which was revised down from June’s estimate of 53mn tonnes) – this appears too high in our view. In addition to expecting lowered estimates of Russian production, we also anticipate lowered estimates for production in Kazakhstan (July WASDE: 13mn tonnes) and the EU (July WASDE: 133.1mn tonnes).

Further weather-related supply issues for wheat to look out for include wet weather in Western Europe that has hampered harvest progress, dry weather in Western Australia and the potential effect of an El Nino.

While market focus has rightly been on the sizeable cuts to US corn and soybean supply estimates, the wheat market has also been witnessing a spate of weather woes.

“We expect global balances for all three markets – corn, wheat and soybeans – to tighten further in the USDA’s next monthly WASDE report due on 10 August.” Barclays concluded.