Russia and Ukraine will not repeat their star performance on the world wheat export stage in 2003-04.
Winterkill has slashed production there.
But the United States Department of Agriculture expects a one percent increase in global production thanks to a strong rebound in production by traditional exporters.
Global stocks are expected to shrink by 21.9 million tonnes to 134.46 million as demand continues to outstrip production.
This will slant the situation toward steady to stronger prices, especially if production does not go as planned in any of the major exporting countries, the USDA said May 12.
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While the USDA report was close to analysts’ expectations, wheat, corn and soybean prices rose on the major commodity exchanges, continuing the rise from the previous week.
Analysts attributed the strength to technical signals and heavy rain in parts of the U.S. Midwest that had delayed seeding, as well as a troubling dry region in winter wheat country.
“If we continue to have weather problems, prices will keep moving up,” said Don Roose, president of U.S. Commodities in Des Moines, Iowa.
The bull run in commodity prices was offset in Canada by the stronger Canadian dollar, which on May 12 soared past the 72 cents US mark for the first time in 51/2 years.
Soybeans rallied in part due to USDA cutting its estimate of year-end stocks by 10 million bushels, to 135 million bu. from 145 million, although that was slightly more than trade estimates.
The report also raised its world oilseed production forecast by about 18 million tonnes, which was seen limiting new-crop prices.
U.S. corn production was projected at 255.4 million tonnes and soybeans at 72.5 million tonnes, both just shy of all-time records.
Analyst Emily French at the consulting firm World Perspectives said rainy weather in the Midwest could curtail corn planting.
“We certainly believe there will be increased (soybean) planting, given this weather,” French said, noting soybeans can be planted later than corn.
In its first forecast of the new crops, the U.S. agriculture department forecast growers would reap 42.5 million tonnes of winter wheat.
Larger plantings and better weather fuelled the upturn in winter wheat prospects. Yields are forecast to average 42.9 bu. an acre, 4.4 bu. higher than in 2002. More than half of the winter wheat crop was rated as good or excellent, compared with 36 percent one year ago.
The USDA forecast global wheat ending stocks for the current crop year at 156.36 million tonnes, down 11.1 million from last month’s estimates, due largely to a 6.5 million tonne decrease in India’s ending stocks.
USDA sees production by the five major exporters – Argentina, Australia, Canada, the European Union and the U.S. – rising 21 percent to 223 million tonnes.
The major exporters’ ending stocks for the current crop year are estimated to shrink to about 29 million tonnes, down from 43.6 million, due to last summer’s production problems.
But as they boost exports and reclaim market share from Russia and Ukraine, their ending stocks are forecast to continue tight, climbing to only 34 million tonnes at the end of 2003-04.
USDA expects a 2.08 million tonne U.S. oats crop, up from 1.84 million in 2002-03.
It expects oats imports to slip to 1.47 million tonnes from 1.54 million in 2002-03.
