SASKATOON – So how much wheat is there in the world, anyway?
Ask the world’s two preeminent grain forecasting agencies and you’ll get two quite different answers.
According to the International Grains Council, there will be 93 million tonnes of wheat on hand when the 1995-96 marketing year comes to a close at the end of June.
But according to the U.S. Department of Agriculture, the stockpile will be substantially larger, at slightly over 101 million tonnes.
Based on USDA numbers, the ratio of stocks to use, a crucial factor in determining price trends, will be 18.4 percent. If you buy the IGC figures, the ratio is a tighter 16.8 percent.
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The differences are no less startling when the two agencies turn their attention to how much wheat will be grown in 1996-97.
The London-based grains council is projecting a new crop of 562 million tonnes, while the USDA says production will total 579 million tonnes.
Why are the two agencies so far apart and who should be believed?
Larry Sawatzky, grain industry analyst with the Canadian Wheat Board, said it’s not surprising that production forecasts at this time of year vary so much.
“I guess one of the biggest problems right now is it’s still so early,” he said. “There’s just so much room to go one way or the other.”
The wheat board does its own analysis but keeps the results confidential, using the figures to plan its sales and pricing strategies for the coming year. However, Sawatzky said the board is at the lower end of the range.
“Our number is in the middle, but it’s closer to the grains council,” he said.
Gregg Doud, a market analyst with U.S. Wheat Associates, has a similar view, saying the USDA number represents a highly optimistic outlook.
“This is clearly a best-case scenario for world wheat production in the coming year,” he said, describing the grains council’s forecast as “a more realistic figure.”
The USDA projects a crop of 78 million tonnes in the 12 republics that make up the former Soviet Union, while the IGC says 69 million. For India, the USDA says 68 million tonnes, while the council says 65 million.
Doud said planting delays in Canada, questionable farming practices in the former Soviet republics and the fact that harvest is six months away in Australia and Argentina make any estimate at this time of year little more than “an interesting talking point.”
As for the nine million tonne gap in year-end stock estimates, that’s harder to explain since the disposition of the 1995-96 crop should be fairly clear by now. The USDA is actually projecting greater wheat consumption at 551 million tonnes, versus the grains council’s 548 million tonnes. But according to the Americans, world stocks at the beginning of the year were 117 million tonnes, while the council had them pegged at just 103 million.
Sawatzky said he’s at a loss to explain why the two agencies are so far apart in their stocks numbers, noting they both have sizable resources and are looking at essentially the same raw material.
“But if I had to make a choice between the two, I’d say the grains council is more credible,” he said.
In its latest market report, the grains council also lowered its estimate of 1995-96 world trade in wheat and flour by 1.5 million tonnes to 94.4 million tonnes, slightly below the previous year’s 95.1 million tonnes. It is not yet forecasting trade in 1996-97.
The USDA is also forecasting a drop in trade, but as might be expected, its numbers are different. It says exports in the current year will be 111 million tonnes and will decline slightly to 108.3 million in 1996-97.
