Recent wheat and durum market reviews show the odds are for similar to lower prices in 2002-03.
But the outlooks are so early that they play about the same role as a 10-day weather forecast. They give you something to talk about, but it’s still a good idea to pack your shorts and a winter coat.
The United States Department of Agriculture’s report increased its world wheat production forecast by almost two million tonnes to 577 million. This reflects the larger-than-expected crop in Russia and the former Soviet Union.
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China purchased just over 20 million tonnes of wheat, corn, barley and sorghum last year, that is well below the 60 million tonnes purchased in 2021-22.
Reflecting the latest Statistics Canada report, USDA increased Canada’s wheat crop by 600,000 tonnes. It also boosted the forecast for Morocco, but reduced Iran’s wheat crop by 500,000 tonnes, as lingering drought wiped out that country’s hope for a recovery.
USDA’s forecast for world wheat trade in 2001-02 was unchanged at 107.2 million tonnes.
Year-end wheat stocks are forecast to fall 19 million tonnes to 143.97 million tonnes. While that is the lowest in a long time, it is not as bullish as the USDA wheat report last month that showed stocks dropping by 23 million tonnes.
This, coupled with sluggish American wheat exports, maintained the generally lower trend for wheat futures prices on U.S. commodity exchanges.
However, several of the world’s major winter wheat crops – the U.S., China and northern Africa – have gone into dormancy in only fair condition. Also, the Argentine crop has quality problems.
Generally, the market appears unconcerned about lower stocks and prices appear caught in a narrow range unless there is a surprising increase in demand or the weather next spring turns ugly in a major producing region.
Agriculture Canada’s world durum market report last week traces the turn around from last spring’s dismal price outlook of $191 a tonne for 11.5 percent protein durum to today’s Pool Return outlook of $254.
The report says the strong market this year will encourage larger acreage next spring, which will produce around five million tonnes provided the weather is normal. This means durum prices have the potential to be weaker in 2002-03.
However, supporting factors are also at play. U.S. farmers, after three poor harvests due in part to fusarium, might be reluctant to seed the crop next spring. Also, northern Africa, a major production zone and the largest importer of durum, has been dry this fall.
