It’s a year of extremes in world wheat production.
U.S. production is exceeding expectations while crops in Canada, Russia and Kazakhstan are suffering.
The U.S. Department of Agriculture now sees steady U.S. production despite fewer seeded acres but less world production, dropping its July forecast to 661.07 million tonnes from 668.52 million last month. Last year’s production was 679.85 million.
It might have to make similar revisions in its next update.
Reports from northwestern Kansas show farmers harvesting 50 to 60 bushels an acre, up from an estimate of 41 bu. made during an industry tour in May.
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So the U.S. crop could get bigger. After practically ignoring the United States in the last year, wheat buyers will have to give it more attention now that crops elsewhere are getting smaller.
The Canadian crop is smaller because of unseeded acres and forecasts might have to be cut more if we don’t get a long harvest window.
Russia is undergoing its worst drought in a decade and the dryness is expected to persist through July.
USDA put Russia’s wheat crop at 53 million tonnes, but SovEcon, an influential analysis group, has put the crop at 49 to 51 million tonnes.
Given large stocks remaining at the conclusion of the current crop year, Russia expects it will have a good supply to export despite the smaller crop.
However, by the start of the 2011-12 crop year, its stocks should have been mostly used up.
That should lessen Russia’s tendency to sell at fire sale prices, which lowers the bottom end of the market.
