USDA sees 26pc drop in Australia’s new-crop wheat

The United States Department of Agriculture has issued its forecast for 2023-24 global wheat production at 789.8 million tonnes (Mt), up 1.5Mt on the 2022-23, which includes an Australian crop down by 26 percent.

The forecast has come as part of USDA’s World Agricultural Supply and Demand Estimates May report, and the accompanying Grain: World Markets and Trade report.

USDA has this month estimated Australia’s 2022-23 wheat exports in the year to June at 32.5Mt, up 2.5Mt from the April forecast, citing strong demand, especially from China and other Asian markets, as the reason for the lift.

However, much less wheat is expected from Australia in 2023-24, with exports pencilled in at 24.5Mt, primarily to Asia.

USDA has estimated the current Australian wheat crop at 39Mt, and new crop at 29Mt.

“After three consecutive record crops, Australia is forecast down 26pc on anticipated lower yields,” USDA said.

“Australia is anticipated to have a sharp decline in exports with production forecast down by one quarter.

“Given the reduction in supplies and only slightly lower domestic use, Australia exports are projected down 8Mt to 24.5Mt.

The largest increase in 2023-24 global production is forecast for Argentina, which is anticipated to recover following its drought-affected crop the prior year.

Indian production is estimated to rise 6pc to a record 110Mt, with rising domestic prices spurring additional area.

EU production is forecast to rise with favorable weather across the region, except for Spain, and expanded area in Canada is expected to see it produce a near-record crop.

China’s 2023-24 production is expected to lift with higher yields forecast, and the US is forecast to rise slightly on additional winter wheat harvested area, with all-wheat production expected up just 1pc to 45.2Mt.

Russia is expected to have an 11pc decline in its 2023-24 production compared to the current year because of reduced area and yield.

Ukraine’s 2023-24 wheat crop is forecast to be down by more than 20pc from 2022-23, and be half the level reached in 2021-22.

“Area harvested is lower amid ongoing conflict, while reduced access to inputs limits yield potential.”

Global wheat consumption in 2023-24 has been forecast at 789.5Mt, up 2.9Mt from 2022-23.

“Global growth in FSI consumption is expected to rise on population growth, with the largest increases in China and Pakistan.

“With prices easing, consumption is expected to rebound in some countries where consumers have recently eschewed wheat products in favour of other food grains such as rice.”

USDA said Indonesia and Nigeria are among the countries where improved wheat demand can be expected.

“Wheat feed and residual use exhibits more annual variability compared to FSI depending on its price relative to feed grains and harvest quality.

“In 2023-24, feed and residual use is expected to weaken as corn will be more competitive for feed in most markets given larger US and Brazilian corn production.”

In its commentary of the latest USDA data, Rabobank said the USDA’s initial estimates for 2023-24 have provided “a mixed bag”.

“While wheat was bullish for markets, corn and soy were both bearish,” Rabobank said.

“Wheat bullishness is being propelled by a decline in production across Russia, Australia and Ukraine, with more possibly to come, considering the report assumes a record year in Canada which is seeing drying conditions.”

Rabobank said USDA estimates have also assumed a rebound in Argentina’s production to the five-year average, despite no material improvement in the weather so far.

“Soy and corn are bearish on rising global stocks and also to a large extent hinge on weather in North and South America playing ball.

“There are expectations of a record US corn crop, which currently is under drought conditions in multiple states, and Argentina rebounding to a record production year.

“Ukraine is expected to see declines across the board, but more may be to come.”

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