Mecardo Analysis - We live in a world of Wheat
- By: "Farm Tender" News
- Cattle News
- May 14, 2019
- 519 views
- Share
This article is bought to you by GE Silos.
By Andrew Whitelaw | Source: USDA
The US Department of Agriculture has released their May WASDE report. This report is the first to provide a forecast for the coming crop. It isn’t a good report for producers, and in this article, we delve into some of the numbers.
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
Over the past year, those in Australia could be forgiven for ignoring what is happening around the world. We had our own problems on the continent and our pricing was largely set by the domestic demand on the East Coast.
We are, however, moving on to a new season and with recent rains examining production outwith Australia becomes important again.
The WASDE report has been very bearish and has exceeded the expectations of many trade participants and analysts. The world is forecast to produce 777mmt of wheat, this is 15mmt higher than the prior record in 2017/18 (Figure 1).
As we know, global wheat demand tends to increase in a linear fashion, however, production has been quite strong for much of this decade. The result of production increasing at a rate higher than consumption has led to increased stock levels, which at the end of the season are forecast at 293mmt.
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
In delving into the data (Figure 2), we can see that all major crop production areas are forecast to experience growth in production (except for Kazakhstan).
Key points
* World wheat production is forecast to hit a record of 777mmt
* World wheat stocks are forecast at record levels of 293mmt
* The global stocks to use ratio is at 39%, which is the highest level since 1968/69
What does this mean?
The data in the USDA report is bleak for pricing, with such increases in production around the world global pricing is likely to remain subdued.
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
Ad - Looking to add more Grain Storage? - Get a GE Silo - Ad
It is important to maintain a handle on the overseas markets, as we will revert to an export crop provided we receive beneficial rains.
It also has to be noted that these forecasts are all still liable for change.
Share Ag News Via