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USDA raises projection for 2021-22 wheat supply, ending stocks

Highlights

USDA keeps Russia, Ukraine output steady on month

Australia 2021-22 wheat output seen rising, Canada falling

India, China, EU wheat crop seen rising in 2021-22

The US Department of Agriculture has increased its estimate for global wheat supply, ending stocks and output after several scale downs, the World Agricultural Supply and Demand Estimates, or WASDE report, said Sept. 10.

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The USDA raised its estimate for global wheat supply 7.1 million mt to 1.073 billion mt for the marketing year 2021-22.

"Supplies are projected rising...on the combination of larger beginning stocks for Canada, EU, and India and higher production for Australia, India, and China," WASDE said.

It increased its estimate for global output to 780.3 million mt, against 776.9 million mt pegged a month ago, due to a likely rise in output in Australia, China and India.

Along with the likely increase in supply, the global ending stocks are also expected to rise to 283.2 million mt from 279.1 million mt seen in August.

The USDA has increased its output estimates for the first time in the current marketing year. Due to the expected falling supplies, wheat export prices have increased sharply over the past few weeks.

During the past month, FOB prices of wheat across Russia, Australia, and Ukraine increased sharply.

According to S&P Global Platts assessments, FOB prices of Australia's APW wheat rose 12% on month to $324.5/mt. Similarly, FOB prices of 12.5% Russian wheat rose 9% to $303.5/mt and 11.5% Ukrainian wheat quotes rose 8.4% to $291.5/mt.

Output projections

USDA has pegged Australian production to increase to 31.5 million mt, up 1.5 million mt from August.

"This would be Australia's third largest wheat crop on record," it added.

The European Union, the largest producer, is also expected to harvest 139 million mt wheat in MY2021-22, up from the 138.6 million mt seen in the last report.

The USDA pegged China's wheat output estimates to 136.9 million mt, up from 136 million mt pegged in the previous report, and for India it has pegged the output rising 1.5 million mt to 109.5 million mt.

For Canada, the USDA has lowered its projection for wheat output by 1 million mt to 23 million mt. The USDA has also trimmed its forecast for Argentina's wheat output 500,000 mt to 20 million mt for MY2021-22.

For Russia and Ukraine, it has kept its output projections steady at 72.5 million mt and 33 million mt, respectively.

Consumption and trade

Projected MY2021-22 world consumption is increased by 3 million mt to 789.6 million mt, said USDA.

"Most of the higher consumption is for feed and residual use, led by China," it said.

Global trade for MY2021-22 is projected to 1.5 million mt higher at 199.7 million mt on increased shipments from Australia and India, more than offset by lower exports by Canada, it added.

For Australia, exports are seen increasing to 23 million mt against 22 million mt seen previously. The USDA pegged India's wheat exports at 3.5 million mt, up from 2.7 million mt.

The USDA has trimmed Canada's wheat exports 500,000 mt to 17 million mt for MY2021-22.