The USDA's April World Agricultural Supply and Demand Estimates (WASDE) report estimated global ending wheat stocks for 2020-21 at 295.52 million metric tons, revised lower for a sixth consecutive month after this volume was estimated at 321.45 mmt as recent as October.
This marks the second time in three years that global stocks are forecast to have fallen year over year, while the forecast drop of 4.521 mmt or 1.5% in the current crop year is the largest annual drop in stocks seen in eight years or since the 2012-13 crop year.
As seen by the brown line on the attached chart, stocks held by all countries of the world excluding China are forecast to grow for a second year in 2020-21, to rise by 1.7 mmt or 1.2%. At the same time, the blue line represents a drop in China's stocks for the first time in eight crop years, forecast to fall by 6.250 mmt or 4.1%.
To signal how quickly things can change on the demand side, the USDA's forecast for China's total demand has been revised from 130 mmt in October to 150 mmt in April, having been revised higher in each of the six months including a 5-mmt increase in this forecast seen for each of the past three months.
This demand is entirely due to feed demand, which has been revised 100% higher from October to April, from 20 mmt to 40 mmt. While the forecast for imports was been left unchanged at 10.5 mmt this month, this forecast has also increased in seven of the past eight months, from 6 mmt to 10.5 mmt, a 75% increase. The 10.5 mmt is up 95.2% from the imports reported for 2019-20 and 158% higher than the five-year average.
It is way too early to know if this year is an anomaly or the start of a new trend. After years of bearish global data, with record global stocks reported in five of the past six crop years, it is nice to see a demand-driven change in the marketplace that could signal the start to a return to a less burdensome global supply.
Cliff Jamieson can be reached at email@example.com
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