One surprise in Wednesday's USDA report was a modest increase in global stocks of wheat for 2018/19 to 261.3 million metric tons, when the average of Dow Jones pre-report estimates pointed to an expectation of a month-over-month reduction in estimated stocks to an average of 257.2 mmt, down 1.8 mmt from the August estimate. The 261-mmt estimate, while still down 4.8% from 2017/18, lies at the upper end of the range of pre-report estimates.
This was largely tied to a 3.4 mmt increase in the agency's global production forecast, with a 3-mmt increase in production forecast for Russia since last month, while India's production estimate was increased by 2.7 mmt. USDA's year-over-year change in global production points to a 3.3% reduction, while the International Grains Council is less generous in estimating production given a 5.5% reduction shown in their latest supply and demand tables.
Wednesday's estimates would suggest USDA is more conservative in lowering forecasts for foreign crops, when compared to recent estimates released by Statistics Canada, Australia's ABARES and perhaps even the European Union, which suggests that further downward revisions may lie ahead.
The attached chart highlights the stocks held by eight major exporters -- Argentina, Australia, Canada, European Union, Russia, Kazakhstan, Ukraine and the United States. Stocks held by this group have increased over the past month to 55.22 mmt, or 21%, of the estimated total global stocks. However, this is well below levels seen in the past two crop years and a reminder of how tight exportable supplies may be this crop year. Future cuts to production in some of these exporting nations by USDA should perhaps be expected and could see this percentage tighten further this crop year.
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Cliff Jamieson can be reached at email@example.com
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