Canada Markets

China's Wheat Stocks Forecast to Keep Growing

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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Tuesday's USDA report estimates China's 2017/18 ending stocks of wheat at 126.8 million metric tons (blue bar, measured against the primary vertical axis), representing 47% of the global carryout (black line, measured against the secondary vertical axis) and higher for the fifth consecutive year. A USDA attache report suggests that 2018/19 stocks may climb a further 13.3 million metric tons to 140 mmt (yellow bar). (DTN graphic by Cliff Jamieson)

Tuesday's USDA report saw an increase in estimated 2017/18 global wheat stocks from the March report to a record 271.22 million metric tons, up 2.33 mmt from last month and up 16.62 mmt or 6.5% from the previous crop year. This would represent the fifth consecutive annual increase, representing a global stocks to use ratio of 36.5%, up from last year's 34.5% and well-above the recent low of 26.1% based on USDA estimates for 2012/13.

As seen on the attached chart, China's share of global stocks continues to grow, with ending stocks are up for the fifth consecutive year to an estimated 126.8 mmt (blue bar), which represents 47% of global stocks, as indicated by the black line. While USDA's official 2018/19 estimates will be released next month, a USDA attache report released today includes a forecast that points to China's stocks growing in 2018/19 to 140.119 mmt. This is due to a large carry-in from 2017/18, and despite lower estimated production and higher estimated consumption. Exports are expected to remain steady. This growth in ending stocks is marked by the yellow bar on the attached chart, which would represent the sixth consecutive annual increase.

Global stocks for 2017/18 held by the eight largest exporters (Argentina, Australia, Canada, European Union, United States, Russia, Ukraine and Kazakhstan) are expected to dip by 1 mmt in 2017/18, to 69.2 mmt, which represents 25.5% of estimated global stocks, down from 27.6% in 2016/17. Year-over-year increases in stocks are forecast for the EU and Russia, despite Russia's record pace of exports.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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