The World Agricultural Supply and Demand Estimates for May are always an interesting one, as they are the first to start forecasting new crop.
Another big year for wheat globally on the cards. Production for the coming season is estimated at 789mmt, which would be a record level.
The Australian crop has been forecast at 27mmt, which, although a significant fall from last years records crop, remains 5mmt above the average since 2000. There is clearly a long way to go until harvest, but 27mmt seems a respectable number with present conditions.
The biggest surprise to me is the USDA using an estimate of 85mmt for the Russian crop. This is far higher than private analysts expectations. EP3 contributor and Russian analyst Andre Sizov of Sovecon has the crop at approximately 80mmt.
As expected, consumption of wheat is expected to rise (see ‘No-corn is irreplaceable’.) However, consumption remains below expected production, resulting in ending stocks remaining at 2nd record levels.
All of the above points towards a bearish situation for wheat. However, as we have mentioned before, the story of wheat is really the story of corn.
I’d be keeping an eye on the WASDE reports over the coming months as it starts to reflect the progression of the coming crop. There will be corrections.