Higher projections for global wheat production

Since 2000-01, the prices of key food commodities have soared considerably in the wake of rising demand and rigid supplies. The declining stock-to-use ratio for an essential commodity like wheat has been worrisome for developing countries and humanitarian agencies. However, the latest report from the United States Department of Agriculture (USDA) forecasts higher supplies of the commodity for next year. The Wheat Outlook released by the USDA on September 14 projects higher ending stocks of wheat, reaching 194.6 million tons by the end of crop marketing year 2011-12 (or MY12). This increase in leftover stocks is attributed to revisions in beginning stocks, higher production, and changes in consumption and international trade of the commodity. Projections for global wheat production have been revised recently to 678.1 million tons for MY12, up 6 million tons from last months projections. This is primarily attributed to 2.5 million tons incremental wheat production in Canada, due to higher acreage and rising yields. Wheat production in EU-27 countries is projected to rise further, led by Germany, France, Spain, Romania and Bulgaria. Wheat production in Ukraine may also rise. The USDA outlook states that increased beginning stocks also helped boost the MY12 wheat supplies to a record figure of 871.5 million tons, 20 million tons higher than in MY11. This is mainly on account of revised MY11 supply and demand figures from Canada; higher imports by Algeria, Tunisia and Egypt during later months of MY11; and small data adjustments for various countries last year. The projected consumption of wheat for MY12 is also revised upwards to 676.9 million tons. Wheat feed and residual use is expected to rise in Canada, China, Morocco and Turkey. However, wheat consumption for food and in seeds and industry are marginally down in this months projections owing to slightly lower wheat use in Russia. Driven by production changes and shifts in competitiveness, global wheat trade in MY12 may be higher, as projected in this months report. Higher production of Canadian durum wheat (used in pasta and bread) will likely hurt the biggest exporter of wheat, the United States. Exports by the EU-27 countries are also projected to be higher in MY12. Turkish exports would likely be down on account of decreased durum wheat production. The global wheat ending stocks are projected to reach 194.6 million tons by the tail of MY12, revised upwards by 5.7 million tons, this month. The increase in leftover stocks is mainly due to higher projected production in the EU-27 countries, Canada, and Ukraine. Lower domestic wheat consumption in Russia and reduced Turkish exports are also a factor at play. However, Chinese and Moroccan ending stocks would likely be lower in MY12 due to higher wheat feeding. Despite projections of higher production, wheats expected stock-to-use ratio for MY12 would come to 28.75 percent, down from 29.53 percent in MY11. This translates into a global wheat buffer stock for 105 days in a year. The MY12 stock-to-use ratio is higher than the average ratio of 26.9 percent from MY01 to MY11; however rising demand from developing countries will remain a serious cause of concern.

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GLOBAL WHEAT OUTLOOK
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(mn tons)    Beginning            Supply                     Use               Ending
                stocks   Production    Imports*     Domestic     Exports*      stocks
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MY12 (P)
Pakistan           3.4         24.0         0.2         23.4          1.0         3.2
Global           193.3        678.1       129.8        676.9        131.9       194.6
MY11 (E)
Pakistan           3.6         23.9         0.2         23.2          1.0         3.4
Global           199.9        648.2       129.7        654.7        130.2       193.3
MY10
Pakistan           2.7         24.0         0.2         23.0          0.3         3.6
Global           167.8        684.4       133.6        652.3        135.8       199.9
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* Global imports and exports may not balance due to differences in marketing years,
  grain in transit, and reporting discrepancies in some countries
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Source: World agricultural supply & demand estimates, USDA (September 12, 2011)
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