The USDA has released the latest World Agricultural Supply and Demand Estimate. This report provides comprehensive forecasts of supply and demand for major U.S. and global crops and livestock.
Global wheat production is predicted lower on a 3.7 million ton reduction in foreign (outside the US) production. Dry weather in Russia and Kazakhstan has impacted area and yield prospects in those countries, and lowered production is also expected in Turkey, Syria, Argentina, and the EU. Global wheat use, on the other hand, is expected to rise as more countries turn to the grain for use as feed in the face of tight corn supplies. Wheat consumption prospects have been raised by 3.2 million tons, while global ending stocks are projected to be 5.3 million tons lower at 177.2 million. In conjunction, reduced global supply and increased expected use are beginning to impact wheat prices; the Hard Wheat Excessive Food Price Variability Early Warning System is currently seeing a period of excessive volatility. However, the situation in the wheat market is not as tight as it is for corn and soybeans, and will depend greatly on conditions in other exporting countries in the coming weeks.
US corn production is forecast sharply lower by 2.2 million bushels due to the ongoing severe summer weather. At this rate, US corn yields will be their lowest since 1995-96. Global corn trade will also be affected by the situation in the US, with both exporting and importing countries seeing decreases. Global corn consumption is expected to fall by 38.9 million tons. Global corn feeding will also see a decline of 8.8 million tons are more countries move to cheaper and more readily available wheat for feeding. While corn prices are not currently seeing high volatility, the supply situation remains very tight and should be watched in the coming weeks.
Soybean prices are also currently experiencing high levels of volatility. US soybean production is down an estimated 358 million bushels due to the ongoing severe summer weather; soybean prices in the country reached all-time levels in July. Soybean exports from the US are also expected to drop by 260 million bushels. In addition to the US, soybean production in Canada and the EU is also reduced due to poor weather conditions. Planters in Brazil and Paraguay are responding to the higher prices with increased plantings, with production in Brazil expected to reach a record 81 million tons. However, these increased plantings will only partially offset the reduced production from the US.