The IGC raised their 2008/09 world wheat production estimate by 10Mt to a record of 672Mt compared to their previous month’s forecast following higher Back Sea output and improved crop prospects in Australia and Argentina. This is a 63Mt increase compared to the 609Mt crop harvested in 2007/08. Given the greater availability this season, global wheat consumption is now seen at 643Mt, 4Mt up on the previous month’s forecast and 31Mt higher than in 2007/08.
World maize production in 2008/09 is forecast at 774Mt, 15Mt higher than projected in the previous month’s forecast but 11Mt down on 2007/08 following a lower forecast crop in the US. Global maize consumption, however, is seen at 789Mt, 7Mt higher than forecast in July and 15Mt up on 2007/08 consumption. As a result, world maize closing stocks are projected to fall to a low of 112Mt, which would be 15Mt below 2007/08 stocks and 3Mt less than the low carry-over of 2006/07.
Total world grain production in 2008/09 is forecast to rise to 1,749Mt, which is 31Mt higher than last month and 62Mt above output in 2007/08. Global consumption was adjusted 13Mt higher when compared to last month and is now projected 47Mt above last season, at 1,731Mt. Stocks are seen to recover by 18Mt on 2007/08 to 300Mt. See www.igc.org.uk.
Less high quality wheat available from Ukraine this season. The percentage of the high quality wheats (grades 1 to 3) has reportedly fallen to 11% compared to 40% in 2007. Latest estimates put the ’08 Ukrainian wheat crop at 22.5Mt, compared to 13.9Mt in ’07 (IGC). Ukrainian wheat exports are forecast to rise to 7.5Mt in 2008/09. This compares with just 1.2Mt in 2007/08, 3.3Mt in 2006/07 and 6.5Mt in 2005/06. It was announced that 3.2Mt of grain (including wheat) had been exported to date since 1 July 2008. However, unconfirmed trade reports indicate that French and German wheat has recently been used to replace Black See wheat in export sales.
Russia could harvest 95Mt, or more, of grain and pulses this year, up from its previous forecast of 85Mt (81.8Mt in 2007) according to the Agriculture Ministry. Wheat production (clean weight) could be 54-57Mt (49.4Mt in 2007) and barley production could be 19-20.5Mt (15.7Mt). Russian grain exports could reach 15Mt compared to 13Mt last season, and the Minister said he was optimistic about the quality, although the percentage milling wheat was likely to be less than last year. Statistics show that Russia has already exported 2.15Mt of grain since 1 July (including 1.9Mt of wheat).
Argentina and Australia received welcome rain last week. Their 2008/09 wheat crops are forecast at 13M (15.5Mt in ‘07/08) and 24Mt (13Mt) respectively. Argentine dryness and changing export policy have resulted in farmers planting just 4.5Mha to wheat, the lowest since 1995/96 (USDA). The IGC forecasts Argentine wheat exports in 2008/09 at 9Mt, down from 9.9Mt in 2007/08 and well below the 12Mt exported in 2006/07. Australian wheat exports are seen to nearly double from last season's drought-induced low of 7.5Mt to 14Mt this season, providing production expectations are met.
The Argentine government announced an increase in agricultural subsidies of ARS 1 bn ($330M) on Monday, designed to quell farmer unrest in the country. Producers remain concerned about high taxes and export limits on grains, and are continuing to threaten unrest at the end of August.
The US Dollar has strengthened against other major currencies in recent weeks. The Dollar equalled $1 = EUR 0.678657 on Friday 29 August, compared to $1 = EUR 0.63674 a month earlier. Against the Pound, the Dollar equalled $1 = £0.546318 on Friday, compared to $1 = £0.502865 at the end of July 2008.
