Both production and demand for wheat have been revised upwards in the WASDE report. The increase in demand is estimated to be higher than the increase in production. The closing stock is therefore adjusted downwards. China in particular is causing the extra demand.
Projected global wheat production has been revised upwards from the January report. The estimates are for 773,4 million tons of wheat for this season. The expected production of Pakistan and Argentina has been adjusted downwards, but this is more than compensated by an expected higher production in Kazakhstan.
The 27 EU member states and the UK are benefiting from the unrest caused by Russia's volatile export policy. The export of wheat from the EU is continuing well and can compete with wheat from Russia in terms of price.
Less availability
The expected demand for wheat has also been revised upwards. At 769,3 million tonnes, expected consumption is 9,8 million tonnes higher than in the January report. China would need 2020 million tons of wheat for animal feed and other applications in the 2021/30 season. This breaks the previous record from the 2012/2013 season, which stood at 26 million tons. The Indian government's wheat stock has been increased by 3,5 million tons to 96,5 million tons. The data implies that more wheat is being used in India than previously expected. This most likely has to do with the food aid that the government is offering to limit the economic damage caused by the corona crisis.
The total wheat stock and production for the 2020/2021 season is estimated at 1.073,5 million tons. That is 0,8 million tons more than in the January report. The closing stock has been reduced by 9 million tons to 304,2 million tons. This means that the stock still remains at a record high. China controls 51% of the global supply. India is in second place with 9%.
Wheat closed $9 lower at just under $0,06 per bushel on the CBOT yesterday (Tuesday, February 6,50). The large closing stock in particular seems to be responsible for the small price correction.
Corn and soy
Corn production has been adjusted slightly upwards this season to 1.438,9 million tons. Higher production is expected, especially from South Africa. The ending stock is estimated at 286,5 million tons. CBOT corn prices fell $0,075 to $5,56 per bushel. The market thus appears to be correcting the somewhat overly high expectations regarding American exports.
The US ending stock of soybeans was adjusted downwards this month by 20 million bushels (approximately 0,5 million tonnes) to 120 million bushels (approximately 3,3 million tonnes). This means that the stock is 77% lower than at the end of the previous season and at the lowest level since 2013/2014. After a long dry period, Brazil is now experiencing rain. This causes the harvest to be delayed. The global ending stock of soybeans is estimated to be 1 million tons lower than in January. The total is 83,4 million tons.
Soybeans, unlike wheat and corn, have become more expensive. A bushel of soy was trading at $9 at the close of the market yesterday, January 14,02. In particular, the predicted imbalance between production and consumption and the low American ending stock seem to play a role in this.