The United States Department of Agriculture (USDA) released its July WASDE report yesterday (Monday, July 12). Spring wheat in the US in particular is disappointing, but analysts call the report neutral in tone. However, the quotations on the US futures market CBoT rose.
In the WASDE report, the USDA slightly adjusts the expected wheat yields downwards for the 2021 harvest. In the US, an average wheat yield of approximately 3 tons per hectare is expected. That is 0,33 tons per hectare lower than in the June report. This is mainly because spring wheat is in poor to poor condition in the northern prairie states due to drought. Winter wheat yields are actually higher than previously expected.
Top harvest in the EU
Lower wheat production in the US is only partially offset by larger harvests in other parts of the world. Australian wheat production has increased by 1,5 million tonnes to 28,5 million tonnes. The crop is growing well there and developing better than expected. The expected yield has also been adjusted upwards in the EU and the UK: by 1,4 million tonnes to 138,2 and 14,8 million tonnes. Good weather conditions continue in Northern and Central Europe. Spring wheat yields in Russia and Kazakhstan are estimated to be 0,5 and 1 million tons lower respectively due to warm and dry weather.
Global wheat production this season amounts to 792,4 million tons. Although this is 2 million tons lower than in the June report, it is still a record harvest. According to the USDA, the global use of wheat is slightly lower than previously expected at 790,9 million tons. In particular, the demand for wheat for feed and other uses in the US, Russia and Kazakhstan is less than expected. The final stock therefore amounts to 291,7 million tons. That is 5,1 million tons lower than in the May report, but still slightly higher than last season's closing stock.
Supplies of corn and soy are increasing
For corn, the USDA expects a fractionally higher yield and increasing ending stocks. Corn is doing well, especially in the eastern part of the corn belt in the US. The yield for Brazil and Paraguay has been adjusted downwards due to poor weather conditions.
The USDA has hardly changed the production and consumption of soy in the July report compared to the June report. The closing stock has been adjusted upwards: by 1,9 million tons to 94,5 million tons. There is more soy in stock, especially in Brazil and Argentina, which more than compensates for the Chinese stock - which is slightly lower. High soy prices have caused China to import less soy from Latin America. Analysts point out that the weather in August has a major influence on soy yields in the US.