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The USDA is poised to deliver its first look at the 2022/23 marketing year balance for wheat in a move that offers the first glimpse of the accrued impact that two years of pandemic, extreme weather, and war have had on farmers’ decisions.
While the update will flesh out and build on some of the US winter wheat expectations, and elaborate on the evidence to date, the big question marks still remain over the Black Sea following Russia’s brutal invasion of Ukraine at the end of February.
While much of Ukraine’s wheat production was already in the ground when the invasion began, the blockade of ports is likely to make whatever the country’s farmers do something of a moot point.
Alongside that, the trade will be looking to the EU, Australia, Canada, and Argentina to see what their supply promise looks like amid ongoing uncertainty, while US futures investors will be looking for an idea of how this year’s US crop is shaping up amid renewed weather worries.
But Russia and Ukraine will likely prove to be the significant unknown, not least because the production angle will be overshadowed by logistical considerations – can whatever is being produced make it to the global market?
Forecasts for Russian wheat production in the 2022/23 marketing year currently stand in a range of between 83.3 and 87.4 million tonnes with favorable weather conditions boosting yield expectations and spring wheat plantings – which contribute around 50% of production – largely stable on last year.
Local analytical agency Sovecon increased its export outlook to 34.1 million tonnes noting the steady pace of exports to date.
For fellow producer, Australia, another barn-busting harvest approaches, with estimates already expecting at least 30 million tonnes of supply, but India remains a conundrum.
Despite marking out its new territory as a wheat exporter, signing deals with Egypt, and supplying cargoes to Vietnam, scorching weather across key producing regions has sounded alarm bells for the upcoming harvest and raised the prospect of an early end to India’s export promise.
Market sources have told Fastmarkets Agricensus that they expect production in the 95-105 million tonnes range – a sizeable volume but well down on the 111 million tonnes announced initially.
The export surplus will be key, with India-based sources pegging their estimates at everything from 7 million tonnes to an ambitious 12 million tonnes.
Even so, production outlooks are expected to be unable to cope with demand and logistical hurdles with analysts polled by Agricensus expecting the new marketing year ending stocks to be markedly down on the current marketing year.
With the April Wasde holding its global wheat stocks at 278 million tonnes, the first stab at new marketing year outlooks could see 6 million tonnes shaved off the outlook – despite a sizeable increase in US production expected.
Even so, that figure masks wide ranges, with the highest outlook for 2022/23 ending stocks coming in at 285 million tonnes, and the lowest at 263 million tonnes.
Zooming into the detail of the US production outlook, analysts expect output to top 1.7 billion bushels (48 million tonnes) in the new marketing year, although again the average masks a range spanning 1.6-1.9 billion bushels.
Of that, among the winter grades, durum wheat output is expected to almost double to 67 million bushels (1.8 million tonnes), with white winter (204 million bushels) and soft red winter (371 million bushels) both marginally higher versus the April old crop outlooks.
However, hard red winter is expected to come in at a lower level than 2021/22, down 66 million bushels at 683 million bushels (18.5 million tonnes), but early guesses at spring wheat plantings expect a sizeable jump in hard red spring – up 144 million bushels to 441 million bushels (12 million tonnes).
Nonetheless, expectations for US new crop ending stocks reflect the same draw reported on global stocks – a decline of 41 million bushels versus the April old crop outlook to 637 million bushels (17.3 million tonnes).
Finally, analysts also revisited their outlooks for the old 2021/22 crop, with ending stock levels buoyed as high prices slow the US export rate.
On average, those polled are looking for the USDA to peg old crop ending stocks at 690 million bushels (18.8 million tonnes) up 12 million bushels.
The USDA releases its May 2022 Wasde report at 1200 Eastern Time on May 12.