World wheat supplies have been upgraded to their highest ever, after the best harvest on record last year, even as Spain joined the list of countries over which weather is threatening 2012 crops.
The US Department of Agriculture, whose data are taken as world benchmarks, raised by 3.1m tonnes to an all-time high of 213.10m tonnes its estimate for global wheat inventories at the close of 2011-12.
The future, which beat the previous record set 12 years ago, reflected improved estimates for already-harvested crops in Kazakhstan, Morocco and, in particular India, where the crop was pegged 900,000 tonnes higher at 86.8m tonnes, reflecting an upgraded yield estimate.
The inventory data was viewed by some analysts as the most striking in the USDA’s crop revisions contained in its monthly Wasde crop report, with Benson Quinn Commodities terming it “the figure that jumped off the page”, and “well above the trade’s estimates”.
“This may result in a knee-jerk reaction lower to start the session,” the Minneapolis-based broker added.
FCStone noted that “wheat has to deal with record world carry-out and should see more wheat working into the feed ration worldwide”.
UN warning
Wheat futures gave up early resilience to succumb to the weight of the higher stocks, and despite cold weather maintaining concerns for European and former Soviet Union crops due for harvest this summer, with temperatures set to be “extremely cold” for the next week, weather service WxRisk.com said.
| Thursday’s closing wheat pricesKansas: $6.92 a bushel, -2.5%
Chicago: $6.46 a bushel, -2.2% Paris: E213.00 a tonne, -1.4% Minneapolis: $8.31 34 a bushel, -1.2% London: £167.45 a tonne, -0.7% Prices for March contracts except in London, where price is for May contract |
“From the Pyrenees to western Russia temperatures will average 10 degrees Celsius or more below normal,” with temperatures in the Balkans and southern Ukraine 6 degrees Celsius “or more” below average.Abdolreza Abbassian, senior grains economist at the United Nations food agency, the Food and Agriculture Organization warned that the poor weather in Europe, and other regions, “remains a cause for concern”.
And USDA staff in Spain cautioned that the country, the European Union’s top wheat importer, had received “significantly low” levels of rainfall since October, which “could result in a serious drought if February and the spring do not bring enough water to the crops”.
The comments came the day after the USDA’s Baghdad bureau flagged the “failure to date of general rains” in Iraq’s northern wheat-growing area, cutting hopes of a sharp drop in imports in 2012-13.
Meanwhile, dry conditions have also raised concerns across much of the key importing region of North Africa, notably in Morocco, besides provoking fears for much of the northern US and Canada, spring wheat country.
Changing trade flows
The USDA edged higher its estimate for farmgate US wheat prices in 2011-12, from $6.95-7.45 a bushel to a range of $7.15-7.45 a bushel, despite the increase in world stocks, citing increased demand for US supplies from importers, notably Mexico and South Korea.
Spain is also believed to have, unusually, turned to US wheat, buying 200,000 tonnes, to replace the Black Sea supplies which have been fallen victim to logistical snarl-ups caused by poor weather.
However, Iraq, one of the world’s top importers, was on Thursday revealed to have, unexpectedly, bought from Australia in its latest tender, continuing a strong start by Australia to 2011-12 exports.
Separately, official Australian data showed wheat shipments soaring 65%, year on year, to top 2m tonnes in December, boosted by the rebound in production in Western Australia, the country’s top grain-growing state.
