(New York) The United States Department of Agriculture (USDA) on Tuesday again lowered its global wheat production estimate for the current season, mainly due to lower-than-expected harvests in Australia, Canada and Argentina, hit by the drought.
After having already reduced its forecasts by 3.3 million tonnes in August, the USDA further reduced them by 6 million tonnes in its latest monthly WASDE report, closely followed by analysts and the agricultural world.
At 787 million tonnes for the 2023-2024 campaign, which goes from one harvest to the next (June to May of the following year), global production of the queen cereal is now expected to decline compared to the 2022 vintage. -23 (790 million tons).
In detail, the USDA sees the volumes harvested in Australia contracting by three million tonnes.
The Australian Department of Agriculture indicated in early September that it expected a “fall” in the production of winter crops, including wheat.
Queensland, as well as northern New South Wales and southern Western Australia, were affected by dry conditions, attributed to the El Nino weather phenomenon.
“It’s not a huge surprise,” commented Gautier Le Molgat, from the Agritel firm. “Australia has been seen as too high for a long time. »
The drought also hit western Canada, a major wheat producing region, particularly the province of Alberta, pushing the USDA to cut its harvest estimate by two million tonnes.
Lack of precipitation also in Argentina, where volumes were reduced by a million tonnes, as well as in the European Union.
“The market was not prepared for year-end inventory levels to be so low,” observed Michael Zuzolo of Global Commodity Analytics and Consulting.
At 258 million tonnes at the end of the campaign, stocks would therefore be at their lowest level in 7 years.
These production declines are only partially offset by an increase of one million tonnes in production in Ukraine.
“Where it is interesting is to see the market shares of the Black Sea (Russia and Ukraine) to the detriment of other exporting countries, which have a little less production,” underlined Gautier Le Molgat.
According to USDA estimates, Russia would represent almost 24% of global wheat exports compared to 16% in 2021-22.
The WASDE report allowed prices to recover on Tuesday, without causing them to take off.
After recording its lowest level since December 2020 earlier in the session, the most traded contract for American winter wheat of the SRW variety (“soft red winter wheat”) ended slightly up 0.51%. , at $5.8750 per bushel (about 27 kg).
However, analysts are questioning the propensity of this report to provide a floor to the price of wheat, which has been in very poor shape for several weeks.
“There is still a lot of wheat in the world,” says Jake Hanley of Teucrium Trading, who mentions, first of all, Russia. “Russian prices are the lowest on the market and as long as they remain low, it prevents prices from rising. »
In addition, “the Russians carry out non-public sales”, over the counter, outside of calls for tenders, which blurs the benchmarks of the industry, according to Michael Zuzolo. “Competition is biased,” penalizing the United States in particular, says the analyst.
In the longer term, prices could benefit from further revisions to production estimates, particularly in Australia, where wheat harvests do not start until October. “Weather conditions continue to affect crops” in Australia, underlines Michael Zuzolo.
Another market in bad shape is that of corn, whose prices suffered on Tuesday from a small increase in the world production estimate, to 1.214 million tonnes for 2023-2024.
The USDA also reduced its soybean harvest forecast by nearly 1.5 million tonnes, to 401.33 million tonnes, which remains a record level.
