In its latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA provided a look at what is shaping up to be another record year for wheat production, use and stock levels. Worth noting is the fact that USDA expects two traditionally non-exporting countries, China and India, will control more than 61% of the world’s wheat stocks at the end of marketing year 2020/21.
Each month, U.S. Wheat Associates (USW) updates a graphic summary of USDA’s WASDE report that includes global wheat market factors, major country and regional export history and U.S. wheat supply and demand summaries by class.
Here are some notable highlights from USW’s August World Wheat Supply and Demand report:
Global wheat production to hit another record of 766 million metric tons (MMT). USDA expects increases in Australia, Russia, Argentina, Canada and other countries to offset lower production in the European Union and the United States. Global use continues to grow and USDA expects it to reach another record in 2020/21 at 750 MMT.
Global ending stocks are now projected at a record level of 317 MMT. If realized, that volume would be 5% more than 2019/20 and 14% more than the 5-year average. A more in-depth analysis of ending stocks shows the stockpiling of wheat in China and India continued unabated in large part because of government price guarantees that artificially incentivize wheat production and distort world trade. China’s record 2020/21 beginning stocks of 152 MMT could increase through the marketing year to end at 163 MMT and USDA expects India to hold a record level of 30.7 MMT at the end of 2020/21. China will not export any of its stocks. India, however, may start exporting as it has periodically when its subsidized production exceeds its ability to store and distribute it domestically.
U.S. ending stocks are expected to decrease 11% from last year, the lowest in 6 years. The expected drop in U.S. ending stocks from 28.4 MMT in 2019/20 to 25.2 MMT in 2020/21 would be the fourth consecutive year of declining U.S. stocks.
Yet profitability from wheat is not a certainty for U.S. farmers. In fact, USDA indicates a decline in the average price U.S. farmers will receive per bushel, from $4.58/bu ($168/MT) last year to $4.50/bu ($165/MT) in 2020/21.
Partly as a result, all wheat area planted for harvest in 2020 was estimated at almost 44.5 million acres (about 17.9 million hectares), down 2% from 2019 and the lowest since USDA records began in 1919.