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World corn production (Main producers, million tonnes) 2015/6

2016/7

2017/8

USA

345.5

384.8

357.3/362

China

224.6

219.6

215.0

Brazil

67.0

97.0

95.0

2016/7

2017/8

EU

58.7

60.7

62.0

China

128.9

131

29

40

40.0

India

87

96

Argentina

World wheat output (Main producers, million tonnes USDA June)

Ukraine

23.3

28

28.5

Russia

72.5

69

Russia

13.2

15.3

16.0

USA

62.9

49.6

S Africa

8.2

16.4

12.5

EU

145.5

150.8

31.7

28.4

Mexico

26.0

27.0

25.0

Canada

India

22.6

26.0

25.0

Australia

35

25

Canada

13.6

13.2

14.4

Argentina

17

17.5

World

968

1,067

1032

World

754

739.5

Consumption

965

1055

1062

Consumption

740

735

Ending stock

212

225

194

Carryover stock

256

261

current dry hot weather in key exporting states like Western Australia continues to stress recently-sown crops. Australia, of course, has long been one of the main sources of higher quality food wheat. So is Canada, where the government has just marked down its estimate of 2017 sown wheat acreage by 900,000 acres from an earlier forecast after planting delays from some very mixed spring weather - which continues still. Fortunately for consumers, the spring bread wheat acreage is actually estimated two percent higher than last year’s. However, durum wheat customers will take a hit from a much steeper cut in expected in Canada’s sown acreage for this grain. Argentina’s crop – another key component of the bread wheat export market - was still being sown as we went to press and that, at least, is seen similar to or a little better than to last year’s at 17.5m tonnes. Summing up, the world wheat market faces some trimming of the overall crop production number – but the overall supply, plus stocks, will remain very large. That should help put some sort of anchor on the upward price trend and may held dissuade funds and other speculators from trying to recreate the sort of bull market we saw back in the period 2011-2013, when Russia, Ukraine and several other major producers crops got damaged by drought, heat waves and other weather problems (let alone the conditions seen in 2008/09 when CBOT wheat futures hit a record US$13/bushel or about US$480/tonne!). Higher-grade wheat supplies will likely be down more significantly, especially at the top end of this market, keeping bread/other food wheat price premiums unusually high well into next year. That could help drive speculative interest and result in prices going higher than the +11 percent indicated by the CBOT market a year hence but such a move would more likely be a price spike rather than a sustained rise in the value of ordinary wheat.

96 | August 2017 - Milling and Grain

Another question is how import buyers will react. In the past few weeks of worsening US spring wheat crop conditions, most of the big buyers seem to have kept their nerve, rather than chasing prices up. However, some import tenders are now appearing and if a ‘stocking up’ mentality does start to emerge, that could encourage the funds to get more heavily involved. Certainly the big Middle Eastern buyers who bought wheat heavily in May or June must feel they got some bargains compared with offers ruling now.

AUG 2017 - Milling and Grain magazine