International production of wheat at all-time high

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Mumbai, Nov 28: Global wheat production this year has climbed to a new record high of 985 million metric tonne (mmt) after six straight years of decline. The nearly 70 million tonne jump is the largest year-to-year increase in history.

According to the United States Department of Agriculture (USDA), this has been primarily due to excellent harvests throughout Europe and the former Soviet Union, as well as good North African crops. The more abundant supply has pushed down prices from last year’s levels.

Although world consumption will also reach a record level with higher feed use in Europe as well as steady population growth, it will nevertheless be outstripped by global production. This will allow some stock rebuilding for the first time in 5 years, a large portion of which is expected in the European Union. Intervention stocks, especially in Hungary and Czech Republic, have already begun to swell.

Global Trade
Total world trade is expected to be fairly steady year to year, although import demand will shift substantially from Europe to Asia. China is returning as the world’s largest market and has maintained a very robust early-season import pace from the United States, Australia, and Canada. Substantial purchases from France were also announced recently, the first major purchases in nearly a decade.

Pakistan has also returned as a major wheat import market, purchasing a million tonne earlier this trade year and announcing recently the intention to issue additional tenders for half a million tonne.

Although global import demand remains steady, export competition has intensified due to larger crops in many of the world’s major suppliers. EU-25 and Black Sea exports are recovering from last year’s low, with increased sales into key North African and Middle East markets.

Argentina and Australia have also boosted export volumes, and harvesting is under way in both of these countries. Argentina’s crop is expected to be bigger and a large supply of old crop wheat combined with the impeding harvest has caused prices in the last few months to drop, making Argentine wheat very price attractive on the world market. This has even allowed large sales to Egypt, a market from which Argentina had been largely absent for a number of years.