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Australian wheat at unexpectedly high 22Mt: USDA

Grain Central, August 13, 2018

AUSTRALIA is projected to produce 22 million tonnes (Mt) of wheat from the crop now growing, according to the latest monthly USDA’s World Agricultural Supply and Demand Estimates (WASDE) report.

This is unchanged from its July estimate, and 3Mt above the latest projection of 19Mt from INTL FCStone’s production survey.

USDA’s standing estimate of Australia’s wheat production is in line with the Australian Bureau of Agricultural and Resource Economics and Sciences’ (ABARES) most recent June forecast, which is 3Mt below the mean of the five prior years at 25Mt.

Market participants expect that ongoing dry conditions in eastern Australia will trigger a reduction in ABARES and USDA estimates, in response to drastically reduced production outlooks for much of New South Wales and Queensland.

Cuts in Europe

The August WASDE has left wheat production estimates for Argentina, Canada and  Ukraine unchanged, but has cut its estimate for Europe’s cereal crop now being harvested by 7.5 million tonnes (Mt) to 137.5Mt following two months of hot and dry weather.

The report said cumulative rainfall from mid-June has been well below average for most of the major cropping regions of Europe, including the production powerhouses of France, Germany and the UK, as well as Scandinavia, Ireland and the Baltic states which usually benefit from mild summers (Chart 1).

Chart 1. Europe rainfall percentage of mean. Source: USDA (click to enlarge)

EU corn paddocks initially planted for grain have been cut for silage as regional dryness reduced fodder supplies.

This has been in the face of an EU area planted to corn which was estimated to be down 9 per cent from the five-year average, while yields overall were slightly above average as the Balkan states responded to beneficial rainfall.  Stages of development of the corn crop are shown in Chart 2.

Chart 2. Europe corn crop stage. Source USDA (click to enlarge)

Summer rainfall has been excessive in Romania, and was seen as being likely to severely curtail prospects for its rapeseed crop.

In central Europe, high temperatures and dry conditions were expected to cut rapeseed yields and lead to the EU crop being down 15pc on the five-year average.  (Chart 3).

Chart 3. EU rapeseed yield, black line, t/ha. and production ‘000 tonnes. Source: USDA Foreign Agricultural Service; Office of Global Analysis: International Production Assessment Division. (click to enlarge)

 

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