GLOBAL wheat production for 2017/18 is set to reach a record 757 million tonnes (Mt), driven primarily by a larger crop from Russia, according to the latest report from the United States Department of Agriculture (USDA).
The estimated Russian yield of 3.13 tonnes/hectare is 16 per cent above last year’s record, and the estimated harvested area of 27.2 million hectares is the highest since 1982.
This year’s Russian wheat crop benefited from favourable weather in every major production region. Record yields were reported in the Southern, Central, North Caucasus and Volga Districts, and the reported yields in the Siberian and Ural Districts were the second-highest on record.
The USDA estimates Pakistan’s 2017/18 wheat production will also be a record at 26.5Mt.
On the export front, the USDA has lowered its wheat export estimates since last report by 1.3Mt to 182.9Mt, led by reductions for Australia and the European Union that reflect decreased supplies and increased market competition.
Russian exports, in contrast, are raised 1.5Mt to a record 35Mt on increased supplies and competitive prices.
Global wheat use for 2017/18 is lowered fractionally and ending stocks are lowered 0.4Mt to 268Mt, which remain at record highs.
Black Sea competition
In recent years the Black Sea region – Kazakhstan, Russia, and Ukraine – has emerged as a strong player in the global wheat market, and is competing strongly on Australia’s traditional Asian markets.
Over the last five years, Ukraine has gained market share in the Indonesian market, which is Australia’s main customer and the second-largest wheat importer.
In 2012/13, Ukraine supplied just 1pc of the Indonesian wheat imports; today its market share has reached 16pc.
Despite Indonesian preference for Australian wheat for its milling quality, the competitive price for Black Sea wheat has prompted increased purchases to blend with higher-quality milling wheat.
Russia expands exports
With bumper supplies, Russian grain exports overall are forecast to reach record levels in 2017/18.
The USDA says the expansion is primarily driven by record wheat exports, set to exceed both the US and the European Union.
Russia’s corn and barley exports are forecast to be the second-highest on record. Russian barley and wheat exports each account for nearly one-fifth of global trade, while corn exports account for a small share in the world market.
Russia’s ability to export has been assisted by favourable exchange rates and low prices compared to other traditional wheat and barley exporters.
Another key advantage is geographic proximity to rapidly growing markets in the Middle East and North Africa.
The USDA forecasts global coarse grain production for 2017/18 to be 1324.2Mt, with reductions for Russia, Vietnam and the Philippines more than offsetting an increase for Pakistan.
Major global trade changes for 2017/18 include lower corn exports for Russia, partially offset by an increase for Thailand.
Global corn stocks are estimated to be 206.6Mt.
Global oilseed production is projected to be 580.1Mt with recent gains for Brazil and the EU partly offset by lower production for Argentina and the US.
The Brazil soybean crop estimate has been increased since last report by 2Mt to 110Mt, reflecting higher yield estimates in recent government reports, while soybean production for Argentina is reduced 1Mt to 56Mt on a lower area planted to date, particularly in northern Argentina.
Other changes include higher rapeseed production for Ukraine and lower sunflower seed production for Argentina.
Global oilseed ending stocks are projected at 111.2Mt, up 0.4Mt mainly on higher soybean stocks for Brazil and the US and higher canola stocks for Australia.
Partly offsetting this are lower soybean stocks for Argentina and sunflower seed stocks for the EU.
Grain Central: Get our free daily cropping news straight to your inbox – Click here