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Grain Council Report Confirms More Competitive Global Wheat Market


The 2011-2012 world wheat supply is 3% greater than last year thanks to excellent production and abundant carryover stocks, according to the International Grains Council (IGC). In its monthly report released Nov. 24, IGC’s total global stocks estimate is 879 million metric tons (MMT), 28 MMT more than last year and equal to the current USDA estimate.

IGC estimates world production will be the second largest on record at 683 million metric tons (mmt), despite a downward revision of 1 mmt from last month. Most of the 20-mmt increase, compared to 2010-2011 production, comes from the Black Sea region, which experienced a severe drought in 2010-2011. Production estimates for that region include an additional 16.5 MMT for Russia, pushing its production to 58 mmt, a 28% increase to 21.5 mmt for Ukraine. Kazakhstan had its largest crop in 20 years at 18 mmt – 80% greater than last year.

The U.S. production estimate decreased 200,000 mt from IGC’s estimates last month. That is down 10% on the year to 54.4 mmt, due to lower-than-expected spring wheat production.

IGC estimates world wheat use for 2011-2012 at 679 mmt, a 2.0 mmt increase attributed almost entirely to increased feed wheat use. Large global supplies of low and medium quality wheat, combined with higher-than-average corn prices, have caused many livestock producers to switch from corn, a traditional feed grain, to wheat. Estimated feed use is 126 mmt this year, up 9% from last year and just below a record 130 mmt in 1990-1991. China’s estimated feed wheat use is the single largest increase of any country, up 27% this year to 16.5 mmt.

The reemergence of Black Sea supplies has heated up export competition this year. World exports are up 9 mmt this year to 135 mmt, an upward revision of 2.2 mmt since last month and the second highest of all time. IGC projects Russia will export 20 mmt after exporting just 4 mmt last year. IGC expects Ukraine to more than double last year’s exports of 4 mmt with 9 mmt this year, while it expects Kazakhstan to export 8 mmt, up from 5.6 mmt last year.

IGC says Black Sea exporters will pick up much of the sales they forfeited to the U.S. and European Union (EU) last year. IGC projects U.S. exports for the year down 25% to 26.5 mmt (roughly equal to the five-year average for U.S. wheat exports) and EU exports down 23% to 18.6 mmt.

Looking forward to next year, IGC expects 2012-2013 carryover stocks to reach 200 mmt, a 10-year high. That is up 5 mmt from a year ago but down slightly from last month’s estimate of 202 mmt. Winter wheat seeding in the northern hemisphere is nearly complete with total planted areas projected to rise 1.6% to 225 million hectares (about 540 million acres). While conditions are good in the EU, Russia and parts of the U.S., concerns remain about the ongoing drought in the U.S. southern plains, dry conditions in Ukraine and too much rain in Australia.

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