November wheat futures went back up to more than £150/t delivered on Thursday after the release of US Department of Agriculture figures reducing estimates for both world wheat and world maize production.
World wheat production is now estimated at 646m tonnes, down 15m tonnes on USDA’s July estimate and considerably lower than the 680m tonnes produced in 2009/10.
The reduction is mainly accounted for by lower Russian production (down 8m tonnes to 45m tonnes compared with 62m tonnes last season), but also by falls in the expected harvests in Ukraine, Kazakhstan and the EU. The drop in Russian production is almost equivalent to Russia’s total grain exports last season.
USDA also reckons that world demand for wheat will fall slightly because higher prices will reduce demand from the animal feed sector.
All of these changes mean that world wheat stocks at the end of the current season are likely to reduce slightly to represent 26% of annual demand.
Maize harvests will also fall slightly to bring production exactly in line with demand, making stocks very important to the market. The maize stock situation is much tighter than that for wheat, at just 16.7%.