GRAINS

Wheat

Despite a forecast modest increase in global demand for wheat in 2010-11, relatively large global wheat supplies (production plus stocks) are expected to place downward pressure on prices. The world wheat indicator price (US hard red winter, fob Gulf) is forecast to fall by 6% in 2010-11 to average US$196 a tonne, following a forecast decline of 23% in 2009-10.

World Current Conditions

World wheat production is forecast to decline in 2010-11, which reflects expected lower plantings, particularly in the United States. Average yields in 2010-11 are expected to be lower, which is also expected to contribute to lower global wheat production. World wheat production is forecast to fall by around 2% in 2010-11, to 656 kt.

In the United States, the total area seeded for the 2010-11 winter wheat crop is reportedly down 14% on 2009-10, with area planted to spring and winter wheat forecast to fall by 2.5 million hectares, to 18 million hectares. A key factor contributing to reduced plantings was the slow 2009 corn and soybean harvest, which considerably delayed and reduced winter wheat plantings in some states.

Another factor expected to lead to a reduced total area seeded of wheat in the United States is the build-up of US wheat stocks. US wheat stocks rose by 24% in 2009 and export volumes have fallen by approximately 28% for the 12 months to January 2010, with US export volumes for 2009-10 expected to be the lowest in 30 years.

China is the world’s biggest producer of wheat and is expected to account for around 17% of global production in 2009-10. Chinese wheat production has risen each year since 2003-04. Despite dry conditions in northern China in early 2009, the 2009-10 production and yields exceeded those of the previous year as a result of sufficient precipitation in late winter and early spring. In 2010-11 the area planted to wheat is forecast to remain largely unchanged at around 23.6 million hectares.

The area sown to wheat in the Black Sea region is forecast to be approximately 2% higher in 2010-11. However, production is forecast to be largely unchanged as yields are expected to be lower.

On average, India plants more area to wheat than any other country. Winter wheat plantings for the 2010-11 crop are reportedly down 1.5% for the period October 2009 to January 2010.

World wheat consumption is forecast to rise in 2010-11 to 650 mt. Wheat for human consumption has been increasing at around 1% each year. Increases in world wheat consumption in the past five years have been driven predominantly by increased demand for livestock feed.

However, in 2010-11, feed wheat consumption is forecast to remain largely unchanged at 102 mt. The biggest consumers of feed wheat are the European Union, consuming 54 mt in 2009-10, and the Russian Federation, at 14 mt. Livestock numbers in the European Union are reported to be down in 2009-10, which is expected to limit growth in the consumption of feed wheat in 2010-11.

• World wheat trade is forecast to be largely unchanged at around 117 mt in 2010-11. In the past two years, the world’s biggest wheat net importers have been Brazil, Indonesia, Iran, Iraq, Japan, Mexico, Nigeria and the Republic of Korea. In aggregate, volumes of wheat imported by these countries are projected to remain steady in 2010-11.
• The world’s major wheat exporters are Australia, Canada, the European Union, the United States and the Russian Federation. In the past, Argentina has also been a big contributor to world wheat exports. However, exports of wheat from Argentina have continued to fall since 2006-07.
• Wheat exports from the United States, the world’s biggest exporter, are estimated to be the lowest in 30 years in 2009-10. US exporters have been struggling, with producers in the Black Sea region benefiting from freight and logistics advantages, particularly to the Middle East.
• World wheat stocks are projected to increase in 2010-11 to 203 mt. This is an increase of 3% on 2009-10 stocks, but 2 mt less than the record in 1999-2000. The stocks to use ratio for 2010-11 is forecast to be 31%. The recent increase in world wheat stocks has arisen from the combination of producers responding to historically high prices and weaker growth in consumption because of the world economic downturn.
• Stocks of wheat held by the major exporters, Australia, Canada, the European Union, the Russian Federation and the United States, have been trending up since 2007-08, as production recovers. (ABARE, Australian Commodities, March 2010)