June 13, 2014
Global wheat supply forecast improves
The projected world wheat supply was revised up in USDA's June WASDE (World Agricultural Supply and Demand Estimates Report) report as higher production is now expected in Europe and China.
The biggest revision for the 2014/15 marketing year was to the outlook for wheatsupplies. Projected wheat output was revised 4.5 million tonnes higher compared to the projections in the May report despite projected US production being revised lower on the back of the low crops progress following the cold winter and dry weather. Larger output from Europe and China will more than offset the lower projected US output.
Wheat prices dropped about US$14/bu. immediately following the publication of the new estimates.
However, looming El Niño weather may change this. Recent El Niño forecast reports indicate that El Niño weather may approach in July, while further suggesting that it most likely will be a weak or moderate El Niño. If El Niño weather develops during the summer, it will affect Australia's large wheat crops, but also crops in Southeast Asia. El Niño weather will most likely push prices up and increase volatility. Price changes depend on how strong it will be.