US grain futures declined on Tuesday, with wheat futures for March delivery falling 0.3 percent to $6.1975 a bushel. Earlier, the price touched $6.1875, the lowest for a most-active contract since June 2012, amid forecasts for record-high global output.
In its latest World Agricultural Supply and Demand Estimates , the USDA writes that projected U.S. wheat supplies for 2013/14 are raised 10 million bushels this month with higher projected imports. Record production and higher exports for Canada are expected to add to wheat supplies in the United States. Imports are raised 5 million bushels each for Hard Red Spring (HRS) and Soft Red Winter (SRW) wheat. Projected exports for all wheat are unchanged, but minor adjustments are made by class with SRW wheat exports raised 5 million bushels and HRS wheat exports lowered an offsetting amount. Projected ending stocks are raised 10 million bushels. The 2013/14 projected season-average farm price is lowered 10 cents at the midpoint with the range narrowed to $6.65 to $7.15 per bushel as near record world supplies and increased export competition reduce price prospects for U.S. wheat.
Global 2013/14 wheat supplies are raised 5.3 million tons to 887.3 million. This is up 32.1 million tons from last year, but 9.0 million tons below the record supplies of 2011/12. Global 2013/14 production is raised 5.0 million tons with most of the increase for Canada based on the latest Statistics Canada estimate which put production at a record 37.5 million tons. This is up 4.3 million tons from last month’s forecast and 5.4 million tons higher than the previous record in 1990/91 as excellent summer weather and an extended growing season boosted yields to record levels. Production is also raised for Australia, up 1.0 million tons to 26.5 million, slightly above the recent forecast by the Australian Bureau of Agricultural and Resource Economics and Sciences. Production is also raised 0.4 million tons for 2012/13 reflecting recent revisions to last year’s crop by the Australian Bureau of Statistics. Partly offsetting this month’s 2013/14 increases is a small reduction for the European Union as the latest statistical reports lower output for Denmark, but raise output slightly for the Netherlands and France.
Global wheat trade for 2013/14 is raised this month with larger available supplies in key exporter countries and stronger demand expected for several importing countries. Exports are raised 1.5 million tons for Canada, 1.0 million tons for the European Union, 0.5 million tons for Australia, and 0.2 million for Turkey. Imports are raised for Egypt, Bangladesh, Mexico, Azerbaijan, South Korea, Syria, and Turkey. Most of the increase in exportable supplies is from higher production in Canada and Australia; however, in the European Union higher corn imports and feeding are expected to free up wheat to support the strong ongoing pace of sales and shipments. Wheat feeding is increased for Canada, Egypt, and South Korea. Wheat food use is raised for Bangladesh and Syria. Global wheat ending stocks are projected 4.3 million tons higher mostly on increases for Canada and Australia.
“We’re really out of production-risk area,” said Michael Pitts, a commodity sales director at National Australia Bank Ltd. “We’re largely near or moving into dormancy for the Northern Hemisphere wheat crops, so for the next six weeks or so there’s really unlikely to be too much that can hurt.”
Prices may further decline to $6.23 a bushel, Pitts said by phone, without giving a time frame.