World wheat production is raised by less than 1 million metric tons this month to 773.4 million as a larger crop for Kazakhstan more than offsets cuts to Pakistan and Argentina .
Production for Kazakhstan is revised 1.76 million tons higher to 14.26 million based on final official data from the Kazakhstan National Statistics.
Production for Pakistan is lowered by 500,000 tons to 25.2 million tons based on updated data from the Government of Pakistan.
The reduction in production is primarily because of untimely rains at harvest.
Wheat production for Argentina is reduced 300,000 tons to 17.2 million tons based on drought conditions during the earlier grain fill of the crop. This change is close to the updated production figure provided by Argentina’s Ministry of Agriculture. As harvest progressed and moved beyond regions that were most profoundly affected by dryness, yields improved—especially in areas in and around Buenos Aires
World wheat consumption is raised 9.8 million tons to 769.3 million primarily driven by China, India, and Canada.
Feed and residual use in China is up 5 million tons from the January forecast to a record 30 million.
Government auction activity over the last several months shows a strong liquidation of stocks of old-crop wheat, much of which is several years old.
The spread between China’s domestic wheat and corn prices has collapsed in recent months so that wheat now holds a significant price discount to corn .
Food, seed, and industrial use in India is boosted 3.5 million tons to a record 96.5 million.
The Government has been expanding distribution of subsidized food to ease the burden of COVID-19 on its population.
Wheat consumption is believed to have been stronger because of this distribution effort. This increase to consumption, as well as the consequent downward revision to India’s stocks, is supported by updated Government stock estimates.
Feed and residual use for Canada is raised based on larger-than-expected disappearance during the August-December period as reported by Statistics Canada.
World trade for the July/June trade year is fractionally larger at 193.1 million tons as larger forecast exports for the European Union, Kazakhstan, India, and Brazil more than offset lower projected shipments from Argentina.
Larger projected Imports for China and Pakistan more than offset reductions for Indonesia, Saudi Arabia, and Sudan.
Exports for the European Union are raised 500,000 tons to 27 million based on improving competitiveness with Russia and a strong pace of exports in recent weeks.
Stocks for the European Union are lowered with the expectation that exporters will want to take full advantage of strong old-crop pricing before the new crop is harvested.
India is raised 400,000 tons to 2.2 million with a strong pace of shipments in recent months and strong sales to nearby markets including Afghanistan, Bangladesh, and Nepal.
With India’s pricing competitive for export to these markets on rising world wheat prices, it is expected that India will be able to take advantage of possibly diminishing exports from Russia later in the marketing year once its higher export duty is in place.
Exports for Kazakhstan exports are raised 500,000 tons to 7.5 million based on a strong pace of trade to date and a larger crop.
Exports for Brazil are boosted 300,000 tons to 900,000 based on large shipments during December and January. While Brazil relies on imports to meet internal consumption, it also periodically exports some of its own wheat production when the quality does not meet domestic standards for food use. Exports for Moldova are reduced 100,000 tons to 300,000 on a slow pace of shipments to the European Union.
Exports for Russia are unchanged this month despite news that its export duties will be raised. The 25-eruo-per-ton export tax on wheat was scheduled to take effect on February 15, in addition to quantitative restrictions that were imposed.
In January, the Government announced that export taxes would be raised to 50 euros per ton starting March 1. In early February, the Government subsequently announced an additional measure to establish a formula-based export tax that will remain in effect starting June 2.
The tax will be calculated as 70 percent of the difference between the exchange calculation and a base price of $200 (US dollars) per ton.
These higher export taxes are expected to inhibit wheat exports, but it bears mentioning that Russia’s exports tend to be heavily front-loaded in the trade year.
Official exports from July through November total more than 20 million tons, more than half of Russia’s total projected 2020/21 exports.
Weekly shipments since then have proceeded at a rapid pace as exporters sought to move their wheat quickly before being subjected to higher tax rates.
Thus, Russia’s total export projection remains at 39 million tons based on the expectation that a large portion of this trade will take place before the tax increases take effect.
Imports for China are boosted 1 million tons to 10 million, the largest import total in 25 years, based on a fast pace of imports to date and an anticipated continuation of strong demand.
Imports for Pakistan are boosted 500,000 tons to 3 million with the Government recently approving additional duty-free wheat imports to offset low stock levels.
Indonesia imports are lowered 300,000 tons to 10.5 million with the expectations that higher global wheat prices will result in reduced feed use as well as lower stock levels.
Saudi Arabia import is lowered 200,000 to 3 million based on a slow pace of trade.
Similarly, Sudan is lowered 300,000 tons to 2.2 million on trade to date as well as the expectation of diminished imports from Russia once the higher export tax takes effect.
With global production projected up only slightly and consumption raised significantly,
World ending stocks are cut 9 million tons to 304.2 million but remain record high
Stock adjustments for China and India account for nearly all the change this month, but these two nations are still forecast to represent 51 and 9 percent of global stocks.
Stocks held by exporters are often considered a relevant point of analysis as these are the stocks that are more accessible to the world market and thereby more readily affect prices.
To that end, 2020/21 ending stocks held by the top 8 exporters are forecast down only slightly from what was projected last month.
This level of exporter-ending stocks would be the lowest level since 2013/14 ).
Even as global stocks are a record, exporter-held stocks have tightened, which contributed to higher prices this year.
