Wasde: Wheat outlooks bolstered as Australia redresses Argentina losses

The US Department of Agriculture (USDA)’s November update provided only a light touch on US balances, with supply questions largely put to bed, production held at 1.6 billion bu (45 million mt) and exports unchanged at 775 million bu (21 million mt).

While domestic US demand was pushed slightly higher, the bigger decisions fell to the international market – where well-documented supply problems resulted in big cuts to key producers.

Nonetheless, while one hand took away the other gave back as increases in Australian, UK and Kazakhstan balances overwhelmed the reductions to Argentina – all while Russian production remained anchored at 91 million mt.

Chicago wheat futures had been in the red for much of the day, but the release did little to reverse the trend leaving the March 2023 contract 10 cents lower in the aftermath of the release.

In detail, starting with the world layout, Argentina’s production was pared back by 2 million mt to 15.5 million mt – coming in still well above local estimates, but a sizeable reduction on the 20 million mt estimate debuted back in May.

That was passed directly on to the export outlook, as the agency cut it by 2 million mt to 10 million mt.

Sharper eyes may have also spotted the slight reduction in the Argentinian 2021/22 production figure by 350,000 mt to 22.15 million mt.

Even so, the old crop ending stock estimate, which teed up the opening balance for the 2022/23 marketing year of 276.31 million mt, was increased as the loss of production was redressed by higher 2020/21 ending stocks and a fall in global consumption.

With Argentina reeling under a third consecutive La Nina, the country’s weather-based loss has been Australia’s gain and the USDA added 1.5 million mt to the country’s production outlook to 34.5 million mt, pushing exports up by 1 million mt to 26 million mt.

Russian and Ukrainian figures were held unchanged, with production at 91 million mt and 20.5 million mt respectively, while exports also held at 42 million mt and 11 million mt.

While Europe’s output was lightly trimmed, down 450,000 mt to 134.30 million mt, steady rains through the early part of the UK’s planting added 800,000 mt to the country’s outlook taking it to 15.4 million mt.

The upswing in output was completed by Kazakhstan, chipping in another one million mt of production to take their balance to 14 million mt and exports to 9 million mt.

With 2022/23 beginning stocks coming in 300,000 mt higher and global production raised by close to a million tonnes to 782.7 million mt, overall disappearance only nudged marginally higher – leaving ending stocks to rise slightly to 267.8 million mt.

That ensured pressure stayed on, and futures continued to slide in the session following the report’s release.

For the US itself, the only change was an increase in domestic use, where food use crept up by 7 million bushels (190,000 mt) and contributed to a reduction in year end stocks.