Supply estimates are out, but what's in doubt?
By Matt Wallis
21st September, 2023
Last week saw the release of the September USDA WASDE report which published a decline in global wheat supplies, mainly from AUS, Argentina, Canada and the EU. Lurking in the background were questions about the Black Sea grain impacted by the war. Even as the USDA increased its forecast for Ukrainian wheat exports, Russia has damaged that nation’s key export facilities at the same time EU nations have pledged not to allow passage in their direction. Adding further doubt to the numbers is that the Ukrainians have launched several missiles at Russia’s Sevastapol shipping port and suggest more yet to come.
If the WASDE production cuts are realised, this would be the first decline in global wheat production since the 2018/19 season. World ending stocks were also cut by 7 million metric tons to be the tightest since the 2015/16 season.
Australian production was cut 3mmt to 26mmt although still looks heavy given the unfavourable finish to September forecast for WA, QLD and NSW where again no rain of significance and hotter than average temperatures are forecast.
September for the most part hasn’t been all that friendly to the winter croppers with the lack of rainfall now exacerbated by the extreme temperatures forecast into this third week of the month. If it wasn’t for Port Adelaide choking out in straight sets it would be hard to put a smile on most faces!
Another negative input would be the frosts which occurred in the second week of September, having escaped any significant early frosts, here’s hoping the outcome of the latest isn’t as bad as initially feared. Having said that, not much good can come out of a September frost when the mercury in parts dips below -2 for over 5 hours. With a lot of the northern canola in late flowering to early pod fill and wheat starting to flower, the timing was far from ideal.
On a positive note, even with these setbacks the Port Kembla and northern Melbourne zones remain just one rain away from adding some serious dollars to the farmers bottom line. Further south into the Victorian Mallee and Western Districts these growers still have plenty of time on their hands for the season to play its part with the general sentiment today more positive then negative.
To add to the positive sentiment, markets continue to hold firm with the northern feedlots stocked heavily under the dry conditions and presently consuming close to 20k per week of barley and nearly double that of wheat. With new crop barley already trading around $470/mt delivered QLD Jan+ and new crop wheat $10 to $15/mt over barley, the levels of support today in the north are favourable for those with a crop to sell this coming year.
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