Analysts fear greater supply shortages on the wheat market in 2013/14
Without waiting for the forthcoming USDA report in two days, market experts are already signaling a larger than previously predicted supply shortage for wheat in the 2013/14 campaign. According to previous estimates, the wheat harvest is expected to be just under 700 million tonnes, although pessimistic estimates, such as those of the International Grains Council (IGC), are only around 690 million tonnes.
The weak US wheat harvest in 2013 of only 55 million tons compared to average harvests of 65 million tons has already been taken into account in the previous figures.
However, current knowledge suggests that the wheat harvest in Russia has been overestimated. Even official Russian sources assume a lower harvest of around 5 million tons. Unofficial figures are even higher. Major drought damage is said to have occurred in the Tartastan region, possibly also in the Siberian part.
There is uncertainty regarding the damage to the Chinese wheat harvest, which was heavily infested with fungi due to high humidity and showed considerable sprouting. According to unofficial reports, the damage is said to amount to 10 to 20 million tons. In any case, the damaged wheat is said to be unfit for human consumption. A substitute for bread wheat could be created by importing more than previously intended.
Wheat harvests in the southern hemisphere have so far been extrapolated using multi-year averages. More recently, it has become increasingly apparent that drought and frost have led to damage on a scale that cannot yet be precisely determined. The Australian Department of Agriculture (ABARES) has already reduced the harvest by several million tons. In Western and Eastern Australia, rainfall has returned after a dry phase, but there are still further risks to be overcome before the end of Nov/Dec.
There has been frost damage in Argentina and the southern states of Brazil, the extent of which is estimated at several million tons and cannot yet be precisely quantified.
The slightly higher estimated EU wheat harvest does not have the potential to compensate for possible damage in other growing regions.
According to the current status of the various estimates, the stock-to-use ratio is - largely in agreement - below the long-term average. A further reduction in harvest estimates, which cannot be ruled out, could lead to shortages, particularly in the bread wheat sector. In the case of feed wheat, it is generally possible to compensate for the good average maize supply situation.
The new USDA grain estimate will possibly take into account the first but possibly not all current information, because a processing time for market information must be taken into account.
