WASDE: Australian wheat production remains at 26 million tonnes

This month’s WASDE has not changed Australia’s wheat production estimates but there were some surprises. See what the report found here.

Predictions remain: This month’s United States Department of Agriculture’s World Agricultural Supply and Demand Estimates report made no changes to Australia’s 2020-21 outlook.

AUSTRALIAN wheat production estimates remain at 26 million tonnes, new findings from an international report have shown.

This month’s United States Department of Agriculture’s World Agricultural Supply and Demand Estimates report made no changes to Australia’s 2020-21 production outlook compared to last month.

However, it did lower global wheat production 3.7 million tonnes, led by a 4 million tonne reduction for Europe and a 1 million tonne reduction each for Kazakhstan and Turkey.

According to this month’s WASDE, the changes are partially offset by a 1.5 million tonne production increase for Russia and a 1.1 million tonne increase for Brazil.

Global exports are also lowered slightly, with a 1.5 million tonne cut for Europe and an 800,000 tonne reduction for Kazakhstan, both on reduced production.

However, these are offset by a 1.5 million tonne export increase for Russia, based on increased supplies, and a 700,000 tonne increase for the United States.

WADE’s increased corn, soyabean and cotton yield predictions surprised the market, according to Rabobank, after they came in above expectations.

Corn production is forecast at 15.3 billion bushels, up 278 million from the July projection.

According to a Mecardo report, released following the WASDE, corn has lost about 9 per cent of its value compared to a month ago on the back of expectations of the bumper US crop.

“Over history, the price of other grains such as wheat has been seen to move roughly in step with corn, because of their significant ability to be substituted for one another, particularly in feed markets,” Mecardo said.

“Aussie wheat prices have taken a beating on the back of promising rainfall over the last week, with cropping regions from Queensland down to Victoria and especially New South Wales receiving a badly needed drink.

“ASX January ’21 futures have fallen over $20 from $295 at the start of the month, to just $275.”

Meanwhile cotton production for the 2020 crop was raised 3 percent to 18.1 million bales.

World production is 1.3 million bales higher as lower production in Mali and Greece is offset by increases for India, the United States, and Australia, the WASDE found.

The forecast caused a “cotton price slump”, according to a Commonwealth Bank market analyst, which was just about to gain “positive momentum”.

“The fall in price did not strictly kill the positive momentum by the close of trading, but the close is likely just a very minor mercy because it has probably only delayed the momentum kill,” Commonwealth Bank market analyst Tobin Gorey said.

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