Global Grain Supply and Use to Expand

For 2019/20, global corn production is projected up with larger area in many countries. For key exporters, crops for Argentina and Brazil are projected at record levels, while Ukraine and the United States reach nearrecord crops. Global consumption continues to outpace production driven by higher feed use, particularly for growth in poultry production. Corn for non-feed use also expands, primarily driven by growth in China. With larger consumption, global trade is expected to expand. Global ending stocks are projected down at the world level as a decline in China more than offsets stock-building outside of China.

For 2019/20, global wheat production is forecast up with larger crops in most major exporting countries. Production for Argentina, Australia, Canada, the European Union, Russia, and Ukraine are all forecast higher than the previous year. Food consumption continues to rise due to changing diets and growing incomes, especially in developing regions of Asia and Africa. Feed and residual use is expected to be higher this year on lower prices from large global wheat supplies. With consumption and production up, trade is also forecast higher. Global ending stocks are forecast to grow as well, with China continuing to account for about half of the total.

For 2019/20, global rice production is forecast down with smaller crops in top-producing countries China and India. In contrast, global consumption is forecast to rise, particularly in Sub-Saharan Africa where affordable Asian rice is growing as a staple for a rising population. Global trade is forecast at a near-record level, with India continuing to dominate exports. Notably, while China is the top importer, it has also grown in prominence as a significant exporter. Global stocks are up, with China accounting for 68 percent of the total. The increase in stocks, both globally and in China, is the smallest in a decade.

OVERVIEW FOR 2019/20

Global production is forecast at a record 777 million tons, rebounding 46 million from last year. Production among the top exporting countries is projected up a combined total of 34 million tons as nearly all are expecting larger crops. EU wheat production is forecast up about 17 million tons from last year’s crop. Australia is expected to have a larger crop after experiencing drought in back-to-back years. Russia and Ukraine are also expected to have larger crops based on good winter conditions in both countries. Argentina and Canada are both expected to have larger crops based on expanded area. U.S. production is also forecast up as higher projected yields more than offset a smaller harvested area. Kazakhstan is also expecting a smaller crop based on reduced area.

Outside of the major exporting countries, production is also projected higher. China is up slightly at 132 million tons. India is up marginally to a record 100 million tons, which would be its third straight bumper crop. Pakistan and Turkey are projected up with higher yields in both countries. The world’s largest importer, Egypt, is expected to have a slightly bigger crop due to larger area. Key importers Algeria, Brazil, Ethiopia, and South Africa are all expected to have crops about the same size as last year. Favorable weather has led to expectations of a larger crop in Tunisia. On the other hand, dry conditions in Morocco have cut the expectations for that crop by nearly 3 million tons from the previous year.

Global consumption is projected at a record in 2019/20 but will be surpassed by surging production. This would be the sixth time in 7 years that production has been larger than consumption.

Food, Seed, and Industrial (FSI) consumption makes up the bulk of wheat use and exhibits a steady trend upwards over time. In 2019/20, FSI is forecast at a record with growth seen across nearly all regions. Growth is particularly significant in South Asia and East Asia based on rising food use in India and China. Sub-Saharan Africa also demonstrates strong growth in food use based on rapid population growth and changing tastes and preferences. Consumers continue to move toward a more wheat-based diet with rising incomes and increased urbanization. FSI use in most other regions continues to rise mainly related to population growth.

Feed and residual use, on the other hand, is generally more variable and depends on price relationships with other grains. In 2019/20, feed and residual is forecast to rebound based on larger supplies in major producing countries. While feed and residual often rises based on competitiveness with other grains, it also represents expectations of losses at various stages of the marketing chain. Generally, such losses are greater in years of abundant supply. The European Union represents the largest year-to-year increase in feed and residual with a much larger domestic crop. Feed and residual is also up in China and Ukraine with large supplies in both countries.

Global ending stocks for 2019/20 are projected up about 17 million tons from the previous year to 292 million. China, with stocks projected up about 6 million tons, still accounts for half of global stocks. Those stocks, however, are generally unavailable to the world market.

Stocks in the major exporting countries collectively are projected to rebound 13 percent from a 5-year low. U.S. ending stocks are forecast to grow even larger as global competition will limit the U.S. share of trade. Stocks in the European Union are projected up significantly with greater supplies and strong competition from Russia. Similarly, Australia and Canada will also have larger production and are expected to rebuild stocks. Among the Black Sea exporters, stocks are also up mainly on larger crops in Russia and Ukraine. Kazakhstan is projected to have tighter stocks with small exportable supplies. Stocks in Argentina are forecast up but remain tight with robust exports.

Selected Importers 

Global trade is forecast up 3 percent to a record 184 million tons with larger imports expected across many regions. Sub-Saharan Africa leads import growth as long-term consumption trends continue based on rising population and changing tastes and preferences. The next strongest projected growth is for Southeast Asia, where feed use is expected stronger amid larger global supplies. Furthermore, food use is up due to continued trends in dietary changes.

  • Egypt is unchanged at 12.5 million tons as growth in domestic demand is accounted for by a larger crop.
  • Indonesia is raised 500,000 tons to 11.5 million on growing consumption in both food and feed.
  • Brazil is unchanged at 7.5 million tons with consumption and production both up slightly.
  • Algeria is flat at 7.0 million tons on greater domestic supplies.
  • Philippines is projected unchanged at 7.0 million tons and remains record-large with strong growth in both food and feed use.
  • Bangladesh is up 1.5 million tons to 6.5 million on demand growth.
  • Japan is up 100,000 tons to 5.9 million.
  • European Union is down 300,000 tons to 5.5 million tons on a much larger crop. Imports of high-quality wheat from North America and feed-quality wheat from Ukraine are likely to change little even with large domestic supplies.
  • Mexico is up 200,000 tons to 5.5 million on continued growth in demand for wheatbased products.
  • Turkey is flat at 5.5 million tons. Even though the country is once again harvesting a bumper domestic crop, imports are expected to continue in order to process and re-export flour as part of the Inward Processing Regime (IPR).
  • Nigeria is up 300,000 tons to 5.3 million as population growth and urbanization continue to support higher wheat demand.
  • Morocco is up 800,000 tons to 4.8 million with smaller production.
  • Vietnam is up 500,000 tons to 4.5 million on a growing food and feed industry.
  • South Korea is up 100,000 tons to 4.1 million with expectations of stronger food and feed use.
  • United States is up 50,000 tons to 3.8 million as large Canadian supplies will likely lead to relatively strong imports.
  • China is unchanged at 3.5 million tons based on another large crop and high stock levels. China traditionally imports higher-quality wheat for blending.
  • Iraq is down 1.0 million tons to 3.3 million based on a bumper crop.
  • Yemen is up 100,000 tons to 3.3 million tons with demand rebounding slightly amid larger global supplies.
  • Saudi Arabia is up 200,000 tons to 3.2 million with consumption rising. Imports are still expected to rise, despite a larger 2019/20 crop.
  • Thailand is up 100,000 tons to 3.1 million with rising food use. Thailand maintains its restrictions on feed wheat in order to support domestic corn.
  • Uzbekistan is down 100,000 tons to 3.1 million on a larger crop.
  • Afghanistan is down 700,000 tons to 3.0 million based on a larger domestic crop.
  • Sudan is up 200,000 tons to 2.7 million as wheat demand continues to trend higher.
  • Kenya is up 300,000 tons to 2.4 million on rapid consumption growth, fueled by growing population, rising incomes, and urbanization.
  • Peru is up 50,000 tons to 2.1 million with continued demand growth.
  • Colombia is up 200,000 tons to 2.0 million on rising food use.
  • Israel is up 100,000 tons to 1.9 million with steady growth in food use.
  • Malaysia is up 100,000 tons to 1.8 million on rising food consumption with the popularity of Western-style products.
  • United Arab Emirates is up 400,000 tons to 1.8 million as demand is expected to rebound after smaller 2018/19 imports.
  • South Africa is flat at 1.7 million tons with another year of large production.
  • Ethiopia is up 200,000 tons to 1.7 million based on expectations of stronger demand.
  • Tunisia is down 200,000 tons to 1.6 million on a larger crop.

Selected Exporters

Even with record global demand, competition for market share will be intense based on abundant exporter supplies. Russia’s exports are forecast to be down slightly, but it is expected to remain the world’s leading wheat exporter by a large margin, supported its forecast second-largest crop. The European Union is forecast to be the second-largest exporter based on a bumper crop. Canada is projected to have larger production and another year of strong exports, which will provide direct competition against U.S. wheat in key Latin American and Asian markets. Exports for the United States are projected down significantly as large competitor supplies will make it difficult for U.S. wheat in price-sensitive markets.

  • Russia is down 1.0 million tons 36.0 million as beginning stocks are expected to be tighter than last year. Production is forecast up from the previous year and would be the second-highest on record if realized.
  • The European Union is forecast up 3.0 million tons to 27.0 million. The crop is significantly larger this year, which is expected to be more competitive globally even as domestic wheat feeding is projected larger.
  • Canada is projected at 24.0 million tons with another year of ample supplies. Production is forecast larger but with beginning stocks tighter. Domestic feed use is expected higher with the abundant supplies. Stocks are expected to grow as transportation and logistical challenges would likely make it difficult for Canada to exceed the current export forecast.
  • The United States is forecast down 2.8 million tons to 23.5 million. With most competitors exporting more next year, U.S. wheat exports will likely struggle to reach beyond traditional markets in Latin America and Asia.
  • Ukraine is projected up 2.5 million tons to 19.0 million with a record crop.
  • Argentina is forecast up 1.0 million tons to 14.0 million as domestic production is expected to continue trending larger.
  • Australia is projected up 3.5 million tons to 13.5 million based on a larger crop following back-to-back years of drought.
  • Kazakhstan is forecast down 1.0 million tons to 7.5 million with reduced supplies.
  • Turkey is projected up 200,000 tons to 6.5 million with continued exports of wheat flour. With larger crops across the region, Iran is also expected to have larger flour exports, while Iraq and Syria will likely have smaller imports. Consequently, to reach its export estimate, Turkey will need to boost its flour exports to other regions, such as SubSaharan Africa.
  • Serbia is forecast unchanged at 1.3 million tons as a smaller crop is mostly offset by larger carry-in supplies.
  • China is projected up 100,000 tons to 1.3 million on large supplies.
  • Mexico is forecast up 300,000 tons to 1.0 million with larger supplies.
  • Pakistan is projected down 400,000 tons to 800,000 with the expiration of its export subsidy.

OVERVIEW FOR 2018/19

Global wheat production is lowered slightly with smaller crops in Afghanistan, Bangladesh, the European Union, and Pakistan. Global consumption is down mainly on lower use in the United States. Global trade is down, and U.S. exports are reduced. The U.S. seasonaverage farm price is unchanged at $5.20 per bushel.

WHEAT PRICES

US: Overall, U.S. wheat prices were down during the month of April on a slower-thanexpected pace of exports and reports of good crop conditions in major competing countries. Hard Red Winter (HRW) fell $19/ton to $201, spurred by reports of good U.S. growing conditions and expectations of favorable yields. Soft Red Winter (SRW) dropped $20/ton to $189 in spite of overly wet conditions in many growing areas. Soft White Winter (SWW) declined $12/ton to $230. Hard Red Spring (HRS) plummeted $39 to $222 with expectations of large new-crop supplies in Canada.

Global: Global exporter quotes were mostly down in April on reports of good new-crop conditions in key Northern Hemisphere countries, particularly the European Union and Russia. Black Sea prices dropped $12/ton to $216 and EU prices declined $3/ton to $211. U.S. wheat fell $19/ton to $201 based on a weaker-than-expected pace of shipments and expectations for abundant competitor supplies. Canada dropped the farthest, down $25/ton to $222, based on reports of expanded area and consequently, a very large crop. Australian prices also declined during the month but remain high relative to other exporters.

Month Ending Prices for Major Wheat Exporters

Month Ending

Argentina

Australia

Black Sea

Canada

EU

US

April

$219

$260

$216

$222

$211

$201

March

$220

$270

$228

$247

$214

$220

February

$235

$283

$234

$253

$221

$223

Source: IGC

Note on FOB prices: Argentina- 12.0%, up river; Australia- average of APW; Fremantle, Newcastle, and Port Adelaide; Black Seamilling; Canada- CWRS 13.5% St. Lawrence; EU- France grade 1, Rouen; US- HRW 11.5% Gulf