Russian Wheat Crop Higher
- IKAR increased its forecast for the 2021 Russian wheat crop to 79.8 million tonnes from 78 million previously.
- The forecast was raised due to favourable weather in Russia's southern grain producing regions.
- IKAR increased the new crop Russian wheat export estimate to 39.5 million tonnes, up from 38.5 million last month.
- USDA estimates last year’s crop was 85.4 million tonnes, with exports estimated at 39.0 MMT.
- Russian export prices are down over $30 per tonne, which is greater than a 10% loss in the last four weeks.
FBN’s Take On What It Means: Overall, Northern Hemisphere wheat production conditions have been favorable this month, and this is being reflected by reduced risk premium in the market. However much of the price move appears to be related to the Russian export tax plan that makes it difficult for exporters to make future sales. Unfortunately the US has not benefited from the expected decrease as futures have followed world prices lower.
IGC Forecasts Grain Balance
- International Grains Council (IGC) forecasts world grain production will increase to a record 2.3 billion tonnes in 2021/22.
- Due to higher consumption, ending stocks are projected to be unchanged from last year at 609 million tonnes.
- IGC forecast 2021/22 world corn production at 1.2 billion tonnes, up from 1.14 billion in 2020/21.
- The US crop is projected to increase to 384 million tonnes (15,117 million bushels) from 360 million last year.
- Soybean production for the coming year was forecast at 383 million tonnes, up from 361 million last season.
- The council forecast wheat production at 790 million tonnes, up from the prior season’s 774 million.
- For major exporters, production increases in France and Argentina are offset by a smaller crop in Russia.
FBN’s Take On What It Means: Record production is expected to be met with record consumption, which leaves little room for problems through the growing season. Stocks of corn and especially soybeans may remain fairly tight, which will continue to support higher prices.
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