The US Department of Agriculture USDA has significantly revised expectations for global harvests in its monthly production report. For Europe, the USDA expects an even smaller wheat harvest, while wheat production in Russia, the US and Ukraine is increasing.
In August, the USDA foresees much bigger changes in corn and soybeans in the US itself. Here, the new numbers are too unpredictable as hurricane season is approaching. This can cause significant damage and disappointing harvests in the agricultural midwest. That has not been included in the August report, and leaves a lot of room for speculation.
While the markets are facing strong upward revisions in corn, soybean and wheat crops, the futures markets are reacting rather cautiously immediately after the release of USDA data. Many of the new ratings were apparently expected in the same way by the analysts before - and thus factored in to some extent.
While the EU wheat harvest continues to decline, the USDA increased the harvest in Russia by 1.5 million tons, in Ukraine by 0.5 million tons and for the US by 1.0 million tons. The USDA cuts global wheat production 2020/21 by 3.7 million tons of wheat, thanks to a reduction of 4.0 million tons for the EU and 1.0 million tons each for Kazakhstan and Turkey. These changes are partially offset by an increase in production of 1.5 million tons of wheat for Russia and an increase of 0.5 million tons for Ukraine and 1.0 million tons for the US.
Global soy production is growing by no less than 5 million tons to 320 million tons. Global soybean trade is therefore expected to increase by 3.9 million tons, while exports from Brazil, Argentina and the US will also increase. This is happening in parallel with higher imports from China, Thailand, Egypt and India. Higher global consumption of soybeans, particularly in China, will only increase global closing stocks slightly by 0.3 million tons to 95.4 million soybeans, the USDA expects.
The outlook for the global maize market now assumes higher production, higher trade and increasing inventory. However, maize production in the EU has been reduced by 0.5 million tonnes to 67.8 million tonnes, mainly due to reductions in Romania and France, which are somewhat offset by increases in Poland, Italy and Hungary.
Maize production in Ukraine is expected to be 39.5 million tonnes of maize higher than previously expected, mainly due to the increased acreage. In the EU, Kazakhstan, Argentina and Ukraine, the forecast for barley production is also lowered.