The global outlook for 2020/21 wheat is for increased consumption, higher exports, and reduced stocks, compared to last month’s WASDE.
Global wheat production remains at a record high.
Argentina’s wheat crop is forecast at 18Mt, reduced by 1Mt from October’s update, driven by drought and local frost damage.
For soybeans, US production is lowered to 113.5Mt in the US Department of Agriculture's outlook report, with lower yields reported in several major producing states. Ending stocks are down to 5.2mt. It that comes to pass, the AHDB team said this would be the lowest ending soybean stocks for the last five to six years.
“Over successive months we have seen maize and soybeans push to their highest level in November since 2012 and 2013 respectively. This latest WASDE paints a further bullish picture for maize and soybeans,” said the UK analysts, in their review of the latest WASDE.
US maize [corn] production is forecast down 5.5Mt, to 368.5Mt, and US exports are increased by 8.3Mt. “The combination of reduced production and increased exports has pushed US ending stocks to 43.2Mt, 11.8Mt down on October’s WASDE.”
Meanwhile, Ukrainian maize production has also been revised down to 28.5Mt from 36.5Mt, with exports lowered 8Mt on October’s estimates as well, found the AHDB analysis.
“At a global level, ending stocks are now forecast at 291.4Mt, down 9.0Mt on the month.”
China's buying patterns
Chinese maize imports were revised up from 7Mt to 13Mt for 2020/21, but the market had already anticipated this to a degree, said the AHDB team.
“Chinese imports for Jan-Sep 2020 stood at 6.7Mt, when they have an annual Tariff Rate Quota (TRQ) of 7.2Mt. Furthermore, China has already committed to purchasing 10.8Mt of maize for this marketing year (Sep to Aug), with 2.2Mt already exported post-September. This buying above the TRQ level has continued to support grain markets."
The AHDB analysts reckon that, if China’s current buying patterns continue, demand could well exceed the 13Mt forecast in the latest WASDE report.
The USDA Beijing office has pegged it’s 2020/21 outlook for maize imports at 22Mt.
In other maize exporting markets like Argentina and Brazil, recent dry weather has hampered planting progression and germination of crops, they noted.
“One key focus will be the Brazilian Safrinha (second) crop planted between January and March. With the crop following the delayed soybean crop, late planting of this crop could have an impact on yields which could alter the global supply for maize markets.”