In its August WASDE report, the USDA has adjusted the world wheat production forecast downward by 3 million tonnes, placing it at 793 million tonnes. Projected global ending stocks for wheat have been revised down by 0.9 million tons to 265.6 million tons, the lowest level since the 2015/16 season.

The U.S. Department of Agriculture (USDA) released its World Agricultural Supply and Demand Estimates (WASDE) report on August 11th, 2023. In a downward shift from the previous month's estimates, the USDA lowered its world grain production forecast for the 2023/24 season by 19 million tonnes to 2.811 billion tonnes.

A CLOSER LOOK AT LOWER SUPPLIES AND ADJUSTED PRODUCTION

The global wheat outlook for the 2023/24 season paints a picture of reduced supplies, lower consumption, decreased trade, and consequently, lower ending stocks. The projected supplies of wheat are set to decline by approximately 4.3 million tons, settling at 1.0617 billion tons. This downward trend in supplies is primarily driven by reduced production forecasts for key wheat-producing nations. The USDA's world wheat production forecast has been adjusted downward by 3 million tonnes, placing it at 793 million tonnes. The EU's wheat production has been lowered by 3.0 million tons to 135.0 million tons, mainly due to reductions in Spain, Lithuania, and Romania. China's production has also faced a downward adjustment of 3.0 million tons, arriving at 137.0 million tons. Canada's wheat production forecast experienced a decrease of 2.0 million tons, landing at 33.0 million tons. This reduction is attributed to worsening drought conditions in the Prairie Provinces. In contrast, Ukraine's wheat production is anticipated to rise by 3.5 million tons to 21.0 million tons. Kazakhstan, too, sees a boost in its wheat production estimate, with an increase of 1.0 million tons to 15.0 million tons.

REDUCED WHEAT CONSUMPTION AND TRADE

Global wheat consumption is predicted to decline by 3.4 million tons, reaching 796.1 million tons. This decrease is mainly attributed to reduced feed and residual use in the EU and a decrease in food, seed, and industrial use in China. Global wheat trade is expected to contract by 2.2 million tons to 209.4 million tons, influenced by lower exports from Canada and the United States. Ukraine’s exports are unchanged at 10.5 million tons with the expiration of the Black Sea Grain Initiative.

Projected global ending stocks for wheat have been revised down by 0.9 million tons to 265.6 million tons, marking the lowest level since the 2015/16 season. This points towards a tighter global wheat market, with potential implications for prices and trade dynamics. 

CORN: LOWER PRODUCTION, TRADE, AND ENDING STOCKS

Shifting the focus to corn, the USDA's August WASDE report presents a slightly less optimistic outlook for global corn production in the 2023/24 season. The estimated corn production stands at 1.213 billion tons, reflecting a 0.9% month-on-month decline. This reduction in production is primarily attributed to unfavorable weather conditions affecting key corn-producing regions, including the EU, the US, China, and Russia. However, these production cuts are somewhat balanced by production increases in Ukraine and Canada.

The European Union's corn production has witnessed a decline primarily due to adverse weather conditions affecting yields in countries such as Germany, Italy, Romania, and Hungary. Similarly, excessive rains in northeast China have led to a 1.1% month-on-month reduction in China's corn production, bringing it down to 277 million tons. On the other hand, Ukraine's corn production is expected to see a significant boost, with estimates showing a 10% increase month-on-month, reaching 27.5 million metric tons.

Turning towards corn trade, both the US and EU corn exports are anticipated to decrease. The US corn exports are revised lower to 52 million tons, while EU corn exports are projected to reach 4.1 million tons. Global corn ending stocks are expected to decline by 1.6 million tons to 255.1 million tons, primarily due to decreases in Russia and China, partially offset by increases in Ukraine and South Africa. 

GLOBAL RICE OUTLOOK

The August USDA WASDE report also offers insights into the global rice market. This market is projected to witness slightly increased supplies, decreased consumption, and raised ending stocks for the 2023/24 season. Rice supplies are set to increase by 0.4 million tons to 694.7 million tons, largely driven by larger beginning stocks in India, partly offset by smaller stocks in Vietnam. World rice production is predicted to be slightly higher month-to-month and significantly larger compared to the previous season, with an increase of 8.1 million tons.

However, global rice exports are expected to decrease by 3.4 million tons to 53.0 million tons. This reduction is primarily attributed to India's ban on milled rice exports. India's exports are projected to decline by 4.0 million tons to 19.0 million tons, partially offset by increases in exports from Pakistan, Brazil, and Vietnam. World rice consumption is forecasted to decrease by 1.0 million tons to 523.0 million tons, influenced by reduced imports by several countries in Asia and Sub-Saharan Africa.

Projected global rice ending stocks are raised by 1.3 million tons to 171.8 million tons. This increase is particularly notable for India, where ending stocks are projected to be 4.0 million tons higher than the previous month. However, this increase is balanced by lower ending stocks for other major exporters, including China, Vietnam, and Pakistan.