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Tight wheat stocks among China and top exporters constrain global stock growth

19 March 20212 min reading

The global wheat stocks-to-use ratio is anticipated to decline in 2020/21 despite record production, with consumption up more than 10 percent from the prior year on more use in China and India, USDA said.

wheat stocks Global stocks are up only marginally from 2019/20. Approximately half of stocks are held by China, where the government has encouraged sustained large production by guaranteeing a high minimum purchase price. In turn, the government has purchased large volumes of wheat over the past several years, leading to temporary reserves in excess of a year’s supply. However, high domestic corn prices over the past year have induced the sale of substantial quantities of old-crop wheat stocks at government auctions, which is expected to be used for feed. Thus, China’s stocks are forecast to decline for the first time in 8 years as consumption rises by more than 15 percent. Similarly, ending wheat stocks among the top 8 exporters1 are projected to collectively decline. The largest reductions are forecast for the United States and the European Union, which both had smaller crops. Major exporter stocks are usually an indicator of the overall supplies available to the world. However, Russia, the largest wheat exporter, has set both an export quota and an export tax to encourage more wheat to remain within the country to quell high consumer prices. While Russia’s food use is forecast slightly higher, its stocks are forecast to expand, the largest increase in stocks among major exporters. wheat stocks Wheat stocks in India are also forecast to expand. Similar to the situation in China, the government has been supporting producers with high prices for many years which has in turn resulted in high stocks. This year, stocks are expected to grow, despite higher consumption, as the government distributes subsidized wheat to mitigate the economic impact of the pandemic. Ample stocks also allow India to become a significant exporter once again, with 2020/21 exports forecast at 2.5 million tons, more than triple the amount of the previous trade year. USDA
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