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Increased Production but Less Trades Forecasted for Australia

Increased Production but Less Trades Forecasted for Australia


Increased Production but Less Trades Forecasted for Australia

Article by: Hari Yellina

The United States Department of Agriculture (USDA) was always going to take a cautious approach to this month’s World Agricultural Supply and Demand Estimates, given the global uncertainty generated by Russia’s unprovoked invasion of Ukraine (WASDE). Last week, the most recent WASDE report was released. However, any market impact was completely overshadowed by the continuous instability caused by Putin’s war of aggression against Ukraine, which was formerly a vital element of the erstwhile Union of Soviet Socialist Republics, which Putin continues to mislead.

The Ukraine government declared an export restriction on wheat, corn, sunflower oil, oats, rye, barley, sugar, and cattle only hours before the USDA released its March WASDE report, as authorities attempt to ensure they can feed the country. In an attempt to protect its own domestic supply, the Kremlin declared on Friday last week that it would ban wheat, meslin, rye, barley, and corn shipments to the Eurasian Economic Union (EAEU) until August 31. Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia are the current members of the EAEU.

Kazakhstani millers reacted quickly, requesting that the government prohibit wheat exports due to severely low domestic supplies. The nation had a significant export programme into other Central Asian countries, but due to the EAEU export restriction, it can no longer rely on imports from Russia to cover the local shortage until the new crop harvest. The USDA’s March wheat outlook for the marketing year 2021-22 predicts higher output, lower trade, and lower consumption.

Due to a rise in Australian output from 34 million tonnes to 36.3 million tonnes, global production climbed by 2.1 million tonnes. The USDA followed the Australian Bureau of Agricultural and Resource Economics and Sciences’ (ABARES) lead, which raised its output forecast earlier this month. While this is a new high in terms of production, it is still at least 3 million tonnes short of reality. The USDA reduced global wheat exports by 3.58 million tonnes, and the Black Sea Region, unexpectedly, took a hit. The export expectations for Russia and Ukraine were reduced by 3 million tonnes and 4 million tonnes, respectively, to 32 million tonnes and 20 million tonnes.

Nobody knows the full impact of Russia’s invasion on Black Sea exports, but suffice it to say that the longer it continues, the larger and longer the negative impact will be. The reduction in Black Sea exports was somewhat offset by a rise of 2 million tonnes in Australian shipments to a new high of 27.5 million tonnes for the period October 1, 2021, to September 30, 2022. The second substantial increase came from India, which has taken full advantage of the high price situation this season. On the heels of a record crop, which the USDA put at 109.59 million tonnes, that country’s wheat exports are expected to grow by 1.5 million tonnes to a record 8.5 million tonnes.

In fact, the USDA cut its forecast for US exports for this marketing year from 22.05 million tonnes to 21.77 million tonnes. Since the Russian invasion began almost three weeks ago, US export activity has barely blinked, with the most recent export numbers unimpressive considering the global situation. From 145.79 million tonnes to 146.14 million tonnes, global barley production climbed somewhat. Australia was the big mover once again, with the USDA estimating the local harvest at 13.7 million tonnes, up 0.7 million tonnes from February and in line with the latest ABARES estimate.