United States Department of Agriculture (USDA) estimates the Russian wheat harvest to be at 91 million tonnes(MT) for the current season, as stated in its October World Agricultural Supply and Demand Estimates report. The USDA is sticking to its forecast of Russian wheat produced, the forecast is far lower than what others are projecting. That estimate is at odds with official data from the Russian Ministry of Agriculture (MinAg), which is reporting production of 101.8 million tonnes. “The reported yields from MinAg would be about 10 percent higher than the previous record in 2017,” said the USDA.
Andrey Sizov, Russia’s SovEcon analyst, expected the USDA to raise its forecast ‘substantially’ in its October report but that did not happen. He believes that Russian producers harvested 100MT of wheat which includes 1.3MT harvested in Crimea. However, the USDA does not include Crimea in its estimated reports which still leaves behind a huge discrepancy. It is an important difference as the world’s wheat stocks are concentrated amongst the top eight exporters of the commodity who wouldn’t be so snug if the USDA upped its Russian wheat production number by 10MT.
USDA’s Estimates
“Exporter stocks are often evaluated as a measure of supplies available to the global market and are closely correlated with export prices,” the USDA stated. Export stocks for 2022-23 have been forecasted at 55.7MT, the lowest level recorded in a decade which is the major reason why prices are still at elevated levels even though they have reduced from the highs set earlier in the present year.
Neil Townsend, the lead analyst with FarmLink Marketing Solutions, said that: He is inclined to side with the USDA over the Russian ministry of agriculture. “They do a wonderful job. They are good people, and they don’t have a political bias,” he said. Townsend further noted that Russia uses bunker weight or the pre-cleaning weight of the grain and thus its estimate should automatically be adjusted down 5-6% from the mentioned value.
But that said, there are many analysts he knows and trusts who are also indicating that Russia’s crop is closer to 100 million tonnes than 90 million tonnes.
Export Quantity and Price Projections
USDA is forecasting 42 MT of exports from Russia while SovEcon is estimating 43.4MT. Townsend pointed out that while there are big discrepancies in production estimates but the export numbers are close. What concerns Townsend is what could happen to the wheat market if there was a cessation in the war in Ukraine and countries suddenly became more willing to do business with Russia. He stated “That could be very dampening to the world price regime,” “We could see a huge amount of Russian wheat going out.”
The U.S. is forecasted to have the largest stocks among all major exporters. However, those stocks are projected to be at their lowest level since 2007-08. The U.S. season-average farm price is forecast at US$9.20 per bushel, which would shatter the previous record of $7.77 established in 2012-13. “The tighter U.S. supply situation is reflected in the elevated prices for the United States compared to other major suppliers,” said the USDA.
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