Advertise with

Dry times
Dry times

USDA to gauge Russia drought impact on world crops


Reuters - Aug 12th 2010, 00:00

The U.S. government is set to forecast a bigger decline in world wheat stocks and a modest drop in global production as Russia's worst drought in over a century halts exports and threatens to whither the next crop. 

After weeks of unrelenting heat forced Moscow to halt wheat exports for the rest of this year and sent prices surging more than 90 percent since June to a two-year high, traders are now looking to the U.S. Agriculture Department's monthly report as the most authoritative gauge of market fundamentals.

It is expected to cut its forecast of the world wheat crop by 11 million tonnes or 1.6 percent from last month's report, according to a Reuters poll of traders. It would be the third downgrade in three months by USDA, which often is cautious about sweeping revisions.

Since May, USDA has trimmed its forecast by 11 million tonnes, to 661 million tonnes for 2010/11. For the first time in three years, the world would eat more wheat than it grows. As a result, reserves would fall to 187 million tonnes, down 3 percent, by the end of 2010/11, USDA estimated in July.

The August report is also the first estimate of U.S. corn and soybean yields and output based on field surveys. Record-large crops are expected but traders are consumed with only one question: how much worse can it get for wheat?


"There is going to be a primary focus on the world balance sheet," said Shawn McCambridge, grains analyst for Prudential Bache Commodities in Chicago.

Traders expect a Russian wheat crop of 46.5 million tonnes, compared to USDA's estimate in July of 53 million tonnes. Russia harvested 61.7 million tonnes in 2009 and exported 17.5 million tonnes. Moscow has banned grain exports from Aug 15-Dec 31. Russia ordinarily is the No 3 wheat exporter.

The drought also is ravaging Ukraine and Kazakhstan and raised fear of a global food crisis like 2007-08 when prices soared and tens of millions of people were unable to buy enough to eat.

Most analysts are skeptical of a looming food crisis. They say wheat shortfalls in Russia will be stauched by surpluses in other major nations after three years of bumper crops.

The United States, the world's biggest wheat exporter, has nearly a four-month supply of wheat. With a hefty crop this year, the surplus could grow to a half-year supply.


"It's a windfall for U.S. wheat farmers. They are going to get a substantial premium on prices they were looking at a month ago," said McMinimy.

On the domestic side, traders said they expected USDA to estimate a record corn crop of 13.279 billion bushels was likely and a near-record 3.357 billion bushels of soybeans. The estimates are based on interviews of farmers, field surveys and satellite imaging among various sources.

The U.S. wheat surplus will drop to 962 million bushels at the end of 2010/11, 12 percent lower than now forecast, due to larger exports, said traders. 

Read more about: global production | farming | crops | drought

Related News

AB InBev rolls out blockchain solution to assist farmers
01/08/2019 - 14:16
Multinational brewing company AB InBev Africa is rolling out a blockchain solution to assist smallholder farmers in its supply chain.

Laying the groundwork for SA's emerging farmers
20/06/2019 - 14:27
Smallholder farmers have called on the government to address issues bedevilling the sector to grow the embattled economy. Specifically, they want Thoko Didiza, minister of the newly reconfigured agriculture, land reform & rural development department, to champion their struggles.

HEINEKEN SA sows seeds for greater economic participation through barley farming
19/06/2019 - 11:17
By 2021, HEINEKEN South Africa intends to reduce their South African malt imports significantly, as the barley that the local HEINEKEN brewery requires will be locally grown, through the company’s Barley Emerging Farmers Economic Development (BE-FED) project.

Zimbabwe's farmers smell the tea and coffee
14/06/2019 - 09:50
Farmers in Zimbabwe’s Eastern Highlands are smelling the tea and coffee.

SA Agribusiness records $660m trade surplus in the first quarter
28/05/2019 - 09:22
Data from the Agricultural Business Chamber (Agbiz), which represents commercial farmers and agribusiness enterprises showed that the sector weathered the tough start to the year and recorded a trade surplus of $660 million (R9.53 billion) in the first quarter, up 11 percent from the same period last year.