Source: U.S. Wheat Associates - Wheat Letter

International Wheat Notes

China's wheat area planted may be the smallest since 1983, according to a report issued this week by the UN Food and Agriculture Organization (FAO). The agency also estimates that China's total wheat production will come in at 83 million metric tons (MMT), about 3.4 percent lower than in 2003.

India, the world's second largest wheat producer after China, will likely have a sharp increase over last year in wheat production, according to the FAO report. Despite production increases, however, media reports from India indicate that their new government has stopped exports. Food and Agriculture Minister Sharad Pawar reportedly will make a decision on whether to resume exports after assessing the south-west monsoon, which lasts until the end of September.

Wheat production in the EU-25 is set to rebound from last year's crop, rising by over 20 MMT to 127.1 MMT, says a report issued by the agricultural experts at the U.S. Mission to the EU. There will be a 6.2 percent increase in area planted to wheat, the report says. The substantial increase will likely result in decreased imports (-2.2 MMT) and higher exports (+5 MMT), but "imports of high quality wheat from U.S. are expected to continue at a pace of around 1.3 MMT." (Western Europe has imported 2.19 MMT of U.S. wheat this marketing year, as of May 20.)

Argentina's farmers are beginning to plant their new wheat crop. The private Buenos Aires Grain Exchange puts wheat area at 6.32 million hectares, up 6.8 percent from 2003/04 when 5.92 million hectares were planted. The U.S. Department of Agriculture forecasts Argentina's new wheat harvest at 14 MMT, down from the crop that was harvested January. Argentina puts 2003/04 output at 14.5 MMT.

The perennial speculation about Australia's rainfall (or lack thereof) is well underway. While moisture is sufficient this year in southwest Australia, the wheat area in southeast Australia needs more rain. Last week AWB was forecasting domestic wheat production in the range of 21-24 MMT based on the normal rainfall predicted for the coming season. Last year's wheat harvest was a record 25.2 MMT.

Areas in western Canada are currently experiencing problems with too much rainfall, which can reduce yields. Even before the rain became a problem, the Canadian government predicted that non-durum wheat production was going to decrease slightly, with an accompanying decline in total exports. Agriculture and Agri-Food Canada also forecasted a 10% rise in durum production, with higher yields more than offsetting lower seeded area. However, the agency projected declining durum exports (to 3.2 MMT), due to increased competition from the EU and lower import demand from North Africa because of increased production.

European Union 25: Wheat production up
by Ann Courtmanche, USW market analyst

USDA projects EU-25 wheat new crop production at more than 126 million metric tons (MMT), according to a new Foreign Agricultural Service report. Production will likely rise 19 percent from the drought-reduced crop of 2003/04, and 7 percent above the previous five-year average.

Most European countries expect increases in production comparing the new crop to last year’s drought-damaged crop. Many countries may also boast increases in production when comparing the new crop to 2002/03. The biggest increases in production will likely be seen in Germany, where winter wheat area is up 8.5 percent, according to the federal statistics office. USDA projects Germany’s production up 20 percent from 2002/03 at 25 MMT for 2004/05. Increases in production above the 2002/03 level are also projected in Belgium-Luxembourg, Denmark, Finland, Hungary, Ireland, the Netherlands, Slovenia and Sweden.

USDA projects production in France at 38 MMT, 24% above 2003/04, but slightly below the 2002/03 production. Spain’s forecasts vary widely. USDA projects Spain production down for 2004/05 at more than 6 MMT, just below the 2003/04 production and 9 percent below 2002/03. Spain’s agricultural ministry reported total wheat area planted at 2.2 million hectares. Soft wheat is down for the third year in a row and durum plantings remain steady, but lower than 2002/03. This forecast is in sharp contract to Spain’s Confederation of Animal Feed Compounders (CESFAC) who project production for 2004/05 at 7.3 MMT, including 4.6 MMT soft wheat and 2.7 MMT durum. The USDA forecasts 2004/05 production levels down in Austria, Estonia, Greece, Italy, Latvia, Poland and Portugal. Production will remain close to the 2002/03 season in the United Kingdom, Cyprus, Lithuania and Malta, says the report.

With the EU’s new crop wheat production up and no significant weather problems impacting the crop to date, weather will be the key factor to watch throughout the summer.