In the latest WASDE report, USDA projected lower world wheat production than last season. This lower projection was primarily a result of lower expected wheat production in Ukraine, although partially offset by higher spring wheat production in Canada.
The southern hemisphere represents 6-10% of annual global wheat production, 45-72 MMT over the past 10-years (USDA-PSD). The two dominant producers in the southern hemisphere are Australia and Argentina, contributing 75-82% of total southern hemisphere production. An increase in winter wheat acreage for the two main exporters from the southern hemisphere, Argentina and Australia, would have been expected given soaring prices. On the contrary, USDA projects lower wheat production for the upcoming 2022-23 season in Argentina and Australia (Graph 1) which are both coming from record high production levels in their previous seasons. The effect of La Niña and high production costs have reduced 2022-23 wheat projections, compared to last year’s records.
The lack of moisture in the soil has decreased planting progress in much of the Pampas region of Argentina. Total acreage projections have also decreased below USDA estimates (20 MT) during the last month (Rosario Stock Exchange). High production costs, high breakeven prices, high breakeven yields, and uncertainty in government policies discourage wheat planting in areas with a lack of moisture and higher production risk. According to the Rosario Stock Exchange, 2022-23 winter wheat planting projections decreased to 15.32 million acres (10% less than last season). Wheat estimated production in Argentina could reach 18.5 MT if assuming an average yield of 46 bu/acre.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) projects winter wheat production below last year in Australia. Weather conditions were reported favorable for wheat planting in most of the country. ABARES production projections are similar to the USDA’s (30 MT) and 16.5% lower than last season. High fertilizer prices have decreased yield projections for the next campaign, especially considering last season’s record high production of 36 MT.
High costs and non-favorable weather have primarily offset the influence of high prices to increase wheat production in the southern hemisphere this season, reduce the chances of increasing worldwide ending stocks, and support prices in the short term.
Abello , Francisco Pancho . “Wheat Production of Major Exporters in the Southern Hemisphere“. Southern Ag Today 2(28.1). July 4, 2022. Permalink