This month’s changes are mainly driven by revisions of the Chinese supply-and-demand estimates for both 2012/13 and 2013/14. Foreign 2013/14 beginning stocks are forecast down 4.7 million tons to 154.9 million, more than offsetting a 1.0-million-ton increase in foreign wheat production. Changes in beginning stocks are made for a number of countries, and for all of them, except for China, the EU, and Pakistan, those changes reflect trade revisions, for both imports and exports for 2012/13.
Chinese beginning stocks for 2013/14 are down 4.6 million tons to 54.2 million, following a revision for the country’s feed and residual use in 2012/13 (see the discussion below). Changes in EU beginning stocks, up 0.3 million tons, mainly reflect Croatia joining the EU. A reduction of beginning stocks in Pakistan follows an increase in domestic consumption in 2012/13 that better maintains stable wheat consumption in line with a growing population.
Foreign wheat use for 2013/14 is projected up 5.7 million tons to 664.2 million this month driven by two major changes: an increase in Chinese feed and residual use, and in Indian food use. Projected increases in feed and residual use of 5.0 million tons to 25.0 million in China for each of 2012/13 and 2013/14 are expected to go more into residual disappearance of wheat than into feeding per se. Last year part of China’s wheat output was affected by vomitoxin, a type of mycotoxin (or toxic fungus) that strongly limits the use of affected wheat for both human consumption and feed, as well as complicates the storage of such wheat. As a result, larger amounts of wheat are expected to have disappeared into residual use in 2012/13. This year, ill-timed rains damaged the crop in the major wheat-producing provinces of Henan, Shandong, and Hubei. Although the damage appears not to have affected the size of the wheat harvest, it substantially affected the quality of grain. And despite relative domestic prices that should motivate lower use of wheat as a substitute for corn in feeding in 2013/14, the damaged wheat is expected to be either priced competitively for feed use (e.g. as a “binder” in aquaculture feedstuff), or to be partly wasted.
Wheat food use is projected up 1.0 million tons to 85.5 million in India, where a generous program for distributing food among the poor is expected to get underway in 2013/14. Other changes in wheat consumption are largely offsetting, and are mostly driven by trade revisions.
World wheat ending stocks for 2013/14 are projected down 8.9 million tons this month to 172.4 million, (while foreign stocks are down 6.6 million to 156.7 million), the lowest in 5 years with the stock-to-use ratio of nearly 25 percent. The largest decline in ending stocks is projected for China, down 4.6 million tons. This change in ending stocks is absorbing a 10-million-ton increase over a 2-year period in feed and residual use, that is only partly offset by higher projected 2013/14 imports. A reduction in stocks is projected for Australia, down 1.0 million tons to 3.0 million, the lowest level since 1998/99, because of sharply increased export expectations. Reduced ending stocks are projected for Canada, down 0.5 million tons to 5.2 million, also with higher projected 2013/14 wheat exports. Higher wheat imports only partly offset the reduced beginning stocks and increased domestic consumption in Pakistan, leading to a 0.8-million-ton reduction in ending stocks.
Small reductions of ending stocks are made for Russia, Syria, and several other countries. Partly offsetting are several small (0.1-0.2 million ton) upward revisions in wheat ending stocks for Brazil, EU (part of the increase is an addition of Croatia), Uruguay, and several other countries with even smaller changes.