On the heels of a record crop last year, Australia continues to move old-crop supplies in the first quarter of 2017/18 trade year (July-June). Therefore, Australia wheat exports are forecast to remain comparatively high at 20.0 million tons, despite a smaller production forecast. Even so, Australia is still expected to have ample old-crop supplies when the bulk of its new harvest enters the market around December. The majority of Australia’s exports are destined for Asia, which continues to have strong demand for high-quality wheat.
During the second half of the trade year, some regional demand may be filled by Black Sea supplies, which will be substantially more abundant and competitively priced. For example, as those large crops enter the market, Australia’s dominant share in Indonesia, the second largest global wheat importer, may be threatened. Indonesia prefers Australian wheat, but will purchase Black Sea wheat when there is a large spread in price.
WORLD MARKETS AND TRADE OVERVIEW
For 2017/18, global production is up this month as larger crops are expected for Canada, the European Union, India, Morocco, Russia, and Turkey. Global trade is forecast nearly unchanged from last month, but remains a record. Imports are forecast down for India and Turkey, but higher for Iraq. Exports are projected up for Argentina and Canada, offsetting a reduction for Australia. U.S. trade is unchanged this month. Global ending stocks, already forecast at a record, are further raised this month. The season-average farm price is unchanged at $4.60 per bushel.