USDA Aussie production, export numbers raise eyebrows

USDA Aussie production, export numbers raise eyebrows

Grain
USDA wheat production forecasts for Australia are seen by the industry as being significantly too high given the drought and damaging frosts in many regions.

USDA wheat production forecasts for Australia are seen by the industry as being significantly too high given the drought and damaging frosts in many regions.

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Numbers regarding Australian wheat production and exports in a recent USDA report as seen as wildly optimistic by many local analysts.

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WORLD grain futures have lifted across a range of commodities in the past week on the back of a US Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report that lowered international production.

And there may be further production cuts to come, with the report featuring an extremely generous assessment of the Australian crop.

Australian grain analysts were struggling to see how the WASDE report came up with an Australian wheat crop of 18.5 million tonnes.

Even the highest local estimates are struggling to plug in a number much in excess of 16.5m tonnes.

This figure was also compounded by a USDA estimate of 5.4m tonnes of Aussie carryover, leading it to forecast Australia would forecast 13m tonnes of wheat.

Most local estimates are for exports in the range of 8m tonnes.

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“The industry here is not reacting to the USDA numbers on Australia,” said Nick Crundall, Market Check head of strategy.

“The issue will simply be finding how far off they are – it is one of those things when you’ve got an agency where numbers take a bit of time to put through, it does not react as quickly to a change in conditions like we have had.”

Mr Crundall said when combining the likely shortfall in Australian grain with other spots where the USDA forecasts seemed high, such as Russia, it could mean further tightening of world balance sheets.

“If you pencil in the 7-8m tonnes of exports most people here are using and if the Russian export figure does turn out to be a bit high then all of a sudden there’s another 10m tonnes of wheat that needs to be sourced elsewhere,” Mr Crundall said.

Tobin Gorey, Commonwealth Bank analyst, said the supportive news was not limited to Australia and Russia.

“Crops in Argentina, Australia and Canada are all being revised lower,” Mr Gorey said.

Reports from Argentina are saying initial yields from the first deliveries of the season are below expectations, with drought and frost taking their toll.

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