USDA is projecting a substantial rebound in world wheat production this year. The new estimate for 2011/12 is for production of about 670 million tonnes, up from last year’s poor production of 648 million. While the rebound in world wheat production is sizable, the forecast for the new crop is still 14 million tonnes below the record crop of 684 million tonnes in 2009/10. Here we look at the forecasts for the 2011/12 crop compared to where we were just two years ago.
The big drop in production in 2010/11 was concentrated in the countries of the former Soviet Union where drought sharply lowered yields. Compared to production in 2009, last year’s crop plunged by 20 million tonnes in Russia, 7 million tonnes in Kazakhstan, and 4 million tonnes in Ukraine. Production fell by 3.7 million tonnes in Canada and there was a nearly 3 million tonne decline in the EU. Production was up year-over-year in 2010/11 in Southern Hemisphere countries, especially Argentina and Australia, each up about 4 million tonnes.
At least based on conditions so far, wheat production will bounce back in the areas hard hit by drought last year, but the rebounds are smaller than you might expect. Wheat production in Russia bounces back to 53 million tonnes, up more than 10 million from 2010, but still almost 12 million below the 2009 crop. Production in Kazakhstan is up 5 million tonnes from last year, but still 2 million below 2009 and the crop in Ukraine is recovering only about half of the 4 million tonnes drop from 2009 to 2010. At least at the moment, wheat production in the EU is projected to increase by about 3 million tonnes this year, but the current weather in key producing areas may cause the rebound to be smaller.
The fact that production in the countries of the former Soviet Union does not rebound to 2009 levels is due to both area and yield. Wheat area in all three countries remains below the 2009 levels in 2011. Area in Russia is down 2.7 million hectares from 2009 to 2011, area is down 750,000 hectares in Kazakhstan and area in Ukraine is about 250,000 hectares lower. But USDA’s forecasts of yield are also below both 2009 and the estimated trends. Yields in this part of the world are very erratic and there is no clear, definitive trend. However, if we use yield data from the last decade projected to 2011, the yields are below trend by 10 percent in Russia and 6 percent in Ukraine. Most reports from the region indicate that the crops are in relatively good condition, and a recovery closer to trend yields is possible.
If we use trend yields for these three countries in 2011 and the USDA’s area estimates. Production would be about 7 million tonnes higher than currently projected. Most of that extra production would be available for export, which would tend to reduce potential U.S. exports. Foreign wheat production would total 620 million tonnes, about 4 million below the record high of 2009. With even a little bigger increase in area in key producing areas, the bounce in world wheat production could be even larger.