While the U.S. Department of Agriculture raised its forecasts for U.S. and Canadian wheat production this year in its August World Agricultural Supply and Demand Estimates report issued Aug. 10, it tightened the outlook for world wheat production and supplies in 2012-13, mostly because of drought-reduced crops in Russia and Kazakhstan. The smaller crops in those countries were expected to shift some world wheat demand to other wheat-exporting nations, including the United States. The short crops also raised worries the Russian government may move to restrict exports as it did in 2010-11, when Russia last experienced a sharp drop in wheat production. The Russian government asserted there would be no such restrictions this year, but markets remained wary.

The U.S.D.A. forecast Russian wheat production this year at 43 million tonnes, down 6 million tonnes from its July projection, down 13 million tonnes from its initial forecast issued in May and down 13.2 million tonnes from Russia’s 2011 outturn of 56.2 million tonnes. It would be the smallest Russian crop since 41.5 million tonnes in 2010 and compares with 52.5 million tonnes as the recent five-year average outturn. The Kazakhstan crop was estimated at 11 million tonnes, down 2 million tonnes from the July projection, down 4 million tonnes from the initial forecast for this year and down 52% from 22.73 million tonnes in 2011. The recent five-year average Kazakhstan wheat outturn was 15.7 million tonnes.

The U.S.D.A. said its lower estimates for Russia and Kazakhstan comes from a lower estimated wheat area in Russia and from yield decreases in both countries. Wheat area in Russia was projected down 1.5 million hectares after a recent Russian government field survey indicated higher-than-expected winterkill in the high-yielding Krasnodar and Stavropol regions in the southern district as well as in Tartarstan and Bashkorstan in the Volga region. In both countries, severe heat and drought in July and early August damaged yield prospects in the primary spring wheat areas.

The smaller crops were expected to result in lower wheat exports from both countries this marketing year. The U.S.D.A. forecast Russian wheat exports in 2012-13 at 8 million tonnes, down 4 million tonnes from the July outlook, down 10 million tonnes from the initial forecast for this year and down 63% from 21.6 million tonnes in 2011-12. Exports would be the lowest since 3.98 million tonnes in 2010-11, when Russia restricted exports.

The U.S.D.A. forecast Kazakhstan’s wheat exports in 2012-13 at 7 million tonnes, down 1.5 million tonnes from the initial forecast for the year and down 3.5 million tonnes from the country’s 2011-12 outgo.
It was largely because of the diminished export prospects for Russia and Kazakhstan that the U.S.D.A. made no change in the U.S. wheat export forecast for 2012-13, at 1.2 billion bus, despite a slower-than-expected pace of export sales seen thus far.