WASHINGTON — Wheat futures slumped in the wake of the U.S. Department of Agriculture’s unexpected hike in its forecast for Russian wheat production in 2018. The U.S.D.A. on Sept. 12 forecast Russian wheat production this year at 71 million tonnes, up 3 million tonnes from the August outlook but down 13.99 million tonnes, or 16%, from a record 84.99 million tonnes in 2017.
The U.S.D.A. left unchanged its forecast for Russian wheat exports in 2018-19 at 35 million tonnes, which was down 6.42 million tonnes, or 15%, from a record 41.42 million tonnes in 2017-18. While down sharply from the previous year, Russian wheat exports would be the second largest on record.
The Russian wheat production and exports forecasts surprised the markets, which were expecting the drop in wheat production from a year ago to result in a smaller exportable supply and perhaps government intervention to limit exports.
Twice in recent weeks, wheat futures spiked on news the Russian agriculture ministry would meet with exporters. Twice there were meetings, and twice, following the meetings, the Russian agriculture ministry denied export controls were imminent or even being contemplated with the effect wheat futures resumed their trek lower. The U.S.D.A.’s September outlook for Russian wheat production and exports may quiet the rumor mill, at least for a while.
The U.S.D.A. noted, “Spring wheat in the eastern regions of the country, from the Volga district to Ural and then Siberia, is approaching maturity. Weather has been favorable, and abundant moisture boosted yields further. Winter wheat, which has been almost completely harvested, is also forecast up this month based on both an area increase and the harvest reports that indicated a jump in accumulated yields in the North Caucasus.”
The new wheat production estimate includes 51 million tonnes of winter wheat and 20 million tonnes of spring wheat, and excludes estimated output from Crimea. The all-wheat harvested area was estimated at 26 million hectares (14.35 million hectares winter and 11.65 million hectares spring), against 27.3 million hectares last year.
“The month-to-month increase is based on two factors: a 2% increase in the estimated harvested area for total wheat, and a 3% increase in the estimated winter wheat yield,” the U.S.D.A. said.
“With supplies up 4.7 million tonnes (3 million tonnes in production and 1.7 million tonnes in beginning stocks), Russian ending 2018-19 wheat stocks are projected 2.1 million tonnes higher this month, with a stocks-to-use ratio at 17%,” the U.S.D.A. said. “This is a big improvement from the previous estimate of less than 13%, especially in view of rumors about the introduction of some type of export regulation to alleviate tight supplies.”