World Grain - March 2005 - 23

FEATURE: WHEAT FUTURES TREND DOWNWARD

won't be buying much wheat.
CONTRAST WITH A YEAR AGO
This year's downward trend in wheat
futures prices contrasted with the advancing market in the winter of 200304. At that time, prices derived strength
from the strong momentum sustained by
U.S. wheat exports because of droughtreduced crops harvested in 2003 by
other principal exporting countries,
particularly the European Union, Russia
and Ukraine.
But the world wheat supply situation
is much different this year. World wheat
production in 2004-05 was estimated by
the U.S. Department of Agriculture at a
record 620.89 million tonnes, up 68.19
million tonnes, or 12%, from 552.7 million tonnes in the previous year.
The increase from 2003-04 was the
largest year-to-year increase in global
wheat production in records going back
to 1960-61. The previous record year-toyear increase in production was 61.7 million tonnes from 1975-76 to 1976-77.
The record world crop put an end to
a 4-year decline in world wheat stocks.
World wheat ending stocks for 2004-05
were projected at 145.29 million tonnes,
up 14.38 million tonnes from 130.91
million tonnes the previous year.
The E.U. harvested a record crop in
2004 at 136.73 million tonnes, compared
with 106.45 million tonnes the year before. And the former Soviet Union turned
out 85.63 million tonnes of wheat, not a
record, but up 24.22 million tonnes from
61.41 million tonnes in 2003.
The Southern Hemisphere wheat
harvest, with principal producers Australia and Argentina, just concluded.
Argentina harvested 16 million tonnes
of wheat, 1 million tonnes more than
had been projected in December and up
2.5 million tonnes from 2003-04.
Among major wheat exporters, only
Australia and the U.S. produced less
wheat this crop year than last. The
USDA estimated Australian wheat
production this winter at 21.5 million
tonnes, down 4.73 million tonnes from
the record 26.23 million tonnes in 2003-

04. The U.S. produced 58.74 million
tonnes in 2004, compared with 63.81
million the year before.

Many principal wheat importers also
had larger crops in 2004 than during the
WG
year before, including China.

Jay Sjerven is the senior editor markets, for World Grain's sister magazine, Milling & Baking News.
Read this article in full on www.world-grain.com. Go to Archives and enter "Downward price trend
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World Grain - March 2005

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