US wheat production will fall this year at its fastest in 26
years, fuelling a decline in the world harvest, underpinning hopes of a recovery
in prices, officials said.
The US Department of Agriculture, at its annual Outlook
Forum giving crop prospects for the next marketing year, pegged the US wheat
harvest at 1.84bn bushels, equivalent to 50.0m tonnes.
A harvest at that level would be the lowest in 11 years, and
represent a 20% fall in output year on year – a pace of decline exceeded only
once, in 1991-92, on data going back to the 1960s.
And wheat harvests will fall too in Australia, Canada, Russia
and Ukraine, meaning that "after setting record in four consecutive years,
world wheat production in 2017-18 is expected to decline", despite some
recovery in output expected in the European Union, the top grower.
The US harvest forecast reflected "expectations of both
lower planted area and yields", said the USDA, which on Thursday unveiled an
estimate for domestic sowings for the 2017 harvest of 46.0m acres - the lowest in
more than a century, and a smaller figure than investors had expected.
On yield, officials forecast a retreat of some 10% from last
year's record high of 52.6 bushels per acre, flagging some dryness in the
Although drought in much of the northern Plains has "largely
abated, sections of the hard red winter wheat belt in the central and southern
Plains are experiencing dry conditions.
"In particular, areas of eastern Colorado, western Kansas,
and parts of Oklahoma are experiencing areas of moderate-to-severe drought."
'Supportive for prices'
US exports will fall too in 2017-18, by 50m bushels to 975m
bushels, undermined by "tough international competition", including the EU
which - given the prospect of a recovery in output from last year's weather-affected
levels – can expect "plentiful exports".
Nonetheless, US inventories will fall by 234m bushels to a
three-year low of 905m bushels, allowing the prospect of some increase in
US farmgate prices will average $4.30 a bushel next season,
a rise of 11.7% from the $3.85 a bushel expected for 2016-17.
"The prospect of lower hard red winter wheat acreage… and
relatively tight supplies for hard red spring wheat are supportive for US wheat
prices," the USDA said.