World wheat crop to rebound, but not set record

World wheat production will rise "significantly" in 2013-14, but will not set a new record, and prove insufficient to foster a recovery in inventories held by major exporters, the US Department of Agriculture said.

USDA officials, expanding on forecasts on Thursday of a 169m-bushel drop to 2.10bn bushels in domestic production in the forthcoming season, said that the decline would not be mirrored in rival exporting countries.

"World wheat production is expected to recover significantly from last year, with all major exporting countries except the US expected to have larger crops," the USDA said in a report to its annual Outlook conference.

The European Union and the major former Soviet Union producers, Kazakhstan, Russia and Ukraine, would "account for the majority of the increase".

'Stocks not expected to expand'

Nonetheless, the world harvest will fall short of the record 696.6m tonnes set in 2011-12, the report said, while failing to put a number on its estimate.

Nor will the harvests prove sufficient to rebuild inventories held by major exporters, which are poised to end this season at their tightest in four years, and are seen as a particularly important pricing signal.

While stocks countries such as China are believed to hold large wheat inventories, they are not available to the market, limiting their impact on prices.

"Despite near-record production projections, exporter ending stocks are not expected to expand as strong global demand and supply are projected to nearly balance," the briefing said.

'Limited scope for stock rebuilding'

The estimates follow a forecast from the International Grains Council that world wheat production will increase to 682m tonnes in 2013-14, but without making a big impact on rebuilding inventories.

"While only a small increase in global consumption is forecast, much of the rise in supply is absorbed, leaving limited scope for stock rebuilding," the IGC said.

The USDA underlined that its estimates showed that domestic stocks "remains far from tight", expected to end 2013-14 at 28.0%.

Its estimates of a drop in the domestic harvest assume a loss of 17% of sown wheat, "due to the continuation of drought this past fall and winter in the hard red winter wheat area".

The average rate of loss of 13%.

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