23rd Jul 2012, by Agrimoney
Kazakhstan stoked concerns over the comfort of world wheat supplies in making up for heat-depleted hopes for world inventories by cutting the forecast for its grains harvest, following harsh weather.
The country, which last year achieved its best grains crops since the collapse of the former Soviet Union, of 27m tonnes, expects this year to achieve its worst, of 12.8m tonnes. Kazakhstan's grains harvest consists overwhelmingly of spring wheat.
Monday's estimate, a downgrade from a previous forecast of 14m tonnes, follows hot and dry conditions which are expected to cut the average yield below 1 tonne per hectare, and have also lowered harvest hopes in fellow Black Sea producers Russia, Ukraine and Romania.
Muslim Umiryayev, Kazakhstan's deputy agriculture minister, last week termed "alarming" a drought across the country's northern grain belt.
World supply hopes
Nursultan Nazarbayev, the Kazakh president, on Monday said: "Last year we harvested a record crop, but this year won't be an easy one for agriculture," adding that it was "important to control grain prices on the domestic market".
Separately, Agritel noted that the Kazakh government had started "talking about some support for farmers", particularly cattle producers, given the likelihood of higher feed bills caused the weak harvest.
Indeed, with the European Union also on Monday lowering its own hopes for its soft wheat yield to 5.57 tonnes per hectare, has further lowered expectations for world supplies of wheat at a time when US drought has slashed hopes for corn production.
Some corn users, such as livestock feeders and some ethanol plants, can use wheat as an alternative.
'Extreme tightness'
Indeed, "feed grain users around the world will be less likely to differentiate between grain types this year", Commonwealth Bank of Australia analyst Luke Mathews said, saying that "the most bullish factor supporting wheat markets is the extreme tightness in feed grain supplies".
While wheat supplies, forecast by the US Department of Agriculture to end 2012-13 at 182.44m tonnes, may appear adequate, this estimate failed to take account of disappointing Black Sea crops, Mr Mathews said, estimating global year-end stocks at 174m tonnes.
Furthermore, much of this wheat was in China and India, which rarely export.
Inventories in the rest of the world are set to end the season at 21%, down three points year on year, "and only just above the 2008-09 low of 18%", tightness which helped send wheat prices to a record high four years ago.
'Stockpiles depleted'
Separately, Macquarie analyst Chris Gadd said that wheat supplies would not so readily make up for short corn supplies in 2012-13 as they did in 2011-12.
"As the wheat surplus has become limited this season, increased feeding of the grain won't be the saviour of corn," he said.
"Through the 2011-12 season we saw a significant increase in wheat feeding globally as the world responded to high corn prices.
"This won't be the case in the 2012-13 season, as globally stockpiles of low-grade wheat have been depleted."
Kazakhstan stoked concerns over the comfort of world wheat supplies in making up for heat-depleted hopes for world inventories by cutting the forecast for its grains harvest, following harsh weather.
The country, which last year achieved its best grains crops since the collapse of the former Soviet Union, of 27m tonnes, expects this year to achieve its worst, of 12.8m tonnes. Kazakhstan's grains harvest consists overwhelmingly of spring wheat.
Monday's estimate, a downgrade from a previous forecast of 14m tonnes, follows hot and dry conditions which are expected to cut the average yield below 1 tonne per hectare, and have also lowered harvest hopes in fellow Black Sea producers Russia, Ukraine and Romania.
Muslim Umiryayev, Kazakhstan's deputy agriculture minister, last week termed "alarming" a drought across the country's northern grain belt.
World supply hopes
Nursultan Nazarbayev, the Kazakh president, on Monday said: "Last year we harvested a record crop, but this year won't be an easy one for agriculture," adding that it was "important to control grain prices on the domestic market".
Separately, Agritel noted that the Kazakh government had started "talking about some support for farmers", particularly cattle producers, given the likelihood of higher feed bills caused the weak harvest.
Indeed, with the European Union also on Monday lowering its own hopes for its soft wheat yield to 5.57 tonnes per hectare, has further lowered expectations for world supplies of wheat at a time when US drought has slashed hopes for corn production.
Some corn users, such as livestock feeders and some ethanol plants, can use wheat as an alternative.
'Extreme tightness'
Indeed, "feed grain users around the world will be less likely to differentiate between grain types this year", Commonwealth Bank of Australia analyst Luke Mathews said, saying that "the most bullish factor supporting wheat markets is the extreme tightness in feed grain supplies".
While wheat supplies, forecast by the US Department of Agriculture to end 2012-13 at 182.44m tonnes, may appear adequate, this estimate failed to take account of disappointing Black Sea crops, Mr Mathews said, estimating global year-end stocks at 174m tonnes.
Furthermore, much of this wheat was in China and India, which rarely export.
Inventories in the rest of the world are set to end the season at 21%, down three points year on year, "and only just above the 2008-09 low of 18%", tightness which helped send wheat prices to a record high four years ago.
'Stockpiles depleted'
Separately, Macquarie analyst Chris Gadd said that wheat supplies would not so readily make up for short corn supplies in 2012-13 as they did in 2011-12.
"As the wheat surplus has become limited this season, increased feeding of the grain won't be the saviour of corn," he said.
"Through the 2011-12 season we saw a significant increase in wheat feeding globally as the world responded to high corn prices.
"This won't be the case in the 2012-13 season, as globally stockpiles of low-grade wheat have been depleted."
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