The global wheat outlook for 2021-22 is for higher supplies, greater consumption, increased trade and higher ending stocks in the 2021-22 marketing year, according to the latest World Agricultural Supply and Demand Estimates (WASDE).
On the whole, this month's report from the US Department of Agriculture (USDA) provided very little fodder for the wheat bulls, and the futures market was sold down accordingly.
Last Thursday's Chicago Board of Trade (CBOT) session saw the benchmark December 2021 futures contract close down 17.75 cents per bushel (c/bu) at 773.5c/bu, which was equivalent to $396/tonne.
The contract did recover almost half of that loss in Friday's trade, going into the weekend at 782c/bu, or almost $401/t, after the dust quickly settled on the WASDE report.
Traders in the US returned their focus to the potential impact of extremely dry weather across the US Southern Plains on next year's US wheat harvest.
The USDA increased global wheat production by 2.61 million tonnes to 777.89 million tonnes.
Among the world's major exporters, Canadian production was raised by 0.65 million tonnes to 21.65 million tonnes, which was in line with the latest Statistics Canada forecast.
Russian production was also increased by 1 million tonnes to 75.5 million tonnes.
But, despite the increases, production levels for both countries remain well below that of the 2020-21 season.
The European Union wheat crop was bumped up by 0.3 million tonnes to 138.7 million tonnes, and production in China - the world's biggest producer of wheat - was increased by 0.05 million tonnes to 136.95 million tonnes.
How on earth does the USDA think it can accurately forecast Chinese wheat production to the nearest 50,000 tonne?
The USDA increased Australian wheat production from 31.5 million tonnes to 34 million tonnes.
Unsurprisingly, the USDA took its lead from the most recent Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) crop update, which pegged output a tad higher at 34.4 million tonnes.
The recent wet weather may have decreased production in New South Wales, with losses due to flooding and reduced test weight.
But many analysts had the crop bigger than last year's record before the recent deluge.
That is now unlikely. But production of 14 million tonnes is still on the cards, albeit of much lower quality than originally expected.
The big change to Australian wheat production this year is in Western Australia.
Total receivals into the CBH bulk handling system there have already surpassed that of last year, and there is still more than 25 per cent of the harvest to complete - the majority of which will be wheat.
State-wide production north of 13 million tonnes is definitely on the cards if the current yield trend continues.
Opening global wheat stocks for the current season were increased by 1.69 million tonnes.
Australia was the biggest mover, where 0.95 million tonnes was added, but only by tinkering with the 2020-21 numbers.
The USDA decreased Australian wheat exports in the 12 months to September 30 by 0.65 million tonnes to 23.85 million tonnes.
In the same breath it also increased production by 0.3 million tonnes to 33.3 million tonnes - but still well shy of reality.
The other significant global change was an increase of 0.89 million tonnes to the European Union's 2021-22 starting number to 10.93 million tonnes.
Global wheat consumption was increased by just under 2 million tonnes in last week's report to a record 789.35 million tonnes.
Among the movers were the European Union, which was up 0.4 million tonnes to 107.9 million tonnes; Russia up 0.75 million tonnes to 41.75 million tonnes; China down 0.5 million tonnes to 148.5 million tonnes; and the South East Asian nations of Indonesia, Malaysia, Philippines, Thailand, and Vietnam collectively up 0.6 million tonnes to 25.35 million tonnes.
Australian consumption was increased from a ridiculously low 8 million tonnes to an extremely conservative 8.5 million tonnes, especially considering the volume of feed wheat now available on the doorstep of southern Queensland - Australia's biggest feed wheat consumption region.
With cattle on feed numbers reportedly more than 1.1 million head at the end of the September quarter, and increasing, an expanding poultry industry and solid milling industry intake, domestic wheat demand has to be at least 9 million tonnes - but probably closer to 9.5 million tonnes for the 2021-22 season.
The USDA is forecasting worldwide trade in wheat to increase by another 2.29 million tonnes to a record 205.47 million tonnes.
This follows a 3.53 million tonnes hike in global exports in the November WASDE report.
On the importer front, the three big movers were Iran - up 1.5 million tonnes to 7 million tonnes - South Korea - up 0.3 million tonnes to 4.4 million tonnes - and China - down 0.5 million tonnes to 9.5 million tonnes.
From a major exporter perspective, trade out of the United States was decreased by 0.55 million tonnes to 22.86 million tonnes, which was the lowest since 2015-16 when 21.17 million tonnes was exported.
Prior to that, one must scroll back 50 years to 1971 to find a lower US wheat export number.
The USDA cited a slowdown in hard red winter and hard red spring sales.
There was a slight change to European Union wheat exports, up 0.5 million tonnes to 37 million tonnes.
This is at odds with leading analyst Strategie Grains, which recently cut its demand forecast for the European Union, suggesting high prices were urging leading industrial processors to switch to maize.
Ukraine exports were also adjusted 0.2 million tonnes higher to a record 24.2 million tonnes.
But the gong for the biggest mover in global trade in last week's report goes to Australia.
The USDA increased Australian wheat exports by 2 million tonnes to 25.5 million tonnes.
It is a big number but certainly more than achievable.
Australian wheat export shipments in October 2020 were 0.36 million tonnes.
In October 2021, these were 1.48 million tonnes.
In November last year, national wheat exports totaled just over 0.5 million tonnes.
Last week, west coast bulk handler CBH announced an all-grain November shipping record of 1.17 million tonnes - maybe 30 per cent of which would have been wheat.
While the widespread rains have severely disrupted New South Wales and Queensland logistics, the old crop shipping program has continued.
Accordingly, wheat shipments for November may have also been about 1.5 million tonnes.
That would put wheat exports at 3 million tonnes in the first two months of the Australian marketing year, compared to 0.87 million tonnes in 2020-21.
As long as domestic wheat, regardless of quality, remains competitive into Asia in the second half of 2020 against new crop Northern Hemisphere exports, then wheat shipments above 26 million tonnes are feasible in 2021-22.
