U.S. government estimates for wheat harvests in Russia, Kazakhstan and the European Union may be too high as adverse weather spurs “widespread production downgrades,” Barclays Plc said.
Dry weather in the Black Sea area and excess rain in western Europe may prompt the U.S. Department of Agriculture to reduce its outlook for both regions, Sudakshina Unnikrishnan, an analyst at Barclays in London, said today in a report. The USDA is scheduled to update its global crop forecasts on Aug. 10.
Wheat prices on the Chicago Board of Trade, the global benchmark, have surged 46 percent since mid-June as the worst U.S. drought since 1956 threatens to slash corn supplies. Both grains are used in livestock feed.
“While market focus has rightly been on the sizable cuts to U.S. corn and soybean supply estimates, the wheat market has also been witnessing a spate of weather woes,” Unnikrishnan said. “We expect global balances for all three markets -- corn, wheat and soybeans -- to tighten further” in the next USDA report, she wrote.
The 27 countries of the EU make up the world’s largest wheat grower, according to the USDA. The agency on July 11 estimated EU wheat production at 133.1 million metric tons, up 1.6 percent from its June forecast.
The USDA this month pegged Russia’s wheat output at 49 million tons, down 7.5 percent from its June estimate, while Kazakhstan’s harvest was seen at 13 million tons, 13 percent lower than projected a month earlier. Russia was the world’s third-biggest wheat exporter in the 2011-12 season ended June 30 after the U.S. and Australia, and Kazakhstan ranked sixth.