The USDA forecast a major decline in US winter wheat production for 2022/23, confirming Gro’s prediction that crop yields would slump because of drought in the southern Plains.
In its May WASDE report, the USDA estimated the winter wheat harvest would decrease by 8% year over year, despite a slight increase in planted acreage. It said the bulk of the yield declines would be in the hard red winter wheat (HRW) crop, which is grown mainly in Kansas, Oklahoma, and Texas.
Gro predicted a double-digit-percentage drop in HRW production as early as March, before the crop emerged from dormancy, based on Gro’s Hard Red Winter Wheat Yield Forecast Model. Dry conditions have persisted in the region, as seen via Gro’s Climate Risk Navigator weighted for winter wheat.
The lower winter wheat forecast pushed the USDA to reduce its estimate for 2022/23 US wheat ending stocks by 6% from last year to 16.8 million tonnes (619 million bushels), the lowest level in nine years. Winter wheat accounts for roughly 75% of total US wheat production, with spring wheat making up the rest.
The US wheat shortfall is bad news for already tight global wheat supplies, which have been squeezed further as the Russia-Ukraine war blocks exports from the Black Sea region.
The USDA expects total world wheat production will decline 0.6% in 2022/23 to 774.8 million tonnes, with a 35% drop in Ukraine accounting for the biggest shortfall. Wheat crops in other countries are suffering from drought, including Morocco, where production is projected to be down 70% to 2.25 million tonnes. As a result, the agency lowered its projection for world wheat ending stocks by 5% to the lowest level in six years.
In addition, the USDA raised its estimates for 2021/22 US soybean export demand, and lowered its ending stocks projection, signaling a tightening of soybean supplies as the new planting season gets underway.
However, Gro forecasts that the USDA is still underestimating the magnitude of US soybean exports, based on Gro’s US soybean export pace model. That will keep prices high and increase pressure for a near-perfect growing season.
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