Wheat surprises with supply from all corners

It is unimaginable how much more the wheat crops globally yield this season than expected. Every month, estimates are adjusted upwards. And these adjustments are significant. Since September, the harvest estimate has been increased by 22 million tons. That is almost as much as the total Dutch wheat production in the past twenty years. The September estimate of the U.S. Department of Agriculture is consistently labeled as a very reliable prediction of the final harvest. Deviations from this in the following months are usually limited. However, this year the adjustments are very substantial. Changes of 8 to 9 million tons per month are not exceptions. Such changes are exceptional and indicate that the crops have performed much better than expected. It is notable that the adjustments mainly occur in the major exporting countries, except in the United States. The estimate for the European Union leads this year. Since the harvest period, the harvest expectation in the EU has been increased by almost 7 million tons to 144 million tons. In Australia, a harvest of 31 million tons was predicted a few months ago, but due to more favorable growing conditions, this estimate has now been increased to 37 million tons. The Canadian harvest is also projected to be 5 million tons higher than predicted this summer, reaching a record high of 40 million tons this year. No nonsenseThe past years have shown that the harvest estimators of the U.S. Department of Agriculture do not deal in nonsense. Market participants also take this into account. Before the USDA presents the monthly new outcomes, a significant number of analysts are asked what they think the department will announce. And if the outcomes are somewhat higher or lower, it has an immediate impact on the market. This year, expectations are rising significantly, and adjustments mainly have a price-depressing effect. Although the adjustments are high, they are no joke at the U.S. Department of Agriculture. Also, numerous analysts did not predict that the harvest would be so much higher than previously thought. Additionally, other leading market players are also dealing with the same issue this year. The International Grain Council (IGC) and the World Food Organization (FAO) also have to increase their figures monthly, and they often do so in the same line. Perhaps the statisticians are working somewhat conservatively, and therefore there is an underestimation of the harvest. When considering the development of wheat production in the long term, it appears that about 10 million tons more wheat is grown in the world each year. This year, the jump is suddenly 37 million tons, and such large jumps are not common. It is the largest increase since 2013-2014. In that year, production suddenly soared by 56 million tons after the previous season saw a harvest that was almost 40 million tons smaller. Seven fat yearsHowever, this season marks a period of seven fat years, during which the wheat production on a global scale has increased year after year. In 2018-2019, production dropped to 730 million tons, and since then, the harvest has increased by over 137 million tons. More wheat has been harvested year after year. In all the numerical chaos, one very stable factor stands out. The USDA maintains the grower price of wheat in the United States at $5 per bushel. That is equivalent to a price of €158 per ton, and that is not something that the growers are particularly happy about, given the cost increases they have faced in recent years. With a price of $5 per bushel, wheat has fallen to its lowest price level since 2019-2020, when the average price paid was $4.72 per bushel.