Global inventory/consumption ratio should grow in 19/20

Cepea, July 18 2019 – Global supply and consumption of wheat in the 2019/20 season should be higher than that in the previous season, which may boost the inventory/consumption ratio to the third highest level in all times, at 37.89%, which would press down quotes in the mid-term.


According to data from the USDA, global wheat supply may total 771.46 million tons, 1.2% less than that previously reported, but 5.5% more than the output from 2018/19, due to the supply increase in the European Union, Australia, Russia and Ukraine.


Consumption, in turn, is forecast to reach 760.15 million tons, 3.2% higher than in 2018/19, but 0.4% down between the reports from June and July. Among the biggest consuming countries, consumption may decrease in Russia, Ukraine, Indonesia and Canada.


Concerning deals, global trades decreased between the reports from June and July, due to weather issues at important producing countries – it is worth to mention that between the 18/19 and the 19/20 crops the number of deals should grow.


This season, global trades may total 182.25 million tons. The countries forecast to import the largest volumes are Bangladesh, Morocco, Nigeria and Saudi Arabia. Exports, in turn, should increase in Ukraine, the European Union, Australia and Argentina, due to the larger domestic surpluses in these places in the current season. In the United States, supply should be higher and prices may drop, contributing for a higher inventory/consumption ratio worldwide.


In Brazil, wheat supply should total 5.49 million tons in the 2019/20 season, according to Conab (National Company for Food Supply), 1.1% higher than in the previous season and 0.27% above the data released in June. This volume added to imports (7.2 million tons) and initial inventories (831.8 thousand tons) may result in a domestic availability of 13.52 million tons.


BRAZILIAN MARKET – Wheat sowing advanced in Brazil in the first fortnight of July, and producers were willing to trade the remaining product. As purchasers in Brazil were focused on receiving the product from the international market, there were more sellers in the spot market. This scenario limited trades and pressed down quotes.


FIELD – Wheat sowing is ending in Paraná and Rio Grande do Sul. Until July 15, there was only 1% of the area to be sown in Paraná, according to Deral/Seab. In Rio Grande do Sul, 4% still needed to be sown, according to Emater/RS.


In Paraná, crops were damaged by the lack of rains and, later, frosts, which concerned growers. According to Deral/Seab, 85% of the crops were in good conditions, 13%, in average conditions, and 2%, in bad conditions.


INTERNATIONAL TRADES – In June, Brazil imported 419.74 thousand tons of wheat, 3.7% more than in May, according to Secex. Of this total, 92.1% came from Argentina, 5%, from Paraguay and the remaining from Uruguay and Lebanon. In the accumulated of the 2018/19 crop-year (August/18 to June/19), the volume imported totaled 6.195 million tons, accounting for 86% of that estimated by Conab (7.2 million tons).




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