The US Department of Agriculture, in its first forecasts for 2013-14 season, pegged the world wheat harvest at a record 701.10m tonnes, lifted by a sharp recovery in former Soviet Union harvest, and increases in Australia, Canada and the European Union too.

“Production is projected higher in all of the world’s major exporting countries,” the USDA said in its benchmark Wasde report on world crop supply and demand.

Indeed, the Russian harvest was seen rebounding 49% from last year’s drought-affected levels to 56.0m tonnes, narrowly overtaking US production.

The world figure was above forecasts from other commentators, including a 695m-tonne forecast from the United Nations Food& Agriculture Organization on Thursday, and a 680m-tonne estimate from the International Grains Council.

Export competition

With all major world wheat exporting enjoying strong harvests, the US itself faced a drop of nearly 10% in its own shipments, to 25.2m tonnes (925m bushels).

“Large crops for major export competitors limit opportunities for US wheat,” the USDA said.

The impact was exacerbated by strong crops in many importing nations, with Middle Eastern purchases, for instance, expected to drop more than 20%.

“Also affecting global trade prospects are year-to-year production increases for major importers, the Middle East and North Africa, where weather has been favourable for winter crops since seeding last fall,” the USDA said.

Market reaction

World stocks were seen rising by 6.2m tonnes to 186.4m tonnes over 2013-14, with higher feed use in the likes of the European Union and Russia swallowing up much of the extra output.

Nonetheless, US farmers were expected to receive $6.15-7.45 a bushel for their wheat, down from $7.80 a bushel this season and, at the midpoint for the range, signalling a downgrade from the $7.00 a bushel the USDA outlined in initial estimates in February.

On the markets, Chicago wheat for July finished at $7.04 ¼ a bushel in late deals, down 2.7%, extending losses ratcheted up ahead of the report.

Paris wheat for November, which had shown a marginal loss ahead of the Wasde, closed down 1.1% at E208.75 a tonne.

London wheat for November ended down 0.8% at £181.50 a tonne.

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