The prospect of a steep drop in Moroccan wheat output this year looks like providing only modest consolation to wheat bulls.
US Department of Agriculture officials disappointed them on Friday when unveiling a larger-than-expected (or rather, less-small-than-expected) estimate of US winter wheat area.
While the USDA offered a more price supportive dynamic overnight, in cautioning over Morocco’s 2018 harvest prospects, it does not look like the North African country will need be ramping up its imports, and soaking up some of the huge supplies sitting in major exporting countries.
Sure, the outlook for the Moroccan wheat harvest this year is not great, after setbacks from weather extremes.
First came “widespread” rains which delayed sowings, in some cases until late last month, the US Department of Agriculture bureau in Rabat said.
However, dryness remains an issue too, with the bureau noting official data that, at 32% full, “water reserves for agricultural use were at their lowest levels of the last six crop years” as of mid-December.
The outcome is that Morocco looks on course for a sharp drop in wheat production in 2018 from last year’s 6.25m-tonne crop.
“Industry analysts are projecting wheat production to come in at a range of 3.0m-5.5m tonnes.”
But even worse prospects may be needed to see Moroccan wheat buy-ins jump.
Some increase in imports in 2018-19 looks a near-certainty, assuming harvest forecasts are correct, with Morocco seeing only one season in the last 40 (1989-90) when a drop in production did not spark a rise in buy-ins.
However, the increase may not be that big.
The largest increases in Moroccan wheat imports in recent years came last season – when they rose by 17.7% following a particularly steep drop in output, of two-thirds – and in 2010-11, when a more modest drop in output (of 24%) came at a time of low inventories (of 1.9%).
Moroccan wheat inventories will end this season at 5.2m tonnes, on USDA estimates, a stockpile which even if adjusted for growing consumptions to form the key stocks-to-use ratio still implies supplies twice as loose as in 2010-11.
Barley import boost?
Where Morocco could see a sharp pick-up in its imports is in barley, with the potential for a weather depressed harvest this year coming at a time of thin stocks, pegged by the USDA at less than 200,000 tonnes as of the close of 2017-18.
That said, the country has never been a huge importer of barley, with its record buy-ins set 19 years ago, at 951,000 tonnes.
Indeed, while Morocco’s woes may prove some help to grain bulls, they do not look like on their own injecting much vim into world prices.