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USDA Wheat Outlook


11 April 2014

USDA Wheat Outlook - 11 April 2014USDA Wheat Outlook - 11 April 2014


USDA Wheat Outlook

U.S. Feed and Residual Use Lowered, Raising 2013/14 Ending Stocks

U.S. wheat ending stocks for 2013/14 are projected 25 million bushels higher this month with lower imports more than offset by a reduction in feed and residual use. Imports are projected 5 million bushels lower, based on available shipment data. Feed and residual use is projected 30 million bushels lower, based on disappearance during the December- February and September-November quarters as indicated by the March 1 stocks and revisions to the December 1 stocks, both from the March 31 Grain Stocks report. Projected feed and residual use is lowered 10 million bushels each for hard red winter, hard red spring, and white wheat. The all wheat export projection is unchanged, but small by-class adjustments are made to exports as well as imports. The projected season-average farm price for all wheat is unchanged at $6.75 to $6.95 per bushel.

World wheat carryout for 2013/14 is raised this month. Slightly higher wheat supplies and lower feed and residual consumption (mainly Chinese) leave projected world ending stocks up 2.9 million tons. Wheat export prospects are trimmed for Australia, Canada, India, and Ukraine, but increased for Kazakhstan. Small adjustments are made to U.S. imports for the July-June trade year and the June-May local marketing year.

Domestic Outlook

Prospective Wheat Plantings for 2014 Are Down From 2013 Seedings

All wheat plantings for 2014 in the National Agricultural Statistics Service (NASS) March 31 Prospective Plantings report are estimated at 55.8 million acres, down 1 percent above last year’s seedings. Winter wheat plantings for 2014 are estimated at 42.0 million acres, 3 percent below last year’s seedings, but up slightly from the previous estimate in the NASS January 10 Winter Wheat Seedings report.

Of the 2014 total winter wheat acreage, 30.2 million acres are hard red winter (HRW), 0.7 million acres above last year. During the winter months, HRW conditions declined in the Great Plains due to adverse weather conditions and exposure to cold temperatures due to lack of snow cover in some areas.

Soft red winter (SRW) wheat seeded area 2014 is 8.4 million acres, down 1.6 million acres from last year’s seedings.

Soft white winter wheat planted area is 2.967 million acres for 2014, down from 3.134 million acres in 2013. Hard white winter wheat planted area is 0.378 million acres for 2014, up slightly from 0.365 million acres in 2013.

Spring wheat plantings for 2014, including durum, are estimated at 13.8 million acres, 0.7 million acres above last year. Other spring wheat growers intend to plant 12.0 million acres this year, up 0.4 million acres from 2012 seedings. Of this other spring total, 11.3 million acres are hard red spring (HRS) wheat. The HRS planted acreage is up from 10.9 million acres in 2013.

Area seeded to durum wheat for 2014 is expected to total 1.799 million acres, up from 1.470 million acres in 2013. Large increases are expected in Montana and North Dakota.

Soft white spring wheat planted area is expected to be 0.550 million acres for 2014, up from 0.512 million acres in 2013. Hard white spring wheat planted area is expected to be 0.140 million acres for 2014, down from 0.146 million acres in 2013.

Projected 2013/14 Supplies Down Slightly This Month

Projected total 2013/14 supplies, at 3,013 million bushels, are down 5 million bushels this month. Total projected imports are down 5 million bushels based on pace. HRW imports are up 2 million bushels, while durum and SRW imports are down 4 million bushels and 3 million bushels, respectively.

Projected 2013/14 Supplies Down From 2012/13

Total U.S. wheat supply for 2013/14 is down 118 million bushels from 2012/13 as reduced production and lower beginning stocks more than offset higher imports. Supplies of HRW and durum are down year to year, while supplies are up for the other classes. HRW supplies decreased the most, as smaller production and imports more than offset higher beginning stocks. HRW production is down from 2012 due partially to the smaller planted area for the 2013 crop, and both a higher abandonment rate and a lower yield because of severe drought and spring freezedamage. SRW supplies were up the most year to year as higher production and imports more than offset lower beginning stocks. SRW production is higher than 2012 because of larger harvested area and higher yield.

Projected Total 2013/14 Use Is Down This Month, Raising Ending Stocks

Projected 2013/14 total U.S. wheat use, at 2,429 million bushels, is down 30 million bushels this month. Projected feed and residual use is lowered 30 million bushels to 220 million bushels following release of the National Agricultural Statistics Service’s March 31 Grain Stocks report. Feed and residual use for HRW, HRS, and white wheat are each lowered 10 million bushels. There are minor by-class changes in seed use.

Total projected exports are unchanged this month. There are offsetting class export changes based on pace. Projected HRS exports are lowered 5 million bushels, and white wheat exports are raised 5 million bushels.

Projected 2013/14 Use Is Up From 2012/13

Projected total use for 2013/14 is up 15 million bushels million bushels from 2012/13 as higher exports more than offset lower domestic use. Domestic use is expected to be down 152 million bushels from 2012/13 while exports are projected up 168 million bushels. Domestic use is down because feed and residual use is expected to fall 168 million bushels from 2012/13. Total food use is expected 15 million bushels higher than in 2012/13, with population growth and an expected lower flour extraction rate.

Projected 2013/14 Total Ending Stocks Down From March and Down From 2012/13

The projected 2013/14 U.S. total wheat ending stocks, at 583 million bushels, are up 25 million bushels from March as the 30-million-bushel cut in feed and residual use is partially offset by the 5-million-bushel cut in imports. These projected ending stocks are down 135 million bushels from 2012/13.

Total ending stocks for 2013/14 are expected to decrease by 19 percent from 2012/13. Stocks of HRW, white, and durum are expected down 44 percent, 14 percent, and 4 percent, respectively. Stocks of HRS and SRW are expected up 15 percent and 1 percent, respectively.

2013/14 Price Range Projection Unchanged From March

The 2013/14 season-average farm price range of $6.75 to $6.95 per bushel is unchanged from last month. The 2013/14 range is down from the record $7.77 per bushel reported for 2012/13.

Winter Wheat Conditions Are Mixed

The NASS April 8 Crop Progress report indicated that 35 percent of the winter wheat crop is rated good to excellent and 29 percent was rated poor to very poor. Ayear ago at this time, 36 percent of the winter wheat crop was rated good to excellent, and 30 percent was rated poor to very poor. Drought conditions continue to be a problem on the Central and Southern Plains.

Conditions are poor in Texas and worse than a year ago. This year, 61 percent of the Texas crop is rated poor to very poor, compared with 51 percent for the 2013 crop. Oklahoma is also worse. This year, 48 percent of the Oklahoma crop is rated poor to very poor, compared with 33 percent for the 2013 crop.The crop conditions for Kansas, Nebraska, Colorado and South Dakota are better year to year. Respectively, the shares of each State’s 2014 and 2013 crops that rated poor to very poor are: Kansas, 27 percent to 31 percent; Nebraska, 13 percent to 51 percent; Colorado, 33 percent to 46 percent; and South Dakota, 3 percent to 75 percent. For these six HRW-producing States, the average share of winter wheat crops rated good to excellent is 36 percent, compared with 17 percent a year ago at this time.

The SRW-producing States are generally in good condition this year compared to the winter wheat crop in the Plains, but conditions are worse than a year ago in most of these States. The SRW-producing States’ 2014 crop averages 53 percent rated good to excellent and 10 percent poor to very poor. The SRW-producing States’ crop at this time last year averaged 66 percent rated good to excellent, and 5 percent poor to very poor.

Conditions for the 2014 crop are also good in the Pacific Northwest (PNW), but conditions are down from last year in Oregon and Washington. Winter wheat in the PNW States, which also include Idaho, average 54 percent rated good to excellent and 8 percent poor to very poor. Last year, these States averaged 68 percent good to excellent and 2 percent poor to very poor.

USDA Wheat Baseline, 2014-23

Each year, USDA updates its 10-year projections of supply and utilization for major field crops grown in the United States, including wheat. A detailed discussion summarizing the historical forces determining U.S. wheat supply and utilization, along with the analysis underlying the wheat projections for 2014-23, is available at http://www.ers.usda.gov/topics/crops/wheat/usda-wheat-baseline,-2014-23.aspx.

International Outlook

Foreign Wheat Supplies Up Slightly

World wheat production for 2013/14 is projected down just 0.2 million tons to 712.5 million this month, while global supplies slightly increase by 0.5 million tons, with 0.7-million-ton higher world beginning stocks. With just a few months to go until the end of a July-June international trade year, supply and demand wheat balances have been revised for numerous countries, although the majority of adjustments are fairly small.

The 2013/14 wheat harvests in most countries were completed long ago, and this month’s production revisions reflect new information received mostly from government agencies. There are a number of partly offsetting small revisions in wheat production, the largest being 0.1-million-ton reductions in each of Tunisia, Sudan, and Azerbaijan. Changes of less than 0.1 million tons in wheat production are made for Kenya, Japan,, Russia, Israel, Nigeria, Burma , Eritrea, Mexico, South Africa, South Korea, Colombia, and Chad.

Beginning stocks for 2013/14 are up 0.7 million tons this month. Stocks are revised up in the European Union and Ukraine by 0.5 and 0.4 million tons, respectively, based on reductions in estimated 2012/13 wheat consumption. Small revisions (under 0.2 million tons) in beginning stocks are made for a number of other countries.

Foreign wheat consumption is projected down 1.6 million tons to 668.3 million this month, while global domestic consumption is down 2.4 million tons, with a 0.8 million ton reduction for the United States. The main reduction is for China wheat feed and residual use, down 2.0 million tons to 23.0 million. Overall weakness in meat demand (and, therefore, grains for feeding) in China has been coupled with a falling share of wheat in feeding, as relative domestic prices favor corn and sorghum. Wheat consumption is also down 0.3 million tons in the European Union, where a 1.3-milllion-ton decline in food, seed, and industrial (FSI) use is partly offset by a 1.0-million-ton increase in wheat feeding. The reduction in FSI use reflects a switch away from wheat in biofuel production, mainly to imported corn from Ukraine and South America. Wheat FSI consumption is also projected down in South Africa by 0.3 million tons and down in Algeria and Indonesia by 0.2 million tons each. There are smaller reductions in a number of other countries.

The decline in wheat consumption is partly offset by increased wheat consumption in India, Canada, and Nigeria. In India, FSI use is adjusted up 0.5 million, given lower Indian projected wheat exports. In Nigeria, a 0.2-million-ton increase in FSI use reflects higher projected wheat imports, while a 0.2-million-ton increase in feed and residual use in Canada comes from lower projected exports. Other changes in wheat consumption are 0.1 million tons or smaller and largely offsetting.

Foreign wheat ending stocks for 2013/14 are projected up 2.2 million tons to 170.8 million this month, while global wheat stocks are up 2.9 million tons because of higher expected U.S. stocks. Ending stocks are raised 0.9 million tons for Ukraine, reflecting higher estimated beginning stocks and lower projected exports. In the European Union, higher beginning stocks and lower consumption also drive up ending wheat stocks by 0.6 million tons. For Australia, stocks are up 0.5 milliontons due to lower projected exports, while for China the 0.5-million-ton increase in ending stocks is the result of a reduction in wheat use that is only partly offset by lower projected wheat imports. Stocks are also up in the range of 0.2-0.3 million tons in Brazil, Canada, Russia, Indonesia, Algeria, and Japan. The largest reduction for wheat ending stocks is in Kazakhstan, down 1.0 million tons, reflecting higher projected exports. Ending wheat stocks are also down 0.4 millions in Pakistan, with lower projected imports, higher exports, and higher consumption; and down in Bangladesh and Azerbaijan by 0.3 and 0.2 million tons, respectively. Smaller changes in ending stocks are made for numerous countries.

World Wheat Trade Down Slightly

World wheat trade for the July-June international trade year is down 1.7 million tons (or 1 percent) this month to 156.8 million. This is still above of the previous record in 2011/12 by 3.0 million tons. As three quarters of the trade year have already passed, most of the trade revisions this month are based on the pace of sales and shipments.

The most important change in wheat imports is a projected 1.5-million-ton reduction for China to 7.0 million tons. As domestic prices favor corn feeding over wheat, China continues to curtail its wheat imports. Australia and Canada, which along with the United States are China’s main wheat suppliers, appear to be shipping less wheat than expected in that direction. Wheat imports are reduced 0.3 million tons for Bangladesh, based on the reported pace of shipments and in anticipation of lower Indian exports. Imports for the European Union, Pakistan, and South Africa are adjusted down 0.2 million tons each also based on the pace of imports. Partly offsetting are 0.2-million-ton increases in import projections for each of the following countries: Mexico (higher than expected imports from Russia); Nigeria (high pace of imports from the European Union, United States, and Russia); and Russia (based on larger imports from Kazakhstan). Imports are also adjusted by smaller amounts for a number of countries, based mostly on the pace of trade to date.

Projected wheat exports are reduced this month for Australia, Canada, India, Ukraine, and Brazil. Australian exports, projected down 0.5 million tons to 18.0 million this month, are expected to be affected by reduced demand from China. Canadian exports are also reduced by 0.5 million tons to 22.0 million. In addition to a reduction in Chinese demand, Canadian ability to move wheat to Pacific Coast terminals continues to be affected by this year’s logistical difficulties, in part resulting from record harvests of both wheat and canola. The country’s wheat exports are still projected at a near-record level, though slightly lower than last month. Indian wheat exports are projected down 0.5 million tons to 5.0 million. India currently maintains a quota for exports out of government stocks. Despite some revival in exporting activity in March in reaction to higher world prices, exports by private traders outside of the quota are minor, as firm domestic wheat prices and low quality make Indian wheat uncompetitive. Accumulated exports as well as additional exports that could occur under this year’s quota suggest that Indian exports are unlikely to exceed 5.0 million tons for the July-June trade year and 6.0 million for the April-March local marketing year.

Exports for Ukraine are reduced 0.5 million tons to 9.5 million tons this month. The change is unrelated to the current political situation. The country is aggressively exporting grain, but its exports are heavily skewed towards exporting corn, while the pace of its wheat exports has been slowing. Wheat exports are also reduced for Brazil, down 0.3 million tons to just 0.2 million, as the country so far has exported hardly any wheat. Brazilian wheat is of low quality, and requires transportation subsidies to be moved to the ports and shipped (usually to Africa and the Middle East).

Wheat exports are projected higher for Kazakhstan, up 0.5 million tons to 7.5 million. For its local September-August marketing year, Kazakh exports are projected even higher, up 1.0 million tons, due to much stronger expected wheat exports in the coming August 2014 compared to the previous August of 2013. The increase is based on evidence of record-level railroad and truck shipments to Russia and several other neighboring countries. Exports are adjusted up 0.1 million tons for Pakistan, with its higher-than-expected flour exports to Afghanistan. Smaller adjustments for wheat exports are made for several more countries.

U.S. Export Pace Supports the Current Forecast, Imports are Up

U.S. 2013/14 wheat exports remain unchanged this month at 31.5 million tons (1,175 million bushels for June-May). This projection is 3.8 million tons higher than exports estimated for 2012/13. According to U.S. Census data for July 2012 through February 2013, grain inspection data for March, and outstanding export sales as of March 27, export commitments (from the three sources combined) remain strong and are in line with the forecast.

U.S. July-June trade year imports are up 0.2 million tons to 4.7 million this month, further pushing record wheat imports. For the June-May local marketing year, U.S. wheat imports are projected down 0.1 million tons to 4.5 million (or down 5 million bushels). These opposite direction revisions are based on anticipation of strong imports from Canada in June 2014, compared with weak imports in June 2013. Logistical problems are expected to ease, as warmer weather improves transportation from Canada to the United States.

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