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USDA Wheat Outlook


15 October 2014

USDA Wheat Outlook - 15 October 2014USDA Wheat Outlook - 15 October 2014


USDA Wheat Outlook

2014/15 U.S. Wheat Ending Stocks Lowered This Month

Projected U.S. wheat ending stocks for 2014/15 are lowered 44 million bushels as increased production is more than offset by higher feed and residual disappearance and higher exports. Production for 2014/15 is raised 5 million bushels based on the latest estimate from the September 30 Small Grains 2014 Summary. Hard red spring (HRS) wheat and hard red winter wheat are raised 32 million bushels and 9 million bushels, respectively. Reductions in the other three classes are partially offsetting. Projected feed and residual use is raised 25 million bushels reflecting the September 1 stocks that indicated higher than expected June- August disappearance. Projected exports are raised 25 million bushels on higher than expected sales for HRS and soft red winter wheat. The projected range for the 2014/15 season-average farm price is narrowed 5 cents on both the high and low end to $5.55 to $6.25 per bushel.

An increased 2014/15 foreign production forecast led by the European Union (EU) is almost fully offset by lower beginning stocks. As low prices encourage feed and food consumption across the globe, wheat use is projected higher, driving down ending stocks. A record wheat crop in the EU makes the region a formidable competitor, with its exports surpassing those from the United States by 2.5 million tons. U.S. wheat export prospects are slightly higher, reversing last month’s change.

Domestic Outlook

Wheat Ending Stocks for 2014/15 Projected Down From September

Ending stocks of all wheat for 2014/15 are projected down 44 million bushels from September as larger domestic use and larger exports more than offset higher production. Total wheat supplies for 2014/15 are projected up 6 million bushels from September with larger production. Total projected uses are up 50 million bushels from August because of lower exports.

2014 U.S. Winter Wheat Production Is Down From September

The survey-based forecast of winter wheat production, at 1,378 million bushels, is down 19 million bushels from September and down 165 million bushels from 2013. Expected 2014 harvested area is 32.3 million acres, down 0.3 million acres from 2013. The 2014 winter wheat yield is forecast at 42.6 bushels per acre, down 4.7 bushels from the previous year.

The year-to-year comparisons in the following winter and spring wheat discussions are based on revised 2013 area, yield, and production estimates provided in the NASS 2014 Small Grains Annual Summary report. See Table 2 of this report for the new estimates for 2013.

NASS To Resurvey Operators With Unharvested Small Grains

Unharvested areas of crops were reported in the following States:

• Durum wheat: Montana, North Dakota, and South Dakota

• Other spring wheat: Colorado, Idaho, Minnesota, Montana, North Dakota, South Dakota, and Utah

Unharvested area and expected production is included in the estimates published on September 30. NASS will recontact only survey respondents who previously reported unharvested acreage in the States identified. As a result of this resurveying effort, NASS may release updated estimates for small grains in its November 10 Crop Production report. Stocks estimates are also subject to review since unharvested production is included in the estimate of onfarm stocks. NASS resurvey information was issued September 30, 2014 by the U.S. Department of Agriculture, National Agricultural Statistics Service, Agricultural Statistics Board. For more information contact, Lance Honig at (202) 720-2127 or lance.honig@nass.usda.gov.

2014 Winter Wheat Production Estimates by Class

Hard red winter (HRW) production is forecast at 738 million bushels, up 9 million bushels from September, but down 9 million bushels from a year ago. Production for 2014 is down from 2013 as a lower yield more than offset higher harvest area. Forecast yield is 33.7 bushels per acre, down from last year because of drought conditions and an April spring freeze. Forecast planted area, harvested area, and yield and year-to-year changes for 2014 from 2013 are 30.5 million acres, up 0.8 million acres; 21.9 million acres, up 1.5 million acres; and 33.7 bushels per acre, down 2.9 bushels per acre, respectively.

Soft red winter (SRW) production is forecast at 455 million bushels, down 11 million bushels from September and down 113 million bushels from last year. Production in 2014 is forecast lower than 2013 because of lower harvested area. Harvested area was lower mostly because of fewer planted acres. The weather was very favorable for timely harvesting of 2012 row crops, leaving ample time for seeding the 2013 SRW crop. Forecast planted area, harvested area, and yield and year-to-year changes for 2014 from 2013 are 8.5 million acres, down 1.5 million acres; 7.2 million acres, down 1.7 million acres; and 63.6 bushels per acre, down 0.1 bushels per acre, respectively.

White winter wheat production for 2014 is forecast to total 184 million bushels, down 17 million bushels from September and down 43 million bushels from a year ago.

Desert durum production in California and Arizona is forecast at 11.7 million bushels for 2014.This production is less than the 12.4 million bushels in 2013.

Spring Wheat Production Estimates by Class

Hard red spring (HRS) production is forecast at 561 million bushels, up 32 million bushels from September and up 70 million bushels from 2013. HRS production is forecast up with both higher harvested area and higher yields. Forecast planted area, harvested area, and yield and year-to-year changes for 2014 from 2013 are, respectively, 12.2 million acres (up 1.3 million), 12.1 million acres, (up 1.4 million), and 46.6 bushels per acre (up 0.8 bushels).

White spring production is estimated to total 39.5 million bushels, down 3.7 million bushels from September and down 4.0 million bushels from 2013.

Durum wheat production is forecast to total 57.1 million bushels, down 3.4 million bushels and down 0.9 million bushels from a year ago. Durum production is forecast down from 2013 as lower yields more than offset slightly higher harvested area. Forecast planted area, harvested area, and yield and year-to-year changes for 2014 from 2013 are, respectively, 1.40 million acres (unchanged), 1.37 million acres, (up 0.03 million), and 41.6 bushels per acre (down 1.7 bushels).

Projected 2014/15 Supplies Up Slightly This Month

The 2014/15 outlook for U.S. wheat supplies is raised 6 million bushels from September to 2,795 million bushels because of the net increase in total production. Total beginning stocks for 2014/15, at 590 million bushels, are unchanged from September. Projected total imports, at 170 million bushels, are unchanged from September, but there are class changes month to month. Imports of HRS, durum, and white are raised 10, 5, and 1 million bushels, respectively. HRW and SRW imports are lowered 9 and 7 million bushels, respectively. These changes are based on the pace of imports.

Projected 2014/15 Supplies Down From 2013/14

Total supplies are down a projected 226 million bushels from 2013/14. HRS and durum supplies are projected up year to year. Projected supplies of the other classes are down. HRW supplies are down mostly because of lower carryin stocks; the combined result of sharply lower production in 2013/14 compared to 2012/13 and strong 2013/14 exports. SRW and white supplies are down mostly due to lower production; yields are down from the previous year.

Projected 2014/15 Utilization Up This Month

The 2014/15 outlook for U.S. wheat use is projected up 50 million bushels from September to 2,141 million bushels. Projected food use and seed use, at 960 million bushels and 76 million bushels, respectively, is unchanged from September. Projected feed and residual use is raised 25 million bushels to 180 million bushels this month based on the implications of lower first quarter ending stocks than expected. HRS, HRW, and durum feed and residual are raised by 15, 10, and 5 million bushels, respectively. HRS and durum feed and residual are raised because of quality concerns, while HRW feed and residual is up with higher production. White feed and residual use is lowered as projected ending stocks tighten.

Projected 2014/15 exports are raised 25 million bushels from September to 925 million bushels. Exports are raised for HRS, SRW, and durum by 10, 10, and 5 million bushels, respectively. Exports of the other two classes are unchanged.

Projected 2014/15 Utilization Down From 2013/14

Total use is projected down by 291 million bushels from 2013/14. Total use of HRS and durum are up, while total use of the other three classes is down year to year, especially SRW.

Projected domestic use, at 1,216 million bushels, is down 40 million bushels from 2013/14 as lower expected feed and residual use more than offset higher food use. Projected 2014/15 exports are down 251 million bushels from 2013/14, especially due to lower expected SRW and HRW exports. SRW and HRW are exports expected down 128 million bushels and 106 million bushels, respectively.

Projected 2014/15 Ending Stocks Down From September, But Up 2013/14

The projected 2014/15 outlook for U.S. wheat ending stocks is lowered 44 million bushels from September to 654 million bushels. Total 2014/15 ending stocks are expected up 11 percent from 2013/14. Ending stocks of HRS and SRW are expected up year to year by 46 percent and 44 percent, respectively. Durum, white, and HRW ending stocks are expected down 27 percent, 26 percent, and 19 percent, respectively.

The 2014/15 Price Range Is Narrowed From September

The projected season-average farm price range for 2014/15 is $5.55 to $6.25 per bushel compared with the September range of $5.50 to $6.30 per bushel. The season-average farm price for 2013/14 is estimated at $6.87 per bushel.

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

World Production up, Led by Record European Crop

World wheat production in 2014/15 is forecast at 721.1 million tons, up 1.2 million tons this month, and 6.0 million tons ahead of last year’s record. With a small increase in projected U.S. wheat output, foreign wheat production is projected up 1.0 million tons this month.

Wheat production in the European Union (EU) is up again, raised another 3.0 million tons this month to a record crop of 154.0 million. For a second month in a row, wheat output across the EU from the United Kingdom (UK) in the west to Poland and Hungary in the east is projected considerably higher. The biggest increase is made for Germany, the second-largest wheat producer in the EU and a major source of a limited volume of high-quality wheat produced in Europe this year. More generally, unusually wet harvest weather in the EU, especially in its major wheat producer France, seriously lowered average wheat quality in the Union. Wheat production in Germany is up 1.4 million tons to 27.5 million, based on local government estimates (Ministry of Agriculture). Sufficient moisture throughout the growing period and mostly good harvest weather in the country promoted record wheat yields and production. Wheat output is also projected higher in the Czech Republic, Poland, United Kingdom, Hungary, and Sweden.

For Ukraine, where the wheat harvest is complete, the production estimate is raised 0.5 million tons this month to 24.5 million tons, based on that country’s Statistical Committee estimates. Projected wheat output is also increased 0.5 million tons to 25.0 million for Pakistan. The wheat crop in Pakistan was harvested back in May, and reported flooding reduced the quality of part of the already stored abundant wheat harvest.

Partly offsetting is a projected decline of wheat output in Kazakhstan. With more than 80 percent of the crop already harvested, the statistical reports indicate lower area than previously expected (down 0.5 million hectares) and smaller yields. The information justifies a 1.0-million-ton reduction in wheat production in Kazakhstan, for a crop of 12.5 million tons.

Another sizeable reduction in wheat production is for Algeria, where this month wheat production is again estimated sharply lower, down 0.8 million tons to 1.8 million, the lowest since 2008/09. Dryness in the eastern part of the country in March?a critical month for wheat in Algeria?harmed wheat yields more than expected.

Canadian wheat production is trimmed 0.5 million tons to 27.5 million, as the latest survey of Statistics Canada revealed lower area under wheat.

In the Southern Hemisphere, wheat output is reduced for two major wheat producers-Australia and Argentina. Production prospects are reduced further this month in Australia, down 0.5 million tons to 25.0 million. Although satellite imagery suggests decent crop development, September rainfall, which is usually crucial for wheat production in Australia, was insufficient and spotty, leaving some wheat fields in South Australia and Victoria dry and struggling.Wheat production in Argentina is further reduced 0.3 million tons this month to 12.0 million, with a small reduction in planted wheat area. Excessive wetness in the Buenos Aires region, low wheat prices, and high domestic inflation in a period of economic uncertainty all contributed to the reduction in planted wheat area.

Small changes in wheat production are made for Chile, Kenya, Kyrgyzstan, Zambia, and India.

Smaller Beginning Stocks Nearly Offset Production Increase

The rise in global supplies caused by higher production prospects this month is almost fully offset by a 0.9-million-ton reduction in 2014/15 world wheat beginning stocks. This limits the growth in global supplies to 0.3 million tons. Foreign supplies are left almost unchanged, up just 0.1 million tons.

Lower beginning stocks are projected in Iran, down 0.5 million tons, due to an upward revision of its 2013/14 feed and residual consumption; in Turkmenistan, down 0.5 million tons as part of a multi-year revision of the country’s wheat consumption; in Argentina, Uruguay, and Russia, down 0.2 million tons each, reflecting higher 2013/14 exports for the first two countries, and lower imports for the latter. With lower projected 2013/14 exports, beginning stocks are projected up 0.5 million tons in Australia. Smaller mostly offsetting changes for wheat beginning stocks are made for a number of countries.

Both Wheat Food and Feed Use Are Projected Higher This Month

World wheat use for 2014/15 is projected up 4.1 million tons to 714.1 million this month, while foreign wheat use is projected 3.4 million tons higher than last month. About 55 percent of the increase in the latter (1.9 million tons) is expected to be in greater feed and residual use encouraged by low wheat prices. Wheat feed and residual use for 2014/15, which includes losses, is projected 0.5 million tons higher for the EU, for Iran, and for Pakistan. In the EU and Pakistan, higher supplies of low-quality wheat are expected to generate additional feeding and/or losses. For Iran, wheat feeding is raised for both 2013/14 and the current 2014/15. Over the three last years the country accumulated abundant wheat supplies that are unlikely to go unused. Small (under 0.1 million tons) changes are made for several countries.

Wheat food use has been reassessed in many countries this month to put it more in line with population growth. In addition, many changes in food consumption this month reflect the fact that wheat food consumption in low-income countries is more sensitive to prices than in richer countries. Food use is adjusted up in a number Sub- Saharan African countries (Ethiopia, Kenya, Mozambique, Sudan, Somalia, and several others), North African countries (Algeria and Egypt), as well as in some countries of the Middle East (Yemen and some other countries of this region), and Asia (Indonesia, India, and several more). Wheat food consumption is also up 0.3 million tons in Russia, on account of increased population?people who fled the war zone in Eastern Ukraine and at least for now have relocated to Russia. All changes to wheat food use for individual countries this month are under 0.3 million tons each, and most of them are under 0.1 million tons.

Higher Wheat Consumption Drives Stocks Down

World wheat 2014/15 ending stocks are projected down 3.8 million tons this month, with higher projected use and virtually unchanged supplies of wheat. With a 1.2 million ton reduction in U.S. stocks, the decline in foreign ending stocks is smaller, down 2.6 million tons. Higher feed use pushed down projected stocks in Iran (down 1.0 million tons in 2014/15 and down 0.5 million tons in 2013/14) and in Pakistan, down 0.3 million tons. With lower projected imports and higher food use, Russian stocks are projected down 0.7 million tons this month. With lower projected wheat output, both Canada and Algeria are expected to hold lower stocks, down 0.5 million tons each. Stocks are also projected 0.5 million tons down for Turkmenistan because of lower beginning stocks. Several offsetting changes include higher stocks for Australia (despite reduced production that is more than offset by higher beginning stocks and lower projected exports) and Ukraine (higher wheat output), up 0.5 million tons each. Smaller (less than 0.3 million tons) and largely offsetting adjustments to wheat ending stocks are made for a number of countries.

World Wheat Trade for 2014/15

Is Up World trade projected this month for the international trade year 2014/15 (July- June) is up 1.7 million tons to 156. million. Higher record-level wheat supplies this month in the European Union make the region a formidable competitor, despite its higher projected wheat feed use and lower imports. The region’s export expectations are up 2.0 million tons to a 28.0 million, surpassing the U.S. by 2.5 million tons. Exports from Canada and Mexico are up 0.5 million tons each. In Canada, exports are increased for the July-June trade year, reflecting unusually strong old-crop exports in July and August, while its local marketing year exports are currently left unchanged. In Mexico, supplies of durum wheat are large this year, while a demand for high quality durum wheat in the world is running high. Also, logistics favor shipping durum wheat for export rather than transporting it within the country for domestic consumption, as durum wheat in Mexico is grown in coastal Sinaloa. Consequently, wheat (durum) exports for the country are projected higher this month. At the same time, the country is expected to import low-quality wheat (possibly from the U.S.) to replace exported durum in feeding, and Mexican imports are projected 0.5 million tons higher.

Reduced production prospects for Kazakhstan, Australia, and Argentina lower their export prospects by 1.0, 0.5, and 0.3 million tons, respectively.

Wheat imports are projected higher this month for many countries (mainly lowincome ones), where wheat food consumption is raised (see the wheat use section above). Imports are also further increased for Algeria, up 0.5 million tons, to relieve the increased projected decline in the country’s wheat crop. As already mentioned in the discussion on exports, wheat imports are increased 0.5 million tons in Mexico.

With vast wheat supplies and expected higher trade within the EU, imports for the EU are projected 0.5 million tons lower. A higher projected wheat crop results in a lower import projection for Pakistan, down 0.5 million tons. Imports are also projected 0.2 million tons lower in Russia. The country imports wheat mainly from  Kazakhstan (into its Siberian regions), where the wheat crop and exports are both reduced this month.

U.S. Exports Prospects Slightly Up, Reversing Last Month’s Change

U.S. 2014/15 wheat exports (for June-July international trade year) are projected up 0.5 million tons to 25.5 million tons, reversing last month’s reduction. However, given increased world trade, the United States does not increase its world export share. Despite this month’s increased export projection, total commitments reported in USDA, Foreign Agricultural Service Export Sales lag 5.2 million tons behind last year, and this month’s higher projection is still 6.0 million tons below the 2013/14 export level. This also implies a very modest pace for future sales. In a recent window of opportunity, the United States sold some additional wheat, which to some extent improved its current pace of sales to Mexico and some other South American countries, Japan, EU (Italy), and Nigeria. The United States also has the opportunity to sell additional wheat to Brazil (supplanting Argentina). 

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