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USDA Wheat Outlook


13 November 2014

USDA Wheat Outlook - 13 November 2014USDA Wheat Outlook - 13 November 2014


USDA Wheat Outlook

Resurvey Lowers 2014/15 Wheat Supplies

U.S. wheat supplies for 2014/15 are decreased 10 million bushels based on updated production estimates for the States resurveyed following the September 30 Small Grains report. Adjustments to production in these States, where significant acreage remained unharvested in early September, lowers production estimates for Hard Red Spring (HRS) wheat and durum. The change results in corresponding decreases in ending stocks. The projected range for the 2014/15 season-average farm price is narrowed 10 cents on both the high and low end to $5.65 to $6.15 per bushel.

Wheat output is projected lower for Australia, Egypt, and Kazakhstan, which is partly offset by higher European Union production. World wheat trade is projected lower with a reduction in Australian, Kazakh, and Serbian exports. U.S. exports are unchanged.

Domestic Outlook

2014 U.S. Winter Wheat Production Is Unchanged From October

The survey-based estimate of winter wheat production, at 1,378 million bushels, is unchanged from October and down 165 million bushels from 2013. Estimated 2014 harvested area is 32.3 million acres, down 0.3 million acres from 2013. The 2014 winter wheat yield is estimated at 42.6 bushels per acre, down 4.7 bushels from the previous year.

2014 Winter Wheat Production Estimates by Class

Hard red winter (HRW) production is estimated at 738 million bushels, unchanged from October, 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. Estimated yield is 33.7 bushels per acre, down from last year because of drought conditions and an April spring freeze. Estimated 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 estimated at 455 million bushels, unchanged from October, but down 113 million bushels from last year. Production in 2014 is estimated 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. Estimated 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 estimated to total 184 million bushels, unchanged from October, but down 43 million bushels from a year ago.

Desert durum production in California and Arizona is estimated at 10.6 million bushels for 2014. This production is less than the 12.4 million bushels in 2013.

2014 U.S. Spring Wheat Production Is Down From October

The survey-based estimate of spring wheat production, at 648 million bushels, is down 10 million bushels from October and down 56 million bushels from 2013 based on a re-survey of operators who had unharvested wheat during the previous survey. Estimated 2014 harvested area is 14.1 million acres, down 1.4 million acres from 2013. The 2014 spring wheat yield is estimated at 46.0 bushels per acre, down 0.7 bushels from the previous year.

Spring Wheat Production Estimates by Class

Hard red spring (HRS) production is estimated at 556 million bushels, down 5.7 million bushels from October, but up 65 million bushels from 2013. HRS production is estimated up with both higher harvested area and higher yields. Estimated 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), 12.0 million acres, (up 1.3 million), and 46.3 bushels per acre (up 0.5 bushels).

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

Durum wheat production is estimated to total 53.1 million bushels, down 4.0 million bushels from October and down 4.9 million bushels from a year ago. Durum production is estimated down from 2013 with both smaller harvested area and lower yields. Estimated planted area, harvested area, and yield and year-to-year changes for 2014 from 2013 are, respectively, 1.40 million acres (unchanged), 1.34 million acres, (unchanged), and 39.7 bushels per acre (down 3.6 bushels).

Projected 2014/15 Supplies Down Slightly This Month

The 2014/15 outlook for U.S. wheat supplies is lowered 10 million bushels from October to 2,785 million bushels because of lower spring wheat production. Total beginning stocks for 2014/15, at 590 million bushels, are unchanged from October. Projected total imports, at 170 million bushels, are unchanged from October. However, 5 million bushels are moved from HRS to durum to offset the otherwise very low durum ending stocks with the reduced U.S. durum production.

Projected 2014/15 Supplies Down From 2013/14

Total supplies are down a projected 236 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 Is Unchanged This Month

The 2014/15 outlook for projected U.S. wheat use, at 2,141 million bushels, is unchanged from October. Projected food use (960 million bushels), feed and residual use (180 million bushels), and seed use (76 million bushels) are unchanged from October.

Projected 2014/15 exports, at 925 million bushels, are unchanged from October. However, 20 million bushels are moved from HRW to HRS based on pace to date. Exports of the other 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 126 million bushels, respectively.

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

The projected 2014/15 outlook for U.S. wheat ending stocks is lowered 10 million bushels from October to 644 million bushels. Total 2014/15 ending stocks are expected up 9 percent from 2013/14. Ending stocks of SRW and HRS are expected up year to year by 44 percent and 28 percent, respectively. White, durum, and HRW ending stocks are expected down 26 percent, 23 percent, and 10 percent, respectively.

The 2014/15 Price Range Is Narrowed From October

The projected season-average farm price range for 2014/15 is $5.65 to $6.15 per bushel compared with the October range of $5.55 to $6.25 per bushel. The seasonaverage farm price for 2013/14 is estimated at $6.87 per bushel. 

NASS Revisions for 2008 Through 2012

NASS has made revisions in wheat output, seed use, and stocks for the years 2008 to 2012. The revised by-class, by-quarter supply and use tables for 2008/09 through 2012/13 are expected to be posted at http://www.ers.usda.gov/data-products/wheatdata. aspx by November 13, 2014.

2014 Wheat Qualities Compared With 2013 and 5-Year Averages

The U.S. Wheat Associates’ 2014 Crop Quality Report provides the following data for the 2014 crop. Go to http://www.uswheat.org/cropQuality to access the full report with additional data.

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 Wheat Production Slightly Down

Global wheat production in 2014/15 is projected to reach 719.9 million tons, down 1.3 million tons this month, with slightly lower projected area (down 0.4 million hectares) and no decline in wheat yield. The largest reduction in 2014/15 wheat production this month is for Australia, down 1.0 million tons, to 24.0 million. Dryness persisted into October in the southeastern part of the Australian continent, which further reduced wheat yield potential in the states of South Australia, and in the northwestern parts of Victoria, where dryness has persisted since the beginning of August. The wheat harvest in eastern Australia is moving from north to south, from Queensland to New South Wales and then the southern states of Victoria and South Australia. In October wheat in the two southern states was still in the maturation stage, still susceptible to lack of moisture, and yields are expected to have been hurt by extended dryness. The two affected states together produce about 30 percent of Australian wheat.

Wheat production in Egypt in 2014/15 is revised down 0.8 million tons to 8.2 million this month, with a 0.1 million hectare reduction in area and a slightly lower yield. Wheat production is also revised down 0.4 million tons to 8.3 million for 2013/14. Both reductions are the consequence of higher input costs, as the Government sharply reduced subsidies for both diesel fuel and fertilizers.

Wheat production for Kazakhstan is reduced 0.5 million tons this month to 12.0 million, with a corresponding reduction in area, down 0.5 million hectares to 11.7 million. The reductions are based on recent reports of nearly completed harvesting in Kazakhstan. By the end of October, below freezing temperatures and rains turning into snowfalls, virtually brought harvesting in the Kostanai and North Kazakhstan regions to a standstill. The beginning of November produced some dry weather that opened perhaps the last window of opportunity for wheat harvesting, and is expected to contain losses in area.

A downward adjustment in wheat production is made for Mexico, down 0.2 million tons to 3.7 million, based on the recent official estimate of SAGARPA – the Mexican ministry of agriculture.

Wheat production forecast for 2014/15 for the world’s largest producer, the European Union (EU), is increased again this month, as the member countries further refine their harvest results. Wheat output is up 1.4 million tons this month to push the record even further to 155.4 million. Wheat area estimates are also up this month, leaving the average EU wheat yield unchanged. The largest increase in output is for Poland, up 0.6 million tons to 11.2 million, while increases of 0.3 million tons and smaller occurred in Romania, Czech Republic, Germany, Spain, and Lithuania. Those increases more than offset modest reductions in Hungary, Italy, and Croatia. Wheat production is also projected down for Serbia (not an EU member country), down 0.2 million tons to 2.4 million, with both area and yield reduction.

A small upward adjustment in wheat production (up 0.1 million tons) is made for each of Algeria (based on the official report of total grain output) and Japan. A slight adjustment is made for wheat output in Mongolia.

The decline in wheat global supplies caused by lower production prospects this month is slightly offset by a 0.1-million-ton increase in 2014/15 world wheat beginning stocks. Beginning stocks in Australia are up 0.4 million tons, from a downward revision of its 2013/14 export number. Stocks are projected down 0.4 million tons in Japan with a small upward revision of wheat feed use in 2012/13 and 2013/14. Beginning stocks are also projected slightly up (equal or less 0.1 million tons) for Vietnam, South Korea, Brazil, and Turkey, but down for Russia. Tiny adjustments are made for El Salvador, Guatemala, and Jordan.

World Wheat Feed Use Projected Lower, Stocks Inch Up

World wheat use for 2014/15 is projected down 1.4 million tons this month, while feed use is down 0.4 million.

Wheat feed and residual use for 2014/15, which includes losses, is reduced in Egypt 0.4 million tons to 1.6 million, while wheat food use is estimated 1.1 million tons lower. The Government of Egypt has fundamentally reformed its bread subsidy program with the goal of reducing and perhaps eliminating use of subsidized bread and flour for feeding animals. This program also encourages diversification of allocated subsidies away from bread to other food products. Previously, the subsidy program allowed consumers to buy an unlimited amount of low-priced subsidized bread that was often fed to animals. The new program caps purchases of bread per consumer while allowing purchases of other subsidized food products. Feed use is also projected lower in South Korea, down 0.3 million tons. The reduction is partly offset by an increase in corn feeding, and also reflects smaller herds of pigs, cows, and poultry. Wheat feeding is adjusted down 0.2 million tons for Uzbekistan, as Kazakhstan—its main provider of imported wheat—is expected to have smaller wheat output. Wheat feed use is projected higher in Brazil, up 0.4 million tons, as a larger amount of unusually low-quality wheat is expected to be fed to the animals, or even completely lost. Small changes to domestic wheat consumption for other countries are largely offsetting.

World wheat ending stocks projected for 2014/15 are up slightly by 0.3 million tons this month to 192.9 million. With larger production, the EU is expected to hold increased stocks, up 1.4 million tons. Despite lower wheat production, stocks are projected 0.4 million tons higher in Australia. Lower production is fully offset by a reduction in 2014/15 exports, while a downward adjustment of the country’s 2013/14 wheat exports adds to Australian wheat supplies (see beginning stocks). Lower beginning stocks and imports and a small increase in wheat food use reduce stocks in Russia, down 0.6 million tons. Stocks are also lowered 0.3 million tons in Japan, due to the previous years’ revisions of feed use (see beginning stocks). Lower projected wheat stocks in Pakistan reflect a reduction in projected imports. Smaller offsetting changes for ending stocks are made for a number of countries.

World Wheat Trade Lower This Month, No Change in U.S. Exports

The world wheat trade projected for the international 2014/15 July-June trade year is down this month by 1.4 million tons, to 155.2 million. The changes in world trade reflect, as usual, wheat availability, logistics, policies, and recent sales. Egyptian imports are projected 0.8 million tons lower, as the change in the country’s program for food subsidies is expected to reduce both bread consumption and the use of wheat bread for animal feeding (see the earlier feed use section).

Imports by Korea are projected down 0.4 million tons this month, as the pace of imports is slow and the country is expected to take advantage of ample world supplies of corn. Wheat imports are also projected down 0.3 million tons for Pakistan, which has recently imposed a new 20-percent wheat import duty in an attempt to help domestic producers compete with surging imports. China’s imports are also projected 0.3 million tons lower to 1.7 million. A low pace of wheat imports, uncertainty about further Government purchases, and the tariff-rate quota (TRQ) of just 1.0 million tons assigned to the private sector contribute to this reduction. Russian imports are reduced by 0.3 million tons to 0.2 million (in 2013/14 imports were 0.8 million tons). The reasons for this reduction are large domestic wheat production and expectations of lower size and quality of Kazakh wheat output. A downward adjustment of 0.2 million tons in wheat imports is made for Uzbekistan, also in response to the lower volume of Kazakh supplies. With ongoing political instability and disruption, Libyan imports are also down 0.2 million tons to 1.9 million. With slightly higher projected wheat output, a downward adjustment of 0.1 million tons is made for Algeria.

The above declines are partly offset by increased imports for Brazil, Mexico, and Kazakhstan. The low quality of Brazil’s wheat harvest means that a larger than usual share of output can be used only for feeding. Consequently, the country is expected to import 0.5 million tons more higher quality wheat for blending purposes either from neighboring countries—Argentina, Uruguay, Paraguay—or from the United States. In Mexico, a projected increase in imports of 0.3 million tons is justified by this month’s lower production estimate, and is also supported by an unusually high pace of imports.

An unusual development is an increase of wheat imports for Kazakhstan, from essentially zero to 0.2 million tons. Evidence shows that Kazakhstan is importing wheat from neighboring regions in Russia. Normally wheat in that region flows in the opposite direction. This might be a temporary development related to the several weeks of rain and snow in the northern parts of Kazakhstan which prevented wheat harvesting. A tiny adjustment in wheat imports is made for India, up 25,000 tons to 45,000 tons, bought from Australia despite India’s huge wheat stocks.

Wheat exports are projected lower this month for Australia, down 1.0 million tons to 18.0 million, where wheat production is expected to be 1.0 million tons lower; and also for Serbia, down 0.2 million tons to 0.8 million, which matches the reduction in the country’s wheat output. Wheat exports are reduced 0.2 million tons to 5.3 million for Kazakhstan, partly offsetting lower production.

U.S. 2014/15 wheat exports for the international July-June trade year remain unchanged at 25.5 million tons (925 million bushels for June-May), down 19 percent from a year earlier (down 21 percent for June-May local marketing year). Accumulated exports as of the end of October are down about 33 percent compared to last year. But in 2013/14, U.S. wheat exports were strong during the first half of the marketing year, that is, they were “front-loaded.” However, U.S. wheat exports in 2014/15 are expected to have a slow start, and to become stronger later in the year—or to be “back-loaded.” This year’s exports are expected to be more comparable to (though even lower than) the monthly pattern of 2011/12. In that year, major competitors had decent wheat supplies, as in this year, while the level of the U.S wheat output was even lower than in the current year. Outstanding sales are improving and, at the end of October, were down just about 7.6 percent on the year.

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