USDA Wheat Outlook
15 November 2012
USDA Wheat Outlook - November 2012
Projected US wheat ending stocks for 2012/13 are raised 50 million bushels this month.Lower Exports Raise Ending Stocks
and an outlook for increased foreign competition. Projected US exports are lowered 25 million
bushels each for hard red winter (HRW) and soft red winter (SRW) wheat. Projected all-wheat
imports are unchanged, but imports are projected slightly higher for HRW wheat with an
offsetting reduction made for SRW wheat imports. The projected range for the 2012/13 seasonaverage
farm price is narrowed 10 cents on both ends to $7.75 to $8.45 per bushel.
US wheat export prospects are reduced further, whereas other major exporters are expected to
tighten up stocks with larger projected exports. The global wheat production forecast is lowered
1.6 million tons with deteriorating prospects for Australia. Both foreign wheat feed use and
ending stocks are projected lower.
Domestic Situation and Outlook
2012/13 Supplies
Total projected supplies for 2012/13, at 3.142 million bushels, are unchanged from October.
Supplies for 2012/13 are 168 million bushels above 2011/12. Higher production (+270 million
bushels) and imports (+18 million bushels) more than offset lower beginning stocks (-119
million bushels) year to year.
Projected supplies of hard red winter (HRW), hard red spring (HRS), and durum are up year to
year, mostly because of higher production. HRW production is up 224 million bushels year to
year, with higher planted area and smaller abandonment rate. Yields are also higher year to year
because of the recovery from the severe drought on the Central and Southern Plains the previous
year. HRS and durum production are up 107 million bushels and 32 million bushels,
respectively, from a year ago with larger harvested areas and higher yields. Production for these
two classes of wheat recovered from the previous year when excessive moisture and cool
temperatures in the Northern Plains resulted in late seeding and prevented plantings.
Projected supplies of soft red winter (SRW) and white are down from 2011/12. Both classes had
lower production for 2012/13, down 38 million bushels and 55 million bushels, respectively, on
the year. Production is down for both classes because of smaller harvested area and lower yields.
SRW planted area was down because a late row crop harvest delayed plantings in the Corn Belt
and Northeast.
All-wheat 2012 production is estimated at 2,269 million bushels, unchanged from October, but
up 270 million bushels from 2011. The all-wheat harvested area is estimated at 49.0 million
acres, unchanged from October, but up 3.3 million acres from last year. The US all-wheat
estimated yield is 46.3 bushels per acre for 2012, equaling the record 46.3 bushels for 2010. The
yield is unchanged from October, but up 2.6 bushels from the previous year.
Projected total 2012/13 carryin stocks of 743 million bushels are unchanged from October, but
down 119 million bushels from 2011/12. Carryin stocks are down year to year for all classes
except SRW. Projected all-wheat imports for 2012/13 at 130 million bushels are unchanged
from October, but 9 million bushels were shifted this month from SRW to HRW based on the
pace to date.
2012/13 Use
Domestic use of wheat for 2012/13 is projected at 1,338 million bushels, unchanged from
October, but 156 million bushels higher than last year. Food use for 2011/12 is projected at 950
million bushels, unchanged from October, but up 9 million bushels from 2011/12. The higher year-to-year food use reflects both continued high extraction rates due to the high wheat prices
and population growth. Feed and residual use is projected at 315 million bushels, unchanged
from October. Projected feed and residual use for 2012/13 is 151 million bushels above feed and
residual use for 2011/12.
Projected exports for 2012/13 are 1,100 million bushels, down 50 million bushels from October
based on the pace to date and higher projected exports from Ukraine and Russia. The projected
exports for 2012/13 are 50 million bushels higher than in 2011/12.
Both HRW and SRW exports are reduced 25 million bushels based on pace to date. Exports of
HRS, white and durum are unchanged.
Projected total US ending stocks for 2012/13, at 704 million bushels, are up from October by
50 million bushels with the lower projected exports. The 2012/13 ending stocks are down 39
million bushels from 2011/12.
All wheat ending stocks are down 5 percent from 2011/12. Durum, HRS, and SRW ending
stocks are up from 2011/12 by 55 percent, 12 percent, and 11 percent, respectively. HRW and
white ending stocks are down from 2011/12 by 28 percent and 5 percent, respectively.
2012/13 Price Range Is Narrowed in November
The projected range for the 2012/13 season-average farm price is narrowed to $7.75 to $8.45 per bushel compared with $7.65 to $8.55 per bushel last month. This compares with the record $7.24 per bushel reported for 2011/12.
Winter Wheat Conditions Are Mixed
Winter wheat conditions as of November 4 are not as favorable as last year at this time. For all
winter wheat seedings, 39 percent of the crop rated good to excellent compared to 49 percent a
year ago. Nineteen percent of the seedings this year are rated poor to very poor compared to 15
percent a year ago at this time.
This year’s crop conditions are quite variable by region of the country. Conditions for HRW
seendings are not as good as for SRW seedings. For the Central and Southern Plains, the
percentage of seedings rated poor to very poor are: Nebraska, 49; Kansas, 13; Oklahoma, 30; and
Texas, 24. SRW States that have the highest percentage of their seedings rated good to excellent
include: Illinois, 78; North Carolina, 77; Indiana, 72; Michigan, 71; and Ohio, 69. Seventy five
percent of Washington’s winter wheat seedings are rated good to excellent, the highest in the
Pacific Northwest region.
2012 Wheat Qualities Compared With 2011 and 5-Year Averages
The US Wheat Associates’ 2012 Crop Quality Report provides the following data for the 2012 crop. Go to http://www.uswheat.org/reports/cropQuality/ to access the full report.
US wheat crop, 2012, 2011, and 5-year average | ||||
---|---|---|---|---|
2012 wheat crop | Protein (Percent) |
Flour/semolina extraction (Percent) |
Test weight (Pounds/bushel) |
Wheat falling numbers (Seconds) |
Hard red winter | 12.6 | 75.2 | 61.1 | 409 |
Hard red spring | 14.7 | 68.9 | 61.3 | 418 |
Soft red winter | 9.9 | 73.4 | 60.2 | 329 |
Soft white | 9.8 | 75.7 | 61.0 | 320 |
Great Plains durum | 14.6 | 63.4 | 60.6 | 412 |
2011 wheat crop | ||||
Hard red winter | 12.3 | 70.4 | 60.8 | 403 |
Hard red spring | 14.8 | 68.5 | 60.4 | 368 |
Soft red winter | 10.2 | 71.4 | 58.8 | 328 |
Soft white | 9.2 | 75.4 | 58.8 | 306 |
Great Plains durum | 13.6 | 64.5 | 59.9 | 372 |
5-year average | ||||
Hard red winter | 12.0 | 70.8 | 60.5 | 415 |
Hard red spring | 14.1 | 68.8 | 61.1 | 388 |
Soft red winter | 10.1 | 69.6 | 58.7 | 331 |
Soft white | 9.8 | 71.4 | 59.8 | 324 |
Great Plains durum | 14.1 | 64.2 | 60.3 | 359 |
Source: US Wheat Associates |
USDA Wheat Baseline, 2012-21
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, and the analysis underlying the wheat projections for 2012-21, is available at http://www.ers.usda.gov/topics/crops/wheat/usda-wheatbaseline,- 2012-21.aspx.
International Situation and Outlook
World Wheat Production Down, Led by Australia
World wheat production in 2012/13 is projected down 1.6 million tons to 651.4 million, which is
44.6 million tons lower, compared with the previous year, and foreign wheat production is down
52.0 million tons on the year. This is the largest year-to-year drop in world wheat production
since 1991/92, and the largest drop for foreign production on record. Several major producers –
three Former Soviet Union (FSU) countries (Russia, Ukraine, and Kazakhstan), Australia, and
EU-27— account for the production decline.
Adverse weather conditions affected the average world wheat yield this year, with a decline of
4.5 percent on the year (5.4 percent down for foreign countries). Also, despite relatively
favorable world prices during planting in 2012/13 when price incentives should have maintained
the area level in most parts of the world, USDA data show a year-to-year decline in world wheat
area of 4.4 million hectares, or 2.0 percent (5.8 million hectares decline for foreign countries, or
2.8 percent of foreign wheat area). This can give an impression that lower planting intentions are
partly responsible for this year’s wheat production decline. However, the decline in area numbers
refers to harvested, not planted, area, as USDA maintains data on area harvested only, and not on
area planted for crops in foreign countries. Therefore to a nontrivial degree, declining world and
foreign wheat area this year is also a result of adverse weather that prevented planting and/or
increased abandonment.
The largest reduction in 2012/13 wheat production this month is for Australia, down 2.0 million
tons, to 21.0 million. Dryness persisted into October in parts of both eastern and western growing
regions, further reducing yield potential in Western Australia, southern New South Wales, and
parts of Victoria. Moreover, light and patchy October rains came too late to enhance production
prospects of wheat, which was already beyond its reproductive period and in the final stages of
maturity, ready to be harvested.
Wheat production for 2012/13 is projected down 0.25 million tons to 15.5 million in Turkey,
where the wheat harvest is completed. Yields are lower than expected for the delayed crop that
suffered through cold and overly wet conditions in the Central Anatolian Plateau driving the total
wheat yield in the country to a 9-year low.
Partly offsetting are small increases projected for EU-27 and Pakistan. EU-27 wheat production
for 2012/13 increased slightly this month, up just 0.25 million tons, as reported increases for
Poland, Greece, Austria, Bulgaria, and Denmark more than offset reductions for the United
Kingdom (UK), Germany, France, Sweden, Belgium, and the Netherlands. Based on the latest
report from the Polish statistical office, wheat production in Poland is projected higher by 0.75
million tons, with reduced area and higher yields. Despite adverse weather conditions, the crop
did better towards the end of the growing season, though both yields and production are
projected lower than last year. Wheat production is also up for Greece and Austria (0.3 million
tons each), Bulgaria and Denmark (0.2 million tons each). Those increases are partly offset by a
further reduction of projected wheat output for the UK, down 0.5 million tons, with the second
wettest summer on record in a 100 years. Production is also projected lower for Germany (down 0.4), France (down 0.3), Sweden, Belgium, and the Netherlands (down 0.1-0.2 each). Smaller
revisions are also made for a number of other EU-27 countries. In Pakistan, where the wheat
harvest was completed in April, wheat output is adjusted up 0.3 million tons following official
reports.
The wheat crop for several former Soviet Union (FSU) countries were adjusted, with small
increases for Azerbaijan and Tajikistan more than offsetting a decline for Moldova. A small
upward adjustment is made for Algeria, while offsetting downward adjustments are made for
Bangladesh and Mexico.
Beginning Stocks Slightly Lower, Further Reducing Supplies
Global beginning stocks of wheat for 2012/13 are projected to decline 0.3 million tons this
month to 197.9 million, due to revisions for 2011/12 use and trade. The largest change is a 1.2-
million-ton reduction in EU-27 stocks, as feed and residual consumption estimated for 2011/12 is
raised 1.0 million tons, getting closer to the consumption levels in years with favorable relative
prices for wheat (e.g. in 2006/07, 2008/09, and 2009/10). Also, 2011/12 wheat production in the
EU-27 is revised slightly down by 0.2 million tons, which affects beginning 2012/13 stocks.
China’s wheat stocks declined 0.5 million tons this month, as 2011/12 wheat production is
revised downward based on data published by the government statistics agency. A downward
0.1-million-ton wheat stocks revision is also made for Bangladesh following a 2011/12
production change.
On the upward side, stocks in Pakistan are up 0.8 million tons to 4.3 million following a 2011/12
production revision. Beginning stocks are also up 0.3-million-ton in Australia, as the final
numbers for the 2011/12 Australian local marketing year (October-September) wheat exports
ended up being lower than expected. Japanese stocks are also up 0.3 million tons, reflecting
lower 2011/12 feeding. Smaller partly offsetting changes are made for a number of countries.
Wheat Feed Use Is Expected Lower
Global wheat consumption for 2012/13 is projected 3.1 million tons lower this month to 675.1 million tons. Wheat feed and residual use is down 2.5 million tons to 132.0 million. EU-27 wheat feed use projected for 2012/13 is reduced 1.5 million tons this month, whereas both corn imports and coarse grain feeding are projected higher, more than offsetting the wheat feeding reduction, as relative prices favor corn over wheat for feeding. Wheat feed use is also down 0.5 million tons in Russia falling to 12.5 million, which is far below anything we have seen since 2003/04. In 2003/04, the harvest was down sharply leading to much reduced livestock production. The livestock sector in Russia (especially poultry and hogs) is expected to maintain its rapid development, and despite constantly increasing feed efficiency as the sector becomes gradually more industrialized, it is bound to consume more feed. Russian corn feeding is projected to increase, reflecting relative prices and availability, but does not grow enough to fully offset the reduction projected for wheat feed and residual disappearance. It appears that existing supplies in the country are higher than is officially reported affecting calculated feed and residual usage. Farmers in Russia have multiple incentives to under-report grain production, from limiting tax exposure to being able to claim disaster harvest benefits. Those extra supplies are presumably being fed and exported, and are reflected in the USDA data by assuming “negative” residual in feed and residual use. Feed use is also down 0.5 million tons in Ukraine which has higher projected exports, and down 0.3 million tons in South Korea with a shift to corn feeding. Smaller partly offsetting changes in feed use are made for Egypt, India, Israel, Japan, Taiwan, and Moldova. Small changes in wheat food and industrial use are largely offsetting.
Global Ending Stocks Up, Foreign Stocks Down Slightly
World wheat 2012/13 ending stocks are projected up 1.2 million tons this month, to 174.2
million, with lower projected use more than offsetting reduced supplies of wheat. Alternatively,
foreign ending stocks are projected down 0.2 million tons, to 155.0 million, as this month’s US
stocks’ increase considerably exceeds the decline in foreign ending stocks. The small reduction
in foreign stocks reflects larger partly offsetting changes in individual countries. The largest
reductions in wheat ending stocks are the changes for Ukraine and Russia. With higher projected
exports only partly offset by reduced feeding, ending stocks in both countries are projected down
1.5 and 0.5 million tons, respectively. With sharply reduced production prospects, Australian
stocks are down just 0.2 million tons, as lower projected exports largely absorb the production
cut. Downward production revisions also resulted in lower ending stocks for Turkey and
Bangladesh, down 0.3 and 0.2 million tons, respectively.
Production revisions for 2011/12 and 2012/13 pushed wheat stocks up in Pakistan and China by
0.9 and 0.5 million tons, respectively. Higher projected imports in Egypt are expected to be
partly stored, raising their stocks 0.3 million tons. Stocks in Japan are projected up 0.2 million
tons, while smaller increases of about 0.1 million tons are made for Azerbaijan, Belarus,
Moldova, and Taiwan. Even smaller adjustments are made for several countries.
World Wheat Trade Higher this Month
World wheat trade for the international 2012/13 July-June trade year is projected higher this
month by 2.7 million tons, to 138.8 million. China’s imports are projected 1.0 million tons higher
to 2.5 million, reflecting strong pace of imports in the past month and recent purchases from
various major exporters. Wheat imports in the EU-27 are boosted 0.5 million tons, mainly on
account of lower wheat availability in the United Kingdom, where there are reportedly shortages
of milling-quality wheat. Egyptian imports are up 0.5 million tons to 9.5 million, as the Egyptian
wheat-buying agency, the General Authority for Supply Commodities (GASC), continues
extensive acquisitions of wheat, mainly from Russia and Ukraine. Intensified and largely
unexpected wheat purchases from Russia and Ukraine in recent months lead to higher projected
imports in Israel, Kenya, and Mexico, up 0.2 million tons each. Imports are also adjusted up 0.1
million tons for Taiwan, Tanzania, Vietnam, and Armenia. Imports are trimmed for South
Korea, down 0.2 million tons to 4.4 million, as wheat feeding contracts with relative prices
increasingly favoring corn. Imports are also adjusted down 0.1 million tons for Algeria,
reflecting higher wheat output.
Exports from Ukraine are projected up 2.0 million tons this month, reaching 6.0 million. The
Government reportedly has recently increased the top limit in its so called “goodwill” agreement
with wheat exporters, raising it to 5.5 million tons. Exporters, nervous and wary of the Government’s unpredictability, are attempting to export the maximum possible quantities of
wheat, fearing still another change in export policy. So far through the first week of November,
Ukraine has already exported 4.5 million tons of wheat. Exports by Russia are projected up
another 1.0 million tons to 10.0 million, reflecting winning tenders to Egyptian GASC and a
generally rapid pace of exports, despite reportedly tight supplies. In July-October, Russia had
already exported about 8.2 million tons of wheat, while total grain exports surpassed 10 million
tons. As already noted in our previous October publication, the pace of exports is expected to
slow down and practically halt in the second part of the marketing year, as domestic wheat prices
are on the rise, thereby reducing exports and likely opening the door to wheat imports.
Projected wheat exports are also raised further for India, up by 1.0 million tons to 6.0 million.
Higher exports by India support the current fast pace of wheat imports mainly by South East
Asia, but also by the Middle East and East Africa. A share of the additional volume of wheat that
the Indian government is pushing through the country’s public distribution system is expected to
end up in the open market and be exported. Another 1.0-million-ton increase in wheat exports is
for EU-27, with exports projected to reach 17.5 million tons. The EU-27 has been very
competitive in the Middle East and North Africa, with French wheat being considerably cheaper
than Russian. The high current volume of issued export licenses supports the increase. Pakistan
exports are up 0.2 million tons to 1.0 million. The country’s wheat is competitive in the region,
and with a higher estimate for 2012/13 wheat output, Pakistan is expected to export additional
wheat.
Wheat exports are projected lower this month for Australia, down 1.5 million tons to 19.0
million, where wheat production is expected to be 2.0 million tons lower. Exports are slightly
reduced for Moldova, down to almost zero, reflecting lower supplies.
U.S wheat exports for 2012/13 July-June are projected to decrease further by 1.0 million tons
this month to 30.5 million, which is still 2.4 million larger than in the previous year. The pace of
sales and commitments is slow, while domestic wheat prices have been trending up. Though it is
expected that US wheat exports are going to be back loaded this year, the existing data that
already cover 5 months of the international July-June year (and 6 months of the local June-May
year) show lower commitments than last year at this time. Census wheat exports for July through
September 2012 were only 7.1 million tons, down 8 percent compared to the previous year.
According to Grain Inspections, October wheat exports remained behind the previous year’s
pace by 22 percent, reaching just 1.5 million tons. As of November 1, outstanding export sales
of wheat were 4.1 million tons, slightly lower than a year ago. Consequently, U.S export
commitments (July-August data from the US Census Bureau, plus October inspections, plus
November 1 outstanding sales) add up to 12.7 million tons, versus 13.8 million last year, an 8
percent decline. For the local 2012/13 June-May marketing year, US exports are projected
down 50 million bushels this month to 1,100 million.
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