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Grain Market Outlook

Wheat Market Outlook in December 2014

December 18, 2014


Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on December 10, 2014, U.S. wheat market prices have trended higher.  The USDA projected marginally larger World wheat production, ending stocks and ending stocks-to-use, but marginally higher U.S. domestic wheat supply-demand balances.  The USDA projected for the “current crop” 2014/2015 marketing year that a) World wheat production, supplies, and total use would be at record high levels, b) World wheat export trade would be 4.7% lower than a year ago but still the third highest on record, and c) World wheat ending stocks and percent ending stocks-to-use would be at their highest levels in three marketing years, although still less than during the 2009/2010 through 2011/2012 period.  Wheat prices in the U.S. are projected to be down to the lowest levels in four years due to limited U.S. wheat exports and domestic livestock wheat feeding.  

The USDA projects that foreign wheat supplies are more than adequate to “mitigate” shortfalls in 2014 U.S. hard red winter wheat production in the Central and Southern plains states.  Also, no other major production problems in competing World wheat exporting countries have yet emerged to the degree that the “large crop-over-supply” situation in World wheat markets has been affected.  However, there are developing concerns about dry wheat production conditions in Australia, crop quality problems in parts of Europe, and wheat export supply availability from Russia and the Black Sea region.  United States’ wheat exports have been reduced by a recent strong positive trend in the U.S. dollar.  The wheat market will now likely focus on weekly export sales and shipments, the condition of U.S. and foreign crops in the field, Russian export supply news, and the upcoming January 12, 2015 USDA NASS Crop Production Annual Summary report

USDA U.S. Wheat Forecast for “current crop” MY 2014/15: The USDA maintained its projection of lower 2014 U.S. wheat production, reduced total use, increased ending stocks and % stocks-to-use, and lower prices in “current crop” MY 2014/15 vs a year ago.  The USDA’s projected MY 2014/15 scenario is for a 2.026 billion bushel (bb) 2014 U.S. wheat crop, 2.795 bb total supplies (up 10 mb), 925 mb exports, 2.141 bb total use, 654 mb ending stocks (up 10 mb), 30.6% ending stocks-to-use (vs 30.1% last month), and a forecast U.S. price of $6.00 /bu (range of $5.80 to $6.20) – compared to $5.65-$6.15 ($5.90 midpoint) from November.  If recent wheat futures prices hold through May, the USDA “current crop” MY 2014/15 price may rise to near $6.38 /bu.  

KSU U.S. Wheat Forecast for “current crop” MY 2014/15: KSU projections of “current crop” MY 2014/15 supply-demand balances and prices are essentially equal to the USDA’s except for the possibility of either “Lower Export” or “Higher Export” scenarios, which are as follows.  A) “Lower Export” Scenario: 10% prob. of acreage, yields, production and total supplies being the same as those of the USDA, but with 125 mb less U.S. wheat exports.  This would result in 800 mb exports, 2.016 bb total use, 779 mb ending stocks, 38.64% S/U, and a forecast price of $5.65-6.15 /bu (midpoint of $5.90 – down from $6.00 for the USDA).  Cash wheat prices in the U.S. will need to decline to $5.20-$5.25 for January-May 2015 for this price forecast to occur.  B) “Higher Export” Scenario: 20% prob. of acreage, yields, production and total supplies being the same as those of the USDA, but with 125 mb more U.S. wheat exports.  This would result in 1.050 bb exports, 2.266 bb total use, 529 mb ending stocks, 23.35% S/U, and a forecast price of $6.60 /bu (up from the USDA midpoint of $6.00).   Cash wheat prices in the U.S. will need to rise to $7.75 for January-May 2015 for this to occur.  

USDA World Wheat: World wheat total supplies of 907.5 mmt in “current crop” MY 2014/15 are up from 889.2 mmt in MY 2013/14, and 854.1 mmt in MY 2012/13.  Projected World wheat ending stocks in “current crop” MY 2014/15 of 194.9 mmt (27.4% S/U) are up from 185.3 mmt (26.3% S/U) in MY 2013/14, and from 174.5 mmt (25.7% S/U) in MY 2012/13.  For perspective, these figures can be compared to the historic World wheat ending stocks and ending stocks-to-use minimums of 129.0 mmt and 21.0% S/U in MY 2007/08.  

I. U.S. Wheat Market Situation & Outlook

I-A. December 2014 and Upcoming January 2015 USDA Reports

On December 10, 2014 the USDA National Agricultural Statistical Service (NASS) released its December  2014 Crop Production report containing state and national level U.S. wheat production estimates for 2014.  The December Crop Production report focused on U.S. cotton and orange production, with no substantive changes made from the November 10th Crop Production report.  The next major survey based USDA report addressing U.S. crop production for wheat, corn, other feedgrains, soybeans, and other major crops will be the USDA Annual Crop Production Summary report to be released on Monday, January 12, 2015.   On that same day USDA NASS will also release the January 2015 Crop Production, December Grain Stocks, and U.S. Winter Wheat Seedings reports.

Also on December 10th the USDA World Agricultural Outlook Board (WAOB) released its December 2014 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply-demand and price projections for the “current crop” 2014/15 marketing year.  The “current crop” 2014/15 U.S. wheat marketing year began June 1, 2014 and will last through May 31, 2015. 

I-B. CME Hard Red Winter Wheat Futures & U.S. Dollar Index Trends

Since market highs of $8.62 per bushel on May 6, 2014 for the MARCH 2015 contract, Kansas hard red winter wheat futures trended sharply lower through the later part of September-early October – with the MARCH 2015 contract trading as low as $5.54 ¾ per bushel on October 1, 2014.  This four month decline in wheat market prices was attributed largely to a) unthreatened prospects for record large world wheat production in the 2014/15 marketing year during this same time period, b) a second consecutive year of near record large world coarse grain production which lessened the demand for wheat feed use, and c) an uptrend in the value of the U.S. dollar against other major World currencies – making the effective price of U.S. wheat higher for World import buyers. 

However, since those wheat futures market lows in the last half of September-early October ($5.54 on 10/1/2014), and again in early November ($5.70 ¼ on 11/10/2014), wheat futures markets have trended higher.  Reasons for this price uptrend include a) the onset and intensification of the most recent El Nino weather pattern – which has caused dry growing conditions and reduced wheat production prospects in Australia – a major World wheat exporter, and 2) emerging geopolitical, logistical and financial problems in the Black Sea Region countries – posing a threat to their ability to supply wheat exports to World wheat markets.  On Wednesday, December 17th CME Hard Red Winter Wheat futures traded as high as $6.85 per bushel – up to the highest level since July 8th of this year.

MARCH 2015 Hard Red Winter Wheat futures prices responded to the release of the December 10th USDA reports by trading lower for the day.  MARCH 2015 HRW wheat efutures prices opened at $6.22 ¾ on Wednesday, December 10th the high for the day. The USDA reports were released at midday (i.e., 11 a.m., central time).  Prices declined as low as $6.13 per bushel during the session before closing $0.04 ½ lower for the day at $6.17 ½ /bu (Figure 1).   Since then, MARCH 2015 HRW wheat efutures prices have trended higher, rising from a low of $6.10 ½ on December 11th up to a high of $6.82 ¾ on December 17th before closing at $6.81 ½ on that same day. 

Figure 1. MARCH 2015 & JULY 2015 CME Kansas Wheat Futures Price Charts (electronic trade)

 

Similarly, JULY 2015 Hard Red Winter wheat efutures prices opened at $6.27 ½ on Wednesday, December 10th – the day of the release of the USDA reports at midday (i.e., 11 a.m., central time), and traded in a low-high range of $6.20 ½ to $6.31 during the session before closing $0.05 ¾ lower for the day at $6.24 ½ /bu (Figure 1).   Since then, JULY 2015 HRW wheat efutures prices have also risen, rising from a low of $6.17 ¾ on December 11th up to a high of $6.82 ¾ on Wednesday, December 17th before closing at $6.81 ½ on that same day. 

The U.S. Trade Weighted U.S. Dollar Index has been generally trending higher since mid-July 2011, but has trended all that much more sharply higher since early July 2014 (Figure 2).  After an index value of 75.69 on July 1, the calculated U.S. trade weighted dollar index trended up to a high of 84.31 on December 8th, with the most recent index value of 83.56 on Friday, December 12th.  

Figure 2. Daily U.S. Trade Weighted Dollar Index (Source: St. Louis Federal Reserve Bank, FRED)

 

This trend in the value of the U.S. trade weighted dollar index is significant to the U.S. wheat market, because a higher U.S. dollar exchange rate relative to other major currencies generally makes it more expensive for foreign buyers of U.S. wheat to exchange their country’s currencies for U.S. dollars which they would then in turn use to purchase U.S. wheat exports (denominated or “priced” in U.S. dollars).  Although this is not the only factor that is negatively impacting U.S. wheat exports at this time, it is a very important one – working against U.S. wheat being an affordable, competitive alternative in World wheat trade.

I-C. U.S. Wheat Production

U.S. All Wheat Acreage, Yield & Production

In its December 10th Crop Production report the USDA made no changes in regards to 2014 U.S. wheat planted and harvested acreage, yields, and production both in aggregate and by specific wheat class (i.e., winter wheat, other spring wheat, and durum). 

The USDA’s current projections are for 2014 U.S. wheat total planted acreage to be 56.822 million acres (ma), up from 56.236 ma in 2013, 55.294 ma in 2012, and 54.277 ma in 2011 (Table 1 and Figures 3-4).   In addition, the USDA projected 2014 U.S. wheat harvested acreage to be 46.381 ma, up from 45.332 ma in 2013, down from 48.758 ma in 2012, and up from 45.687 ma in 2011.  The 2014 proportion of harvested-to-planted acreage for all U.S. wheat is projected to be 81.6%, up from 80.6% in 2013, but down from 88.2% in 2012, and 84.2% in 2011 (Table 1 and Figure 4).  The proportion of harvested-to-planted U.S. wheat acreage in 2013 of 80.6% was the lowest since 81.6% in 2006 and 76.0% in 2002.

The projected 2014 U.S. average wheat yield of 43.7 bushels per acre (bu/ac) is down from the record high of 47.1 bu/ac in 2013, the previous record of 46.2 bu/ac in 2012, and 46.1 bu/ac in 2010, but is up marginally from 43.6 bu/ac in 2011 (Table 1 and Figure 5).   

Taking these harvested acreage and yield projections together, the USDA forecast 2014 U.S. wheat production to be 2.026 billion bushels (bb) (Table 1 and Figure 6).   However, the 2014 projection of 2.026 bb is still down from 2.135 bb in 2013, and 2.252 bb in 2012, while being up from 1.999 bb in 2011.   

I-D. U.S. Wheat Total Supplies

Total supplies of 2.795 bb are projected by the USDA for “current crop” MY 2014/15, resulting from beginning stocks of 590 mb, projected 2014 production of 2.026 bb, and projected imports of 180 mb (Table 1 and Figure 6).   

Total supplies of U.S. wheat of 2.795 bb in “current crop” MY 2014/15 are up 10 mb from the November WASDE report, and are down to the lowest amount of U.S. wheat supplies since the 2006/07 and 2007/08 marketing years.  Over the last eight (8) marketing years, U.S. wheat total supplies have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.932 bb in MY 2008/09, 2.993 bb in MY 2009/10, 3.279 bb in MY 2010/11, 2.974 bb in MY 2011/12, 3.118 bb in MY 2012/13, 3.021 bb in MY 2013/14, and are now projected to be 2.795 bb in “current crop” MY 2014/15.

Forecast U.S. wheat beginning stocks of 590 mb in “current crop” MY 2014/15 is down 17.8% from 718 mb in beginning stocks in MY 2013/14, and down from 743 mb in MY 2013/14.  This is the lowest level of U.S. wheat beginning stocks since 306 mb in MY 2008/09 (following the historically tight U.S. wheat ending stocks situation that developed in MY 2007/08).  This projected decline in U.S. wheat beginning stocks into the “current crop” 2014/15 marketing year is a continuance of the pattern of steadily tighter U.S. wheat supplies over the last four marketing years (since the recent high in beginning stocks of 976 mb in MY 2010/11).  

Projected U.S. wheat imports of 180 mb for “current crop” MY 2014/15 are up 10 mb from November, and would be the highest amount on record, being higher than the previous record high of 169 mb in MY 2013/14.  Since MY 1973/74 the next highest amounts of U.S. wheat imports have been: 1) 127 mb in MY 2008/09; 2) 123 mb in MY 2012/13; 3) 122 mb in MY 2006/07; and 4) 119 mb in MY 2009/10. 

Nearly all of U.S. wheat imports come from Canada because of favorable location / logistics.  Large Canadian wheat supplies over the last two years have been a major factor in this increase in U.S. wheat imports.  Canada produced a record large wheat crop of 37.5 million metric tons (mmt) (or 1.378 billion bushels in 60 lb/bu units) in MY 2013/14.  The next largest Canadian wheat crops since 1960 that were over 30.0 mmt were in 1990 (32.1 mmt), 1991 (32.0 mmt), and 1986 (31.4 mmt).  Projected Canadian wheat production in the “current crop” 2014/15 marketing year is lower – down to 29.3 mmt (1.077 bb).  This amount of Canadian wheat production is larger than the most recent 10 year average (years 2004-2013) of 26.5 mmt (973 mb).  

I-E. U.S. Wheat Total Use & Use by Category

Food Use: Projected U.S. wheat food use of 960 mb in “current crop” MY 2014/15 has been trending consistently higher over time due to steady growth in the U.S. population and associated increases in demand for processed wheat products.  This projected amount of 960 mb in food use in “current crop” MY 2014/15 is trending steadily upward from 951 mb in MY 2013/14, from 945 mb in MY 2012/13, and from 941 mb in MY 2011/12 (Table 1 and Figure 7). 

Seed Use: Forecast seed use of 76 mb in “current crop” MY 2014/15 is down marginally from 77 mb in MY 2013/14, and compares to 73 mb in MY 2012/13, and 76 mb in MY 2011/12 (Table 1 and Figure 7).  The USDA’s forecast U.S. wheat seed use extends the historic pattern of there being a relatively small but inelastic demand for U.S. wheat seed over time, driven primarily by a) the amount of U.S. wheat seed needed to plant adequate U.S. wheat acreage each year (from on-farm and commercial seed sources), and b) the need for adequate wheat seed stocks to cover possible U.S. seed wheat production shortfalls from year to year. 

Exports: Projected U.S. wheat exports of 925 mb in “current crop” MY 2014/15 are down sharply from 1.176 bb for MY 2013/14, and would be the lowest amount since 879 mb in MY 2009/10 (Table 1 and Figure 7).  The anticipation of lower available supplies of U.S. hard red winter wheat for export sales in “current crop” MY 2014/15, along with the likelihood of more than adequate foreign wheat supplies for export trade purposes, are both factors in this lower U.S. export projection.  That said, the risk of lower “current crop” MY 2014/15 Australian wheat production with the forecast onset of an El Nino weather pattern in coming months, as well as the uncertain impact on World wheat trade in the future from geopolitical conflicts (between Russian and Ukraine), and potential dry or otherwise adverse weather conditions in other major World wheat production areas are all factors that may by themselves or together eventually support increased U.S. wheat exports and higher World wheat prices in the later stages of the “current crop” 2014/15 marketing year.  

Cumulative U.S. wheat export shipments through December 12th – the 27th week of the “current crop” 2014/15 marketing year for U.S. wheat – totaled 454.4 mb, which is 49.1% of the USDA’s projected “current crop” MY 2014/15 exports of 925 mb with 51.9% (27 of 52 weeks) of the marketing year completed.  “Current crop” MY 2014/15 ends on May 31, 2015.  United States’ export shipments will need to average 18.8 mb per week through the remainder of the “current crop” 2014/15 marketing year to attain the USDA’s December WASDE projection of 925 mb.  Wheat export shipments by the U.S. of 16.0 mb and 12.2 mb during the weeks ending November 27th and December 4th, respectively, were “behind pace” to meet the USDA forecast of 925 bb in the “current crop” 2014/15 marketing year.  (Source: USDA Foreign Agricultural Service U.S. Weekly Export Sales report - http://apps.fas.usda.gov/export-sales/esrd1.html).

In addition, when accounting for unshipped forward sales of exports of 184.0 mb in U.S. wheat for “current crop” MY 2014/15 (that had not yet been shipped as of December 4th), total U.S. wheat shipped plus outstanding shipments added up to 638.4 mb (i.e., 454.4 mb shipped plus 184.0 mb forward sales).  This amounts to 69.0% of the USDA’s projection of 925 mb for “current crop” MY 2014/15 with 51.9% of the marketing year having already occurred (i.e., 27 of 52 weeks). 

If a sharp, unexpected increase in U.S. wheat exports were to occur during the remainder of the “current crop” 2014/15 marketing year, U.S. wheat price prospects could improve considerably as U.S. wheat supply-demand balances would tighten.  The potential exists during the remainder of “current crop” MY 2014/15 for wheat production problems in major wheat producing and exporting countries such as Australia, Russia, Ukraine, parts of the European Union, Canada, Argentina, and even the United States.  The potential impact on U.S. wheat supply-demand balances and prices for “current crop” 2014/15 will be discussed in the “KSU Forecast” section below.  As noted in an earlier section, the higher value of the U.S. Dollar is being cited as a factor that has been limiting U.S. wheat exports (see Figure 2 and accompanying discussion).

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 180 mb in “current crop” MY 2014/15, down from 228 mb for  MY 2013/14, the recent high of 370 mb in MY 2012/13, and from 162 mb in MY 2011/12 (Table 1 and Figure 6).  Domestic U.S. wheat feeding has trended lower across MY 2013/14 and “current crop” MY 2014/15 due to sizable 2013 and 2014 U.S. corn and grain sorghum crops – which has led to more abundant competitive U.S. feedgrain supplies at lower market prices than during the “drought stricken” MY 2012/13 for feedgrains.  Subsequently, over the last two U.S. wheat marketing years there has been and continues to be lower cross-market demand for U.S. wheat in U.S. livestock feed rations.

Total U.S. Wheat Use:  Summing the categories together, total use of U.S. wheat for “current crop” MY 2014/15 is projected to be 2.141 bb, which would be the 3rd smallest amount of U.S. wheat total usage since MY 2004/05 (Figure 6).  U.S. wheat total use has varied from 2.234 bb in MY 2004/05, 2.154 bb in MY 2005/06, 2.045 bb in MY 2006/07, 2.314 bb in MY 2007/08, 2.288 bb in MY 2008/09, 2.008 bb in MY 2009/10, 2.373 bb in MY 2010/11 (the 2nd largest amount during the 11 year period), 2.226 bb in MY 2011/12, 2.400 bb in MY 2012/13 (the 3rd largest amount during the 11 year period), to the largest amount in this period of 2.432 bb in  MY 2013/14, and finally to 2.141 bb in “current crop” MY 2014/15.  Total usage of U.S. wheat in MY 2012/13 and MY 2013/14 were boosted by higher than usual livestock feeding of wheat in reaction to extremely tight U.S. corn and grain sorghum supplies – which in turn led to substitutionary demand for U.S. wheat in domestic livestock feed rations.

I-F. U.S. Wheat Ending Stocks, % Stocks-to-Use & Prices

United States’ wheat ending stocks for the “current crop” 2014/15 marketing year were projected to be 654 mb, up 10 mb from November but equal to October (Table 1 and Figure 6).  This amount of U.S. wheat ending stocks is still markedly larger than 306 mb in MY 2007/08 – the historic “tight stocks” marketing year in recent years.  Over the last eight marketing years, U.S. wheat ending stocks were a record low 306 mb in MY 2007/08, 657 mb in MY 2008/09, 976 mb in MY 2009/10, 863 in MY 2010/11, 743 mb in MY 2011/12, 718 mb in MY 2012/13, an estimated 590 mb in MY 2013/14, and a projected amount of 654 mb in “current crop” MY 2014/15.

Percent (%) ending stocks-to-use for U.S. wheat of 30.6% in “current crop” MY 2014/15 is up marginally from 30.1% in November but equal to the USDA’s forecast in October, and up from 24.3% in MY 2013/14 (Table 1 and Figures 7-8).  Since the historic 67 year low of 13.2% in MY 2007/08, U.S. wheat ending stocks-to-use has varied from 28.7% in MY 2008/09, 48.6% in MY 2009/10, 36.4% in MY 2010/11, 33.4% in MY 2011/12, 29.9% in MY 2012/13, 24.3% for MY 2013/14, to now a projected level of 30.6% in “current crop” MY 2014/15.   

U.S. average wheat prices for “current crop” MY 2014/15 are projected to be in the range of $5.80-$6.20 per bushel (“/bu”) (midpoint = $6.00 /bu) – up $0.15 /bu on the lower end and up $0.05 /bu on the upper end of the price range from the November WASDE report (Table 1 and Figures 7-8).  Since the record tight U.S. and World wheat ending stocks marketing year of 2007/08, U.S. wheat prices have varied in the following manner over time: $6.48 per bushel in MY 2007/08, $6.78 in MY 2008/09, $4.87 in MY 2009/10, $5.70 in MY 2010/11, $7.24 in MY 2011/12, the record high of $7.77 in MY 2012/13, $6.87 in MY 2013/14, and now a forecast range of $5.80-$6.20 /bu (midpoint = $6.00 /bu) in “current crop” MY 2014/15.     

This USDA forecast may already be out of date or “too low” as indicated in the following table.  Using U.S. hard red winter wheat futures prices for March 2015, May 2015, and July 2015 futures, the weighted average U.S. wheat price is estimated to be $6.38 per bushel rather than $6.00 – given recent strength in CME HRW wheat futures. 

 

Month

% Avg. Sales by Month

11/6/2014

Scenario

12/17/2014

Scenario

June 2014

13.0%

$6.50

$6.50

July

19.3%

$6.16

$6.16

August

13.3%

$5.98

$5.98

September

9.1%

$5.74

$5.74

October

6.3%

$5.71

$5.71

November

4.9%

$5.96

$5.96

December Forecast

6.6%

$5.82

$6.96

January Forecast 2015

7.6%

$5.82

$6.96

February Forecast

5.2%

$5.82

$6.96

March Forecast

6.0%

$5.90

$6.98

April Forecast

4.6%

$5.90

$6.98

May Forecast

4.1%

$5.96

$6.95

Totals

100.0% of Grain Sales

$6.00 MYA U.S. Wheat $

$6.38 MYA U.S. Wheat $

An indicator of inflation that has occurred in U.S. wheat prices is found by comparing the situation in the historical “tight stocks” year of MY 2007/08 with “current crop” MY 2014/15.  In MY 2007/08, U.S. wheat % ending stocks-to-use were a record low 13.2% with an average U.S. wheat price of $6.48 per bushel – at that time a record high.  In comparison, in “current crop” MY 2014/15, U.S. wheat % ending stocks-to-use are estimated to be 30.6% S/U – which is 231% of 13.2% S/U in MY 2007/08 (or 1.31 times higher).  However, U.S. wheat prices in “current crop” MY 2014/15 are projected to be only moderately lower, in the range of $5.80-$6.20 (midpoint = $6.00 /bu).  Similarly, in MY 2012/13 U.S. wheat % ending stocks-to-use of 29.9% are estimated to be 226% higher (1.26 times larger) than in 2007/08 (13.2%), while U.S. wheat prices are still 20% higher at a record high of $7.77 /bu.  The existence of higher prices for U.S. wheat while U.S. wheat ending percent (%) stocks–to–use measures are also higher are indicators that inflation has occurred over time in U.S. wheat prices.

I-G. KSU U.S. Wheat “Lower & Higher Export” Supply-Demand & Price Scenarios for “current crop” MY 2014/15

The primary factor that could change U.S. wheat price prospects for the worse or better at this time in the “current crop” 2014/15 marketing year would be either a sharp and significant decrease or increase in U.S. wheat exports.  There is still a reasonable chance that this could occur, given uncertainty regarding wheat production prospects for the remainder of “current crop” MY 2014/15 (i.e., through May 31, 2015 and beyond) in other major World wheat exporting and using countries such as Australia, the Black Sea Region, Canada, Argentina, Europe, China, the United States, and elsewhere.  

KSU projections of 2014 U.S. wheat planted and harvested acreage, yields and production (all equal to those of the USDA) for both the “Lower Exports” and “Higher Exports” scenario are found in Table 1.  Probability-weighted KSU forecasts of U.S. wheat average prices for “current crop” MY 2014/15 for these two alternative U.S. wheat market scenarios based on projections of U.S. wheat % ending stocks-to-use are provided Table 1.  Specifics are provided below.

A.     Lower Exports” Scenario: Exports = 800 mb, 38.1% Stx/Use, $5.90/bu – 10% Probability

In this “Lower Exports” scenario, it is estimated that at this time there is approximately a 10% chance of U.S. wheat acreage, yields, production, and non-export usage being essentially equal to USDA projections in the December 10, 2014 USDA WASDE report with the exception of 125 mb lower exports, which leads to lower total use, higher ending stocks and higher % ending stocks-to-use, and to lower projected prices (Table 1 and Figure 7). 

Under this scenario, 2014 U.S. wheat total supplies and U.S. food, seed, livestock feeding, and residual use are all unchanged from the December USDA WASDE projection for “current crop” MY 2014/15.  However, a decline of 125 mb from the 925 mb USDA projection down to 800 mb would cause U.S. wheat total usage to be 2.016 bb (down 125 mb), and ending stocks to be 769 mb (up 125 mb from the USDA December estimate).  Consequently, % ending stocks-to-use are projected to be 38.6% (up from 30.6% projected by the USDA). Given these forecast assumptions, U.S. wheat average prices are projected by KSU to be in the range of $5.65-$6.15 per bushel for “current crop” MY 2014/15 (midpoint = $5.90). 

This KSU price mid-point projection for the “Lower Export” scenario of $5.90 /bu within a range of $5.65-$6.15 /bu compares to the USDA’s “current crop” MY 2014/15 projection of $5.80-$6.20 (mid-point = $6.00 /bu), with the midpoint of the KSU “Lower Export” forecast of $5.90 being within the USDA forecast price range (i.e., below $5.65 /bu). 

To accomplish this, U.S. wheat prices would have to decline sharply through the end of the “current crop” 2014/15 marketing year to overcome the “early season sales price weighting” effect that has already taken place.  The following calculation table shows how for the “$5.90/bu Low U.S. Export Scenario” U.S. wheat prices would have to be in the $5.20-$5.25 range for January-May 2015 to cause the “current crop” MY 2014/15 marketing year average price to fall to $5.90 per bushel.

 

Month

% Avg. Sales by Month

11/6/2014

Scenario

12/17/2014

Scenario

$5.90/bu Low U.S. Export Scenario

$6.60/bu Low U.S. Export Scenario

June 2014

13.0%

$6.50

$6.50

$6.50

$6.50

July

19.3%

$6.16

$6.16

$6.16

$6.16

August

13.3%

$5.98

$5.98

$5.98

$5.98

September

9.1%

$5.74

$5.74

$5.74

$5.74

October

6.3%

$5.71

$5.71

$5.71

$5.71

November

4.9%

$5.96

$5.96

$5.96

$5.96

December Forecast

6.6%

$5.82

$6.96

$6.96

$7.00

January Forecast 2015

7.6%

$5.82

$6.96

$5.25

$7.75

February Forecast

5.2%

$5.82

$6.96

$5.25

$7.75

March Forecast

6.0%

$5.90

$6.98

$5.25

$7.75

April Forecast

4.6%

$5.90

$6.98

$5.25

$7.75

May Forecast

4.1%

$5.96

$6.95

$5.20

$7.75

Totals

100.0% of Grain Sales

$6.00 MYA U.S. Wheat $

$6.38 MYA U.S. Wheat $

$5.90 MYA

U.S. Wheat $

$6.60 MYA

U.S. Wheat $

B.      Higher Exports” Scenario: Exports = 1.050 bb, 23.4% Stx/Use, $6.60/bu – 20% Probability

In this “Higher Exports” outcome scenario, it is estimated that at this time there is approximately a 20% chance of U.S. wheat acreage, yields, production, and non-export usage being essentially equal to USDA projections in the December 10, 2014 USDA WASDE report with the exception of 125 mb higher exports, which leads to higher total use, lower ending stocks and lower % ending stocks-to-use, and to higher projected prices (Table 1 and Figure 7). 

Under this scenario, 2014 U.S. wheat total supplies and U.S. food, seed, livestock feeding, and residual use are all unchanged from the December USDA WASDE projection for “current crop” MY 2014/15.  However, an increase in exports of 125 mb from the 925 mb USDA projection up to 1.050 bb, leads to an increase in U.S. wheat total usage of 2.266 bb (up 125 mb), and ending stocks of 529 mb (down 125 mb from the USDA).  Consequently, % ending stocks-to-use are projected to be 23.4% (down from 30.6% projected by the USDA). Given these forecast assumptions, U.S. wheat average prices are projected by KSU to be in the range of $6.35-$6.95 per bushel for “current crop” MY 2014/15 (midpoint = $6.60). 

This KSU price mid-point projection for the “Higher Export” scenario of $6.60 /bu within a range of $6.35-$6.95 /bu compares to the USDA’s “current crop” MY 2014/15 projection of $5.80-$6.20 (mid-point = $6.00 /bu), with the midpoint of the KSU “Higher Export” forecast of $6.60 being above the upper end of the USDA forecast price range (i.e., above $6.20 /bu).  

To accomplish this, U.S. wheat prices would have to rise sharply through the end of the “current crop” 2014/15 marketing year to overcome the “early season sales price weighting” effect that has already taken place (see the previous calculation table presented above).  The following table shows how for the “$6.60/bu High U.S. Export Scenario” U.S. wheat prices would have to be near $7.75 for January-May 2015 to cause the “current crop” MY 2014/15 marketing year average price to rise to $6.60 per bushel.

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “current crop” MY 2014/15 will be up 1.0% from the  2013/14 marketing year that ended on May 31, 2014, and up 9.8% from two years ago in MY 2012/13.  World wheat total supplies in “current crop” MY 2014/15 are forecast to be 907.6 mmt, up 2.0 mmt (up 0.2%) from 905.6 mmt a year ago, and up 18.3 mmt (up 6.25%) from 854.1 mmt two years ago.  Given these changes, World wheat total use in “current crop” MY 2014/15 is projected to increase 1.2% from MY 2013/14, and to be up 4.8% from MY 2012/13.  World wheat ending stocks in “current crop” MY 2014/15 are projected to increase by 5.2% from a year earlier in MY 2013/14, and by 11.7% from two years ago in MY 2012/13.  

Uncertainty still exists for the World wheat market supply-demand balance situation that will ultimately occur in “current crop” MY 2014/15 (i.e., over the June 1, 2014 through May 31, 2015 period).  However, absent any major 2014 wheat production shortfalls or other unanticipated geopolitical conflicts or disruptive economic problems among major world wheat producers and exporters, if the USDA’s December 10th WASDE report projection holds true, wheat prices in “current crop” MY 2014/15 will likely end up being lower than the price levels that occurred in MY 2013/14.   

Wheat producing areas of the World from which annual variations in wheat production have had a notable impact on wheat markets (i.e., caused market volatility) in the last several years include a) Russia, Ukraine and Kazakhstan in the Black Sea Region, b) Australia, c) the United States, d) Canada, e) the wheat production regions in the European Union, and f) China.  At this time World wheat markets either are aware of possible wheat production problems that could develop in a) Australia (due to intensification of the El Nino weather pattern), b) Kazakhstan, c) Canada, d) potential U.S. winter wheat establishment and cold weather problems, and e) elsewhere.  Also, financial and currency problems are now occurring in Russia, leading to concerns being expressed by Russian government entities about retaining wheat off of World export markets to ensure adequate domestic wheat supplies.  To the degree that Russia would effectively reduce or constrain its wheat exports, U.S. wheat exports would be supported along with World wheat prices.  

In this and each other marketing year the potential exists for production and/or supply problems to develop in World wheat production areas sometime during the remainder of 2014 and on into 2015 that are of a magnitude that World wheat markets could be significantly impacted.   And such World wheat market concerns seem now to be emerging in late 2014.   

II-A. World Wheat Production by Country / Region

Projected World wheat production of 722.2 mmt in “current crop” MY 2014/15 would be the largest crop on record, being up 1.0% from the previous record high of 714.8 mmt for MY 2013/14.  This total for “current crop” MY 2014/15 of 722.2 mmt is also up 9.8% from 657.9 mmt in MY 2012/13, and marginally larger than the 3rd largest crop on record of 695.8 mmt in MY 2011/12.  World wheat production was in the range of 613-687 mmt during the previous MY 2007/08-MY 2010/11 period (Table 2 and Figure 9).  Foreign (non-U.S.) wheat production is projected to be 667.1 mmt in “current crop” MY 2014/15, up from 656.7 mmt in MY 2013/14, and up from 596.6 mmt in MY 2012/13. 

Table 2 provides a projected list of the major wheat producing countries or regions in the World in “current crop” MY 2014/15, the 2013/14 marketing year, and MY 2012/13, along with any changes that have occurred in their wheat production forecasts since the November WASDE report.  Year-over-year increases in wheat production are projected in Argentina (up 1.5 mmt to 12.0 mmt), the European Union (up 12.3 to 155.4 mmt), Brazil (up 1.0 to 6.3 mmt), China (up 4.1 to 126.0 mmt), Pakistan (up 1.0 to 25.0 mmt), India (up 2.4 to 95.9 mmt), Russia (up 6.9 to 59.0 mmt), and Ukraine (up 2.2 to 24.5 mmt).  Year-over-year declines in “current crop” MY 2014/15 production are projected for the United States (down 3.0 to 55.1 mmt), Australia (down 3.0 to 24.0 mmt), Canada (down 8.2 to 29.3 mmt), selected Middle Eastern Countries (down 1.4 to 17.5 mmt), North Africa (down 2.9 to 16.8 mmt), and Kazakhstan (down 1.4 to 12.5 mmt).  

In “current crop” MY 2014/15, the European Union is projected to be the largest World producer of wheat at 155.4 mmt, followed by China (126.0 mmt), India (95.9 mmt), Russia (59.0 mmt), the United States (55.1 mmt), Canada (29.3 mmt), Pakistan (25.0 mmt), Ukraine (24.5 mmt), Australia (24.0 mmt), Selected Middle Eastern Countries (17.5 mmt), North Africa (16.8 mmt), Kazakhstan (12.5 mt), Argentina (12.0 mmt), and Brazil (6.3 mmt).

II-B. World Wheat Exports by Country / Region

Global wheat exports in “current crop” MY 2014/15 are projected to be a 158.0 mmt, down 4.7% from 165.8 mmt in  MY 2013/14, while also up 15.1% from 137.4 mmt in MY 2012/13 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 132.9 mmt in “current crop” MY 2014/15, down 0.7% from 133.8 mmt in MY 2013/14, and up 21.0% from 109.8 mmt in MY 2012/13. 

Table 3 provides a projected list of the major wheat exporting countries or regions in the World in the “current crop” 2014/15 marketing year, along with MY 2013/14 and MY 2012/13.  Year-over-year increases in wheat exports in “current crop” MY 2014/15 are projected for Argentina, Brazil, China, selected Middle Eastern countries, Russia, and Ukraine.  However, decreased exports are projected for the United States, Australia, Canada, the EU, North Africa, Pakistan, Southeast Asia, India, and Kazakhstan. 

The largest projected exporter of wheat in “current crop” MY 2014/15 is the European Union (29.0 mmt), followed by the United States (25.2 mmt), Canada (22.5 mmt), Russia (22.0 mmt), Australia (17.5 mmt), Ukraine (10.3 mmt), Kazakhstan (5.8 mmt), Argentina (6.0 mmt), India (3.3 mmt), China (1.0 mmt), and Brazil (1.0).

II-C. World Wheat Imports by Country / Region

Global wheat imports in “current crop” MY 2014/15 are projected to be 156.2 mmt, down 0.3% from 156.6 mmt in MY 2013/14, and up 8.3% from 144.2 mmt in MY 2012/13 (Table 4).  Foreign (non-U.S.) wheat imports are projected to be 151.3 mmt in “current crop” MY 2014/15, down 0.4% from 152.0 mmt in MY 2013/14, and up 7.4% from 140.9 mmt in MY 2012/13. 

Table 4 provides a projected list of the major wheat importing countries or regions in the World in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  While increased wheat imports are projected for the United States, the European Union, selected Middle Eastern countries, Pakistan, and Southeast Asia, and Kazakhstan for “current crop” MY 2014/15, only marginal or no year-over-year changes in wheat imports in “current crop” MY 2014/15 are projected for Argentina, Australia, Canada, Brazil, India, and Ukraine.   Decreased imports are projected for China, North Africa, and Russia. 

North Africa (23.8 mmt) is projected to be the largest World wheat importer in “current crop” MY 2014/15, followed by Selected Middle Eastern countries (22.5 mmt), Southeast Asia (17.0 mmt), Brazil (7.0 mmt), the Former Soviet Union (12 countries) (7.0 mmt), the European Union (5.0 mmt), the United States (4.9 mmt), China (1.7 mmt), Pakistan (0.7 mmt), Canada (0.5 mmt), Russia (0.2 mmt), Kazakhstan (0.2 mmt), and Australia (0.15 mmt).  China is projected to see “current crop” MY 2014/15 wheat imports decrease to 1.7 mmt from 6.8 mmt in MY 2013/14, and down from 3.0 mmt in MY 2012/13. 

II-D. World Wheat Domestic Feed Use by Country / Region

Global wheat domestic feed use in “current crop” MY 2014/15 is projected to be a 139.2 mmt, up 6.9% from 130.3 mmt in MY 2013/14, and up 1.6% from 137.1 mmt in MY 2012/13 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 134.3 mmt in “current crop” MY 2014/15, up 8.3% from 124.1 mmt in MY 2013/14, and up 5.7% from 127.0 mmt in MY 2012/13. 

Table 5 provides a projected list of the major countries or regions in the World terms of wheat domestic feed use in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat feed use in “current crop” MY 2014/15 are projected for Canada, the European Union, Brazil, China, selected Middle Eastern countries, Pakistan, Russia, and Ukraine.  Declines in domestic wheat feeding are forecast for the United States, Australia, North Africa, and India, with little or no changes for Argentina, Southeast Asia, and Kazakhstan. 

The European Union (56.0 mmt) is projected to be the largest World user of wheat for domestic feeding in “current crop” MY 2014/15, followed by China (23.0 mmt), Russia (13.0 mmt), the United States (4.9 mmt), Canada (5.0 mmt), India (4.5 mmt), selected Middle East countries (4.2 mmt), Ukraine (4.0 mmt), Australia (3.4 mmt), Southeast Asia (2.5 mmt), North Africa (2.2 mmt), Kazakhstan (1.9 mmt), Pakistan (1.2 mmt), Brazil (1.0 mmt), and Argentina (0.1 mmt). 

II-E. World Wheat Food, Seed & Industrial (FSI) Use by Country / Region

Global wheat food, seed and industrial (FSI) use in “current crop” MY 2014/15 is projected to be a 573.4 mmt, down 0.1% from 573.7 mmt in MY 2013/14, and up 5.7% from 542.6 mmt in MY 2012/13 (Table 6).  Foreign (non-U.S.) wheat FSI use is projected to be 545.2 mmt in “current crop” MY 2014/15, down 0.1% from 545.7 mmt in  MY 2013/14, and up 5.9% from 514.9 mmt in MY 2012/13. 

Table 6 provides a projected list of the major countries or regions in the World in terms of wheat FSI use in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  Year-over-year increases or no changes in wheat FSI use in “current crop” MY 2014/15 are projected for all countries except North Africa and the Ukraine – which are projected to decline marginally. 

China (101.0 mmt) is projected to be the largest World FSI user of wheat in “current crop” MY 2014/15, followed by India (90.0 mmt), the European Union (68.5 mmt), North Africa (39.7 mmt), selected Middle Eastern countries (33.9 mmt), the United States (28.2 mmt), Pakistan (23.9 mmt), Russia (22.0 mmt), Southeast Asia (13.9 mmt), Brazil (11.3 mmt), Ukraine (8.0 mmt), Argentina (6.1 mmt), Canada (5.3 mmt), Kazakhstan (4.8 mmt), and Australia (3.4 mmt). 

II-F. World Wheat Total Use by Country / Region

Projected World wheat total use of 712.6 mmt in “current crop” MY 2014/15 is the highest amount on record, being up 1.2% from the previous record high of 703.9 mmt in MY 2013/14, up 4.8% from 679.7 mmt in MY 2012/13, and up from the range of 614.5-688.0 mmt during the MY 2007/08-MY 2011/12 period (Table 7 and Figure 9).  Foreign (non-U.S.) wheat total use is projected to be 679.5 mmt in “current crop” MY 2014/15, up 1.5% from 669.8 mmt in  MY 2013/14, and up 5.9% from 641.9 mmt in MY 2012/13. 

Table 7 provides a projected list of the major countries or regions in the World in terms of total wheat use in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  Sizable year-over-year increases in wheat total use in “current crop” MY 2014/15 are projected for the European Union and China, with smaller increases projected for Argentina, Canada, Brazil, selected Middle Eastern countries, Pakistan, Southeast Asia, India, Russia, and Ukraine.  Decreases in total wheat usage are forecast for the United States, Australia, North Africa, and Kazakhstan.

The European Union (124.5 mmt) is projected to be the largest World user of wheat in “current crop” MY 2014/15, followed closely by China (124.0 mmt), India (94.2 mmt), North Africa (41.9 mmt), selected Middle Eastern countries (38.1 mmt), Russia (35.0 mmt), the United States (33.1 mmt), Pakistan (25.1 mmt), Southeast Asia (16.4 mmt), Brazil (12.3 mmt), Ukraine (12.0 mmt), Canada (10.3 mmt), Australia (6.8 mmt), Kazakhstan (6.7 mmt), and Argentina (6.2 mmt).

II-G. World Wheat Ending Stocks by Country / Region

Projected World wheat ending stocks of 194.9 mmt for “current crop” MY 2014/15 is up 5.2% from 185.3 mmt in MY 2013/14, and up 11.7% from 174.5 mmt in MY 2012/13, but is down from the range of 196.2-201.2 mmt over the MY 2009/10 through 2011/12 period (Table 8 and Figure 9).  The 37 year low in World wheat ending stocks occurred when supply-demand balances fell to 129.0 mmt in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks are projected at 177.1 mmt in “current crop” MY 2014/15, up 4.6% from 169.3 mmt in MY 2013/14, and up 14.3% from 154.9 mmt in MY 2012/13. 

Table 8 provides a list of the major countries or regions in the World in terms of projected holdings of wheat ending stocks in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat ending stocks in “current crop” MY 2014/15 are projected for the United States, the European Union, China, selected Middle Eastern countries, Russia, and Ukraine.  Decreases are projected for Argentina, Australia, Canada, North Africa, Southeast Asia, and India.  No or marginal changes are projected for Brazil, Pakistan, and Kazakhstan.

China (63.0 mmt) is projected to be the largest holder of wheat ending stocks in the World in “current crop” MY 2014/15, followed by the United States (17.8 mmt), the European Union (17.1), India (16.3 mmt), North Africa (11.7 mmt), selected Middle Eastern countries (11.1 mmt), Russia (7.4 mmt), Canada (6.8 mmt), Australia (6.1 mmt), Ukraine (5.9 mmt), Southeast Asia (3.3 mmt), Pakistan (2.1 mmt), Argentina (2.4 mmt), Kazakhstan (2.2 mmt), and Brazil (1.9 mmt).

II-H. World Wheat Ending Stocks-to-Use by Country / Region

Projected World wheat ending stocks-to-use of 27.4% for “current crop” MY 2014/15 are up from 26.3% in  MY 2013/14, and up from 25.7% in MY 2012/13 (Table 9 and Figure 8).  After falling to minimum levels of World wheat % ending stocks-to-use in MY 2006/07 (21.7% S/U) and MY 2007/08 (21.0% S/U), World wheat % S/U was 26.4% in MY 2008/09, 30.9% in MY 2009/10, 30.3% in MY 2010/11, 28.5% in MY 2012/13, 25.4% in MY 2012/13, and 26.7% in MY 2013/14, and is now projected to be 27.4% in “current crop” MY 2014/15.  The 37 year low in World wheat ending stocks-to-use occurred when supply-demand balances fell to 21.0% in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks-to-use are projected at 21.8% in “current crop” MY 2014/15, up from 21.1% in  MY 2013/14, and 20.6% in MY 2012/13. 

Table 9 provides a list of the major countries or regions in the World in terms of projected wheat percent (%) ending stocks-to-use in the “current crop” 2014/15 marketing year, along with MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat ending stocks-to-use in “current crop” MY 2014/15 are projected for the United States, Australia, the European Union, China, selected Middle Eastern countries, Russia, Kazakhstan, and Ukraine.  Decreases are projected for Argentina, Canada, Brazil, North Africa, Pakistan, Southeast Asia, and India. 

China (50.4%) is projected to be the largest holder of wheat ending stocks-to-use in the World in “current crop” MY 2014/15, followed by the United States (30.6%), selected Middle Eastern countries (28.3%), North Africa (27.6%), Ukraine (26.5%), Australia (25.1%), Canada (20.6%), Argentina (19.8%), Southeast Asia (19.4%), Kazakhstan (17.5%), India (16.7%), Brazil (14.1%), Russia (13.0%), the European Union (11.1%), and Pakistan (8.0%).

Similar to the relationship between U.S. wheat ending stocks-to-use and U.S. average wheat prices (see Figure 8) since MY 1973/74, a negative market relationship has existed between U.S. wheat season average cash prices and World wheat % ending stocks-to-use – but with an adjustment or “structural jump” after MY 2009/10 (Figure 10).  Larger World wheat supply-demand balances (i.e., higher percentages of ending stocks-to-use) are typically associated with lower U.S. wheat prices, while smaller supply-demand balances are usually associated with higher U.S. wheat prices – all else being equal.  As in Figure 8 earlier, U.S. wheat prices in Figure 10 are reported on a nominal basis (i.e., not adjusted for inflation).   Whereas the minimum U.S. wheat percent stocks-to-use since MY 1973/74 was 13.2% in the historic tight stocks year of MY 2007/08, the historic minimum in World wheat percent stocks-to-use occurred in that same marketing year at 21.0%.  Since that time, World wheat ending stocks-to-use have not fallen below 25.4% in MY 2012/13.

Table 1. U.S. Wheat Supply-Demand Balance Sheet: MY 2008/09 – “current crop” MY 2014/15 (Dec. 10th USDA WASDE & KSU 2014/15 Projections)

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

USDA

2014/15

KSU

Lower Exports***

2014/15

KSU

Higher Exports***

2014/15

% Probability of Occurring

 

 

 

 

 

 

70%

10%

20%

Planted Area (million acres)

63.617

59.017

52.620

54.277

55.294

56.236

56.822

56.822

56.822

Harvested Area (million acres)

56.036

49.841

46.883

45.687

48.758

45.332

46.381

46.381

46.381

% Harvested/Planted Area

88.1%

84.5%

89.1%

84.2%

88.2%

80.6%

81.6%

81.6%

81.6%

Yield / harvested acre (bu/ac)

44.8

44.3

46.1

43.6

46.2

47.1

43.7

43.7

43.7

 

Million Bushels

Beginning Stocks

306

657

976

862

743

718

590

590

590

Production

2,512

2,209

2,163

1,993

2,252

2,135

2,026

2,026

2,026

Imports

127

119

97

112

123

169

180

180

180

Total Supply

2,945

2,984

3,236

2,968

3,118

3,021

2,795

2,795

2,795

 

 

Food Use

927

919

926

941

945

951

960

960

960

Seed Use

78

68

71

76

73

77

76

76

76

Exports

1,015

879

1,291

1,051

1,012

1,176

925

 ò125  800

ñ125  1,050

Feed & Residual Use

268

150

85

162

370

228

180

180

180

Total Use

2,288

2,008

2,373

2,226

2,400

2,432

2,141

2,016

2,266

 

 

Ending Stocks

657

976

863

743

718

590

654

779

529

% Ending Stocks-to-Use

28.72%

48.61%

36.37%

33.38%

29.92%

24.26%

30.55%

38.64%

23.35%

U.S. Wheat Avg. Farm Price ($/bushel)

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$5.80-$6.20 ($6.00)

$5.65-$6.15 ($5.90)

$6.35-$6.95

($6.60)


 

Figure 3. U.S. Wheat Planted Acreage – All Winter, Spring & Durum Wheat Classes (1973-2014) plus KSU Estimate for 2015 U.S. Winter Wheat

Text Box: Question?: Will U.S. wheat acreage ñ or ò in 2015?  Up 5%?  Up 10%?

Figure 4. U.S. All Wheat Planted & Harvested Acreage (1973-2014)

Figure 5. U.S. All Wheat Yield Trend (1973-2013), USDA 2014 Projection, & KSU 2014 Trend  (December 10, 2014)

Text Box: USDA 2014 Yield = 43.7 bu/ac
KSU 2015 trend: 45.9 bu/ac 
10 year Min. = 38.6 bu/ac
10 year Max. = 47.1 bu/ac
 

Figure 6. U.S. Wheat Total Supplies for MY 2004/05 – “current crop” MY 2014/15 (December 10, 2014)



Figure 6. Trends in U.S. Wheat Use & Ending Stocks: MY 2004/05 - “current crop” MY 2014/15

                    (December 10, 2014 USDA WASDE Report)

Figure 7. U.S. Wheat Ending Stocks vs U.S. Cash Prices: MY 2004/05 thru “current crop” MY 2014/15      
(December 10, 2014 USDA WASDE Report & KSU forecasts for MY 2014/15)

Figure 8. U.S. Wheat Price vs U.S. % Stocks-to-Use (MY 1973/74 thru “Current Crop” MY 2014/15)

Text Box: “New Crop”
MY 2014/15
30.6% S/U
$6.00
Text Box: 2011/12

Figure 9. World Wheat Usage & Ending Stocks: MY 2007/08 thru “current crop” MY 2014/15                              
(December 10, 2014 USDA WASDE Report)

Text Box: Wheat Usage
ñ12.0 mmt/yr 
(+2.0%/yr) 
since 2007/08
Text Box: Production
ñ13.7 mmt/yr (+2.2%/yr) 
since 2007/08
 
Text Box: End Stocks
194.9 mmt in “new crop” 2014/15
 
Up 65.9 mmt (+51%) since 
37 year low in 
MY 2007/08
Text Box: Wheat Trade
133-166 mmt since 2008/09
 
158.0 mmt in MY 2014/15

Figure 10. U.S. Wheat Price vs % World Stocks-to-Use (MY 1973/74 through “current crop” MY 2014/15)       

Text Box: “New Crop” 2014/15 
27.6% S/U & $6.00/bu
Text Box: 2011/12
Text Box: 2012/13 
25.4% S/U & $7.77/bu
Text Box: “Old Crop” 2013/14 
26.7% S/U & $6.87/bu
Text Box: 2008/09
Text Box: 2011/12
Text Box: 2010/11
Text Box: 2007/08
Text Box: 2006/07 
Text Box: 2009/10
Text Box: 1986/87

 

Table 2. World Wheat Production Projections for “current crop” MY 2014/15, MY 2013/14, and MY 2012/13

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2014/15     December 2014

Wheat Production: November 2014 New Crop 2014/15                   (1 month ago)

New Crop 2014/15 Production:               December Less November  2014                    

New Crop 2014/15 Production:                Percent (%)         December of November  2014

December Wheat Production: Old crop 2013/14          

November  Wheat Production: Old crop 2013/14

December Less November  Wheat  Production             for Old crop 2013/14

New Crop 2014/15 Production             Less Last year’s 2013/14

% New Crop 2014/15 Production of                         Old crop 2013/14

Wheat Production: 2012/13                           (2 years ago)

New Crop 2014/15 Production             Less 2012/13

% Old crop 2014/15 Production       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

722.18

719.86

2.32

100.3%

714.77

714.74

0.03

7.41

101.0%

657.94

64.24

109.8%

United States

55.13

55.13

0.00

100.0%

58.11

58.11

0.00

(2.98)

94.9%

61.30

(6.17)

89.9%

Total Foreign

667.05

664.73

2.32

100.3%

656.66

656.63

0.03

10.39

101.6%

596.64

70.41

111.8%

Major Exporters

220.70

218.90

1.80

100.8%

218.17

218.15

0.02

2.53

101.2%

193.21

27.49

114.2%

Argentina

12.00

12.00

0.00

100.0%

10.50

10.50

0.00

1.50

114.3%

9.30

2.70

129.0%

Australia

24.00

24.00

0.00

100.0%

27.01

27.01

0.00

(3.01)

88.9%

22.86

1.14

105.0%

Canada

29.30

27.50

1.80

106.5%

37.53

37.50

0.03

(8.23)

78.1%

27.21

2.09

107.7%

European Union

155.40

155.40

0.00

100.0%

143.13

143.13

0.00

12.27

108.6%

133.85

21.55

116.1%

Major Importers

196.14

196.14

0.00

100.0%

194.06

194.06

0.00

2.08

101.1%

187.29

8.85

104.7%

Brazil

6.30

6.30

0.00

100.0%

5.30

5.30

0.00

1.00

118.9%

4.38

1.92

143.8%

China

126.00

126.00

0.00

100.0%

121.93

121.93

0.00

4.07

103.3%

121.02

4.98

104.1%

Selected Middle East

17.53

17.53

0.00

100.0%

18.92

18.92

0.00

(1.39)

92.7%

17.18

0.35

102.0%

North Africa

16.80

16.80

0.00

100.0%

19.72

19.72

0.00

(2.92)

85.2%

17.32

(0.52)

97.0%

Pakistan

25.00

25.00

0.00

100.0%

24.00

24.00

0.00

1.00

104.2%

23.30

1.70

107.3%

Southeast Asia

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

India

95.91

95.91

0.00

100.0%

93.51

93.51

0.00

2.40

102.6%

94.88

1.03

101.1%

Former Soviet Union - 12 Countries

111.60

111.10

0.50

100.5%

103.87

103.87

0.00

7.73

107.4%

77.80

33.80

143.4%

Russia

59.00

59.00

0.00

100.0%

52.09

52.09

0.00

6.91

113.3%

37.72

21.28

156.4%

Kazakhstan

12.50

12.00

0.50

104.2%

13.94

13.94

0.00

(1.44)

89.7%

9.84

2.66

127.0%

Ukraine

24.50

24.50

0.00

100.0%

22.28

22.28

0.00

2.22

110.0%

15.76

8.74

155.5%

 

Table 3. World Wheat Export Projections for “current crop” MY 2014/15, MY 2013/14, and MY 2012/13

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2014/15     December 2014

Wheat Exports: November  2014 New Crop 2014/15                   (1 month ago)

New Crop 2014/15 Exports:               December Less November  2014                    

New Crop 2014/15 Exports:                Percent (%)         December of November  2014

December Wheat Exports: Old crop 2013/14          

November  Wheat Exports: Old crop 2013/14

December Less November  Wheat  Exports for Old crop 2013/14

New Crop 2014/15 Exports Less Last year’s 2013/14

% New Crop 2014/15 Exports of Old crop 2013/14

Wheat Exports: 2012/13                           (2 years ago)

New Crop 2014/15 Exports Less 2012/13

% Old crop 2014/15 Exports       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

158.04

154.92

3.12

102.0%

165.80

165.81

(0.01)

(7.76)

95.3%

137.36

20.68

115.1%

United States

25.17

25.17

0.00

100.0%

32.01

32.01

0.00

(6.84)

78.6%

27.54

(2.37)

91.4%

Total Foreign

132.87

129.75

3.12

102.4%

133.79

133.79

0.00

(0.92)

99.3%

109.82

23.05

121.0%

Major Exporters

75.00

73.50

1.50

102.0%

75.98

75.98

0.00

(0.98)

98.7%

63.85

11.15

117.5%

Argentina

6.00

6.00

0.00

100.0%

2.20

2.20

0.00

3.80

272.7%

3.55

2.45

169.0%

Australia

17.50

17.50

0.00

100.0%

18.62

18.62

0.00

(1.12)

94.0%

18.66

(1.16)

93.8%

Canada

22.50

22.00

0.50

102.3%

23.24

23.24

0.00

(0.74)

96.8%

18.97

3.53

118.6%

European Union

29.00

28.00

1.00

103.6%

31.93

31.93

0.00

(2.93)

90.8%

22.68

6.32

127.9%

Major Importers

6.87

6.34

0.53

108.4%

5.28

5.28

0.00

1.59

130.1%

6.47

0.40

106.2%

Brazil

1.00

1.00

0.00

100.0%

0.10

0.10

0.00

0.90

1000.0%

1.58

(0.58)

63.3%

China

1.00

1.00

0.00

100.0%

0.89

0.89

0.00

0.11

112.4%

0.97

0.03

103.1%

Selected Middle East

1.03

0.53

0.50

194.3%

0.58

0.58

0.00

0.45

177.6%

0.69

0.34

149.3%

North Africa

0.50

0.48

0.02

104.2%

0.50

0.50

0.00

0.00

100.0%

0.61

(0.11)

82.0%

Pakistan

0.70

0.70

0.00

100.0%

0.75

0.75

0.00

(0.05)

93.3%

0.85

(0.15)

82.4%

Southeast Asia

0.84

0.84

0.00

100.0%

0.88

0.88

0.00

(0.04)

95.5%

0.77

0.07

109.1%

India

3.30

3.00

0.30

110.0%

5.90

5.90

0.00

(2.60)

55.9%

6.82

(3.52)

48.4%

Former Soviet Union - 12 Countries

38.84

38.54

0.30

100.8%

37.10

37.10

0.00

1.74

104.7%

25.38

13.46

153.0%

Russia

22.00

22.50

(0.50)

97.8%

18.53

18.53

0.00

3.47

118.7%

11.29

10.71

194.9%

Kazakhstan

5.80

5.30

0.50

109.4%

8.10

8.10

0.00

(2.30)

71.6%

6.29

(0.49)

92.2%

Ukraine

10.30

10.00

0.30

103.0%

9.76

9.76

0.00

0.54

105.5%

7.19

3.11

143.3%

 

Table 4. World Wheat Import Projections for “current crop” MY 2014/15, MY 2013/14, and MY 2012/13

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2014/15     December 2014

Wheat Imports: November  2014 New Crop 2014/15                   (1 month ago)

New Crop 2014/15 Imports:               December Less November  2014                    

New Crop 2014/15 Imports:                Percent (%)         December of November  2014

December Wheat Imports: Old crop 2013/14          

November  Wheat Imports: Old crop 2013/14

December Less November  Wheat  Imports for Old crop 2013/14

New Crop 2014/15 Imports Less Last year’s 2013/14

% New Crop 2014/15 Imports of Old crop 2013/14

Wheat Imports: 2012/13                           (2 years ago)

New Crop 2014/15 Imports             Less 2012/13

% Old crop 2014/15 Imports       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

156.16

153.44

2.72

101.8%

156.59

156.59

0.00

(0.43)

99.7%

144.22

11.94

108.3%

United States

4.90

4.63

0.27

105.8%

4.59

4.59

0.00

0.31

106.8%

3.34

1.56

146.7%

Total Foreign

151.27

148.82

2.45

101.6%

152.00

152.00

0.00

(0.73)

99.5%

140.87

10.40

107.4%

Major Exporters

5.64

5.64

0.00

100.0%

4.58

4.58

0.00

1.06

123.1%

5.91

(0.27)

95.4%

Argentina

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.00

0.01

#DIV/0!

Australia

0.15

0.15

0.00

100.0%

0.15

0.15

0.00

0.00

100.0%

0.14

0.01

107.1%

Canada

0.48

0.48

0.00

100.0%

0.45

0.45

0.00

0.03

106.7%

0.48

0.00

100.0%

European Union

5.00