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Grain Market Outlook

Wheat Market Outlook in June 2015

June 18, 2015


Summary

Since USDA’s World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on June 10th, U.S. wheat market prices have traded lower due to a) marginal improvements in U.S. Hard Red Winter wheat production prospects in the Great Plains, and b) continued strength of the U.S. dollar – a negative for U.S. wheat exports.  For the “new crop” 2015/16 marketing year the USDA projected that 1) World wheat total supplies and total use would be at record high levels, 2) World wheat export trade would be up marginally from a year ago - with a moderate improvement in U.S. exports from the 15 year low in MY 2014/15, and c) World wheat ending stocks would be record high, with percent ending stocks-to-use at their highest level since MY 2011/12.  There are emerging concerns about potential wheat supply prospects from Australia, India, and elsewhere in “new crop” MY 2015/16 due to the development of a significant “El Nino” World weather pattern, as well as the ongoing geopolitical problems in the Black Sea region, and long term uncertainty in World financial and currency markets. World markets have evolved into a “large crop-over-supply” situation, with future prospects dependent on whether production and/or export problems can be avoided in major World wheat producing and exporting areas in year 2015 and beyond.  

The June 30th USDA Acreage and Quarterly Stocks reports may provide direction to the wheat market – both in regards 2015 U.S. wheat planted and harvested acreage and production prospects, as well as the amount of U.S. wheat feeding and other uses that have occurred during the March-May 2015 time frame. 

USDA U.S. Wheat Supply-Demand & Price Forecast: For U.S. wheat in the “new crop” 2015/16 marketing year, the USDA projected that there would be 55.367 million acres (ma) planted, 47.977 ma harvested, 44.2 bu/ac yields, 2.121 billion bushels (bb) production, 2.973 bb total supplies, 925 million bushel (mb) exports, 195 mb feed & residual use, 2.159 bb total use, 814 mb end stocks, with 37.7% ending-stocks-to-use (the highest level since 48.6% in MY 2009/08).  The USDA projected U.S. average wheat prices for “new crop” MY 2015/16 in the range of $4.40-$5.40 /bu. (midpoint =$4.90) – the lowest since $4.87 /bu in MY 2009/10.

KSU U.S. Wheat Supply-Demand & Price Forecast: Key market factors for “new crop” MY 2015/16 are the level of 2015 U.S. wheat production, and the degree of recovery in U.S. wheat exports.  Kansas State University projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two scenarios:  A) “Medium Yield-Higher Exports” Scenario: 65% prob. of 55.367 ma planted, 46.557 ma harvested, 43.9 bu/ac yield, 2.044 bb production, 2.895 bb total supplies, 975 mb exports, 2.194 bb total use, 702 mb ending stocks, 32.0% S/U, and $5.50 /bu U.S. avg. price. B) “Lower Yield-Higher Exports” Scenario: 35% prob. of 55.367 ma planted, 46.557 ma harvested, 42.5 bu/ac lower yield, 1.979 bb production, 2.841 bb total supplies, 1.000 bb exports, 2.196 bb total use, 645 mb ending stocks, 29.4% S/U, and $6.10 /bu U.S. avg. price.  

USDA World Wheat: Prospects for large World wheat supplies and stocks are causing lower World wheat market prices.  World wheat total supplies of 922.0 mmt in “new crop” MY 2015/16 are up from 916.3 mmt in MY 2014/15, and from 893.7 mmt in MY 2013/14.  Projected World wheat ending stocks in “new crop” MY 2015/16 of 202.4 mmt (28.1% S/U) are up from 200.4 mmt (28.0% S/U) in MY 2014/15, and from 190.0 mmt (27.0% S/U) in MY 2013/14.  For perspective, these recent supply-demand figures can be compared to the historic World wheat ending stocks and stocks-to-use minimums of 128.75 mmt and 20.9% S/U in MY 2007/08.  

I. U.S. Wheat Market Situation & Outlook

I-A. June 10th USDA Reports & “New Crop” MY 2015/16 Projections

On June 10th the USDA released two reports, the June 2015 Crop Production report from the National Agricultural Statistics Service (NASS), and the June 2015 World Agricultural Supply and Demand Estimates (WASDE) report from the World Agricultural Outlook Board (WAOB)

In the June 10th Crop Production report the USDA released projections of the 2015 U.S. wheat crop.  Projections of 2015 crop size for wheat are based on actual farmer surveys and field trials conducted from May 25th to June 5th by USDA NASS – representing crop conditions and production prospects as of June 1, 2015.  The June 10th WASDE report contained U.S. and World wheat supply-demand and price projections for the 2013/14, “current” 2014/15, as well as the “new crop” 2015/16 marketing years.  The “current” 2014/15 marketing year for U.S. wheat ended on May 31, 2015, while the “new crop” 2015/16 U.S. wheat marketing year began on June 1, 2015, and will last through May 31, 2016. 

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

Since market highs of $7.03 ¾ per bushel for the CME JULY 2015 Kansas hard red winter wheat efutures contract occurring on December 18, 2014, July futures have trended sharply lower – down to a low of $5.37 on February 2, 2015.  Then after rising to a high of $5.86 on February 17, 2015, JULY 2015 futures fell again to $5.22 ¾ on March 6th.  Another round of an upward price trend to above $5.90 in early April was followed by a decline to below $4.90 in early May, and then a rise to $5.63 ¾ on May 18th, and $5.64 ½ on May 21st.  Then after a decline to as low as $4.95 ¾ on May 29th, prices rose as high as $5.53 ¾ on June 5th and $5.54 on June 9th – the day prior to the June 10th USDA Crop Production and WASDE reports.  

Chicago Mercantile Exchange (CME) JULY 2015 Kansas HRW Wheat efutures prices responded to the release of the June 10th USDA reports by trading sharply lower for the day.  JULY 2015 HRW wheat efutures prices opened at $5.48 on Wednesday, June 10th - trading as high as $5.53 ½ and as low as $5.29 ¼ per bushel during the session before closing $0.17 ¾ lower for the day at $5.30 ½ /bu (Figure 1).  The USDA reports were released at midday (i.e., 11 a.m., central time).  

Since the June 10th USDA report, CME JULY 2015 Kansas HRW wheat futures have traded sharply lower – from a high of $5.34 on Thursday, June 11th to a low of $5.05 ¼ on Tuesday, June 16th, before closing at $5.05 ½ on Wednesday, June 17th.    

Similarly, CME DEC 2015 Hard Red Winter wheat efutures prices opened at $5.76 ½ on Wednesday, June 10th – the day of the release of the USDA reports at midday (i.e., 11 a.m., central time) – and traded in a high-low range of $5.82 ¼ down to $5.56 ¼ during the session before closing $0.20 lower for the day at $5.32 ¾ /bu (Figure 1).   Since the June 10th USDA report, CME DEC 2015 Kansas HRW wheat futures have traded sharply lower – from a high of $5.60 ¼ on Thursday, June 11th to a low of $5.32 on Tuesday, June 16th, before closing at $5.33 ¾ on Wednesday, June 17th.    

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

The 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, 2014 the calculated U.S. trade weighted dollar index trended up to a high of 93.37 on Friday, March 13, 2015 – an increase of 23.4%.  Since then the index has moved sideways to lower in a volatile manner, with a High-Low range of 93.10 (March 16th) to 87.57 (May 13th), with the latest recorded value of 89.33 on June 12, 2015.

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 (i.e., which are denominated or “priced” in U.S. dollars).  Although this is not the only factor negatively impacting U.S. wheat exports, it is a very important one – working against U.S. wheat being an affordable, competitive alternative export seller in World wheat trade.  Since early March the U.S. Trade Weighted Dollar Index has decline moderately – lending support longer term prospects for U.S. wheat trade should this down trend continue.  

I-C. U.S. Wheat Production

U.S. Wheat Planted Acreage

In the March 31, 2015 USDA NASS Prospective Plantings report the USDA projected that 2015 U.S. wheat total planted acreage would be 55.367 million acres (ma), down 1.455 ma (-2.6%) from 56.822 ma in 2014, down 869,000 acres (-1.5%) from 56.236 ma in 2013, up 294,000 acres (+0.1%) from 55.294 ma in 2012, and down from 54.277 ma in 2011 (Table 1 and Figures 3 and 4).  The USDA has maintained the same assumption about U.S. wheat planted acreage in the May and June WASDE reports.  The USDA National Agricultural Statistics Service (NASS) will release the annual Acreage report on June 30th in which at lease marginal changes in the USDA’s projection of 2015 U.S. wheat acreage are likely to occur.

The USDA left unchanged its forecasts that total U.S. winter wheat plantings in 2015 would be 40.751 ma, down 1.648 ma (-3.9%) from 42.399 ma in 2014, and down 2.479 ma (-5.7%) from 43.230 ma in 2013.  Of this total, 29.6 ma were projected to be seeded to Hard Red Winter (HRW) wheat in 2015, down approximately 4% from 30.47 ma in 2014, and down marginally from 29.67 ma in 2013.  Soft Red Winter (SRW) wheat planted acreage was projected to be 7.75 ma, down 8.8% from 8.50 ma in 2014, and down 22.8% from 10.04 ma in 2013. White Winter (WW) wheat acres of 3.433 ma in 2015 are essentially equal to the previous year. 

The USDA projected that total U.S. other spring wheat plantings in 2015 would be 12.969 ma, down 56,000 acres (-0.4%) from 13.025 ma in 2014, but up 1.363 ma (+11.7%) from 11.606 ma in 2013.  Of this total, 12.1 ma are Hard Red Spring (HRS) wheat, down from 12.25 ma in 2014, but up from 10.94 ma in 2013.

 Durum wheat plantings in the U.S. in 2015 was projected by the USDA to be 1.647 ma in 2015, up 249,000 acres (+17.8%) from 1.398 ma in 2014, and up 247,000 acres (+17.6%) from 1.400 ma in 2013.

U.S. Wheat Harvested Acreage

In the June 10th USDA WASDE report the USDA left unchanged its previous May 12th WASDE projections of U.S. wheat harvested acreage in 2015 that were based on 10 year harvested-to-planted ratios by state.  Aggregated total U.S. percent harvested-to-planted acreage in the U.S. was estimated to be 86.7% in 2015, up from 81.6% in 2014, 80.6% in 2013, and comparable to the range of 76.0%-89.1% (average = 84.1%, median = 84.4%) over the 2000-2014 period (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 USDA projected that 2015 U.S. wheat total harvested acreage would be approximately 47.977 million acres (ma), up 1.596 ma (+3.4%) from 46.381 ma in 2014, up 2.645 ma (+5.8%) from 45.332 ma in 2013, down 781,000 acres (-1.6%) from 48.758 ma in 2012, and up from 45.687 ma in 2011 (Table 1 and Figure 4).  The USDA also left unchanged its forecast that total U.S. winter wheat harvested acres in 2015 would be 33.838 ma, up 1.534 ma (+4.7%) from 32.304 ma in 2014, and up 1.188 ma (+3.6%) from 32.650 ma in 2013. 

U.S. Wheat Yields & Production

The USDA projected that 2015 U.S. average wheat yields would be 44.2 bushels per acre (bu/ac) – up from 43.5 bu/ac in May, and reflecting improved Hard Red Winter wheat prospects in the Central Plains due to recent rains and cool weather (in spite of accompanying lodging and disease problems).  This projection of 2015 U.S. wheat yields of 44.2 bu/ac is up from 43.7 bu/ac in 2014, the record high of 47.1 bu/ac in 2013, the previous record of 46.2 bu/ac in 2012, 43.6 bu/ac in 2011, and 46.1 bu/ac in 2010 (Table 1 and Figure 5). 

Based on this combination of projections for 2015 planted acreage (55.367 ma), harvested acreage (47.977 ma), and yield (44.2 bu/ac), 2015 U.S. wheat production would be 2.121 billion bushels (bb).  This projection of 2015 U.S. wheat production of 2.121 bb is up 34 mb from May, up from 2.026 bb in 2014, and within the 2004-2014 range of 1.808-2.512 bb (average = 2.128 bb, median = 2.135 bb) (Table 1 and Figure 6).   

I-D. U.S. Wheat Total Supplies

Total supplies of U.S. wheat of 2.973 bb are projected by the USDA for “new crop” MY 2015/16 (up 36 mb from May), resulting from beginning stocks of 712 mb, projected 2015 production of 2.121 bb, and projected imports of 140 mb (Table 1 and Figure 6).   Over the last ten (10) marketing years, U.S. wheat total supplies have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.945 bb in MY 2008/09, 2.984 bb in MY 2009/10, 3.236 bb in MY 2010/11, 2.968 bb in MY 2011/12, 3.118 bb in MY 2012/13, 3.021 bb in MY 2013/14, 2.764 bb in MY 2014/15, and now are projected to be 2.973 bb in “new crop” MY 2015/16.

Forecast U.S. wheat beginning stocks of 712 mb in “new crop” MY 2015/16 are up 3 mb from May, up 20.7% from 590 mb in beginning stocks in MY 2014/15, and down marginally from 718 mb in MY 2013/14.  This projection of 712 mb in beginning stocks in “new crop” MY 2015/16 is more than double the long term historic low of 306 mb in MY 2008/09 – which resulted from the historically tight U.S. wheat ending stocks situation that occurred in MY 2007/08. 

Projected U.S. wheat imports of 140 mb for “new crop” MY 2015/16 would be the third highest amount on record, less than 148 mb in MY 2014/15 (down 2 mb), and the record high of 169 mb in MY 2013/14.  Since MY 1973/74 and prior to MY 2013/14, 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 geographic location and associated grain transportation logistics.  Large Canadian wheat supplies over the last several 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 bb in 60 lb/bu units) in MY 2013/14, followed by a crop of 29.5 mmt (1.085 bb) in MY 2014/15, with a projection of 29.0 mmt (1.066 bb) in “new crop” MY 2015/16.  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).       

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

Food Use: Projected U.S. wheat food use of 967 mb in “new crop” MY 2015/16 has been trending consistently higher over time due to a) steady growth in the U.S. population, and b) associated increases in demand for processed wheat products.  This projected amount of 967 mb in food use in “new crop” MY 2015/16 continues the steady upward trend following from 960 mb in MY 2014/15, 955 mb in MY 2013/14, and from 951 mb in MY 2012/13 (Table 1 and Figure 7). 

Seed Use: Forecast seed use of 72 mb in “new crop” MY 2015/16 is down marginally from 77 mb in MY 2014/15, and compares to 77 mb in MY 2013/14, and 73 mb in MY 2012/13 (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, driven primarily by a) the amount of U.S. wheat seed needed to plant adequate U.S. wheat acreage each year (from both commercial and on-farm 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 “new crop” MY 2015/16 are up from 855 mb in MY 2014/15 (down 5 mb from May) – the lowest amount since 879 mb in MY 2010/11 (Table 1 and Figure 7).  Over the last ten (10) marketing years, the U.S. has exported 908 mb of wheat in MY 2006/07, 1.263 bb in MY 2007/08, 1.015 bb in MY 2008/09, 879 mb in MY 2009/10, 1.291 bb in MY 2010/11, 1.051 bb in MY 2011/12, 1.012 bb in MY 2012/13, 1.176 bb in MY 2013/14, and 855 mb in MY 2014/15, with a projection of 925 mb in “new crop” MY 2015/16.

Some of the factors that have caused lower U.S. wheat exports in MY 2014/15 are a) the sharp increase in the value of the U.S. dollar relative to other World currencies, and b) prospects for fully adequate competitive foreign wheat supplies for export trade purposes.  That said, the uncertain impact on World wheat trade in the future from ongoing geopolitical conflicts (between Russian and Ukraine), and the potential for dry or adverse weather conditions in other major World wheat production areas due to the likelihood of an “El Nino” weather pattern in the coming year are both factors that may eventually support increased U.S. wheat exports and at least somewhat higher World wheat prices in the “new crop” 2015/16 marketing year.  

Cumulative U.S. wheat export shipments through June 4th – the 1st week of the “new crop” 2015/16 marketing year for U.S. wheat – totaled 3.39 mb, which is 0.4% of the USDA’s projected MY 2015/16 exports of 925 mb, with 1.9% (1 of 52 weeks) of the marketing year completed.  The 2015/16 marketing year began on June 1, 2015 and will last through May 31, 2016.  United States’ wheat export shipments will need to average 18.1 mb per week through the remainder of the “new crop” 2015/16 marketing year to attain the USDA’s June 10th WASDE projection of 925 mb.  Wheat export shipments by the U.S. of 4.8 mb during the week ending June 4th were “behind pace” to meet the USDA forecast of 925 mb in the “new crop” 2015/16 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 170.5 mb in U.S. wheat for “new crop” MY 2015/16 (i.e., that had not yet been shipped as of June 4th), total U.S. wheat shipped plus outstanding shipments added up to 173.9 mb (i.e., 3.4 mb shipped plus 170.5 mb forward sales).  This amounts to 18.8% of the USDA’s projection of 925 mb for “new crop” MY 2015/16 with 1.9% of the marketing year having already occurred (i.e., 1 of 52 weeks). 

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 195 mb in “new crop” MY 2015/16 (up 15 mb from May), and up from 160 mb for MY 2014/15, down from 223 mb in MY 2013/14, and down from the recent high of 364 mb in MY 2012/13 (Table 1 and Figure 7).  Domestic U.S. wheat feeding has trended lower in MY 2014/15 and “new crop” MY 2015/16 due to sizable 2013 and 2014 U.S. corn and grain sorghum crops – which has led to more abundant competitive U.S. feedgrain supplies for domestic livestock feeding at lower market prices than during “drought stricken” MY 2012/13.  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 – causing U.S. wheat usage to be approximately 75 to 150 mb less than it would have been if the short feedgrain supply situation of the MY 2012/13 and MY 2013/14 had continued.  Lower wheat prices in “new crop” MY 2015/16 are projected by the USDA which may help to spur a modest recovery in U.S. wheat feeding – even with projections of large supplies of low cost U.S. corn and grain sorghum available.

Total U.S. Wheat UseTotal use of U.S. wheat for “new crop” MY 2015/16 is projected to be 2.159 bb (up 15 mb from May), which would be the 5th smallest amount of U.S. wheat total usage in the last 12 marketing years, i.e., since MY 2004/05 (Figure 7).  United States’ 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, 2.226 bb in MY 2011/12, 2.400 bb in MY 2012/13, 2.431 bb in MY 2013/14 (the largest amount during the 11 year period), 2.052 bb in MY 2014/15 (down 5 mb from May), and finally to 2.159 bb in “new crop” MY 2015/16.  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 in 2013-2013 – which in turn led to substitutionary demand for U.S. wheat in domestic livestock feed rations and support for U.S. wheat prices.

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

United States’ wheat ending stocks for the “new crop” 2015/16 marketing year are projected to be 814 mb (up 21 mb from May) (Table 1 and Figure 7).  This amount of U.S. wheat ending stocks is markedly larger than 306 mb in MY 2007/08 – the historic “tight stocks” marketing year in recent years.  Over the last ten (10) marketing years, U.S. wheat ending stocks were 456 mb in MY 2006/07, 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, 590 mb in MY 2013/14, an estimated 712 mb in MY 2014/15 (up 3 mb from May), and now a projected amount of 814 mb in “new crop” MY 2015/16 – the largest amount of ending stocks since 976 mb in MY 2009/10 and 863 mb in MY 2010/11.

Percent (%) ending stocks-to-use for U.S. wheat of 37.7% in “new crop” MY 2015/16 are projected to be at the highest level since MY 2009/10 (Table 1 and Figures 7 and 8).  Since percent ending stocks-to-use of 22.3% in MY 2006/07 and the historic 67 year low of 13.2% in MY 2007/08, U.S. wheat ending stocks-to-use has varied widely, being 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% in MY 2013/14, 34.7% in MY 2014/15, to now a projected level of 37.7% in “new crop” MY 2015/16 – the largest U.S. wheat percent ending stocks-to-use figure since 48.6% in MY 2009/10.   

U.S. average wheat prices for “new crop” MY 2015/16 are projected to be in the range of $4.40-$5.40 per bushel (“/bu”) (midpoint = $4.90 /bu) (Table 1 and Figures 7 and 8).  The June projection is down $0.10 per bushel on each end of the price range from the May WASDE report (i.e., which had been $4.50-$5.50, midpoint = $5.00).   Starting in MY 2006/07 with at that time the record U.S. wheat price of $4.28, U.S. wheat prices rose to $6.48 per bushel in MY 2007/08, and $6.78 in MY 2008/09, before moving to $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, $6.00 in MY 2014/15, and now to the forecast range of $4.40-$5.40 /bu (midpoint = $4.90 /bu) in “new crop” MY 2015/16 – the lowest level since $4.87 in MY 2009/10.     

I-D. KSU Wheat Market Scenarios for “New Crop” MY 2015/16

Kansas State University Extension forecasts by this author of U.S. wheat supply-demand balances and prices for the “new crop” 2015/16 marketing year are provided below.   The direction of U.S. and World wheat markets for the June 2015 through May 2016 period, i.e., “new crop” MY 2015/16, will depend primarily on how total World wheat supplies balance with total demand, as well as on volatile financial and currency markets.  From the perspective of the United States, the opportunity for sharp improvements in U.S. wheat export demand for “new crop” MY 2015/16 appear to be limited at this time given the high value of the U.S. dollar and its negative impact on U.S. wheat export sales as the U.S. competes with other major wheat exporting countries.  However, it is still possible that the geopolitical conflict that is occurring in the Black Sea Region between major World wheat exporters Russia and Ukraine could significantly disrupt the flow of wheat export shipments from that region, or that geopolitical conflicts in the Middle East could escalate to the point of causing volatility in World energy and grain markets.

In making a projection of U.S. wheat supply-demand and prices for “new crop” MY 2015/16, the primary focus here will be on uncertainty associated with 2015 U.S. production, total supplies, and exports, and how potential variation in these factors may impact U.S. wheat total usage, ending stocks, ending stocks-to-use, and prices. 

In the KSU forecasts that follow, total U.S. wheat planted acreage in 2015 of 55.367 ma is assumed.  This is the amount of U.S. wheat planted acreage forecast by the USDA in its June 10th USDA WASDE report.  However, these KSU projections vary from the USDA’s forecasts in regards to the percent of harvested-to-planted acreage, as it is assumed here that U.S. wheat harvested acres equal the long term (2000-2014) U.S. average of 84.1% - below the USDA’s most recent projection of 86.7%.  Consequently, U.S. wheat harvested acreage in 2015 in these projections equals 46.557 ma – down from 47.977 ma assumed by the USDA in 2015.

Regarding 2015 U.S. wheat yields, two possible yield scenarios are considered.  The 2015 U.S. wheat yield in the first scenario of 43.9 bu/ac – up from a similar KSU projection from a month ago, but still less than the USDA’s projection of 44.2 bu/ac in their June WASDE report.  A second, lower U.S. wheat yield scenario of 42.5 bu/ac. reflects the possibility of greater early season U.S. winter wheat drought and freeze, and spring-time wheat disease damage than is currently being accounted for by most recent USDA 2015 U.S. wheat production projections.  It is noteworthy that each of these projections is less than the long term (1973-2014) trend line yield projection for 2015 of 45.9 bushels per acre.   

These Kansas State University projections of “new crop” 2015/16 supply-demand balances and prices are shown in Table 1, with the following scenarios represented:

A. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Medium Yield = 43.9 bu/ac

Projections by Kansas State University of U.S. wheat supply-demand and price projections for “new crop” MY 2015/16 reflect lower than trend line yields and damage that has already occurred to 2015 U.S. wheat production prospects.  These KSU projections of 2015 U.S. wheat planted and harvested acreage are found in Table 1 and Figure 4.  Projections of 2015 probability-weighted U.S. wheat yields are found in Table 1 and Figure 5.  Projected total supplies, total usage, and ending stocks of U.S. wheat in “new crop” MY 2015/16 are shown in Table 1.  Probability-weighted KSU forecasts of U.S. corn average prices for “new crop” MY 2015/16 are based on projections of U.S. wheat % ending stocks-to-use, and are shown in Table 1 and Figures 8 and 9.  

It is estimated here in this first KSU forecast that there is a “6.5 out of 10” or 65% chance that for “new crop” MY 2015/16 final 2015 U.S. wheat production will be 2.044 bb – up moderately from 2.026 bb in 2014 (Table 1).  These KSU estimates project a “moderate” recovery in U.S. wheat exports in “new crop” MY 2015/16, up to 975 mb, i.e., 50 mb (+5.4%) higher than the USDA’s June WASDE forecast of 925 mb for “new crop” MY 2015/16.  Total use of U.S. wheat in “new crop” MY 2015/16 is projected to be 2.194 bb, up 35 mb (+1.6%) from 2.159 bb projected by the USDA in “new crop” MY 2015/16 in the June 10th WASDE report.  

With these KSU projections, U.S. wheat ending stocks would equal 702 mb, with % ending stocks-to-use estimated being 31.99% for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9).  Based on historic stocks-to-use vs price relationships, U.S. wheat average prices are projected to be $5.50 per bushel for “new crop” MY 2015/16 – up $0.60 /bu from the USDA projection of $4.90 for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9). 

The key factor in this projection is the assumption of a moderate recovery in U.S. wheat exports to a level approximating recent year’s levels, i.e., 975 mb rather than the USDA’s June 2015 WASDE report forecast of 925 mb for “new crop” MY 2015/16. 

 “New crop” 2015/16 KSU Scenario for U.S. Wheat S-D @ 43.9 bu/a – 65% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 55.367 ma                ò  0.8% (‒455,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 46.557 ma                ñ  0.3% (+176,000 acres) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 43.9 bu/ac                ñ  0.2 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.044 bb                 ñ  0.9% (+18 mb) vs 2014

- Total Supplies (bb)                           =   2.895 bb                 ñ  4.7% (+131 mb) vs MY 2014/15

- Exports                                              =   0.975 bb                 ñ14.0% (+120 mb) vs MY 2014/15

- Total Use                                          =   2.194 bb                 ñ  6.9% (+142 mb) vs MY 2014/15

- Ending Stocks                                    =   0.702 bb                 ò  1.4% (-10 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 31.99%                     vs 34.70% S/U in MY 2014/15

- U.S. Wheat Price                             = $5.50 /bu                 vs $6.00 /bu in MY 2014/15

If U.S. wheat exports in “next crop” MY 2015/16 are 1.050 bb in this scenario (i.e., 75 mb higher than the 975 mb projection for “KSU Scenario A”), then – all else being equal – total use would be 2.269 bb with ending stocks of 626 mb, % ending stocks to use would be 27.59%, and marketing year average prices would be projected to be near $6.60 /bu.  

B. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Low Yield = 42.5 bu/ac & Higher Exports

It is estimated here in this second KSU forecast that there is a “3.5 out of 10” or 35% chance for “new crop” MY 2015/16 that some combination of yet lower U.S. wheat yields and higher U.S. wheat exports could occur.  With the same acreages as in Scenario A, but lower yields of 42.5 /bu, final 2015 U.S. wheat production would be 1.979 bb – down 47 mb from 2.026 bb in 2014 (Table 1). 

Even with U.S. wheat production problems, his KSU scenario projects a recovery in U.S. wheat exports in “new crop” MY 2015/16 up to 1.000 bb, i.e., up 145 mb (+17.0%) from the USDA’s June WASDE forecast of 855 mb for MY 2014/15.  Total use of U.S. wheat in “new crop” MY 2015/16 is projected in this scenario to be 2.196 bb, up 144 mb (+7.0%) from 2.057 bb estimated by the USDA in MY 2014/15.  

With these KSU projections, U.S. wheat ending stocks would equal 645 mb, with % ending stocks-to-use estimated to be 29.37% for “new crop” MY 2015/16 (Table 1 and Figure 8).  Based on historic stocks-to-use vs price relationships, U.S. wheat average prices would be projected to rise $0.10 to $6.10 per bushel for “new crop” MY 2015/16 (Table 1 and Figure 8).  The projected price of $6.10 /bu in this KSU scenario is up $1.20 /bu from the USDA projection of $4.90 /bu in “new crop” MY 2015/16. 

“New crop” 2015/16 KSU Scenario for U.S. Wheat S-D @ 43.5 bu/a – 35% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 55.367 ma                ò  0.8% (‒455,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 46.557 ma                ñ  0.3% (+176,000 acres) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 42.5 bu/ac                ò  1.2 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   1.979 bb                 ò  2.3% (-47 mb) vs 2014

- Total Supplies (bb)                           =   2.841 bb                 ñ  2.7% (+77 mb) vs MY 2014/15

- Exports                                              =   1.000 bb                 ñ17.0% (+145 mb) vs MY 2014/15

- Total Use                                          =   2.196 bb                 ñ  7.0% (+144 mb) vs MY 2014/15

- Ending Stocks                                    =   0.645 bb                 ò9.4% (-67 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 29.4%                       vs 34.7% S/U in MY 2014/15

- U.S. Wheat Price                             = $6.10 /bu                 vs $6.00 /bu in MY 2014/15

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “new crop” MY 2015/16 will be down 0.7% from the 2014/15 marketing year that ended on May 31, 2015, and up 0.7% from two years ago in MY 2013/14 (Figure 10).  World wheat total supplies in “new crop” MY 2015/16 are forecast to be 922.0 mmt, up 5.7 mmt (up 0.6%) from 916.3 mmt in MY 2014/15, and up 28.2 mmt (up 3.2%) from 893.7 mmt in MY 2013/14.  Given these changes, World wheat total use in “new crop” MY 2015/16 is projected to increase 0.5% from MY 2014/15, and to be up 2.2% from MY 2013/14.  World wheat ending stocks in “new crop” MY 2015/16 are projected to increase by 1.0% from a year earlier in MY 2014/15, and by 6.5% from two years ago in MY 2013/14.  

Wheat producing areas of the World from which periodic annual variations in wheat production historically have had a notable impact on wheat markets (i.e., which have caused significant 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, f) Argentina, g) India, and h) China.  Whether World wheat markets improve from current levels or not in the near or longer term will likely depend on whether production and/or export problems can be avoided in these major wheat producing and exporting areas in year 2015 and beyond.    

II-A. World Wheat Production by Country / Region

Projected World wheat production of 721.55 mmt in “new crop” MY 2015/16 would be the second largest crop on record, being down 0.7% from the previous record high of 726.3 mmt for MY 2014/15.  This total for “new crop” MY 2015/16 of 721.55 mmt is also up 0.7% from 716.8 mmt in MY 2013/14, is larger than the “short” 658.5 mmt World wheat crop in MY 2012/13, and above the range of 612.7-696.1 mmt during the previous MY 2007/09-MY 2011/12 period (Table 2 and Figure 10).  Foreign (non-U.S.) wheat production is projected to be 663.8 mmt in “new crop” MY 2015/16, down from 671.2 mmt in MY 2014/15, but up from 658.7 mmt in MY 2013/14. 

Table 2 provides a projected list of the major wheat producing countries or regions in the World in “new crop” MY 2015/16, the 2014/15 marketing year, and MY 2013/14, along with any changes that have occurred in their wheat production forecasts in the June 2015 WASDE report.  Year-over-year increases in wheat production are projected in the United States (up 2.6 to 57.7 mmt), Australia (up 2.0 to 26.0 mmt), Brazil (up 0.5 to 6.5 mmt), China (up 3.8 to 130.0 mmt), selected Middle Eastern Countries (up 0.5 to 17.9 mmt), and North Africa (up 2.5 to 19.4 mmt).   Year-over-year declines in “new crop” MY 2015/16 production are projected for Argentina (down 1.0 to 11.5 mmt), Canada (down 0.3 to 29.0 mmt), the European Union (down 5.8 to 150.7 mmt), Pakistan (down 0.5 to 25.0 mmt), India (down 5.85 to 90.0 mmt), Russia (down 4.1 to 55.0 mmt), Kazakhstan (down 0.5 to 12.5 mmt), and Ukraine (up 1.75 to 23.0 mmt).    

In “new crop” MY 2015/16, the European Union is projected to be the largest World producer of wheat at 150.7 mmt, followed by China (130.0 mmt), India (90.0 mmt), Russia (55.0 mmt), the United States (57.7 mmt), Canada (29.0 mmt), Australia (26.0 mmt), Pakistan (25.0 mmt), Ukraine (23.0 mmt), North Africa (19.4 mmt), Selected Middle Eastern Countries (17.9 mmt), Kazakhstan (12.5 mt), Argentina (11.5 mmt), and Brazil (6.5 mmt).

II-B. World Wheat Exports by Country / Region

Global wheat exports in “new crop” MY 2015/16 are projected to be a 158.4 mmt, down 3.3% from 163.85 mmt in MY 2014/15, and also down 5.5% from 165.9 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 133.2 mmt in “new crop” MY 2015/16, down 5.2% from 140.6 mmt in MY 2014/15, and down 0.5% from 133.9 mmt in MY 2013/14. 

Table 3 provides a projected list of the major wheat exporting countries or regions in the World in the “new crop” 2015/16 marketing year, along with MY 2014/15 and MY 2013/14.  Year-over-year increases in wheat exports in “new crop” MY 2015/16 are projected for the United States (up 1.9 mmt), Argentina (up 1.7 mmt), Australia (up 1.5 mmt), and Pakistan (up 0.3 mmt).  However, decreased exports are projected for Canada (down 3.0 mmt), the European Union (down 2.0 mmt), Brazil (down 0.8 mmt), Selected Middle Eastern countries (down 0.7 mmt), India (down 2.9 mmt), and Russia (down 1.2 mmt).  No change is projected for China, North Africa, Southeast Asia, Kazakhstan, and Ukraine. 

The largest projected exporter of wheat in “new crop” MY 2015/16 is the European Union (32.5 mmt), followed by the United States (25.2 mmt), Russia (21.0 mmt), Canada (20.5 mmt), Australia (18.5 mmt), Ukraine (11.5 mmt), Argentina (6.7 mmt), Kazakhstan (6.0 mmt), Selected Middle Eastern countries (0.8 mmt), Brazil (1.0), China (1.0 mmt), Pakistan (1.0 mmt), Southeast Asia (0.9 mmtt), North Africa (0.55 mmt), and India (0.5 mmt).

II-C. World Wheat Imports by Country / Region

Global wheat imports in “new crop” MY 2015/16 are projected to be 155.1 mmt, down 3.1% from 160.05 mmt in MY 2014/15, and down 2.0% from 158.2 mmt in MY 2013/14 (Table 4).   Foreign (non-U.S.) wheat imports are projected to be 151.3 mmt in “new crop” MY 2015/16, down 3.0% from 156.0 mmt in MY 2014/15, and down 1.5% from 153.6 mmt in MY 2013/14. 

Table 4 provides a projected list of the major wheat importing countries or regions in the World in the “new crop” 2015/16 marketing year, along with MY 2014/15, and MY 2013/14.  While increased wheat imports are projected for Brazil (up 0.2 mmt), and India (up 0.45 mmt) for “new crop” MY 2015/16, decreased imports are projected for the United States (down 0.2 mmt), the European Union (down 0.5 mmt), China (down 0.3 mmt), selected Middle Eastern countries (down 0.9 mmt), North Africa (down 0.55 mmt), Pakistan (down 0.65 mmt), Southeast Asia (down 0.5 mmt), and Kazakhstan (down 0.2 mmt).  Only marginal or no year-over-year changes in wheat imports in “new crop” MY 2015/16 are projected for Argentina (down 0.01 mmt), Australia, Canada (down 0.02 mmt), Russia, and Ukraine.     

North Africa (24.6 mmt) is projected to be the largest World wheat importer in “new crop” MY 2015/16, followed by Selected Middle Eastern countries (21.25 mmt), Southeast Asia (18.8 mmt), the Former Soviet Union (12 countries less Russia, Kazakhstan, and Ukraine) (6.5 mmt), Brazil (6.5 mmt), the European Union (5.5 mmt), the United States (3.8 mmt), China (1.2 mmt), India (0.5 mmt), Canada (0.5 mmt), Kazakhstan (0.4 mmt), Russia (0.35 mmt), Australia (0.15 mmt), Pakistan (0.1 mmt), Ukraine (0.05 mmt), and Argentina (0.03 mmt).    

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

Global wheat domestic feed use in “new crop” MY 2015/16 is projected to be 139.0 mmt, down 2.0% from 141.8 mmt in MY 2014/15, and up 5.1% from 132.2 mmt in MY 2013/14 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 133.7 mmt in “new crop” MY 2015/16, down 2.7% from 137.4 mmt in MY 2014/15, and up 5.9% from 126.2 mmt in MY 2013/14. 

Table 5 provides a projected list of the major countries or regions in the World terms of wheat domestic feed use in the “new crop” 2015/16 marketing year, along with MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat feed use in “new crop” MY 2015/16 are projected for the United States (up 1.0 mmt), Australia (up 0.1 mmt), the European Union (up 1.0 mmt), Brazil (up 0.3 mmt), North Africa (up 0.4 mmt), and India (up 0.3 mmt).   Declines in domestic wheat feeding are forecast for Argentina (down 0.2 mmt), Canada (down 1.5 mmt), China (down 3.0 mmt), selected Middle Eastern countries (down 0.4 mmt), Southeast Asia (down 0.2 mmt), and Ukraine (both down 0.5 mmt).  No changes are projected for Pakistan, Russia, and Kazakhstan.

The European Union (55.5 mmt) is projected to be the largest World user of wheat for domestic feeding in “new crop” MY 2015/16, followed by China (20.0 mmt), Russia (13.0 mmt), the United States (5.3 mmt), India (4.8 mmt), selected Middle East countries (4.65 mmt), Canada (4.5 mmt), Australia (3.9 mmt), Southeast Asia (3.8 mmt), Ukraine (3.7 mmt), North Africa (2.9 mmt), Kazakhstan (2.0 mmt), Pakistan (1.0 mmt), Brazil (0.6 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 “new crop” MY 2015/16 is projected to be a 580.6 mmt, up 1.1% from 574.1 mmt in MY 2014/15, and up 1.6% from 571.5 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) wheat FSI use is projected to be 552.3 mmt in “new crop” MY 2015/16, up 1.4% from 544.9 mmt in MY 2014/15, and up 1.6% from 543.4 mmt in MY 2013/14. 

Table 6 provides a projected list of the major countries or regions in the World in terms of wheat FSI use in the “new crop” 2015/16 marketing year, along with MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat FSI use in “new crop” MY 2015/16 are projected for the European Union (up 0.4 mmt), Brazil (up 0.1 mmt), China (up 0.5 mmt), Selected Middle Eastern countries (up 0.9 mmt), North Africa (up 0.9 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.3 mmt), India (up 0.5 mmt), Russia (up 0.5 mmt), the Former Soviet Union Countries (less Russia, Kazakhstan, and Ukraine) (up 0.31 mmt), and Ukraine (up 0.2 mmt).  A decline is projected for Canada (down 0.13 mmt).  Marginal or no changes are forecast for the United States (up 0.05 mmt), Argentina, Australia (up 0.03 mmt), and Kazakhstan.

China (101.5 mmt) is projected to be the largest World FSI user of wheat in “new crop” MY 2015/16, followed by India (89.8 mmt), the European Union (69.0 mmt), North Africa (41.35 mmt), selected Middle Eastern countries (32.45 mmt), the U.S. (28.3 mmt), Pakistan (23.6 mmt), Russia (23.0 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (16.3 mmt), Southeast Asia (14.3 mmt), Brazil (11.0 mmt), Ukraine (8.2 mmt), Argentina (6.05 mmt), Canada (5.2 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 719.6 mmt in “new crop” MY 2015/16 is the highest amount on record, being up 0.5% from the previous record high of 715.9 mmt in MY 2014/15, up 2.2% from 703.8 mmt in MY 2013/14, and up from the range of 614.6-689.4 mmt during the MY 2007/08-MY 2012/13 period (Table 7 and Figure 10).  Foreign (non-U.S.) wheat total use is projected to be 686.0 mmt in “new crop” MY 2015/16, up 0.5% from 682.3 mmt in MY 2014/15, and up 2.4% from 669.6 mmt in MY 2013/14. 

Table 7 provides a projected list of the major countries or regions in the World in terms of total wheat use in the “new crop” 2015/16 marketing year, along with MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat total use in “new crop” MY 2015/16 are projected for the United States (up 1.0 mmt), Australia (up 0.1 mmt), the European Union (up 1.4 mmt), Brazil (up 0.4 mmt), selected Middle Eastern countries (up 0.5 mmt), North Africa (up 1.3 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.2 mmt), Russia (up 0.5 mmt), and India (up 0.8 mmt).   Decreases in total wheat usage are forecast for Argentina (down 0.2 mmt), Canada (down 1.6 mmt), China (down 2.5 mmt), and Ukraine (down 0.1 mmt).  No change is projected for Kazakhstan. 

The European Union (124.5 mmt) is projected to be the largest World user of wheat in “new crop” MY 2015/16, followed closely by China (121.5 mmt), India (94.6 mmt), North Africa (44.2 mmt), selected Middle Eastern countries (37.1 mmt), Russia (36.0 mmt), the U.S. (33.6 mmt), Pakistan (24.6 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (21.4 mmt), Southeast Asia (18.1 mmt), Ukraine (11.9 mmt), Brazil (11.6 mmt), Canada (9.7 mmt), Australia (7.3 mmt), Kazakhstan (6.8 mmt), and Argentina (6.15 mmt).

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

Projected World wheat ending stocks of 202.4 mmt for “new crop” MY 2015/16 are up 1.0% from 200.4 mmt in MY 2014/15, and up 6.5% from 190.0 mmt in MY 2013/14, and is comparable to the range of 128.75-203.2 mmt over the MY 2007/08 through 2012/13 period (Table 8 and Figure 10).  The 37 year low in World wheat ending stocks occurred when supply-demand balances fell to 128.75 mmt in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks are projected at 180.2 mmt in “new crop” MY 2015/16, down 0.4% from 181.0 mmt in MY 2014/15, and up 3.6% from 173.9 mmt in MY 2013/14. 

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 “new crop” 2015/16 marketing year, along with MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat ending stocks in “new crop” MY 2015/16 are projected for the United States (up 2.8 mmt), Australia (up 0.3 mmt), Brazil (up 0.4 mmt), China (up 8.7 mmt), selected Middle Eastern countries (up 1.2 mmt), Kazakhstan (up 0.1 mmt), and the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (up 0.05 mmt).  Decreases are projected for Argentina (down 1.3 mmt), Canada (down 0.7 mmt), the European Union (down 0.8 mmt), North Africa (down 0.8 mmt), Pakistan (down 0.5 mmt), Southeast Asia (down 0.2 mmt), India (down 4.6 mmt), the Russia (down 1.65 mmt), and Ukraine (down 0.35 mmt). 

China (71.6 mmt) is projected to be the largest holder of wheat ending stocks in the World in “new crop” MY 2015/16, followed by the United States (22.2 mmt), selected Middle Eastern countries (14.6 mmt), the European Union (14.1), India (11.9 mmt), North Africa (11.3 mmt), Australia (6.5 mmt), Russia (6.5 mmt), Canada (4.6 mmt), Ukraine (4.6 mmt), Southeast Asia (3.7 mmt), Kazakhstan (2.9 mmt), Pakistan (2.7 mmt), Argentina (2.4 mmt), and Brazil (1.6 mmt).

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

Projected World wheat ending stocks-to-use of 28.1% for “new crop” MY 2015/16 are up from 28.0% in  MY 2014/15 (Table 9 and Figure 11).  After falling to a minimum level of World wheat % ending stocks-to-use in MY 2007/08 (20.9% S/U) World wheat % S/U was 26.5% in MY 2008/09, 31.3% in MY 2009/10, 30.5% in MY 2010/11, 28.7% in MY 2011/12, 25.7% in MY 2012/13, 27.0% in MY 2013/14, 28.0% in MY 2014/15, and are now projected to be 28.1% in “new crop” MY 2015/16.  The 38 year low in World wheat ending stocks-to-use occurred when supply-demand balances fell to 20.9% in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks-to-use are projected at 22.0% in “new crop” MY 2015/16, unchanged from 22.0% in MY 2014/15, and up from 21.6% in MY 2013/14. 

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 “new crop” 2015/16 marketing year, along with MY 2014/15 and MY 2013/14.  Year-over-year increases in wheat ending stocks-to-use in “new crop” MY 2015/16 are projected for the U.S., Brazil, China, selected Middle Eastern countries, Southeast Asia, and Kazakhstan.  Decreases are projected for Argentina, Australia, Canada, the European Union, North Africa, Pakistan, India, Russia, and Ukraine.

China (58.5%) is projected to be the largest holder of wheat ending stocks-to-use in the World in “new crop” MY 2015/16, followed by selected Middle Eastern countries (40.3%), the U.S. (37.7%), North Africa (25.3%), Australia (25.0%), Kazakhstan (22.5%), Ukraine (19.7%), Southeast Asia (19.3%), Argentina (18.4%), Canada (15.1%), Brazil (12.6%), India (12.5%), Pakistan (10.6%), Russia (9.2%), and the European Union (9.0%).

Similar to the relationship between U.S. wheat ending stocks-to-use and U.S. average wheat prices (see Figure 9) since MY 1973/74, a negatively correlated 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 11).  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 9 earlier, U.S. wheat prices in Figure 11 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 2008/09, the historic minimum in World wheat percent stocks-to-use occurred in that same marketing year at 20.9%.  Since that time, World wheat ending stocks-to-use have not fallen below 25.7% in MY 2013/14.

 

Table 1. U.S. Wheat Supply-Demand Balance Sheet: MY 2008/09 – “Next Crop” MY 2015/16 (June 10th USDA WASDE & adjusted Agricultural Baseline forecasts, & USDA-KSU 2015/16 Projections)

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

Medium Yields &

Higher Exports

2015/16

KSU

Lower Yields

&

Higher Exports 2015/16

% Probability of Occurring

 

 

 

 

 

 

 

 

65%

35%

Planted Area (million acres)

63.617

59.017

52.620

54.277

55.294

56.236

56.822

55.367

55.367

55.367

Harvested Area (million acres)

56.036

49.841

46.883

45.687

48.758

45.332

46.381

47.977

46.557

46.557

% Harvested/Planted Area

88.1%

84.5%

89.1%

84.2%

88.2%

80.6%

81.6%

86.7%

84.1%

84.1%

Yield / harvested acre (bu/ac)

44.8

44.3

46.1

43.6

46.2

47.1

43.7

44.2

**43.9

**42.5

 

Million Bushels

Beginning Stocks

306

657

976

863

743

718

590

712

712

712

Production

2,512

2,209

2,163

1,993

2,252

2,135

2,026

2,121

2,044

1,979

Imports

127

119

97

112

123

169

148

140

140

150

Total Supply

2,945

2,984

3,236

2,968

3,118

3,021

2,764

2,973

2,895

2,841

 

 

Food Use

927

919

926

941

951

955

960

967

967

965

Seed Use

78

68

71

76

73

77

77

72

72

75

Exports

1,015

879

1,291

1,051

1,012

1,176

855

925

**975

**1,000

Feed & Residual Use

268

142

85

157

364

223

160

195

180

156

Total Use

2,288

2,008

2,373

2,226

2,400

2,431

2,052

2,159

2,194

2,196

 

 

Ending Stocks

657

976

863

743

718

590

712

814

702

645

% Ending Stocks-to-Use

28.69%

48.58%

36.37%

33.37%

29.91%

24.27%

34.70%

37.70%

31.99%

29.37%

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

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$6.00

$4.40-$5.40 ($4.90)

$5.50

$6.10


 

Figure 3. U.S. Wheat Planted Acreage – All Winter, Other Spring & Durum Wheat Classes (1973-2015) with USDA Estimates for 2015 U.S. Wheat Acres by Class

Text Box: 2015 U.S. Winter Wheat acreage projected to be ò 3.9% vs 2014
USDA Estimate of All U.S. Wheat Acres in 2015 = 55.367 mln ac. (ò1.455 ma or 2.6%)

Figure 4. U.S. All Wheat Planted & Harvested Acreage (1973-2015) Plus KSU 2015 Projections for Planted and Harvested Acreage

Figure 5. U.S. All Wheat Yield (1973-2015), and KSU 2015 Trend Projection (June 10, 2015)

Text Box: USDA 2015 Yield = 44.2 bu/ac
KSU 2015 trend: 45.9 bu/ac 
10 year Minimum = 38.6 bu/ac (2006)
10 year Maximum = 47.1 bu/ac (2013)
 

Figure 6. U.S. Wheat Total Supplies for MY 2004/05 – 2015/16 (WASDE data from June 10, 2015)


 

Figure 7. Trends in U.S. Wheat Use & Ending Stocks: MY 2004/05 - 2015/16
(June 10, 2015 USDA WASDE Report)

Figure 8. U.S. Wheat Ending Stocks vs U.S. Cash Prices: MY 2004/05 thru “New Crop” MY 2015/16
(June 10, 2015 USDA WASDE Report & KSU forecasts for “New Crop” MY 2015/16)

Figure 9. U.S. Wheat Price vs U.S. % Stocks-to-Use: MY 1973/74 thru “New Crop” MY 2015/16 Plus KSU “Next Crop” MY 2015/16 Projection

Text Box: KSU “New Crop” MY 2015/16 (65% Prob.)
32.0% S/U, $5.50 /bu
Text Box: “Current” MY 2014/15
34.5% S/U, $6.00 /bu
Text Box: 2011/12

Figure 10. World Wheat Usage & Ending Stocks: MY 2007/08 thru “New Crop” MY 2015/16                     
(June 10, 2015 USDA WASDE Report)

Text Box: Wheat Trade
133-166 mmt since MY 2008/09
 
158.4 mmt in    MY 2015/16
Text Box: Wheat Usage
ñ12.7 mmt/yr 
(+2.1%/yr) 
since 2007/08
Text Box: Production
ñ13.6 mmt/yr (+2.2%/yr) 
since 2007/08
 
Text Box: End Stocks
202.4 mmt in “New Crop” MY 2015/16
 
Up 73.7 mmt (+57%) since 
38 year low in 
MY 2007/08

Figure 11. U.S. Wheat Price vs % World Stocks-to-Use (MY 1973/74 through “New Crop” MY 2015/16)           

Text Box: 1977/78
Text Box: 2007/08
Text Box: 2009/10
Text Box: “Old Crop” 2014/15 
28.1% S/U & $6.00 /bu
Text Box: 2012/13 
25.7% S/U & $7.77 /bu
Text Box: 1986/87
Text Box: 2006/07 
Text Box: 2008/09
Text Box: 2011/12
Text Box: 2010/11
Text Box: 2013/14 
27.3% S/U & $6.87 /bu

 

Table 2. World Wheat Production Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2015/16    June 2015

Wheat Production: May 2015 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Production:               June Less May 2015                    

New Crop 2015/16 Production:                Percent (%)         June of May 2015

June Wheat Production: 2014/15          

May  Wheat Production: 2014/15

June Less May  Wheat  Production             for 2014/15

New Crop 2015/16 Production             Less 2014/15

% New Crop 2015/16 Production of                         2014/15

Wheat Production: 2013/14                           (2 years ago)

New Crop 2015/16 Production             Less 2013/14

% New Crop 2015/16 Production       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

721.55

718.93

2.62

100.4%

726.32

726.45

(0.13)

(4.77)

99.3%

716.82

4.73

100.7%

United States

57.72

56.81

0.91

101.6%

55.13

55.13

0.00

2.59

104.7%

58.11

(0.39)

99.3%

Total Foreign

663.84

662.12

1.72

100.3%

671.19

671.32

(0.13)

(7.35)

98.9%

658.72

5.12

100.8%

Major Exporters

217.18

217.29

(0.11)

99.9%

222.25

222.25

0.00

(5.07)

97.7%

219.37

(2.19)

99.0%

Argentina

11.50

12.00

(0.50)

95.8%

12.50

12.50

0.00

(1.00)

92.0%

10.50

1.00

109.5%

Australia

26.00

26.00

0.00

100.0%

24.00

24.00

0.00

2.00

108.3%

26.93

(0.93)

96.5%

Canada

29.00

29.00

0.00

100.0%

29.30

29.30

0.00

(0.30)

99.0%

37.53

(8.53)

77.3%

European Union

150.68

150.29

0.39

100.3%

156.45

156.45

0.00

(5.77)

96.3%

144.42

6.26

104.3%

Major Importers

203.22

203.80

(0.58)

99.7%

196.46

196.51

(0.05)

6.76

103.4%

194.10

9.12

104.7%

Brazil

6.50

6.50

0.00

100.0%

6.00

6.00

0.00

0.50

108.3%

5.30

1.20

122.6%

China

130.00

130.00

0.00

100.0%

126.17

126.17

0.00

3.83

103.0%

121.93

8.07

106.6%

Selected Middle East

17.86

17.89

(0.03)

99.8%

17.37

17.42

(0.05)

0.49

102.8%

18.96

(1.10)

94.2%

North Africa

19.36

19.91

(0.55)

97.2%

16.90

16.90

0.00

2.46

114.6%

19.72

(0.36)

98.2%

Pakistan

25.00

25.00

0.00

100.0%

25.50

25.50

0.00

(0.50)

98.0%

24.00

1.00

104.2%

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

90.00

90.00

0.00

100.0%

95.85

95.85

0.00

(5.85)

93.9%

93.51

(3.51)

96.2%

Former Soviet Union - 12 Countries

105.88

103.38

2.50

102.4%

112.73

112.73

0.00

(6.85)

93.9%

103.87

2.01

101.9%

Russia

55.00

53.50

1.50

102.8%

59.08

59.08

0.00

(4.08)

93.1%

52.09

2.91

105.6%

Kazakhstan

12.50

12.50

0.00

100.0%

13.00

13.00

0.00

(0.50)

96.2%

13.94

(1.44)

89.7%

Ukraine

23.00

22.00

1.00

104.5%

24.75

24.75

0.00

(1.75)

92.9%

22.28

0.72

103.2%

 

Table 3. World Wheat Export Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2015/16     June 2015

Wheat Exports: June  2014 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Exports:               June Less May 2015                    

New Crop 2015/16 Exports:                Percent (%)         June of May 2015

June Wheat Exports: 2014/15          

June  Wheat Exports: 2014/15

June Less May Wheat  Exports for 2014/15

New Crop 2015/16 Exports Less 2014/15

% New Crop 2015/16 Exports of 2014/15

Wheat Exports: 2013/14                           (2 years ago)

New Crop 2015/16 Exports Less 2013/14

% New Crop 2015/16 Exports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

158.41

156.95

1.46

100.9%

163.85

163.70

0.15

(5.44)

96.7%

165.92

(7.51)

95.5%

United States

25.17

25.17

0.00

100.0%

23.27

23.41

(0.14)

1.90

108.2%

32.01

(6.84)

78.6%

Total Foreign

133.23

131.77

1.46

101.1%

140.58

140.30

0.28

(7.35)

94.8%

133.90

(0.67)

99.5%

Major Exporters

78.20

78.70

(0.50)

99.4%

80.00

80.50

(0.50)

(1.80)

97.8%

76.17

2.03

102.7%

Argentina

6.70

7.20

(0.50)

93.1%

5.00

5.50

(0.50)

1.70

134.0%

2.25

4.45

297.8%

Australia

18.50

18.50

0.00

100.0%

17.00

17.00

0.00

1.50

108.8%

18.62

(0.12)

99.4%

Canada

20.50

20.50

0.00

100.0%

23.50

23.50

0.00

(3.00)

87.2%

23.27

(2.77)

88.1%

European Union

32.50

32.50

0.00

100.0%

34.50

34.50

0.00

(2.00)

94.2%

32.03

0.47

101.5%

Major Importers

6.84

6.84

0.00

100.0%

8.24

8.24

0.00

(1.40)

83.0%

5.19

1.65

131.8%

Brazil

1.00

1.00

0.00

100.0%

1.80

1.80

0.00

(0.80)

55.6%

0.08

0.92

1250.0%

China

1.00

1.00

0.00

100.0%

1.00

1.00

0.00

0.00

100.0%

0.89

0.11

112.4%

Selected Middle East

0.83

0.83

0.00

100.0%

1.53

1.53

0.00

(0.70)

54.2%

0.49

0.34

169.4%

North Africa

0.55

0.55

0.00

100.0%

0.55

0.55

0.00

0.00

100.0%

0.50

0.05

110.0%

Pakistan

1.00

1.00

0.00

100.0%

0.70

0.70

0.00

0.30

142.9%

0.75

0.25

133.3%

Southeast Asia

0.89

0.89

0.00

100.0%

0.89

0.89

0.00

0.00

100.0%

0.89

0.00

100.0%

India

0.50

0.50

0.00

100.0%

3.40

3.40

0.00

(2.90)

14.7%

6.05

(5.55)

8.3%

Former Soviet Union - 12 Countries

38.86

36.91

1.95

105.3%

40.33

39.56

0.77

(1.47)

96.4%

73.15

(34.29)

53.1%

Russia

21.00

20.00

1.00

105.0%

22.20

21.50

0.70

(1.20)

94.6%

18.57

2.43

113.1%

Kazakhstan

6.00

6.00

0.00

100.0%

6.00

6.00

0.00

0.00

100.0%

8.10

(2.10)

74.1%

Ukraine

11.50

10.50

1.00

109.5%

11.50

11.50

0.00

0.00

100.0%

9.76

1.74

117.8%

 

Table 4. World Wheat Import Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2015/16     June 2015

Wheat Imports: May  2014 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Imports:               June Less May 2015                    

New Crop 2015/16 Imports:                Percent (%)         June of May 2015

June Wheat Imports: 2014/15          

June  Wheat Imports: 2014/15

June Less May Wheat  Imports for 2014/15

New Crop 2015/16 Imports Less 2014/15

% New Crop 2015/16 Imports of 2014/15

Wheat Imports: 2013/14                           (2 years ago)

New Crop 2015/16 Imports             Less 2013/14

% New Crop 2015/16 Imports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

155.12

153.61

1.51

101.0%

160.05

159.97

0.08

(4.93)

96.9%

158.21

(3.09)

98.0%

United States

3.81

3.81

0.00

100.0%

4.03

4.08

(0.05)

(0.22)

94.5%

4.59

(0.78)

83.0%

Total Foreign

151.31

149.80

1.51

101.0%

156.02

155.89

0.13

(4.71)

97.0%

153.62

(2.31)

98.5%

Major Exporters

6.14

5.64

0.50

108.9%

6.67

6.47

0.20

(0.53)

92.1%

4.58

1.56

134.1%

Argentina

0.03

0.03

0.00

100.0%

0.04

0.04

0.00

(0.01)

75.0%

0.00

0.03

#DIV/0!

Australia

0.15

0.15

0.00

100.0%

0.15

0.15

0.00

0.00

100.0%

0.15

0.00

100.0%

Canada

0.46

0.46

0.00

100.0%

0.48

0.48

0.00

(0.02)

95.8%

0.45

0.01

102.2%

European Union

5.50

5.00

0.50

110.0%

6.00

5.80

0.20

(0.50)

91.7%

3.97

1.53

138.5%

Major Importers

82.65

81.75

0.90

101.1%

85.24

85.24

0.00

(2.59)

97.0%

87.36

(4.71)

94.6%

Brazil

6.50

6.50

0.00

100.0%

6.30

6.40

(0.10)

0.20

103.2%

7.07

(0.57)

91.9%

China

1.20

1.20

0.00

100.0%

1.50

1.50

0.00

(0.30)

80.0%

6.77

(5.57)

17.7%

Selected Middle East

21.25

21.05

0.20

101.0%

22.14

22.84

(0.70)

(0.89)

96.0%

20.69

0.56

102.7%

North Africa

24.60

24.10

0.50

102.1%

25.15

24.65

0.50

(0.55)

97.8%

25.27

(0.67)

97.3%

Pakistan

0.10

0.10

0.00

100.0%

0.75

0.75

0.00

(0.65)

13.3%

0.40

(0.30)

25.0%

Southeast Asia

18.80

18.60

0.20

101.1%

19.30

18.70

0.60

(0.50)

97.4%

16.41

2.39

114.6%

India

0.50

0.50

0.00

100.0%

0.05

0.05

0.00

0.45

1000.0%

0.03

0.47

1666.7%

Former Soviet Union - 12 Countries

7.27

7.27

0.00

100.0%

7.71

7.71

0.00

(0.44)

94.3%

7.41

(0.14)

98.1%

Russia

0.35

0.35

0.00

100.0%

0.35

0.35

0.00

0.00

100.0%

0.80

(0.45)

43.8%

Kazakhstan

0.40

0.40

0.00

100.0%

0.60

0.60

0.00

(0.20)

66.7%

0.01

0.39

4000.0%

Ukraine

0.05

0.05

0.00

100.0%

0.05

0.05

0.00

0.00

100.0%

0.07

(0.02)

71.4%

 

Table 5. World Wheat Feed Use Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Feed Use                                                 by Major Country / Region

Wheat Feed Use: New Crop 2015/16     June 2015

Wheat Feed Use: May 2015 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Feed Use: June Less May 2015                    

New Crop 2015/16 Feed Use: Percent (%)         June of May 2015

June Wheat Feed Use: 2014/15          

June  Wheat Feed Use: 2014/15

June Less May Wheat  Feed Use for 2014/15

New Crop 2015/16 Feed Use Less 2014/15

% New Crop 2015/16 Feed Use of 2014/15

Wheat Feed Use: 2013/14                           (2 years ago)

New Crop 2015/16 Feed Use             Less 2013/14

% New Crop 2015/16 Feed Use of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

 

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

138.97

136.06

2.91

102.1%

141.77

141.37

0.40

(2.80)

98.0%

132.22

6.75

105.1%

United States

5.31

4.90

0.41

108.4%

4.35

4.35

0.00

0.96

122.1%

6.06

(0.75)

87.6%

Total Foreign

133.66

131.16

2.50

101.9%

137.42

137.02

0.40

(3.76)

97.3%

126.16

7.50

105.9%

Major Exporters

64.00

63.00

1.00

101.6%

64.60

64.60

0.00

(0.60)

99.1%

57.40

6.60

111.5%

Argentina

0.10

0.10

0.00

100.0%

0.30

0.30

0.00

(0.20)

33.3%

0.10

0.00

100.0%

Australia

3.90

3.90

0.00

100.0%

3.80

3.80

0.00

0.10

102.6%

3.60

0.30

108.3%

Canada

4.50

4.50

0.00

100.0%

6.00

6.00

0.00

(1.50)

75.0%

4.20

0.30

107.1%

European Union

55.50

54.50

1.00

101.8%

54.50

54.50

0.00

1.00

101.8%

49.50

6.00

112.1%

Major Importers

33.62

32.82

0.80

102.4%

36.53

36.13

0.40

(2.91)

92.0%

33.30

0.32

101.0%

Brazil

0.60

0.60

0.00

100.0%

0.30

0.30

0.00

0.30

200.0%

0.60

0.00

100.0%

China

20.00

20.00

0.00

100.0%

23.00

23.00

0.00

(3.00)

87.0%

21.00

(1.00)

95.2%

Selected Middle East

4.65

4.55