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Wheat Market Outlook in May 2015

May 19, 2015


Summary

Since the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on May 12, 2015, U.S. wheat market prices have traded higher due to concerns about U.S. Hard Red Winter wheat production prospects and some weakening of the value of the U.S. dollar.  For the “new crop” 2015/16 marketing year the USDA projected that a) World wheat total supplies and total use would be at record high levels, b) World wheat export trade would be 4.1% lower than a year ago - with U.S. exports at their lowest level since MY 2009/10, 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 export supply prospects from Australia in “new crop” MY 2015/16 due to the emergence of a significant El Nino World weather pattern.  Other factors of concern are a) ongoing wariness of how geopolitical problems in the Black Sea region, and b) strength in the U.S. dollar that has limited the competitive position of U.S. wheat exports in World 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.   

USDA U.S. Wheat Forecast for “Current” MY 2014/15: Projected U.S. wheat exports were dropped to 860 million bushels (mb) (down 20 mb) – down to the lowest level since 2008/09. Taken together with a 5 mb decline in imports, the USDA raised its forecast of ending stocks to 709 mb (up 25 mb), with 34.5% ending-stocks-to-use (the highest level in 4 years).  Projected U.S. wheat prices of declined $0.05 to $6.00 /bu – compared to $6.87 in MY 2013/14, $7.77 (record) in MY 2012/13, and $7.24 in MY 2011/12.    

USDA U.S. Wheat Forecast for “New Crop” MY 2015/16: The USDA projected 55.367 million acres (ma) planted, 47.977 ma harvested, 43.5 bu/ac yield, 2.087 billion bushels (bb) production, 2.937 bb total supplies, 925 mb exports, 2.144 bb total use, 793 mb end stocks, 37.0% S/U, and a $5.00 /bu U.S. average price in “new crop” MY 2015/16 – the lowest since $4.87 in MY 2009/10.

KSU U.S. Wheat Forecast for “New Crop” MY 2015/16: KSU projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two alternative scenarios:  A) “Medium Yield-Increased Exports” Scenario: 75% prob. of 55.367 ma planted, 46.557 ma harvested, 43.5 bu/ac yield, 2.025 bb production, 2.874 bb total supplies, 975 mb exports, 2.194 bb total use, 680 mb end stocks, 31.0% S/U, and $5.50 /bu U.S. avg. price. B) “Low Yield-High Exports” Scenario: 25% prob. of 55.367 ma planted, 46.557 ma harvested, 42.0 bu/ac low yield, 1.955 bb production, 2.814 bb total supplies, 1.000 bb exports, 2.196 bb total use, 618 mb end stocks, 28.7% S/U, and $6.20 /bu U.S. avg. price.  Key factors in these forecasts 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. 

USDA World Wheat: World wheat total supplies of 919.3 mmt in “new crop” MY 2015/16 are up from 916.4 mmt in “current” MY 2014/15, and 893.7 mmt in MY 2013/14.  Projected World wheat ending stocks in “new crop” MY 2015/16 of 203.3 mmt (28.4% S/U) are up from 201.0 mmt (28.1% S/U) in “current” MY 2014/15, and from 190.0 mmt (27.0% S/U) in MY 2013/14.  Growing World wheat stocks prospects are a burden on World wheat market prices.  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 21.0% S/U in MY 2007/08.

I. U.S. Wheat Market Situation & Outlook

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

On May 9th the USDA World Agricultural Outlook Board (WAOB) released its May 2015 World Agricultural Supply and Demand Estimates (WASDE) report – containing 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 will end on May 31, 2015, while the “new crop” 2015/16 U.S. wheat marketing year will begin on June 1, 2015 and will last through May 31, 2016. 

In the May 12th WASDE report the USDA released projections for the “new crop” 2015/16 marketing year for corn, grain sorghum, wheat, soybeans and other major crops.  Projections of 2015 crop size for wheat are based on actual farmer surveys and field trials conducted from April 24th to May 7th by the USDA National Agricultural Statistics Service (NASS).

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

Since market highs of $7.03 ¾ per bushel on December 18, 2014, the CME JULY 2015 Kansas hard red winter wheat futures contract trended sharply lower – falling 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 $$.90 in early May, and then a rise to $5.49 ½ on May 15, 2015.

Chicago Mercantile Exchange (CME) JULY 2015 Kansas HRW Wheat futures prices responded to the release of the May 12th USDA reports by trading sideways-to-lower for the day.  JULY 2015 HRW wheat efutures prices opened at $5.09 on Tuesday, May 12th.  The USDA reports were released at midday (i.e., 11 a.m., central time).  That day prices traded as low as $5.05 ¼ and as high as $5.18 ¾ per bushel during the session before closing $0.01 lower for the day at $5.07 ¾ /bu (Figure 1).  

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

 

Since the May 12th USDA report, CME JULY 2015 Kansas HRW wheat futures have traded higher but in an increasingly volatile pattern due to a) unstable weather and its impact on winter wheat development, disease intensity, and production prospects in the U.S. central and southern plains region, b) the increasing likelihood of a developing international El Nino weather pattern that in the past has caused wheat production problems in major wheat exporting countries such as Australia, and c) some marginal weakness in the value of the U.S. dollar relative to other World currencies.  Although concerns about Black Sea geopolitical conflicts and the future availability of wheat exports from that region of the World are legitimate, they have at least not yet tangibly affected the World wheat export trade to the degree that U.S. wheat exports and prices have been positively affected.   Since May 12th, CME JULY 2015 Kansas HRW Wheat have traded from a low of $4.97 on Wednesday, May 13th to a high of $5.63 ¾ on Monday, May 18th, before closing at $5.55 on that same day.    

Similarly, CME DEC 2015 Hard Red Winter wheat efutures prices opened at $5.34 ¾ on Tuesday, May 12th – 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 $5.31 ¼ to $5.44 during the session before closing $0.02 lower for the day at $5.32 ¾ /bu (Figure 1).   Since then, DEC 2015 HRW wheat efutures prices have also generally risen, with a low of $5.23 on May 13th, and a high of $5.87 ¾ on May 18th, before closing at $5.80 ¼ on the same day.       

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, February 13, 2015 – and increase of 23.4%.  The latest recorded value of the Trade Weighted U.S. Dollar Index was 87.58 on May 15, 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).  In the May 12th USDA NASS Crop Production report, the USDA used these same projections of U.S. wheat total planted acreage by class.

At that time the USDA also forecast 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 May 12, 2015 USDA WASDE report the USDA based its projections of U.S. wheat harvested acreage in 2015 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 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 43.5 bushels per acre (bu/ac) – reflecting drought and winter kill damage on U.S. winter wheat acres again in 2015.  This projection of 2015 U.S. wheat yields of 43.5 bu/ac is down 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 (43.5 bu/ac), 2015 U.S. wheat production would be 2.087 billion bushels (bb) – up from 2.026 bb 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 2.937 bb are projected by the USDA for “new crop” MY 2015/16, resulting from beginning stocks of 709 mb, projected 2015 production of 2.087 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, 2.766 bb in “current” MY 2014/15, and now 2.937 bb in “new crop” MY 2015/16.

Forecast U.S. wheat beginning stocks of 709 mb in “new crop” MY 2015/16 are up 20.2% from 590 mb in beginning stocks in “current” MY 2014/15, and down marginally from 718 mb in MY 2013/14.  This projection of 709 mb in beginning stocks in “new crop” MY 2015/16 is more than double the long term historic low of 306 mb in MY 2009/10 – following the historically tight U.S. wheat ending stocks situation that developed in MY 2008/09. 

Projected U.S. wheat imports of 140 mb for “new crop” MY 2015/16 would be the third highest amount on record, less than 150 mb in “current” MY 2014/15, and the 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 geographic 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 “new crop” MY 2015/16 is 29.0 mmt (1.066 bb), compared to 29.3 mmt (1.077 bb) in “current crop” MY 2014/15.     

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 “current” 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 “current” 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 is up from 860 mb in “current” MY 2014/15 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, 860 mb in “current” MY 2014/15, with a projection of 925 mb in “new crop” MY 2015/16.

The sharp increase in the value of the U.S. dollar relative to other World currencies along with prospects for fully adequate foreign wheat supplies for export trade purposes, are factors that have caused lower U.S. wheat exports in “current” MY 2014/15.  That said, the uncertain impact on World wheat trade in the future from geopolitical conflicts (between Russian and Ukraine), and the potential for dry or adverse weather conditions in other major World wheat production areas in the coming year are all factors that may eventually support increased U.S. wheat exports and higher World wheat prices in the “new crop” 2015/16 marketing year.  

Cumulative U.S. wheat export shipments through May 7th – the 49th week of the “current crop” 2014/15 marketing year for U.S. wheat – totaled 774.0 mb, which is 90.0% of the USDA’s projected “current” MY 2014/15 exports of 860 mb with 94.2% (49 of 52 weeks) of the marketing year completed.  “Current” MY 2014/15 ends on May 31, 2015.  United States’ wheat export shipments will need to average 28.7 mb per week through the remainder of the “current crop” 2014/15 marketing year to attain the USDA’s May 12th WASDE projection of 860 mb.  Wheat export shipments by the U.S. of 10.5 mb and 10.9 mb during the weeks ending April 30th and May 7th, respectively, were “behind pace” to meet the USDA forecast of 860 mb 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 78.2 mb in U.S. wheat for “new crop” MY 2015/16 (that had not yet been shipped as of May 7th), total U.S. wheat shipped plus outstanding shipments added up to 852.2 mb (i.e., 774.0 mb shipped plus 78.2 mb forward sales).  This amounts to 99.1% of the USDA’s projection of 860 mb for “new crop” MY 2015/16 with 94.2% of the marketing year having already occurred (i.e., 49 of 52 weeks). 

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 180 mb in “new crop” MY 2015/16, up from 160 mb for “current” MY 2014/15, but 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 across “current” 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 they would have been if the short feedgrain supply situation of the last two years had continued.

Total U.S. Wheat UseTotal use of U.S. wheat for “new crop” MY 2015/16 is projected to be 2.144 bb, which would be the 3rd smallest amount of U.S. wheat total usage since MY 2004/05 (Figure 7).  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, 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), 2.057 bb in “current” MY 2014/15, and finally to 2.144 bb in “new crop” MY 2015/16.  Total usage of U.S. wheat in MY 2013/14 and “current” MY 2014/15 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 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 793 mb (Table 1 and Figure 6).  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 2006/17, 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 709 mb in “current” MY 2014/15, and now a projected amount of 793 mb in “new crop” MY 2015/16 – the largest amount of ending stocks since 863 mb in MY 2010/11 and 973 mb in MY 2009/10.

Percent (%) ending stocks-to-use for U.S. wheat of 37.0% 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 over time, 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, 34.5% in “current” MY 2014/15, to now a projected level of 37.0% in “New crop” MY 2015/16 – the largest amount of percent ending stocks-to-use 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 $4.50-$5.50 per bushel (“/bu”) (midpoint = $5.00 /bu) (Table 1 and Figures 7 and 8).  Starting in MY 2006/07 with at then record U.S. wheat price of $4.28, U.S. wheat prices rose to $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, $6.00 in “current” MY 2014/15, and now a forecast range of $4.50-$5.50 /bu (midpoint = $5.00 /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 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.  From the perspective of the United States, the opportunity for sharp improvements in U.S. wheat export demand for the remainder of “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 in competition with other major wheat exporting countries.  However, it is still possible that the geopolitical conflict that is occurring in the Black Sea Region between 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 May 12th USDA WASDE report.  However, these KSU projections vary from the USDA in regards to the percent 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% - down from the USDA 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.

Regarding 2015 U.S. wheat yields, two possible yield scenarios are considered, one at 43.5 bu/ac (same as the USDA), and a second lower scenario of 42.0 bu/ac – reflecting the possibility of more early season winter wheat drought, freeze, and disease damage than currently being accounted for by wheat market projections.  It is noteworthy that each of these projections is less than that 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 – Low Yield = 43.5 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.  

“New crop” 2015/16 KSU Scenario for U.S. Wheat S-D @ 43.5 bu/a – 75% 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)                 = 43.5 bu/ac                ò  0.2 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.025 bb                 ò  small% (-1 mb) vs 2014

- Total Supplies (bb)                           =   2.874 bb                 ñ  3.9% (+108 mb) vs MY 2014/15

- Exports                                              =   0.975 bb                 ñ13.4% (+115 mb) vs MY 2014/15

- Total Use                                          =   2.194 bb                 ñ  6.6% (+137 mb) vs MY 2014/15

- Ending Stocks                                    =   0.680 bb                 ò  4.1% (-29 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 30.99%                     vs 34.49% S/U in “current” MY 2014/15

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

It is estimated here in this first KSU forecast that there is a “7.5 out of 10” or 75% chance that for “new crop” MY 2015/16 final 2015 U.S. wheat production will be 2.025 bb – down marginally 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., up 50 mb (+5.4%) higher than the USDA’s May 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 50 mb (+2.3%) from 2.144 bb projected by the USDA in “new crop” MY 2015/16.  

With these KSU projections, U.S. wheat ending stocks would equal 680 mb, with % ending stocks-to-use estimated being 30.99% 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 $0.50 /bu from the USDA projection of $5.00 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 May 2015 WASDE report forecast of 925 mb for “new crop” MY 2015/16.  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 605 mb, % ending stocks to use would be 26.66%, and marketing year average prices would be projected to be in the $6.50-$7.00 /bu range.  

B. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Low Yield = 42.0 bu/ac & Higher Exports

It is estimated here in this second KSU forecast that there is a “2.5 out of 10” or 25% chance that for “new crop” MY 2015/16 that some combination of yet lower yields and higher export could occur. With that same acreages as in Scenario A, but lower yields of 42.0 /bu, final 2015 U.S. wheat production would be 1.955 bb – down 71 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 140 mb (+16.3%) from the USDA’s May WASDE forecast of 860 mb for “current” 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 139 mb (+6.7%) from 2.057 bb estimated by the USDA in “current” MY 2014/15.  

 “New crop” 2015/16 KSU Scenario for U.S. Wheat S-D @ 43.5 bu/a – 75% 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)                 = 42.0 bu/ac                ò  1.7 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   1.955 bb                 ò  3.5% (-71 mb) vs 2014

- Total Supplies (bb)                           =   2.814 bb                 ñ  1.7% (+48 mb) vs MY 2014/15

- Exports                                              =   1.000 bb                 ñ16.3% (+140 mb) vs MY 2014/15

- Total Use                                          =   2.196 bb                 ñ  6.8% (+139 mb) vs MY 2014/15

- Ending Stocks                                    =   0.618 bb                 ò12.8% (-91 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 28.74%                     vs 34.49% S/U in “current” MY 2014/15

- U.S. Wheat Price                             = $6.20 /bu                 vs $6.00 /bu in “current” MY 2014/15

With these KSU projections, U.S. wheat ending stocks would equal 618 mb, with % ending stocks-to-use estimated to be 28.74% 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 $0.20 to $6.20 per bushel for “new crop” MY 2015/16 (Table 1 and Figure 8).  The projected price of $6.20 /bu in this KSU scenario is up $1.20 /bu from the USDA projection of $5.00 /bu in “new crop” MY 2015/16. 

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “new crop” MY 2015/16 will be down 1.0% from the “current” 2014/15 marketing year that will end on May 31, 2015, and up 0.3% from two years ago in MY 2013/14 (Figure 10).  World wheat total supplies in “new crop” MY 2015/16 are forecast to be 919.90 mmt, up 3.47 mmt (up 0.4%) from 916.43 mmt in “current” MY 2014/15, and up 26.2 mmt (up 2.9%) from 893.73 mmt in MY 2013/14.  Given these changes, World wheat total use in “new crop” MY 2015/16 is projected to increase 0.2% from “current” MY 2014/15, and to be up 1.8% from MY 2013/14.  World wheat ending stocks in “new crop” MY 2015/16 are projected to increase by 1.2% from a year earlier in “current” MY 2014/15, and by 7.0% from two years ago in MY 2013/14.  

Wheat producing areas of the World from which annual variations in wheat production historically 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.  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 718.9 mmt in “new crop” MY 2015/16 would be the second largest crop on record, being down 1.0% from the previous record high of 726.45 mmt for “current” MY 2014/15.  This total for “new crop” MY 2015/16 of 718.9 mmt is also up 0.3% from 716.8 mmt in MY 2013/14, and larger than the “shorter” 658.7 mmt World wheat crop in MY 2012/13.  World wheat production was in the range of 614.5-689.3 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 662.1 mmt in “new crop” MY 2015/16, down from 671.3 mmt in “current” 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 “current” 2014/15 marketing year, and MY 2013/14, along with any changes that have occurred in their wheat production forecasts since the April 2015 WASDE report.  Year-over-year increases in wheat production are projected in the United States (up 1.7 to 56.8 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 3.0 to 19.9 mmt).   Year-over-year declines in “new crop” MY 2015/16 production are projected for Argentina (down 0.5 to 12.0 mmt), Canada (down 0.3 to 29.0 mmt), the European Union (down 6.2 to 150.3 mmt), Pakistan (down 0.5 to 25.0 mmt), India (down 5.9 to 90.0 mmt), Russia (down 5.6 to 53.5 mmt), Kazakhstan (down 0.5 to 12.5 mmt), and Ukraine (up 2.75 to 22.0 mmt).    

In “new crop” MY 2015/16, the European Union is projected to be the largest World producer of wheat at 150.3 mmt, followed by China (130.0 mmt), India (90.0 mmt), Russia (53.5 mmt), the United States (56.8 mmt), Canada (29.0 mmt), Australia (26.0 mmt), Pakistan (25.0 mmt), Ukraine (22.0 mmt), North Africa (19.9 mmt), Selected Middle Eastern Countries (17.9 mmt), Kazakhstan (12.5 mt), Argentina (12.0 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 157.0 mmt, down 4.1% from 163.7 mmt in “current” MY 2014/15, and also down 5.4% from 165.9 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 131.8 mmt in “new crop” MY 2015/16, down 6.1% from 140.3 mmt in “current” MY 2014/15, and down 1.6% 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 “current” 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 1.8 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),  Middle Eastern countries (down 0.7 mmt), India (down 2.9 mmt), Russia (down 1.5 mmt), and Ukraine (down 1.0 mmt).  No change is projected for China, North Africa, Southeast Asia, and Kazakhstan. 

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), Canada (20.5 mmt), Russia (20.0 mmt), Australia (18.5 mmt), Ukraine (10.5 mmt), Argentina (7.2 mmt), Kazakhstan (6.0 mmt), India (0.5 mmt), Selected Middle Eastern countries (0.8 mmt), Brazil (1.0), China (1.0 mmt), Pakistan (1.0 mmt), Southeast Asia (0.9 mmtt), and North Africa (0.55 mmt).

II-C. World Wheat Imports by Country / Region

Global wheat imports in “new crop” MY 2015/16 are projected to be 153.6 mmt, down 4.0% from 160.0 mmt in “current” MY 2014/15, and down 2.9% from 158.2 mmt in MY 2013/14 (Table 4).  Foreign (non-U.S.) wheat imports are projected to be 149.8 mmt in “new crop” MY 2015/16, down 3.9% from 155.9 mmt in “current” MY 2014/15, and down 2.5% 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 “current” MY 2014/15, and MY 2013/14.  While increased wheat imports are projected for India (down 0.45 mmt) for “new crop” MY 2015/16. Decreased imports are projected for the United States (down 0.3 mmt), Argentina (down 0.1 mmt), the European Union (down 0.8 mmt), China (down 0.3 mmt), selected Middle Eastern countries (down 1.8 mmt), North Africa (down 0.55 mmt), Pakistan (down 0.65 mmt), Southeast Asia (down 0.1 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 Australia, Canada (down 0.02 mmt), Brazil (down 0.1 mmt), Russia, and Ukraine.     

North Africa (24.1 mmt) is projected to be the largest World wheat importer in “new crop” MY 2015/16, followed by Selected Middle Eastern countries (21.05 mmt), Southeast Asia (18.6 mmt), the Former Soviet Union (12 countries) (7.3 mmt), Brazil (6.5 mmt), the European Union (5.0 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), and Ukraine (0.05 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 136.1 mmt, down 3.8% from 141.4 mmt in “current” MY 2014/15, and up 2.9% from 132.2 mmt in MY 2013/14 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 131.2 mmt in “new crop” MY 2015/16, down 4.3% from 137.0 mmt in “currentt” MY 2014/15, and up 4.0% 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 “current” 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 0.55 mmt), Australia (up 0.1 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 0.5 mmt), Southeast Asian (down 0.5 mmt), Russia and Ukraine (both down 0.5 mmt).  No changes are projected for the European Union, Pakistan, and Kazakhstan.

The European Union (54.5 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 (12.5 mmt), the United States (4.9 mmt), India (4.8 mmt), selected Middle East countries (4.55 mmt), Canada (4.5 mmt), Australia (3.9 mmt), Ukraine (3.5 mmt), Southeast Asia (3.3 mmt), North Africa (2.7 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 580.5 mmt, up 1.1% from 574.1 mmt in “current” 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 552.25 mmt in “new crop” MY 2015/16, up 1.2% from 545.9 mmt in “current” 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 “current” MY 2014/15, and MY 2013/14.  Year-over-year increases or no changes in wheat FSI use in “new crop” MY 2015/16 are projected for all countries except for Canada (down 0.13 mmt). 

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 (41.25 mmt), selected Middle Eastern countries (32.45 mmt), the United States (28.3 mmt), Pakistan (23.6 mmt), Russia (23.0 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 716.6 mmt in “new crop” MY 2015/16 is the highest amount on record, being up 0.2% from the previous record high of 715.5 mmt in “current” MY 2014/15, up 1.8% from 703.8 mmt in MY 2013/14, and up from the range of 614.5-687.4 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 683.4 mmt in “new crop” MY 2015/16, up 0.1% from 682.9 mmt in “current” MY 2014/15, and up 2.1% 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 “current” 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 0.6 mmt), Australia (up 0.13 mmt), the European Union (up 0.4 mmt), Brazil (up 0.3 mmt), selected Middle Eastern countries (up 0.4 mmt), North Africa (up 1.2 mmt), Pakistan (up 0.1 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), Southeast Asia (down 0.14 mmt), and Ukraine (down 0.3 mmt).  No change is projected for Russia and Kazakhstan. 

The European Union (123.5 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 (43.9 mmt), selected Middle Eastern countries (37.0 mmt), Russia (35.5 mmt), the United States (33.2 mmt), Pakistan (24.6 mmt), Southeast Asia (17.6 mmt), Ukraine (11.7 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 203.3 mmt for “new crop” MY 2015/16 are up 1.2% from 201.0 mmt in “current” MY 2014/15, and up 7.0% 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 181.74 mmt in “new crop” MY 2015/16, up marginally from 181.67 mmt in “current” MY 2014/15, and up 4.5% 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 “current” 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 2.3 mmt), Australia (up 0.3 mmt), Brazil (up 0.4 mmt), China (up 8.7 mmt), selected Middle Eastern countries (up 1.1 mmt), Southeast Asia (up 0.1 mmt), and Kazakhstan (0.1 mmt).  Decreases are projected for Argentina (down 1.3 mmt), Canada (down 0.7 mmt), the European Union (down 0.7 mmt), North Africa (down 0.5 mmt), Pakistan (down 0.5 mmt), India (down 4.6 mmt), Russia (down 1.65 mmt), and Ukraine (down 0.15mmt). 

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 (21.6 mmt), selected Middle Eastern countries (15.3 mmt), the European Union (14.0), India (11.9 mmt), North Africa (11.4 mmt), Australia (6.5 mmt), Russia (6.0 mmt), Canada (4.6 mmt), Ukraine (4.6 mmt), Southeast Asia (3.6 mmt), Kazakhstan (2.9 mmt), Pakistan (2.7 mmt), Argentina (1.9 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 28.4% for “new crop” MY 2015/16 are up from 28.1% in  “current” 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 (21.0% 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, 28.1% in “current” MY 2014/15, and are now projected to be 28.4% in “new crop” MY 2015/16.  The 38 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 22.3% in “new crop” MY 2015/16, up from 22.1% in “current” MY 2014/15, and 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 “current” 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 United States, China, selected Middle Eastern countries, and Kazakhstan.  Decreases are projected for Argentina, Australia, Canada, the European Union, Brazil, North Africa, Pakistan, Southeast Asia, 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 United States (37.0%), North Africa (25.6%), Australia (25.0%), Kazakhstan (22.5%), Ukraine (21.7%), Southeast Asia (19.3%), Canada (15.1%), Argentina (13.9%), Brazil (12.6%), India (12.5%), Russia (10.7%), the European Union (9.0%), and Pakistan (10.6%).

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 21.0%.  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 (May 12th 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

 

 

 

 

 

 

 

 

75%

25%

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

43.5

**43.5

**42.0

 

Million Bushels

Beginning Stocks

306

657

976

863

743

718

590

709

709

709

Production

2,512

2,209

2,163

1,993

2,252

2,135

2,026

2,087

2,025

1,955

Imports

127

119

97

112

123

169

150

140

140

150

Total Supply

2,945

2,984

3,236

2,968

3,118

3,021

2,766

2,937

2,874

2,814

 

 

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

860

925

**975

**1,000

Feed & Residual Use

268

142

85

157

364

223

160

180

180

156

Total Use

2,288

2,008

2,373

2,226

2,400

2,431

2,057

2,144

2,194

2,196

 

 

Ending Stocks

657

976

863

743

718

590

709

793

680

618

% Ending Stocks-to-Use

28.69%

48.58%

36.37%

33.37%

29.91%

24.28%

34.49%

36.98%

30.99%

28.74%

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

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$6.00

$4.50-$5.50 ($5.00)

$5.50

$6.20


 

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 (May 12, 2015)

Text Box: USDA 2015 Yield = 43.5 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 May 12, 2015)


 

Figure 7. Trends in U.S. Wheat Use & Ending Stocks: MY 2004/05 - 2015/16 (May 12, 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
(May 12, 2015 USDA WASDE Report & KSU forecasts for “next 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 (75% Prob.)
30.99% 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                     
(May 12, 2015 USDA WASDE Report)

Text Box: Wheat Trade
133-166 mmt since MY 2008/09
 
157.0 mmt in    MY 2015/16
Text Box: Wheat Usage
ñ12.3 mmt/yr 
(+2.0%/yr) 
since 2007/08
Text Box: Production
ñ13.3 mmt/yr (+2.2%/yr) 
since 2007/08
 
Text Box: End Stocks
203.3 mmt in “New Crop” MY 2015/16
 
Up 74.6 mmt (+58%) 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: 1986/87
Text Box: 2012/13 
25.7% S/U & $7.77 /bu
Text Box: 2006/07 
Text Box: 2007/08
Text Box: 2008/09
Text Box: 2011/12
Text Box: 2010/11
Text Box: 2009/10
Text Box: “Current” 2014/15 
28.2% S/U & $6.00 /bu
Text Box: 2013/14 
27.3% S/U & $6.87 /bu

 

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

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2015/16    May 2015

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

New Crop 2015/16 Production:               May Less April 2015                    

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

May Wheat Production: Current 2014/15          

April  Wheat Production: Current 2014/15

May Less April  Wheat  Production             for Current 2014/15

New Crop 2015/16 Production             Less Current 2014/15

% New Crop 2015/16 Production of                         Current 2014/15

Wheat Production: 2013/14                           (2 years ago)

New Crop 2015/16 Production             Less 2013/14

% Current 2015/16 Production       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

718.93

na

#VALUE!

#VALUE!

726.45

726.45

0.00

(7.52)

99.0%

716.82

2.11

100.3%

United States

56.81

na

#VALUE!

#VALUE!

55.13

55.13

0.00

1.68

103.0%

58.11

(1.30)

97.8%

Total Foreign

662.12

na

#VALUE!

#VALUE!

671.32

671.32

0.00

(9.20)

98.6%

658.72

3.40

100.5%

Major Exporters

217.29

na

#VALUE!

#VALUE!

222.25

222.25

0.00

(4.96)

97.8%

219.37

(2.08)

99.1%

Argentina

12.00

na

#VALUE!

#VALUE!

12.50

12.50

0.00

(0.50)

96.0%

10.50

1.50

114.3%

Australia

26.00

na

#VALUE!

#VALUE!

24.00

24.00

0.00

2.00

108.3%

26.93

(0.93)

96.5%

Canada

29.00

na

#VALUE!

#VALUE!

29.30

29.30

0.00

(0.30)

99.0%

37.53

(8.53)

77.3%

European Union

150.29

na

#VALUE!

#VALUE!

156.45

156.45

0.00

(6.16)

96.1%

144.42

5.87

104.1%

Major Importers

203.80

na

#VALUE!

#VALUE!

196.51

196.24

0.27

7.29

103.7%

194.10

9.70

105.0%

Brazil

6.50

na

#VALUE!

#VALUE!

6.00

5.90

0.10

0.50

108.3%

5.30

1.20

122.6%

China

130.00

na

#VALUE!

#VALUE!

126.17

126.00

0.17

3.83

103.0%

121.93

8.07

106.6%

Selected Middle East

17.89

na

#VALUE!

#VALUE!

17.42

17.42

0.00

0.47

102.7%

18.96

(1.07)

94.4%

North Africa

19.91

na

#VALUE!

#VALUE!

16.90

16.90

0.00

3.01

117.8%

19.72

0.19

101.0%

Pakistan

25.00

na

#VALUE!

#VALUE!

25.50

25.50

0.00

(0.50)

98.0%

24.00

1.00

104.2%

Southeast Asia

0.00

na

#VALUE!

#VALUE!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

India

90.00

na

#VALUE!

#VALUE!

95.85

95.85

0.00

(5.85)

93.9%

93.51

(3.51)

96.2%

Former Soviet Union - 12 Countries

103.38

na

#VALUE!

#VALUE!

112.73

112.73

0.00

(9.35)

91.7%

103.87

(0.49)

99.5%

Russia

53.50

na

#VALUE!

#VALUE!

59.08

59.08

0.00

(5.58)

90.6%

52.09

1.41

102.7%

Kazakhstan

12.50

na

#VALUE!

#VALUE!

13.00

13.00

0.00

(0.50)

96.2%

13.94

(1.44)

89.7%

Ukraine

22.00

na

#VALUE!

#VALUE!

24.75

24.75

0.00

(2.75)

88.9%

22.28

(0.28)

98.7%

 

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

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2015/16     May 2015

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

New Crop 2015/16 Exports:               May Less April 2015                    

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

May Wheat Exports: Current 2014/15          

May  Wheat Exports: Current 2014/15

May Less April Wheat  Exports for Current 2014/15

New Crop 2015/16 Exports Less Current 2014/15

% New Crop 2015/16 Exports of Current 2014/15

Wheat Exports: 2013/14                           (2 years ago)

New Crop 2015/16 Exports Less 2013/14

% Current 2015/16 Exports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

156.95

na

#VALUE!

#VALUE!

163.70

162.03

1.67

(6.75)

95.9%

165.92

(8.97)

94.6%

United States

25.17

na

#VALUE!

#VALUE!

23.41

23.95

(0.54)

1.76

107.5%

32.01

(6.84)

78.6%

Total Foreign

131.77

na

#VALUE!

#VALUE!

140.30

138.08

2.22

(8.53)

93.9%

133.90

(2.13)

98.4%

Major Exporters

78.70

na

#VALUE!

#VALUE!

80.50

79.50

1.00

(1.80)

97.8%

76.17

2.53

103.3%

Argentina

7.20

na

#VALUE!

#VALUE!

5.50

5.50

0.00

1.70

130.9%

2.25

4.95

320.0%

Australia

18.50

na

#VALUE!

#VALUE!

17.00

17.00

0.00

1.50

108.8%

18.62

(0.12)

99.4%

Canada

20.50

na

#VALUE!

#VALUE!

23.50

23.50

0.00

(3.00)

87.2%

23.27

(2.77)

88.1%

European Union

32.50

na

#VALUE!

#VALUE!

34.50

33.50

1.00

(2.00)

94.2%

32.03

0.47

101.5%

Major Importers

6.84

na

#VALUE!

#VALUE!

8.24

8.01

0.23

(1.40)

83.0%

5.19

1.65

131.8%

Brazil

1.00

na

#VALUE!

#VALUE!

1.80

1.60

0.20

(0.80)

55.6%

0.08

0.92

1250.0%

China

1.00

na

#VALUE!

#VALUE!

1.00

1.00

0.00

0.00

100.0%

0.89

0.11

112.4%

Selected Middle East

0.83

na

#VALUE!

#VALUE!

1.53

1.53

0.00

(0.70)

54.2%

0.49

0.34

169.4%

North Africa

0.55

na

#VALUE!

#VALUE!

0.55

0.55

0.00

0.00

100.0%

0.50

0.05

110.0%

Pakistan

1.00

na

#VALUE!

#VALUE!

0.70

0.70

0.00

0.30

142.9%

0.75

0.25

133.3%

Southeast Asia

0.89

na

#VALUE!

#VALUE!

0.89

0.86

0.03

0.00

100.0%

0.89

0.00

100.0%

India

0.50

na

#VALUE!

#VALUE!

3.40

3.50

(0.10)

(2.90)

14.7%

6.05

(5.55)

8.3%

Former Soviet Union - 12 Countries

36.91

na

#VALUE!

#VALUE!

39.56

38.16

1.40

(2.65)

93.3%

73.15

(36.24)

50.5%

Russia

20.00

na

#VALUE!

#VALUE!

21.50

20.50

1.00

(1.50)

93.0%

18.57

1.43

107.7%

Kazakhstan

6.00

na

#VALUE!

#VALUE!

6.00

6.00

0.00

0.00

100.0%

8.10

(2.10)

74.1%

Ukraine

10.50

na

#VALUE!

#VALUE!

11.50

11.00

0.50

(1.00)

91.3%

9.76

0.74

107.6%

 

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

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2015/16     May 2015

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

New Crop 2015/16 Imports:               May Less April 2015                    

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

May Wheat Imports: Current 2014/15          

May  Wheat Imports: Current 2014/15

May Less April Wheat  Imports for Current 2014/15

New Crop 2015/16 Imports Less Current 2014/15

% New Crop 2015/16 Imports of Current 2014/15

Wheat Imports: 2013/14                           (2 years ago)

New Crop 2015/16 Imports             Less 2013/14

% Current 2015/16 Imports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

153.61

na

#VALUE!

#VALUE!

159.97

158.96

1.01

(6.36)

96.0%

158.21

(4.60)

97.1%

United States

3.81

na

#VALUE!

#VALUE!

4.08

3.95

0.13

(0.27)

93.4%

4.59

(0.78)

83.0%

Total Foreign

149.80

na

#VALUE!

#VALUE!

155.89

155.02

0.87

(6.09)

96.1%

153.62

(3.82)

97.5%

Major Exporters

5.64

na

#VALUE!

#VALUE!

6.47

6.17

0.30

(0.83)

87.2%

4.58

1.06

123.1%

Argentina

0.03

na

#VALUE!

#VALUE!

0.04

0.04

0.00

(0.01)

75.0%

0.00

0.03

#DIV/0!

Australia

0.15

na

#VALUE!

#VALUE!

0.15

0.15

0.00

0.00

100.0%

0.15

0.00

100.0%

Canada

0.46

na

#VALUE!

#VALUE!

0.48

0.48

0.00

(0.02)

95.8%

0.45

0.01

102.2%

European Union

5.00

na

#VALUE!

#VALUE!

5.80

5.50

0.30

(0.80)

86.2%

3.97

1.03

125.9%

Major Importers

81.75

na

#VALUE!

#VALUE!

85.24

84.93

0.31

(3.49)

95.9%

87.36

(5.61)

93.6%

Brazil

6.50

na

#VALUE!

#VALUE!

6.40

6.70

(0.30)

0.10

101.6%

7.07

(0.57)

91.9%

China

1.20

na

#VALUE!

#VALUE!

1.50

1.50

0.00

(0.30)

80.0%

6.77

(5.57)

17.7%

Selected Middle East

21.05

na

#VALUE!

#VALUE!

22.84

23.03

(0.19)

(1.79)

92.2%

20.69

0.36

101.7%

North Africa

24.10

na

#VALUE!

#VALUE!

24.65

24.35

0.30

(0.55)

97.8%

25.27

(1.17)

95.4%

Pakistan

0.10

na

#VALUE!

#VALUE!

0.75

0.75

0.00

(0.65)

13.3%

0.40

(0.30)

25.0%

Southeast Asia

18.60

na

#VALUE!

#VALUE!

18.70

18.20

0.50

(0.10)

99.5%

16.41

2.19

113.3%

India

0.50

na

#VALUE!

#VALUE!

0.05

0.05

0.00

0.45

1000.0%

0.03

0.47

1666.7%

Former Soviet Union - 12 Countries

7.27

na

#VALUE!

#VALUE!

7.71

7.61

0.10

(0.44)

94.3%

7.41

(0.14)

98.1%

Russia

0.35

na

#VALUE!

#VALUE!

0.35

0.35

0.00

0.00

100.0%

0.80

(0.45)

43.8%

Kazakhstan

0.40

na

#VALUE!

#VALUE!

0.60

0.40

0.20

(0.20)

66.7%

0.01

0.39

4000.0%

Ukraine

0.05

na

#VALUE!

#VALUE!

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     May 2015

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

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

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

May Wheat Feed Use: Current 2014/15          

May  Wheat Feed Use: Current 2014/15

May Less April Wheat  Feed Use for Current 2014/15

New Crop 2015/16 Feed Use Less Current 2014/15

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

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

New Crop 2015/16 Feed Use             Less 2013/14

% Current 2015/16 Feed Use of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

 

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

136.06

na

#VALUE!

#VALUE!

141.37

139.38

1.99

(5.31)

96.2%

132.22

3.84

102.9%

United States

4.90

na

#VALUE!

#VALUE!

4.35

4.35

0.00

0.55

112.6%

6.06

(1.16)

80.9%

Total Foreign

131.16

na

#VALUE!

#VALUE!

137.02

135.03

1.99

(5.86)

95.7%

126.16

5.00

104.0%

Major Exporters

63.00

na

#VALUE!

#VALUE!

64.60

63.60

1.00

(1.60)

97.5%

57.40

5.60

109.8%

Argentina

0.10

na

#VALUE!

#VALUE!

0.30

0.30

0.00

(0.20)

33.3%

0.10

0.00

100.0%

Australia

3.90

na

#VALUE!

#VALUE!

3.80

3.80

0.00

0.10

102.6%

3.60

0.30

108.3%

Canada

4.50

na

#VALUE!

#VALUE!

6.00

5.00

1.00

(1.50)

75.0%

4.20

0.30

107.1%

European Union

54.50

na

#VALUE!

#VALUE!

54.50

54.50

0.00

0.00

100.0%

49.50

5.00

110.1%

Major Importers

32.82

na

#VALUE!

#VALUE!

36.13

35.45

0.68

(3.31)

90.8%

33.30

(0.48)

98.6%

Brazil

0.60

na

#VALUE!

#VALUE!

0.30

0.80

(0.50)

0.30

200.0%

0.60

0.00

100.0%

China

20.00

na

#VALUE!

#VALUE!

23.00

23.00

0.00

(3.00)

87.0%

21.00

(1.00)

95.2%

Selected Middle East

4.55

na

#VALUE!

#VALUE!

5.05

4.37

0.68

(0.50)

90.1%

4.92