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Grain Market Outlook

Wheat Market Outlook in July 2014

July 16, 2014


Summary

When the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on July 11, 2014, U.S. wheat market prices initially responded negatively – but have since traded in a sideways pattern.  The USDA projected 2014 U.S. and World wheat production and supplies to be higher, with expectations for larger U.S. and World ending stocks and lower wheat market prices in the “new crop” 2014/15 marketing year. 

The prevailing consensus of the U.S./World wheat market is that adequate Foreign wheat supplies exist to more than “cover” or “mitigate” 2014 U.S. hard red winter wheat production shortfalls in the Central and Southern plains states, and that no other major threats to World wheat supplies and trade have yet emerged to cause wheat prices to need to rise from current levels.  The types of market factors that would cause this market outlook to change have not yet occurred or become apparent – such as substantially lower wheat production in North America or other major wheat producing regions of the World, or geopolitically-driven disruptions to trade World wheat markets in such places as the Middle East or the Black Sea region.  Unless or until such disruptive events as these would occur, World wheat market prospects are pointing to steady-to-lower World wheat prices. 

USDA U.S. Wheat Forecast for “New Crop” MY 2014/15: Compared to a year earlier, the USDA projected lower 2014 U.S. wheat production, reduced wheat usage, an increase in U.S. wheat ending stocks and % stocks-to-use, and lower prices in “new crop” MY 2014/15.  The USDA’s projected “new crop” market scenario is: 56.5 million acres (ma) planted, 46.2 ma harvested, 81.9% harvested-to-planted acres, 43.1 bu/ac yield (up from 42.3 bu/ac a month ago), a 1.992 billion bushel (bb) 2014 U.S. wheat crop (up 50 million bushels or ‘mb’), 2.741 bb total supplies (up 46 mb), 900 mb exports (down 25 mb), 2.081 bb total use (down 40 mb), 660 mb ending stocks (up 86 mb), 31.7% ending stocks-to-use (up from 27.1%), and $6.60 average price per bu. (range of $6.00 to $7.20) – down from $7.00 /bu. 

KSU U.S. Wheat Forecast for “New Crop” MY 2014/15: KSU projections of “new crop” MY 2014/15 supply-demand balances and prices are as follows:  a) “Likely Production” Scenario: 65% prob. of 46.2 ma harvested, 43.1 bu/ac, 1.992 bb 2014 U.S. wheat production, 2.741 bb U.S. wheat supplies, 900 mb exports, 2.081 bb total use, 660 mb ending stocks, 31.7% S/U, & $6.10 /bu;  b) “Low Production” Scenario: 20% prob. of 45.4 ma harvested, low yields of 41.1 bu/ac (both harvested acres and yield lower than USDA), 1.868 bb 2014 U.S. wheat production, 2.628 bb U.S. wheat supplies, 890 mb exports, 2.061 bb total use, 567 mb ending stocks, 27.5% S/U, & $6.55 /bu;  and c) “Expected Production – Higher Exports” Scenario: 15% prob. of 46.2 ma harvested, yields of 43.1 bu/ac, 1.992 bb 2014 U.S. wheat production, 2.741 bb U.S. wheat supplies, 1.050 bb exports (up 150 mb from USDA forecast), 2.231 bb total use, 510 mb ending stocks, 22.9% S/U, & $7.50 /bu. 

USDA World Wheat: World wheat total supplies of 889.5 mmt in “new crop” MY 2014/15 are down marginally from 889.8 mmt in “old crop” MY 2013/14, but up from 854.9 mmt in MY 2012/13.  Projected World wheat ending stocks in “new crop” MY 2014/15 of 189.5 mmt (27.0% S/U) are up from 184.3 mmt (26.1% S/U) in MY 2013/14, and from 175.6 mmt (25.9% S/U) in MY 2012/13. 

For market perspective these levels of World wheat stocks need to be analyzed relative to the historic World wheat stocks minimum of 129.4 mmt (21.0% S/U) in MY 2007/08.   Year-over-year increases are projected for wheat exports in “new crop” MY 2014/15 for Argentina (+4.5 mmt), Brazil (+0.4 mmt), and Russia (+1.0 mmt), with decreases forecast for the U.S. (-7.7 mmt), Australia (-0.5 mmt), Canada (-1.5 mmt), the EU (-2.5 mmt), India (-2.4 mmt), Kazakhstan (-2.4 mmt), and Ukraine (-0.5 mmt).  


I. U.S. Wheat Market Situation & Outlook

I-A. July 2014 USDA Reports & Projections for “New Crop” MY 2014/15

On July 11, 2014 the USDA released two reports of consequence to wheat market prospects.  The USDA National Agricultural Statistical Service (NASS) released the July 11, 2014 Crop Production report, providing the third monthly survey-based projection of 2014 U.S. winter wheat production (following the May and June USDA Crop Production reports), and the first such monthly survey-based projection for 2014 U.S. durum and other spring wheat categories.   The July 11th USDA NASS Crop Production report made use of wheat-related 2014 U.S. wheat planted and harvested acreage information released in the June 30th National Agricultural Statistical Service (NASS) Acreage report.

In addition, the USDA World Agricultural Outlook Board (WAOB) released its July 11, 2014 World Agricultural Supply and Demand Estimates (WASDE) report – containing U.S. and World wheat supply-demand and price projections for both the “old crop” 2013/14 marketing year as well as for “new crop” MY 2014/15.  The “old crop” 2013/14 marketing year for U.S. wheat ended on May 31, 2014, while the “new crop” 2014/15 U.S. wheat marketing year will last from June 1, 2014 through May 31, 2015.  The July 11th WASDE report made use of the information released in both the NASS July 11th Crop Production and the June 30th Quarterly Stocks reports.  Information in the June 30th USDA NASS Quarterly Stocks report was used in calculating adjustments to “old crop” MY 2013/14 U.S. wheat usage and ending stocks in the July 11th USDA WASDE report.

The upcoming August 12th USDA NASS Crop Production report will provide another confirming in-field survey-based forecast of the 2014 U.S. wheat crop – with a particular focus on other spring wheat and durum wheat prospects as they stand in early August 2014.  This 2014 U.S. wheat production estimate will provide the basis for the August 11th WASDE report projection of U.S. wheat supply-demand and prices. 

I-B. Kansas City Wheat Futures Trends Following the July 11 USDA Reports

Wheat futures contract prices had trended higher from late January to early May 2014 due to a) declines in 2014 U.S. hard red winter wheat production prospects compared to a year ago for, and b) geopolitical conflicts in the Black Sea Region between Ukraine and Russia that put at risk and in question that region’s wheat and coarse grains exports - and ultimately were thought to provide a boost to U.S. wheat export prospects.    

However, since the market high in early May, Kansas hard red winter wheat futures have trended sharply lower as a) domestic U.S. hard red winter wheat crop prospects improved with adequate moisture and cooler temperatures in the Great Plains, b) adequate-to-favorable weather occurred in the U.S. eastern Corn Belt for at least “decent” 2014 U.S. soft red winter wheat production, c) major crop production problems were largely avoided for other major wheat export competitors – although excess moisture has likely caused wheat production problems in parts of Canada, and d) the ongoing geopolitical conflict between major wheat exporters Russia and Ukraine in the Black Sea Region has not caused a major disruption in the flow of wheat exports in World wheat markets. 

In terms of specific price levels, after trading at a low of $6.08 ¾ on January 29th, electronic SEPTEMBER 2014 Kansas City Hard Red Winter Wheat futures prices trended sharply higher up to $7.81 ½ on March 20th, and up to $8.57 ¼ on May 6th (Figure 1).   Since then, SEPTEMBER 2014 Kansas Wheat futures have trended markedly lower, trading as low as $6.32 ½ on July 11th – the day of the USDA July Crop Production and WASDE reports.

“New crop” SEPTEMBER 2014 Kansas City wheat futures prices responded to the release of the July 11th USDA reports by first trading lower on the day of the report, and then moving higher and lower in a volatile manner on the succeeding two trading days.  SEPTEMBER 2014 CBOT Kansas City wheat efutures prices opened at $6.46 ¾ on Friday, July 11th – the day of the release of the USDA reports at midday (i.e., 11 a.m., central time), and traded in a low-high range of $6.32 ½ to $6.47 ¼ during the session before closing at $0.11 lower for the day at $6.36 ¼ /bu (Figure 1).   On Monday (July 14th) and Tuesday (July 15th), SEPTEMBER 2014 Kansas City wheat efutures prices traded in the range from a low of $6.34 ¾ up to a high of $6.47 ½ - both on June 14th, before closing at $6.39 on Tuesday, June 15th – down $0.07 ¼ /bu. from the previous trading day. 

Figure 1. SEPTEMBER 2014 CME Kansas Wheat Futures Price Charts (electronic trade, 11/15/2013 to 7/15/2014)

 

Text Box: $7.01 Low
June 25th

I-C. U.S. Wheat Production

U.S. All Wheat Acreage, Yield & Production

Following the results of June 30th USDA NASS Acreage report, in its July 11th Crop Production report the USDA projected that 2014 U.S. wheat total planted acreage would be 56.474 million acres (ma), up from 56.156 ma in 2013, 55.666 ma in 2012, 54.409 ma in 2011 (Table 1 and Figures 1-2).   In addition, the USDA projected 2014 U.S. wheat harvested acreage to be 46.240 ma, up from 45.157 ma in 2013, down from 48.921 ma in 2012, and up from 45.705 ma in 2011.   

The 2014 proportion of harvested-to-planted acreage for all U.S. wheat is projected to be 81.9%, up from 80.4% in 2013, but down from 87.9% in 2012, and 84.0% in 2011 (Figure 2).  The proportion of harvested-to-planted U.S. wheat acreage in 2013 of 80.4% was the lowest since 81.6% in 2006 and 76.0% in 2002.

The projected 2014 U.S. average wheat yield of 43.1 bushels per acre (bu/ac) is up 0.8 bu/ac from the USDA’s June projection, but down from the record high of 47.2 bu/ac in 2013, the previous records of 46.3 bu/ac in 2012 and 2010, and from 43.7 bu/ac in 2011 (Table 1 and Figure 3).   The USDA projected 2014 U.S. wheat production to be 1.992 billion bushels (bb) – up 50 million bushels (mb) from June, but down from 2.130 bb in 2013, 2.266 bb in 2012, and 1.999 bb in 2011 (Table 1).   

U.S. Winter Wheat Acreage, Yield, and Production for 2014

As indicated above, updated estimates of U.S. winter wheat planted and harvested acreage were given in the June 30th USDA NASS Acreage report.  Consequently, the July 11th USDA Crop Production report followed these numbers in projecting U.S. winter wheat planted acreage to be 42.296 ma.  These acres of winter wheat were seeded in the fall of 2013 with the intention of harvesting them in the summer of 2014.  This projection of 42.296 ma planted in the U.S. for 2014 harvest is down from 43.090 ma for 2013, but greater than 41.224 ma for 2012, and 40.646 ma for 2011 (Figure 1).  Winter wheat harvested acreage in the U.S. in 2014 is projected to be 32.419 ma – with an implicit 2014 U.S. winter wheat percent harvested-to-planted acres of 76.6%.  This compares to U.S. winter wheat harvested acreage in 2013 of 32.402 ma – with an implicit 2013 U.S. winter wheat percent harvested-to-planted acres of 75.2%. 

The extreme drought conditions and freeze damage that have occurred this past fall and winter in the U.S. Great Plains states of Texas, Oklahoma, Kansas, Colorado and Nebraska have been the primary factors leading to a lower than normal forecast of percent harvested-to-planted acreage in 2014.  Even with recent moisture received in parts of Kansas in recent weeks, it is possible that the carryover impact of earlier wheat crop development problems in these states will cause the proportion of 2014 harvested-to-planted acres to decline even further, possibly even below the 75.2% level of 2013.

Winter wheat yields in 2014 in the U.S. are projected to be 42.2 bu/ac, down 0.2 bu/ac from June, and down from the record high of 47.4 bu/ac in 2013.  United States’ 2014 winter wheat production is forecast to be 1.367 bb, down 0.014 bb (13.628 million bushels or ‘mb’) from June, and down from 1.534 bb in 2013.   Of the 2014 total U.S. All Wheat Production of 1.992 bb, 2014 U.S. hard red winter wheat production is forecast to be 703 mb – down 17 mb from June – and down from 744 mb in 2013.   U.S. 2014 soft red winter wheat production is forecast to be 458 mb, down from 565 mb a year ago – primarily due to lower U.S. soft red winter wheat planted acreage in 2014.  White winter wheat production in the U.S. in 2014 is projected to be 206 mb, down from 225 mb in 2013.   

U.S. Other Spring & Durum Wheat Acreage, Yield and Production for 2014

The USDA projection of 2014 U.S. other spring wheat planted and harvested acreage is equal to the June 30th USDA Acreage report forecast of 12.709 ma and 12.403 ma, respectively.  The USDA’s estimate of 2014 U.S. other spring wheat planted acreage to 12.709 ma is up from 11.596 ma in 2013, from 12.289 ma in 2012, and from 12.394 ma in 2011.  Other spring wheat yields in 2014 in the U.S. are projected to be 45.6 bu/ac, down from the record high of 47.1 bu/ac in 2013.  United States’ 2014 other spring wheat production is forecast to be 564.6 mb, up from 533.5 mb in 2013.

The USDA’s estimate of 2014 U.S. durum wheat planted and harvested acreage to 1.469 ma and 1.418 ma, respectively, are essentially equal to year earlier levels, while 2014 durum wheat planted acreage of 1.469 ma is comparable to 1.470 ma in 2013, 2.153 ma in 2012, and 1.369 ma in 2011.  Durum wheat yields in 2014 in the U.S. are projected to be 42.1 bu/ac, down from 43.6 bu/ac in 2013.  United States’ 2014 durum wheat production is forecast to be 59.6 mb, down from 61.9 mb in 2013. 

I-D. U.S. Wheat Total Supplies

Total supplies of 2.741 bb are projected by the USDA for “new crop” MY 2014/15, resulting from beginning stocks of 590 mb, projected 2014 production of 1.992 bb, and projected imports of 160 mb (Table 1). Total supplies of U.S. wheat of 2.741 bb in MY 2014/15 are up 50 mb from the June WASDE report, but still down to the lowest amount of U.S. wheat supplies since the 2006/07 and 2007/08 marketing years.  Over the last eight (8) marketing years, U.S. wheat total supplies have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.932 bb in MY 2008/09, 2.993 bb in MY 2009/10, 3.279 bb in MY 2010/11, 2.974 bb in MY 2011/12, 3.131 bb in MY 2012/13, 3.016 bb in “old crop” MY 2013/14, and are now projected to be 2.741 bb in “new crop” MY 2014/15.

Forecast U.S. wheat beginning stocks of 590 mb in “new crop” MY 2014/15 follow from the June 1st U.S. wheat stocks estimate in the June 30th USDA Quarterly Stocks report. This projection of 590 mb in U.S. wheat beginning stocks for MY 2014/15 is down 3 mb from June, and is down 17.8% from 718 mb in beginning stocks in “old crop” MY 2013/14, and down from 743 mb in MY 2013/14.  This would be the lowest level of U.S. wheat beginning stocks since 306 mb in MY 2008/09 (following the historically tight ending stocks situation that developed in MY 2007/08).  This projected decline in U.S. wheat ending stocks into the “new crop” 2014/15 marketing year is a continuance of the pattern that had developed of steadily increasing tightness of U.S. wheat supplies over the last four marketing years (since the recent high in beginning stocks of 976 mb in MY 2010/11).  

Projected U.S. wheat imports of 160 mb for “new crop” MY 2014/15 would be the second highest amount on record, down from the record high of 168 mb in “old crop” MY 2013/14 (which is also down 2 mb from June).  Since MY 1973/74 the next highest amounts 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.  Record large 2013 Canadian wheat production of 37.5 million metric tons (mmt) (or 1,377.5 million bushels in 60 lb/bu units) has had an impact on U.S. wheat markets in “old crop” MY 2013/14.  The next largest Canadian wheat crops since 1960 that were over 30.0 mmt were in 1990 (32.098 mmt), 1991 (31.946 mmt), and 1986 (31.359 mmt).  Projected Canadian wheat production in the “new crop” 2014/15 marketing year is lower – down to 28.5 mmt.

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

Food Use: Projected U.S. wheat food use of 960 mb in “new crop” MY 2014/15 has been trending consistently higher over time due to steady growth in the U.S. population and associated increases in demand for processed wheat products.  This projected amount of 960 mb in food use in “new crop” MY 2014/15 is up from 950 mb in “old crop” MY 2013/14, from 945 mb in MY 2012/13, and from 941 mb in MY 2011/12 (Table 1 and Figure 4). 

Seed Use: Forecast seed use of 76 mb in “new crop” MY 2014/15 is down marginally from 77 mb in “old crop” MY 2013/14, and compares to 73 mb in MY 2012/13, and 76 mb in MY 2011/12 (Table 1 and Figure 4).  The USDA’s forecast U.S. wheat seed use extends the historic pattern of there being a relatively small but inelastic demand for U.S. wheat seed over time, driven primarily by a the amount of U.S. wheat seed needed to plant adequate U.S. wheat acreage each year (from on-farm and commercial seed sources), and b) by the need for adequate wheat seed stocks to cover possible seed wheat production shortfalls from year to year. 

Exports: Projected U.S. wheat exports of 900 mb in “new crop” MY 2014/15 (down 50 mb from May and down 25 mb from June) are down sharply from 1.182 bb for “old crop” MY 2013/14 (which is up 2 mb from June).  This amount of U.S. wheat exports would be the lowest since 879 mb in MY 2009/10.  The anticipation of lower available supplies of U.S. hard red winter wheat for export sales in “new crop” MY 2014/15, along with the likelihood of more than adequate foreign wheat supplies for export trade purposes, are factors in this lower U.S. export projection of 900 mb in “new crop” MY 2014/15 (Table 1 and Figure 4).  That said, the risk of lower “new crop” MY 2014/15 Australian wheat production with the forecast onset of an El Nino weather pattern in coming months, as well as the uncertain impact on World wheat trade in the future from geopolitical conflicts (between Russian and Ukraine) and potential dry or otherwise adverse weather conditions in other are factors that may eventually support increased U.S. wheat exports and higher World wheat prices in the later stages of the “new crop” 2014/15 marketing year.  

Cumulative U.S. wheat export shipments through July 3rd – the 5th week of the “new crop” 2014/15 marketing year for U.S. wheat, totaled 79.7 mb, which is 8.9% of the USDA’s projected “new crop” MY 2014/15 exports of 900 mb with 9.6% (5 of 52 weeks) of the marketing year completed.  “New crop” MY 2014/15 ends on May 31, 2015.  United States’ export shipments will need to average 17.5 mb per week through the remainder of the “new crop” 2014/15 marketing year to attain the USDA’s July WASDE projection of 900 mb.  Wheat export shipments by the U.S. of 12.3 mb and 14.5 mb during the weeks ending June 26th and July 3rd, respectively, were “behind pace” to meet the USDA forecast of 900 bb in the “new 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).

However, when accounting for unshipped forward sales of exports of 220.3 mb in U.S. wheat for “new crop” MY 2014/15 (that had not yet been shipped as of July 3rd), total U.S. wheat shipped plus outstanding shipments added up to 300.0 mb (i.e., 79.7 mb shipped plus 220.3 mb forward sales with rounding).  This amounts to 33.3% of the USDA’s projection of 900 mb for “new crop” MY 2014/15 with 9.6% of the marketing year having already occurred (i.e., 5 of 52 weeks). 

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 160 mb in “new crop” MY 2014/15, down 10 mb from May.  This projection of 160 mb is down from 220 mb for “old crop” MY 2013/14, the recent high of 388 mb in MY 2012/13, and from 162 mb in MY 2011/12 (Table 1 and Figure 4).  Domestic U.S. wheat feeding in “old crop” MY 2013/14 declined due to sizable 2013 U.S. corn and grain sorghum crops – which lead to more abundant U.S. feedgrain supplies at lower market prices than during the “drought stricken” MY 2012/13.  Subsequently, there is now lower cross-market demand for U.S. wheat in livestock feed rations – in both domestic and foreign markets.

Total U.S. Wheat Use:  Summing the categories together, total use of U.S. wheat for “new crop” MY 2014/15 is projected to be 2.081 bb, down 40 mb from the June 11th WASDE report (Table 1 and Figure 4).  U.S. wheat total use of 2.081 bb in “new crop” MY 2014/15 would be the 3rd smallest amount of U.S. wheat total usage over the last decade (since MY 2005/06). 

Over the last decade, U.S. wheat total use has varied from 2.154 bb in MY 2005/06, 2.045 bb in MY 2006/07, 2.314 bb in MY 2007/08, 2.275 bb in MY 2008/09, 2.018 bb in MY 2009/10, 2.417 bb in MY 2010/11 (the 2nd largest amount during the 8 year period), 2.231 bb in MY 2011/12, 2.414 bb in MY 2012/13 (the 3rd largest amount during the 8 year period), to the largest amount in this period of 2.426 bb in “old crop” MY 2013/14, and finally to 2.081 bb in “new crop” MY 2014/15.  Total usage of U.S. wheat in MY 2012/13 and “old crop” MY 2013/14 were boosted by higher than usual livestock feeding of wheat in reaction to extremely tight U.S. corn and grain sorghum supplies – which in turn led to substitutionary demand for U.S. wheat feeding.

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

United States’ wheat ending stocks for the “new crop” 2014/15 marketing year were projected to be 660 mb, up 120 mb from the May WASDE report, and up 86 mb from June (Table 1 and Figure 4).  The USDA’s July 11th WASDE report projection of “new crop” MY 2014/15 ending stocks of 660 mb is still uncertain for a number of reasons. This amount of U.S. wheat ending stocks is still markedly larger than 306 mb in MY 2007/08 – the historic “tight stocks” marketing year in recent years.  Over the last eight marketing years, U.S. wheat ending stocks have been a record low 306 mb in MY 2007/08, 657 mb in MY 2008/09, 976 mb in MY 2009/10, 862 in MY 2010/11, 743 mb in MY 2011/12, 718 mb in MY 2012/13, an estimated 590 mb in “old crop” MY 2013/14 (down 3 mb from June), and a projected amount of 660 mb in “new crop” MY 2014/15.

Percent (%) ending stocks-to-use for U.S. wheat of 31.71% in “new crop” MY 2014/15 is up from 24.31% in “old crop” MY 2013/14 (Table 1 and Figures 5-6).  This projection of 31.71% U.S. wheat % ending stocks-to-use in “new crop” MY 2014/15 is comparable to the historic 67 year low of 13.2% in MY 2007/08, 28.9% in MY 2008/09, 48.4% in MY 2009/10, 35.7% in MY 2010/11, 33.3% in MY 2011/12, 29.7% in MY 2012/13, 24.3% for “old crop” MY 2013/14, and now 31.71% in “new crop” MY 2014/15.   

U.S. average wheat prices for “new crop” MY 2014/15 are projected to be in the range of $6.00-$7.20 per bushel (“/bu”) (midpoint = $6.60 /bu) – down $0.35 /bu on the lower end and down $0.45 /bu on the upper end of the price range.  The midpoint forecast of the price range of $6.60 is down $0.40 /bu from the price range midpoint from the June 11th WASDE report.  This compares to $6.87 /bu in “old crop” MY 2013/14, and the record high of $7.77 /bu for MY 2012/13 (Table 2 and Figures 5-6). 

Since the record tight U.S. and World wheat ending stocks marketing year of 2007/08, U.S. wheat prices have varied in the following manner over time: $6.48 per bushel in MY 2007/08, $6.78 in MY 2008/09, $4.87 in MY 2009/10, $5.70 in MY 2010/11, $7.24 in MY 2011/12, $7.77 in MY 2012/13, $6.87 in “old crop” MY 2013/14, and now a forecast range of $6.00-$7.20 /bu (midpoint = $6.60 /bu) in “new crop” MY 2014/15.  It should be noted that the top end of the “new crop” price range of $7.20 /bu would still be the second highest U.S. wheat marketing year average cash price on record, behind only the record high U.S. wheat price of $7.77 in MY 2012/13.   

An indicator of inflation that has occurred in U.S. wheat prices is found by comparing the situation in the historical “tight stocks” year of MY 2007/08 with “new crop” MY 2014/15.  In MY 2007/08, U.S. wheat % ending stocks-to-use were a record low 13.2% with an average U.S. wheat price of $6.48 per bushel – at that time a record high.  In comparison, in “new crop” MY 2014/15, U.S. wheat % ending stocks-to-use are estimated to be 2.4 times higher at 31.71%, but with U.S. wheat prices being moderately higher as well at $6.60 /bu.  Similarly, in MY 2012/13 U.S. wheat % ending stocks-to-use are estimated to be higher at 29.7%, but with U.S. wheat prices being moderately higher and a record high of $7.77 /bu. 

I-G. KSU U.S. Wheat Market Scenarios for “New Crop” MY 2014/15

These early 2014 projections by Kansas State University of U.S. wheat production and U.S. wheat supply-demand balances and prices for “new crop” 2014/15 marketing year reveal the importance that planted and harvested acreage, yields, beginning stocks, export, and feed use prospects continue to have on wheat markets.   Following the July 11th USDA Crop Production and WASDE reports, information is now available in regards a) 2014 U.S. winter wheat crop size and quality, b) U.S. spring and durum wheat crop development and production prospects, c) initial observations on prospects of the “new crop” MY 2014/15 wheat crops of major foreign export competitors, and d) the USDA’s latest forecast of U.S. wheat supply-demand and price prospects for “new crop” MY 2014/15. 

There are still a number of possible U.S. wheat production, supply-demand balance, and price outcome scenarios for the U.S. wheat “new crop” 2014/15 marketing year, due to the uncertainty of associated with U.S. and World wheat supply-demand prospects at this point in time.   

KSU Probability-Based Projections U.S. Wheat Supply-Demand & Price Scenarios for “new crop” MY 2014/15

KSU projections of 2014 U.S. wheat planted and harvested acreage for alternative production scenarios are found in Table 1 and Figure 2.   Projections of U.S. wheat planted and harvested acres follow the survey-based results originating from the USDA June 30th Acreage report – which in turn were used by the USDA in their July 11th WASDE report projections.   

Varying projections of 2014 U.S. wheat yields are found in Table 1 and Figure 3.  Probability-weighted KSU forecasts of U.S. wheat average prices for “new crop” MY 2014/15 that are based on projections of U.S. wheat % ending stocks-to-use provided Table 1 and Figures 5-6

Three probability-weighted KSU U.S. wheat supply-demand and price scenarios for “next crop” MY 2014/15 are shown below.  

1.      “Likely Production” Scenario: Production = 1.992 bb, 31.7% Stx/Use, $6.10/bu – 65% Probability

In this “likely production” outcome scenario, it is estimated that at this time there is a 65% chance of U.S. wheat acreage, yields, production, and supply-demand balances following somewhat consistently with planted and harvested acreage in the July 11, 2014 USDA Crop Production and WASDE reports with the exception of lower projected prices (Table 1 and Figures 5-6). 

With 2014 U.S. wheat planted acres of 56.156 million acres (ma), harvested acres of 46.240 ma, 2014 U.S. wheat yields of 43.1 bu/ac, 2014 U.S. wheat production of 1.992 bb, “new crop” MY 2014/15 total supplies equaling 2.741 bb, exports of 900 mb, U.S. wheat total usage of 2.081 bb, ending stocks of 660 mb, % ending stocks-to-use are projected to be 31.71%. Given these forecast assumptions, U.S. wheat average prices are projected to be in the range of $5.60-$6.60 per bushel for “new crop” MY 2014/15 (midpoint = $6.10). 

This KSU price projection compares to the USDA’s “new crop” MY 2014/15 projection of $6.00-$7.20 (mid-point = $6.60 /bu), with the midpoint of the KSU forecast of $6.10 being within the lower end of the USDA forecast price range (i.e., above $6.00 /bu).

2.      “Low Production” Scenario: Production = 1.868 bb, 27.51% Stx/Use, $6.55/bu – 20% Probability

In this “low production” outcome scenario, it is estimated that there is a 20% chance of approximately 124 mb less U.S. wheat production than projected by KSU and the USDA in the “likely production scenario #1”, leading to tighter U.S. wheat supplies, lower end stocks-to-use, and moderately higher U.S. wheat prices (Table 1 and Figure 5).  In this scenario, the lower U.S. wheat planted acres projection is based on the addition of the lower end of the 67% forecast confidence interval for planted acreage of U.S. winter, other spring, and durum wheat as provided in the June 30th USDA Acreage report.  The production estimate in this scenario was based on the lower end of the 90% confidence interval for 2014 U.S. wheat production from the July 11th USDA NASS Crop Production report, with harvested acreage calculated using the USDA’s percent harvested-to-planted acreage as represented in the June 30th USDA Acreage report.  The U.S. average yield was calculated by dividing the projected production by the estimated harvested acreage.

With 2014 U.S. wheat planted acres of 55.448 million acres (ma), harvested acres of 45.433 ma, 2014 U.S. wheat yields of 41.1 bu/ac, 2014 U.S. wheat production of 1.868 bb, “new crop” MY 2014/15 total supplies equaling 2.628 bb, exports of 890 mb, U.S. wheat total usage of 2.061 bb, ending stocks of 567 mb, % ending stocks-to-use are projected to be 27.51%.  Given these assumptions, U.S. wheat average prices are projected to be in the range of $6.05-$7.05 per bushel for “new crop” MY 2014/15 (midpoint = $6.55) - $0.45 per bushel higher than for “Expected Production scenario #1” above. 

3.      “Expected Production - High Exports” Scenario: Production = 1.992 bb, Exports = 1.050 bb, 22.85% Stx/Use, $7.50/bu – 15% Probability

In this “expected production – high exports” outcome scenario, it is estimated that there is a 15% chance that 2014 U.S. wheat yields and production are equal to the July 11th USDA Crop Production report projections, but that exports are higher than the USDA is projecting due to currently unanticipated foreign wheat production problems in major wheat exporting countries.  This change would lead to smaller ending stocks-to-use and markedly higher prices than for the “Expected Production” or “Low Production” scenarios for “new crop” MY 2014/15 that are presented above (Table 1). 

With 2014 U.S. wheat planted acres of 56.156 ma, harvested acres of 46.240 ma, 2014 U.S. wheat yields of 43.1 bu/ac, 2014 U.S. wheat production of 1.992 bb, “new crop” MY 2014/15 total supplies equaling 2.741 bb, exports of 1.050 bb (vs 900 mb for the USDA), U.S. wheat total usage of 2.231 bb (vs 2.081 bb for USDA), ending stocks of 510 mb, % ending stocks-to-use would be 22.85%.  Given these assumptions, U.S. wheat average prices would be projected to be in the range of $7.00-$8.00 per bushel for “new crop” MY 2014/15 (midpoint = $7.50 /bu). The KSU $7.50 midpoint forecast is marginally above the upper end of the USDA forecast range, i.e., greater than $7.20 /bu for “new crop” MY 2014/15. 

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “new crop” MY 2014/15 will be down 1.3% from the “old crop” 2013/14 marketing year that ended on May 31st, but still up 7.2% from two years ago in MY 2012/13.  World wheat total supplies in “new crop” MY 2014/15 are forecast to be 889.46 mmt, essentially equal to a year ago, but up 4.0% from 854.92 mmt two years ago.  Given these changes, World wheat total use in “new crop” MY 2014/15 is projected to decrease marginally (down 0.8%) from “old crop” MY 2013/14, but to be up 3.0% from MY 2012/13.  World wheat ending stocks in “new crop” MY 2014/15 are projected to increase by 2.8% from a year earlier in “old crop” MY 2013/14, and by 7.9% from two years ago in MY 2012/13.  

A large amount of uncertainty still exists for the World wheat market supply-demand balance situation that will ultimately develop in “new crop” MY 2014/15 (i.e., over the June 1, 2014 through May 31, 2015 period).  However, absent any major 2014 wheat production shortfalls or other unanticipated geopolitical conflicts or disruptive economic problems among major world wheat producers and exporters, if the USDA’s July 11th WASDE report projection holds true, wheat prices in “new crop” MY 2014/15 will likely be similar to or lower than the price levels that occurred in “old crop” MY 2013/14.   

Wheat producing areas of the World whose varying production have had a notable impact on wheat markets 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 European Union, and f) China.  Even though World wheat markets seem at this time not to be focusing on or aware of possible production problems that could occur in these key World wheat production areas (i.e., except for winter wheat production in the United States’ central and southern plains), this year as in every other year the potential still exists for production and/or supply problems to develop of a magnitude that World wheat markets could be significantly impacted sometime during the remainder of 2014 and on into 2015.     

II-A. World Wheat Production by Country / Region

Projected World wheat production of 705.2 mmt in “new crop” MY 2014/15 is the 2nd largest crop on record, being down 1.3% from the record high of 714.2 mmt for “old crop” MY 2013/14.  This total for “new crop” MY 2014/15 of 705.2 mmt is also up 7.2% from 657.7 mmt in MY 2012/13, and marginally larger than the 3rd largest crop on record of 696.0 mmt in MY 2011/12.  World wheat production was in the range of 613-687 mmt during the previous MY 2007/08-MY 2010/11 period (Table 2 and Figure 7).  Foreign (non-U.S.) wheat production is projected to be 651.0 mmt in “new crop” MY 2014/15, down from 656.2 mmt in “old crop” MY 2013/14, but up from 596.0 mmt in MY 2012/13. 

Table 2 provides a projected list of the major wheat producing countries or regions in the World in “new crop” MY 2014/15, “old crop” 2013/14 marketing year, and MY 2012/13, along with any changes that have occurred in their wheat production forecasts since the June 2014 WASDE reportYear-over-year increases in wheat production are projected in Argentina (up 2.0 mmt to 12.5 mmt), the European Union (up 4.6 to 147.9 mmt), Brazil (up 1.0 to 6.3 mmt), China (up 2.1 to 124.0 mmt), Pakistan (up 0.5 to 24.5 mmt), India (up 2.3 to 95.9 mmt), and Russia (up 0.9 to 53.0 mmt).  Year-over-year declines in “new crop” MY 2014/15 production are projected for the United States (down 3.8 to 54.2 mmt), Australia (down 1.0 to 26.0 mmt), Canada (down 9.5 to 28.0 mmt), selected Middle Eastern Countries (down 1.31 to 17.6 mmt), North Africa (down 1.3 to 18.9 mmt), Kazakhstan (down 0.4 to 13.5 mmt), and Ukraine (down 1.3 to 21.0 mmt).  

In “new crop” MY 2014/15, the European Union is projected to be the largest World producer of wheat at 147.9 mmt, followed by China (124.0 mmt), India (95.9 mmt), the United States (54.2 mmt), Russia (53.0 mmt), Canada (28.0 mmt), Australia (26.0 mmt), Pakistan (24.5 mmt), Ukraine (21.0 mmt), North Africa (18.9 mmt), Selected Middle Eastern Countries (17.6 mmt), Kazakhstan (13.5 mt), Argentina (12.5 mmt), and Brazil (6.3 mmt).

II-B. World Wheat Exports by Country / Region

Global wheat exports in “new crop” MY 2014/15 are projected to be a 151.6 mmt, down 7.7% from 164.3 mmt in “old crop” MY 2013/14, while also up 10.5% from 137.2 mmt in MY 2012/13 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 127.1 mmt in “new crop” MY 2014/15, down 3.8% from 130.6 mmt in “old crop” MY 2013/14, and up 15.8% from 109.8 mmt in MY 2012/13. 

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

The largest projected exporter of wheat in “new crop” MY 2014/15 is the European Union (28.0 mmt), the United States (24.5 mmt), followed by Canada (21.0 mmt), Russia (19.5 mmt), Australia (19.0 mmt), Ukraine (9.0 mmt), Argentina (6.5 mmt), Kazakhstan (6.0 mmt), India (3.5 mmt), and China (1.0 mmt).

II-C. World Wheat Imports by Country / Region

Global wheat imports in “new crop” MY 2014/15 are projected to be 149.9 mmt, down 4.0% from 156.1 mmt in “old crop” MY 2013/14, and up 3.9% from 144.2 mmt in MY 2012/13 (Table 4).  Foreign (non-U.S.) wheat imports are projected to be 145.6 mmt in “new crop” MY 2014/15, down 4.0% from 151.6 mmt in “old crop” MY 2013/14, and up 3.3% from 140.9 mmt in MY 2012/13. 

Table 4 provides a projected list of the major wheat importing countries or regions in the World in the “new crop” 2014/15 marketing year, along with “old crop” MY 2013/14, and MY 2012/13.  While increased wheat imports are projected for the European Union for “new crop” MY 2014/15, only marginal or no year-over-year changes in wheat imports in “new crop” MY 2014/15 are projected for Canada, Pakistan, Southeast Asia, and the three major Black Sea Region exporting countries.  Decreased imports are projected for the United States, Brazil, China, Selected Middle Eastern countries, and North Africa. 

North Africa (23.5 mmt) is projected to be the largest World wheat importer in “new crop” MY 2014/15, followed by Selected Middle Eastern countries (19.5 mmt), Southeast Asia (16.4 mmt), the Former Soviet Union (12 countries) (7.8 mmt), Brazil (6.5 mmt), the European Union (5.0 mmt), China (3.0 mmt), Russia (1.2 mmt), and Pakistan (0.5 mmt).  China is projected to see “new crop” MY 2014/15 wheat imports decrease to 3.0 mmt from 7.0 mmt in “old crop” MY 2013/14, but equal to the total of 3.0 mmt in MY 2012/13. 

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

Global wheat domestic feed use in “new crop” MY 2014/15 is projected to be a 129.4 mmt, down 3.8% from 133.1 mmt in “old crop” MY 2013/14, and down 5.3% from 136.7 mmt in MY 2012/13 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 125.4 mmt in “new crop” MY 2014/15, down 1.4% from 127.2 mmt in “old crop” MY 2013/14, and down 0.5% from 126.1 mmt in MY 2012/13. 

Table 5 provides a projected list of the major countries or regions in the World terms of wheat domestic feed use in the “new crop” 2014/15 marketing year, along with “old crop” MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat feed use in “new crop” MY 2014/15 are projected for the European Union, Pakistan and the Ukraine.  Declines in domestic wheat feeding are forecast for the United States, Australia, Canada, China, Selected Middle Eastern countries, North Africa, Southeast Asia, India, the Former Soviet Union (12 countries), and Russia specifically. 

The European Union (54.5 mmt) is projected to be the largest World user of wheat for domestic feeding in “new crop” MY 2014/15, followed by China (21.0 mmt), Russia (12.0 mmt), Canada (4.5 mmt) and India (4.5 mmt), the United States (4.0 mmt), Ukraine (3.5 mmt), Australia (3.4 mmt), Selected Middle East countries (2.9 mmt), North Africa (2.4 mmt), Southeast Asia (2.2 mmt), Kazakhstan (2.0 mmt), Pakistan (0.7 mmt) and Brazil (0.6 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 2014/15 is projected to be a 570.6 mmt, down 0.3% from 572.4 mmt in “old crop” MY 2013/14, and up 5.1% from 542.7 mmt in MY 2012/13 (Table 6).  Foreign (non-U.S.) wheat FSI use is projected to be 542.3 mmt in “new crop” MY 2014/15, down 0.4% from 544.4 mmt in “old crop” MY 2013/14, and up 5.3% from 515.0 mmt in MY 2012/13. 

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

China (101.0 mmt) is projected to be the largest World FSI user of wheat in “new crop” MY 2014/15, followed by India (89.4 mmt), the European Union (68.5 mmt), North Africa (40.4 mmt), Selected Middle Eastern countries (33.1 mmt), the United States (28.2 mmt), Pakistan (23.7 mmt), Russia (21.5 mmt), Southeast Asia (13.8 mmt), Brazil (11.0 mmt), Ukraine (8.0 mmt), Argentina (6.1 mmt), Canada (5.25 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 699.9 mmt in “new crop” MY 2014/15 is the 2nd highest amount on record, being down 0.8% from the record high 705.5 mmt for “old crop” in MY 2013/14, up 3.0% from 679.3 mmt in MY 2012/13, and up from the range of 615-688 mmt during the MY 2007/08-MY 2011/12 period (Table 7 and Figure 7).  Foreign (non-U.S.) wheat total use is projected to be 667.8 mmt in “new crop” MY 2014/15, down 0.6% from 671.7 mmt in “old crop” MY 2013/14, and up 4.2% from 641.1 mmt in MY 2012/13. 

Table 7 provides a projected list of the major countries or regions in the World in terms of total wheat use in the “new crop” 2014/15 marketing year, along with “old crop” MY 2013/14, and MY 2012/13.  Sizable year-over-year increases in wheat total use in “new crop” MY 2014/15 are projected for the European Union, with smaller increases projected for Argentina, Brazil, Pakistan, and Southeast Asia.  Decreases in total wheat usage are forecast for the United States, Australia, Canada, China, Selected Middle Eastern countries, India, and Russia.  No changes were forecast for Kazakhstan and Ukraine.

The European Union (123.0 mmt) is projected to be the largest World user of wheat in “new crop” MY 2014/15, followed closely by China (122.0 mmt), India (93.9 mmt), North Africa (42.8 mmt), Selected Middle Eastern countries (36.0 mmt), Russia (33.5 mmt), United States (32.1 mmt), Pakistan (24.4 mmt), Southeast Asia (16.0 mmt), Brazil (11.6 mmt), Ukraine (11.5 mmt), Canada (9.8 mmt), Kazakhstan (6.8 mmt) and Australia (6.8 mmt), and Argentina (6.2 mmt).

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

Projected World wheat ending stocks of 189.5 mmt for “new crop” MY 2014/15 is up 2.8% from 184.3 mmt in “old crop” MY 2013/14, and up 7.9% from 175.6 mmt in MY 2012/13, but is down from the range of 197-202 mmt over the MY 2009/10 through 2011/12 period (Table 8 and Figure 7).  The 37 year low in World wheat ending stocks occurred when supply-demand balances fell to 129.4 mmt in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks are projected at 171.6 mmt in “new crop” MY 2014/15, up 2.1% from 168.0 mmt in “old crop” MY 2013/14, and up 9.9% from 156.1 mmt in MY 2012/13. 

Table 8 provides a list of the major countries or regions in the World in terms of projected holdings of wheat ending stocks in the “new crop” 2014/15 marketing year, along with “old crop” MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat ending stocks in “new crop” MY 2014/15 are projected for the United States,  Australia, the European Union, Brazil, China, Selected Middle Eastern countries, Russia, Kazakhstan, and Ukraine.  Decreases are projected for Argentina, Canada, North Africa, Pakistan, Southeast Asia, and India. 

China (62.4 mmt) is projected to be the largest holder of wheat ending stocks in the World in “new crop” MY 2014/15, followed by the United States (18.0 mmt), India (16.3 mmt), the European Union (12.1), North Africa (12.0 mmt), Selected Middle Eastern countries (11.3 mmt), Canada (8.0 mmt), Russia (7.0 mmt), Australia (5.7 mmt), Ukraine (4.6 mmt), Southeast Asia (3.5 mmt), Argentina (2.6 mmt), Brazil (2.5 mmt), Kazakhstan (2.4 mmt), and Pakistan (2.1 mmt).

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

Projected World wheat ending stocks-to-use of 27.1% for “new crop” MY 2014/15 are up from 26.1% in “old crop” MY 2013/14, and up from 25.9% in MY 2012/13 (Table 9 and Figure 8).  After falling to minimum levels of World wheat % ending stocks-to-use in MY 2006/07 (21.7% S/U) and MY 2007/08 (21.0% S/U), World wheat % S/U was 26.6% in MY 2008/09, 31.0% in MY 2009/10, 30.3% in MY 2010/11, 28.7% in MY 2012/13, 25.6% in MY 2012/13, and 26.4% in “old crop” MY 2013/14, and is now projected to be 27.1% in “new crop” MY 2014/15.  The 37 year low in World wheat ending stocks-to-use occurred when supply-demand balances fell to 21.0% in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks-to-use are projected at 21.6% in “new crop” MY 2014/15, up from 20.9% in “old crop” MY 2013/14, and 20.8% in MY 2012/13. 

Table 9 provides a list of the major countries or regions in the World in terms of projected wheat percent (%) ending stocks-to-use in the “new crop” 2014/15 marketing year, along with “old crop” MY 2013/14, and MY 2012/13.  Year-over-year increases in wheat ending stocks-to-use in “new crop” MY 2014/15 are projected for the United States, Australia, the European Union, Brazil, China, Russia, Kazakhstan, and Ukraine.  Decreases are projected for Argentina, Canada, North Africa, Pakistan, Southeast Asia, and India.  No change in percent ending stocks-to-use is forecast for Selected Middle Eastern countries.

China (50.7%) is projected to be the largest holder of wheat ending stocks-to-use in the World in “new crop” MY 2014/15, followed by the United States (31.7%), Selected Middle Eastern countries (31.0%), North Africa (27.7%), Canada (22.8%), Ukraine (22.2%), Southeast Asia (20.7%) and Brazil (20.7%), Australia (20.6%) and Argentina (20.6%), Kazakhstan (18.7%), India (16.7%), Russia (13.1%), Pakistan (8.8), and the European Union (8.0%).

Similar to the relationship between U.S. wheat ending stocks-to-use and U.S. average wheat prices (see Figure 6) since MY 1973/74, a negative market relationship has existed between U.S. wheat season average cash prices and World wheat % ending stocks-to-use – but with an adjustment or “structural jump” after MY 2009/10 (Figure 8).  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 6 earlier, U.S. wheat prices in Figure 8 are reported on a nominal basis (i.e., not adjusted for inflation).   Whereas the minimum U.S. wheat percent stocks-to-use since MY 1973/74 was 13.2% in the historic tight stocks year of MY 2007/08, the historic minimum in World wheat percent stocks-to-use occurred in that same marketing year at 21.0%.  Since that time, World wheat ending stocks-to-use have not fallen below 25.5% in MY 2012/13.

Table 1. U.S. Wheat Supply-Demand Balance Sheet: MY 2008/09 – “Next Crop” MY 2014/15 (July 11th USDA WASDE & KSU 2014/15 Projections)

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

USDA

2014/15

KSU

Low Production

2014/15

KSU

Expected Production

2014/15

KSU

Exptd. Prodn High Exports

2014/15

% Probability of Occurring

 

 

 

 

 

 

 

20%

65%

15%

Planted Area (million acres)

63.193

59.168

53.593

54.409

55.666

56.156

56.474

55.448

56.156

56.156

Harvested Area (million acres)

55.699

49.893

47.619

45.705

48.921

45.157

46.240

45.433

46.240

46.240

% Harvested/Planted Area

88.1%

84.3%

88.9%

84.0%

87.9%

80.4%

81.9%

81.9%

81.9%

81.9%

Yield / harvested acre (bu/ac)

44.9

44.5

46.3

43.7

46.3

47.2

43.1

41.1

43.1

43.1

 

 

Beginning Stocks

306

657

976

862

743

718

590

590

590

590

Production

2,499

2,218

2,207

1,999

2,266

2,130

1,992

1,868

1,992

1,992

Imports

127

119

97

112

123

168

160

170

160

160

Total Supply

2,932

2,993

3,279

2,974

3,131

3,016

2,741

2,628

2,741

2,741

 

 

 

 

 

 

 

 

 

 

 

Food Use

927

919

926

941

945

950

960

955

960

960

Seed Use

78

69

71

76

73

77

76

76

76

76

Exports

1,015

879

1,291

1,051

1,007

1,182

900

890

900

1,050

Feed & Residual Use

255

150

129

162

388

217

145

140

145

145

Total Use

2,275

2,018

2,417

2,231

2,414

2,426

2,081

2,061

2,081

2,231

 

 

 

 

 

 

 

 

 

 

 

Ending Stocks

657

976

862

743

718

590

660

567

660

510

% Ending Stocks-to-Use

28.87%

48.36%

35.66%

33.30%

29.74%

24.31%

31.71%

27.51%

31.71%

22.85%

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

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$6.00-$7.20 ($6.60)

$6.05-$7.05

($6.55)

$5.60-$6.60

($6.10)

$7.00-$8.00

($7.50)


 

Figure 1. U.S. Wheat Planted Acreage – All Winter, Spring & Durum
Wheat Classes (1973-2014)

Figure 2. U.S. All Wheat Planted & Harvested Acreage (1973-2014)

Figure 3. U.S. All Wheat Yield Trend (1973-2013), USDA 2014 Forecast, & KSU 2014 Trend Projection (July 11, 2014)

Text Box: USDA 2014 Yield = 43.1 bu/ac
KSU-trend: 45.8 bu/ac 
10 year Min. = 38.6 bu/ac
10 year Max. = 47.2 bu/ac
 

Figure 4. Trends in U.S. Wheat Use and Ending Stocks: MY 2004/05 - “New Crop” MY 2014/15

                    (July 11, 2014 USDA WASDE Report)

Figure 5. U.S. Wheat Ending Stocks vs U.S. Cash Prices: MY 1973/74 thru “New Crop” MY 2014/15      
(July 11, 2014 USDA WASDE Report & KSU forecasts for MY 2014/15)

Figure 6. U.S. Wheat Price vs U.S. % Stocks-to-Use (MY 1973/74 thru “New Crop” MY 2014/15)     

Text Box: KSU “New Crop” MY 2014/15
31.7% S/U, $6.10 /bu
Text Box: USDA 
“New Crop”
MY 2014/15
31.7% S/U
$6.60
Text Box: 2011/12

Figure 7. World Wheat Usage & Ending Stocks: MY 2007/08 thru “New Crop” MY 2014/15                      
(July 11, 2014 USDA WASDE Report)

Text Box: Wheat Usage
ñ10.5 mmt/yr 
(+1.7%/yr) 
since 2007/08
Text Box: Production
ñ11.6 mmt/yr (+1.9%/yr) 
since 2007/08
 
Text Box: End Stocks
189.54 mmt in “new crop” 2014/15
 
Up 60.2 mmt (+47%) since 
37 year low in 
MY 2007/08
Text Box: Wheat Trade
133-164 mmt since 2008/09
 
152.6 mmt in MY 2014/15

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

Text Box: USDA 2014/15:
27.1% S/U, $6.60 /bu
Text Box: Cross Market Price Support
Tight corn stocks & high corn prices since MY 2006/07 had been supporting wheat prices   – especially in the 2011/12 & 2013/14 marketing years
 
 
Text Box: 2011/12

 

Table 2. World Wheat Production Projections for "New Crop" MY 2014/15, "Old crop" MY 2013/14, and MY 2012/13

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2014/15     June 2014

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

New Crop 2014/15 Production:               July Less June  2014                    

New Crop 2014/15 Production:                Percent (%)         July of June  2014

July Wheat Production: Old crop 2013/14          

June  Wheat Production: Old crop 2013/14

July Less June  Wheat  Production             for Old crop 2013/14

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

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

Wheat Production: 2012/13                           (2 years ago)

New Crop 2014/15 Production             Less 2012/13

% Old crop 2014/15 Production       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

705.17

701.62

3.55

100.5%

714.20

713.97

0.23

(9.03)

98.7%

657.70

47.47

107.2%

United States

54.21

52.58

1.63

103.1%

57.96

57.96

0.00

(3.75)

93.5%

61.67

(7.46)

87.9%

Total Foreign

650.97

648.77

2.20

100.3%

656.24

656.01

0.23

(5.27)

99.2%

596.03

54.94

109.2%

Major Exporters

214.38

212.75

1.63

100.8%

218.32

218.32

0.00

(3.94)

98.2%

192.21

22.17

111.5%

Argentina

12.50

12.50

0.00

100.0%

10.50

10.50

0.00

2.00

119.0%

9.30

3.20

134.4%

Australia

26.00

25.50

0.50

102.0%

27.01

27.00

0.01

(1.01)

96.3%

22.86

3.14

113.7%

Canada

28.00

28.50

(0.50)

98.2%

37.50

37.50

0.00

(9.50)

74.7%

27.21

0.79

102.9%

European Union - 28 Countries

147.88

146.25

1.63

101.1%

143.32

143.32

0.00

4.56

103.2%

133.85

14.03

110.5%

Major Importers

195.93

195.63

0.30

100.2%

194.47

194.26

0.21

1.46

100.8%

187.29

8.64

104.6%

Brazil

6.30

6.00

0.30

105.0%

5.30

5.30

0.00

1.00

118.9%

4.38

1.92

143.8%

China

124.00

124.00

0.00

100.0%

121.93

121.72

0.21

2.07

101.7%

121.02

2.98

102.5%

Selected Middle East

17.63

17.63

0.00

100.0%

18.94

18.94

0.00

(1.31)

93.1%

17.18

0.45

102.6%

North Africa

18.85

18.85

0.00

100.0%

20.12

20.12

0.00

(1.27)

93.7%

17.32

1.53

108.8%

Pakistan

24.50

24.50

0.00

100.0%

24.00

24.00

0.00

0.50

102.1%

23.30

1.20

105.2%

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

95.85

95.85

0.00

100.0%

93.51

93.51

0.00

2.34

102.5%

94.88

0.97

101.0%

Former Soviet Union - 12 Countries

102.22

102.20

0.02

100.0%

103.77

103.76

0.01

(1.55)

98.5%

77.35

24.87

132.2%

Russia

53.00

53.00

0.00

100.0%

52.09

52.09

0.00

0.91

101.7%

37.72

15.28

140.5%

Kazakhstan

13.50

14.50

(1.00)

93.1%

13.94

13.94

0.00

(0.44)

96.8%

9.84

3.66

137.2%

Ukraine

21.00

20.00

1.00

105.0%

22.28

22.28

0.00

(1.28)

94.3%

15.76

5.24

133.2%

 

Table 3. World Wheat Export Projections for "New Crop" MY 2014/15, "Old crop" MY 2013/14, and MY 2012/13

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2014/15     July 2014

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

New Crop 2014/15 Exports:               July Less June  2014                    

New Crop 2014/15 Exports:                Percent (%)         July of June  2014

July Wheat Exports: Old crop 2013/14          

June  Wheat Exports: Old crop 2013/14

July Less June  Wheat  Exports for Old crop 2013/14

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

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

Wheat Exports: 2012/13                           (2 years ago)

New Crop 2014/15 Exports Less 2012/13

% Old crop 2014/15 Exports       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

151.61

152.08

(0.47)

99.7%

164.31

162.75

1.56

(12.70)

92.3%

137.18

14.43

110.5%

United States

24.49

25.17

(0.68)

97.3%

32.16

32.11

0.05

(7.67)

76.2%

27.42

(2.93)

89.3%

Total Foreign

127.12

126.91

0.21

100.2%

132.14

130.63

1.51

(5.02)

96.2%

109.76

17.36

115.8%

Major Exporters

74.50

74.00

0.50

100.7%

74.50

73.50

1.00

0.00

100.0%

63.80

10.70

116.8%

Argentina

6.50

6.50

0.00

100.0%

2.00

2.00

0.00

4.50

325.0%

3.55

2.95

183.1%

Australia

19.00

18.50

0.50

102.7%

19.50

19.50

0.00

(0.50)

97.4%

18.66

0.34

101.8%

Canada

21.00

21.00

0.00

100.0%

22.50

22.00

0.50

(1.50)

93.3%

18.97

2.03

110.7%

European Union - 28 Countries

28.00

28.00

0.00

100.0%

30.50

30.00

0.50

(2.50)

91.8%

22.62

5.38

123.8%

Major Importers

5.33

5.33

0.00

100.0%

5.05

5.08

(0.03)

0.28

105.5%

6.47

(1.14)

82.4%

Brazil

0.50

0.50

0.00

100.0%

0.10

0.10

0.00

0.40

500.0%

1.58

(1.08)

31.6%

China

1.00

1.00

0.00

100.0%

1.00

1.00

0.00

0.00

100.0%

0.97

0.03

103.1%

Selected Middle East

0.53

0.53

0.00

100.0%

0.51

0.54

(0.03)

0.02

103.9%

0.69

(0.16)

76.8%

North Africa

0.48

0.48

0.00

100.0%

0.63

0.63

0.00

(0.15)

76.2%

0.61

(0.13)

78.7%

Pakistan

0.70

0.70

0.00

100.0%

0.70

0.70

0.00

0.00

100.0%

0.85

(0.15)

82.4%

Southeast Asia

0.83

0.83

0.00

100.0%

0.82

0.82

0.00

0.01

101.2%

0.77

0.06

107.8%

India

3.50

3.50

0.00

100.0%

5.90

6.00

(0.10)

(2.40)

59.3%

6.82

(3.32)

51.3%

Former Soviet Union - 12 Countries

35.06

35.60

(0.54)

98.5%

37.12

36.72

0.40

(2.06)

94.5%

25.38

9.68

138.1%

Russia

19.50

19.50

0.00

100.0%

18.50

18.50

0.00

1.00

105.4%

11.29

8.21

172.7%

Kazakhstan

6.00

7.00

(1.00)

85.7%

8.40

8.00

0.40

(2.40)

71.4%

6.29

(0.29)

95.4%

Ukraine

9.00

8.50

0.50

105.9%

9.50

9.50

0.00

(0.50)

94.7%

7.19

1.81

125.2%

 

Table 4. World Wheat Import Projections for "New Crop" MY 2014/15, "Old crop" MY 2013/14, and MY 2012/13

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2014/15     July 2014

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

New Crop 2014/15 Imports:               July Less June  2014                    

New Crop 2014/15 Imports:                Percent (%)         July of June  2014

July Wheat Imports: Old crop 2013/14          

June  Wheat Imports: Old crop 2013/14

July Less June  Wheat  Imports for Old crop 2013/14

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

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

Wheat Imports: 2012/13                           (2 years ago)

New Crop 2014/15 Imports             Less 2012/13

% Old crop 2014/15 Imports       of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

149.91

150.19

(0.28)

99.8%

156.14

155.19

0.95

(6.23)

96.0%

144.22

5.69

103.9%

United States

4.35

4.35

0.00

100.0%

4.58

4.63

(0.05)

(0.23)

95.0%

3.34

1.01

130.2%

Total Foreign

145.56

145.84

(0.28)

99.8%

151.56

150.56

1.00

(6.00)

96.0%

140.88

4.68

103.3%

Major Exporters

5.64

6.12

(0.48)

92.2%

4.40

4.38

0.02

1.24

128.2%

5.91

(0.27)

95.4%

Argentina

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.00

0.01

#DIV/0!

Australia

0.15

0.14

0.01

107.1%

0.15

0.13

0.02

0.00

100.0%

0.14

0.01

107.1%

Canada

0.48

0.48

0.00

100.0%

0.44

0.44

0.00

0.04

109.1%

0.48

0.00

100.0%

European Union - 28 Countries

5.00

5.50

(0.50)

90.9%

3.80

3.80

0.00

1.20

131.6%

5.28

(0.28)

94.7%

Major Importers

78.68

78.80

(0.12)

99.8%

87.09

87.21

(0.12)

(8.41)

90.3%

79.47

(0.79)

99.0%

Brazil

6.50

6.50

0.00

100.0%

7.00

7.20

(0.20)

(0.50)

92.9%

7.36

(0.86)

88.3%

China

3.00

3.00

0.00

100.0%

7.00

7.00

0.00

(4.00)

42.9%

2.96

0.04

101.4%

Selected Middle East

19.48

19.48

0.00

100.0%

20.44

21.01

(0.57)

(0.96)

95.3%

20.86

(1.38)

93.4%

North Africa

23.50

23.50

0.00

100.0%

25.10

24.70

0.40

(1.60)

93.6%

22.06

1.44

106.5%

Pakistan

0.50

0.50

0.00

100.0%

0.40

0.50

(0.10)

0.10

125.0%

0.05

0.45

1000.0%

Southeast Asia

16.40

16.13

0.27

101.7%

16.35

16.10

0.25

0.05

100.3%

15.76

0.64

104.1%

India

0.02

0.02

0.00

100.0%

0.03

0.02

0.01

(0.01)

66.7%

0.02

0.00

100.0%

Former Soviet Union - 12 Countries

7.83

7.83

0.00

100.0%

7.87

7.88

(0.01)

(0.04)

99.5%

7.23

0.60

108.3%

Russia

1.20

1.20

0.00

100.0%

1.20

1.20

0.00

0.00

100.0%

1.17

0.03

102.6%

Kazakhstan

0.01

0.01

0.00

100.0%

0.01

0.01

0.00

0.00

100.0%

0.01

0.00

100.0%

Ukraine

0.10

0.10

0.00

100.0%

0.10

0.10

0.00

0.00

100.0%

0.05

0.05

200.0%

 

Table 5. World Wheat Feed Use Projections for "New Crop" MY 2014/15, "Old crop" MY 2013/14, and MY 2012/13

World Wheat Feed Use                                                 by Major Country / Region

Wheat Feed Use: New Crop 2014/15     July 2014

Wheat Feed Use: June  2014 New Crop 2014/15                   (1 month ago)

New Crop 2014/15 Feed Use: July Less June  2014                     

New Crop 2014/15 Feed Use: Percent (%)         July of June  2014

July Wheat Feed Use: Old crop 2013/14          

June  Wheat Feed Use: Old crop 2013/14

July Less June  Wheat  Feed Use for Old crop 2013/14

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

% New Crop 2014/15 Feed Use of Old crop 2013/14

Wheat Feed Use: 2012/13                           (2 years ago)

New Crop 2014/15 Feed Use             Less 2012/13

% Old crop 2014/15 Feed Use of 2012/13

 

mmt

mmt

mmt

Percent (%)

mmt

 

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

129.39

129.34

0.05

100.0%

133.14

133.12

0.02

(3.75)

97.2%

136.66

(7.27)

94.7%

United States

3.95

4.35

(0.40)

90.8%

5.92

5.99

(0.07)

(1.97)

66.7%

10.57

(6.62)

37.4%

Total Foreign

125.44

124.99

0.45

100.4%

127.23

127.14

0.09

(1.79)

98.6%

126.09

(0.65)

99.5%

Major Exporters

62.50

61.30

1.20

102.0%

58.70

58.70

0.00

3.80

106.5%

59.10

3.40

105.8%

Argentina

0.10

0.10

0.00

100.0%

0.10

0.10

0.00

0.00

100.0%

0.30

(0.20)

33.3%

Australia

3.40

3.20

0.20

106.3%

3.60

3.60

0.00

(0.20)

94.4%

3.40

0.00

100.0%

Canada

4.50

4.50

0.00

100.0%

6.00

6.00

0.00

(1.50)

75.0%

4.40

0.10

102.3%

European Union - 28 Countries

54.50

53.50

1.00

101.9%

49.00

49.00

0.00

5.50

111.2%

51.00

3.50

106.9%

Major Importers

30.55

30.85

(0.30)

99.0%

33.90

33.96

(0.06)

(3.35)

90.1%

35.19

(4.64)

86.8%

Brazil

0.60

0.60

0.00

100.0%

0.60

0.60

0.00