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August 3, 2012
Risk Management Strategies
Department of Agricultural Economics, K-State
Research and Extension …
August 31, 2018
Grain Market Outlook
“Tighter Stocks”
The USDA released their wheat production, supply‐demand and price projections for the U.S. for “new
crop” MY 2018/19 in the August 10th Crop Production & WASDE reports (Tables 1a‐b).
U.S. wheat plantings are forecast to be 47.821 million acres (ma) in 2018, up from the record low of 46.012
ma in 2017, but down from 50.119 ma in 2016 (Table 1, Figure 5‐6). Harvested acres are forecast at 39.556
ma in 2018 (82.72% harvested‐to‐planted), up from the record low of 37.586 ma (81.69% harvested‐to‐
planted) in 2017, but down from 43.850 ma in 2016 (87.49% harvested‐to‐planted) (Table 1, Figure 6). The
2018 U.S. average wheat yield is estimated at 47.5 bu/ac, up from 46.3 bu/ac in 2017, but down from the 2016
record high of 52.7 bu/acre (Table 1, Figure 7).
Wheat production in the U.S. in 2018 is forecast to be 1.877 billion bushels (bb), up from 1.741 bb in 2017,
but down from 2.309 bb in 2016. Projected “new crop” MY 2018/19 total supplies are forecast at 3.112 bb, up
from 3.079 bb in “old crop” MY 2017/18, and down from 3.402 bb in MY 2016/17 (Table 1, Figure 8).
U.S. Wheat total use of 2.177 bb is forecast for “new crop” MY 2018/19 (up 80 mb from June, and up 45
mb from July), up from 1.978 bb in “old crop” MY 2017/18, and from 2.222 bb in MY 2016/17 (Table 1, Figure
9). By usage category, in “new crop” MY 2018/19 U.S. wheat exports are projected to be 1.025 bb (up 75 mb
from June, and 50 mb from July), and up from 901 mb in “old crop” MY 2017/18, while being down from 1.051
bb in MY 2016/17 (Table 1, Figures 10 & 11).
CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16 and MY
2014/15, respectively, down to levels just marginally above those pre‐“Russian Grain Deal” in 1972. This is
more evidence of the only marginally competitive position in recent years that U.S. wheat exports find
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themselves in among foreign export competitors. However, tightening supplies of foreign wheat exporters
may cause U.S. wheat exports to strengthen in the later part of “new crop” MY 2018/19 (i.e., likely fall 2018)
Food Use of U.S. wheat is projected to be 970 million bushels (mb) in “new crop” MY 2018/19, up
marginally from 967 mb in “old crop” MY 2017/18, and trending higher from 949 mb in MY 2016/17 (Table 1,
Figure 9). Feed & Residual Use of U.S. wheat is projected to be 120 mb in “new crop” MY 2018/19 (down 10
mb from July), up from 48 mb in “old crop” MY 2017/18 (down 22 mb from June, and down 2 mb from July),
and from 161 mb in MY 2016/17 (Table 1, Figure 9).
CommentaryKSU: With the USDA’s forecast of tighter U.S. corn and total feedgrain supplies along with
higher feedgrain prices, the USDA is anticipating that feeding wheat to livestock will become more
economically viable compared to a year earlier – even with the 10 mb decline in the current marketing year
forecast of feed & residual use.
The USDA projected “new crop” MY 2018/19 ending stocks to be 935 mb (42.95% S/U). Ending stocks of
935 mb are down 50 mb from July, while 42.95% S/U are down from 46.2% S/U in the July WASDE report.
Ending stocks of 935 mb (42.95% S/U) for “new crop” MY 2018/19 are down substantially from 1.100 bb in
“old crop” MY 2017/18 (55.6% S/U), and from 1.181 bb in MY 2016/17 (53.15% stocks/use) (Table 1, Figures
11 & 12).
CommentaryKSU: This projection of 935 mb in U.S. wheat ending stocks in “new crop” MY 2018/19 is the
lowest in five (5) years – since 752 mb (37.3% stocks/use) in MY 2014/15. Still, until either a major wheat
production shortfall or what could be an “anticipated” surge in U.S. wheat exports occurs, the U.S. will likely
remain in the current “large supply – large ending stocks” situation.
United States’ wheat prices are projected to be in the range of $4.60‐$5.60 /bu – averaging $5.10 /bu in
“new crop” MY 2018/19 (up $0.10 /bu from July). This would be up from $4.73 /bu in “old crop” MY 2017/18,
from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16, but still down from $5.99 /bu in MY 2014/15 (Table
1, Figures 11 & 12).
CommentaryKSU: It is estimated by KSU that these USDA projections for “new crop” MY 2018/19 have a
60% probability of occurring.
G. Three “Alt” KSU U.S. Wheat S/D Forecast Scenarios for “New Crop” MY 2018/19 …
November 26, 2018
Grain Market Outlook
“Tighter but still large stocks”
The USDA released their wheat production, supply‐demand and price projections for the U.S. for “new
crop” MY 2018/19 in the November 9th Crop Production & WASDE reports (Table 1a). There is also a
preliminary projection of the USDA supply‐demand balance sheet for “next crop” MY 2019/20 which will begin
on June 1, 2019. These preliminary forecast indicate USDA’s expectations of 6%‐8% higher acreage, and 2.060
billion bushels of production in 2019, but only marginal changes to usage, ending stocks, and prices.
U.S. wheat plantings are forecast to be 47.800 million acres (ma) in 2018, up from the record low of 46.022
ma in 2017, but down from 50.119 ma in 2016 (Table 1, Figures 5‐6). Harvested acres are forecast at 39.605
ma in 2018 (82.72% harvested‐to‐planted), up from the record low of 37.541 ma (81.69% harvested‐to‐
planted) in 2017, but down from 43.850 ma in 2016 (87.49% harvested‐to‐planted) (Table 1, Figure 6). The
2018 U.S. average wheat yield is estimated at 47.6 bu/ac, up from 46.3 bu/ac in 2017, but down from the 2016
record high of 52.7 bu/acre (Table 1, Figure 7).
Wheat production in the U.S. in 2018 is forecast to be 1.884 billion bushels (bb), up from 1.740 bb in 2017,
but down from 2.309 bb in 2016. Projected “new crop” MY 2018/19 total supplies are forecast at 3.123 bb, up
from 3.078 bb in “old crop” MY 2017/18, and down from 3.402 bb in MY 2016/17 (Table 1, Figure 8).
U.S. Wheat total use of 2.174 bb is forecast for “new crop” MY 2018/19, up from 1.979 bb in “old crop” MY
2017/18, and from 2.222 bb in MY 2016/17 (Table 1, Figure 9a‐b). By usage category, in “new crop” MY
2018/19 U.S. wheat exports are projected to be 1.025 bb, which is up from 901 mb in “old crop” MY 2017/18,
while being down from 1.051 bb in MY 2016/17 (Table 1, Figures 10 & 11).
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CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16 and MY
2014/15, respectively, down to levels just marginally above those pre‐“Russian Grain Deal” levels in 1972. This
is more evidence of the only marginally competitive position that U.S. wheat exports find themselves in among
foreign export competitors in recent years. However, tightening supplies of foreign wheat exporters may cause
U.S. wheat exports to strengthen in the later part of “new crop” MY 2018/19 (i.e., likely fall 2018)
Food Use of U.S. wheat is projected to be 970 million bushels (mb) in “new crop” MY 2018/19, up
marginally from 964 mb in “old crop” MY 2017/18, and trending higher from 949 mb in MY 2016/17 (Table 1,
Figure 9). Feed & Residual Use of U.S. wheat is projected to be 110 mb in “new crop” MY 2018/19, up from 50
mb in “old crop” MY 2017/18, but less than 161 mb in MY 2016/17 (Table 1, Figure 9a‐b).
CommentaryKSU: With the USDA’s forecast of moderately tighter U.S. corn and total feedgrain supplies
along with moderate support for feedgrain prices, the USDA is anticipating that feeding wheat to livestock will
become more economically viable compared to a year earlier.
The USDA projected “new crop” MY 2018/19 ending stocks to be 949 mb (43.65% S/U), which are down
substantially from 1.099 bb in “old crop” MY 2017/18 (55.53% S/U), and from 1.181 bb in MY 2016/17 (53.15%
stocks/use) (Table 1, Figures 11a & 12).
CommentaryKSU: This projection of 949 mb in U.S. wheat ending stocks in “new crop” MY 2018/19 is the
lowest in five (5) years – since 752 mb (37.3% stocks/use) in MY 2014/15. Still, until either a major wheat
production shortfall or what could be an “anticipated” surge in U.S. wheat exports occurs, the U.S. will likely
remain in the current “large supply – large ending stocks” situation.
United States’ wheat prices are projected to be in the range of $4.90‐$5.30 /bu – averaging $5.10 /bu in
“new crop” MY 2018/19. This would be up from $4.72 /bu in “old crop” MY 2017/18, from $3.89 in MY
2016/17, and $4.89 /bu in MY 2015/16, but still down from $5.99 /bu in MY 2014/15 (Table 1, Figures 11a &
12).
CommentaryKSU: It is estimated by KSU that these USDA projections for “new crop” MY 2018/19 have a
70% probability of occurring.
G. Three “Alt” KSU U.S. Wheat S/D Forecast Scenarios for “New Crop” MY 2018/19 …
December 26, 2018
Grain Market Outlook
“Tighter, but still large stocks”
The USDA released their wheat production, supply‐demand, and price projections for the U.S. for “current”
MY 2018/19 in the December 11th Crop Production & WASDE reports (Table 1a). There is also a preliminary
projection of the USDA supply‐demand balance sheet for “next crop” MY 2019/20 which will begin on June 1,
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2019. These preliminary forecast indicate USDA’s expectations of 6%‐7% higher acreage, and 2.060 billion
bushels of production in 2019, but only marginal changes to usage, ending stocks, and prices.
U.S. Wheat Acreage
U.S. wheat plantings are forecast to be 51.000 million acres (ma) in 2019, up 6.7% from 47.800 million
acres (ma) in 2018, which of itself was up from the record low of 46.022 ma in 2017, but down from 50.119 ma
in 2016 (Tables 1a‐b, Figures 5‐6). Harvested acres are forecast at 43.100 ma in 2019 (84.51% harvested‐to‐
planted). This amount of harvested acres is projected to be up 8.8% from 39.605 ma in 2018 (82.72%
harvested‐to‐planted), and the record low of 37.541 ma (81.69% harvested‐to‐planted) in 2017, but still down
from 43.850 ma in 2016 (87.49% harvested‐to‐planted) (Tables 1a‐b, Figure 6). The 2019 U.S. average wheat
yield is forecast to be 47.8 bu/ac, up from 47.6 bu/ac in 2018, and 46.3 bu/ac in 2017, but down from the 2016
record high of 52.7 bu/acre (Tables 1a‐b, Figure 7).
U.S. Wheat Production & Total Supplies
Wheat production in the U.S. in 2019 is forecast to be 2.060 billion bushels (bb), up from 1.884 bb in 2018,
and up from 1.740 bb in 2017, but down from 2.309 bb in 2016 (Tables 1a‐b, Figure 8). Projected “next crop”
MY 2019/20 total supplies are forecast to be 3.164 bb, up from forecast “current” MY 2018/19 total supplies of
3.123 bb, and from 3.078 bb in “old crop” MY 2017/18. However, 3.164 bb in U.S. total wheat supplies in
“next crop” MY 2019/20 would be down from 3.402 bb in MY 2016/17.
Seeding of U.S. Hard Red Winter (HRW) wheat has already occurred in fall 2018 – with preliminary USDA
estimates that all U.S. wheat seeded acres in “next crop” MY 2019/18 will be up 6.7% ‐ including winter, spring,
and durum classes (Table 1a). The USDA’s Winter Wheat and Canola Seedings report will be released by the
USDA on Friday, January 11, 2019.
U.S. Wheat Total Use
U.S. Wheat total use is projected to by 2.213 bb in “next crop” MY 2019/20, up from a projection of 2.149
bb in “current” MY 2018/19, and from 1.979 bb in “old crop” MY 2017/18, but down from 2.222 bb in MY
2016/17 (Tables 1a‐b, Figures 9a‐b).
U.S. Exports: By usage category, in “next crop” MY 2019/20, U.S. wheat exports are forecast to be 1.050
bb, up from 1.000 bb in “current” MY 2018/19, and from 901 mb in “old crop” MY 2017/18, while being
essentially equal from 1.051 bb in MY 2016/17 (Tables 1a‐b, Figures 9a‐b, & 10a).
CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16 and MY
2014/15, respectively, down to levels just marginally above those pre‐“Russian Grain Deal” levels in 1972. This
is more evidence of the only marginally competitive position that U.S. wheat exports find themselves in among
foreign export competitors in recent years. However, tightening supplies of foreign wheat exporters may cause
U.S. wheat exports to strengthen in the later part of “current” MY 2018/19 (i.e., possibly in spring 2019)
U.S. Food Use: Food Use of U.S. wheat is projected to be 975 million bushels (mb) in “next crop” MY
2019/20, up marginally from 970 mb in “current” MY 2018/19, from 964 mb in “old crop” MY 2017/18, and
949 mb in MY 2016/17 (Table 1, Figure 9).
U.S. Feed & Residual Use: Feed & Residual Use of U.S. wheat is projected to be 120 mb in “next crop” MY
2019/20, up from 110 mb in “current” MY 2018/19, up from 50 mb in “old crop” MY 2017/18, but less than
161 mb in MY 2016/17 (Table 1, Figure 9a‐b).
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CommentaryKSU: With the USDA’s forecast of moderately tighter U.S. corn and total feedgrain supplies
along with moderate support for feedgrain prices, the USDA is anticipating that feeding wheat to livestock will
become more marginally more economical in “next crop” MY 2019/20 than in the current marking year.
Ending Stocks & % Stocks‐to‐Use: With an adjustment by KSU for new WASDE report information, USDA
projected “next crop” MY 2019/20 ending stocks to be 951 mb (42.97% S/U), down marginally from “current”
MY 2018/19 ending stocks of 974 mb (45.34% S/U), both of which are down from 1.099 bb in “old crop” MY
2017/18 (55.53% S/U), and from 1.181 bb in MY 2016/17 (53.14% stocks/use) (Tables 1a‐b, Figures 11a‐b &
12).
CommentaryKSU: This projection of 949 mb in U.S. wheat ending stocks in “current” MY 2018/19 is the
lowest in five (5) years – since 752 mb (37.3% stocks/use) in MY 2014/15. Still, until either a major wheat
production shortfall or what could be an “anticipated” surge in U.S. wheat exports occurs, the U.S. will likely
remain in the current “large supply – large ending stocks” situation.
United States’ wheat prices are projected to be $5.20 /bu in “next crop” MY 2019/20, up from the
midpoint of $5.15 /bu in the range of $5.05‐$5.25 /bu in “current” MY 2018/19. This would be up from $4.72
/bu in “old crop” MY 2017/18, from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16, but still down from
$5.99 /bu in MY 2014/15 (Table 1, Figures 11a & 12).
CommentaryKSU: It is estimated by KSU that these USDA projections for “current” MY 2018/19 have a 70%
probability of occurring.
F. “Alt” KSU Scenarios for U.S. Wheat S/D in “Current” MY 2018/19 …
March 25, 2019
Grain Market Outlook
Wheat Market Overview
Hard red winter wheat market prices in the U.S. have weakened considerably since late January
2019. Ongoing weakness in export shipments of U.S. wheat on the one hand, and declining prospects
for future U.S. wheat export sales on the other, have been the main causes along with general
bearishness across grain futures prices.
In Fall‐Winter 2018 prospects for short wheat crops among some major World wheat exporters
improved prospects for U.S. export sales in the later part of the “current” 2018/19 marketing year
(MY). “Current” MY 2018/19 began on 6/1/2018 and will finish on 5/31/2019. In particular, short
crops in the Black Sea Region countries of Russia, Ukraine and Kazakhstan, parts of the European
Union (France and other countries), and Australia were of concern.
However, a combination of #1) large carryover stocks in World markets from “old crop” MY
2017/18, #2) successful wheat crops in many other exporting and importing countries in the World,
and #3) the willingness of the Black Sea Region countries to sell down their domestic reserve stocks
to maintain their export market shares, worked together to limit any improvement in U.S. wheat
exports, and consequently limit any price gains from such an event.
The selling off of domestic inventories may have allowed Russia and other countries to have
maintained their export market shares in “current” MY 2018/19, but it makes them more vulnerable
to any repeated crop shortfalls that could occur in “new crop” MY 2019/20 – which will begin on June
1, 2019. The risk of tightening stocks is that these countries place themselves at risk to the effect of
market shortfalls in the future – because they have reduced their “buffer” stocks.
Going forward, it seems that wheat production risk in the major exporting countries – including
the United States, Russia, Ukraine, Australia, and the European Union – will be the key driving factor
in U.S. grain markets in year 2019. The possibility of rumored sizable increases in Chinese purchases
of U.S. wheat and other agricultural products IF a trade agreement between the U.S. and China is
completed could provide a surprise boost to U.S. wheat exports in coming months. But it seems
judicious to not count on that occurring until such a trade agreement is finalized.
B. Trends in CME Kansas Hard Red Winter Wheat Futures
Prices for the MAY 2019 Chicago Mercantile Exchange (CME) Kansas Hard Red Winter (HRW)
Wheat futures contract declined from a high of $5.23 per bushel (/bu) on January 25, 2019 to a low of
$4.18 ¼ /bu on March 12th, a drop of $1.04 ¼ or 20%. Since then, MAY 2019 CME HRW wheat has
moved higher to a close of $4.45 on March 22nd – down 15% from late‐Jan. 2019 highs (Figures 1‐2‐
3abc).
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Currently CME MAY 2019 Kansas HRW Wheat futures are trading near historic lows since the
beginning of year 2007. Prices for MAY 2019 futures in the $4.40‐$4.50 range compare to longter
term lows of: a) $4.33 /bu for the MAY 2007 contract on 4/2/2007; b) $3.98 ¾ /bu for MAY 2017 on
4/21/2019; and $4.04 /bu for DEC 2017 on 11/28/2018. IF crop conditions and crop progress for the
2019 U.S. HRW Wheat crop are “good” in April 2019 it is possible that prices could AGAIN decline to
$4.00 /bu or less (Figures 1‐2).
It is notable that a record large net short (or sell) position is held by Management Money
(Speculator) traders in CME HRW wheat according to the most recent March 19th Commodity Futures
Trading Commission (CFTC) Commitment of Traders Report (Figures 3abc). Actual short (sell)
positions held by Management Money (Spec) traders are near record levels, combined with declining
long positions on these contracts. This report can be found at the following web address:
https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
Taken together, these data indicate a predominant “bearishness” among Management Money
(Spec) traders in the CME Kansas HRW Wheat futures contract. This consensus “bearish market
narrative” or “pessimistic group mindset” would have to be overcome or changed by some
combination of World and U.S. wheat supply‐demand factors in the wheat market for CME futures to
begin to move appreciably higher. The key issue to watch in these markets will likely be whether
there continue to be successful aggregate crop production prospects among major World wheat
producing, exporting, and importing countries throughout calendar year 2019.
C. Kansas HRW Wheat Cash Price & Basis Levels
In central Kansas on March 22nd – the 10th trading day a full two weeks after the USDA reports –
Kansas cash wheat price terminal quotes for ordinary U.S. no. 1 HRW ranged from $4.19 to $4.55 per
bushel – with basis ranging from $0.26 under to $0.10 over MAY 2019 KS HRW Wheat futures. Cash
wheat prices in eastern Kansas grain terminals ranged from $4.30 to $4.50 /bu with basis ranging
from $0.15 under to $0.05 over MAY 2019 futures. These prices are still up 19% to 22% from the
range of $3.42 ¼ to $3.83 ¼ /bu in late December 2017 in eastern and central Kansas – with basis at
that time being from $0.80 under to $0.39 under nearby MARCH 2018 futures (Figure 2).
In comparison, in western Kansas on March 22nd, bids for ordinary U.S. no. 1 HRW wheat at
selected grain elevators ranged from $3.92 to $4.19 /bu, with basis being $0.55 under to $0.28 under
MAY 2019 futures. Recent wheat cash price bids in western Kansas are up 13% to 15% from $3.47 to
$3.64 /bu in late December 2017 in this same area – when local basis varied from $0.85 under to
$0.58 under MARCH 2018 futures.
A Hard White Wheat (HWW) grain terminal bid was available in Wichita, Kansas on 3/22/2019
for $4.4000 /bu, with a basis of $0.05 /bu under MAY 2019 Kansas HRW wheat futures.
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D. World Wheat Production
In aggregate, forecast global World wheat production in “current” MY 2018/19 of 733.00 mmt is
down 3.9% from last year’s record high of 763.07 mmt. Lower production has occurred in the
“current” 2018/19 marketing year (which began June 1, 2018) in some major exporting countries
such as Australia (down 18.8% to 17.30 million metric tons or ‘mmt’ from a year ago) and the
European Union (down 9.0% in total to 137.60 mmt). In the Black Sea Region, wheat production is
down in Russia (down 15.6% to 71.69 mmt), Ukraine (down 7.3% to 25.00 mmt), and Kazakhstan
(down 5.5% to 13.95 mmt) (Figures 13, 14a‐b & 15a‐b).
These declines were partially offset by production increases projected for exporters such as the
United States (up 8.3% to 51.29 mmt or 1.884 billion bushels, i.e., ‘bb’), Argentina (up 5.4% to 19.5
mmt), and Canada (up 6.1% to 31.80 mmb). Production in China is projected to be down 2.2% to
134.43 mmt, while India wheat production is forecast to be up 1.2% to 99.70 mmt.
E. World Wheat Ending Stocks & % Stocks‐to‐Use
Record large carryover ending stocks of 279.61 mmt (37.56% stocks‐to‐use) from “old crop” MY
2017/18 have upheld total World supplies and supply‐demand balances – which are projected to be
270.53 mmt (36.45% stocks‐to‐use) in “current” MY 2018/19. Percent ending stocks‐to‐use of
37.56% in “old crop” MY 2017/18 were record high in the modern era since the early 1970s, while
34.46% stocks/use in “current” MY 2018/19 are the 2nd highest since the farm crisis years of the mid‐
1980s, and the 4th highest in the modern era (Figures 13, 14a‐b & 15a‐b).
In response to lower production, Russia has chosen to “sell down” it’s carryover wheat stocks to
maintain market position in global trade. Russia wheat ending stocks are projected to be 6.55 mmt in
“current” MY 2018/19, down from 11.87 mmt in “old crop” MY 2017/18, and from 10.83 mmt in MY
2016/17. In the short run this strategy of “mining” of carryover stocks by Russia DOES allow it to
maintain World export market share in “current” MY 2018/19. HOWEVER, this strategy ALSO may
leave future Russian supply‐demand balances more vulnerable to any domestic crop shortfall that
may occur in “new crop” MY 2019/20 and succeeding years.
F. “World‐Less‐China” Wheat Ending Stocks & % Stocks‐to‐Use
Considering World wheat ending stocks adjusted for Chinese reserves (i.e., “World‐Less‐China”)
provides a much tighter picture of “accessible” or “available” World wheat supply‐demand balances
than the aggregate “World” measure. “World‐Less‐China” wheat carryover ending stocks are
calculated to be 130.53 mmt in “current” MY 2018/19 – down from 148.35 mmt in “old crop” MY
2017/18. These figures compare to World ending stocks of 270.61 mmt in “current” MY 2018/19,
and 249.61 mmt in “old crop” MY 2017/18 (Figure 15ab).
“World‐Less‐China” percent (%) ending stocks‐to‐use are estimated to be and 11 year low of
21.15% in “current” MY 2018/19 – down from 23.80% in “old crop” MY 2017/18. This compares to
aggregate World Stocks‐to‐Use of 36.45% in “current” MY 2017/18, and 37.56% in “old crop” MY
20017/18.
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This “tightness” in “World‐Less‐China” wheat stocks along with tighter exportable supplies in the
European Union and the Black Sea region appear to have provided quiet support to World wheat
market prices, but has not as of yet caused any major rallies.
G. 2019 U.S. Winter Wheat Conditions
Prospects for the 2019 U.S. winter wheat crop are mostly “Fair to Good” at this time in the
southern and central plains region of the country. Reports from the USDA National Agricultural
Statistics Service (NASS) in Kansas for the week ending March 17, 2019 indicated that a survey of
observers in the state of winter wheat acreage rated the crop as 5% “excellent”, 44% “good”, 40%
“fair”, 8% “poor”, and 3% “very poor”. In Oklahoma, the HRW wheat crop was rated as 5%
“excellent”, 55% “good”, 35% “fair”, 5% “poor”, and 0% “very poor”. Similarly, in Texas, the HRW
wheat crop was rated as 6% “excellent”, 27% “good”, 44% “fair”, 17% “poor”, and 6% “very poor”.
As the 2019 hard red winter wheat crop breaks dormancy and begins spring growth in late March‐
early April, the condition in which the crop survived somewhat challenging winter conditions will
become apparent. The USDA’s National Agricultural Statistics Service (NASS) Crop Production
reports first and preliminarily on April 9th, and then especially as the crop is more developed on May
10th, June 11th and July 11th will provide more substantiated information on 2019 U.S. HRW Wheat
production prospects.
H. U.S. Wheat Exports
Export shipments of U.S. wheat have been running behind the pace needed to meet USDA export
projections for U.S. Wheat overall, and for Hard Red Winter (HRW) wheat in particular. According to
USDA Foreign Agricultural Service (FAS) data, through March 14th forward sales of U.S. exports are
still on track to meet USDA forecasts of 965 million bushels (mb) in the “current” 2018/19 marketing
year (MY) – ending on May 31, 2019 (Tables 1‐1a, Figures 9ab‐10ab).
Total shipments to date plus forward sales are projected to have reached 88.1% (850.4 mb) of the
USDA’s forecast on March 14th with 78.8% of the marketing year completed (i.e., 41/52 weeks).
However, actual physical shipments to date of 638.4 mb amount to only 66.1% of the USDA forecast,
with a shipment rate of 29.7 mb per week needed through the end of “current” MY 2018/19 to meet
the USDA target of 965 mb. For the weeks of March 7th and 14th, U.S. Wheat shipments of 27.3 mb
and 13.1 mb were behind the weekly average of 29.7 mb needed to meet the USDA’s projections by
May 31, 2019. Shipments of U.S. HRW Wheat are in a similar situation, as strong weekly shipments
are still needed through August 31st to attain the USDA U.S. export projection of 320 mb in “current”
MY 2018/19.
I. U.S. Wheat Supply‐Demand & Prices
The USDA released their wheat production, supply‐demand, and price projections for the U.S. for
“current” MY 2018/19 in the March 8th WASDE (World Agricultural Supply and Demand Estimates
report) (Tables 1‐1a). The USDA also released its preliminary projections for the “new crop” MY
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2019/20 at it’s February 22nd Agricultural Outlook Conference (Table 1a). The “new crop” 2019/18
marketing year for wheat represents the June 1, 2019 through March 31, 2020 period. These
preliminary forecasts indicate USDA’s expectations of 1%‐2% lower planted acreage in 2019,
approximately 1% higher production and total use in “new crop” MY 2019/20, and marginally higher
prices.
U.S. Wheat Acreage
U.S. wheat plantings are forecast to be 47.000 million acres (ma) in 2019, down 1.67% from
47.800 million acres (ma) in 2018, up from the record low of 46.052 ma in 2017, but down from
50.119 ma in 2016 (Tables 1‐1a, Figures 5‐6). Harvested acres are forecast at 39.800 ma in 2019
(84.68% harvested‐to‐planted). This amount of harvested acres is projected to be up 0.5% from
39.605 ma in 2018 (82.86% harvested‐to‐planted), and the record low of 37.555 ma (81.55%
harvested‐to‐planted) in 2017, but still down from 43.848 ma in 2016 (87.49% harvested‐to‐planted)
(Tables 1a‐b, Figure 6). The 2019 U.S. average wheat yield is forecast to be 47.8 bu/ac, up from 47.6
bu/ac in 2018, and 46.4 bu/ac in 2017, but down from the 2016 record high of 52.7 bu/acre (Tables
1a‐b, Figure 7).
The USDA’s Prospective Plantings report will be released by the USDA on Friday, March 29, 2019.
Average pre‐report projections of U.S. total wheat for 2019 seedings total 46.9 million acres (ma),
with estimates ranging from 45.9 to 48.0 ma. Preliminary estimates of 2019 winter wheat seedings
(average = 31.5 ma, 30.6 – 32.5 ma range), spring wheat (average = 13.4 ma, 12.3 – 13.9 ma range),
and durum acreage (average 2.0 ma, 1.6 – 2.3 ma range).
In its Winter Wheat and Canola Seedings report on January, 11, 2019, the USDA projected that
31,290,000 acres of Hard Red Winter (HRW) wheat were seeded in the U.S. in fall 2018 – down from
32,535,000 acres in fall 2017, and 32,726,000 acres in fall 2016 (Figure 6). The upcoming March 29th
Prospective Plantings report will provide more information on HRW wheat seedings, as well as for
soft red winter (SRW), hard red spring (HRS) wheat, and white wheat (WW) varieties.
U.S. Wheat Production & Total Supplies
Wheat production in the U.S. in 2019 is forecast to be 1.902 billion bushels (bb), up from 1.884 bb
in 2018, and up from 1.741 bb in 2017, but down from 2.309 bb in 2016 (Tables 1a‐b, Figure 8).
Projected “new crop” MY 2019/20 total supplies are forecast to be 3.097 bb, down from forecast
“current” MY 2018/19 total supplies of 3.128 bb, and up from 3.079 bb in “old crop” MY 2017/18.
However, 3.097 bb in U.S. total wheat supplies in “new crop” MY 2019/20 would be down from 3.402
bb in MY 2016/17.
U.S. Wheat Total Use
U.S. Wheat total use is projected to by 2.108 bb in “new crop” MY 2019/20, up from a projection
of 2.073 bb in “current” MY 2018/19, and from 1.980 bb in “old crop” MY 2017/18, but down from
2.222 bb in MY 2016/17 (Tables 1a‐b, Figures 9a‐b).
Page | 6
U.S. Exports
In “new crop” MY 2019/20, U.S. wheat exports are forecast to be 975 million bushels (bu), up
from 965 mb in “current” MY 2018/19, and up from 901 mb in “old crop” MY 2017/18, while being
down from 1.051 bb in MY 2016/17 (Tables 1‐1a, Figures 9a‐b, & 10a).
CommentaryKSU: U.S. wheat exports fell to 47‐year lows of 778 mb and 864 mb in MY 2015/16
and MY 2014/15, respectively, down to levels just marginally above those pre‐“Russian Grain Deal”
levels in 1972. This is more evidence of the only marginally competitive position that U.S. wheat
exports find themselves in among foreign export competitors in recent years.
U.S. Food Use
Food Use of U.S. wheat is projected to be 980 million bushels (mb) in “new crop” MY 2019/20, up
marginally from 965 mb in “current” MY 2018/19, from 964 mb in “old crop” MY 2017/18, and 949
mb in MY 2016/17 (Table 1‐1a, Figure 9ab).
U.S. Feed & Residual Use
Feed & Residual Use of U.S. wheat is projected to be 90 mb in “new crop” MY 2019/20, up from
80 mb in “current” MY 2018/19, up from 51 mb in “old crop” MY 2017/18, but less than 160 mb in
MY 2016/17 (Table 1‐1a, Figure 9ab).
CommentaryKSU: With the USDA’s forecast of moderately tighter U.S. corn and total feedgrain
supplies along with moderate support for feedgrain prices, they are anticipating that feeding wheat to
livestock will become more marginally more economical in “new crop” MY 2019/20 than in the current
marking year.
U.S. Ending Stocks & % Stocks‐to‐Use
With an adjustment by KSU for new WASDE report information, USDA projected “new crop” MY
2019/20 ending stocks to be 989 mb (46.92% S/U). This projection is down from “current” MY
2018/19 ending stocks of 1.055 bb (50.89% S/U), both of which are down from 1.099 bb in “old crop”
MY 2017/18 (55.50% S/U), and from 1.181 bb in MY 2016/17 (53.14% stocks/use) (Tables 1‐1a,
Figures 11 & 12).
CommentaryKSU: This projection of 989 mb in U.S. wheat ending stocks in “new crop” MY 2019/20
is the lowest in four (4) years – since 976 mb (49.99% stocks/use) in MY 2015/16. However, it remains
that until either a major wheat production shortfall or what could be an “anticipated” surge in U.S.
wheat exports occurs, the U.S. will likely remain in the current “large supply – large ending stocks”
situation.
U.S. Wheat Prices
United States’ wheat prices are projected to be $5.20 /bu in “new crop” MY 2019/20, up from the
midpoint of $5.15 /bu in the range of $5.10‐$5.20 /bu in “current” MY 2018/19. This would be up
from $4.72 /bu in “old crop” MY 2017/18, from $3.89 in MY 2016/17, and $4.89 /bu in MY 2015/16,
but still down from $5.99 /bu in MY 2014/15 (Tables 1‐1a, Figures 11 & 12).
Page | 7
J. “Alt” KSU Scenario for U.S. Wheat S/D in “New Crop” MY 2019/20
To represent possible alternative outcomes from the USDA’s March 8th WASDE and February 22nd
Agricultural Profitability Conference projections. One potential KSU‐Scenario for U.S. wheat supply‐
demand and prices is presented in comparison to the USDA forecast for “new crop” MY 2019/20
(Tables 1‐1a & Figure 11).
USDA Scenario (50% probability): This scenario assumes:
2019 U.S. Planted Acres …
December 30, 2020
Grain Market Outlook
measure is consistent with economic theory – where tighter …
December 24, 2020
Grain Market Outlook
measure is consistent with economic theory – in which tighter …
July 29, 2004
Management
Agricultural and Applied Economics.
• Bitsch, Vera and Hogberg … employees.
American Agricultural Economics Association Annual Meeting … managers. American Agricultural Economics
Association Annual Meeting …
September 28, 2011
Tonsor
Dept. of Agricultural Economics
Kansas State University … Professor
Dept. of Agricultural Economics
Kansas State University … KSU-Beef Replacement (Calculate Economic
Value of Purchasing Replacements …
September 22, 2011
Tonsor
Dept. of Agricultural Economics
Kansas State University … Professor
Dept. of Agricultural Economics
Kansas State University … KSU-Beef Replacement (Calculate Economic
Value of Purchasing Replacements …