An analysis of U.S. and World wheat supply-demand factors and 2013 price prospects following the USDA’s March 10th Crop Production and World Agricultural Supply Demand Estimates (WASDE) reports is available on the KSU AgManager website (http://www.agmanager.info/default.asp).
A full analysis of this article on Wheat Market Outlook may be found at this web location: http://www.agmanager.info/marketing/outlook/newletters/Wheat.asp
When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on March 10, 2014, U.S. wheat market prices initially responded negatively before moving higher in the succeeding week. The USDA made no changes in its projections of “current” 2013/14 marketing year supply-demand projections for U.S. wheat, but did make a marginal increase in its projection for U.S. wheat average prices. A mixture of factors are impacting prospects for U.S. and World wheat prices in the coming calendar year. These include a) an expectation of at least moderately lower supplies of U.S. wheat in the “next crop” MY 2014/15 marketing year, b) growing quantities of competitive, exportable foreign wheat supplies likely to be available in coming months – absent continuing or spreading geopolitical conflicts in the Black Sea Region, c) the likelihood of a “weaker-to-moderating” pace of U.S. wheat exports in coming months – should no major foreign wheat production threats materialize, and d) more abundant supplies of U.S. corn and grain sorghum supplies in 2014 “hanging over the market” and limiting U.S. and foreign wheat feeding.
USDA U.S. Wheat “Current” MY 2013/14: Based on projections from the Feb. 21 USDA Agricultural Outlook Conference, with small adjustments made in the beginning stocks estimate, forecast 2014 U.S. wheat production and “next crop” MY 2014/15 supply-demand and price scenarios are: 55.5 ma planted, 47.2 ma harvested, 45.8 bu/ac yields, a 2.160 bb 2014 U.S. wheat crop, 2.281 bb total use, 587 million bushels (mb) ending stocks, 25.7% S/U, & $5.30 average price per bu. The price forecast of $5.30 /bushel seems to be “overly pessimistic” given the uncertainty in U.S. and World supply-demand prospects. If “new crop” 2014 U.S. winter wheat production prospects remain poor in late March-April as the crop breaks dormancy in the spring period – possibly due to dry conditions, damage from cold temperatures, widespread disease issues, a late killing frost, etc. – U.S. wheat market prices will find the impetus to respond by moving sharply higher.
KSU U.S. Wheat Forecast for “Next Crop” MY 2014/15: KSU projections of “next crop” MY 2014/15 supply-demand balances and prices are as follows: a) “Likely Production” Scenario: 55% prob. of 56.3 million acres (ma) planted, 47.4 ma harvested, trend yields of 45.8 bu/ac, 2.171 bb 2014 U.S. wheat production, 2.889 bb U.S. wheat supplies, 1.175 bb exports, 150 mb wheat fed, 2.359 bb total use, 530 mb ending stocks, 22.5% S/U, & $7.10 /bu; b) “Low Production” Scenario: 35% prob. of 55.3 ma planted, 46.6 ma harvested, low yields of 39.0 bu/ac, 1.817 bb 2014 U.S. wheat production, 2.555 bb U.S. wheat supplies, 1.000 bb exports, 100 mb wheat fed, 2.129 bb total use, 426 mb ending stocks, 20.0% S/U, & $8.25 /bu; and c) “High Production” Scenario: 10% prob. of 56.3 ma planted, 48.3 ma harvested, record high yields of 47.5 bu/ac, 2.294 bb 2014 U.S. wheat production, 2.992 bb U.S. wheat supplies, 1.200 bb exports, 160 mb wheat fed, 2.399 bb total use, 593 mb ending stocks, 24.7% S/U, & $6.60 /bu.
USDA World Wheat: World wheat total supplies of 889 mmt in “current” MY 2013/14 are up from 855 mmt “last year’s” MY 2012/13, but down from 896 mmt in MY 2011/12. Projected World wheat ending stocks in “current” MY 2013/14 of 183.8 mmt (26.1% S/U) are up from 175.9 mmt (25.9% S/U) in “last year’s” MY 2012/13, but down from 198.9 mmt (28.5% S/U) in MY 2011/12. The recent historic World wheat stocks minimum of 129.6 mmt (21.1% S/U) occurred in MY 2007/08. Exports from nearly all of the U.S.’ major World wheat trade competitors are projected to be higher in “current” MY 2013/14 than a year ago. This list of export competitors with improved sales prospects includes Australia, Canada, the European Union, Russia, Kazakhstan, and Ukraine. Should threats to U.S. and World wheat markets subside, then the fact remains that large supplies of wheat are available from foreign wheat export competitors – which could still remain as a potential challenge for U.S. wheat exports and prices later in 2014.
U.S. Spring fieldwork in 2013 (Source: http://mybarnyardview.blogspot.com/2013/04/farmer-john-says-yipee.html)