An analysis of U.S. and World Wheat supply-demand factors and 2014 price prospects in mid-February following the USDA’s February 10th World Agricultural Supply Demand Estimates (WASDE) report will soon be placed up on the KSU AgManager website (http://www.agmanager.info/default.asp).
Following is a summary – with the full analysis-article for Wheat to be found at this web location by Wednesday morning, February 18:
When the USDA released its World Agricultural Supply and Demand Estimates (WASDE) report on February 10, 2014, U.S. wheat market prices initially responded in a positive manner. The USDA raised its projections of “current” 2013/14 marketing year exports for U.S. wheat and subsequently lowered its forecast of U.S. wheat ending stocks – causing the wheat market to respond positively the day of the report and through the end of that week (i.e., Friday, February 14th). A longer term upward trend in CBOT Kansas Hard Red Winter wheat futures prices since January 29th has been due to both a) demand for U.S. exports – following logistical shipment problems in Canada, and b) worries about the possible impacts of cold temperatures and dry soil conditions in parts of the U.S. winter wheat production regions. Although it is early to make concrete judgments on the expectations for final 2014 U.S. wheat planted and harvested acreage, growing season weather patterns, crop development prospects, and expected demand factors for the upcoming “next crop” 2014/15 marketing year, the first formal USDA projections for U.S. wheat markets in the 2014/15 marketing year will be made at the USDA Agricultural Outlook Forum on February 20-21, 2014 in Arlington, Virginia.
USDA Grain Market Forecasts Coming on Feb. 20-21, 2014 (Source: http://www.oklahomafarmreport.com/)
USDA U.S. Wheat “Current” MY 2013/14: The USDA raised its forecast of “current” 2013/14 marketing year total supplies to 3.018 billion bushels (bb) (up 10 million bushels or “mb” from January), which is still down from 3.131 bb the previous year. This forecast is based on imports of 170 mb (up 10 mb), beginning stocks of 718 mb, and 2013 production of 2.130 bb. With projected food use of 960 mb (up 10 mb), exports of 1.175 bb (up 50 mb), seed use of 74 mb, and feed and residual use of 250 mb, total use is projected to be 2.459 bb (up 60 mb from January). Projected ending stocks are 558 mb (down 50 mb) – down from 718 mb in “last year’s” MY 2012/13, and from 743 mb in MY 2011/12. Projected U.S. wheat % ending stocks-to-use of 22.7% is down from 29.7% and 33.3% the last two marketing years. The USDA projected U.S. average wheat prices for “current” MY 2013/14 of $6.65-$6.95 /bu (midpoint = $6.80 /bu), down from the record high of $7.77 in “last year’s” MY 2012/13 and from $7.24 in MY 2011/12.
2013 Hard Red Winter Wheat Harvest near Hays, Kansas (Source: http://www.hayspost.com/2013/)
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: 60% 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, & $6.40-$7.40 /bu; b) “Low Production” Scenario: 20% prob. of 55.3 million acres (ma) planted, 46.6 ma harvested, low yields of 40.0 bu/ac, 1.864 bb 2014 U.S. wheat production, 2.602 bb U.S. wheat supplies, 1.025 bb exports, 100 mb wheat fed, 2.154 bb total use, 448 mb ending stocks, 20.8% S/U, & $6.90-$7.90 /bu; and c) “High Production” Scenario: 20% prob. of 56.3 million acres (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, & $5.90-$6.90 /bu. An adjusted “next crop” MY 2014/15 projection in the February 13th USDA Agricultural Projections for 2023 with updates made by KSU for beginning stocks and prices would indicate the following for the coming year: 57.0 ma planted, 48.5 ma harvested, 45.8 bu/ac yields, a 2.220 bb 2014 U.S. wheat crop, 27.8% S/U, and an average price of $4.90 /bu. These initial adjusted USDA 2014 acreage and production estimates are of course subject to change.
Considering Black Sea Wheat Export Competition (Source: http://www.ontariograinfarmer.ca/MAGAZINE.aspx?aid=776)
USDA World Wheat: World wheat total supplies of 888 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 183.7 mmt (26.4% S/U) are up from 175.8 mmt (25.6% S/U) in “last year’s” MY 2012/13, but down from 198.9 mmt (28.9% 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.