An analysis of U.S. and World Wheat supply-demand factors and 2013 price prospects following the USDA’s May 10th World Agricultural Supply Demand Estimates (WASDE) report is up on the KSU AgManager website (http://www.agmanager.info/default.asp).
A full summary – with the full analysis-article for Wheat to be found at this web location: http://www.agmanager.info/marketing/outlook/newletters/Wheat.asp
On May 10, 2013 the USDA released its May Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports – providing forecasts of 2013 U.S. wheat production with associated supply-demand balance sheets and prices for the “new crop” 2013/14 marketing year (i.e., MY 2013/14). “New crop” MY 2013/14 for U.S. wheat runs from June 1, 2013 through May 31, 2014.
USDA Projections: The USDA projected that 2013 U.S. wheat production would decline to 2.057 billion bushels (bb) – down from 2.269 bb in 2012 base on planted acreage of 56.440 million acres (ma), nearly 46.644 ma harvested, a historically low harvested to planted acreage ratio of 82.6%, and an average U.S. wheat yield of 44.1 bushels per acre (bu/ac). Total 2013 U.S. winter wheat production is forecast to be 1.486 bb, down 10% from 1.645 in 2012. On a winter wheat subclass basis, the USDA forecast that 2013 U.S. hard red winter (HRW) wheat production would be 768 million bu (mb), down 236 mb or 23% from 1.004 bb in 2012. Soft red winter (SRW) wheat production in the U.S. in 2013 is forecast to be 501 mb, up 81 mb or 19% from 420 mb in 2012. White winter (WW) wheat production in the U.S. in 2013 is forecast to be 217 mb, down 2% from 2012. The USDA also projects 2013 U.S. spring and durum wheat production prospects to be lower than a year ago.
For “new crop” MY 2013/14 the USDA projected lower total supplies, higher food use, lower exports, seed, feed and residual use, ending stocks (670 mb – down from 731 mb last year), and % ending stocks-to-use (29.82% – down marginally from 30.38% in “old crop” MY 2012/13). With larger supplies of U.S. feedgrains anticipated for fall 2013 and less cross-market support for wheat prices, the USDA projected U.S. average wheat prices of $6.15-$7.45 bu/ac (midpoint = $6.80), down from $7.80 in “old crop” MY 2012/13.
A Kansas Wheat Field (date?) (Source: KSU Hodgeman County Extension http://www.hodgeman.ksu.edu/)
KSU Projections: With risky prospects for U.S. winter wheat growing conditions in the western plains, the following analysis estimates that there is a 30% chance of a “low yield” wheat crop in the U.S. for the “new crop” 2013/14 marketing year, along with a 65% probability of an average “trend yield” crop, and a 5% probability of a “high yield” crop. KSU projections of 2013 U.S. wheat production and “new crop” MY 2013/14 supply-demand and price scenarios are as follows: A) “Short Yield” Crop Scenario: 30% probability of 46.1 ma harvested, 38.6 bu/ac yields, 1.778 bb 2013 U.S. wheat crop, 25.6% S/U, $7.50-$8.50 /bu prices; B) “Trend Yield” Crop Scenario: 65% probability of 46.7 ma harvested, 45.2 bu/ac yields, 2.082 bb 2013 U.S. wheat crop, 29.3% S/U, $6.50-$7.50 /bu prices; and C) “High Yield” Crop Scenario: 5% probability of 46.7 ma harvested, 46.3 bu/ac yields, 2.132 bb 2013 U.S. wheat crop, 30.6% S/U, $6.00-$7.00 /bu prices.
Wheat Storage Problems after bumper harvest in India – May 2012 (Source: http://www.indiatvnews.com/)
World Wheat production in “new crop” MY 2013/14 is projected to be 701 mmt, up sharply from 656 mmt in “old crop” MY 2012/13 – with sizable increases in exports projected for a number of key wheat producing and exporting countries (i.e., Russia, Ukraine, Kazakhstan, Argentina, and India). These increases foreign wheat export prospects result in diminished U.S. wheat export prospects. World wheat % ending stocks-to-use for “new crop” MY 2013/14 are forecast to be 26.8% – up marginally from 26.7% for “old crop” MY 2012/13, but down from 28.6% in MY 2011/12, 30.5% in MY 2010/11, and 31.0% in MY 2009/10, and 26.5% in MY 2008/09. The historic record low World wheat supply-demand balance was 20.9% in MY 2007/08.
U.S. Wheat Price Prospects for 2013: Uncertainties still exist regarding 2013 wheat production prospects in the U.S. central and southern plains for hard red winter wheat, and also for other major World wheat exporters such as Australia, Argentina, and the Black Sea Region countries. World production problems in 2013 could reduce production and tighten supply-demand balances. U.S. wheat prices in 2013 are likely to continue to remain high through at least early spring months. Extremely tight U.S. corn supplies through at least early-mid summer 2013 are also likely to provide cross market support for 2013 wheat prices till fall.
“Wheat People” KSHS Online Exhibit – Goessel, KS Wheat Threshing Demonstration in 1998 (Source: http://www.kshs.org/)