KSU Wheat Market Situation and Outlook (via AgManager – September 2013)

An analysis of U.S. and World Wheat supply-demand factors and 2013 price prospects following the USDA’s September 12th World Agricultural Supply Demand Estimates (WASDE) report is available on the KSU AgManager website (http://www.agmanager.info/default.asp).

A full summary – with the full analysis-article for Wheat can be found at this web location:  http://www.agmanager.info/marketing/outlook/newletters/Wheat.asp



On September 12, 2013 the USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports. Small changes were made in the U.S. wheat “new crop” 2013/14 marketing year supply-demand balance sheet – with imports, and total supplies both up 10 million bushels (mb).  These changes lead to a small increase in “new crop” 2013/14 ending stocks, and % ending stocks-to-use.  Although all the 2013 U.S. winter wheat harvest and most of the 2013 U.S. spring wheat harvest are completed, these U.S. wheat supply-demand projections for “new crop” MY 2013/14 are still subject to change.  The USDA plans to make any needed adjustments in 2013 U.S. wheat acreage in the upcoming October 11th USDA Crop Production and WASDE reports to reflect USDA Farm Service Agency plantings and prevented planted acreage data for 2013.


Kansas Winter Wheat Seedings in 2011 (Source: http://harvestpublicmedia.org/decisions-decisions-decisions-spring-planting-kansas)

USDA U.S. Wheat Forecast: The USDA projected that 2013 U.S. wheat production would be a 2.114 billion bushels (bb) – down from 2.269 bb in 2012.  This forecast was based on planted and harvested acreage of 56.5 and 45.7 million acres (ma), respectively, and U.S. wheat yields of 46.2 bu/ac – down slightly from the record high of 46.3 bu/ac in 2010 and 2012.  The USDA raised its forecast of “new crop” MY 2013/14 total supplies (2.972 bb – up 10 mb), based on a 10 mb increase in imports (140 mb – up 10 mb).  With total use (2.411 bb) unchanged, projected ending stocks were 561 mb – up 10 mb from August, and down from 718 mb last year.  Projected % ending stocks-to-use of 23.3% are down from 29.7% in “old crop” MY 2012/13.  The USDA projected U.S. average wheat prices for “new crop” MY 2013/14 of $6.50-$7.50 /bu (midpoint = $7.00 /bu), down from the record high of $7.77 in “old crop” MY 2012/13.

KSU U.S. Wheat Forecast: KSU projections of “new crop” MY 2013/14 supply-demand balances and prices are as follows:  a) “Likely Yield-Production” Scenario: 80% prob. of 56.5 ma planted, 45.7 ma harvested, 46.2 bu/ac yields, a 2.114 bb U.S. wheat crop, lower wheat exports than the USDA at 1.000 bb, 27.0% S/U, & $6.25-$7.25 /bu;  b) “Likely-Production & High Exports” Scenario: 10% prob. of 56.5 ma planted, 45.7 ma harvested, 46.2 bu/ac yields, a 2.114 bb U.S. wheat crop, wheat exports of 1.100 bb – equal to the September USDA forecast, 21.7% S/U, & $7.50-$8.50 /bu;  and c) “Low Acres & Production” Scenario: 10% prob. of 55.5 ma planted, 44.9 ma harvested (both down from USDA September projections), 46.2 bu/ac yields, a 2.073 bb 2013 U.S. wheat crop, 25.6% S/U, & $7.00-$8.00 /bu.


2010 Wheat Harvest in North Dakota (Source: http://dwellingintheword.wordpress.com)

USDA World Wheat: World wheat total supplies of 883 mmt in “new crop” MY 2013/14 are up 28 mmt from August, up from 855 mmt in “old crop” MY 2012/13, but down from 896 mmt in MY 2011/12.  Projected World wheat ending stocks of 176.3 mmt (25.1% S/U) in “new crop” MY 2013/14 are up 3.3 mmt from August, up from 173.9 mmt (25.3% S/U) in “old crop” MY 2012/13, and down from 199.3 mmt (29.0% S/U) in MY 2011/12.  World wheat % ending stocks-to-use have declined for four consecutive years from a high of 31.0% in MY 2009/10, and are falling closer to the historic World wheat stocks-to-use minimum of 21.0% in MY 2007/08.

Market Perspective: Strong U.S. wheat exports and demand for wheat feeding through June-September have provided support for U.S. wheat prices in the first one third of the “new crop” 2013/14 marketing year.  However, if the U.S. produces a large corn crop in 2013 – leading to sharp declines in U.S. corn prices this fall, then wheat prices will lose some degree of cross market arbitrage support from wheat feeding.  Also, foreign wheat production prospects for “new crop” MY 2013/14 remain positive among nearly all major foreign wheat exporting countries, standing ready to provide strong export competition for the U.S. this fall and winter. Although the pace of U.S. wheat export shipments and forward sales has been strong thus far in “new crop” MY 2013/14, it may not be sustainable in coming months as projected large wheat crops in a number of major foreign wheat exporting and/or using countries become available – leading to a weaker U.S. wheat market. 


Wheat Production in India – Article on Importance of Rice and Wheat in Developing Country Diets (Source: http://www.ibtimes.com/corn-drought-who-cares-worlds-poorest-its-all-about-rice-and-wheat-739483)


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