An analysis of U.S. and World Wheat supply-demand factors and price prospects based on information from the July 11, 2014 USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports have been 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 here.
When the USDA released its Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on July 11, 2014, U.S. wheat market prices initially responded negatively – but have since traded in a sideways pattern. The USDA projected 2014 U.S. and World wheat production and supplies to be higher, with expectations for larger U.S. and World ending stocks and lower wheat market prices in the “new crop” 2014/15 marketing year.
The “Prevailing Wheat Market Consensus”
The prevailing consensus of the U.S./World wheat market is that adequate Foreign wheat supplies exist to more than “cover” or “mitigate” 2014 U.S. hard red winter wheat production shortfalls in the Central and Southern plains states, and that no other major threats to World wheat supplies and trade have yet emerged to cause wheat prices to need to rise from current levels. The types of market factors that would cause this market outlook to change have not yet occurred or become apparent – such as substantially lower wheat production in North America or other major wheat producing regions of the World, or geopolitically-driven disruptions to World wheat markets in such places as the Middle East or the Black Sea region. Unless or until such disruptive events as these would occur, World wheat market prospects are pointing to steady-to-lower World wheat prices.
USDA U.S. Wheat Market Forecast for “New Crop” MY 2014/15
Compared to a year earlier, the USDA projected lower 2014 U.S. wheat production, reduced wheat usage, an increase in U.S. wheat ending stocks and % stocks-to-use, and lower prices in “new crop” MY 2014/15. The USDA’s projected “new crop” market scenario is: 56.5 million acres (ma) planted, 46.2 ma harvested, 81.9% harvested-to-planted acres, 43.1 bu/ac yield (up from 42.3 bu/ac a month ago), a 1.992 billion bushel (bb) 2014 U.S. wheat crop (up 50 million bushels or ‘mb’), 2.741 bb total supplies (up 46 mb), 900 mb exports (down 25 mb), 2.081 bb total use (down 40 mb), 660 mb ending stocks (up 86 mb), 31.7% ending stocks-to-use (up from 27.1%), and $6.60 average price per bu. (range of $6.00 to $7.20) – down from $7.00 /bu.
Kansas State University U.S. Wheat Market Forecast for “New Crop” MY 2014/15
KSU projections of “new crop” MY 2014/15 supply-demand balances and prices are as follows: a) “Likely Production” Scenario: 65% prob. of 46.2 ma harvested, 43.1 bu/ac, 1.992 bb 2014 U.S. wheat production, 2.741 bb U.S. wheat supplies, 900 mb exports, 2.081 bb total use, 660 mb ending stocks, 31.7% S/U, & $6.10 /bu; b) “Low Production” Scenario: 20% prob. of 45.4 ma harvested, low yields of 41.1 bu/ac (both harvested acres and yield lower than USDA), 1.868 bb 2014 U.S. wheat production, 2.628 bb U.S. wheat supplies, 890 mb exports, 2.061 bb total use, 567 mb ending stocks, 27.5% S/U, & $6.55 /bu; and c) “Expected Production – Higher Exports” Scenario: 15% prob. of 46.2 ma harvested, yields of 43.1 bu/ac, 1.992 bb 2014 U.S. wheat production, 2.741 bb U.S. wheat supplies, 1.050 bb exports (up 150 mb from USDA forecast), 2.231 bb total use, 510 mb ending stocks, 22.9% S/U, & $7.50 /bu.
USDA World Wheat Market Outlook
World wheat total supplies of 889.5 mmt in “new crop” MY 2014/15 are down marginally from 889.8 mmt in “old crop” MY 2013/14, but up from 854.9 mmt in MY 2012/13. Projected World wheat ending stocks in “new crop” MY 2014/15 of 189.5 mmt (27.0% S/U) are up from 184.3 mmt (26.1% S/U) in MY 2013/14, and from 175.6 mmt (25.9% S/U) in MY 2012/13. For market perspective, these levels of World wheat stocks need to be analyzed relative to the historic World wheat stocks minimum of 129.4 mmt (21.0% S/U) in MY 2007/08. Year-over-year increases are projected for wheat exports in “new crop” MY 2014/15 for Argentina (+4.5 mmt), Brazil (+0.4 mmt), and Russia (+1.0 mmt), with decreases forecast for the U.S. (-7.7 mmt), Australia (-0.5 mmt), Canada (-1.5 mmt), the EU (-2.5 mmt), India (-2.4 mmt), Kazakhstan (-2.4 mmt), and Ukraine (-0.5 mmt).
2014 Spring Wheat Harvest In North Dakota (Source: http://ag-at-large.areavoices.com/2012/07/21/)
Sowing-Seeding Wheat in Australia (Source: https://www.agric.wa.gov.au/grains-research-development/frost-risk-%E2%80%93-manage-wheat-variety-and-sowing-time)