An analysis of U.S. and World Wheat supply-demand factors and price prospects based on information from the June 10, 2015 USDA Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports will 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 the following web address on Thursday, June 18th: http://www.agmanager.info/marketing/outlook/newletters/archives/
Since USDA’s World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on June 10th, U.S. wheat market prices have traded lower due to a) marginal improvements in U.S. Hard Red Winter wheat production prospects in the Great Plains, and b) continued strength of the U.S. dollar – a negative for U.S. wheat exports.
For the “new crop” 2015/16 marketing year the USDA projected that 1) World wheat total supplies and total use would be at record high levels, 2) World wheat export trade would be up marginally from a year ago – with a moderate improvement in U.S. exports from the 15 year low in MY 2014/15, and c) World wheat ending stocks would be record high, with percent ending stocks-to-use at their highest level since MY 2011/12.
There are emerging concerns about potential wheat supply prospects from Australia, India, and elsewhere in “new crop” MY 2015/16 due to the development of a significant “El Nino” World weather pattern, as well as the ongoing geopolitical problems in the Black Sea region, and long term uncertainty in World financial and currency markets. World markets have evolved into a “large crop-over-supply” situation, with future prospects dependent on whether production and/or export problems can be avoided in major World wheat producing and exporting areas in year 2015 and beyond.
The June 30th USDA Acreage and Quarterly Stocks reports may provide direction to the wheat market – both in regards 2015 U.S. wheat planted and harvested acreage and production prospects, as well as the amount of U.S. wheat feeding and other uses that have occurred during the March-May 2015 time frame.
USDA U.S. Wheat Supply-Demand & Price Forecast
For U.S. wheat in the “new crop” 2015/16 marketing year, the USDA projected that there would be 55.367 million acres (ma) planted, 47.977 ma harvested, 44.2 bu/ac yields, 2.121 billion bushels (bb) production, 2.973 bb total supplies, 925 million bushel (mb) exports, 195 mb feed & residual use, 2.159 bb total use, 814 mb end stocks, with 37.7% ending-stocks-to-use (the highest level since 48.6% in MY 2009/08). The USDA projected U.S. average wheat prices for “new crop” MY 2015/16 in the range of $4.40-$5.40 /bu. (midpoint =$4.90) – the lowest since $4.87 /bu in MY 2009/10.
KSU U.S. Wheat Supply-Demand & Price Forecast
Key market factors for “new crop” MY 2015/16 are the level of 2015 U.S. wheat production, and the degree of recovery in U.S. wheat exports. Kansas State University projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two scenarios:
A) “Medium Yield-Higher Exports” Scenario: 65% prob. of 55.367 ma planted, 46.557 ma harvested, 43.9 bu/ac yield, 2.044 bb production, 2.895 bb total supplies, 975 mb exports, 2.194 bb total use, 702 mb ending stocks, 32.0% S/U, and $5.50 /bu U.S. avg. price.
B) “Lower Yield-Higher Exports” Scenario: 35% prob. of 55.367 ma planted, 46.557 ma harvested, 42.5 bu/ac lower yield, 1.979 bb production, 2.841 bb total supplies, 1.000 bb exports, 2.196 bb total use, 645 mb ending stocks, 29.4% S/U, and $6.10 /bu U.S. avg. price.
USDA World Wheat
Prospects for large World wheat supplies and stocks are causing lower World wheat market prices. World wheat total supplies of 922.0 mmt in “new crop” MY 2015/16 are up from 916.3 mmt in MY 2014/15, and from 893.7 mmt in MY 2013/14. Projected World wheat ending stocks in “new crop” MY 2015/16 of 202.4 mmt (28.1% S/U) are up from 200.4 mmt (28.0% S/U) in MY 2014/15, and from 190.0 mmt (27.0% S/U) in MY 2013/14. For perspective, these recent supply-demand figures can be compared to the historic World wheat ending stocks and stocks-to-use minimums of 128.75 mmt and 20.9% S/U in MY 2007/08.
A scene from past Kansas Wheat Harvests (Source: https://jaygoodrich.com/testimonial-charles-lloyd/kansas-wheat-harvest/)
A wheat field near Dimboola, Victoria in Australia (Source: http://www.theaustralian.com.au/archive/business-old/salim-seaboard-take-minority-stakes-in-wheat-marketer/story-e6frg95o-1225940218159)