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USDA Wheat Outlook


16 April 2013

USDA Wheat Outlook - April 2013USDA Wheat Outlook - April 2013

All wheat plantings for 2013 in the National Agricultural Statistics Service (NASS) March 28 Prospective Plantings report are estimated at 56.4 million acres, up 1 percent above last year’s seedings.
USDA Wheat Outlook

Prospective Wheat Plantings for 2013 Are Up Slightly From 2012 Seedings

U.S. wheat ending stocks for 2012/13 are projected 15 million bushels higher this month, with a small increase in seed use more than offset by lower expected feed and residual disappearance. Seed use for 2012/13 is raised slightly based on producer planting intentions for 2013/14 as reported in the March 28 Prospective Plantings. Feed and residual use for 2012/13 is projected 15 million bushels lower reflecting lower than expected disappearance during the December-February quarter as indicated by the March 1 stocks. Feed and residual use is projected lower for hard red winter (HRW) and hard red spring wheat, but declines are partly offset by higher expected feed and residual use for soft red winter and white wheat. All-wheat imports are unchanged, but a small increase in HRW wheat is offset by a decline in durum. The projected range for the wheat season-average farm price is narrowed 5 cents on both ends to $7.70 to $7.90 per bushel.

World wheat supplies for 2012/13 are up this month with unchanged production and increased beginning stocks. Projected wheat use is reduced, raising ending stocks. World wheat trade for the July-June trade year is up 1.6 million tons this month, with increased exports from the European Union, Ukraine, and Russia. U.S. wheat exports are unchanged.

Domestic Outlook

Prospective Wheat Plantings for 2013 Are Up Slightly From 2012 Seedings

All wheat plantings for 2013 in the NASS March 28 Prospective Plantings report are estimated at 56.4 million acres, up 1 percent above last year’s seedings. Winter wheat plantings for 2013 are estimated at 42.0 million acres, 2 percent above last year’s seedings and up slightly from the previous estimate in the NASS January 11 Winter Wheat Seedings report. Of the 2013 total winter wheat acreage, 28.9 million acres are hard red winter (HRW), 1.0 million acres below last year.

Soft red winter (SRW) wheat seeded area is 9.7 million acres, up 1.6 million acres from last year’s seedings. Increases from last year are estimated in most SRW growing States, with North Carolina planting a record-high acreage.

Soft white winter wheat planted area is 3.059 million acres for 2013, up from 3.005 million acres in 2012. Hard white winter wheat planted area is 0.327 million acres for 2013, down slightly from 0.336 million acres in 2012.

Spring wheat plantings for 2013, including durum, are estimated at 14.5 million acres, 0.1 million acres above last year. Other spring wheat growers intend to plant 12.7 million acres this year, up 0.4 million acres from 2012 seedings. Of this other spring total, 12.1 million acres are hard red spring (HRS) wheat. This HRS planted acreage is up from 11.7 million acres in 2012. The largest expected increase from the previous year is in North Dakota.

Area seeded to durum wheat for 2013 is expected to total 1.751 million acres, down from 2.123 million acres in 2012. Planted acreage is expected to be down in all States except South Dakota.

Soft white spring wheat planted area is expected to be 0.469 million acres for 2013, down from 0.477 million acres in 2012. Hard white spring wheat planted area is expected to be 0.121 million acres for 2013, up from 0.118 million acres in 2012.

Total 2012/13 Supplies Are Unchanged From March

Total projected supplies for 2012/13, at 3,142 million bushels, are unchanged from March. Supplies for 2012/13 are 168 million bushels above 2011/12. Higher production (+270 million bushels) and imports (+18 million bushels) more than offset lower beginning stocks (-119 million bushels) year to year.

Projected supplies of hard red winter (HRW), hard red spring (HRS), and durum are up year to year, mostly because of higher production. HRW production is up 224 million bushels, with higher planted area and a smaller abandonment rate. Yields are also higher year to year because of the recovery from the severe drought in the Central and Southern Plains the previous year. HRS and durum production are up 107 million bushels and 32 million bushels, respectively, from a year earlier, with larger harvested areas and higher yields. Production for these two classes of wheat recovered from the previous year when excessive moisture and cool temperatures in the Northern Plains resulted in late seeding and prevented plantings.

Projected supplies of soft red winter (SRW) and white are down from 2011/12. Both classes had lower production for 2012/13, down 38 million bushels and 55 million bushels, respectively, on the year. Production is down for both classes because of smaller harvested area and lower yields. SRW planted area was down because a late row-crop harvest delayed plantings in the Corn Belt and Northeast.

All-wheat 2012 production is estimated at 2,269 million bushels, unchanged from March, but up 270 million bushels from 2011. The all-wheat harvested area is estimated at 49.0 million acres, unchanged from March, but up 3.3 million acres from last year. The U.S. all-wheat estimated yield is 46.3 bushels per acre for 2012, equaling the 2010 record. The yield is unchanged from March, but up 2.6 bushels per acre from the previous year.

Total 2012/13 carryin stocks, estimated at 743 million bushels, are unchanged from March, but down 119 million bushels from 2011/12. Carryin stocks are down year to year for all classes except SRW. Projected all-wheat imports for 2012/13, at 130 million bushels, are unchanged from March, but up 18 million bushels from the previous year. There are some class changes of projected imports. Based on pace to date, HRW imports are raised 6 million bushels, while durum is lowered by 6 million bushels.

2012/13 Feed and Residual Use Down, Ending Stocks Up

Domestic use of wheat for 2012/13 is projected at 1,386 million bushels, down 14 million bushels from March and 204 million bushels higher than last year. Food use for 2011/12 is projected at 950 million bushels, unchanged from March, but up 9 million bushels from 2011/12. Projected food use reflects continued high extraction rates due to high wheat prices, but population growth and slightly higher per capita use raise food use on the year. Projected seed use is up slightly from March. Feed and residual use is projected at 360 million bushels, down 15 million bushels from March based on higher than expected stocks in the NASS March 28 Grain Stocks report. As projected, feed and residual use would be up 196 million bushels from 2011/12.

Projected exports for 2012/13, at 1,025 million bushels, are unchanged from March. Total wheat exports for 2012/13 are expected to be 25 million bushels less than in 2011/12.

Projected total U.S. ending stocks for 2012/13, at 731 million bushels, are up from March by 15 million bushels with lower feed and residual use. The 2012/13 ending stocks are down 12 million bushels from 2011/12.

All wheat ending stocks are projected down 2 percent from 2011/12. HRS, durum, and HRW ending stocks are up from 2011/12 by 26 percent, 20 percent, and 13 percent, respectively. SRW and white ending stocks are down from 2011/12 by 42 percent and 28 percent, respectively.

2012/13 Price Range Is Narrowed From March

The projected range for the season-average farm price for wheat is narrowed to $7.70 to $7.90 per bushel from $7.65 to $7.95 per bushel in March. This compares with the record $7.24 per bushel reported for 2011/12.

Winter Wheat Conditions Are Mixed

The NASS April 8 Crop Progress report indicated that 36 percent of the winter wheat crop is rated good to excellent and 30 percent was rated poor to very poor. A year ago at this time, 61 percent of the winter wheat crop was rated good to excellent and 10 percent was rated poor to very poor. The principal reason the 2011 winter wheat crop conditions are worse this year than last year’s conditions was the lack of moisture from Texas to South Dakota on the Plains.

Conditions are poor in Texas and worse than a year ago. This year 51 percent of the Texas crop is rated poor to very poor, compared with 31 percent for the 2012 crop. Oklahoma’s crop rating is also worse. This year, 33 percent of the Oklahoma crop is rated poor to very poor, compared with only 4 percent for the 2012 crop. The year-to-year decline in crop conditions for Kansas, Nebraska, Colorado and South Dakota follow a similar pattern. Respectively, the shares of each State’s 2013 and 2012 crops that rated poor to very poor are: Kansas, 31 percent to 6 percent; Nebraska, 51 percent to 5 percent; Colorado, 46 percent to18 percent; and South Dakota, 75 percent to18 percent. For these six HRW-producing States, the average share of their winter wheat crops rated good to excellent is 17 percent.

The SRW-producing States are generally in good condition this year compared to the winter wheat crop in the Plains. The SRW-producing States’ 2013 crop averages 66 percent rated good to excellent and 5 percent poor to very poor. Last year at this time in those States, the average percentage of the crop that was rated good to excellent was 73 percent, with 5 percent of the crop being rated poor to very poor.

Conditions for the 2013 crop are also good in the Pacific Northwest (PNW). The three States in the PNW average 68 percent rated good to excellent and only 2 percent poor to very poor. Last year, these States averaged 77 percent good to excellent and 5 percent poor to very poor.

International Outlook

World Wheat Production Unchanged This Month

While world wheat production for 2012/13 is virtually unchanged this month at 655.4 million tons, global supplies are up almost 3 million tons with an increase in wheat beginning stocks.

The wheat harvest in most countries was finished months ago, and this month’s revisions reflect new information received from government agencies. The largest revisions in wheat production are an increase for Morocco, and two offsetting downward revisions for EU-27 and Saudi Arabia. In Morocco, the government agency has revised wheat yields up, boosting 2012/13 wheat output by almost 0.5 million tons to reach 3.9 million. Two downward revisions for EU-27 and Saudi Arabia almost offset the Moroccan change. A statistical office of the UK lowered its estimates for wheat production by 0.2 million tons, reflecting harsh weather conditions that drove the wheat yield in the UK to its lowest level in 25 years. Wheat output in Saudi Arabia is also estimated 0.2 million tons lower to 0.8 million, with a reduction in planted wheat area. The Saudi Government has been firmer in reinforcing its policy to essentially eliminate wheat production by 2016 because the irrigation necessary to grow the crop threatens to deplete the country’s water reserves.

Among other changes is an upward wheat production revision for Japan, up 0.1 million tons to 0.9 million, reflecting a government report that identifies beneficial rains during the wheat flowering stage in spring and good harvest weather in summer. Wheat production in Chile and Tunisia are down 0.1 million tons each, with slightly lower estimated areas and yields. Small adjustments are made for Bangladesh, South Africa, Russia, Ecuador, and Colombia.

Supplies Boosted by Higher Beginning Stocks

Despite virtually unchanged wheat output, world wheat supplies are boosted by higher beginning stocks for 2012/13 that are up 2.9 million tons to 199.4 million, following reduced estimates for wheat domestic consumption for a number of countries in 2011/12. The largest increase in 2012/13 beginning stocks is for the EU-27, up 1.3 million tons to 13.5 million, mostly reflecting lower estimated feed and residual use for 2011/12. EU wheat domestic consumption in 2011/12 is lowered 1.3 million tons to 126.3 million. Data were revised back to 2009/10 for Morocco, resulting in lower wheat consumption and some adjustment of imports. These changes result in larger beginning stocks for every year since 2010/11, with the increase for 2012/13 being 0.8 million tons. Beginning stocks are projected higher in Mexico, up 0.3 million tons with lower feeding in 2011/12. Stocks are revised upward (though by less than 0.2 million tons) in Bangladesh, Colombia, Ecuador, Indonesia, Kenya, Libya, Malaysia, Paraguay, Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam, and downward in Tunisia.

Wheat Consumption Trimmed, Ending Stocks Raised

Foreign wheat consumption for 2012/13 is projected down 0.8 million tons to 634.8 million this month, with a reduction in foreign feed and residual use of 4.8 million tons. The main drop in wheat feed use is for China, down 3.0 million tons to 20.0 million. The share of wheat in Chinese grain feeding is reduced as relative domestic prices for grains continue to support corn over wheat feeding. The reduction also maintains the level of total grain feeding in China more in line with the rates of growth in the country’s livestock sector. In the EU-27, wheat feeding for 2012/13 is reduced by 1.0 million tons to 51 million this month, with higher projected wheat exports. This decline is partly offset by higher projected corn feeding that is supported by increased EU-27 corn production. Partly offsetting the decline in wheat feeding is an increase of food, seed, and industrial (FSI) use in the EU-27, up 0.5 million tons with stronger starch production in Austria and France. Feed and residual use is reduced by 0.5 million tons to just 11.5 million for Russia due to increased wheat exports and reduced import prospects. Given the fast growth in the Russian swine and poultry industries, the declining estimates for Russian 2012/13 feed consumption (the current estimate is the lowest in 15 years) do not accurately reflect the actual amounts of grain being fed to animals. Rather, in this case, feed and residual use numbers reveal a problem with under-reporting of grain production by farmers. This situation has been widely accepted not only by market analysts, but also by government officials (see http://www.apkinform. com/en/harvest2012/1015449#.UWR0i6JeaSo). The issue was discussed at greater length in our November 2012 publication (see http://usda01.library.cornell.edu/usda/ers/WHS//2010s/2012/WHS-11-14- 2012.pdf).

Wheat feed use is also reduced by a third in Vietnam, down 0.4 million tons, with relative prices favoring corn imports and feeding. FSI use in the country is up this month partly offsetting the reduction in wheat feed use. Higher FSI use in this country reflects a strong demand for Western-type wheat-based foods that shifts the structure of Vietnamese wheat consumption and imports in favor of milling-quality wheat. Wheat feed and residual use is slightly reduced for Ukraine and India. Partly offsetting are small increases in wheat feeding in Japan and Uzbekistan, and a number of other countries. In addition to the already mentioned EU-27 and Vietnam, projected FSI has been revised for a number of countries, mainly reflecting trade changes, with all of the changes being under 0.3 million tons.

This month the 2012/13 global wheat balance has become a bit less tight. Increased wheat supplies and lower consumption boost projected world ending stocks for 2012/13 by 4.0 million tons, while foreign ending stocks are projected up 3.6 million tons to 162.4 million. Ending stocks are revised up 3.0 million tons for China, reflecting lower feed consumption. For Morocco, ending wheat stocks are revised up for 4 consecutive years (the data series revision mentioned above). For 2009/10 the increase is 0.3 million tons, while for each of the 3 years 2010/11 through 2012/13, ending wheat stocks in Morocco are up 0.8 million tons. For EU- 27, the stocks are projected up for 2011/12 and 2012/13 by 1.3 and 0.5 million tons, respectively, as lower domestic wheat use in the EU-27 in both years is only partly offset by higher 2012/13 projected exports. For Algeria and Iran, ending wheat stocks are up 0.5 and 0.4 million tons, respectively, due to higher projected imports that are partly offset by higher wheat consumption. The largest reduction in wheat stocks this month is in Australia, down 1.0 million tons to 4.8 million, reflecting higher local marketing year (October-September) exports. Ending stocks are also down in the range of 0.2-0.3 million tons in Ukraine and Russia (higher exports), as well as in Saudi Arabia and Tunisia (lower wheat supplies). Trade and/or consumption data are revised for several previous years for Colombia, Kenya, Libya, Philippines, Thailand, and Vietnam, resulting in small changes for ending stocks. Other changes in ending stocks are mostly offsetting.

World Wheat Trade Up Slightly

World wheat trade for the July-June trade year is up 1.6 million tons this month. As three quarters of the trade year have already passed, most of trade revisions this month are based on the pace of sales and shipments. Wheat exports are increased for EU-27, up 1.0 million tons to 20.5 million, based on a strong pace of exports licenses, and comparatively large—almost 1 million tons—exports of wheat products (pasta). Exports for Ukraine and Russia are up 0.5 and 0.2 million tons this month. With a quarter of the trade year still ahead, both countries are approaching the previously projected wheat exports levels. The Government of Ukraine hinted that it could allow some additional exports, while in Russia wheat domestic prices continue to fall. Although Russian wheat prices are still higher than in Europe and the United States, they are expected to decrease further, resulting in additional (though small) export sales. For the United Arab Emirates, a country that does not produce any wheat, exports are up 0.1 million tons as higher than expected imports suggest stronger re-export volumes of flour to neighboring countries. Wheat exports are down 0.2 million tons for Pakistan, as it appears that its wheat is not competitive with Indian wheat within the region. Exports are also reduced 0.1 million tons for both Mexico and Sri Lanka, based on the current pace of sales. For its local October-September marketing year, exports are projected higher in Australia, up 1.0 million tons to 17.5 million, due to the stronger pace of exports in January and February 2013.

Wheat imports are projected up 1.0 million tons to 5.0 million for Iran, reflecting additional confirmed purchases. Wheat imports are boosted 0.7 million tons for Algeria based on pace and on loading data for French ports. Imports for Ethiopia, Nigeria, and United Arab Emirates are up 0.5, 0.3, and 0.3 million tons, respectively, also based on pace of imports.

Imports are reduced for Morocco, down 0.7 million tons, as its wheat supplies are projected up this month. Projected Russian wheat imports are down 0.5 million tons to 1.0 million, as it appears that declining Russian wheat prices in the regions along the border with Kazakhstan make wheat imports less attractive. Imports are also reduced for Bangladesh, down 0.4 million tons, resulting from higher domestic supplies and lower projected domestic consumption; for Mexico, down 0.3 million tons, reflecting higher supplies and the slow pace of imports; and for Vietnam, down 0.3 million tons, because of higher supplies and lower feeding. Imports are also adjusted within the range of 0.2- 0.1 million tons for a number of countries, based mostly on the pace of trade to date.

U.S. Export Pace Supports the 2012/13 Forecast

U.S. 2012/13 wheat exports remain unchanged this month at 28.5 million tons (1,025 million bushels for June-May), with its SRW prices being competitive in comparison with other major exporters. This projection is 0.4 million tons higher than exports estimated for 2011/12. According to U.S. Census data for July 2012 through February 2013, grain inspection data for March, and outstanding export sales as of March 28, export commitments (from the three sources combined) are on par with last year, while a month ago the commitments were lagging almost a million tons behind.

The current U.S. local June-May marketing year projection for 2012/13 is 0.7 million tons lower than the 28.6 million tons estimated for the 2011/12 local marketing year, with total commitments for the June-May year lagging behind last year by about 0.5 million tons.

April 2013

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