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USDA Wheat Outlook


17 June 2013

USDA Wheat Outlook - June 2013USDA Wheat Outlook - June 2013


USDA Wheat Outlook

Projected U.S. wheat supplies for 2013/14 are raised this month, with an increase in beginning stocks and higher forecast winter wheat production. Beginning stocks are higher, with a 15-million-bushel reduction in 2012/13 exports as May shipments fell below expectations. Projected production for 2013/14 is up 23 million bushels as higher yields boost forecast production of hard red winter wheat in the Southern and Central Plains and soft red winter wheat across the South and Midwest. Exports are projected 50 million bushels higher for 2013/14, with strong early-season sales and a reduced outlook for foreign production this month. Ending stocks for 2013/14 are projected down 11 million bushels. Projected stocks of 659 million bushels remain at a 5-year low. The projected range for the 2013/14 season-average farm price is raised 10 cents on both ends to $6.25-$7.55 per bushel. This is down from the record $7.80 per bushel expected for 2012/13.

Reduced production prospects in Ukraine and Russia this month lower those countries’ export prospects, boosting projected exports for the United States and some other exporting countries. With reduced global supplies, both projected use and ending stocks are down this month.

Domestic Outlook

Ending Stocks for 2013/14 Projected Down From May

Ending stocks of wheat for 2013/14 are projected to be down 11 million bushels from May as total use increases more than total supplies. Total wheat supplies for 2013/14 are projected up 39 million bushels because of higher production and carryin stocks. Total projected use is up 50 bushels from May because of higher exports.

Total production is projected at 2,080 million bushels, up 23 million bushels from May.

Winter Wheat Production

The survey-based forecast of winter wheat production, at 1,509 million bushels, is up 23 million bushels from May, but down 136 million bushels from 2012. Expected harvested area, at 32.7 million acres, is unchanged from May but down 2.1 million acres from last year despite slightly higher planted area. The lower harvested area is mostly because of a lower harvest-to-planted ratio for hard red winter wheat due to adverse weather conditions. The U.S. winter wheat yield is forecast at 46.1 bushels per acre, up 0.7 bushels from May, but down 1.1 bushels from the previous year.

Winter Wheat Production Estimates by Class

Hard red winter (HRW) production is forecast at 781 million bushels, up 13 million bushels from May, but down 223 million bushels from a year ago. Planted and harvested areas are unchanged from May. HRW yield is forecast at 37.0 bushels per acre, up 0.6 bushels from May.

Production is down from 2012 with the lower forecast planted area for the 2013 crop, a higher expected abandonment rate, and lower yield due to severe drought and spring freeze damage. Forecast planted area, harvested area, and yield and yearto- year changes for 2013 are, respectively, 28.9 million acres (down 0.9 million), 21.1 million acres (down 3.6 million), and 37.0 bushels per acre (down 3.7 bushels).

Soft red winter (SRW) production is forecast at 509 million bushels, up 8 million bushels from May and up 89 million bushels from last year. SRW planted and harvested areas are unchanged from May. SRW yield is 60.6 bushels per acre, up 0.9 bushels from May.

SRW production is forecast higher than 2012, with larger harvested area and slightly higher yield. Forecast planted area, harvested area, and yield and year-toyear changes for 2013 are, respectively, 9.7 million acres (up 1.6 million), 8.4 million acres, (up 1.4 million), and 60.6 bushels per acre (up 0.3 bushels).

White winter wheat production for 2013 is forecast to total 219 million bushels, up 2 million bushels from May but down 3 million bushels from a year ago. Of the white production total, 12 million bushels are hard white (HW) and 207 million bushels are soft white (SW). The 2012 production totals of HW and SW were 13 million bushels and 208 million bushels, respectively.

The 2013 HW and SW harvested and planted areas, at 0.33 million acres and 0.26 million acres and 3.06 million acres and 2.95 million acres, respectively, are unchanged from May. The previous year, the HW and SW harvested and planted areas were 0.34 million acres and 0.29 million acres and 3.01 million acres and 2.91 million acres, respectively. HW 2013 yield is 44.5 bushels per acre compared with 46.0 bushels in 2012. SW 2013 yield is 70.2 bushels per acre compared with 71.6 bushels in 2012.

Desert durum production in California and Arizona is forecast at 15 million bushels for 2013. This production is less than the 24 million bushels in 2012 due to smaller harvested area.

Projected 2013/14 Utilization

Total U.S. wheat use for 2013/14 is projected down from May by 50 million bushels to 2,297 million bushels. Total projected use is down 94 million bushels from 2012/13. Food use is projected at 958 million bushels, unchanged from May but up 13 million bushels from the current year, as flour extraction rates are expected to fall from a very high level in 2012/13 while consumption grows with population. Feed and residual use is projected at 290 million bushels, unchanged from May but down from the 360 million bushels projected for 2012/13 as larger supplies and lower prices for feed grains in 2013/14 make wheat feeding less attractive by late summer. Exports are projected at 975 million bushels, up 50 million bushels from May because of strong early-season sales and lower projected foreign production. Projected exports are down 35 million bushels from projected 2012/13 exports as large crops in major world export competitor countries are expected to limit U.S. exports. Ending stocks for 2013/14 are projected at 659 million bushels, down 11 million bushels from May and down 87 million bushels from 2012/13.

2013/14 Price Range Projection

The 2013/14 season-average farm price range is projected at $6.25 to $7.55 per bushel, up from May’s range of $6.15 to $7.45. This is down from the record $7.80 per bushel projected for 2012/13.

Total 2012/13 Supplies Are Unchanged From May

Total projected supplies for 2012/13, at 3,137 million bushels, are unchanged from May. Supplies for 2012/13 are 163 million bushels above 2011/12. Higher production (+270 million bushels) and imports (+13 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 wheat 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 fall plantings in the Corn Belt and Northeast.

All-wheat 2012 production is estimated at 2,269 million bushels, unchanged from May but up 270 million bushels from 2011. The all-wheat harvested area is estimated at 49.0 million acres, unchanged from May but up 3.3 million acres from the previous 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 May but up 2.6 bushels per acre from the previous year.

Total 2012/13 carryin stocks, estimated at 743 million bushels, are unchanged from May 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 125 million bushels, are unchanged from May but up 13 million bushels from the previous year. There are some class changes for projected imports. Durum and HRW imports are raised 3 million and 1 million bushels, respectively, while HRS and SRW are both down 2 million bushels.

2012/13 Ending Stocks Up With Reduced Exports

Domestic use of wheat for 2012/13 is projected at 1,381 million bushels, unchanged from May but 199 million bushels higher than 2011/12. Food use for 2011/12 is projected at 945 million bushels, unchanged from May, but up 4 million bushels from 2011/12. Projected seed use is unchanged from May. Feed and residual use is projected at 360 million bushels, unchanged from May. As projected, feed and residual use would be up 196 million bushels from 2011/12.

Projected exports for 2012/13, at 1,010 million bushels, are down 15 million bushels from May. Total wheat exports for 2012/13 are expected to be 40 million bushels less than in 2011/12. The class changes this month, based on pace to date, are as follows: durum, up 3 million bushels; HRW and SRW, both down 7 million bushels; HRS, down 3 million bushels; and white, down 1 million bushels.

Projected total U.S. ending stocks for 2012/13, at 746 million bushels, are up from May with the 15 million bushel drop in exports. The 2012/13 ending stocks are up 3 million bushels from 2011/12.

All-wheat ending stocks are projected down less than 1 percent from 2011/12. HRS, durum, and HRW ending stocks are up from 2011/12 by 33 percent, 16 percent, and 10 percent, respectively. SRW and white ending stocks are down from 2011/12 by 35 percent and 26 percent, respectively.

The Projected 2012/13 Price Is Record-High

The projected 2012/13 season-average farm price for wheat is unchanged from May at a record $7.80 per bushel. This compares with the previous record of $7.24 per bushel reported for 2011/12.

Spring Wheat Planting Pace Behind Last Year and 5-Year Average

The USDA, National Agricultural Statistics Service (NASS) June 10 Crop Progress report indicated that spring wheat seeding progress reached 87 percent as of June 9, compared with 100 percent at the same time last year. The 5-year average is 96 percent.

Crop Progress rated 62 percent of the spring crop good to excellent and 7 percent poor to very poor. Last year at this time 75 percent of the spring crop was rated good to excellent and 4 percent poor to very poor.

Monthly Outlook Charts

The charts for the report can be found using the link to the Chart Gallery that is on the page just before the tables.

USDA Wheat Baseline, 2013-22

Each year, USDA updates its 10-year projections of supply and utilization for major field crops grown in the United States, including wheat. A detailed discussion summarizing the historical forces determining U.S. wheat supply and utilization, along with the analysis underlying the wheat projections for 2013-22, is available at http://www.ers.usda.gov/topics/crops/wheat/usda-wheat-baseline,-2013-22.aspx.

International Outlook

Russia, Ukraine, and EU-27 Changes Trim Global Production Prospects

World wheat production in 2013/14 is projected to reach 695.9 million tons, down 5.2 million this month, while foreign production is down 5.9 million to 639.2 million. Wheat production is projected down for Russia, Ukraine, the EU-27, and Tunisia.

The largest decline in the 2013/14 wheat output is projected for Ukraine, down 2.5 million tons to 19.5 million this month, with both area and yield reduced. Wheat area is projected slightly lower (by 0.1 million hectares) this month, reflecting new official estimates on planted area adjusted for winterkill. While the northern, western, and central parts of Ukraine are enjoying comparatively favorable growing conditions, the southern regions of the country, as well as parts of eastern regions (such as Kherson, Nikolayev, Zaporozhe, Odessa, and especially the Crimea), suffered a 6-week stretch of excessive heat and low precipitation, beginning in the second half of April and running through mid- to late May. Most wheat in Ukraine is currently going through the milk stage of development. Despite recent beneficial rains in the region, the preceding abnormal heat is expected to adversely affect wheat yields.

Wheat production in Russia is down 2.0 million tons to 54.0 million this month. Parts of the major winter wheat producing areas of the South District (neighboring Ukraine) and some of the adjacent parts of the Volga District were hurt in May by relentless heat and dryness during the critical flowering and early filling stages of plant development. Temperatures were consistently 5-10 degrees C higher than normal. In the northern part of the South District, the number of days when it was hotter than 30° C (86° F) was almost 4 times higher than a 30-year average. Precipitation was insufficient and unevenly distributed in the region, totaling around 45 percent of the 30-year average. In addition, persistent rainfall (150-200 percent of normal) and cool weather delayed planting of spring grains in Siberia, which might affect the final rate of abandonment, given the region’s short window for the crop-growing season.

Wheat output is projected down 1.3 million tons this month for the EU-27 to 137.4 million, with slightly reduced area and yield. Wheat output is projected down by 0.4, 0.2, and 0.1 million tons in Italy, Poland and Germany, respectively, as early statistical estimates suggest lower area and yield in these countries. Wheat output is also slightly reduced for Bulgaria, the Czech Republic, Hungary, and Sweden. Recent flooding in the Po valley in Italy is expected to have only a marginal effect on the country’s wheat output, as the main wheat growing areas are located to the south of the floods. This month’s excessive precipitation and flooding in Central and Eastern Europe is also not expected to have a large impact on wheat development as it occurred between the periods of planting and harvesting; rather, excess rainfall is likely to replenish soil moisture in the region.

Wheat production is slightly reduced for Tunisia, where growing conditions appear to have worsened somewhat in the areas away from the coast.

Wheat Beginning Stocks Marginally Down This Month

While global production is projected down 5.2 million tons this month, lower estimated 2013/14 beginning stocks are down an additional 0.3 million tons, marginally exacerbating the production decline. Foreign beginning stocks are projected down 0.7 million tons, a result of numerous partly offsetting changes. Higher exports in the 2012/13 marketing year contribute to lower beginning stocks for Australia (down 0.8 million tons), Canada (down 0.3 million tons), and EU-27 (down 0.5 million tons), while lower 2012/13 exports resulted in larger beginning stocks in Paraguay, up 0.1 million tons. Beginning wheat stocks are also boosted by the higher 2012/13 imports by Egypt and Iran (0.2 million tons each), while lower 2012/13 imports resulted in smaller beginning stocks in Vietnam. Minor and mostly offsetting changes in beginning stocks are made for a number of other countries.

Despite Reduced Supply, Projected Wheat Use Almost Unchanged

Both global and foreign wheat use for 2013/14 are reduced somewhat this month by an equal amount of 0.4 million tons, to 694.5 and 658.5 million tons, respectively, while the amount of wheat for feeding is projected down 2.5 million. EU-27 wheat feed use is projected down 1.0 million tons due to lower domestic wheat production, higher exports, and reduced availability of Ukrainian low-quality wheat that EU-27 countries traditionally import to cover their feeding needs. Russian feed use is also down 1.0 million, due to reduced production prospects. With lower wheat output, wheat feed use forecasts are also reduced this month for Ukraine, down 0.5 million tons. Food, seed, and industrial use are projected up for India, Iran, and Egypt by 1.0, 0.5, and 0.2 million tons, respectively.

Wheat Ending Stocks Are Down

With only small reductions in projected wheat use, the reduced supply is causing a decline in projected ending stocks. World wheat ending stocks for 2013/14 are forecast down 5.1 million tons this month to 181.3 million, while foreign stocks are projected down 4.8 million tons. The largest stocks’ decline is projected for the EU- 27, down 2.8 million tons to 11.5 million, because of lower supplies (both wheat production and imports) and increased exports. Stocks are down 1.0 million tons for India, with higher projected consumption that is expected to come partly from Government stocks. Ending wheat stocks are projected lower for Canada, down 0.8 million tons because of higher projected exports. For Australia, ending stocks are down 0.8 million tons, reflecting lower beginning stocks; for Ukraine, they are down 0.5 million tons as reductions in feed consumption and exports do not fully offset a wheat production cut. Partly offsetting the reduction is the increase in stocks in Iran, up 0.7 million tons, as the Government continues to import wheat at a high pace and build up its food reserves. Smaller changes in ending stocks are made for quite a number of countries, each change being within the 0.1-million-ton range, and with the changes in general mirroring the revisions in beginning stocks discussed above.

World and U.S Wheat Trade for 2013/14 Increased

World wheat trade projected for the 2013/14 (July-June) international year inched up this month by 0.4 million tons to 143.4 million. A lower production estimate is the cause of a significant decline in projected Ukrainian exports, down 1.5 million tons to 8.0 million. Projected 2013/14 wheat exports by Russia are cut 1.0 million tons this month to 17.0 million, due to expected lower production of winter wheat in the southern part of the country. By virtue of being close to ports, this region is by far Russia’s main exporting territory and is often considered a barometer for the export outlook for Russian wheat. Tighter supplies and reduced competition from Russia and Ukraine are expected to support export prospects for these countries’ main competitors, namely EU-27, Canada, and the United States, up 1.5, 0.5, and 1.0 million tons, respectively. For 2013/14, reduced foreign wheat supplies and strong demand are expected to boost U.S. exports to 26.5 million tons. Prospects for tightening U.S. ending stocks are expected to be a limiting factor for U.S. 2013/14 exports.

The largest increase in projected 2013/14 imports is for Iran, up 1.0 million tons to 2.0 million. Iran has just purchased 0.6 million tons of wheat from the EU, and the country is not expected to significantly slow down the current pace of wheat purchases. Partly offsetting Iran’s imports is a reduction in 2013/14 wheat imports for the EU-27, reflecting lower availability of Black Sea wheat. A small downward adjustment in wheat imports is made for Sri Lanka.

World Wheat Trade for 2012/13 Increased, U.S Exports Down

World wheat trade for the international year 2012/13 is estimated to reach 145.3 million tons, up 1.6 million, the second highest after a record of 153.8 million tons in 2011/12. As the end of the July-June world trade year approaches, the pace of sales and shipments motivates a number of adjustments.

Australian exports are boosted 1.5 million tons to 20.5 million, reflecting a higher pace of exports of Australian wheat to Asian countries, Egypt, and Iran. The pace of Australian exports is expected to slow down in late fall, with increased competition from the EU-27 and Black Sea countries. Australian local 2012/13 marketing year (October-September) wheat exports are expected to grow by 1.0 million tons, or 0.5 million less than for the July-June international year. July-June exports are up 0.5 million tons for the EU-27, where the pace of export licenses support an increase and near-record-high corn imports free wheat for export. Exports are also increased for Russia (up 0.4 million tons), and for Brazil and Canada (up 0.3 million tons each). Small upward export changes are made for Thailand and Taiwan based on pace.

Partly offsetting export increases are 2012/13 wheat export reductions for India, down 0.5 million tons to 8.0 million, and smaller reductions for Paraguay and Sri Lanka.

Increases in 2012/13 import estimates are made for Egypt, up 0.5 million tons, with the private sector providing additional wheat supplies. For each of the following countries?Ethiopia, Indonesia, Iran, Iraq, South Africa, and Sudan?wheat imports are up 0.2 million tons. Smaller changes are made for several other countries.

The U.S. wheat export forecast for the 2012/13 July-June trade year is reduced 0.7 million tons to 27.3 million (down 15 million bushels to 1,010 million in the June- May marketing year). The slow pace of shipments in May supports this reduction.

Census data from July through April 2013 indicate that wheat grain shipments reached 21.8 million tons, while May 2013 wheat inspections were 2.7 million tons. Given that flour and product exports on a wheat-equivalent basis are expected to be about 0.6 million tons for the year, June 2013 exports would have to reach only 2.3 million tons to fulfill the forecast.

June 2013

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