Wheat Outlook: Global Production, Ending Stocks Are Record High
U.S. exports are lowered 25 million bushels this month to 775 million. The current projection sets 2015/16 U.S. wheat exports at the lowest level since 1971/72 when exports totaled just 599 million bushels. Increased competition, particularly from Canada, has reduced sales and prospects for U.S. wheat in international markets. Carryout is increased by 25 million bushels and is now projected at 966 million, the largest ending stocks forecast since 2009/10 when carryout totaled 976 million bushels.
2015/16 Exports Cut, at Lowest Level Since 1971/72
Based on increased international competition, especially from Canada, U.S. exports are lowered this month to 775 million bushels. The current projection pegs U.S. wheat exports at the lowest level in 44 years when U.S. wheat exports totaled just 599 million bushels during the 1971/71 marketing year. Food use is unchanged as the 2015/16 forecast aligns with production estimates published in the USDA National Agricultural Statistics Service (NASS) Flour Milling Products report.
With no other changes in total use, the 25 million bushel export reduction augments carryout by an equivalent volume. Ending stocks for 2015/16 are now estimated at 966 million bushels and are the largest since 2009/10 when carryout totaled 976 million bushels.
2015 Winter Wheat Production by Class, Unchanged in January
For 2015, winter wheat production is estimated at 1,370 million bushels, unchanged from the January forecast, and down 7 million bushels from 2014. Expected planted and harvested area are also unchanged from the previous projection, released in August. Harvested area is 32.3 million acres, down 42,000 acres from last year as a higher harvest-to-planted ratio offsets a lower planted area.
Area planted to winter wheat in 2015 is nearly 3 million acres less than the 42.4 million acres planted in 2014. The U.S. winter wheat yield is forecast at 42.5 bushels per acre and is 0.1 bushels per acre lower than the previous year.
Hard red winter (HRW) wheat production, forecast at 827 million bushels, is unchanged from January but up 88 million bushels from a year ago. HRW production is up in the current marketing year despite a 1.5 million-acre reduction in planted area and is attributable to a 2-bushel-per-acre increase in yields and a proportional increase in harvested area. Forecast planted and harvested area for 2015 are estimated at 29 million acres and 23 million acres, respectively. The harvested-to-planted ratio is 0.79 and compares to 0.72 in 2014.
Soft red winter (SRW) wheat production is forecast at 359 million bushels, unchanged from January, but down 95 million bushels from last year due to a combination of lower harvested area and lower yields. Forecast planted area, harvested area, and yield and year-to-year changes for 2015 from 2014 are 7.1 million acres, down 1.4 million acres; 5.9 million acres, down 1.3 million acres; and 60.9 bushels per acre, down 2.7 bushels per acre, respectively.
White winter wheat production for 2015 is forecast to total 184 million bushels, up 0.2 million bushels from a year ago. The planted and harvested areas, production, and yield for white winter wheat were as follows (hard white winter = HWW and soft white winter = SWW):
2015 HWW SWW
Planted area (million acres) 0.474 2.922
Harvested area (million acres) 0.42 2.801
Yield (bushels/acre) 37.9 60.1
Production (million bushels) 15.914 168.306
2014 HWW SWW
Planted area (million acres) 0.385 3.042
Harvested area (million acres) 0.326 2.893
Yield (bushels/acre) 35.4 59.6
Production (million bushels) 11.50 172.49
2015 Spring Wheat Production Estimates by Class Are Unchanged From January
Hard red spring (HRS) wheat production is forecast at 564 million bushels, unchanged from January, and up nearly 9 million bushels from 2014. The production gain is attributable to expanded harvested area, despite a slight year-to-year decline in yields. Forecast planted area, harvested area, yield and year-to-year changes for 2015 are, respectively, 12.5 million acres (up 0.3 million), 12.2 million acres, (up 0.2 million), and 46.2 bushels per acre (down 0.1 bushels).
White spring wheat production is estimated to total 34.9 million bushels, unchanged from January, but down 4.5 million bushels from 2014. The planted and harvested areas, production, and yield for white spring wheat are as follows (hard white spring = HWS and soft white spring = SWS):
2015 HWS SWS
Planted area (million acres) 0.086 0.648
Harvested area (million acres) 0.082 0.636
Yield (bushels/acre) 67.4 46.3
Production (million bushels) 5.53 29.45
2014 HWS SWS
Planted area (million acres) 0.140 0.638
Harvested area (million acres) 0.133 0.615
Yield (bushels/acre) 67.2 49.7
Production (million bushels) 8.943 30.552
Durum wheat production is forecast to total 82 million bushels, unchanged from January, but up 28 million bushels from a year ago. Forecast planted area, harvested area, and yield and year-to-year changes for 2015 are, respectively, 1.94 million acres (up 0.53 million), 1.90 million acres, (up 0.55 million), and 43.5 bushels per acre (up 3.3 bushels). Desert durum production in California and Arizona is forecast at 20.3 million bushels for 2015, nearly double the size of the 2014 crop.
Projected 2015/16 Exports Lowered, Ending Stocks Raised
Exports are lowered from the January forecast and projected at 775 million bushels. Strength in the U.S. dollar and abundant global supplies continue to diminish U.S. competitiveness in export markets. Increased competition from Canada, as evidenced by the brisk pace of Canadian exports, puts further downward pressure on the U.S. share of total wheat trade and supports the 25 million bushel month-to-month export reduction. The current 2015/16 export projection is the lowest in 44 years and is nearly 80 million bushels lower than the 2014/15 estimate.
U.S. imports for the 2015/16 marketing year are unchanged, both in aggregate and by class. Total imports are projected at 120 million bushels and–by class imports for HRW, HRS, SRW, WW, and Durum wheat–are 8 million bushels, 45 million, 20 million, 9 million, and 38 million, respectively.
Ending stocks for 2015/16 are projected at 966 million bushels, up 214 million bushels from 2014/15. Projected 2015/16 stocks are the highest since 2009/10 when carryout was estimated at 976 million bushels. The current all-wheat stocksto- use ratio is 0.49 and compares to 0.37 for the 2014/15 marketing year and the 5- year average of 0.32. The high ratio reflects decreased total use and is driven by relatively low exports and relatively high stocks.
The all-wheat price remains forecast at a range of $4.90 – $5.10 per bushel, the mid-point of which is the lowest since 2009/10 when farm gate prices averaged $4.87 per bushel. Prices for the 2015/16 crop have reduced incentives to plant wheat in the 2016/17 marketing year. This assertion was confirmed by the January USDA-NASS Winter Wheat Seedings report in which winter wheat planted area is estimated at 36.609 million acres, the lowest level since the 2010/11 marketing year when 36.576 million acres were planted.
Season average price and ending stocks forecasts for the 2015/16 marketing year track closely with estimates from 2009/10 and substantiate expectations of out-year reductions in winter wheat seedings.
Ending Stocks Projections for 2015/16 by Class
HRW, HRS, SRW, and Durum ending stocks for 2015/16 are projected up from the January forecast. Projected HRW ending stocks are up 4.5 million to 429 million, an increase of 46 percent relative to the 2014/15 estimate. Projected HRS ending stocks are 278 million bushels, up 10 million bushels from the previous month and up 31 percent from 2014/15, due to larger supplies and lower expected utilization, including lower year-to-year food use and lower exports.
Projected SRW ending stocks are raised 5 million bushels from January and, at 170 million, are up 10 percent from 2014/15. Durum carryout is also raised 5 million bushels this month to 34 million, a 31-percent increase over the year previous. White wheat carryout is raised slightly to 55 million bushels, an 18-percent decline relative to the 2014/15 carryout.
Seed Use Updated for 2014/15
Subsequent to a review of USDA-NASS seed use estimates by class for the 2014/15 marketing year, a revision to white wheat seed use was required. This adjustment reduces aggregate 2014/15 seed use by 1.79 million bushels to 79 million. The feed and residual category absorbs the change and is increased to 122 million bushels for the previous marketing year.
The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.