K-State AgManager.info website
  About     Contributors     Useful links     Site map      Feedback  

Search AgManager.Info:

 

K-State AgManager.info website
Agribusiness
Crops
Energy
Farm Management
Livestock & Meat
Policy
Decision Tools
--------------------
Ag Econ News
Contributors
Programs
Sponsors
Upcoming Events
Presentations Archive
Reposting Policy
--------------------
K-State Dept. of Agricultural Economics
--------------------
Department Theses & Dissertations
--------------------
KFMA
--------------------
SIGN-UP for Weekly Email Updates
--------------------
--------------------
--------------------
PFT
AgManager.info: Grain Outlook
AgManager.info: Crops
   Home / Crops

Marketing

Insurance
 and Risk

Projected
Budgets

Production
Economics

Links to Other
Crop Information

Grain Market Outlook Risk Management Non-Irrigated Crops Production Enterprise Summaries
KSRN Grain Market Interview Price Risk Management Irrigated Crops Precision Ag Policy
Crop Basis Tool & Maps Crop Insurance Price Histories Decision Tools Decision Tools Storage & Handling
Grain Basis Issues Decision Tools     Other Crop Links
Decision Tools Interest Rate Forecasts      
Grain Supply and Demand        

PDF: Current Grain Outlook
 

Focused on Grains Blog, by Dan O'Brien

KSRN Radio Interview

Previous Grain Outlooks

Grain Market Outlook

Wheat Market Outlook in July 2015

July 23, 2015


Summary

Since USDA’s World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on July 10th, U.S. wheat market prices have trended sharply lower due to a) continuing large World wheat supply-demand balances, 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 down moderately from a year ago - with some 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 World percent ending stocks-to-use at their highest level since MY 2009/10. 

There are emerging but as of yet largely unconfirmed concerns about potential problems with 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 wheat markets have evolved into a “large crop-over-supply” situation, with the future depending on whether production and/or export problems can be avoided in major World wheat producing and exporting areas in year 2015 and beyond.  

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 56.079 million acres (ma) planted, 48.454 ma harvested, 44.3 bu/ac yields, 2.148 billion bushels (bb) production (up 27 million bushels or ‘mb’ from June), 3.031 bb total supplies (up 58 mb), 950 mb exports (up 25 mb), 200 mb feed & residual use (up 5 mb), 2.189 bb total use (up 30 mb), 842 mb end stocks (up 28 mb), with 38.5% 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 $4.75-$5.75 /bu. (midpoint =$5.25) – up $0.25 from a month ago but still 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.  KSU projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two scenarios:  A) “Medium Yield-Higher Exports” Scenario: 85% prob. of USDA acreage, yields and production of 2.148 bb production, 3.031 bb total supplies, 1.000 bb exports, 2.214 bb total use, 817 mb ending stocks, 36.9% S/U, and $5.50 /bu U.S. avg. price. B) “Lower Yield-Higher Exports” Scenario: 15% prob. of 56.079 ma planted, 48.454 ma harvested, 42.5 bu/ac yields (lower than the USDA estimate), 2.059 bb production, 2.947 bb total supplies, 1.000 bb exports, 2.204 bb total use, 743 mb ending stocks, 33.72% S/U, and $6.10 /bu U.S. avg. price. If U.S. wheat exports increased by 100 mb, U.S. wheat prices could increase to the $6.15-$6.40 / bushel range.

USDA World Wheat: The expectation of large World wheat supplies and stocks is pressuring World wheat prices.  World wheat total supplies of 934.0 mmt in “new crop” MY 2015/16 are up from 919.4 mmt in “old crop” MY 2014/15, and from 892.2 mmt in MY 2013/14.  Projected World wheat ending stocks in “new crop” MY 2015/16 of 219.8 mmt (30.8% S/U) are up from 212.1 mmt (30.0% S/U) in “old crop” MY 2014/15, and from 193.5 mmt (27.7% S/U) in MY 2013/14.  The current supply-demand situation 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, which led to record high U.S. season average wheat prices of $6.89 /bu in that marketing year.  

I. U.S. Wheat Market Situation & Outlook

I-A. July 10th USDA Reports & “New Crop” MY 2015/16 Projections

On July 10th the USDA released two reports, the July 2015 Crop Production report from the National Agricultural Statistics Service (NASS), and the July 2015 World Agricultural Supply and Demand Estimates (WASDE) report from the World Agricultural Outlook Board (WAOB)

In the July 10th Crop Production report the USDA released projections of the 2015 U.S. wheat crop.  Projections of 2015 crop size for wheat are based on actual farmer surveys and field trials conducted from June 24th to July 7th by USDA NASS – representing crop conditions and production prospects as of July 1, 2015.  The July 10th WASDE report contained U.S. and World wheat supply-demand and price projections for the 2013/14, “old crop” 2014/15, as well as the “new crop” 2015/16 marketing years.  The “old crop” 2014/15 marketing year for U.S. wheat ended on May 31, 2015, while the “new crop” 2015/16 U.S. wheat marketing year began on June 1, 2015, and will last through May 31, 2016. 

I-B. CME KC Hard Red Winter Wheat Futures & U.S. Dollar Index Trends

Since market highs of $7.10 ½ per bushel for the CME SEPTEMBER 2015 Kansas hard red winter wheat futures contract occurred on December 18, 2014, September futures have trended generally lower – down to a low of $4.95 ½ on May 5, 2015.  Then after trading in a range of $5.00 ½ to $5.74 ½ during the May 6th to June 26th period, September 2015 Kansas HRW wheat futures rose to $6.11 ½ on June 30th – the day of the 2015 USDA Acreage and June Quarterly Stocks reports.  

Chicago Mercantile Exchange (CME) SEPT 2015 Kansas HRW Wheat futures prices responded to the release of the July 10th USDA reports by trading lower for the day.  The USDA reports were released at midday (i.e., 11 a.m., central time).  SEPT 2015 HRW wheat futures prices opened at $5.78 on Friday, July 10th - trading as high as $5.86 ½ and as low as $5.66 ¾ per bushel during the session, before closing $0.07 lower for the day at $5.72 ¼ /bu (Figure 1).  Since then, September 2015 wheat futures have fallen to a low of $5.11 on Wednesday, July 22, before closing at $5.12 ¾ per bushel that same day.   

Figure 1. SEPT 2015 & JULY 2016 CME Kansas Wheat Futures Price Charts (electronic trade)

Similarly, CME JULY 2016 Hard Red Winter wheat futures prices opened at $6.23 ½ on Wednesday, July 10th – the day of the release of the USDA reports at midday (i.e., 11 a.m., central time) – and traded in a high-low range of $6.33 down to $6.15 during the session, before closing $0.05 ½ lower for the day at $6.19 ¼ /bu (Figure 1).   Since the July 10th USDA WASDE report, CME JULY 2016 Kansas HRW wheat futures have traded sharply lower – from a high of $6.17 ¼ on Monday, July 13th to a low of $5.60 ¾ on Wednesday, July 22nd, before closing at $5.62 ¾ that same day.     

The Trade Weighted U.S. Dollar Index trended higher from mid-July 2011 through early July 2014 (Figure 2).  After an index value of 75.69 on July 1, 2014, the calculated U.S. trade weighted dollar index trended up to a high of 93.37 on Friday, February 13, 2015 – an increase of 23.4%.  The latest recorded value of the Trade Weighted U.S. Dollar Index was 90.78 on July 10, 2015 – moving sideways-to-lower from the July 2014 highs.

Figure 2. Daily U.S. Trade Weighted Dollar Index (Source: St. Louis Federal Reserve Bank, FRED)

This trend in the value of the U.S. trade weighted dollar index is significant to the U.S. wheat market, because a higher U.S. dollar exchange rate relative to other major currencies generally makes it more expensive for foreign buyers of U.S. wheat to exchange their country’s currencies for U.S. dollars.  After they would have purchased or exchanged their currencies for “high priced” U.S. dollars, they would then in turn use these U.S. dollars to purchase U.S. wheat exports (i.e., which are denominated or “priced” in U.S. dollars). 

Although this is not the only factor negatively impacting U.S. wheat exports, it is a very important one – working against U.S. wheat being an affordable, competitive alternative export seller in World wheat trade.  Since early March the U.S. Trade Weighted Dollar Index has decline moderately – lending support longer term prospects for U.S. wheat trade should this down trend continue.  

I-C. U.S. Wheat Production

U.S. Wheat Planted Acreage

The USDA’s projections of 2015 U.S. wheat planted acres from the June 30th Acreage report were used without adjustment in the July 10th USDA Crop Production and WASDE reports.  In the June 30, 2015 USDA Acreage report the USDA projected that 2015 U.S. wheat total planted acreage would be 56.079 million acres (ma), down 743,000 acres (-1.3%) from 56.822 ma in 2014, and down 157,000 acres (-0.2%) from 56.236 ma in 2013 (Table 1 and Figures 3 and 4).  

The USDA lowered its forecast of 2015 U.S. winter wheat plantings to 40.620 ma – down 131,000 acres from the USDA March 31st Prospective Plantings report estimate.  This 2015 projection of 40.620 ma is down 1.779 ma (-4.2%) from 42.399 ma in 2014, and down 2.610 ma (-6.0%) from 43.230 ma in 2013.  Of this total, 29.57 ma were projected to be seeded to Hard Red Winter (HRW) wheat in 2015, down approximately 4% from 30.47 ma in 2014, and down marginally from 29.67 ma in 2013.  Soft Red Winter (SRW) wheat planted acreage was projected to be 7.61 ma, down 10.5% from 8.50 ma in 2014, and down 22.8% from 10.04 ma in 2013.  In 2015, USDA projects there to be 4.30 ma of all white wheat planted, with 3.433 ma of white winter (WW) wheat, and approximately 867,000 acres of spring white (SW) wheat. All acreage planted of U.S. white wheat in 2015 of 4.30 ma is up marginally from 4.21 ma in 2014.   

The USDA projected that total U.S. other spring wheat plantings in 2015 would be 13.505 ma, up 480,000 acres (+3.7%) from 13.025 ma in 2014, but up 1.363 ma (+11.7%) from 11.606 ma in 2013.  Of this total, 12.6 ma are Hard Red Spring (HRS) wheat, up from 12.25 ma in 2014, but up from 10.94 ma in 2013.

 Durum wheat plantings in the U.S. in 2015 was projected by the USDA to be 1.954 ma in 2015, up 556,000 acres (+39.8%) from 1.398 ma in 2014, and up 554,000 acres (+39.6%) from 1.400 ma in 2013.

U.S. Wheat Harvested Acreage

The USDA’s projections of 2015 U.S. wheat harvested acres from the June 30th Acreage report were also used without adjustment in the July 10th USDA Crop Production and WASDE reports.  In the June 30, 2015 USDA Acreage report the USDA projected that 2015 U.S. wheat total harvested acreage would be 48.454 million acres (ma), up 2.073 ma (+4.5%) from 46.381 ma in 2014, and up 3.122 ma (+6.9%) from 45.332 ma in 2013 (Table 1 and Figures 3 and 4).  

Aggregated total U.S. percent harvested-to-planted acreage in the U.S. was estimated to be 86.4% in 2015, up from 81.6% in 2014, 80.6% in 2013, and comparable to the range of 76.0%-89.1% (average = 84.1%, median = 84.4%) over the 2000-2014 period (Table 1 and Figure 4).  The proportion of harvested-to-planted U.S. wheat acreage in 2013 of 80.6% was the lowest since 81.6% in 2006 and 76.0% in 2002.

The USDA forecast 2015 U.S. winter wheat harvested acreage at 33.329 ma – up 1.025 ma (+3.2%) from 30.304 ma in 2014, and up 0.679 ma (+2.1%) from 32.650 ma in 2013.  Of this total, 23.61 ma were projected to be Hard Red Winter (HRW) wheat in 2015, up 7.7% from 21.92 ma in 2014, and up from 20.39 ma in 2013.  Soft Red Winter (SRW) wheat harvested acreage was projected to be 6.44 ma, down 10.1% from 7.16 ma in 2014, and down 27.8% from 8.92 ma in 2013.  In 2015, USDA projects there to be 3.222 ma of all white wheat harvested, with 3.277 ma of white winter (WW) wheat, and approximately 834,000 acres of spring white (SW) wheat. All acreage harvested of U.S. white wheat in 2015 of 4.11 ma is up marginally from 3.97 ma in 2014.  

The USDA projected that total U.S. other spring wheat harvested area in 2015 would be 13.217 ma, up 477,000 acres (+3.7%) from 12.740 ma in 2014, but up 1.873 ma (+16.5%) from 11.344 ma in 2013.  Of this total, 12.38 ma are Hard Red Spring (HRS) wheat, up from 11.99 ma in 2014, and from 10.70 ma in 2013.

 Durum wheat harvested area in the U.S. in 2015 was projected by the USDA to be 1.908 ma in 2015, up 571,000 acres (+42.7%) from 1.337 ma in 2014, and up 570,000 acres (+42.6%) from 1.338 ma in 2013.

U.S. Wheat Yields & Production

The USDA projected that 2015 U.S. average wheat yields would be 44.3 bushels per acre (bu/ac) – up from 44.2 bu/ac in June and from 43.5 bu/ac in May.  This increase in projected 2015 U.S. wheat yields reflected improved Hard Red Winter wheat prospects in the U.S. Central and Southern Plains due to recent rains and cool weather (in spite of accompanying lodging and disease problems).  This projection of 2015 U.S. wheat yields of 44.3 bu/ac is up from 43.7 bu/ac in 2014, and is comparable to the record high of 47.1 bu/ac in 2013, the previous record of 46.2 bu/ac in 2012, 43.6 bu/ac in 2011, and 46.1 bu/ac in 2010 (Table 1 and Figure 5). 

Based on this combination of projections for 2015 planted acreage (56.079 ma), harvested acreage (48.454 ma), and yield (44.3 bu/ac), 2015 U.S. wheat production would be 2.148 billion bushels (bb).  This projection of 2015 U.S. wheat production of 2.148 bb is up 27 mb from the June WASDE report, and up 61 mb from May.  Production of U.S. wheat of 2.148 bb in 2015 is up from 2.026 bb in 2014, and 2.135 bb in 2013, and within the 2004-2014 range of 1.808-2.512 bb (average = 2.128 bb, median = 2.135 bb) (Table 1 and Figure 6).  

By class, 2015 U.S. Hard Red Winter (HRW) wheat production is forecast at 866 mb, up 17.3% from 738 mb in 2014.  United States’ 2015 Hard Red Spring (HRS) wheat production is forecast at 573 mb, up 3.1% from 556 mb in 2014.  Soft Red Winter (HRS) wheat production in 2015 is forecast at 393 mb, down 13.6% from 455 mb in 2014.  Recently concerns about quality characteristics of the U.S. 2015 SRW wheat crop have emerged, following from extremely wet late season conditions in the eastern U.S. Corn Belt. United States’ 2015 White wheat (WW) production is forecast at 239 mb, up 6.7% from 224 mb in 2014.  Even with this USDA forecast for higher 2015 production, extremely dry conditions have impacted U.S. white wheat 2015 production prospects in the Pacific Northwest.  Durum wheat production in 2015 in the U.S. is forecast at 76 mb, up 43.4% from 53 mb in 2014. 

I-D. U.S. Wheat Total Supplies

Total supplies of U.S. wheat of 3.031 bb are projected by the USDA for “new crop” MY 2015/16 (up 58 mb from June, and up 94 mb from May), resulting from beginning stocks of 753 mb, projected 2015 production of 2.148 bb, and projected imports of 130 mb (Table 1 and Figure 6).   Over the last ten (10) marketing years, U.S. wheat total supplies have been 2.501 bb in MY 2006/07, 2.620 bb in MY 2007/08, 2.945 bb in MY 2008/09, 2.984 bb in MY 2009/10, 3.236 bb in MY 2010/11, 2.968 bb in MY 2011/12, 3.118 bb in MY 2012/13, 3.021 bb in MY 2013/14, 2.764 bb in MY 2014/15, and now are projected to be 2.973 bb in “new crop” MY 2015/16.

Forecast U.S. wheat beginning stocks of 753 mb in “new crop” MY 2015/16 are up 41 mb from June, and are up 26.7% from 590 mb in beginning stocks in MY 2014/15, and up 4.9% from 718 mb in MY 2013/14.  This projection of 753 mb in beginning stocks in “new crop” MY 2015/16 is more than double the long term historic low of 306 mb in MY 2008/09 – which resulted from the historically tight U.S. wheat ending stocks situation that occurred in MY 2007/08. 

Projected U.S. wheat imports of 130 mb for “new crop” MY 2015/16 (down 10 mb from June) would be the third highest amount on record, less than 144 mb in “old crop” MY 2014/15 (down 4 mb from June), and the record high of 169 mb in MY 2013/14.  Since MY 1973/74 and prior to MY 2013/14, the next highest amounts of U.S. wheat imports have been: 1) 127 mb in MY 2008/09; 2) 123 mb in MY 2012/13; 3) 122 mb in MY 2006/07; and 4) 119 mb in MY 2009/10. 

Nearly all of U.S. wheat imports come from Canada because of favorable geographic location and associated grain transportation logistics.  Large Canadian wheat supplies over the last several years have been a major factor in this increase in U.S. wheat imports.  Canada produced a record large wheat crop of 37.5 million metric tons (mmt) (or 1.378 bb in 60 lb/bu units) in MY 2013/14, followed by a crop of 29.3 mmt (1.077 bb) in MY 2014/15, with a projection of 27.5 mmt (1.010 bb) in “new crop” MY 2015/16.  The next largest Canadian wheat crops since 1960 that were over 30.0 mmt were in 1990 (32.1 mmt), 1991 (32.0 mmt), and 1986 (31.4 mmt).       

I-E. U.S. Wheat Total Use & Use by Category

Food Use: Projected U.S. wheat food use of 967 mb in “new crop” MY 2015/16 has been trending consistently higher over time due to a) steady growth in the U.S. population, and b) associated increases in demand for processed wheat products.  This projected amount of 967 mb in food use in “new crop” MY 2015/16 continues the steady upward trend following from 960 mb in MY 2014/15, 955 mb in MY 2013/14, and from 951 mb in MY 2012/13 (Table 1 and Figure 7). 

Seed Use: Forecast seed use of 72 mb in “new crop” MY 2015/16 is down from 81 mb in MY 2014/15 (up 4 mb from the June WASDE report), and compares to 77 mb in MY 2013/14, and 73 mb in MY 2012/13 (Table 1 and Figure 7).  The USDA’s forecast U.S. wheat seed use extends the historic pattern of there being a relatively small but inelastic demand for U.S. wheat seed, driven primarily by a) the amount of U.S. wheat seed needed to plant adequate U.S. wheat acreage each year (from both commercial and on-farm seed sources), b) the need for adequate wheat seed stocks to cover possible U.S. seed wheat production shortfalls from year to year, and c) whatever marginal increases or decreases in seed use are needed to accommodate changing U.S. wheat seeded acreage on a year-to-year basis. 

Exports: Projected U.S. wheat exports of 950 mb in “new crop” MY 2015/16 (up 25 mb from the June WASDE report) are up from 855 mb in MY 2014/15 – the lowest amount since 879 mb in MY 2010/11 (Table 1 and Figure 7).  Over the last ten (10) marketing years, the U.S. has exported 908 mb of wheat in MY 2006/07, 1.263 bb in MY 2007/08, 1.015 bb in MY 2008/09, 879 mb in MY 2009/10, 1.291 bb in MY 2010/11, 1.051 bb in MY 2011/12, 1.012 bb in MY 2012/13, 1.176 bb in MY 2013/14, and 855 mb in “old crop” MY 2014/15, with a projection of 950 mb in “new crop” MY 2015/16.

Some of the factors that have caused lower U.S. wheat exports in MY 2014/15 are a) the sharp increase in the value of the U.S. dollar relative to other World currencies, and b) prospects for at least adequate competitive foreign wheat supplies for export trade purposes.  That said, the uncertain impact on World wheat trade in the future from ongoing geopolitical conflicts (between Russian and Ukraine), and the potential for dry or adverse weather conditions in other major World wheat production areas due to the likelihood of an “El Nino” weather pattern in the coming year are both factors that may eventually support increased U.S. wheat exports and at least somewhat higher World wheat prices in the “new crop” 2015/16 marketing year.  

Cumulative U.S. wheat export shipments through July 9th – the 6th week of the “new crop” 2015/16 marketing year for U.S. wheat – totaled 61.8 mb, which is 6.5% of the USDA’s projected MY 2015/16 exports of 950 mb, with 11.5% (6 of 52 weeks) of the marketing year completed.  The 2015/16 marketing year began on June 1, 2015 and will last through May 31, 2016.  United States’ wheat export shipments will need to average 19.3 mb per week through the remainder of the “new crop” 2015/16 marketing year to attain the USDA’s July 10th WASDE projection of 950 mb.  Wheat export shipments by the U.S. of 10.5 mb during the week ending July 9th were “behind pace” to meet the USDA forecast of 950 mb in the “new crop” 2015/16 marketing year.  (Source: USDA Foreign Agricultural Service U.S. Weekly Export Sales report - http://apps.fas.usda.gov/export-sales/esrd1.html).

In addition, when accounting for unshipped forward sales of exports of 176.4 mb in U.S. wheat for “new crop” MY 2015/16 (i.e., that had not yet been shipped as of July 9th), total U.S. wheat shipped plus outstanding shipments added up to 238.2 mb (i.e., 61.8 mb shipped plus 176.4 mb forward sales).  This amounts to 25.1% of the USDA’s projection of 950 mb for “new crop” MY 2015/16 with 11.5% of the marketing year having already occurred (i.e., 6 of 52 weeks). 

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 200 mb in “new crop” MY 2015/16 (up 5 mb from June and up 20 mb from May).  This projection of 200 of U.S. wheat fed in “new crop” MY 2015/16 is up from 111 mb for “old crop” MY 2014/15 (down 49 mb from the June WASDE), but still down from 223 mb in MY 2013/14, and down from the recent high of 364 mb in MY 2012/13 (Table 1 and Figure 7). 

Domestic U.S. wheat feeding has trended lower in “old crop” MY 2014/15 due to sizable 2013 and 2014 U.S. corn and grain sorghum crops – which has led to more abundant and competitive U.S. feedgrain supplies for domestic livestock feeding at lower market prices than during “drought stricken” MY 2012/13.  Subsequently, over the last two U.S. wheat marketing years, there has been and continues to be lower cross-market demand for U.S. wheat in U.S. livestock feed rations – causing U.S. wheat usage to be approximately 75 to 150 mb less than it would have been if the short feedgrain supply situation of the MY 2012/13 and MY 2013/14 had continued.  Lower wheat prices in “new crop” MY 2015/16 are projected by the USDA which may help to spur a modest recovery in U.S. wheat feeding as is projected by the USDA in the July 10th WASDE report – even with projections of large competitive feed supplies of low cost U.S. corn and grain sorghum anticipated to be available.

Total U.S. Wheat UseTotal use of U.S. wheat for “new crop” MY 2015/16 is projected to be 2.189 bb (u 30 mb from June, and up 45 mb from May), which would be the 5th smallest amount of U.S. wheat total usage in the last 12 marketing years, i.e., since MY 2004/05 (Figure 7). 

United States’ wheat total use has varied from 2.234 bb in MY 2004/05, 2.154 bb in MY 2005/06, 2.045 bb in MY 2006/07, 2.314 bb in MY 2007/08, 2.288 bb in MY 2008/09, 2.008 bb in MY 2009/10, 2.373 bb in MY 2010/11, 2.226 bb in MY 2011/12, 2.400 bb in MY 2012/13, 2.431 bb in MY 2013/14 (the largest amount during the most recent 11 year period), 2.007 bb in MY 2014/15 (down 45 mb from June, and down 50 mb from May), and finally to 2.189 bb in “new crop” MY 2015/16. 

Total usage of U.S. wheat in MY 2012/13 and MY 2013/14 were boosted by higher than usual livestock feeding of wheat in the U.S. and World in reaction to extremely tight U.S. corn and grain sorghum supplies in 2012-2013 – which in turn led to substitutionary demand for U.S. wheat in domestic livestock feed rations and support for U.S. wheat prices.

I-F. U.S. Wheat Ending Stocks, % Stocks-to-Use & Prices

United States’ wheat ending stocks for the “new crop” 2015/16 marketing year are projected to be 842 mb (up 25 mb from June and up 46 mb from May) (Table 1 and Figure 7).  This amount of U.S. wheat ending stocks is markedly larger than 306 mb in MY 2007/08 – the historic “tight stocks” marketing year in recent years.  Over the last ten (10) marketing years, U.S. wheat ending stocks have been 456 mb in MY 2006/07, a record low 306 mb in MY 2007/08, 657 mb in MY 2008/09, 976 mb in MY 2009/10, 863 in MY 2010/11, 743 mb in MY 2011/12, 718 mb in MY 2012/13, 590 mb in MY 2013/14, an estimated 753 mb in “old crop” MY 2014/15 (up 41 mb from June, and up 44 mb from May), and now a projected amount of 842 mb in “new crop” MY 2015/16 – the largest amount of ending stocks since 976 mb in MY 2009/10 and 863 mb in MY 2010/11.

Percent (%) ending stocks-to-use for U.S. wheat of 38.5% in “new crop” MY 2015/16 are projected to be at the highest level since MY 2009/10 – up from 37.7% in the June WASDE report (Table 1 and Figures 7 and 8).  Since percent ending stocks-to-use of 22.3% in MY 2006/07 and the historic 67 year low of 13.2% in MY 2007/08, U.S. wheat ending stocks-to-use has varied widely, being 28.7% in MY 2008/09, 48.6% in MY 2009/10, 36.4% in MY 2010/11, 33.4% in MY 2011/12, 29.9% in MY 2012/13, 24.3% in MY 2013/14, 37.5% in “old crop” MY 2014/15 (up from 34.7% in June), to now a projected level of 38.5% in “new crop” MY 2015/16 – the largest U.S. wheat percent ending stocks-to-use figure since 48.6% in MY 2009/10.   

U.S. average wheat prices for “new crop” MY 2015/16 are projected to be in the range of $4.75-$5.75 per bushel (“/bu”) (midpoint = $5.25 /bu) (Table 1 and Figures 7 and 8).  The July 10th WASDE projection is up $0.35 per bushel on each end of the price range from the June WASDE report (i.e., which had been $4.40-$5.40, midpoint = $4.90).   Starting in MY 2006/07 with at that time the record U.S. wheat price of $4.28, U.S. wheat prices rose to $6.48 per bushel in MY 2007/08, and $6.78 in MY 2008/09, before moving to $4.87 in MY 2009/10, $5.70 in MY 2010/11, $7.24 in MY 2011/12, the record high of $7.77 in MY 2012/13, $6.87 in MY 2013/14, $5.99 in “old crop” MY 2014/15 (down $0.01 /bu from June), and now to the forecast range of $4.75-$5.75 /bu (midpoint = $5.25 /bu) in “new crop” MY 2015/16 – still the lowest level since $4.87 in MY 2009/10.     

I-D. KSU Wheat Market Scenarios for “New Crop” MY 2015/16

Kansas State University Extension forecasts by this author of U.S. wheat supply-demand balances and prices for the “new crop” 2015/16 marketing year are provided below.   The direction of U.S. and World wheat markets for the June 2015 through May 2016 period, i.e., “new crop” MY 2015/16, will depend primarily on how total World wheat supplies balance with total demand, as well as on volatile financial and currency markets.  From the perspective of the United States, the opportunity for sharp improvements in U.S. wheat export demand for “new crop” MY 2015/16 appear to be limited at this time given the high value of the U.S. dollar and its negative impact on U.S. wheat export sales as the U.S. competes with other major wheat exporting countries. 

However, it is still possible that a) significant wheat production shortfalls could occur in 2015-2016 wheat production due to El Nino-related weather anomalies among major wheat exporters, b) the geopolitical conflict that is occurring in the Black Sea Region between major World wheat exporters Russia and Ukraine could significantly disrupt the flow of wheat export shipments from that region, or c) that geopolitical conflicts in the Middle East could escalate to the point of causing volatility in World financial, energy and grain markets.

In making a projection of U.S. wheat supply-demand and prices for “new crop” MY 2015/16, the primary focus here will be on uncertainty associated with 2015 U.S. production, total supplies, and exports, and how potential variation in these factors may impact U.S. wheat total usage, ending stocks, ending stocks-to-use, and ultimately U.S. wheat marketing year average cash prices. 

In the KSU forecasts that follow, total U.S. wheat planted acreage in 2015 of 56.079 ma and U.S. wheat harvested acreage of 48.454 ma are assumed as was projected in the June 30th USDA Acreage report and used without adjustment in the July 10th USDA WASDE report.  Two potential 2015 U.S. wheat yield scenarios are considered.  The 2015 U.S. wheat yield in the first scenario of 44.3 bu/ac – equal to the USDA’s projection of 44.3 bu/ac in their July 10th USDA Crop Production and WASDE reports.  A second, lower U.S. wheat yield scenario of 42.5 bu/ac. reflects the possibility of lower 2015 U.S. winter and spring wheat final yields than is currently projected by the USDA.  It is noteworthy that each of these projections is less than the long term (1973-2014) trend line yield projection for 2015 of 45.9 bushels per acre.   

These Kansas State University projections of “new crop” 2015/16 supply-demand balances and prices are shown in Table 1, with the following scenarios represented:

A. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Medium Yield = 43.9 bu/ac

Projections by Kansas State University of U.S. wheat supply-demand and price projections for “new crop” MY 2015/16 reflect moderately higher U.S. wheat exports, and in on case, lower U.S. wheat yields and production than are projected by the USDA in the July 10th USDA Crop Production and WASDE reports. Projections of 2015 probability-weighted U.S. wheat yields are found in Table 1 and Figure 5.  Projected total supplies, total usage, and ending stocks of U.S. wheat in “new crop” MY 2015/16 are shown in Table 1.  Probability-weighted KSU forecasts of U.S. wheat average prices for “new crop” MY 2015/16 are based on projections of U.S. wheat % ending stocks-to-use, and are shown in Table 1 and Figures 8 and 9.  

It is estimated here in this first KSU forecast that there is a “8.5 out of 10” or 85% chance that for “new crop” MY 2015/16 final 2015 U.S. wheat production will be 2.148 bb – equal to the July 10th USDA forecast (Table 1).  However, this KSU estimate projects a “moderate” recovery in U.S. wheat exports in “new crop” MY 2015/16, up to 1.000 bb, i.e., 50 mb (+5.3%) higher than the USDA’s July 10th WASDE forecast of 950 mb for “new crop” MY 2015/16.  Factoring in a 175 mb projection of U.S. wheat feeding (down 25 mb from the USDA’s forecast), total use of U.S. wheat in “new crop” MY 2015/16 is projected to be 2.214 bb, up 25 mb (+1.1%) from 2.189 bb projected by the USDA in “new crop” MY 2015/16 in the July 10th WASDE report.  

With these KSU projections, U.S. wheat ending stocks would equal 817 mb, with % ending stocks-to-use estimated being 36.90% for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9).  Based on historic stocks-to-use vs price relationships, U.S. wheat average prices are projected to be $5.50 per bushel for “new crop” MY 2015/16 – up $0.25 /bu from the USDA midpoint projection of $5.25 for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9). 

The key factor in this projection is the assumption of a moderate recovery in U.S. wheat exports to a level approximating recent year’s levels, i.e., 1.000 bb rather than the USDA’s July 10, 2015 WASDE report forecast of 950 mb for “new crop” MY 2015/16. 

If U.S. wheat exports in “next crop” MY 2015/16 are 1.100 bb in this scenario (i.e., 100 mb higher than the 1.000 bb projection for “KSU Scenario A”), then – all else being equal – total use would be 2.314 bb with ending stocks of 720 mb, percent ending stocks to use would be 31.11%, and marketing year average prices would be projected to be near $6.15 /bu.  

 “New crop” MY 2015/16 KSU Scenario for U.S. Wheat S-D @ 44.3 bu/a – 85% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 56.079 ma                ò  1.3% (‒743,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 48.454 ma                ñ  4.5% (+2.073 ma) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 44.3 bu/ac                ñ  0.6 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.148 bb                 ñ  6.0% (+122 mb) vs 2014

- Total Supplies (bb)                           =   3.031 bb                 ñ  9.8% (+271 mb) vs MY 2014/15

- Exports                                              =   1.000 bb                 ñ17.0% (+145 mb) vs MY 2014/15

- Total Use                                          =   2.214 bb                 ñ10.3% (+207 mb) vs MY 2014/15

- Ending Stocks                                    =   0.817 bb                 ñ  8.5% (+64 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 36.90%                     vs 37.52% S/U in MY 2014/15

- U.S. Wheat Price                             = $5.50 /bu                 vs $5.99 /bu in MY 2014/15

B. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Low Yield = 42.5 bu/ac & Higher Exports

It is estimated here in this second KSU forecast that there is a “1.5 out of 10” or 15% chance for “new crop” MY 2015/16 that some combination of yet lower U.S. wheat yields and higher U.S. wheat exports could occur.  With the same acreages as in Scenario A, but lower yields of 42.5 /bu, final 2015 U.S. wheat production would be 2.059 bb – up 33 mb from 2.026 bb in 2014 (Table 1). 

Even with U.S. wheat production problems, his KSU scenario projects a recovery in U.S. wheat exports in “new crop” MY 2015/16 up to 1.000 bb, i.e., up 145 mb (+17.0%) from the USDA’s July 10th WASDE forecast of 855 mb for MY 2014/15.  Total use of U.S. wheat in “new crop” MY 2015/16 is projected in this scenario to be 2.204 bb, up 197 mb (+9.8%) from 2.007 bb estimated by the USDA in MY 2014/15.  

“New crop” MY 2015/16 KSU Scenario for U.S. Wheat S-D @ 42.5 bu/a – 15% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 56.079 ma                ò  1.3% (‒743,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 48.454 ma                ñ  4.5% (+2.073 ma) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 42.5 bu/ac                ò  1.2 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.059 bb                 ñ  1.6% (+33 mb) vs 2014

- Total Supplies (bb)                           =   2.947 bb                 ñ  6.8% (+187 mb) vs MY 2014/15

- Exports                                              =   1.000 bb                 ñ17.0% (+145 mb) vs MY 2014/15

- Total Use                                          =   2.204 bb                 ñ  9.8% (+197 mb) vs MY 2014/15

- Ending Stocks                                    =   0.743 bb                 ò  1.3% (-10 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 33.72%                     vs 37.52% S/U in MY 2014/15

- U.S. Wheat Price                             = $6.10 /bu                 vs $5.99 /bu in MY 2014/15

With these KSU projections, U.S. wheat ending stocks would equal 743 mb, with % ending stocks-to-use estimated to be 33.72% for “new crop” MY 2015/16 (Table 1 and Figure 8).  Based on historic stocks-to-use vs price relationships, U.S. wheat average prices would be projected to rise $0.11 to $6.10 per bushel for “new crop” MY 2015/16 (Table 1 and Figure 8).  The projected price of $6.10 /bu in this KSU scenario is up $0.85 /bu from the USDA’s July 10th projection of $5.25 /bu in “new crop” MY 2015/16. 

If U.S. wheat exports in “next crop” MY 2015/16 are 1.100 bb in this scenario (i.e., 100 mb higher than the 1.000 bb projection for “KSU Scenario A”), then – all else being equal – total use would be 2.304 bb with ending stocks of 643 mb, percent ending stocks to use would be 27.91%, and marketing year average prices would be projected to be near $6.40 /bu.  

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “new crop” MY 2015/16 will be down 0.5% from the “old crop” 2014/15 marketing year that ended on May 31, 2015, and up 1.0% from two years ago in MY 2013/14 (Figure 10).  World wheat total supplies in “new crop” MY 2015/16 are forecast to be 934.0 mmt, up 14.6 mmt (up 1.6%) from 919.4 mmt in “old crop” MY 2014/15, and up 41.8 mmt (up 4.7%) from 892.2 mmt in MY 2013/14.  Given these changes, World wheat total use in “new crop” MY 2015/16 is projected to increase 1.0% from “old crop” MY 2014/15, and to be up 2.2% from MY 2013/14.  World wheat ending stocks in “new crop” MY 2015/16 are projected to increase by 3.7% from a year earlier in “old crop” MY 2014/15, and by 3.6% from two years ago in MY 2013/14.  

Wheat producing areas of the World from which periodic annual variations in wheat production historically have had a notable impact on wheat markets (i.e., which have caused significant market volatility) in the last several years include a) Russia, Ukraine and Kazakhstan in the Black Sea Region, b) Australia, c) the United States, d) Canada, e) wheat production regions in the European Union, f) Argentina, g) India, and h) China.  Whether World wheat markets improve from current levels or not in the near or longer term will likely depend on whether production and/or export problems can be avoided in these major wheat producing and exporting areas in year 2015 and beyond, and the degree to which World wheat farmers reduce their acreage and production in response to low prices and reduced profitability in “new crop” MY 2015/16.    

II-A. World Wheat Production by Country / Region

Projected World wheat production of 722.0 mmt in “new crop” MY 2015/16 would be the second largest crop on record, being down 0.5% from the record high of 725.9 mmt for “old crop” MY 2014/15.  This total for “new crop” MY 2015/16 of 722.0 mmt is also up 1.0% from 715.1 mmt in MY 2013/14, is larger than the “short” 658.7 mmt World wheat crop in MY 2012/13, and above the range of 612.7-696.1 mmt during the previous MY 2007/09-MY 2011/12 period (Table 2 and Figure 10).  Foreign (non-U.S.) wheat production is projected to be 663.5 mmt in “new crop” MY 2015/16, down from 670.8 mmt in “old crop” MY 2014/15, but up from 657.1 mmt in MY 2013/14. 

Table 2 provides a projected list of the major wheat producing countries or regions in the World in “new crop” MY 2015/16, the “old crop” 2014/15 marketing year, and MY 2013/14, along with any changes that have occurred in their wheat production forecasts in the July 10th 2015 WASDE report.  Year-over-year increases in wheat production are projected in the United States (up 3.3 to 58.5 mmt), Australia (up 2.3 to 26.0 mmt), Brazil (up 0.5 to 6.5 mmt), China (up 3.8 to 130.0 mmt), selected Middle Eastern Countries (up 0.5 to 17.9 mmt), North Africa (up 2.5 to 19.4 mmt), and Kazakhstan (up 0.5 to 13.5 mmt).   Year-over-year declines in “new crop” MY 2015/16 production are projected for Argentina (down 1.0 to 11.5 mmt), Canada (down 1.8 to 27.5 mmt), the European Union (down 8.6 to 147.9 mmt), Pakistan (down 0.5 to 25.0 mmt), India (down 5.85 to 90.0 mmt), Russia (down 2.1 to 57.0 mmt), and Ukraine (down 0.75 to 24.0 mmt).    

In “new crop” MY 2015/16, the European Union is projected to be the largest World producer of wheat at 147.9 mmt, followed by China (130.0 mmt), India (90.0 mmt), Russia (57.0 mmt), the United States (58.5 mmt), Canada (27.5 mmt), Australia (26.0 mmt), Pakistan (25.0 mmt), Ukraine (24.0 mmt), North Africa (19.4 mmt), Selected Middle Eastern Countries (17.9 mmt), Kazakhstan (13.5 mt), Argentina (11.5 mmt), and Brazil (6.5 mmt).

II-B. World Wheat Exports by Country / Region

Global wheat exports in “new crop” MY 2015/16 are projected to be a 158.1 mmt, down 3.6% from 163.9 mmt in “old crop” MY 2014/15, and also down 4.7% from 165.9 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 132.3 mmt in “new crop” MY 2015/16, down 5.9% from 140.7 mmt in MY 2014/15, and down 1.2% from 133.9 mmt in MY 2013/14. 

Table 3 provides a projected list of the major wheat exporting countries or regions in the World in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15 and MY 2013/14.  Year-over-year increases in wheat exports in “new crop” MY 2015/16 are projected for the United States (up 2.6 mmt), Argentina (up 1.7 mmt), Australia (up 1.5 mmt), China (up 0.15 mmt), and Ukraine (up 1.0 mmt).  However, decreased exports are projected for Canada (down 4.2 mmt), the European Union (down 3.7 mmt), Brazil (down 0.8 mmt), Selected Middle Eastern countries (down 0.7 mmt), Pakistan (down 0.1 mmt), India (down 3.1 mmt), and Russia (down 0.2 mmt).  No change is projected for North Africa, Southeast Asia, and Kazakhstan

The largest projected exporter of wheat in “new crop” MY 2015/16 is the European Union (31.0 mmt), followed by the United States (25.9 mmt), Russia (22.0 mmt), Canada (19.5 mmt), Australia (18.5 mmt), Ukraine (12.5 mmt), Argentina (6.7 mmt), Kazakhstan (6.0 mmt), Brazil (1.0), China (1.0 mmt), Southeast Asia (0.9 mmt), Selected Middle Eastern countries (0.8 mmt), Pakistan (0.6 mmt), North Africa (0.55 mmt), and India (0.3 mmt).

II-C. World Wheat Imports by Country / Region

Global wheat imports in “new crop” MY 2015/16 are projected to be 155.3 mmt, down 3.1% from 160.2 mmt in “old crop” MY 2014/15, and down 1.9% from 158.2 mmt in MY 2013/14 (Table 4).   Foreign (non-U.S.) wheat imports are projected to be 151.7 mmt in “new crop” MY 2015/16, down 2.9% from 156.3 mmt in “old crop” MY 2014/15, and down 1.2% from 153.65 mmt in MY 2013/14. 

Table 4 provides a projected list of the major wheat importing countries or regions in the World in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15, and MY 2013/14.  While increased wheat imports are projected for the European Union (up 0.5 mmt), Brazil (up 0.2 mmt), China (up 0.3 mmt), and India (up 0.95 mmt) for “new crop” MY 2015/16, decreased imports are projected for the United States (down 0.4 mmt), Selected Middle Eastern countries (down 1.5 mmt), North Africa (down 1.15 mmt), China (down 1.5 mmt), Pakistan (down 0.65 mmt), Southeast Asia (down 0.8 mmt), and Kazakhstan (down 0.6 mmt).  Only marginal or no year-over-year changes in wheat imports in “new crop” MY 2015/16 are projected for Argentina (down 0.01 mmt), Australia, Canada (down 0.02 mmt), Russia, and Ukraine.     

North Africa (24.6 mmt) is projected to be the largest World wheat importer in “new crop” MY 2015/16, followed by Selected Middle Eastern countries (20.25 mmt), Southeast Asia (18.8 mmt), the Former Soviet Union (12 countries less Russia, Kazakhstan, and Ukraine) (6.5 mmt), Brazil (6.5 mmt), the European Union (6.5 mmt), the United States (3.5 mmt), China (2.0 mmt), India (0.5 mmt), Canada (0.5 mmt), Russia (0.35 mmt), Australia (0.15 mmt), Pakistan (0.1 mmt), Ukraine (0.05 mmt), Kazakhstan (0.03 mmt), and Argentina (0.03 mmt).    

II-D. World Wheat Domestic Feed Use by Country / Region

Global wheat domestic feed use in “new crop” MY 2015/16 is projected to be 133.2 mmt, down 0.6% from 134.1 mmt in “old crop” MY 2014/15, and up 4.7% from 127.2 mmt in MY 2013/14 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 127.8 mmt in “new crop” MY 2015/16, down 2.5% from 131.0 mmt in “old crop” MY 2014/15, and up 5.4% from 121.2 mmt in MY 2013/14. 

Table 5 provides a projected list of the major countries or regions in the World terms of wheat domestic feed use in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat feed use in “new crop” MY 2015/16 are projected for the United States (up 2.4 mmt), Australia (up 0.1 mmt), the European Union (up 0.5 mmt), Brazil (up 0.3 mmt), selected Middle Eastern countries (up 0.1 mmt), North Africa (up 0.4 mmt), and India (up 0.3 mmt).   Declines in domestic wheat feeding are forecast for Argentina (down 0.2 mmt), Canada (down 2.2 mmt), China (down 2.0 mmt), and Southeast Asia (down 0.3 mmt).  No changes are projected for Pakistan, Russia, Kazakhstan, and Ukraine.

The European Union (55.0 mmt) is projected to be the largest World user of wheat for domestic feeding in “new crop” MY 2015/16, followed by China (15.0 mmt), Russia (13.0 mmt), the United States (5.4 mmt), India (4.8 mmt), selected Middle East countries (4.65 mmt), Ukraine (4.0 mmt), Australia (3.9 mmt), Canada (3.8 mmt), Southeast Asia (3.8 mmt), North Africa (2.9 mmt), Kazakhstan (2.0 mmt), Pakistan (1.0 mmt), Brazil (0.6 mmt), and Argentina (0.1 mmt). 

II-E. World Wheat Food, Seed & Industrial (FSI) Use by Country / Region

Global wheat food, seed and industrial (FSI) use in “new crop” MY 2015/16 is projected to be 581.0 mmt, up 1.3% from 573.3 mmt in “old crop” MY 2014/15, and up 1.7% from 571.5 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) wheat FSI use is projected to be 552.7 mmt in “new crop” MY 2015/16, up 1.4% from 545.0 mmt in “old crop” MY 2014/15, and up 1.7% from 543.4 mmt in MY 2013/14. 

Table 6 provides a projected list of the major countries or regions in the World in terms of wheat FSI use in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat FSI use in “new crop” MY 2015/16 are projected for the European Union (up 0.4 mmt), Brazil (up 0.1 mmt), China (up 0.5 mmt), selected Middle Eastern countries (up 0.8 mmt), North Africa (up 0.9 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.3 mmt), India (up 2.6 mmt), Russia (up 0.5 mmt), the Former Soviet Union Countries (less Russia, Kazakhstan, and Ukraine) (up 0.31 mmt), and Ukraine (up 0.2 mmt).  A decline is projected for Canada (down 0.13 mmt).  Marginal or no changes are forecast for the United States (down 0.04 mmt), Argentina, Australia (up 0.03 mmt), and Kazakhstan.

China (101.5 mmt) is projected to be the largest World FSI user of wheat in “new crop” MY 2015/16, followed by India (91.2 mmt), the European Union (69.0 mmt), North Africa (41.35 mmt), selected Middle Eastern countries (32.45 mmt), the United States (28.3 mmt), Pakistan (23.6 mmt), Russia (23.0 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (16.3 mmt), Southeast Asia (14.3 mmt), Brazil (11.0 mmt), Ukraine (8.2 mmt), Argentina (6.05 mmt), Canada (5.2 mmt), Kazakhstan (4.8 mmt), and Australia (3.4 mmt). 

II-F. World Wheat Total Use by Country / Region

Projected World wheat total use of 714.2 mmt in “new crop” MY 2015/16 is the highest amount on record, being up 1.0% from the previous record high of 707.4 mmt in “old crop” MY 2014/15, up 2.2% from 698.7 mmt in MY 2013/14, and up from the range of 614.6-689.4 mmt during the MY 2007/08-MY 2012/13 period (Table 7 and Figure 10).  Foreign (non-U.S.) wheat total use is projected to be 680.5 mmt in “new crop” MY 2015/16, up 0.7% from 676.0 mmt in “old crop” MY 2014/15, and up 2.4% from 664.6 mmt in MY 2013/14. 

Table 7 provides a projected list of the major countries or regions in the World in terms of total wheat use in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat total use in “new crop” MY 2015/16 are projected for the U.S. (up 2.4 mmt), Australia (up 0.1 mmt), the European Union (up 0.9 mmt), Brazil (up 0.4 mmt), selected Middle Eastern countries (up 0.9 mmt), North Africa (up 1.3 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.1 mmt), India (up 2.9 mmt), Russia (up 0.5 mmt), and Ukraine (up 0.2 mmt).   Decreases in total wheat usage are forecast for Argentina (down 0.2 mmt), Canada (down 2.3 mmt), and China (down 1.5 mmt).  No change is projected for Kazakhstan

The European Union (124.0 mmt) is projected to be the largest World user of wheat in “new crop” MY 2015/16, followed closely by China (116.5 mmt), India (96.0 mmt), North Africa (44.2 mmt), selected Middle Eastern countries (37.1 mmt), Russia (36.0 mmt), the U.S. (33.7 mmt), Pakistan (24.6 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (28.2 mmt), Southeast Asia (18.1 mmt), Ukraine (12.2 mmt), Brazil (11.6 mmt), Canada (9.0 mmt), Australia (7.3 mmt), Kazakhstan (6.8 mmt), and Argentina (6.15 mmt).

II-G. World Wheat Ending Stocks by Country / Region

Projected World wheat ending stocks of 219.8 mmt for “new crop” MY 2015/16 are up 3.7% from 212.1 mmt in “old crop” MY 2014/15, and up 13.6% from 193.52 mmt in MY 2013/14, and is comparable to the range of 128.75-203.2 mmt over the MY 2007/08 through 2012/13 period (Table 8 and Figure 10).  Note that in the July 10th WASDE report the USDA adjusted World wheat ending stocks upward by 11.65 mmt in “old crop” MY 2014/15, and by 17.4 mmt in “new crop” MY 2015/16. These changes came in response primarily to adjustments in Chinese ending stocks reflecting a more accurate accounting of the quantity of domestic wheat stockpiles in that country.  The 37 year low in World wheat ending stocks occurred when supply-demand balances fell to 128.75 mmt in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks are projected at 196.9 mmt in “new crop” MY 2015/16, up 2.8% from 191.6 mmt in “old crop” MY 2014/15, and up 11.0% from 177.45 mmt in MY 2013/14. 

Table 8 provides a list of the major countries or regions in the World in terms of projected holdings of wheat ending stocks in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15, and MY 2013/14.  Year-over-year increases in wheat ending stocks in “new crop” MY 2015/16 are projected for the United States (up 2.8 mmt), Australia (up 0.3 mmt), Brazil (up 0.4 mmt), China (up 14.4 mmt), selected Middle Eastern countries (up 0.2 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (up 0.05 mmt), and Kazakhstan (up 0.7 mmt).  Decreases are projected for Argentina (down 1.3 mmt), Canada (down 0.5 mmt), the European Union (down 0.6 mmt), North Africa (down 0.8 mmt), Pakistan (down 0.1 mmt), Southeast Asia (down 0.2 mmt), India (down 5.3 mmt), Russia (down 0.65 mmt), and Ukraine (down 0.65 mmt). 

China (88.7 mmt) is projected to be the largest holder of wheat ending stocks in the World in “new crop” MY 2015/16, followed by the United States (22.9 mmt), the European Union (14.1), selected Middle Eastern countries (13.6 mmt), North Africa (11.9 mmt), India (11.9 mmt), Russia (6.3 mmt), Canada (4.6 mmt), Australia (4.6 mmt), Ukraine (4.3 mmt), Southeast Asia (3.9 mmt), Kazakhstan (3.5 mmt), Pakistan (3.2 mmt), Argentina (2.4 mmt), and Brazil (1.6 mmt).

II-H. World Wheat Ending Stocks-to-Use by Country / Region

Projected World wheat ending stocks-to-use of 30.8% for “new crop” MY 2015/16 are up from 30.0% in  “old crop” MY 2014/15 (Table 9 and Figure 11).  After falling to a minimum level of World wheat % ending stocks-to-use in MY 2007/08 (20.9% S/U) World wheat % S/U was 26.5% in MY 2008/09, 31.3% in MY 2009/10, 30.5% in MY 2010/11, 28.7% in MY 2011/12, 25.8% in MY 2012/13, 28.0% in MY 2013/14, 30.1% in “old crop” MY 2014/15, and are now projected to be 30.8% in “new crop” MY 2015/16.  The 38 year low in World wheat ending stocks-to-use occurred when supply-demand balances fell to 20.9% in MY 2007/08. 

Foreign (non-U.S.) wheat ending stocks-to-use are projected at 24.2% in “new crop” MY 2015/16, up from 23.5% in “old crop” MY 2014/15, and up from 22.2% in MY 2013/14.  Note that the percent ending stocks-to-use projections for “new crop” MY 2015/16 increased by 2.6% from the June 10th WASDE report, and that the “old crop” MY 2014/15 projection increased 2.0% – both reflecting the changes made by the USDA in its accounting for and estimates of Chinese ending wheat stocks.

Table 9 provides a list of the major countries or regions in the World in terms of projected wheat percent (%) ending stocks-to-use in the “new crop” 2015/16 marketing year, along with “old crop” MY 2014/15 and MY 2013/14.  Year-over-year increases in wheat ending stocks-to-use in “new crop” MY 2015/16 are projected for the U.S., Canada, Brazil, China, selected Middle Eastern countries, and KazakhstanDecreases are projected for Argentina, Australia, the European Union, North Africa, Pakistan, Southeast Asia, India, Russia, and Ukraine.

China (75.5%) is projected to be the largest holder of wheat ending stocks-to-use in the World in “new crop” MY 2015/16, followed by selected Middle Eastern countries (35.9%), the U.S. (38.4%), Kazakhstan (27.4%), North Africa (26.7%), Southeast Asia (20.4%), Argentina (18.4%), Ukraine (17.5%), Australia (17.4%), Canada (16.0%), Brazil (12.6%), India (12.4%), Pakistan (12.4%), Russia (10.8%), and the European Union (9.1%).

Similar to the relationship between U.S. wheat ending stocks-to-use and U.S. average wheat prices (see Figure 9) since MY 1973/74, a negatively correlated market relationship has existed between U.S. wheat season average cash prices and World wheat % ending stocks-to-use – but with an adjustment or “structural jump” after MY 2009/10 (Figure 11).  Larger World wheat supply-demand balances (i.e., higher percentages of ending stocks-to-use) are typically associated with lower U.S. wheat prices, while smaller supply-demand balances are usually associated with higher U.S. wheat prices – all else being equal. 

As in Figure 9 earlier, U.S. wheat prices in Figure 11 are reported on a nominal basis (i.e., not adjusted for inflation).   Whereas the minimum U.S. wheat percent stocks-to-use since MY 1973/74 was 13.2% in the historic tight stocks year of MY 2007/08, the historic minimum in World wheat percent stocks-to-use occurred in that same marketing year at 20.9%.  Since that time, World wheat ending stocks-to-use have not fallen below 25.8% in MY 2012/13.

Table 1. U.S. Wheat Supply-Demand Balance Sheet: MY 2008/09 – “New Crop” MY 2015/16 (July 10th USDA WASDE &KSU 2015/16 Projections)

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

USDA  Yields &

Higher Exports

2015/16

KSU

Lower Yields &

Higher Exports 2015/16

% Probability of Occurring

 

 

 

 

 

 

 

 

85%

15%

Planted Area (million acres)

63.617

59.017

52.620

54.277

55.294

56.236

56.822

56.079

56.079

56.079

Harvested Area (million acres)

56.036

49.841

46.883

45.687

48.758

45.332

46.381

48.454

48.454

48.454

% Harvested/Planted Area

88.1%

84.5%

89.1%

84.2%

88.2%

80.6%

81.6%

86.4%

86.4%

86.4%

Yield / harvested acre (bu/ac)

44.8

44.3

46.1

43.6

46.2

47.1

43.7

44.3

44.3

**42.5

 

Million Bushels

Beginning Stocks

306

657

976

863

743

718

590

753

753

753

Production

2,512

2,209

2,163

1,993

2,252

2,135

2,026

2,148

2,148

2,059

Imports

127

119

97

112

123

169

144

130

130

135

Total Supply

2,945

2,984

3,236

2,968

3,118

3,021

2,760

3,031

3,031

2,947

 

 

Food Use

927

919

926

941

951

955

960

967

967

967

Seed Use

78

68

71

76

73

77

81

72

72

72

Exports

1,015

879

1,291

1,051

1,012

1,176

855

950

**1,000

**1,000

Feed & Residual Use

268

142

85

157

364

223

111

200

175

165

Total Use

2,288

2,008

2,373

2,226

2,400

2,431

2,007

2,189

2,214

2,204

 

 

Ending Stocks

657

976

863

743

718

590

753

842

817

743

% Ending Stocks-to-Use

28.69%

48.58%

36.37%

33.37%

29.91%

24.27%

37.52%

38.47%

36.90%

33.72%

U.S. Wheat Avg. Farm Price ($/bushel)

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$5.99

$4.75-$5.75 ($5.25)

$5.50

$6.10


 

Figure 3. U.S. Wheat Planted Acreage – All Winter, Other Spring & Durum Wheat Classes (1973-2015) with USDA Estimates for 2015 U.S. Wheat Acres by Class

Text Box: 2015 U.S. Winter Wheat acreage projected to be ò 4.2% vs 2014
USDA Estimate of All U.S. Wheat Acres in 2015 = 56.079 mln ac. (ò743,000 ac or 1.3%)

Figure 4. U.S. All Wheat Planted & Harvested Acreage (1973-2015) Plus KSU 2015 Projections for Planted and Harvested Acreage

Figure 5. U.S. All Wheat Yield (1973-2015), and KSU 2015 Trend Projection (July 10, 2015)

Text Box: USDA 2015 Yield = 44.3 bu/ac
KSU 2015 trend: 45.9 bu/ac 
10 year Minimum = 38.6 bu/ac (2006)
10 year Maximum = 47.1 bu/ac (2013)
 

Figure 6. U.S. Wheat Total Supplies for MY 2004/05 – 2015/16 (WASDE data from July 10, 2015)


 

Figure 7. Trends in U.S. Wheat Use & Ending Stocks: MY 2004/05 - 2015/16 (July 10, 2015 USDA WASDE)

Figure 8. U.S. Wheat Ending Stocks vs U.S. Cash Prices: MY 2004/05 thru “New Crop” MY 2015/16
(July 10, 2015 USDA WASDE Report & KSU forecasts for “New Crop” MY 2015/16)

Figure 9. U.S. Wheat Price vs U.S. % Stocks-to-Use: MY 1973/74 thru “New Crop” MY 2015/16 with KSU Projections

Text Box: KSU “New Crop” MY 2015/16 (85% Prob.)
36.9% S/U, $5.50 /bu
Text Box: “Current” MY 2014/15
37.5% S/U, $5.99 /bu
Text Box: 2011/12

Figure 10. World Wheat Usage & Ending Stocks: MY 2007/08 thru “New Crop” MY 2015/16                     
(July 10, 2015 USDA WASDE Report)

Text Box: Wheat Trade
133-166 mmt since MY 2008/09
 
158.1 mmt in    MY 2015/16
Text Box: Wheat Usage
ñ12.1 mmt/yr 
(+2.0%/yr) 
since 2007/08
Text Box: Production
ñ13.7 mmt/yr (+2.2%/yr) 
since 2007/08
 
Text Box: End Stocks
219.8 mmt in “New Crop” 
MY 2015/16
 
Up 91.1 mmt (+71%) since 
38 year low in 
MY 2007/08

Figure 11. U.S. Wheat Price vs % World Stocks-to-Use (MY 1973/74 through “New Crop” MY 2015/16)           

Text Box: 1977/78
Text Box: 2006/07 
Text Box: 1986/87
Text Box: 2008/09
Text Box: “Old Crop” 2014/15 
30.1% S/U & $5.99 /bu
Text Box: 2010/11
Text Box: 2007/08
Text Box: 2009/10
Text Box: 2012/13 
25.8% S/U & $7.77 /bu
Text Box: 2011/12
Text Box: 2013/14 
28.0% S/U & $6.87 /bu

 

Table 2. World Wheat Production Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2015/16    July 2015

Wheat Production: June 2015 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Production:               July Less June 2015                    

New Crop 2015/16 Production:                Percent (%)         July of June 2015

July Wheat Production: 2014/15          

June  Wheat Production: 2014/15

July Less June  Wheat  Production             for 2014/15

New Crop 2015/16 Production             Less 2014/15

% New Crop 2015/16 Production of                         2014/15

Wheat Production: 2013/14                           (2 years ago)

New Crop 2015/16 Production             Less 2013/14

% New Crop 2015/16 Production       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

721.96

721.55

0.41

100.1%

725.92

726.32

(0.40)

(3.96)

99.5%

715.11

6.85

101.0%

United States

58.46

57.72

0.74

101.3%

55.13

55.13

0.00

3.33

106.0%

58.11

0.35

100.6%

Total Foreign

663.50

663.84

(0.34)

99.9%

670.79

671.19

(0.40)

(7.29)

98.9%

657.01

6.49

101.0%

Major Exporters

212.88

217.18

(4.30)

98.0%

221.92

222.25

(0.33)

(9.04)

95.9%

217.75

(4.87)

97.8%

Argentina

11.50

11.50

0.00

100.0%

12.50

12.50

0.00

(1.00)

92.0%

10.50

1.00

109.5%

Australia

26.00

26.00

0.00

100.0%

23.67

24.00

(0.33)

2.33

109.8%

25.30

0.70

102.8%

Canada

27.50

29.00

(1.50)

94.8%

29.30

29.30

0.00

(1.80)

93.9%

37.53

(10.03)

73.3%

European Union

147.88

150.68

(2.80)

98.1%

156.45

156.45

0.00

(8.57)

94.5%

144.42

3.46

102.4%

Major Importers

203.22

203.22

0.00

100.0%

196.46

196.46

0.00

6.76

103.4%

194.11

9.11

104.7%

Brazil

6.50

6.50

0.00

100.0%

6.00

6.00

0.00

0.50

108.3%

5.30

1.20

122.6%

China

130.00

130.00

0.00

100.0%

126.17

126.17

0.00

3.83

103.0%

121.93

8.07

106.6%

Selected Middle East

17.86

17.86

0.00

100.0%

17.37

17.37

0.00

0.49

102.8%

18.97

(1.11)

94.1%

North Africa

19.36

19.36

0.00

100.0%

16.90

16.90

0.00

2.46

114.6%

19.72

(0.36)

98.2%

Pakistan

25.00

25.00

0.00

100.0%

25.50

25.50

0.00

(0.50)

98.0%

24.00

1.00

104.2%

Southeast Asia

0.00

0.00

0.00

#DIV/0!

0.00

0.00

0.00

0.00

#DIV/0!

0.00

0.00

#DIV/0!

India

90.00

90.00

0.00

100.0%

95.85

95.85

0.00

(5.85)

93.9%

93.51

(3.51)

96.2%

Former Soviet Union - 12 Countries

109.88

105.88

4.00

103.8%

112.73

112.73

0.00

(2.85)

97.5%

103.87

6.01

105.8%

Russia

57.00

55.00

2.00

103.6%

59.08

59.08

0.00

(2.08)

96.5%

52.09

4.91

109.4%

Kazakhstan

13.50

12.50

1.00

108.0%

13.00

13.00

0.00

0.50

103.8%

13.94

(0.44)

96.8%

Ukraine

24.00

23.00

1.00

104.3%

24.75

24.75

0.00

(0.75)

97.0%

22.28

1.72

107.7%

 

Table 3. World Wheat Export Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2015/16     July 2015

Wheat Exports: July  2014 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Exports:               July Less June 2015                    

New Crop 2015/16 Exports:                Percent (%)         July of June 2015

July Wheat Exports: 2014/15          

June  Wheat Exports: 2014/15

July Less June Wheat  Exports for 2014/15

New Crop 2015/16 Exports Less 2014/15

% New Crop 2015/16 Exports of 2014/15

Wheat Exports: 2013/14                           (2 years ago)

New Crop 2015/16 Exports Less 2013/14

% New Crop 2015/16 Exports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

158.07

158.41

(0.34)

99.8%

163.94

163.85

0.09

(5.87)

96.4%

165.92

(7.85)

95.3%

United States

25.86

25.17

0.69

102.7%

23.28

23.27

0.01

2.58

111.1%

32.01

(6.15)

80.8%

Total Foreign

132.31

133.23

(0.92)

99.3%

140.66

140.58

0.08

(8.35)

94.1%

133.90

(1.59)

98.8%

Major Exporters

75.70

78.20

(2.50)

96.8%

80.40

80.00

0.40

(4.70)

94.2%

76.17

(0.47)

99.4%

Argentina

6.70

6.70

0.00

100.0%

5.00

5.00

0.00

1.70

134.0%

2.25

4.45

297.8%

Australia

18.50

18.50

0.00

100.0%

17.00

17.00

0.00

1.50

108.8%

18.62

(0.12)

99.4%

Canada

19.50

20.50

(1.00)

95.1%

23.70

23.50

0.20

(4.20)

82.3%

23.27

(3.77)

83.8%

European Union

31.00

32.50

(1.50)

95.4%

34.70

34.50

0.20

(3.70)

89.3%

32.03

(1.03)

96.8%

Major Importers

6.44

6.84

(0.40)

94.2%

8.09

8.24

(0.15)

(1.65)

79.6%

5.19

1.25

124.1%

Brazil

1.00

1.00

0.00

100.0%

1.80

1.80

0.00

(0.80)

55.6%

0.08

0.92

1250.0%

China

1.00

1.00

0.00

100.0%

0.85

1.00

(0.15)

0.15

117.6%

0.89

0.11

112.4%

Selected Middle East

0.83

0.83

0.00

100.0%

1.53

1.53

0.00

(0.70)

54.2%

0.49

0.34

169.4%

North Africa

0.55

0.55

0.00

100.0%

0.55

0.55

0.00

0.00

100.0%

0.50

0.05

110.0%

Pakistan

0.60

1.00

(0.40)

60.0%

0.70

0.70

0.00

(0.10)

85.7%

0.75

(0.15)

80.0%

Southeast Asia

0.89

0.89

0.00

100.0%

0.89

0.89

0.00

0.00

100.0%

0.89

0.00

100.0%

India

0.30

0.50

(0.20)

60.0%

3.40

3.40

0.00

(3.10)

8.8%

6.05

(5.75)

5.0%

Former Soviet Union - 12 Countries

40.86

38.86

2.00

105.1%

40.33

40.33

0.00

0.53

101.3%

37.15

3.71

110.0%

Russia

22.00

21.00

1.00

104.8%

22.20

22.20

0.00

(0.20)

99.1%

18.57

3.43

118.5%

Kazakhstan

6.00

6.00

0.00

100.0%

6.00

6.00

0.00

0.00

100.0%

8.10

(2.10)

74.1%

Ukraine

12.50

11.50

1.00

108.7%

11.50

11.50

0.00

1.00

108.7%

9.76

2.74

128.1%

 

Table 4. World Wheat Import Projections for “New Crop” MY 2015/16, MY 2014/15, and MY 2013/14

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2015/16     July 2015

Wheat Imports: June  2014 New Crop 2015/16                   (1 month ago)

New Crop 2015/16 Imports:               July Less June 2015                    

New Crop 2015/16 Imports:                Percent (%)         July of June 2015

July Wheat Imports: 2014/15          

June  Wheat Imports: 2014/15

July Less June Wheat  Imports for 2014/15

New Crop 2015/16 Imports Less 2014/15

% New Crop 2015/16 Imports of 2014/15

Wheat Imports: 2013/14                           (2 years ago)

New Crop 2015/16 Imports             Less 2013/14

% New Crop 2015/16 Imports       of 2013/14

 

mmt

mmt

mmt

Percent (%)

mmt

mmt

mmt

mmt

Percent (%)

mmt

mmt

Percent (%)

World

155.26

155.12

0.14

100.1%

160.20

160.05

0.15

(4.94)

96.9%

158.24

(2.98)

98.1%

United States

3.54

3.81

(0.27)

92.9%

3.92

4.03

(0.11)

(0.38)

90.3%

4.59

(1.05)

77.1%

Total Foreign

151.73

151.31

0.42

100.3%

156.28

156.02

0.26

(4.55)

97.1%

153.65

(1.92)

98.8%

Major Exporters

7.14

6.14

1.00

116.3%

6.67

6.67

0.00

0.47

107.0%

4.58

2.56

155.9%

Argentina

0.03

0.03

0.00

100.0%

0.04

0.04

0.00

(0.01)

75.0%

0.00

0.03

#DIV/0!

Australia

0.15

0.15

0.00

100.0%

0.15

0.15

0.00

0.00

100.0%

0.15

0.00

100.0%

Canada

0.46

0.46

0.00

100.0%

0.48

0.48

0.00

(0.02)

95.8%

0.45

0.01

102.2%

European Union

6.50

5.50

1.00

118.2%

6.00

6.00

0.00

0.50

108.3%

3.97

2.53

163.7%

Major Importers

82.45

82.65

(0.20)

99.8%

86.24

85.24

1.00

(3.79)

95.6%

87.36

(4.91)

94.4%

Brazil

6.50

6.50

0.00

100.0%

6.30

6.30

0.00

0.20

103.2%

7.07

(0.57)

91.9%

China

2.00

1.20

0.80

166.7%

1.70

1.50

0.20

0.30

117.6%

6.77

(4.77)

29.5%

Selected Middle East

20.25

21.25

(1.00)

95.3%

21.74

22.14

(0.40)

(1.49)

93.1%

20.69

(0.44)

97.9%

North Africa

24.60

24.60

0.00

100.0%

25.75

25.15

0.60

(1.15)

95.5%

25.27

(0.67)

97.3%

Pakistan

0.10

0.10

0.00

100.0%

0.75

0.75

0.00

(0.65)

13.3%

0.40

(0.30)

25.0%

Southeast Asia

18.80

18.80

0.00

100.0%

19.60

19.30

0.30

(0.80)

95.9%

16.41

2.39

114.6%

India

1.00

0.50

0.50

200.0%

0.05

0.05

0.00

0.95

2000.0%

0.03

0.97

3333.3%

Former Soviet Union - 12 Countries

6.89

7.27

(0.38)