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Grain Market Outlook

Wheat Market Outlook in Early September 2015

September 1, 2015


Summary

Since USDA’s World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports on August 12th, U.S. and World wheat market prices have traded sharply lower.  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 strong export sales competition occurring in what can be termed a “buyer’s market”, and c) World wheat ending stocks would be record high, with percent ending stocks-to-use at their highest level since MY 2009/10. 

There are underlying concerns about key World wheat market factors, such as a) potential wheat production problems and supply prospects in Australia, India, Russia, and elsewhere in “new crop” MY 2015/16, b) the ongoing geopolitical problems in the Black Sea region and the potential for conflict in the Middle East, and c) uncertainty in World economic, financial and currency markets.  However, the overriding “large crop-over-supply” situation that now exists in World & U.S. wheat markets continues to negatively influence wheat futures and cash prices.  Recovery in wheat market prices may dependent on whether significant problems in wheat production and/or trade occur in major World wheat producing and exporting areas in year 2015 and beyond, and for the U.S. how long the strong value of the U.S. dollar relative to other currencies continues.  

USDA U.S. Wheat Supply-Demand & Price Forecast: For U.S. wheat in the “new crop” 2015/16 marketing year, the USDA projected that there would be 55.079 million acres (ma) planted, 48.454 ma harvested, 44.1 bu/ac yields (down 0.2 bu), 2.136 billion bushels (bb) production (down 12 mb), 3.014 bb total supplies (down 17 mb), 925 million bushel (mb) exports (down 25 mb), 200 mb feed & residual use, 2.164 bb total use (down 25 mb), 850 mb end stocks (up 8 mb), with 39.3% ending-stocks-to-use (up from 38.5% in July, and up to 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 $4.65-$5.55 /bu. (midpoint =$5.10) – the lowest since $4.87 /bu in MY 2009/10.

KSU U.S. Wheat Supply-Demand & Price Forecast: Key market factors to consider are the level of 2015 U.S. hard red spring wheat production, and prospects for improved U.S. wheat exports.  Kansas State University projections of “new crop” MY 2015/16 supply-demand balances and prices are represented in two scenarios:  A) “Lower Exports” Scenario: 65% prob. of the same U.S. wheat production estimates as the USDA, but with U.S. exports dropping to “old crop” 2014/15 levels, i.e., 3.014 bb total supplies, 850 mb exports, 2.089 bb total use, 925 mb ending stocks, 44.3% S/U, and $4.75 /bu U.S. avg. price. B) “Higher Exports” Scenario: 35% prob. of production prospects equal to the USDA’s but with higher U.S. wheat exports, i.e., 3.014 bb total supplies, 1.000 bb exports, 2.224 bb total use, 790 mb ending stocks, 35.2% S/U, and $5.75 /bu U.S. average price.  

USDA World Wheat: The expectation fo large World wheat supplies and stocks are a “burden” on World wheat markets – driving them toward lower World wheat market prices.  Record World total wheat supplies of 936.2 mmt in “new crop” MY 2015/16 are up from 918.6 mmt in “old crop” MY 2014/15, and from 892.1 mmt in MY 2013/14.  Projected World wheat ending stocks in “new crop” MY 2015/16 of 221.5 mmt (31.0% S/U) are also record high, and up from 209.7 mmt (29.6% S/U) in “old crop” MY 2014/15, and from 193.4 mmt (27.7% S/U) in MY 2013/14.  For perspective, these recent supply-demand figures can be compared to the historic World wheat ending stocks and stocks-to-use minimums of 128.8 mmt and 21.0% S/U in MY 2007/08.

I. U.S. Wheat Market Situation & Outlook

I-A. August 12th USDA Reports & “New Crop” MY 2015/16 Projections

On August 12th the USDA National Agricultural Statistics Service (NASS) in its Crop Production report with its’ projections of 2015 U.S. wheat production as of August 1, 2015.  Wheat production forecasts in the August 12th Crop Production report were based on actual farm operator surveys and objective yield field trials conducted between July 25th and August 6th by USDA NASS – representing crop conditions and expected yield and production prospects as of August 1, 2015.   

On the same day the USDA World Agricultural Outlook Board (WAOB) released its August 2015 World Agricultural Supply and Demand Estimates (WASDE) report – containing 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 “new crop” 2015/16 marketing year for U.S. corn 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 $6.28 ¾ per bushel for the CME DECEMBER 2015 Kansas hard red winter wheat futures contract occurred on June 30, 2015, December futures have trended sharply lower – down to a low of $4.78 ¼ on August 31, 2015 (Figure 1).  The slow pace of U.S. wheat exports caused by record large World wheat production prospects in “new crop” MY 2015/16 and the historically high value of the U.S. dollar have been key factors causing the recent sharp decline in CME DECEMBER 2015 Kansas HRW wheat prices

Figure 1. DECEMBER 2015 & JULY 2016 CME Kansas Wheat Futures Price Charts

Chicago Mercantile Exchange (CME) DEC 2015 Kansas HRW Wheat futures prices responded negatively to the release of the August 12th USDA reports.  DEC 2015 HRW wheat efutures prices opened at $5.09 ½ on Wednesday, August 12th - trading as high as $5.14 ¼ and as low as $4.91 per bushel during the session before closing $0.13 lower for the day at $4.96 ½ /bu (Figure 1).  The USDA reports were released at midday (i.e., 11 a.m., central time).   Since then, DECEMBER 2015 Kansas HRW wheat futures have trended lower, trading in the range of a high of $5.15 ¼ on Friday, August 14th to a low of $4.78 ¼ on Monday, August 31st, before closing at $4.82 ¼ per bushel on Tuesday, September 1st.   

Similarly, CME JULY 2016 Hard Red Winter wheat futures prices opened at $5.40 ¾ on Wednesday, August 12th – 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 a high of $5.47 ½ down to a low of $5.29 during the session before closing $0.12 lower for the day at $5.31 ½ /bu (Figure 1).   Since the August 12th USDA report, CME JULY 2016 Kansas HRW wheat futures have trended lower, trading in the range of a high of $5.47 ½ on Friday, August 14th to a low of $5.12 ½ on Monday, August 31st, before closing at $5.14 ½ per bushel on Tuesday, September 1st.   

The Trade Weighted U.S. Dollar Index has been generally trending 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%.  After moving lower for a period of time, the index rose again to a high of 93.09 on August 5, 2015. The latest recorded value of the Trade Weighted U.S. Dollar Index was 90.93 on August 21, 2015 – moving sideways to lower from the early August 2015 high.

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 especially significant to the U.S. wheat market.  This is 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 – which they would then in turn use 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 March 31st Prospective Plantings report were adjusted upward in the USDA June 30th Acreage report, and have since been used without adjustment in the July 10th and August 12th USDA Crop Production and WASDE reports.   In the June 30, 2015 USDA Acreage report and subsequent July and August Crop Production reports the USDA projected that 2015 U.S. wheat total planted acreage would be 56.079 million acres (ma), up 712,000 acres from 55.367 ma projected earlier in the March 31st USDA Prospective Plantings report.   This projection of 56.079 ma of 2015 U.S. wheat planted area is down 743,000 acres (-1.3%) from 56.822 ma in 2014, down 157,000 acres (-0.3%) from 56.236 ma in 2013, but up from 55.294 ma in 2012, 54.277 ma in 2011, and the 6 year low of 52.620 ma in 2010 (Table 1 and Figures 3 and 4).  

The USDA left unchanged from the June 30th Acreage Report and the July 10th WASDE report 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, and 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 are 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 is 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.  For 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 forecast to be up marginally from 4.21 ma in 2014.   

The USDA projected that total U.S. other spring wheat plantings in 2015 amount to 13.505 ma, up 480,000 acres (+3.7%) from 13.025 ma in 2014, and up 1.363 ma (+11.7%) from 11.606 ma in 2013.  Of this total, 12.65 ma are seeded to Hard Red Spring (HRS) wheat, up from 12.25 ma in 2014, and up from 10.94 ma in 2013.

 Durum wheat plantings in the U.S. in 2015 are 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 and August 12th USDA Crop Production and WASDE reports.  In the June 30, 2015 USDA Crop Production 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 32.304 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 44.1 bushels per acre (bu/ac) – down from a USDA projection of 44.3 in July, but up from 43.5 bu/ac in May.  This decrease in projected 2015 U.S. wheat yields reflected mainly lower than expected 2015 U.S. Soft Red Winter wheat production in the eastern Corn Belt due to problems stemming from excessive late season rain and cool weather. This projection of 2015 U.S. wheat yields of 44.1 bu/ac is up from 43.7 bu/ac in 2014, but less than the record high of 47.1 bu/ac in 2013, and the previous record of 46.2 bu/ac in 2012 (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 (44.1 bu/ac), 2015 U.S. wheat production is projected to be 2.136 billion bushels (bb).  This projection of 2015 U.S. wheat production of 2.136 bb is down 12 mb from July, but up 15 mb from June, up 49 mb from May, up from 2.026 bb in 2014, 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).   

I-D. U.S. Wheat Total Supplies

Total supplies of U.S. wheat of 3.014 bb are projected by the USDA for “new crop” MY 2015/16 (down 17 mb from July), resulting from beginning stocks of 753 mb, projected 2015 production of 2.136 bb, and projected imports of 125 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, 3.022 bb in MY 2013/14, 2.760 bb in MY 2014/15, and now are projected to be 3.014 bb in “new crop” MY 2015/16.

Forecast U.S. wheat beginning stocks of 753 mb in “new crop” MY 2015/16 are up 27.6% from 590 mb in beginning stocks in “old crop” MY 2014/15, and up 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 125 mb for “new crop” MY 2015/16 is less than 144 mb in MY 2014/15 (2nd highest on record), 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 26.5 mmt (973 million bushels or ‘mb’) in “new crop” MY 2015/16.  The largest Canadian wheat crops since 1960 that were over 30.0 mmt were in 1986 (31.4 mmt or 1.152 bb), 1990 (32.1 mmt or 1.179 bb), 1991 (31.9 mmt or 1.174 bb), and 2013 (37.5 mmt or 1.379 bb).       

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 followed a consistent upward trend 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 follows from 958 mb in MY 2014/15 (down 2 mb from July), 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, 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 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) with consideration for possible production shortfalls. 

Exports: Projected U.S. wheat exports of 925 mb in “new crop” MY 2015/16 (down 25 mb from July) are up from 854 mb in MY 2014/15 (down 1 mb from July) – 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, an estimate of 854 mb in “old crop” MY 2014/15, with a projection of 925 mb in “new crop” MY 2015/16.

Some of the factors that have caused lower U.S. wheat exports in “old crop” MY 2014/15 and “new crop” MY 2015/16 are a) the sharp increase in the value of the U.S. dollar relative to other World currencies, and b) prospects for fully 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.  However, until tangible evidence of such potential damage to World wheat production should occur in late 2015 or 2016, it appears to be treated as a non-factor in current World wheat export markets.

Cumulative U.S. wheat export shipments through August 20th – the 13th week of the “new crop” 2015/16 marketing year for U.S. wheat – have totaled 158.3 mb, which is 17.1% of the USDA’s projected “new crop” MY 2015/16 exports of 925 mb, with 25.0% (13 of 52 weeks) of the marketing year completed.  The “new crop” 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 19.7 mb per week through the remainder of the “new crop” 2015/16 marketing year to attain the USDA’s August 12th WASDE projection of 925 mb.  Wheat export shipments by the U.S. of 22.3 mb and 13.1 mb during the weeks ending August 13th and 20th, respectively, were on average (17.7 mb / week) “behind pace” to meet the USDA forecast of 925 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 201.4 mb in U.S. wheat for “new crop” MY 2015/16 (i.e., that had not yet been shipped as of August 20th), total U.S. wheat shipped plus outstanding shipments added up to 359.7 mb (i.e., 158.3 mb shipped plus 201.4 mb forward sales).  This amounts to 38.9% of the USDA’s projection of 925 mb for “new crop” MY 2015/16 with 25.0% of the marketing year having already occurred (i.e., 13 of 52 weeks) – presenting a more positive perspective on potential U.S. wheat export sales and the likelihood of U.S. wheat exports reaching the 925 mb target set by the USDA in the August 12th WASDE report. 

Feed & Residual Use: The USDA projected that U.S. feed and residual use would be 200 mb in “new crop” MY 2015/16, up from 115 mb for “old crop” MY 2014/15 (up 4 mb from July), 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 had trended lower in “old crop” MY 2014/15 and “new crop” MY 2015/16 due to sizable 2013 and 2014 U.S. corn and grain sorghum crops – which has led to more abundant 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 – even with projections of large supplies of low cost U.S. corn and grain sorghum available.

Total U.S. Wheat UseTotal use of U.S. wheat for “new crop” MY 2015/16 is projected to be 2.164 bb (down 25 mb from July due to lower projected exports), 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 12 year period), 2.008 bb in “old crop” MY 2014/15 (up 1 mb from July), and finally to 2.164 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 reaction to extremely tight U.S. corn and grain sorghum supplies in 2013-2013 – 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 850 mb (up 81 mb from July) (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 since the early 1970s.  Over the last ten (10) marketing years, U.S. wheat ending stocks were 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, and now a projected amount of 850 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 39.3% in “new crop” MY 2015/16 is projected to be at the highest level since MY 2009/10 (Table 1 and Figures 7 and 8).  Since having historically tight 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, to now a projected level of 39.3% 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 $4.65-$5.55 per bushel (“/bu”) (midpoint = $5.10 /bu) (Table 1 and Figures 7 and 8).  The August 12th projection is down $0.10 per bushel on the lower end and $0.20 on the upper end of the price range from the July WASDE, with the midpoint of $5.10 being down $0.15 /bu from July.   Starting in MY 2006/07 with at that time the record U.S. wheat price of $4.26, 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, and now to the forecast range of $4.65-$5.55 /bu (midpoint = $5.10 /bu) in “new crop” MY 2015/16 – 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 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 September 2015 through May 2016 period, i.e., the remainder of “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 the geopolitical conflict that significant wheat crop production problems could occur in other key wheat production areas of the World, or that 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.  It is also possible that geopolitical conflicts in the Middle East could escalate to the point of causing volatility and higher prices in World 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 prices. 

In the KSU forecasts that follow, total U.S. wheat planted acreage in 2015 of 56.079 ma is assumed.  This is the amount of U.S. wheat planted acreage forecast by the USDA in its August 12th USDA WASDE report.  However, these KSU projections vary from the USDA’s forecasts in regards to U.S. wheat exports, with one lower export scenario and one higher export scenario examined.

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 – Lower Exports of 850 mln bu (65% Likelihood of Occurring)

Projections by Kansas State University of U.S. wheat supply-demand and price projections for “new crop” MY 2015/16 are unchanged from the USDA’s August 12th Crop Production and WASDE reports except for variations in U.S. wheat exports and accompanying changes in total usage, ending stocks, percent ending stocks-to-use, and projected marketing year average (MYA) prices.  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. corn 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 scenario that there is a “6.5 out of 10” or 65% chance that for “new crop” MY 2015/16, final U.S. wheat exports will be 850 mb – down from the USDA’s forecast of 925 mb for the same “new crop” period (Table 1). 

With these KSU projections, U.S. wheat ending stocks would equal 925 mb, with % ending stocks-to-use estimated being 44.3% 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 $4.75 per bushel for “new crop” MY 2015/16 – down $0.35 /bu from the USDA’s August 12th midpoint projection of $5.10 for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9). 

The key factor in this projection is the assumption of continued struggles in U.S. wheat exports – causing them to fall in “new crop” MY 2015/16 to the lowest level since MY 2009/10 – a U.S. wheat marketing year where prices fell below $5.00 /bu down to $4.87 /bu – and “old crop” MY 2014/15, i.e., 854 mb. 

 “New crop” 2015/16 KSU Scenario for U.S. Wheat Exports @ 850 mln bu – 65% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 56.079 ma                ò   1.4% ( ‒803,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 48.454 ma                ñ   4.5% (2,073,000 acres) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 44.1 bu/ac                ñ   0.4 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.136 bb                 ñ   5.4% (+110 mb) vs 2014

- Total Supplies (bb)                           =   3.014 bb                 ñ   9.4% (+254 mb) vs MY 2014/15

- Exports                                              =   0.850 bb                 ò   0.5% (+4 mb) vs MY 2014/15

- Total Use                                          =   2.089 bb                 ñ   4.0% (+81 mb) vs MY 2014/15

- Ending Stocks                                    =   0.925 bb                 ñ 22.8% (+172 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 44.3%                       vs 37.5% S/U in MY 2014/15

- U.S. Wheat Price                             = $4.75 /bu                 vs $5.10 /bu in MY 2014/15


B. KSU “New Crop” MY 2015/16 U.S. Wheat Projection – Higher Exports of 1.00 bln bu (35% Likelihood of Occurring)

It is also estimated in this first KSU forecast that there is a “3.5 out of 10” or 35% chance that for “new crop” MY 2015/16, final U.S. wheat exports will be 1.000 bb – up from the USDA’s forecast of 925 mb for the same “new crop” marketing year period (Table 1).  

With these KSU projections, U.S. wheat ending stocks would equal 790 mb, with % ending stocks-to-use estimated being 35.5% 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 $5.75 per bushel for “new crop” MY 2015/16 – up $0.65 /bu from the USDA’s August 12th midpoint projection of $5.10 for “new crop” MY 2015/16 (Table 1 and Figures 8 and 9). 

The key factor in this projection is the assumption of continued struggles in U.S. wheat exports – causing them to fall in “new crop” MY 2015/16 to the lowest level since MY 2009/10 – a U.S. wheat marketing year where prices fell below $5.00 /bu down to $4.87 /bu – and “old crop” MY 2014/15, i.e., 854 mb. 

“New crop” 2015/16 KSU Scenario for U.S. Wheat Exports @ 1.000 bln bu – 35% Probability

- U.S. Planted Area (mln. acres or ‘ma’)   = 56.079 ma                ò   1.4% ( ‒803,000 acres) vs 2014

- U.S. Harvested Area (ma)                  = 48.454 ma                ñ   4.5% (2,073,000 acres) vs 2014

- U.S. Wheat Yield (bu/acre)                 = 44.1 bu/ac                ñ   0.4 bu/ac from 43.7 bu/ac in 2014

- U.S. Production (billion bu or ‘bb’)        =   2.136 bb                 ñ   5.4% (+110 mb) vs 2014

- Total Supplies (bb)                           =   3.014 bb                 ñ   9.4% (+254 mb) vs MY 2014/15

- Exports                                              =   1.000 bb                 ñ   8.1% (+75 mb) vs MY 2014/15

- Total Use                                          =   2.224 bb                 ñ 10.8% (+216 mb) vs MY 2014/15

- Ending Stocks                                    =   0.790 bb                 ñ   4.9% (+37 mb) vs MY 2014/15

- % Ending Stocks/Use                      = 35.5%                       vs 37.5% S/U in MY 2014/15

- U.S. Wheat Price                             = $5.75 /bu                 vs $5.10 /bu in MY 2014/15

 

II. World Wheat Supply-Demand Trends

The USDA forecast that World wheat production in “new crop” MY 2015/16 will be up 0.2% from the “old crop” 2014/15 marketing year that ended on May 31, 2015, and up 1.7% from two years ago in MY 2013/14 (Figure 10).  World wheat total supplies in “new crop” MY 2015/16 are forecast to be 936.2 mmt, up 17.6 mmt (up 1.9%) from 918.6 mmt in “old crop” MY 2014/15, and up 44.1 mmt (up 4.9%) from 892.1 mmt in MY 2013/14.  Given these changes, World wheat total use in “new crop” MY 2015/16 is projected to increase 0.8% from “old crop” MY 2014/15, and to be up 2.3% from MY 2013/14.  World wheat ending stocks in “new crop” MY 2015/16 are projected to increase by 5.6% from a year earlier in “old crop” MY 2014/15, and by 14.4% 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) the 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 are avoided in these major wheat producing and exporting areas in year 2015 and beyond.    

II-A. World Wheat Production by Country / Region

Projected World wheat production of 726.55 mmt in “new crop” MY 2015/16 would be the largest crop on record, being up 0.2% from the previous record high of 725.25 mmt for “old crop” MY 2014/15.  This total for “new crop” MY 2015/16 of 726.55 mmt is also up 1.6% 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 668.4 mmt in “new crop” MY 2015/16, down from 670.1 mmt in “old crop” MY 2014/15, but up from 657.0 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 August 2015 WASDE report.  Year-over-year increases in wheat production are projected in the United States (up 3.0 to 58.1 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 2.7 to 19.4 mmt), Russia (up 0.9 to 60.0 mmt), Kazakhstan (up 1.0 to 14.0 mmt), and Ukraine (up 0.75 to 25.5 mmt).   Year-over-year declines in “new crop” MY 2015/16 production are projected for Argentina (down 1.4 to 11.1 mmt), Canada (down 2.55 to 26.75 mmt), the European Union (down 8.6 to 147.8 mmt), Pakistan (down 0.5 to 25.0 mmt), and India (down 5.85 to 90.0 mmt).    

In “new crop” MY 2015/16, the European Union is projected to be the largest World producer of wheat at 147.8 mmt, followed by China (130.0 mmt), India (90.0 mmt), Russia (60.0 mmt), the United States (58.1 mmt), Canada (26.75 mmt), Australia (26.0 mmt), Ukraine (25.5 mmt), Pakistan (25.0 mmt), North Africa (19.6 mmt), Selected Middle Eastern Countries (17.9 mmt), Kazakhstan (14.0 mt), Argentina (11.1 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 156.2 mmt, down 5.4% from 165.1 mmt in “old crop” MY 2014/15, and also down 5.8% from 165.9 mmt in MY 2013/14 (Table 3).  Foreign (non-U.S.) wheat exports are projected to be 131.0 mmt in “new crop” MY 2015/16, down 7.6% from 141.8 mmt in “old crop” MY 2014/15, and down 2.1% 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 1.9 mmt), Australia (up 1.5 mmt), China (up 0.2 mmt), Russia (up 0.3 mmt), and Ukraine (up 1.7 mmt).  However, decreased exports are projected for Canada (down 6.0 mmt), the European Union (down 4.2 mmt), Brazil (down 0.7 mmt), Selected Middle Eastern countries (down 0.7 mmt), Pakistan (down 0.1 mmt), and India (down 3.1 mmt).  No or minimal changes are projected for Argentina, 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 (25.2 mmt), Russia (21.0 mmt), Australia (18.5 mmt), Canada (18.0 mmt), Ukraine (13.0 mmt), Kazakhstan (6.0 mmt), Argentina (5.5 mmt), Brazil (1.0), China (1.0 mmt), Southeast Asia (0.89 mmtt), Selected Middle Eastern countries (0.83 mmt), North Africa (0.63 mmt), Pakistan (0.6 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 155.1 mmt, down 3.2% from 160.25 mmt in “old crop” MY 2014/15, and down 2.0% 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 3.0% from 156.3 mmt in “old crop” MY 2014/15, and down 1.3% 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 0.5 mmt), China (up 0.3 mmt), and India (up 0.75 mmt) for “new crop” MY 2015/16, decreased imports are projected for the United States (down 0.5 mmt), selected Middle Eastern countries (down 2.1 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, Australia, Canada, Russia, and Ukraine.     

North Africa (25.3 mmt) is projected to be the largest World wheat importer in “new crop” MY 2015/16, followed by Selected Middle Eastern countries (19.5 mmt), Southeast Asia (19.1 mmt), the Former Soviet Union (12 Countries less Russia, Kazakhstan, and Ukraine) (6.7 mmt), Brazil (6.5 mmt), the European Union (6.5 mmt), the United States (3.4 mmt), China (2.2 mmt), India (0.8 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 136.2 mmt, up 1.2% from 134.5 mmt in “old crop” MY 2014/15, and up 7.5% from 126.7 mmt in MY 2013/14 (Table 5).   Foreign (non-U.S.) wheat domestic feed use is projected to be 130.7 mmt in “new crop” MY 2015/16, down 0.6% from 131.4 mmt in “old crop” MY 2014/15, and up 8.3% from 120.7 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 2.3 mmt), Australia (up 0.1 mmt), the European Union (up 1.5 mmt), Brazil (up 0.3 mmt), Selected Middle Eastern countries (up 0.3 mmt), North Africa (up 0.4 mmt), India (up 0.3 mmt), Russia (up 0.5 mmt), and Ukraine (up 0.5 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 0.4 mmt).   No changes are projected for Pakistan and Kazakhstan.

The European Union (56.0 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 (13.5 mmt), the United States (5.4 mmt), Selected Middle East countries (4.85 mmt), India (4.8 mmt), Ukraine (4.5 mmt), Southeast Asia (3.9 mmt), Australia (3.9 mmt), Canada (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 a 578.5 mmt, up 0.7% from 574.4 mmt in “old crop” MY 2014/15, and up 1.1% from 572.0 mmt in MY 2013/14 (Table 6).  Foreign (non-U.S.) wheat FSI use is projected to be 550.4 mmt in “new crop” MY 2015/16, up 0.8% from 546.2 mmt in “old crop” MY 2014/15, and up 1.2% from 544.0 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 China (up 0.5 mmt), Selected Middle Eastern countries (up 0.8 mmt), North Africa (up 1.05 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.4 mmt), India (up 2.4 mmt), Russia (up 0.5 mmt), the Former Soviet Union Countries (less Russia, Kazakhstan, and Ukraine) (up 0.34 mmt), and Ukraine (up 0.2 mmt).  A decline is projected for the European Union (down 0.55 mmt) and Canada (down 0.13 mmt).  Marginal or no changes are forecast for the United States, Argentina, Australia, Brazil, 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 (91.0 mmt), the European Union (68.85 mmt), North Africa (41.25 mmt), Selected Middle Eastern countries (32.5 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 (10.9 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 714.7 mmt in “new crop” MY 2015/16 is the highest amount on record, being up 0.8% from the previous record high of 708.9 mmt in “old crop” MY 2014/15, up 2.3% from 698.8 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 681.0 mmt in “new crop” MY 2015/16, up 0.5% from 677.55 mmt in “old crop” MY 2014/15, and up 2.5% 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 United States (up 2.3 mmt), Australia (up 0.1 mmt), the European Union (up 0.95 mmt), Brazil (up 0.3 mmt), Selected Middle Eastern countries (up 1.1 mmt), North Africa (up 1.45 mmt), Pakistan (up 0.1 mmt), Southeast Asia (up 0.1 mmt), India (up 2.7 mmt), Russia (up 1.0 mmt), and Ukraine (up 0.7 mmt).   Decreases in total wheat usage are forecast for Argentina (down 0.2 mmt), Canada (down 1.6 mmt), and China (down 1.5 mmt).  No change is projected for Kazakhstan. 

The European Union (124.85 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 (95.8 mmt), North Africa (44.1 mmt), Selected Middle Eastern countries (37.3 mmt), Russia (36.5 mmt), the United States (33.7 mmt), the Former Soviet Union (12 Countries less Russia, Kazakhstan, and Ukraine) (28.4 mmt), Pakistan (24.6 mmt), Southeast Asia (18.2 mmt), Ukraine (12.7 mmt), Brazil (11.5 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 221.5 mmt for “new crop” MY 2015/16 are up 5.6% from 210.0 mmt in “old crop” MY 2014/15, and up 14.4% from 193.5 mmt in MY 2013/14, and is comparable to the range of 128.8-203.2 mmt over the MY 2007/08 through 2012/13 period (Table 8 and Figure 10).  The 37 year low in World wheat ending stocks occurred when supply-demand balances fell to 128.79 mmt in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks are projected at 198.3 mmt in “new crop” MY 2015/16, up 4.8% from 189.2 mmt in “old crop” MY 2014/15, and up 11.9% from 177.3 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 2.6 mmt), Australia (up 0.3 mmt), Brazil (up 0.4 mmt), North Africa (up 0.1 mmt), China (up 14.7 mmt), Russia (up 0.85 mmt), and Kazakhstan (up 1.2 mmt).  Decreases are projected for Argentina (down 0.5 mmt), the European Union (down 1.5 mmt), Selected Middle Eastern countries (down 0.8 mmt), Pakistan (down 0.1 mmt), India (down 5.3 mmt), and Ukraine (down 0.15 mmt).  No or minimal changes are forecast for the Former Soviet Union (less Russia, Kazakhstan, and Ukraine), Canada, and  Southeast Asia.

China (89.3 mmt) is the largest holder of wheat ending stocks in the World in “new crop” MY 2015/16, followed by the United States (23.1 mmt), Selected Middle Eastern countries (12.5 mmt), the European Union (11.7), India (11.9 mmt), North Africa (12.55 mmt), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (9.9 mmt), Australia (4.5 mmt), Russia (7.3 mmt), Canada (4.8 mmt), Ukraine (5.0 mmt), Southeast Asia (4.2 mmt), Kazakhstan (4.0 mmt), Pakistan (3.1 mmt), Argentina (2.7 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 31.0% for “new crop” MY 2015/16 are up from 29.6% in  “old crop” MY 2014/15 and from 27.7% in MY 2013/14 (Table 9 and Figure 11).  After falling to a minimum level of World wheat % ending stocks-to-use in MY 2007/08 (21.0% S/U), World wheat % S/U was 26.6% 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, 27.7% in MY 2013/14, 29.6% in “old crop” MY 2014/15, and are now projected to be 31.0% in “new crop” MY 2015/16.  The 38 year low in World wheat ending stocks-to-use occurred when supply-demand balances fell to 21.0% in MY 2007/08.  Foreign (non-U.S.) wheat ending stocks-to-use are projected at 24.4% in “new crop” MY 2015/16, up from 23.1% in “old crop” MY 2014/15, and up from 22.2% in MY 2013/14. 

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 United States, Australia, Canada, Brazil, China, Southeast Asia, the Former Soviet Union (less Russia, Kazakhstan, and Ukraine), Russia, and KazakhstanDecreases are projected for Argentina, the European Union, Selected Middle Eastern countries, North Africa, Pakistan, India, and Ukraine.

China (76.0%) is projected to be the largest holder of wheat ending stocks-to-use in the World in “new crop” MY 2015/16, followed by the United States (39.3%), the Former Soviet Union (less Russia, Kazakhstan, and Ukraine) (34.8%), Selected Middle Eastern countries (32.7%), Kazakhstan (31.3%), North Africa (28.0%), Argentina (22.8%), Southeast Asia (22.1%), Ukraine (19.5%), Canada (17.6%), Australia (17.4%), Brazil (12.7%), India (12.4%), Pakistan (12.4%), Russia (12.2%), and the European Union (7.5%).

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 21.0%.  Since that time, World wheat ending stocks-to-use have not fallen below 25.8% in MY 2013/14.

Table 1. U.S. Wheat Supply-Demand Balance Sheet: MY 2008/09 – “New Crop” MY 2015/16 (August 12th USDA & KSU 2015/16 Projections)

Item

2008/09

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

USDA

2015/16

KSU

Lower Exports

2015/16

KSU

Higher Exports 2015/16

% Probability of Occurring

 

 

 

 

 

 

 

 

65%

35%

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

44.1

44.1

44.1

 

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

2,136

2,136

2,036

Imports

127

119

97

112

123

169

144

125

125

125

Total Supply

2,945

2,984

3,236

2,968

3,118

3,022

2,760

3,014

3,014

3,014

 

 

Food Use

927

919

926

941

951

955

958

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

854

925

**850

**1,000

Feed & Residual Use

268

142

85

157

364

223

115

200

200

185

Total Use

2,288

2,008

2,373

2,226

2,400

2,431

2,008

2,164

2,089

2,224

 

 

Ending Stocks

657

976

863

743

718

590

753

850

925

790

% Ending Stocks-to-Use

28.69%

48.58%

36.37%

33.37%

29.91%

24.27%

37.50%

39.28%

44.28%

35.52%

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

$6.78

$4.87

$5.70

$7.24

 

$7.77

 

$6.87

$5.99

$4.65-$5.55 ($5.10)

$4.75

$5.75


 

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 (August 12, 2015)

Text Box: USDA 2015 Yield = 44.1 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 August 12, 2015)


 

Figure 7. Trends in U.S. Wheat Use & Ending Stocks: MY 2004/05 - 2015/16 (Aug. 12, 2015 USDA WASDE)

Figure 8. U.S. Wheat Ending Stocks vs U.S. Cash Prices: MY 2004/05 thru “New Crop” MY 2015/16
(August 12, 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
Info from the August 12, 2015 USDA WASDE report with KSU Projections

Text Box: KSU “New Crop” MY 2015/16 (65% Prob.)
44.3% S/U, $4.75 /bu
Text Box: “Old Crop” 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                     
(August 12, 2015 USDA WASDE Report)

Text Box: Wheat Trade
133-166 mmt since MY 2008/09
 
156.2 mmt in    MY 2015/16
Text Box: Wheat Usage
ñ12.4 mmt/yr 
(+2.0%/yr) 
since 2007/08
Text Box: Production
ñ14.2 mmt/yr (+2.3%/yr) 
since 2007/08
 
Text Box: End Stocks
221.5 mmt in “New Crop” 
MY 2015/16
 
Up 92.7 mmt (+72%) 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: 2012/13 
25.8% S/U & $7.77 /bu
Text Box: 1977/78
Text Box: 2006/07 
Text Box: 1986/87
Text Box: 2008/09
Text Box: “Old Crop” 2014/15 
29.8% S/U & $5.99 /bu
Text Box: 2010/11
Text Box: 2007/08
Text Box: 2009/10
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, “OLD CROP” MY 2014/15, and MY 2013/14

World Wheat Production                                                 by Major Country / Region

Wheat Production: New Crop 2015/16    August 2015

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

New Crop 2015/16 Production:               August Less July 2015                    

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

August Wheat Production: 2014/15          

July  Wheat Production: 2014/15

August Less July  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

726.55

721.96

4.59

100.6%

725.25

725.92

(0.67)

1.30

100.2%

715.11

11.44

101.6%

United States

58.13

58.46

(0.33)

99.4%

55.13

55.13

0.00

3.00

105.4%

58.11

0.02

100.0%

Total Foreign

668.41

663.50

4.91

100.7%

670.12

670.79

(0.67)

(1.71)

99.7%

657.01

11.40

101.7%

Major Exporters

211.42

212.88

(1.46)

99.3%

221.92

221.92

0.00

(10.50)

95.3%

217.75

(6.33)

97.1%

Argentina

11.10

11.50

(0.40)

96.5%

12.50

12.50

0.00

(1.40)

88.8%

10.50

0.60

105.7%

Australia

26.00

26.00

0.00

100.0%

23.67

23.67

0.00

2.33

109.8%

25.30

0.70

102.8%

Canada

26.75

27.50

(0.75)

97.3%

29.30

29.30

0.00

(2.55)

91.3%

37.53

(10.78)

71.3%

European Union

147.82

147.88

(0.06)

100.0%

156.45

156.45

0.00

(8.63)

94.5%

144.42

3.40

102.4%

Major Importers

203.42

203.22

0.20

100.1%

196.47

196.46

0.01

6.95

103.5%

194.11

9.31

104.8%

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

19.56

19.36

0.20

101.0%

16.90

16.90

0.00

2.66

115.7%

19.72

(0.16)

99.2%

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

115.03

109.88

5.15

104.7%

112.73

112.73

0.00

2.30

102.0%

103.87

11.16

110.7%

Russia

60.00

57.00

3.00

105.3%

59.08

59.08

0.00

0.92

101.6%

52.09

7.91

115.2%

Kazakhstan

14.00

13.50

0.50

103.7%

13.00

13.00

0.00

1.00

107.7%

13.94

0.06

100.4%

Ukraine

25.50

24.00

1.50

106.3%

24.75

24.75

0.00

0.75

103.0%

22.28

3.22

114.5%

 

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

World Wheat Exports                                                 by Major Country / Region

Wheat Exports: New Crop 2015/16     August 2015

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

New Crop 2015/16 Exports:               August Less July 2015                    

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

August Wheat Exports: 2014/15          

July  Wheat Exports: 2014/15

August Less July 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

156.21

158.07

(1.86)

98.8%

165.05

163.94

1.11

(8.84)

94.6%

165.90

(9.69)

94.2%

United States

25.17

25.86

(0.69)

97.3%

23.25

23.28

(0.03)

1.92

108.3%

32.00

(6.83)

78.7%

Total Foreign

131.04

132.31

(1.27)

99.0%

141.80

140.66

1.14

(10.76)

92.4%

133.90

(2.86)

97.9%

Major Exporters

73.00

75.70

(2.70)

96.4%

81.70

80.40

1.30

(8.70)

89.4%

76.17

(3.17)

95.8%

Argentina

5.50

6.70

(1.20)

82.1%

5.50

5.00

0.50

0.00

100.0%

2.25

3.25

244.4%

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

18.00

19.50

(1.50)

92.3%

24.00

23.70

0.30

(6.00)

75.0%

23.27

(5.27)

77.4%

European Union

31.00

31.00

0.00

100.0%

35.20

34.70

0.50

(4.20)

88.1%

32.03

(1.03)

96.8%

Major Importers

6.32

6.44

(0.12)

98.1%

7.85

8.09

(0.24)

(1.53)

80.5%

5.19

1.13

121.8%

Brazil

1.00

1.00

0.00

100.0%

1.70

1.80

(0.10)

(0.70)

58.8%

0.08

0.92

1250.0%

China

1.00

1.00

0.00

100.0%

0.80

0.85

(0.05)

0.20

125.0%

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

0.63

0.55

0.08

114.5%

0.61

0.55

0.06

0.02

103.3%

0.50

0.13

126.0%

Pakistan

0.60

0.60

0.00

100.0%

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%

0.94

0.89

0.05

(0.05)

94.7%

0.89

0.00

100.0%

India

0.30

0.30

0.00

100.0%

3.40

3.40

0.00

(3.10)

8.8%

6.05

(5.75)

5.0%

Former Soviet Union - 12 Countries

42.41

40.86

1.55

103.8%

40.66

40.33

0.33

1.75

104.3%

37.15

5.26

114.2%

Russia

23.00

22.00

1.00

104.5%

22.70

22.20

0.50

0.30

101.3%

18.57

4.43

123.9%

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

13.00

12.50

0.50

104.0%

11.30

11.50

(0.20)

1.70

115.0%

9.76

3.24

133.2%

 

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

World Wheat Imports                                                 by Major Country / Region

Wheat Imports: New Crop 2015/16     August 2015

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

New Crop 2015/16 Imports:               August Less July 2015                    

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

August Wheat Imports: 2014/15          

July  Wheat Imports: 2014/15

August Less July 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

155.07

155.26

(0.19)

99.9%

160.25

160.20

0.05

(5.18)

96.8%

158.24

(3.17)

98.0%

United States

3.40

3.54

(0.14)

96.0%

3.93

3.92

0.01

(0.53)

86.5%

4.59

(1.19)

74.1%

Total Foreign

151.67

151.73

(0.06)

100.0%

156.31

156.28

0.03

(4.64)

97.0%

153.65

(1.98)

98.7%

Major Exporters

7.14

7.14

0.00

100.0%

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

6.50

0.00

100.0%

6.00

6.00

0.00

0.50

108.3%

3.97

2.53

163.7%

Major Importers

82.87

82.45

0.42

100.5%

85.84

86.24

(0.40)

(2.97)

96.5%

87.36

(4.49)

94.9%

Brazil

6.50

6.50

0.00

100.0%

6.00

6.30

(0.30)

0.50

108.3%

7.07

(0.57)

91.9%

China

2.20

2.00

0.20

110.0%

1.93

1.70

0.23

0.27

114.0%

6.77

(4.57)

32.5%

Selected Middle East

19.47

20.25

(0.78)

96.1%

21.61

21.74

(0.13)

(2.14)

90.1%

20.69

(1.22)

94.1%

North Africa

25.30

24.60

0.70

102.8%

25.28

25.75

(0.47)

0.02

100.1%

25.27

0.03

100.1%

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

19.10

18.80

0.30

101.6%

19.90

19.60

0.30

(0.80)

96.0%

16.41

2.69

116.4%

India

0.80

1.00

(0.20)

80.0%

0.05

0.05

0.00

0.75

1600.0%

0.03

0.77

2666.7%

Former Soviet Union - 12 Countries

7.09

6.89

0.20

102.9%

7.76

7.71

0.05

(0.67)

91.4%

7.41

(0.32)