20170512-USDA-USDA_Wheat_Outlook_2017.05.12_30页_1mb

Economic Research Service Wheat Outlook Summary (May 12, 2017)

Core Content

This document provides an overview of the U.S. and global wheat production, supply, and utilization for the 2017/18 marketing year, as well as updates on the 2016/17 balance sheet. It includes key market insights, export forecasts, and international outlooks.

U.S. 2017/18 Wheat Outlook

• Winter Wheat Production: U.S. winter wheat production for 2017/18 is projected to decline by 25% from 2016, due to lower harvested area and yields (48.8 bushels/acre vs. 55.3 bushels/acre in 2016).
• All-Wheat Production: Overall U.S. wheat production is expected to fall by 21% compared to 2016/17, contributing to an all-wheat production forecast that is nearly 500 million bushels smaller than the prior year.
• Exports: Despite reduced production, U.S. exports are forecast to fall only 5% in 2017/18, supported by strong sales, particularly of hard red winter wheat. Exports are projected to reach 1,035 million bushels.
• Season-Average Farm Price (SAFP): The all-wheat SAFP for 2017/18 is expected to rise by 35 cents, to $4.25 per bushel, but remains well below the 5-year average of $5.88 per bushel and $7.77 per bushel, the 5-year high from 2012/13.
• Domestic Use: Food use for 2017/18 is forecast to remain at 955 million bushels, slightly below the 2016/17 estimate due to reduced per capita consumption and improved milling efficiency. Feed and residual use is projected down by 11%.
• Imports: U.S. wheat imports for 2016/17 were increased by 5 million bushels to 115 million, primarily due to higher imports of hard red spring and durum wheat.

Key Market Information

• Harvested Area and Yields: The May 10 USDA NASS Crop Progress report indicates that 50% of winter wheat is headed, slightly above the 5-year average of 46%, but 5 points below the previous year's pace.
• Weather Impact: Adverse weather, particularly a late-April snowstorm, affected the Eastern Plains of the hard red winter wheat region. The condition of the crop in Kansas and Nebraska declined by 6% and 14%, respectively, between the weeks of April 30 and May 7.
• Flour Milling: Flour production data for the third quarter of 2016/17 helped clarify food use. Extraction rates have increased, leading to reduced total use of wheat for food. Food use for 2016/17 is slightly more than 2 million bushels below the 2015/16 projection.
• Supply and Utilization: Total U.S. supply for 2017/18 is projected to decrease by 9%, while total use is expected to fall by 2%. The ending stocks for 2016/17 remain unchanged at 1,159.3 million bushels.

International Outlook

• Global Wheat Production: World wheat production for 2017/18 is projected at 737.8 million tons, a 15.3 million ton decline from the 2016/17 record. The U.S. accounts for most of the reduction, while foreign production is expected to fall by 1.9 million tons.
• Major Wheat Producers:
  • European Union (EU): Expected to produce 151.0 million tons, a third-highest harvest ever, up almost 10 million tons from the previous year.
  • China: Projected to be the second-largest producer, with 131.0 million tons. China maintains a high wheat price due to government intervention, with a minimum price of $9.70 per bushel for winter wheat.
  • India: Projected to produce a record 97.0 million tons, up 11.5% from the previous year.
  • Morocco: Expected to produce 26.2 million tons, up slightly from the previous year.
  • Russia, Kazakhstan, and Ukraine (KRU): Projected to produce 105.0 million tons, down 9.3 million tons from the previous year due to lower yields.
• China's Wheat Policies: China's government continues to support wheat through minimum price guarantees and import quotas, ensuring high domestic prices despite global declines. This has led to increased wheat stocks, with China projected to hold nearly 50% of global wheat inventories for 2017/18, compared to its 18% share of global production.
• Other Countries:
  • Canada: Wheat planting area is expected to remain similar to last year, but western red spring wheat is up and durum is down.
  • Australia: Wheat production is projected to decline due to return to trend yields and low prices, leading to a 10 million ton drop.
  • Argentina: Wheat production is expected to increase by 1.0 million tons, due to higher planted area.
  • North Africa: Wheat production is forecast to rise by 3.7 million tons, recovering from drought, but recent dryness may limit record yields.

Summary of Key Changes

• U.S. Production: Down 25% for winter wheat, 21% for all wheat.
• U.S. Exports: Up 10 million bushels to 1,035 million bushels, making the U.S. the top wheat exporter.
• Global Production: Down 15.3 million tons, with U.S. contributing the largest decline.
• China's Role: Maintains high prices and significant stocks, influencing global wheat trade.
• Market Trends: Reduced per capita consumption and improved milling efficiency are key factors in declining food use, while exports remain strong due to competitive pricing and demand.

Conclusion

The 2017/18 wheat outlook reflects a decline in U.S. production, strong export performance, and continued high prices in China. Global wheat supply is expected to increase slightly, driven by China's growing stocks and moderate production declines in other major wheat-producing regions. The U.S. remains a key player in the global wheat market, supported by export sales momentum and market dynamics.