20181015-USDA-USDA_Wheat_Outlook_2018.10.15_28页_1mb

Wheat Outlook Summary

Core Content

This report provides an overview of the global and domestic wheat market outlook for the 2018/19 marketing year. It highlights changes in production, supply, utilization, and trade, along with the implications of the new United States-Mexico-Canada Agreement (USMCA) on wheat grading standards.

Main Points

Global Wheat Supplies Tighter

• Global all-wheat production for 2018/19 is reduced by 2.5 million metric tons due to significant cuts in Australia and Russia.
• Despite a slight increase in U.S. production, global supplies are now 5 percent below the record levels of the previous year.
• Global ending stocks are at 260.2 million metric tons, reflecting a tighter balance sheet due to increased use and reduced supply.

Domestic Outlook

• The U.S. 2018/19 all-wheat production is increased by 7.7 million bushels, with the largest gains in hard red spring (HRS) and durum wheat.
• Soft red winter (SRW) wheat production is cut by 6.2 million bushels.
• Imports of hard red spring and durum wheat from Canada have increased, lifting supplies by 5 million bushels.
• First quarter ending stocks are at 2,378.7 million bushels, with a 21 percent increase in disappearance from June to August compared to the same period in 2017.
• Feed and residual use of all-wheat is reduced by 10 million bushels due to the rising wheat-to-corn price ratio and abundant corn supplies.
• The 2018/19 ending stocks are increased by about 21 million bushels, leading to a higher carryout.

U.S. Wheat Exports

• U.S. all-wheat export projections remain at 27.9 million metric tons (1,025 million bushels).
• Despite slow first quarter exports, recent sales have improved, and HRW exports are nearly equivalent to the same period last year.
• However, HRW exports are still reduced by 10 million bushels due to the lagging pace of trade.
• White wheat exports are increased by 10 million bushels, as Australia's production declines due to drought, reducing its competitiveness in international markets.

Price Trends

• The 2018/19 season average farm price (SAFP) remains unchanged at $5.10 per bushel, with a narrowed range of $4.80 to $5.40 per bushel.
• High wheat prices relative to other grains are expected to reduce feed and residual use in several countries, including the EU, Russia, and others in Asia.

Key Information

USMCA Impact on Wheat Grading

• The USMCA introduces reciprocal grading standards for wheat, meaning wheat from one country will be treated no less favorably than domestic wheat.
• This change aims to ensure fair treatment for U.S. wheat in Canadian markets and vice versa.
• Canadian authorities previously assigned the lowest grade to U.S. wheat due to its non-native origin, which is now being addressed under the new agreement.
• U.S. wheat producers and industry groups have expressed support for the agreement, which they believe will help maintain fair pricing.

Production by Class

• Hard Red Winter (HRW): Production is reduced by 5 million bushels to 40 million bushels.
• Soft Red Winter (SRW): Production is reduced by 5 million bushels to 45 million bushels.
• Hard Red Spring (HRS): Production increased by 53 percent to 587 million bushels, driven by improved yields and planted area.
• Durum: Production increased by 40 percent to 77.3 million bushels, with a 22 bushel per acre yield increase.
• White Wheat: Aggregate white wheat production is up about 4 percent, with soft white winter (SWW) production offsetting declines in hard white winter (HWW).

International Outlook

• Australia: Wheat production is reduced again, with the national average yield at 1.67 tons per hectare and output down 1.5 million tons to 18.5 million tons.
• Russia: Wheat production is cut by 1.0 million tons to 70.0 million tons, with export projections unchanged.
• Argentina: Wheat production is increased by 0.5 million tons to 18.5 million tons due to higher planted area.
• Global Use and Trade: Projected global wheat use is slightly lower due to higher prices, with a 1.0 million ton reduction in world wheat trade for the international trade year (July-June).

Summary Table

Additional Notes

• The report also includes several maps and tables illustrating production changes, supply and utilization trends, and trade dynamics.
• The USMCA is expected to have a modest impact on U.S. wheat producers in the near term.
• The U.S. remains a major exporter, with the potential to increase its market share as other countries face production challenges.