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Wheat Outlook Summary

Core Content

This report provides an overview of the U.S. and global wheat market outlook for the 2018/19 marketing year, including planting intentions, production forecasts, use estimates, and trade dynamics.

U.S. Domestic Outlook

Planting Intentions

• All wheat planted area for 2018 is projected at 47.3 million acres, representing a modest recovery from the previous year.
• Other spring wheat planting intentions increased by 15% to 12.627 million acres, driven by rising prices for spring wheat.
• Durum planting intentions decreased by 13% to 2.0 million acres, as cotton and other grains offered more favorable returns.

Supply and Utilization

• All wheat feed and residual use for 2017/18 was reduced by 30 million bushels, leading to an increase in ending stocks to 1,064 million bushels.
• The stocks-to-use ratio for 2017/18 rose to 52.9%, well above the 5-year average of 38.9%, but still below the 2016/17 level of 1,181 million bushels.
• Hard red winter (HRW) feed and residual use was reduced by 25 million bushels, while hard red spring (HRS) was reduced by 5 million bushels.
• U.S. all wheat exports for 2017/18 remain at 925 million bushels or 24.5 million tons.
• HRW exports were reduced by 10 million bushels to 370 million bushels, while white wheat exports increased by 10 million bushels due to strong demand from Japan.

Wheat Conditions

• Winter wheat conditions in the Southern Plains remain poor, with only 13-14% rated "good" to "excellent" in Kansas and Texas, respectively.
• A freeze on April 7 further damaged Oklahoma and Northern Texas winter wheat.
• In the Northern High Plains, snow eased dry conditions, but overall, winter wheat conditions are among the worst in recent years.
• The stocks-to-use ratio for the 2018/19 season is projected to be 45.4%, slightly lower than the 2017/18 ratio of 52.8%, but still above the 5-year average of 42.7%.
• The season-average farm price (SAFP) for 2018/19 is forecast at $4.70 per bushel, up 5 cents from the 2017/18 midpoint and 10 cents from the November projection.

International Outlook

Global Production

• World wheat production for 2017/18 is projected at 759.8 million tons, up 1.0 million tons from the previous month.
• Morocco saw the largest production revision, with an increase of 0.8 million tons.

Global Use

• Foreign wheat use for 2017/18 is projected at 713.5 million tons, up 1.4 million tons.
• EU is expected to increase feed and residual use by 2.0 million tons, while exports are forecast to decrease due to low prices and strong domestic demand.
• India reduced its FSI consumption by 0.7 million tons to align with government stock data.

Ending Stocks

• Global wheat ending stocks are projected to rise to a record 271.2 million tons, up 1.5 million tons this month.
• Russia is expected to export 38.5 million tons of wheat, the highest individual country export in 20 years.
• EU wheat exports are projected down to 24.0 million tons, despite declining prices in France and Romania.

Trade Dynamics

• Russian exports remain strong due to price competitiveness, expanded outreach, and currency depreciation.
• Argentina increased its wheat exports by 0.5 million tons, reaching 14.5 million tons, the highest on record.
• Australian exports for the 2017/18 trade year were reduced by 0.5 million tons to 17.0 million tons, partly offset by Argentina's increase.
• U.S. exports for both the July-June trade year and June-May marketing year are unchanged at 925 million bushels.

Key Points and Trends

• U.S. wheat faces international price competition, particularly from Russia and Argentina.
• Global wheat market is extremely competitive, with Russia expected to dominate as the largest exporter.
• Domestic use is expected to increase slightly in 2018/19, driven by higher feed and residual use.
• Wheat prices have been influenced by weather conditions and global supply and demand dynamics.
• Ending stocks for 2018/19 are projected to be 1,064 million bushels, a significant increase from the 2017/18 level.
• Wheat production for 2018/19 is expected to rise, with planting area projected at 46.5 million acres in February and 47.3 million acres in March.

Summary of Key Figures

Conclusion

The U.S. wheat outlook for 2018/19 shows a modest increase in planted area, but challenges remain due to global competition and weather-related concerns. Russia is expected to dominate the global wheat export market, while U.S. exports remain stable despite price pressures. Domestic use is expected to increase slightly, and ending stocks are projected to be above the 5-year average. The wheat market is influenced by weather conditions, global supply and demand, and price competitiveness.