WHEAT YEARBOOK--SUMMARY February 26, 1996 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. WHS-0296. The complete text of the WHEAT YEARBOOK is available 2-3 working days following release of this summary. ----------------------------------------------------------------------------- Wheat Supplies Likely To Remain Relatively Tight in 1996/97 U.S. wheat supplies in 1996/97 are expected to rise about 5 percent from the low levels of 1995/96 as increased production more than offsets low carryin stocks. Much of the larger production will come from increased area. Winter wheat planted area was up 7 percent, and spring wheat plantings also will increase. U.S. average yields are expected to rise from last year, when they were below average. Even though wheat in the Southern Plains is reported in poor condition, weather developments this spring and summer will largely determine yields. USDA will release its first forecast of U.S. and world production for 1996 on May 10. Beginning stocks on June 1, 1996, are forecast at 346 million bushels, down more than 160 million from a year earlier and barely larger than in 1974/75. About a third of the stocks are expected to be in CCC inventory, leaving privately owned stocks exceptionally low. Demand for U.S. wheat will likely be strong early in 1996/97. With U.S. supplies remaining relatively tight, demand becomes the key to price developments. Wheat prices usually are lowest during or soon after harvest, when supplies are largest. U.S. corn supplies are forecast to be tight this summer, and wheat will be used for feed unless its price is well above the corn price. Also, little of competing exporters' 1996 production will be available until late summer and fall. However, foreign production is expected up in 1996/97, and as increased competitor supplies become available, world wheat prices are expected to decline. Several major wheat exporting countries are anticipated to increase wheat area in response to this year's high prices. The European Union, Canada, and Australia are each expected to plant more wheat for 1996/97. Increased rainfall in the former Soviet Union and North Africa has improved conditions in those regions. For the 1995/96 year ending May 31, U.S. wheat supplies are down more than 200 million bushels, mostly because of below average yields, particularly in the Southern Plains. Total use is projected down less than 60 million bushels because of strong exports. Lower yields, strong exports, and tight global supplies have pushed the 1995/96 wheat farm price to a projected $4.40-4.50 per bushel, much above the 1974/75 record of $4.09. The December 1995 wheat farm price was $4.88 per bushel, the highest reported for any month since $4.96 in March 1974. However, if past wheat prices are adjusted for inflation, the current prices are not records, as real wheat prices have generally trended down for over a century. Despite increased world wheat production in 1995/96, projected consumption is again expected to exceed production, reducing global stocks to their lowest since 1975/76. The tight supplies and strong import demand have dramatically raised U.S. and international wheat prices. Despite higher prices, global trade is little changed from last year. U.S. wheat exports have shown strong gains in 1995/96. According to U.S. Export Sales, wheat commitments as of February 15 were 2.6 million tons ahead of last year's pace. This issue of the Wheat Yearbook contains a special article entitled "U.S. Wheat Area: Tracking Flexibility and Regional Shifts Since 1990." THE WHEAT SITUATION AT A GLANCE --------------------------------------------------------------------------- All wheat: Supply and disappearance 1/ --------------------------------------------------------------------------- Year beginning 1991/92 1992/93 1993/94 1994/95 1995/96 June 1 Estimated Projected --------------------------------------------------------------------------- Million bushels Beginning stocks 868 475 531 568 507 Production 1,980 2,467 2,396 2,321 2,186 Imports 41 70 109 92 70 Supply, total 2,889 3,012 3,036 2,981 2,762 Domestic Food 789 835 872 852 860 Seed 98 99 96 89 106 Feed and residual 244 194 272 345 175 Domestic, total 1,132 1,128 1,240 1,287 1,141 Exports 1,282 1,354 1,228 1,188 1,275 Disappear., total 2,414 2,481 2,467 2,475 2,416 Ending stocks 475 531 568 507 346 --------------------------------------------------------------------------- Wheat by classes: Supply and disappearance 1/ --------------------------------------------------------------------------- Year beginning Hard Hard Soft White Durum Total June 1 red red red winter spring winter --------------------------------------------------------------------------- 1994/95 (Estimated) Million bushels Beginning stocks 227 201 45 67 28 568 Production 971 515 434 304 97 2,321 Supply, total 2/ 1,202 767 480 386 147 2,981 Domestic disappearance 586 282 231 107 81 1,287 Exports 422 292 212 222 40 1,188 Disappearance, total 1,008 574 443 329 121 2,475 Ending stocks 194 193 37 57 26 507 1995/96 (Projected) Beginning stocks 194 193 37 57 26 507 Production 824 475 450 334 102 2,186 Supply, total 2/ 1,019 699 486 409 149 2,762 Domestic disappearance 477 257 197 122 88 1,141 Exports 400 325 265 245 40 1,275 Disappearance, total 877 582 462 368 128 2,416 Ending stocks 142 117 24 41 22 346 --------------------------------------------------------------------------- 1/ Includes flour and products in wheat equivalent. 2/ Total supply includes imports. Printed copies of Wheat Yearbook will be available in about 1 week. For more information contact Ed Allen (202) 219-0831. Text of the report will also be available electronically. For details, call (202) 720-5505. END-END-END