WHEAT YEARBOOK--SUMMARY March 3, 1997 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. The complete text of the WHEAT YEARBOOK (WHS-1997) will be available 2-3 working days following release of this summary. ------------------------------------------------------------------------------ Wheat Prices Likely To Weaken in 1997/98 U.S. wheat prices are likely to move lower in 1997/98, despite expectations that the wheat crop will be little changed from this year. Increased carryin stocks will lead to a small rise in 1997/98 supplies, but little year-to-year growth in use is expected. Thus, ending stocks are likely to continue to accumulate and prices likely will fall. Increased carryin stocks in other exporting countries and only modest growth in global import demand will pull world wheat prices lower, also pressuring U.S. prices down. U.S. wheat supplies are expected to rise in 1997/98. Beginning stocks are projected up 26 percent from 1996/97's low level and imports are likely to rise. Winter wheat acreage is estimated down 7 percent and spring wheat area is also likely to decline. However, a much larger portion of the planted acres will be harvested for grain than in 1996 and yields should be higher. In 1996/97 adverse weather in the Central and Southern Plains and the Corn Belt led to below average yields and an unusually small percentage of planted acres was harvested for grain. Demand for U.S. wheat is likely to increase only moderately. Domestic use is likely to fall as feed and residual use declines. Although wheat prices are expected to be significantly lower in first-quarter 1997/98 than a year earlier, prices for corn will also be much lower than a year ago when corn and sorghum supplies were extraordinarily tight. The change in relative prices will make wheat less competitive in feed rations than in 1996/97. Unlike 1996/97, competitors will enter the 1997/98 marketing year with large stocks, providing intense competition for U.S. exporters. Dramatically lower prices in 1996/97 are expected to curtail acreage planted to wheat in foreign exporting countries, especially Canada, Australia, and Argentina. However most of the major foreign exporters will carry large stocks into the new marketing year and only moderate import growth is expected. Northern Hemisphere growing conditions have been mixed. Extreme cold in Europe has been accompanied by snowfall that has prevented winterkill in many areas. Moisture conditions have been favorable in Morocco and Spain, but Tunisia and Algeria have been drier than average. Normal weather conditions prevail in China and India. For 1996/97, U.S. wheat supplies are estimated to be the lowest since 1975/76, due to extremely small beginning stocks and poor winter wheat production. Total use is projected down 5 percent from 1995/96 because of expanding foreign production and sharp competition for a smaller global market. U.S. exports are forecast at 950 million bushels, down sharply from 1995/96. Season average farm prices are forecast at $4.20 to $4.40 per bushel, but monthly farm prices have been declining from the record highs achieved in the spring of 1996. Five special articles are included in this issue. They are "Wheat and the Conservation Reserve Program: Past, Present, and Future," "China: Food Security Concerns Affect Wheat Imports," "U.S. Competitors Respond Dramatically to High World Wheat Prices," "Forecasting Feed and Residual Use of Wheat," and "Wheat Farm Characteristics, Income, and Costs in 1994." THE WHEAT SITUATION AT A GLANCE -------------------------------------------------------- All wheat: Supply and disappearance 1/ -------------------------------------------------------- Year beginning 1992/93 1993/94 1994/95 1995/96 1996/97 June 1 2/ 3/ -------------------------------------------------------- Million bushels Beginning stocks 475 531 568 507 376 Production 2,467 2,396 2,321 2,183 2,282 Imports 70 109 92 68 80 Supply, total 3,012 3,036 2,981 2,757 2,738 Domestic disappear. Food 835 872 853 884 910 Seed 99 96 89 104 104 Feed & residual 194 272 344 152 300 Domestic, total 1,128 1,240 1,287 1,140 1,314 Exports 1,354 1,228 1,188 1,241 950 Disappearance, total 2,481 2,467 2,475 2,381 2,264 Ending stocks 531 568 507 376 474 ---------------------------------------------------------- Wheat by class: Supply and disappearance 1/ ---------------------------------------------------------- Year beginning Hard Hard Soft White Durum Total June 1 red red red winter spring winter ---------------------------------------------------------- Million bushels 1995/96: 2/ Beginning stocks 194 193 37 57 26 507 Production 825 475 456 325 102 2,183 Supply, total 4/ 1,019 698 492 401 147 2,757 Domestic disappear. 481 262 207 108 82 1,140 Exports 384 330 250 238 39 1,241 Disappear., total 865 592 457 346 121 2,381 Ending stocks 154 106 35 55 26 376 1996/97: 3/ Beginning stocks 154 106 35 55 26 376 Production 762 627 422 355 116 2,282 Supply, total 4/ 917 781 457 420 163 2,738 Domestic disappear. 493 312 270 147 92 1,314 Exports 280 275 145 215 35 950 Disappear., total 773 588 414 362 127 2,264 Ending stocks 144 193 43 58 36 474 ---------------------------------------------------------- 1/ Includes flour and products in wheat equivalent. 2/ Estimated. 3/ Projected. 4/ Includes imports. Printed copies of the WHEAT YEARBOOK will be available in about 2 weeks. For more information contact Sara Schwartz (202) 210-0768. Text of the full report will also be available electronically. For details, call (202) 720-5505. END_OF_FILE