WHEAT OUTLOOK April 14, 1997 Approved by the World Agricultural Outlook Board ------------------------------------------------------------------------------ WHEAT OUTLOOK is published monthly by the Economic Research Service, U.S. Department of of Agriculture, Washington, DC 20005-4788. WHS-0497. ------------------------------------------------------------------------------ Recent Developments HIGHLIGHTS -- U.S. 1996/97 export forecast revised up 4 percent based on the pace of sales and shipments. -- World consumption forecast boosted; global stocks reduced. --USDA March 1 Stocks confirm low total, as on-farm share increases. --U.S. import forecast revised up 10 million bushels. --USDA prospective wheat plantings down 9 percent from last year. United States, Canada, and Australia 1996/97 Export Forecasts Raised Higher import demand in several countries has pushed the pace of purchases and shipments beyond earlier expectations, boosting export prospects for the second half of 1996/97. The export forecasts for the United States and Canada each increased 1.0 million tons, while Australia's is up 0.5 million. Australia has shipped wheat at a record pace in recent months, moving its record-large crop quickly. While Canada encountered transportation problems during the winter, which slowed exports, sales have recently increased, and shipments are expected to continue to accelerate this spring. U.S. 1996/97 (June-May) wheat exports are forecast at 985 million bushels (26.5 million tons July-June), up 35 million from last month. With tight supplies in the United States keeping nearby wheat prices relatively high, and no Export Enhancement Program export subsidies, it was expected that the pace of U.S. exports would drop as the season progressed. Exports have slowed, but not as dramatically as expected. As of April 3, Grain Inspections showed 870 million bushels for export, and U.S. Export Sales reported that outstanding sales of wheat grain were over 100 million bushels. Additionally, flour and product exports are expected to reach almost 30 million bushels of wheat equivalent. World Wheat Consumption and Trade Up; Global Stocks Reduced World wheat imports forecast for 1996/97 increased almost 2 million tons this month, boosting world trade 0.5 million tons above last year. Several countries in Eastern Europe, especially Poland, are importing more than expected, as governments take action after a poor 1996 harvest. The pace of purchases has also boosted import forecasts by 0.5 million each for Iran (now the world's largest importer), Turkey, and the European Union (EU). These increases and smaller increases in several other countries more than offset reduced imports by the Newly Independent States (NIS) (down 1.0 million) and by China (down 0.5 million). Forecast foreign wheat consumption for 1996/97 increased 5.5 million tons this month, up 1 percent from last month, and 4 percent from a year ago. Stronger than expected disappearance is indicated for several countries, more than offsetting reductions in the NIS plus Baltics (the Former Soviet Union), and Eastern Europe. Iran's consumption was increased 1.5 million tons, with 1.0 million tons of the increase in feed disappearance as quality problems with 1996 production have caused mills to turn to imported wheat. Some undocumented shipments to neighboring countries may also appear as disappearance in Iran. Forecast consumption was increased 0.5 million tons each for Egypt and the EU, with most of the EU increase in feed use. Smaller increases for several countries boosted consumption for the North Africa/Middle East region, where, excluding Iran and Egypt, consumption increased 0.9 million tons. Increased 1996/97 global consumption has reduced forecast world ending stocks by 3.8 million tons. As a result of the revisions, the global stocks-to-use ratio is now forecast at 18.8 percent, down from 19.1 percent a year ago. Previous forecasts implied increasing world wheat stocks-to-use in 1996/97. However, even though prospective ending stocks were reduced this month for the United States, Canada, and Australia, they are still up sharply from a year ago. Importers' stocks, while forecast down from last year, are generally based on less reliable data. U.S. Import Forecast Boosted to 90 Million Bushels USDA forecasts 1996/97 wheat imports at 90 million bushels, up 10 million from last month. The import pace, which was slow during the summer and early fall because Canadian supplies were tight, quickened in October. Imports are forecast at 27 million bushels for the December-February quarter, more than double the level a year earlier. Imports are expected to remain strong in the final quarter of the season (March-May). About 60 percent of the 10-million-bushel increase is hard spring wheat (excluding durum), with white wheat accounting for the rest. Imports for the season would be one-third higher than last season's level, but nearly the same as in 1994/95. U.S. Season-Average Farm Price Increased Slightly USDA increased the season-average farm price range to $4.30-$4.40, up 5 cents on both ends from last month. After 9 months of declining average monthly farm prices, the March all-wheat price rebounded to $3.96, up 12 cents from February. Winter and other spring prices increased 7 and 13 cents from last month, respectively. In the past 8 years, an average 93 percent of the crop was marketed by the end of March. Marketings in 1996/97 appear to be slower than this average. Last month, when average farm prices continued to decline, it appeared a larger than usual proportion of the crop would likely be sold at lower prices at the end of the marketing year. However, recent price gains give farmers an opportunity to sell at higher prices. U.S. Wheat Farm Stocks Increase USDA's Grain Stocks report, released on March 31, estimated all wheat stocks on March 1 at 822 million bushels, down slightly from a year ago, but still very low by historical standards. Off-farm stocks were estimated at 501 million bushels, down 20 percent from a year ago, while farm stocks were estimated at 321 million bushels, up 31 percent. The farm stocks in the hard red spring producing States of North Dakota and Minnesota rose 31 and 35 percent from last year. Hard red winter producing states such as Kansas, Oklahoma and Montana also experienced increased farm stocks of 21, 32, and 25 percent from last year. White wheat producing states also held more farm stocks--farm stocks increased 25 percent in Oregon and 41 percent in Washington. Higher farm stocks compared with a year ago indicate a slower marketing pace for 1996/97 (below the pace in each of the last 5 years) as producers hold their grain for higher prices. U.S. Wheat Planting Intentions Down 6.5 Million Acres in 1997 USDA released its Prospective Plantings report on March 31, 1997. All wheat acreage was estimated at 69.2 million acres, down 9 percent from last year, but up slightly from 1995 plantings. The report showed other spring and durum wheat planting intentions down this year, as wheat prices sharply below 1996 have encouraged farmers in the Northern Plains to plant alternative crops such as oats, sunflower, and flaxseed, or return to more normal crop rotation practices, including extensive summer fallow. Other spring wheat acreage is estimated at 17.8 million acres, down 11 percent from 1996, but up from 1995. On average, 8 out of 12 States intend on planting 15 percent less spring acreage, with the only increases coming from Oregon, Washington, and Wyoming. Durum intentions are estimated at 3.2 million acres, down 12 percent from 1996 and 8 percent from 1995. In North Dakota, which has averaged 85 percent of the total planted acreage the past 2 years, planting intentions declined 13 percent to 2.6 million acres. Arizona and Minnesota intentions are also down 39 and 50 percent from 1996. Winter wheat 1997 plantings are 48.2 million acres, down 7 percent from 1996. Kansas, Oklahoma, and Nebraska declined an average 6 percent from 1996, while some smaller producing States increased slightly. **************************************************************************** * * Information Contacts: * * * * James N. Barnes (domestic) (202) 219-0711 * * Dennis Shields (domestic) (202) 219-0768 * * Edward W. Allen (international) (202) 219-0831 * * Electronic copies available at: * * * * World Wide Web Site www.econ.ag.gov * * ERS Autofax system (202) 219-1107 * * Document Number 12105 * * Next Wheat Situation Outlook Report will be released on May 13, 1997 * * The 1997 Wheat Yearbook is now available at: * * 1) ERS autofax; Call (202) 219-1107 and select document 12100 for a * * complete directory of the historical tables and special articles. * * 2) ERS homepage: www.econ.ag.gov/, select Products and Services, then * * Publications, Field Crops, and Wheat. * *************************************************************************** Table 1 -- Wheat: U.S. market year supply and disappearance Item |1991/92 1992/93 1993/94 1994/95 1995/96E 1996/97P -------------------|------------------------------------------------------- Area (mil. ac.) | ARP (%) | 15.0 5.0 0.0 0.0 0.0 N.A. Nat'l total base | 89.6 89.6 89.6 88.9 88.5 87.9 CRP base retired | 10.4 10.6 10.8 10.8 10.8 10.6 Eff.base/ctr.acres| 79.2 78.9 78.4 78.1 77.7 77.3 0,50/92/85 | 5.8 4.0 5.7 5.2 6.1 N.A. Planted | 69.9 72.2 72.2 70.3 69.1 75.6 Harvested | 57.8 62.8 62.7 61.8 60.9 62.9 Yield (bu/ac) | 34.3 39.3 38.2 37.6 35.8 36.3 | Supply (mil. bu.) | Beg. Stocks | 868.1 475.0 530.7 568.5 506.6 376.0 Production | 1,980.1 2,466.8 2,396.4 2,321.0 2,182.6 2,281.8 Imports 1/ | 40.7 70.0 108.8 91.9 67.9 90.0 TOTAL | 2,889.0 3,011.8 3,035.9 2,981.4 2,757.1 2,747.8 | Use | Food | 789.5 834.8 871.7 852.9 884.0 900.0 Seed | 97.7 99.1 96.3 89.2 104.1 103.0 Feed & Residual | 244.5 193.6 271.7 344.4 151.9 300.0 Exports 1/ | 1,282.3 1,353.6 1,227.8 1,188.3 1,241.1 985.0 TOTAL | 2,413.9 2,481.2 2,467.4 2,474.8 2,381.1 2,288.0 | Ending stocks | 475.0 530.7 568.5 506.6 376.0 460.3 Farmer-owned | reserve | 50.0 28.0 6.0 0.0 0.0 N.A. CCC inventory 2/ | 152.0 150.0 150.0 142.0 118.0 95.0 Free stocks | 273.0 352.7 412.5 364.6 258.0 365.3 Stocks-to-use | 19.7 21.4 23.0 20.5 15.8 15.0 | Prices ($/bu.) | Season average | 3.00 3.24 3.26 3.45 4.55 4.30-4.40 Target price | 4.00 4.00 4.00 4.00 4.00 N.A. Loan rate | 2.04 2.21 2.45 2.58 2.58 2.58 Def. payment/ | contract rate 3/ | 1.35 0.81 1.03 0.61 4/ 0 0.874 | Def./Contract pmts.| (mil. dollars)3/ | 2,246 1,371 1,900 1,146 100 1,976 Market value | of production | (mil. dollars) | 5,957 7,984 7,812 8,007 9,931 9,926 -------------------------------------------------------------------------- Totals may not add due to rounding. E--Estimated, P--Projected, N.A.--not applicable. 1/ Imports and exports include flour and other products expressed in wheat equivalent. 2/ From 1981 on, includes Food Security Reserve. 3/ Prior to 1996/97 Deficiency payment rate; 1996/97-contract rate.4/ Based on 5-month price + 10 cents. Table 2 -- Wheat supply and disappearance by class 1/ 1995/96E |HRW HRS SRW White Durum All wheat ------------------|-------------------------------------------------- Area: (mil. ac.) | Planted | 33.8 16.1 10.6 5.1 3.4 69.1 Harvested | 27.7 15.7 9.3 4.9 3.4 61.0 Yield (bu/ac) | 29.8 30.2 49.0 66.6 30.5 35.8 Supply: (mil. bu.)| Production | 825 475 456 325 102 2,183 Beg. stocks | 194 193 37 57 26 507 Imports 2/ | 0 30 0 19 18 68 TOTAL | 1,019 698 492 401 147 2,757 Use: | Total domestic | 481 262 207 108 82 1,140 Food | 347 231 150 77 79 884 Seed | 40 27 23 7 7 104 Feed and residual| 95 4 34 23 -4 152 Exports 2/ | 384 330 250 238 39 1,241 TOTAL | 865 592 457 346 121 2,381 | Ending stocks | 154 106 35 55 26 376 1996/97P | HRW HRS SRW White Durum All wheat ------------------|-------------------------------------------------- Area: (mil. ac.) | Planted | 35.8 19.1 11.8 5.3 3.6 75.6 Harvested | 25.8 18.7 9.7 5.2 3.5 62.9 Yield (bu/ac) | 29.6 33.6 43.4 68.9 32.7 36.3 Supply: (mil. bu.)| Production | 762 627 422 355 116 2,282 Beg. stocks | 154 106 35 55 26 376 Imports | .2 54.9 0 14 21 90 TOTAL | 916 787.6 457 424 163 2,748 | Use: | Total domestic | 493 302 269 147 92 1,303 Exports 2/ | 292 285 140 230 38 985 TOTAL | 785 587 409 377 130 2,288 | Ending stocks | 131 201 48 47 33 460 --------------------------------------------------------------------- Totals may not add due to rounding. E--Estimated, P--Projected. 1/ ERS estimates of area, yield, and domestic use. 2/ Imports and exports include flour and other products expressed in wheat equivalent.Table 3 -- Wheat: Quarterly supply and disappearance (1,000 bu.) ----------|---------------------------------------------------------------- Market |Produc- Ending Year | tion Imports Supply Food Seed Feed Exports stocks | 1/ 1/ ----------|---------------------------------------------------------------- 1994/95 | Jun-Aug | 2,321 31 2,920 213 2 376 260 2,069 Sep-Nov | 0 21 2,091 229 61 (29) 338 1,491 Dec-Feb | 0 18 1,509 202 2 25 310 969 Mar-May | 0 22 991 209 24 (29) 280 507 Mkt. year| 2,321 92 2,981 853 89 344 1,188 507 | 1995/96E | Jun-Aug | 2,183 23 2,712 215 8 305 303 1,881 Sep-Nov | 0 16 1,897 232 65 (99) 361 1,338 Dec-Feb | 0 12 1,350 216 3 13 294 823 Mar-May | 0 17 841 220 28 (67) 283 376 Mkt. year| 2,183 68 2,757 884 104 152 1,241 376 1996/97P | Jun-Aug | 2,282 15 2,673 225 9 381 334 1,724 Sep-Nov | 0 21 1,745 235 60 (77) 308 1,219 Dec-Feb | 0 27 1,246 215 2 26 182 822 ---------------------------------------------------------------------------- Totals may not add due to rounding. E--Estimated, P--Projected. 1/ Imports and exports include flour and selected products expressed in wheat equivalent. Table 4 -- Wheat: Food disappearance (1,000 bu.) 1997 1996 | October November December January February --------------|------------------------------------------------------------ Mill grind +| 84,252 73,996 71,607 72,158 67,286 Food exports -| 2,648 2,846 2,336 1,452 N/A Food imports +| 1,830 1,789 1,957 1,570 N/A Non-flour | food use +| 2,000 2,000 2,000 2,000 2,000 Food use | 84,252 74,938 73,228 72,158 69,286 ------------------------------------------------------------------------- 1/ Jun-Oct. 2/ Does not include November import/export data or non-flour est. Source: Department of Commerce, Bureau of Census. Wheat flour and products converted to wheat grain equivalent. Non-flour food use is ERS estimate. Table 5 -- Wheat: Farm prices and prices at selected markets ($/bu.) --------------------- Farm Prices ---------------------- All wheat Winter wheat Durum Other spring Month | 95/96 96/97 95/96 96/97 95/96 96/97 95/96 96/97 ------|----------------------------------------------------------------- Jun | 3.84 5.26 | 3.77 5.14 | 5.20 5.58 | 3.78 5.48 Jul | 4.10 4.73 | 4.05 4.67 | 5.29 5.13 | 4.26 5.30 Aug | 4.26 4.58 | 4.22 4.52 | 5.33 5.03 | 4.19 4.63 Sep | 4.53 4.37 | 4.47 4.28 | 5.87 4.69 | 4.27 4.41 Oct | 4.72 4.18 | 4.70 4.07 | 5.80 4.78 | 4.45 4.23 Nov | 4.81 4.14 | 4.78 4.05 | 5.78 4.56 | 4.61 4.11 Dec | 4.88 4.06 | 4.88 4.04 | 5.75 4.59 | 4.72 4.01 Jan | 4.83 4.03 | 4.80 4.02 | 5.66 4.47 | 4.66 3.95 Feb | 4.98 3.88 | 5.01 3.90 | 5.72 4.31 | 4.81 3.80 Mar 1/| 5.07 3.96 | 5.06 3.97 | 5.73 4.11 | 4.88 3.93 Apr | 5.32 | 5.39 | 5.63 | 5.21 May | 5.73 | 5.81 | 5.62 | 5.67 KC HRW #1 KC HRW #1 St. Louis Portland ordinary 13% prot. #2 SRW #1 soft white Month | 95/96 96/97 95/96 96/97 95/96 96/97 95/96 96/97 ------|----------------------------------------------------------------- Jun | 4.72 6.12 | 4.90 6.20 | 3.90 4.84 | 4.65 5.55 Jul | 4.98 5.34 | 5.24 5.35 | 4.35 4.72 | 4.94 4.96 Aug | 4.76 5.01 | 5.01 5.04 | 4.13 4.62 | 4.65 5.02 Sep | 5.00 4.70 | 5.26 4.71 | 4.56 4.38 | 4.96 4.79 Oct | 5.28 4.76 | 5.59 4.75 | 4.92 4.02 | 5.17 4.28 Nov | 5.34 4.78 | 5.60 4.78 | 5.07 3.85 | 5.35 4.10 Dec | 5.51 4.70 | 5.71 4.72 | 5.14 3.90 | 5.50 4.06 Jan | 5.40 4.61 | 5.62 4.63 | 4.84 3.78 | 5.44 4.10 Feb | 5.67 4.52 | 5.81 4.57 | 4.83 3.55 | 5.59 4.13 Mar | 5.63 | 5.67 | 4.79 | 5.38 Apr | 6.60 | 6.71 | 5.65 | 5.66 May | 7.02 | 7.16 | 5.61 | 6.00 ------------------------------------------------------------------------ Minn. Minn. FOB Gulf Average EEP DNS 14% durum $/ton (HRW) bonus $/ton 2/ Month | 95/96 96/97 95/96 96/97 95/96 96/97 95/96 96/97 ------|----------------------------------------------------------------- Jun | 4.89 6.73 | 7.16 6.57 | 170 227 | 12.71 0.00 Jul | 5.52 6.04 | 7.49 6.18 | 190 203 | 4.35 0.00 Aug | 5.06 5.29 | 6.35 5.77 | 185 192 | 0.00 0.00 Sep | 5.27 4.63 | 7.26 5.47 | 194 179 | 0.00 0.00 Oct | 5.52 4.69 | 6.76 5.41 | 204 178 | 0.00 0.00 Nov | 5.63 4.64 | 7.23 5.56 | 203 176 | 0.00 0.00 Dec | 5.80 4.51 | 7.11 5.57 | 209 176 | 0.00 0.00 Jan | 5.62 4.62 | 6.95 5.42 | 207 176 | 0.00 0.00 Feb | 5.82 4.45 | 6.86 5.25 | 219 172 | 0.00 0.00 Mar | 5.81 | 6.97 | 216 177 | 0.00 0.00 Apr | 6.53 | 7.01 | 250 | 0.00 May | 7.14 | 7.22 | 262 | 0.00 Source: NASS & AMS, USDA. 1/ Mid-month. 2/ Weighted avg., all classes. Table 6 -- Wheat: Exports and imports U.S. wheat exports, (1,000 bu.) 1997 1996 | August September October November December January --------------|----------------------------------------- ----------------- Wheat grain | 145,840 125,910 98,302 75,245 50,979 63,431 Wheat flour | 1,669 3,133 2,496 2,748 2,240 1,344 Products | 142 149 172 135 119 110 Total | 147,651 129,192 100,970 78,129 53,338 64,886 U.S. wheat imports, (1,000 bu.) 1997 1996 | August September October November December January --------------|------------------------------------------------------------ Wheat grain | 3,392 2,997 5,498 7,160 6,780 5,712 Wheat flour | 553 556 682 651 659 508 Products | 1,189 833 1,151 1,139 1,301 1,063 Total | 5,135 4,386 7,331 8,950 8,740 7,282 ---------------------------------------------------------------------------- Source: Department of Commerce, Bureau of Census. Wheat flour and products converted to wheat grain equivalent. Table 7 -- Wheat: U.S. exports, Census and export sales comparison 2/ --------------------------------------------------------------------------- | 1995/96 | 1996/97 --------------------------------------------------------------------------- | Total Shipments |Export Sales (as of 4/03/97)|Census |-----------------------------------------------------|--------- | | | Out- Total | | | | Ship- standing com- |USDA | Census | Export Sales| ments sales mitments |forecast -----------|-----------------------|--------------------------------------- | | --1,000 metric tons-- | Algeria | 444 452 | 229 0 229 | China | 3,057 2,979 | 1,026 39 1,065 | Egypt | 5,069 5,072 | 2,716 200 2,916 | FSU | 929 651 | 288 0 288 | Japan | 3,094 3,468 | 2,531 723 3,354 | S. Korea | 1,413 1,406 | 1,384 241 1,625 | Morocco | 674 693 | 421 0 421 | Nigeria | 820 880 | 590 65 655 | Pakistan | 1,652 1,672 | 1,773 91 1,864 | Philippines| 1,856 2,059 | 1,502 246 1,748 | | | | Total grain|32,823 32,778 |22,945 2,735 25,680 | | | | Total(incl)| | | products)3/|35,842 33,055 |22,982 2,864 25,846 | 26,808 ----------------------------------------------------------------------------- 1/ June - May. 2/ "U.S. Export Sales" report. 3/ Grain equivalent basis. END_OF_FILE