WHEAT OUTLOOK February 12, 2002 February 2002, WHS-0202 Approved by the World Agricultural Outlook Board -------------------------------------------------------------------------------- WHEAT OUTLOOK is issued 11 times a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. Electronic release only; no published copies are available. WHEAT OUTLOOK is supplemented by an annual WHEAT YEARBOOK. The yearbook summary for 2002 will be released on March 26, 2002. Yearbooks are available in print from ERS-NASS Order Desk. For the 2002 issue, call 1-800-999-6779 (703-605-6220) and ask for stock #ERS-WHS-2002, $21. -------------------------------------------------------------------------------- Summary U.S. 2001/02 supply, use, and stocks projections are unchanged from last month. Also, the projected price range is unchanged at $2.75 to $2.85 per bushel. Small adjustments in trade and domestic use estimates for the 1998/99 through 2000/01 marketing years are due to revised import and export estimates by the Bureau of the Census. World wheat supply and demand forecasts for 2001/02 highlight a small reduction in production, a slight increase in global consumption and trade, and a modest drop in projected ending stocks. While forecast world wheat production is down less than 1 percent from the previous year, production is 12 million tons less than projected consumption, causing the drop in stocks. Wheat stocks are expected to drop most in China and in the major exporters, the United States, European Union (EU), Canada, and Australia, but this is partly offset by a sharp increase in stocks forecast for the former Soviet Union. Weather in Plains is a Continuing Concern for 2002/03 Crop State Agricultural Statistical Services provide recently released information about the wheat crop in the central and southern Plains, where weather concerns continue. A shortage of moisture has resulted in poorly developed root systems in some areas. In Kansas, the wheat crop was rated 27 percent good to excellent, 41 percent fair, and 32 percent poor to very poor as of January 31, 2002. The year-earliers crop had a better rating when 41 percent rated good to excellent and 29 percent rated poor to very poor. In Texas, the wheat crop was rated 25 percent good to excellent, 35 percent fair, and 40 percent was poor to very poor as of January 27, 2002. The year- earliers crop had 25 percent of the crop rated poor to very poor and 23 percent rated good to excellent. In Oklahoma, the wheat crop was rated 14 percent good to excellent, 30 percent fair, and 56 percent poor to very poor as of January 31, 2002. A year ago, 48 percent of the crop was rated poor to very poor. In Nebraska, the wheat crop was rated 54 percent good to excellent, 40 percent fair, and 6 percent poor to very poor as of January 31, 2002. The rating is better than a year ago, when 18 percent of the crop was poor to very poor and only 36 percent rated good to excellent. World Wheat Stocks Forecast Reduced this Month This months changes to world wheat production were mostly offsetting. Harvest reports indicate that production in Australia, especially West and South Australia, was larger than expected, boosting the production forecast 1.5 million tons to 23.5 million. Despite early dry weather that contributed to a reduction in area, the 2001/02 crop is Australias third largest. However, Australias increased production was mostly offset by reduced prospects elsewhere. Wheat harvesting was just completed in Argentina, and estimated production dropped this month by 0.8 million tons to 15.7 million, still one of Argentinas larger crops. While yields in later harvested southern areas were above normal, they were less than expected and insufficient to offset losses in those areas that suffered from flooding in October and November 2001. EU production was reduced 0.4 million tons this month because United Kingdom production was reported lower. There was also a small reduction in wheat production for the former Kazakstan. This months changes in world wheat trade were also mostly offsetting. With increased production, Australias 2001/02 exports are up 1.0 million tons. However, reduced production and quality problems caused a 1.0 million-ton reduction in forecast exports by Argentina. While forecast EU wheat exports were reduced 0.5 million tons because of the slow pace of shipments and export licenses, Ukraines exports were boosted 0.5 million because of the strong pace of shipments, especially to the EU. Forecast EU wheat imports (excluding intra- EU trade) increased 1.0 million tons to 6.5 million because of the relatively high EU prices and reduced EU tariffs. Reduced intervention prices have eliminated the variable import levy on most imports. During 2001/02 a smaller, poor quality wheat crop, especially in France, has increased internal prices above intervention supports. The relatively high EU prices encourage imports and discourage exports. The increase in EU imports was mostly offset by reduced imports forecast for parts of the former Soviet Union, Indonesia, and Turkey, countries where the pace of purchases has been less than expected. Forecast global ending stocks are down more than 1 million tons this month, to 152 million. Ending stocks for the former Soviet Union in 2001/02 are down 2 million tons this month, with reduced production, increased exports, and larger consumption. However, the year-over-year increase in forecast wheat stocks in the former Soviet Union is still large, expanding from 6 million tons to 21 million. However, in the EU increased imports are expected to limit wheat stock declines, so this months forecast 2001/02 ending stocks are up 0.7 million tons. Australias forecast ending stocks are up 0.3 million tons this month because of increased production. The next electronic Wheat Outlook report will be issued on April 12, 2002. ============================================================================== Information Contacts: Gary Vocke (Situation Coordinator) (202) 694-5285 Edward W. Allen (International Analyst) (202) 694-5288 Electronic copies are available at: World Wide Website www.ers.usda.gov ============================================================================== For several months, a wide range of ideas have emerged in the farm bill debate on how best to address the needs of farmers and other constituencies. A recently released ERS report, Wheat: Background and Issues for Farm Legislation, provides information on topics important to the debate, including market conditions, policy proposals, WTO considerations, and the interactions between policy and markets. This online-only report, http://www.ers.usda.gov/publications/WHS-0701-01/, is the first of the occasional Wheat Outlook supplements that will provide timely analysis on specific topics. Readers will no longer have to wait for the Wheat Situation and Outlook Yearbook for all of the in-depth reports and special articles on the wheat sector. ============================================================================== Table 1--Wheat: U.S. market year supply and disappearance, 2/12/02 ------------------------------------------------------------------- Item 1996/97 1997/98 1998/99 1999/00 2000/01E 2001/02P ------------------------------------------------------------------- Area: (mil. ac.) National toal base 87.9 0.0 0.0 0.0 0.0 0.0 Eff.base/Ctr. acres 0,50/92,85 0.0 0.0 0.0 0.0 0.0 0.0 CRP base retired 10.6 10.1 9.7 0.0 0.0 0.0 Planted 75.1 70.4 65.8 62.7 62.6 59.6 Harvested 62.8 62.8 59.0 53.8 53.1 48.7 Yield: (bu/acre) 36.3 39.5 43.2 42.7 42.0 40.2 Supply: (mil. bu.) Beginning stocks 376.0 443.6 722.5 945.9 949.7 876.2 Production 2,277.4 2,481.5 2,547.3 2,299.0 2,232.5 1,957.6 Imports 1/ 92.3 94.9 103.0 94.5 89.8 95.0 Total supply 2,745.7 3,020.0 3,372.8 3,339.4 3,272.0 2,928.8 Use: Food 890.7 914.1 909.7 928.9 957.1 950.0 Seed 102.3 92.5 80.5 91.8 79.8 83.0 Feed and residual 307.6 250.5 394.4 279.4 298.2 225.0 Total domestic 1,300.6 1,257.1 1,384.7 1,300.1 1,335.2 1,258.0 Exports 1/ 1,001.5 1,040.4 1,046.0 1,088.6 1,060.6 1,000.0 Total use 2,302.1 2,297.5 2,426.9 2,389.7 2,395.9 2,258.0 Ending stocks: 443.6 722.5 945.9 949.7 876.2 670.8 Farmer-owned reserv 0.0 0.0 0.0 0.0 0.0 0.0 CCC inventory 2/ 93.0 94.0 128.0 104.0 97.0 94.0 Free stocks 350.6 628.5 817.9 845.7 779.2 576.8 Stocks-to-use ratio 19.3 31.4 39.0 39.7 36.6 29.7 Prices: ($/bu.) Target price 0.00 0.00 0.00 0.00 0.00 0.00 Loan rate 2.58 2.58 2.58 2.58 2.58 2.58 Contract rate 3/ 0.87 0.63 0.66 0.64 0.59 0.48 Ave. farm price 4.30 3.38 2.65 2.48 2.622.75-2.85 Contract pmts. (mil. dollars) 3/ 1,941 1,412 2,718 3,828 3,618 2,507 Market value of production (mil. dollars) 9,782 8,287 6,781 5,702 5,849 5,481 ------------------------------------------------------------------- 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/ Includes Food Security Reserve. 3/ Deficiency payments prior to 1996/97. Table 2--Wheat: U.S. market year supply and disappearance, 1/15/02 ------------------------------------------------------------------ 2000/01E HRW HRS SRW White Durum All wheat ------------------------------------------------------------------ Area: Million acres Planted 30.41 14.38 9.52 4.39 3.94 62.63 Harvested 23.59 13.59 8.15 4.23 3.57 53.13 Yield:(bu/acre) 35.87 36.96 57.84 71.60 30.74 42.02 Supply: Million bushels Beg. stocks 457.9 218.0 133.0 91.0 49.8 949.7 Production 846.3 502.3 471.4 302.7 109.8 2,232.5 Imports 2/ 0.0 58.7 0.0 5.2 25.8 89.8 Total 1,304.3 779.1 604.4 398.9 185.4 3,272.0 Utilization: Total domestic 503.0 343.4 290.6 119.6 78.6 1,335.2 Exports 2/ 390.3 225.6 178.8 204.3 61.7 1,060.6 Total 893.3 569.1 469.4 323.9 140.3 2,395.9 Ending stocks: 411.0 210.0 135.0 75.0 45.2 876.2 ------------------------------------------------------------------ 2001/02P HRW HRS SRW White Durum All wheat ------------------------------------------------------------------ Area: Million acres Planted 28.96 14.77 8.65 4.33 2.91 59.62 Harvested 20.87 13.75 7.17 4.08 2.79 48.65 Yield:(bu/acre) 36.74 34.59 55.75 56.91 29.96 40.24 Supply: Million bushels Beg. stocks 411.0 210.0 135.0 75.0 45.2 876.2 Production 766.8 475.7 399.7 232.0 83.6 1,957.6 Imports 2/ 1.0 49.0 0.0 10.0 35.0 95.0 Total 1,178.8 734.7 534.7 317.0 163.7 2,928.8 Utilization: Total domestic 493.1 322.7 260.8 91.0 90.5 1,258.0 Exports 2/ 365.0 220.0 210.0 155.0 50.0 1,000.0 Total 858.1 542.7 470.8 246.0 140.5 2,258.0 Ending stocks: 320.7 192.0 63.9 71.0 23.2 670.8 ------------------------------------------------------------------ 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. Source: World Agricultural Supply and Demand Estimates, WAOB, USDA. Table 3--Wheat: Quarterly supply and disappearance (1,000 bu.), 1/15/02 ----------------------------------------------------------------------- Produc- Imports Supply Food Seed Feed Exports Ending Market Year tion 2/ 2/ stocks ----------------------------------------------------------------------- Million bushels 1998/99 Jun-Aug 2,547 24 3,294 226 1 425 257 2,385 Sep-Nov --- 24 2,409 241 55 -74 292 1,896 Dec-Feb --- 28 1,923 213 1 7 251 1,450 Mar-May --- 27 1,477 230 23 32 246 946 Mkt. year 2,547 103 3,373 910 81 394 1,042 946 1999/00 Jun-Aug 2,299 31 3,275 230 6 271 323 2,445 Sep-Nov --- 19 2,464 241 55 -7 290 1,886 Dec-Feb --- 19 1,905 223 2 27 237 1,417 Mar-May --- 25 1,442 235 28 -10 239 950 Mkt. year 2,299 94 3,339 929 92 280 1,089 950 2000/01 E: Jun-Aug 2,232 20 3,203 239 1 322 288 2,353 Sep-Nov --- 25 2,378 253 50 -25 293 1,806 Dec-Feb --- 21 1,828 231 3 8 247 1,338 Mar-May --- 23 1,361 234 25 -7 233 876 Mkt. year 2,232 90 3,272 956 80 298 1,061 876 2001/02 P: Jun-Aug 1,958 26 2,860 238 3 243 219 2,156 Sep-Nov --- 29 2,185 250 51 -29 289 1,623 Dec-Feb --- --- --- --- --- --- --- --- Mar-May --- --- --- --- --- --- --- --- Mkt. year 1,958 95 2,929 950 83 225 1,000 671 ----------------------------------------------------------------------- Totals might not add due to rounding. E=Estimated, P=Projected. 1/ Imports and exports include flour and selected products expressed in wheat equivalent. Table 4--Monthly food use estimates for last 12 months, 1/15/02 (1,000 bu.) =================================================================== Item Oct Nov Dec Jan Feb Mar =================================================================== Mill grind + 86,755 83,038 77,944 74,926 74,331 78,862 Food imports 1/ + 1,967 2,130 2,039 2,036 1,734 2,122 Non-flour food use 2/ + 2,000 2,000 2,000 2,000 2,000 2,000 Food exports 1/ - 4,442 2,588 3,021 2,532 2,454 2,488 Food use = 86,280 84,580 78,962 76,430 75,611 80,496 =================================================================== Item Apr May Jun Jul Aug Sept =================================================================== Mill grind + 75,010 76,695 73,378 74,624 81,559 78,425 Food imports 1/ + 2,003 2,013 2,042 2,062 2,181 1,563 Non-flour food use 2/ + 2,000 2,000 2,000 2,000 2,000 2,000 Food exports 1/ - 4,133 2,367 1,679 905 1,268 1,201 Food use = 74,880 78,341 75,741 77,782 84,471 80,786 =================================================================== 1/ Wheat flour and flour products converted to wheat grain equivalent. 2/ ERS estimate of cereal use. Totals may not add due to rounding. Source: Department of Commerce, Bureau of Census. Table 5--Wheat: National average price received by farmers ($/bu.), 2/15/02 ----------------------------------------------------------------------- Farm prices 1/ --------------------------------------------------------------- Month All wheat Winter Durum Other spring ----------------------------------------------------------------------- 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 June 2.50 2.74 2.43 2.68 2.71 3.37 2.90 3.03 July 2.32 2.70 2.23 2.67 2.90 2.74 2.74 2.78 August 2.41 2.73 2.31 2.71 2.33 2.38 2.59 2.84 Septembe 2.44 2.85 2.37 2.81 2.32 3.02 2.59 2.87 October 2.68 2.86 2.63 2.81 2.42 2.89 2.80 2.97 November 2.83 2.88 2.70 2.81 2.97 3.45 2.97 2.96 December 2.87 2.89 2.76 2.79 3.03 3.28 2.98 2.96 January 2.85 2.94 2.77 2.89 2.94 2.96 February 2.83 2.74 2.60 2.99 March 2.87 2.85 2.40 2.99 April 2.86 2.77 2.52 3.05 May 2.98 2.94 2.53 3.13 ----------------------------------------------------------------------- 1/ Preliminary mid-month weighted average price for current month of the 2000/01 marketing year. Source: Agricultural Prices, National Agricultural Statistics Service, USDA. Table 6--Wheat by class: Regional average price received by farmers, 2/15/02 ------------------------------------------------------------------------ Supply Disappearance -------------------------------------------------------------- Hard Winter Soft Winter Hard Spring Soft White Month So. Plains 1/ Corn Belt 2/ No. Plains 3/ Northwest 4/ 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 ------------------------------------------------------------------------ Dollars per bushel 5/ June 2.52 2.85 2.24 2.32 2.90 3.03 2.50 3.09 July 2.40 2.65 1.99 2.36 2.74 2.78 2.57 3.17 August 2.35 2.66 1.95 2.50 2.59 2.84 2.38 3.14 September 2.54 2.62 2.03 2.41 2.59 2.87 2.43 3.23 October 2.74 2.65 2.09 2.68 2.80 2.97 2.58 3.33 November 2.80 2.63 2.21 2.73 2.97 2.96 2.70 3.35 December 2.82 2.75 2.31 2.78 2.98 2.96 2.74 3.35 January 2.87 2.41 2.96 2.72 February 2.79 2.48 2.99 2.79 March 2.86 2.37 2.99 2.97 April 2.78 2.20 3.05 3.08 May 2.98 2.37 3.13 3.13 ------------------------------------------------------------------------ 1/ Average price of winter wheat in Kansas, Nebraska, Oklahoma, and Texas. 2/ Average price of winter wheat in Ohio, Indiana, Illinois, and Missouri. 3/ Monthly weighted U.S. average price for other spring wheat. 4/ Average price of all wheat in Washington, Oregon, and Idaho. 5/ Current month of current year based on preliminary mid-month prices. Note: Regional prices are ERS estimates. Source: State prices are from Agricultural Prices, NASS, USDA. Table 7--Wheat : Average cash grain bids at selected markets ($/bu.), 1/15/02 -------------------------------------------------------------------- KC HRW #1 KC HRW #1 Portland FOB Gulf Month ordinary 13% protein #1 HRW Ord. $/mt (#2 HRW) 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 -------------------------------------------------------------------- June 3.07 3.32 3.59 3.47 3.19 3.59 115.66 128.52 July 2.97 3.20 3.25 3.35 3.05 3.40 114.60 124.80 August 2.89 3.15 3.13 3.27 2.98 3.61 112.10 124.95 September 3.13 3.18 3.32 3.27 3.26 3.65 121.49 124.73 October 3.41 3.28 3.59 3.33 3.66 3.77 130.88 124.47 November 3.45 3.37 3.60 3.44 3.79 3.85 129.51 127.11 December 3.47 3.26 3.60 3.36 3.78 3.77 130.51 123.76 January 3.54 3.29 3.64 3.41 3.82 3.78 134.85 127.21 February 3.35 3.46 3.70 130.58 March 3.45 3.50 3.69 131.81 April 3.41 3.49 3.68 131.62 May 3.49 3.64 3.76 135.64 -------------------------------------------------------------------- Minneapolis Minneapolis Minneapolis Minneapolis Month DNS 13% prot. DNS 14% prot. DNS 15% prot. #1 HAD milling 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 -------------------------------------------------------------------- June 3.50 3.63 3.78 3.81 4.08 4.07 4.07 4.80 July 3.24 3.51 3.50 3.72 3.91 4.01 3.85 4.75 August 2.99 3.37 3.29 3.54 3.73 3.92 3.62 5.02 September 3.10 3.47 3.17 3.52 3.37 3.61 4.70 5.03 October 3.52 3.68 3.69 3.71 4.10 3.77 5.12 5.10 November 3.64 3.61 3.77 3.69 4.03 3.75 5.51 5.13 December 3.60 3.54 3.52 3.59 3.97 3.72 N/Q 5.04 January 3.60 3.51 3.79 3.55 4.12 3.63 N/Q 5.05 February 3.53 3.68 3.97 4.50 March 3.45 3.63 3.98 4.98 April 3.59 3.73 4.02 5.00 May 3.69 3.88 4.12 N/Q -------------------------------------------------------------------- St. Louis Chicago Toledo Portland Month #2 soft red #2 soft red #2 soft red #1 soft white 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 -------------------------------------------------------------------- June 2.59 2.41 2.41 2.40 2.27 2.21 2.92 3.37 July 2.17 2.67 2.14 2.56 2.06 2.52 2.78 3.45 August 2.04 2.66 2.08 2.57 2.00 2.58 2.65 3.52 September 2.06 2.73 2.13 2.57 1.98 2.57 2.78 3.65 October 2.41 2.94 2.36 2.68 2.15 2.70 2.86 3.73 November 2.42 2.90 2.42 2.75 2.15 2.73 2.94 3.75 December 2.48 2.96 2.47 2.83 2.26 2.75 2.98 3.71 January 2.52 2.99 2.57 2.96 2.43 2.90 3.01 3.68 February 2.55 2.49 2.33 3.15 March 2.53 2.56 2.36 3.26 April 2.40 2.52 2.32 3.20 May 2.45 2.51 2.30 3.37 -------------------------------------------------------------------- N/Q=no quote. Source: Grain and Feed Weekly Summary and Statistics, AMS, USDA. Table 8--Wheat: U.S. exports and imports for last 6 months, 1/15/01 1/ -------------------------------------------------------------- Exports, (1,000 bu.) 2000/2001 -------------------------------------------------------------- Item 1/ June July August September October November Wheat grain 59,190 64,911 89,582 86,941 94,598 99,800 Wheat flour 1,412 661 1,990 1,005 3,226 2,534 Products 1,036 245 281 286 331 350 Total 61,638 65,817 91,853 88,231 98,154 102,684 -------------------------------------------------------------- Imports, (1,000 bu.) 2000/2001 -------------------------------------------------------------- Item 1/ June July August September October November Wheat grain 5,540 7,633 6,240 6,290 7,076 9,779 Wheat flour 738 734 856 695 843 856 Products 1,309 1,332 1,326 870 1,315 1,313 Total 7,588 9,698 8,422 7,856 9,235 11,949 -------------------------------------------------------------- Source: Department of Commerce, Bureau of Census. 1/ Wheat flour and products converted to wheat grain equivalent. Total may not add due to rounding. Table 9--Wheat: U.S. exports, Census and Exports Sales comparison, 1/15/02 --------------------------------------------------------------------- 1999/2000 2000/01 2001/02 (as of 1/31/02) --------------------------------------------------------- Importing Outstanding country Shipments Shipment sales Total --------------------------------------------------------------------- Data Export Export Export Source Census sales Census sales sales --------------------------------------------------------------------- 1,000 metric tons Country: Egypt 4,006 4,168 4,629 4,705 2,400 682 3,082 Japan 3,172 3,122 3,064 3,124 2,055 575 2,630 Philippines 2,126 2,175 1,977 2,024 1,086 392 1,479 Mexico 1,832 1,963 2,000 2,027 1,416 245 1,661 EU 1,330 1,300 1,300 1,429 1,595 207 1,802 South Korea 1,670 1,475 1,483 1,404 822 262 1,085 Nigeria 1,127 1,185 1,317 1,428 1,291 326 1,616 Taiwan 983 1,005 1,045 1,031 621 63 684 Israel 894 917 694 870 458 0 458 Colombia 779 726 607 626 333 84 416 Total grain 28,047 25,453 27,694 25,819 16,418 3,759 20,177 Total (including products) 29,158 25,500 28,889 25,856 16,438 3,762 20,200 USDA forecast of Census 27,216 --------------------------------------------------------------------- 1/ Export sales and shipments from USDA's weekly U.S. Export Sales report. 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