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OVERVIEW FOR 2018/19

Global production is forecast at 748 million tons, down 11 million from the record set last year, and the third-largest on record. Production among the top exporting countries is projected down a combined total of 6 million tons as smaller crops, particularly in the European Union and Russia, more than offset larger crops in Argentina, Australia, Canada, and the United States. The European Union is down 1 million tons to 150 million with lower area more than offsetting rebounding yields. Russia is down 13 million tons to 72 million (still the third-largest on record) based on lower area and yield. U.S. wheat production is forecast up at 50 million tons as a larger spring wheat crop is expected to more than offset reduced winter wheat output. Wheat area is seen expanding in Argentina and Canada, driving production higher. Australia wheat area is projected down slightly, but average yield is expected to be better than the drought-affected 2017/18 crop. Kazakhstan’s wheat output is projected lower on reduced area. Ukraine is forecast down slightly on lower expected yields.

Outside of the major exporting countries, production is also projected lower. China is slightly lower at 129 million tons. India is down 4 million tons to 95 million on reduced area. Pakistan is projected 1 million tons lower at 26 million. Turkey’s crop is down 1 million tons to 20 million, but would still be its second-largest. Brazil’s production is seen rebounding slightly after hitting a 10-year low in 2017/18. Favorable weather in North Africa has led to expectations of larger crops in Algeria, Morocco, and Tunisia. Wheat production in Egypt and Ethiopia is expected the same as last year, while South Africa’s crop is expected to rebound after being affected by drought last year.

Global consumption is projected at a record in 2018/19, driven mainly by rising food demand. Consumption is forecast to exceed production for the first time in 6 years.

Food, Seed, and Industrial (FSI) consumption makes up the bulk of wheat use and exhibits a steady trend upwards over time. In 2018/19, FSI is forecast to rise to a record level with growth seen across nearly all regions of the world. Growth is particularly significant in Southeast Asia and Sub-Saharan Africa. In these regions, food consumption of wheat continues to surge with population growth and changing tastes and preferences. Consumers continue to move toward a more wheat-based diet as incomes rise and populations become more urban. In most other regions of the world, wheat consumption is more established and is rising mainly due to population growth.

Feed and residual use, on the other hand, is generally more variable and depends on price relationships with other grains. In 2018/19, feed and residual use is forecast nearly unchanged. Feed and residual is projected up in Canada and the United States with larger crops, but lower for the European Union and Russia, where output is seen down from 2017/18. In the European Union, wheat feeding is expected lower on a rebound in barley supplies. Further, 2017/18 EU wheat feeding was unusually high based on problems with crop quality in some Member States, as well as tight competition in export markets.

Global ending stocks for 2018/19 are projected down 6 million tons from the previous year to 264 million. Stocks in the major exporting countries collectively are projected to decrease again in 2018/19 after reaching a 6-year high in 2016/17. With a smaller crop and strong export demand, U.S. ending stocks are forecast down once again this year. Stocks in Australia and Canada are also forecast lower based on strong demand for high quality wheat. Stocks in the European Union are forecast lower with larger exports. Black Sea stocks are forecast lower with smaller crops in all three countries: Russia, Kazakhstan, and Ukraine. Stocks in Argentina are forecast to remain tight despite a larger crop as higher export demand drives use.

China remains the largest holder of global wheat stocks, accounting for over half of global stocks. China’s wheat stocks are forecast up almost 12 million tons.

Selected Importers

Global trade is forecast up 2 percent to a record 188 million tons with larger imports expected across many regions. The region showing the largest year-to-year import boost is South Asia, driven by smaller crops in Afghanistan and India as well as rising consumption in Bangladesh. Sub-Saharan Africa shows the next largest growth as long-term consumption trends continue based on rising population and changing tastes and preferences. Similarly, the rising prominence of wheat-based foods in Southeast Asia is supporting higher trade.

• Indonesia is unchanged at 12.5 million tons with wheat feeding expected to be lower due to expanded corn production and feeding. Food consumption of wheat continues to trend higher.

• Egypt is up 500,000 tons to 12.5 million on rising consumption in line with population growth and stagnant production.

• Algeria is down 500,000 tons to 7.5 million on a larger domestic crop.

• Brazil is up 800,000 tons to 7.5 million on continued demand growth and another relatively small domestic crop.

• Bangladesh is up 600,000 tons to 7.0 million based on diets shifting toward greater wheat consumption.

• Japan is down 200,000 tons to 5.8 million on increased use of corn in feed rations.

• Philippines is unchanged at 5.8 million tons in order to drive down stocks from the previous year. U.S. market share is expected to remain unchanged as competition from the Black Sea region continues to put pressure on U.S. exports, despite continued consumption growth.

• European Union is unchanged at 5.5 million tons on steady demand for both highquality milling and feed wheat.

• Mexico is up 300,000 tons to 5.5 million in light of growing demand and a smaller domestic crop.

• Nigeria is up 300,000 tons to 5.5 million as population growth and urbanization continue to support higher wheat demand.

• South Korea is up 200,000 tons to 4.6 million mainly on rising feed consumption.

• Turkey is down 1.5 million tons to 4.5 million as the country is expecting another relatively large crop and stocks are ample. Further, with flour exports constrained by Iraq’s tariff, slightly less wheat is likely to be imported for re-export.

• Vietnam is up 300,000 tons to 4.5 million on a growing food and feed industry.

• China is unchanged at 4.0 million tons based on production levels and large stocks. China traditionally imports higher quality wheat to blend with domestic production.

• United States is down 500,000 tons to 3.7 million on rebounding spring wheat production. With high-protein wheat in abundant supply, less is needed from Canada.

• Iraq is down 200,000 tons to 3.6 million with the expectation of improved crop quality. In 2017/18, imports were unusually high in response to the lower quality of the domestic crop.

• Afghanistan is up 900,000 tons to 3.5 million based on a smaller domestic crop.

• Morocco is down 500,000 tons to 3.0 million with larger production.

• Yemen is unchanged at 3.4 million tons as continued economic and political uncertainty constrains growth in the market.

• Saudi Arabia is up 100,000 tons to 3.4 million. Demand in this market has been reduced by expatriates departing the country but is expected to be offset by increased tourism.

• Thailand is up 100,000 tons to 3.1 million due to a rise in consumption. Thailand maintains its restrictions on feed wheat to support domestic corn.

• Uzbekistan is up 200,000 tons to 3.2 million on a smaller crop.

• Sudan is up 100,000 tons to 2.7 million as wheat demand continues to trend higher.

• Kenya is up 100,000 tons to 2.5 million on rapid consumption growth, fueled by growing population, rising incomes, and urbanization.

• Peru is unchanged at 2.1 million tons as growth in domestic consumption is expected to be met with a slightly larger crop.

• United Arab Emirates is down 100,000 tons to 1.8 million as imports of wheat for reexport are expected to slow.

• Colombia is up 100,000 tons to 2.0 million on rising food and feed use.

• Malaysia is up 100,000 tons to 2.0 million on rising food consumption with the popularity of Western-style products.

• India is up 1.0 million tons to 2.0 million on a smaller crop and tighter stocks.

• Ethiopia is up 400,000 tons to 1.9 million on growing demand and relatively tight stocks.

• Tunisia is down 100,000 tons to 1.8 million on a larger crop.

• South Africa is down 300,000 tons to 1.7 million as domestic production rebounds after last year’s drought.

Selected Exporters

With global trade forecast at another record and exporter supplies still relatively large, competition for market share will continue to be intense in 2018/19. Russia’s exports are forecast to be down from the current year on a smaller crop. However, it is expected to remain the world’s leading wheat exporter, supported by large carryin supplies. The European Union is forecast to be the next largest exporter, taking advantage of growing global trade and reduced competition from Russia. Exports for the United States are projected up only slightly as large competitor supplies will make it difficult for U.S. wheat to expand its share of global trade. Canada is projected to have a larger crop and greater exports, which will provide more competition for U.S. exports in key Latin American and Asian markets.

• Russia is down 3.0 million tons 36.5 million. Production is forecast down substantially from the previous year (still the third-largest on record) and carryin supplies are expected to be abundant.

• The European Union is forecast up 5.0 million tons to 29.0 million. The crop is slightly down, but supplies are still abundant based on large beginning stocks. Exports dipped in 2017/18 based on competition with Russia and greater use of wheat in feed rations. However, the smaller Russian crop this year should provide an opportunity for the European Union to retake market share in major markets in Africa and the Middle East.

• The United States is forecast up 1.0 million tons to 25.0 million. Production is forecast to rebound slightly and total supplies will be ample in light of large stocks.

• Canada is forecast up 700,000 tons to 23.5 million, supported by a large crop and competitive pricing with U.S. wheat.

• Australia is projected up 1.0 million tons at 17.0 million based on a larger crop.

• Ukraine is projected down 200,000 tons to 17.0 million on a smaller crop.

• Argentina is forecast down 800,000 tons to 13.5 million. Marketing year (December-November) exports are forecast up by more than a million tons based on a larger crop. The July-June trade year, however, is forecast lower based on the expected timing of shipments. Argentina’s 2017/18 trade year exports are estimated to be a record, supported by large July-November 2017 shipments of wheat from the previous marketing year, as well as strong exports from the new crop in December onwards.

• Kazakhstan is forecast down 500,000 tons to 8.0 million on smaller production and tighter stocks.

• Turkey is projected down 200,000 tons to 6.0 million based on Iraq’s imposition of a duty on imports of Turkish wheat flour.

• Serbia is forecast up 600,000 tons to 1.4 million based on large carryin stocks and a bumper crop.

• China is projected up 200,000 tons to 1.2 million on large supplies.

• Iran is forecast up 200,000 tons to 1.0 million based on efforts to expand wheat flour exports. Iran’s competitiveness in shipping flour to Iraq is improved in light of the duty in place on Turkey’s wheat flour shipments.

• Mexico is forecast unchanged at 1.0 million tons based on a smaller crop.

• Pakistan is projected down 200,000 tons to 1.0 million based on a smaller crop.

OVERVIEW FOR 2017/18

For 2017/18, global production is lowered slightly this month, but remains a record. Global trade is forecast lower as reduced imports for Brazil, India, and Morocco more than offset an increase for Turkey. Exports are projected lower for Australia and the United States but higher for Russia. The U.S. season-average farm price is raised $0.05 to $4.70 per bushel.

PRICES

Overall, U.S. wheat prices rose during the month of April, underpinned by continued drought conditions in Hard Red Winter producing regions as well as dry conditions in some other exporting countries. Hard Red Winter (HRW) rose $17/ton to $247, while Soft Red Winter (SRW) jumped $27/ton to $231. Hard Red Spring (HRS) gained $18/ton to $302, underpinned by a slow pace of planting. Soft White Wheat (SWW) gained $11/ton to $233.

Overall, exporter prices were up ending in April. Supplies in the Black Sea and Argentina have become tighter, due to strong exports. Meanwhile, concerns of drier conditions in the wheat growing areas of Australia and the United States put upward pressure on export prices. Argentina’s wheat, which only a few months ago was priced at a deep discount to others, remains just below U.S. and Australian quotes. Notably, Black Sea milling quotes were at a premium to EU quotes for much of the past month.

Month Ending Prices for Major Wheat Exporters

Month Ending

Argentina

Australia

Black Sea

EU

US

April

$234

$246

$214

$207

$247

March

$222

$229

$209

$205

$230

February

$195

$236

$207

$207

$255

Source: IGC

*Note on FOB prices: Argentina- 12.0%, up river; Australia- average of APW; Fremantle, Newcatle, and Port Adelaide ; Black Seamilling; EU- France grade 1, Rouen; US- HRW 11.5% gulf

**Please note that the calculation of Australian wheat price has changed since last month. Using an average price for APW is a better representation of Australian wheat prices.

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