Wheat. World Markets and Trade. May 2015 May 14, 2015
Global Wheat Production Slightly Above Consumption
Wheat production is forecast down from last year's record, but still above consumption for the third straight year. Global consumption is projected up slightly as steady growth in food use more than offsets lower feeding. Global trade is forecast lower, partly driven by larger crops in some major importing countries. U.S. exports are projected higher, but the EU is forecast to be the world's largest exporter for the third straight year. Although global stocks are projected slightly larger, stocks in most exporting countries are expected to tighten.
HIGHLIGHTS FOR 2015/16
Global wheat production is projected to reach 719 million tons, down 1 percent from the 2014/15 record. Of the eight major exporting countries, Australia and the United States are the only two with expected growth in production, while Argentina, Canada, EU, Kazakhstan, Russia, and Ukraine are all projected lower. However, large carryin stocks will offset any production downturn; therefore, exportable supplies are still ample moving into 2015/16. Larger projected crops in several major importing countries in North Africa and the Middle East will lower overall import demand in the region. China's wheat production is projected at a record and exceeds consumption for the third straight year. Saudi Arabia's production is nearly phased out and the country will completely rely on imports to meet its' needs.
Global consumption is expected to rise slightly to 717 million tons as greater food, seed and industrial use more than offsets a drop in feed use. Food use is expected to grow 1 percent as a result of population growth, increased urbanization, and dietary changes in some countries. Feed use is projected lower as coarse grains are expected to displace some wheat in feed rations in several countries, particularly in Canada, China, and Thailand.
Global ending stocks are forecast to rise marginally to 203 million tons as production exceeds consumption for the third straight year. China's stocks are projected to surge because of the record crop, while stocks in India are projected at the lowest in 8 years as a result of a smaller crop. Exporter ending stocks, on the other hand, are down slightly; tightening supplies in Argentina, Canada, EU, and Russia are only slightly offset by projected stock growth in the United States, and to a lesser extent, Australia. The United States is in a good position to capture any unexpected import demand because of its heavy stock situation.
Global trade is projected down from 2014/15, but still sizable at 157 million tons. Considerable shifts in several countries' import demand are notable. Larger crops are expected in Iran, Morocco, Syria, and Turkey, decreasing import demand. Although crops in the EU are smaller than last year, imports are projected down as the quality is expected to improve, particularly in France. Imports are projected lower in Pakistan because of a prohibitive import duty. Thailand is projected lower as it switches back to coarse grain use as feed-quality wheat becomes less competitive. Imports for several countries are up due to rising demand for wheat-based food products, including Algeria, Bangladesh, Indonesia, Iraq, and Nigeria. Brazil is projected higher because of its demand for hard wheat used for blending. The United States is projected lower because of a larger domestic crop and tight Canadian supplies.
- EU is down 800,000 tons to 5.0 million.
- Iran is reduced 1.0 million tons to 5.5 million.
- Indonesia is up 400,000 tons to 8.1 million.
- Iraq is raised 400,000 tons to 3.2 million.
- Morocco is slashed 1.4 million tons to 2.0 million.
- Pakistan is lowered 650,000 tons to 100,000.
- Syria is cut 1.2 million tons to 500,000 tons.
- Thailand is down 500,000 tons to 2.2 million.
- Turkey is slashed 2.3 million tons to 3.5 million.
- United States is down 400,000 tons to 3.8 million.
Global trade is projected 3 percent lower for 2015/16; therefore competition is expected to intensify among major exporting countries. Argentina is up significantly from 2014/15 because of large carry-in supplies and increased demand in South America. Australia is up slightly supported by ample exportable supplies and reports of recent large sales to India. Canada is projected lower due to tightening supplies and reduced demand for durum. EU exports are forecast lower because of competition with other Black Sea countries, and declining import demand for feed-quality wheat, particularly in East and Southeast Asian markets. Kazakhstan is unchanged for 2015/16 as supplies are expected to be similar to 2014/15. Russia and Ukraine are both down slightly as a result of a smaller crop and tightening supplies. The United States is forecast higher for 2015/16 because of abundant exportable supplies and tighter supplies in Canada. India's exports will be limited to neighboring countries, such as Bangladesh and Nepal, because of a smaller crop.
- Argentina is up 2.2 million tons to 6.7 million.
- Australia is raised 500,000 tons to 18.0 million.
- Brazil is down 800,000 tons to 1.0 million.
- Canada is lowered 3.0 million tons to 21.0 million.
- EU is cut 2.0 million tons to 32.5 million.
- Kazakhstan is unchanged at 6.0 million tons.
- India is down 1.1 million tons to 500,000.
- Russia is down 1.5 million tons to 20.0 million.
- Ukraine is down 1.0 million tons to 10.5 million.
- The United States is up 2.3 million tons to 25.5 million.
Domestic: Wheat prices for most classes fell in April, weighed by weak export demand, cancellations of U.S. sales, and mostly favorable growing conditions among competitors. Hard Red Winter (HRW) plunged $39/ton to $223, while Soft Red Winter (SRW) dropped $38/ton to $201. Hard Red Spring (HRS) tumbled $44/ton to $270 and Soft White (SWW) fell $30/ton to $231/ton. Season-average farm prices in 2015/16 are projected in the range of $4.50 to $5.50/bushel, lower than the estimated $6.00/bushel for 2014/15 based on abundant global supplies.
Global trade is up slightly, but still below the previous year's record. The season-average farm price is lowered slightly.
TRADE CHANGES IN 2014/15
- Brazil is cut 500,000 tons to 6.2 million based on the slow pace and ample supplies.
- Egypt is up 400,000 tons to 11.1 million on account of continued government purchases.
- EU is up 300,000 tons to 5.8 million on the pace of import licenses.
- Philippines is up 300,000 tons to 4.4 million based on the pace of feed-quality imports.
- United States is up 100,000 tons to 4.2 million on larger-than-expected shipments of Canadian spring wheat.
- Yemen is down 300,000 tons to 3.0 million on the slow pace of shipments.
- Argentina is down 500,000 tons to 4.5 million on the slow pace of shipments and lack of new government-issued export licenses.
- EU is up 1.0 million to 34.5 million on the continued fast pace of sales and licenses.
- Russia is boosted 1.0 million tons to 21.5 million on larger-than-expected shipments to nearby markets.
- Ukraine is up 500,000 tons to 11.5 million on the pace of exports.
- United States is slashed 800,000 tons to 23.2 million on the slow pace of exports and recent switching of 2014/15 sales to be shipped in 2015/16.
- Uruguay is cut 300,000 tons to 1.2 million on the slow pace of shipments.