OVERVIEW FOR 2019/20

Global production is raised this month based on larger crops in India, Russia, and Ukraine. Global trade is nearly unchanged with higher imports for Indonesia partially offset by lower imports for Vietnam. Exports are projected higher for Russia and Ukraine, but lower for Australia and the European Union. The U.S. season-average farm price is raised $0.40 to $5.10 per bushel.

OVERVIEW FOR 2018/19

For 2018/19, global production is virtually unchanged. Global trade is forecast lower on a plethora of importer adjustments. Exports are projected down for Argentina and Russia, but higher for the United States. The U.S. season-average farm price is unchanged at $5.20 per bushel.

WHEAT PRICES

Prices for most classes of U.S. wheat rose during the month of May, influenced by adverse weather which affected both wheat and corn markets. Hard Red Winter (HRW) and Soft Red Winter (SRW) surged $30/ton to $231 and $34/ton to $223, respectively, with concerns of overly wet conditions in growing regions as the harvest approaches. Hard Red Spring (HRS) advanced $19/ton to $241 as wet conditions slowed the pace of planting. Soft White Winter (SWW) rose $14/ton to $235.

Global: Overall, most exporter prices were up during the month of May. U.S. prices showed the sharpest increase based on rising concerns of crop quality and expectations of tighter feed grain supplies. Argentina and Australia prices also rose sharply on tightening old-crop supplies. On the other hand, Black Sea milling prices were down with large crops expected for both Russia and Ukraine.

Month Ending Prices for Major Wheat Exporters

Month Ending

Argentina

Australia

Black Sea

EU

US

May

$240

$264

$211

$214

$231

April

$219

$261

$216

$211

$201

March

$220

$270

$228

$214

$220

Source: IGC

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

Southeast Asia Projected as Leading Wheat Import Region

Over the last 10 years, global wheat trade has grown significantly and there has been a gradual shift in the major regions that are importing wheat. Historically, the two regions driving global wheat demand were the Middle East and North Africa. While those regions continue to demand large amounts of wheat, Southeast Asia and Sub-Saharan Africa have seen major growth and are now significant forces in global wheat trade. All of these regions are consistent importers because production is insufficient to meet consumption. Southeast Asia is the most extreme example as domestic production is almost nonexistent, meeting less than 1 percent of demand requirements. For this region, growth in consumption leads directly to higher import demand.

For 2018/19, Southeast Asia is expected to be the top wheat importing region for the first time, mainly driven by strong demand in Indonesia and the Philippines. Indonesia has more than doubled its imports in the last decade, becoming the world’s second-leading importer after Egypt. Both food and feed demand in that country have skyrocketed in recent years. Wheat imports for the Philippines have also more than doubled over the last decade, with a large surge occurring in 2018/19. Wheat imports in that year were boosted by reduced supplies of other grains as typhoons cut domestic corn and rice production.

In 2019/20, Southeast Asia is forecast again to be the world’s top wheat importing region, with Indonesia and the Philippines continuing to be the driving forces. Wheat demand in the region continues to trend higher based on longer-term shifts in consumption from rice to wheat as diets diversify. Additionally, with global wheat supplies projected to be more abundant, relatively lower prices are expected to provide further stimulus to demand for both food and feed uses. Imports from Russia and Ukraine have grown significantly in recent years. With both of those exporters anticipating bumper crops, those supplies will likely feature prominently in fulfilling regional demand once again.