AGRICULTURE

Wheat outlook: Sharply lower feed and residual use raises 2013/14 ending stocks

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Farm Forum

U.S. wheat supplies for 2013/14 are unchanged this month, but lower expected use raises projected ending stocks 33 million bushels. Feed and residual use is lowered 60 million bushels reflecting disappearance for June-November as indicated by the December 1 stocks released in the Grain Stocks report. Feed and residual use is lowered for hard red winter (HRW), hard red spring (HRS), and soft red winter (SRW) wheat. Seed use is raised 1 million bushels, based on the winter wheat planted area reported today in the Winter Wheat Seedings report. Wheat exports are projected 25 million bushels higher, with an increase for HRW, on the strong pace of sales and shipments and lower expected competition in Brazil’s milling wheat market. The 2013/14 season-average farm price is projected 10 cents lower at the midpoint with the range narrowed to $6.60 to $7.00 per bushel.

U.S. wheat exports are projected higher as a shift in Brazil’s wheat imports benefits the United States at the expense of Argentina and Paraguay. Wheat exports are projected at a record-high level for the European Union, and are also increased for Russia. Foreign wheat feed and residual is down, as the EU shifts to barley feeding.

Projected 2013/14 Supplies Are Unchanged This Month

Projected total 2013/14 supplies, at 3,008 million bushels, are unchanged this month. There are small offsetting import class changes. Hard red winter (HRW) imports are raised 5 million bushels and durum imports are lowered 5 million bushels based on pace to date.

Projected 2013/14 Supplies Down From 2012/13

Total U.S. wheat supply for 2013/14 is down 123 million bushels from 2012/13. Supplies of HRW and durum are down year to year, while supplies are up for the other classes. HRW supplies decreased the most, as smaller production and imports more than offset higher beginning stocks. HRW production is down from 2012 due partially to the smaller planted area for the 2013 crop, and both a higher abandonment rate and a lower yield because of severe drought and spring freeze damage. SRW supplies were up the most year to year as higher production and imports more than offset lower beginning stocks. SRW production is higher than 2012 because of larger harvested area and higher yield.

Projected Total 2013/14 Utilization Is Down 34 Million Bushels This Month

Projected 2013/14 total U.S. wheat use is down from December as sharply lower feed and residual use offsets higher exports. Based on the December 1 stocks report by the National Agricultural Statistical Service (NASS) in the January 10 Grain Stocks, projected total feed and residual use is lowered by 60 million bushels to 250 million bushels. The by-class reductions are: HRW, 25 million bushels; HRS spring, 5 million bushels; and SRW, 30 million bushels. The other two classes are unchanged. Projected exports, at 1,125 million bushels, are up 25 million bushels from December based on the pace of sales and shipments to date and expectations for stronger shipments to Brazil. Seed use is raised 1 million bushels based on NASS’ Winter Wheat Seedings report.

Projected 2013/14 Use Is Down Slightly From 2012/13

Projected total use for 2013/14 is 2,399 million bushels, down 15 million bushels from 2012/13 as lower feed and residual use more than offsets higher exports. Domestic use is expected to be down 132 million bushels from 2012/13 while exports are projected up 118 million bushels. Domestic use is down because feed and residual use is expected to fall 138 million bushels from 2012/13. Feed and residual use during the summer quarter of 2013/14 was not as high as NASS’ first quarter stocks report (September 30 Grain Stocks) implied. Total food use is expected higher with population growth and expected lower flour extraction rate than in 2012/13.

Projected 2013/14 Ending Stocks Up From December, But Down From 2012/13

The projected 2013/14 U.S. wheat ending stocks are raised 33 million bushels from December to 608 million bushels. These projected ending stocks are down 110 million bushels from 2012/13. Total ending stocks for 2013/14 are expected to decrease by 15 percent from 2012/13. Stocks of HRW, white, and SRW are expected down 43 percent, 6 percent, and 5 percent, respectively. Stocks of HRS and durum are expected up 26 percent and 14 percent, respectively.

2013/14 Price Range Projection

The 2013/14 season-average farm price range is projected at $6.60 to $7.00 per bushel, from $6.65 to $7.15 per bushel in December. The 2013/14 range is down from the record $7.77 per bushel reported for 2012/13.

Winter Wheat Seedings Down

NASS’ Winter Wheat Seedings reported that planted area for harvest in 2014 is estimated at 41.9 million acres, down 3 percent from 2013. HRW seeded area is up 0.5 million acres from 2013 to 30.1 million acres. Relatively high insurance guarantees and favorable weather during planting season were factors encouraging farmers to seed more HRW acres. SRW seeded area is down 1.6 million acres to 8.4 million acres. Late-harvested row crops likely contributed to the reduced SRW acres.

White winter wheat seedings totaled 3.39 million acres. Hard white (HW) and soft white (SW) seeded acres are .37 million acres and 3.01 million acres, respectively. This year’s HW seeded area is up 0.01 million acres from 2013 while the SW seeded area is down 0.12 million acres from 2013.

Durum wheat seedings in Arizona and California for 2014 harvest are estimated at 70 thousand acres and 75 thousand acres respectively. The 2013 Arizona and California acreages were 80 thousand acres and 75 thousand acres, respectively.

USDA Wheat Baseline, 2013-22

Each year, USDA updates its 10-year projections of supply and utilization for major field crops grown in the United States, including wheat. A detailed discussion summarizing the historical forces determining U.S. wheat supply and utilization, along with the analysis underlying the wheat projections for 2013-22, is available at http://1.usa.gov/IJwZUS.