WHEAT OUTLOOK April 16, 1998 April 1998, WHS-0398 Approved by the World Agricultural Outlook Board ---------------------------------------------------------------------------- WHEAT OUTLOOK is issued six times a year by the Economic Research Service, U.S. Department of of Agriculture, Washington, DC 20036-5831. Electronic release only; no printed copies available. ---------------------------------------------------------------------------- NOTICE: This release replaces the April 10, 1998, release. Table 5 contains some revisions to data. ----------------------------------------------------------------------------- HIGHLIGHTS -- U.S. Prospective Wheat Plantings Down 6 Percent From Last Year as Farmers Shift to Other Crops -- Winter Wheat Crop Conditions Favorable as Warm Spring Brings Rapid Growth -- U.S. March 1 Stocks Increase as Domestic Use and Exports Decline -- U.S. 1997/98 Export Forecast Reduced Because of Sluggish Sales -- U.S. Season-average Farm Price Decreased in Face of Higher Ending Stocks ------------------------------------------------------------------------------ U.S. wheat planting intentions down 3.9 million acres or 6 percent in 1998 USDA released its Prospective Plantings report on March 31, 1998. Farmers were surveyed in the first 2 weeks of March to determine 1998 planting intentions. All wheat planted acreage in 1998 was estimated at 67.0 million acres, down 5.6 percent from last year and the lowest planted area since 1988. Other spring wheat planted acres are expected to drop 16 percent from 1997 to 16.3 million acres, the lowest since 1991. However, durum wheat acres are expected to increase to 4.08 million acres, up 25 percent from last year and the highest since 1982. Higher prices relative to other spring crops, including hard red spring (HRS) wheat, are the primary reason. Winter wheat acres seeded for this year, at 46.6 million acres, are down 4 percent from 1997, but little changed from the indications in the Winter Wheat and Rye Seedings report. Of the total, about 32.6 million acres are hard red winter (HRW), 10.0 million are soft red winter (SRW), and 4.0 are white winter. HRW wheat plantings are up about 100,000 acres from the December indications because of larger than expected planted area in Colorado. SRW area is down slightly because several States ranging from Arkansas to South Carolina did not get all of the previously intended winter wheat seeded because of wet weather. Durum wheat area seeded is expected to total 4.08 million acres, up 25 percent from 1997, and the highest since 1982. In North Dakota, which has averaged 83 percent of the total planted acreage the past 2 years, planting intentions increased 600,000 acres and is projected at 3.3 million acres. Durum area in Montana is expected to be the highest since 1981 as area is expected to expand into non-traditional durum growing areas. Arizona and California seedings continued into February. Arizona growers planted more acres than originally intended. Producers plan to seed 16.3 million acres of other spring wheat this year, down 16 percent from last year's high level and at the lowest total since 1991. About 15.4 million of the prospective acres are HRS, with the remainder white spring. Scab has plagued Minnesota fields 5 of the last 6 years, and producers plan to reduce other spring wheat seedings by 600,000 acres this year. With the low prices, producers in the Northern Plains are intending to plant alternative crops offering better prospective returns. Acreage intentions are down over 2.5 million acres in Montana, North Dakota, and South Dakota. Low prices and inadequate moisture are a worry to Montana wheat farmers; some of the marginal land cropped the past couple of years will not likely be placed into production this year. A 1.7 million acre reduction is expected to occur in North Dakota, with about a third of these acres shifting to durum wheat. In South Dakota both HRW and HRS acreage are expected to be down. In contrast, last year South Dakota producers seeded winter-killed winter wheat acres to spring wheat. Other spring wheat acreage will be up slightly in the Pacific Northwest where the white spring wheat is grown. Washington farmers are estimated to be seeding 470,000 acres this year, up from 450,000 last year. In Oregon, the area seeded is expected to increase to 160,000 acres this year, up from 135,000 in 1997. Idaho growers are expected to seed 610,000 acres in 1998, up from 590,000 last year. Acreage seeded to this year's white winter crop was lower in all three States, an indication that producers in those States may be shifting to more spring wheat in their cropping plans. Winter wheat crop conditions favorable as warm spring brings rapid growth Both the HRW and SRW wheat crops entered this month in good condition, with no major problems reported. The favorable crop conditions have exerted downward pressure on both old-crop and new-crop prices. As of April 6, USDA's Crop Progress report indicated that 76 percent of the winter wheat crop was rated as good to excellent condition nationwide, up from 70 percent on the same date last year. Unless weather and disease problems develop, the 1998 winter wheat crop is shaping up as a good one. The Kansas wheat crop was said to have sustained only minimal damage from a cold snap in late March according to the weekly crop and weather report issued by the Kansas Agricultural Statistics Service. As of April 6, 86 percent of the Kansas crop was rated good to excellent, up from 79 percent the week before and 82 percent the previous year. However, the crop is less advanced with 18 percent of the crop jointing, compared with 42 percent in 1997 and the 5-year average of 24 percent. Winter wheat conditions in Texas are rated as 55 percent good to excellent. Seven percent of the crop was headed as of April 5, mostly in the Central and Southern growing areas. Oklahoma's winter wheat crop was rated in good to excellent condition everywhere except the Southeast district where the crop was rated mostly fair. Statewide, 86 percent of the crop was rated good to excellent. Soil moisture is adequate to surplus throughout the State. In Nebraska, the winter wheat crop condition was rated higher than a year ago with 69 percent rated good to excellent. The crop was beginning to come out of dormancy with limited winter kill observed. U.S. wheat stocks increase as domestic use and exports decline The Grain Stocks report, released by the U.S. Department of Agriculture (USDA) on March 31, estimated all wheat stocks on March 1 at 1,166 million bushels in all positions, up 42 percent from March 1, 1997. Off-farm stocks were estimated at 766 million bushels, up 52 percent from last year, while farm stocks were estimated at 400 million bushels, up 25 percent from last March. The March 1 Grain Stocks report revealed that wheat stocks in the HRW producing States of Colorado, Kansas, Oklahoma, and Texas were the largest since 1991. Wheat stocks in Kansas and Oklahoma were up 120 and 149 percent, respectively, over a year ago. Because of lower prices, many growers may carry over and store much more of their remaining old crop than they earlier planned. Farmers in North Dakota and Montana account for over half of the stocks stored on-farm on March 1. U.S. 1997/98 export forecast reduced because of sluggish sales Forecast U.S. wheat exports dropped 0.5 million tons this month to 28.5 million. Although down from last month, the forecast is still up 5 percent from last year. According to U.S. Export Sales, as of April 2, wheat export commitments (shipments plus outstanding sales) were up 4 percent. However, outstanding sales were down slightly from a year ago. While the U.S. export forecast was reduced this month, the prospects for significant sales for prompt delivery are fairly good. Canada and Australia reportedly have already committed most of their old-crop exportable supplies. The European Union (EU) Commission has virtually ended the 1997/98 export campaign by reducing wheat export licenses by 25 percent to their second lowest in a decade. The slow export pace has pushed wheat prices in the EU below support levels, and it is likely that intervention stocks will be rebuilt for the first time in 5 years. The increase in intervention stocks strengthens the case for additional Common Agricultural Policy (CAP) reform and helps the Commission regain a strategic tool for influencing domestic wheat prices. U.S. wheat exports in 1997/98 have been boosted by increased shipments to Egypt, where U.S. share increased; to Iraq, as the United Nations program got moving; to Pakistan, as credit facilitated sales; and to the EU, where a shortage of quality durum increased purchases. However, these increases were partly offset as U.S. shipments dropped to Brazil, because of phytosanitary problems and to China and Mexico because of increased production and reduced total imports. Other changes to the world wheat supply and demand forecasts this month include lower imports by India and lower exports by Australia as delayed shipments are expected to stretch into the next marketing year. Reduced imports by Uzbekistan were partly offset by reduced exports by Russia. Forecast global 1997/98 production (almost all harvested by now) increased slightly, while world wheat consumption declined, leaving ending stocks up almost 3 million tons, up 2 percent from last month with most of the increase in the United States. U.S. season-average farm price decreased slightly The 1997/98 season-average farm price was slightly reduced this month to $3.40, down 5 cents from the mid-point of last month's projected price range. Lackluster late-season export sales and larger March 1 stocks contributed to increasing the 1997/98 ending stock level. Ending stocks for 1997/98 are forecast at 726 million bushels, up 52 million from last month and the largest since 1990/91. Ending stocks of HRW wheat in 1997/98 are projected at 323 million bushels, up 22 percent from the previous month and 126 percent higher than last year. Ending HRS stocks are up this month also. The preliminary March all-wheat price is estimated at $3.34 per bushel. Farm prices have trended downward since the marketing season high of $3.60 peaked in September 1997. U.S. wheat futures markets reached new contract lows several times early in April. The larger U.S. wheat stocks, good winter wheat crop conditions, and slow demand are the main undermining factors. 1998/99 projections USDA will release the first official projections for the 1998/99 wheat marketing year in the May 12, 1998 issue of the World Agricultural Supply and Demand Estimates. *************************************************************************** * Information Contacts: * * James N. Barnes (domestic) (202) 694-5291 * * Mack N. Leath (domestic) (202) 694-5302 * * Edward W. Allen (international) (202) 694-5288 * * * * Electronic copies available at: * * World Wide Web Site www.econ.ag.gov * * ERS Autofax system (202) 694-5700 * * Document Number 12105 * * The next electronic Wheat Outlook report will be issued on May 13, 1998 * * * * The 1998 Wheat Yearbook is now available at: * * 1) ERS autofax; Call (202) 694-5700 and select document 12100 for a * * complete directory of the historical tables and special articles. * * 2) ERS homepage: www.econ.ag.gov/, select "Products and Services," * * then "Publications," "Field Crops," and "Wheat." * * * * Other wheat publications may be obtained from the ERS "Wheat Briefing * * Room" at http://www.econ.ag.gov/Briefing/wheat. * *************************************************************************** Table 1--Wheat: U.S. market year supply and disappearance, 04/10/98 ----------------------------------------------------------------------------- Item | 1992/93 1993/94 1994/95 1995/96 1996/97E 1997/98P ----------------------------------------------------------------------------- Area (mil. ac.) | Nat'l. total base | 89.6 89.6 88.9 88.5 87.9 77.3 Eff. base/ctr.acres| 78.9 78.4 78.1 77.7 76.7 76.7 ARP (%) | 5.0 0.0 0.0 0.0 N.A. N.A. 0,50/92/85 | 4.0 5.7 5.2 6.1 N.A. N.A. CRP base retired | 10.6 10.8 10.8 10.8 10.6 10.1 Planted | 72.2 72.2 70.3 69.1 75.6 71.0 Harvested | 62.8 62.7 61.8 60.9 62.9 63.6 | Yield (bu/ac) | 39.3 38.2 37.6 35.8 36.3 39.7 | Supply (mil. bu.) | Beg. Stocks | 475.0 530.7 568.5 506.6 376.0 443.6 Production | 2,466.8 2,396.4 2,321.0 2,182.6 2,285.1 2,526.6 Imports 1/ | 70.0 108.8 91.9 67.9 92.3 90.0 TOTAL | 3,011.8 3,035.9 2,981.4 2,757.1 2,753.5 3,060.2 | Use | Food | 834.8 871.7 853.0 882.9 891.5 915.0 Seed | 99.1 96.3 89.2 104.1 103.1 94.5 Feed & Residual | 193.6 271.7 344.4 153.0 313.9 275.0 Exports 1/ | 1,353.6 1,227.8 1,188.3 1,241.1 1,001.4 1,050.0 TOTAL | 2,481.2 2,467.4 2,474.8 2,381.1 2,309.9 2,334.5 | Ending stocks | 530.7 568.5 506.6 376.0 443.6 725.7 Farmer-owned | reserve | 28.0 6.0 0.0 0.0 N.A. N.A. CCC inventory 2/ | 150.0 150.0 142.0 118.0 93.0 93.0 Free stocks | 352.7 412.5 364.6 258.0 350.6 632.7 Stocks-to-use ratio | 21.4 23.0 20.5 15.8 19.2 31.1 | Prices ($/bu.) | Target price | 4.00 4.00 4.00 4.00 N.A. N.A. Loan rate | 2.21 2.45 2.58 2.58 2.58 2.58 Contract rate 3/ | 0.81 1.03 0.61 0.00 0.87 0.63 Ave. farm price | 3.24 3.26 3.45 4.55 4.30 3.40 | Contract pmts. | (mil. dollars)3/ | 1,371 1,904 1,146 100 1,976 1,426 Market value | of production | (mil. dollars) | 7,984 7,812 8,007 9,787 9,815 8,590 ----------------------------------------------------------------------------- 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 payment rate prior to 1996/97. Table 2--Wheat supply and disappearance by class, 04/10/98 1/ ---------------------------------------------------------------------------- 1996/97E | HRW HRS SRW White Durum All wheat ---------------------------------------------------------------------------- Area: (mil. ac.) | Planted | 35.8 19.1 11.8 5.3 3.6 75.6 Harvested | 25.7 18.8 9.7 5.2 3.5 62.9 Yield (bu/ac) | 29.6 33.6 43.5 68.9 32.6 36.3 Supply: (mil. bu.) | Production | 761 631 422 355 116 2,285 Beg. stocks | 154 106 35 55 26 376 Imports | .3 53 0 15 24 92 TOTAL | 915 790 457 425 166 2,753 | Use: | Total domestic | 486 324 272 129 97 1,308 Food | 320 260 150 85 76 892 Seed | 38 32 19 7 7 103 Feed and residual | 127 32 103 37 14 314 | Exports 2/ | 286 300 140 237 38 1,001 TOTAL | 772 624 412 366 135 2,309 | Ending stocks | 143 166 45 59 31 444 | ---------------------------------------------------------------------------- 1997/98P | HRW HRS SRW White Durum All wheat ---------------------------------------------------------------------------- Area: (mil. ac.) | Planted | 34.2 18.5 10.0 5.0 3.3 71.0 Harvested | 28.9 17.8 8.9 4.8 3.1 63.6 Yield (bu/ac) | 38.7 28.1 54.4 69.9 27.7 39.7 Supply: (mil. bu.) | Production | 1,121 501 484 335 86 2,527 Beg. stocks | 143 166 45 59 31 444 Imports 2/ | 1 54 0 9 26 90 TOTAL | 1,265 721 529 403 143 3,061 Use: | Total domestic | 565 255 294 107 64 1,285 Exports 2/ | 377 230 185 205 53 1,050 TOTAL | 942 485 479 312 117 2,335 | Ending stocks | 323 236 50 91 26 726 | ---------------------------------------------------------------------------- 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. Table 3--Wheat: Quarterly supply and disappearance (1,000 bu.), 04/10/98 ----------------------------------------------------------------------------- Market | Produc- Imports Supply Food Seed Feed Exports Ending Year | tion 1/ 1/ stocks ----------------------------------------------------------------------------- 1995/96 | Jun-Aug | 2,183 23 2,712 215 8 305 303 1,881 Sep-Nov | 0 16 1,897 232 65 (99) 361 1,338 Dec-Feb | 0 12 1,350 216 3 13 294 823 Mar-May | 0 17 841 220 28 (67) 283 376 Mkt. year | 2,183 68 2,757 883 104 152 1,241 376 | 1996/97E | Jun-Aug | 2,285 15 2,676 224 9 385 334 1,724 Sep-Nov | 0 21 1,745 234 60 (76) 308 1,219 Dec-Feb | 0 27 1,246 214 2 29 179 822 Mar-May | 0 30 852 220 32 (24) 180 444 Mkt. year | 2,285 92 2,753 892 103 314 1,001 444 | 1997/98P | Jun-Aug | 2,527 23 2,993 229 3 396 288 2,076 Sep-Nov | 0 23 2,099 240 58 (114) 296 1,619 Dec-Feb | 0 22 1,641 219 2 (4) 258 1,166 Mar-May | 0 22 1,189 228 31 (3) 208 726 Mkt. Year | 2,527 90 3,060 915 94 275 1,050 726 | ----------------------------------------------------------------------------- Totals may not add due to rounding. E--Estimated, P--Projected. 1/ Imports and exports include flour and selected products expressed in wheat equivalent. Table 4--Wheat: Food disappearance (1,000 bu.), 1997/98, 04/10/98 ----------------------------------------------------------------------------- | June July August September October November ----------------------------------------------------------------------------- Mill grind + | 72,244 76,431 75,848 78,350 82,715 75,304 Food exports - | 1,938 3,028 1,887 3,322 2,847 1,899 Food imports + | 1,558 1,602 1,746 1,526 1,909 1,768 Non-flour | food use + | 2,000 2,000 2,000 2,000 2,000 2,000 Food use | 73,864 77,005 77,707 78,554 83,777 77,173 ----------------------------------------------------------------------------- | December January February March April May ----------------------------------------------------------------------------- Mill grind + | 74,825 N.A. Food exports - | 3,357 1,608 Food imports + | 2,188 1,624 Non-flour | food use + | 2,000 2,000 Food use | 75,656 N.A. ----------------------------------------------------------------------------- Source: Department of Commerce, Bureau of Census. Wheat flour and products converted to wheat grain equivalent. Non-flour food use is ERS estimate. Table 5--Wheat: Farm prices and prices at selected markets ($/bu.), 04/10/98 ---------------------------------------------------------------------------- | ---------------------- Farm Prices ------------------------- | All wheat | Winter | Durum | Other spring Month | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 ---------------------------------------------------------------------------- Jun | 5.25 3.52 | 5.14 3.42 | 5.58 4.21 | 5.48 3.74 Jul | 4.73 3.23 | 4.67 3.16 | 5.13 4.61 | 5.30 3.66 Aug | 4.57 3.56 | 4.52 3.39 | 5.03 5.23 | 4.63 3.75 Sep | 4.37 3.67 | 4.28 3.47 | 4.67 5.35 | 4.41 3.64 Oct | 4.17 3.55 | 4.07 3.42 | 4.78 5.09 | 4.23 3.49 Nov | 4.10 3.50 | 4.04 3.31 | 4.48 5.25 | 4.07 3.55 Dec | 4.06 3.45 | 4.04 3.25 | 4.59 5.17 | 4.01 3.51 Jan | 4.02 3.33 | 4.02 3.16 | 4.47 5.02 | 3.95 3.45 Feb | 3.89 3.27 | 3.90 3.16 | 4.31 4.71 | 3.80 3.34 Mar 1/| 3.93 3.34 | 3.98 3.18 | 4.32 4.84 | 3.83 3.45 Apr | 4.10 | 4.14 | 4.40 | 4.04 May | 4.08 | 4.14 | 4.50 | 3.94 ---------------------------------------------------------------------------- | KC HRW #1 | KC HRW #1 | St. Louis | Portland | ordinary | 13% prot. | #2 SRW | #1 soft white Month | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 ---------------------------------------------------------------------------- Jun | 6.12 4.08 | 6.20 4.19 | 4.84 3.46 | 5.55 4.20 Jul | 5.34 3.57 | 5.35 3.80 | 4.72 3.34 | 4.96 3.85 Aug | 5.01 3.84 | 5.04 4.11 | 4.62 3.64 | 5.02 4.10 Sep | 4.70 3.86 | 4.71 4.07 | 4.38 3.62 | 4.79 4.12 Oct | 4.76 3.88 | 4.75 4.09 | 4.02 3.58 | 4.28 3.98 Nov | 4.78 3.87 | 4.78 4.09 | 3.85 3.57 | 4.10 3.88 Dec | 4.70 3.72 | 4.72 4.01 | 3.90 3.53 | 4.06 3.79 Jan | 4.61 3.61 | 4.63 3.80 | 3.78 3.87 | 4.10 3.67 Feb | 4.52 3.64 | 4.57 3.86 | 3.55 3.32 | 4.13 3.58 Mar | 4.58 3.61 | 4.67 3.94 | 3.71 2.76 | 4.25 3.56 Apr | 4.78 | 4.85 | 3.99 | 4.54 May | 4.61 | 4.76 | 3.80 | 4.70 ---------------------------------------------------------------------------- | Mlps. | Mlps. | FOB Gulf | Average EEP | DNS 14% | #1 durum | $/ton (HRW) | bonus $/ton 2/ Month | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 | 96/97 97/98 ---------------------------------------------------------------------------- Jun | 6.73 4.44 | 6.57 5.38 | 227 148 | 0.00 0.00 Jul | 6.04 4.36 | 6.18 5.93 | 203 140 | 0.00 0.00 Aug | 5.29 4.49 | 5.77 6.39 | 192 152 | 0.00 0.00 Sep | 4.63 4.36 | 5.47 6.69 | 179 150 | 0.00 0.00 Oct | 4.69 4.35 | 5.41 6.52 | 178 153 | 0.00 0.00 Nov | 4.64 4.42 | 5.56 6.38 | 176 150 | 0.00 0.00 Dec | 4.51 4.27 | 5.57 6.55 | 176 145 | 0.00 0.00 Jan | 4.62 4.12 | 5.42 5.60 | 176 139 | 0.00 0.00 Feb | 4.45 4.15 | 5.25 5.64 | 172 140 | 0.00 0.00 Mar | 4.62 2.26 | 5.18 5.81 | 177 139 | 0.00 0.00 Apr | 4.78 | 5.35 | 183 | 0.00 May | 4.58 | 5.38 | 173 | 0.00 ---------------------------------------------------------------------------- Source: NASS & AMS, USDA. 1/ Mid-month for 1997/98. 2/ Weighted average, all classes. (Note: Table revised and updated on 04/13/98. Table 6--Wheat: Exports and imports, 04/10/98 ----------------------------------------------------------------------------- U.S. wheat exports, (1,000 bu.) 1997/98 ----------------------------------------------------------------------------- Item | August September October November December January ----------------------------------------------------------------------------- Wheat grain |123,141 119,029 89,331 79,528 80,906 97,090 Wheat flour | 1,621 3,101 2,518 1,631 3,118 1,403 Products | 265 221 329 269 240 205 Total |125,028 122,352 92,178 81,427 84,264 98.698 ----------------------------------------------------------------------------- U.S. wheat imports, (1,000 bu.) 1997/98 ----------------------------------------------------------------------------- Item | August September October November December January --------------|-------------------------------------------------------------- Wheat grain | 5,887 4,333 6,348 6,893 6,638 5,145 Wheat flour | 498 493 548 476 536 510 Products | 1,248 1,033 1,361 1,292 1,680 1,114 Total | 7,633 5,859 8,257 8,661 8,854 6,709 ----------------------------------------------------------------------------- Source: Department of Commerce, Bureau of Census. Wheat flour and products converted to wheat grain equivalent. Table 7--Wheat: U.S. exports, Census and Export Sales comparison, 04/10/98 ----------------------------------------------------------------------------- | 1995/96 | 1996/97 | 1997/98 (as of 4/02/98) |--------------------------------------------------------------- | |Ship- |Outstanding| Total | Shipments |ments | sales | ----------------------------------------------------------------------------- Data | | Export | | Export | Export Source | Census | Sales | Census | Sales | Sales ----------------------------------------------------------------------------- Country: | --1,000 metric tons-- Algeria | 444 452 | 350 | 350 | 146 0 146 China | 3,057 2,979 | 1,003 | 1,065 | 352 0 352 Egypt | 5,069 5,072 | 2,684 | 2,825 | 4,694 75 4,769 FSU | 929 651 | 408 | 288 | 275 0 275 Japan | 3,094 3,468 | 3,325 | 3,264 | 2,695 617 3,312 S. Korea | 1,413 1,406 | 1,544 | 1,646 | 1,245 215 1,460 Morocco | 674 693 | 443 | 421 | 598 0 598 Nigeria | 820 880 | 590 | 698 | 699 96 794 Pakistan | 1,652 1,672 | 2,027 | 1,973 | 2,232 0 2,232 Philippines | 1,856 2,059 | 1,772 | 1,876 | 1,319 131 1,450 Total grain |32,823 32,778 | 26,516 | 25,964 | 24,027 2,655 26,681 Total(incl) | | | | products)1/ |35,842 33,055 | 27,254 | 26,127 | 24,120 2,676 26,796 USDA forecast| | | | of Census | | | | 28,576 ----------------------------------------------------------------------------- 1/ Grain equivalent basis. END_OF_FILE