USDA Outlook: More U.S. Wheat in 2015/16


by Casey Chumrau, USW Market Analyst

USDA released its Grains and Oilseeds Outlook for the 2015/16 harvest at its annual Agricultural Outlook Forum Feb. 20 in Arlington, VA. Despite lower expected planted acres, USDA predicted a 5 percent increase in total U.S. wheat production in 2015/16. Considering the winter crop is still dormant and the spring crop is not yet in the ground, weather conditions the next six months will be a major factor in helping U.S. wheat farmers meet or beat that expectation. 

Drought conditions that forced high abandonment rates last year are still a concern in the southern and central plains but overall crop conditions are better than this time last year. USDA projected a higher ratio of harvested acres and better yields. The combination of these factors would help total U.S. production reach 57.8 million metric tons (MMT) or 2.12 billion bushels in 2015/16, up from 55.1 MMT (2.02 billion bushels) in 2014/15 and just slightly ahead of the five-year average. In its Jan. 12 Winter Wheat Seedings report, USDA estimated that farmers planted 40.5 million acres (16.4 million hectares) to winter wheat for the 2015/16 crop, a 3 percent decline from 2014/15. Assuming normal weather conditions, USDA forecasted the average yield up 3 percent to 45.2 bushels per acre (3.04 MT per hectare), equal to the five-year average.

Last week’s outlook also provided the first estimate of spring wheat and durum planted area, projecting a 4 percent increase from last year to 15.0 million acres (6.08 million hectares). As spring wheat typically accounts for less than one third of total wheat acres, the projected increase would not fully offset the estimated decline in winter wheat planted area. 

Commercial wheat sales for 2014/15 to date may help explain these mixed planting numbers. Despite futures contracts at or near multiple-year lows, U.S. wheat prices have been relatively high on the world market this marketing year. Sales-to-date of hard red winter (HRW) and soft red winter (SRW) are less than last year due in part to a drop in demand from Brazil and China. However, sales of both hard red spring (HRS) and durum are well ahead of last year’s pace and both will likely exceed the five-year average. Overall, USDA estimated 46 percent (26.5 MMT, 974 million bushels) of the total U.S. crop will be exported in 2015/16. 

While USDA will not release its first official 2015/16 global supply and demand estimates until May, it did comment at last week’s Outlook Forum that world wheat production will likely fall shy of the record 725 MMT (26.6 billion bushels) reached in 2014/15. However, current excellent growing conditions in several major importing countries will likely limit global wheat trade and keep export competition very strong. As a result, USDA predicted 2015/16 U.S. exports will increase 8 percent from 2014/15 to 26.5 MMT (974 million bushels) but fall short of the five-year average of 29.6 MMT (1.09 billion bushels). 

Presuming these predictions will be realized, USDA projected 2015/16 U.S. ending stocks at 20.8 MMT (764 million bushels), their highest since 2010/11. While there is still a lot of time before the new crop hits the market, there is a good chance that the United States will once again have ample supply to meet both projected imports and any special needs that arise.




Source:  US Wheat Associates

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