Marketing Winter Grains
Posted: May 28, 2013
As many of you may already know – I have a personal bias against wheat. I am allergic. Because of this handicap, and the fact wheat is produced on every continent (except Antarctica) I find it difficult to follow wheat markets very closely. So, I rely on Dan O'Brien, Extension Grain Economist, Department of Agricultural Economics, Kansas State University to provide the below analysis.
USDA has released its May Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports – providing forecasts of 2013 U.S. wheat production with associated supply-demand balance sheets and prices for the “new crop” 2013/14 marketing year (i.e., MY 2013/14). “New crop” MY 2013/14 for U.S. wheat runs from June 1, 2013 through May 31, 2014.
U.S. Projections: The USDA projected 2013 U.S. wheat production would decline to 2.057 billion bushels – down from 2.269 in 2012 with average U.S. wheat yield of 44.1 bu/ac. Total 2013 U.S. winter wheat production is forecast to be down 10% from 2012. On a subclass basis, hard red winter wheat production would be down 23%. Soft red winter wheat production to be up 19%. White winter wheat production is forecast to be down 2%. The USDA also projects 2013 U.S. spring and durum wheat production prospects to be lower than a year ago.
For “new crop” MY 2013/14 the USDA projected lower total supplies, higher food use, lower exports, seed, feed and residual use, ending stocks; and ending stocks-to-use (29.82%) down marginally from 30.38% in “old crop” MY 2012/13. With larger supplies of U.S. feedgrains anticipated for fall 2013 and less cross-market support for wheat prices, the USDA projected U.S. average wheat prices of $6.15-$7.45 bu/ac (midpoint = $6.80), down from $7.80 in “old crop” MY 2012/13.
World Wheat production in “new crop” MY 2013/14 is projected to be up sharply from 2012/13 – with sizable increases in exports projected for a number of key wheat producing and exporting countries (i.e., Russia, Ukraine, Kazakhstan, Argentina, and India). These increases foreign wheat export prospects result in diminished U.S. wheat export prospects.
U.S. Wheat Price Prospects for 2013: Uncertainties still exist regarding 2013 wheat production prospects in the U.S. central and southern plains for hard red winter wheat, and also for other major World wheat exporters such as Australia, Argentina, and the Black Sea Region countries. World production problems in 2013 could reduce production and tighten supply-demand balances. U.S. wheat prices in 2013 are likely to continue to remain high through at least early spring months. Extremely tight U.S. corn supplies through at least early-mid summer 2013 are also likely to provide cross market support for 2013 wheat prices till fall.
Also, as we get into our east coast winter grains harvest, let’s stay aware of the support provided by our crop insurance coverage. Below are references for two fact sheets related to winter grains:
Crop Insurance fact sheet that covers the insurance period, causes of loss, reporting requirements as well as additional appropriate information.