wheat outlook

Copyright © 2013 AgResource Company. All Rights Reserved.

Wheat Outlook

William I. Tierney, Jr. PhD

Chief Economist

AgResource Company, Chicago IL.

OSU Extension Webinar

April 15, 2013


US Wheat Supply & Demand

2011/12 2012/13 2012/13 2012/13 2013/14 2013/14

WHEAT USDA USDA USDA ARC USDA Out-

ARC

Est. Mar Apr Proj. look Conf. Proj.Mln Acres, Bushels Area Planted 54.4 55.7 55.7 55.7 56.0 55.7Abandonment (%) 16.0% 12.1% 12.1% 12.1% 17.0% 18.6%Area Harvested 45.7 49.0 49.0 49.0 46.5 45.4Yield 43.7 46.3 46.3 46.3 45.2 44.8Beginning Stocks 862 743 743 743 691 717Production 1,999 2,269 2,269 2,269 2,100 2,034Imports 112 130 130 130 130 120 Supply, Total 2,974 3,142 3,142 3,142 2,921 2,870Food 941 950 950 950 958 955Seed 76 75 75 75 74 75Feed and Residual 164 375 360 360 300 250 Domestic, Total 1,182 1,400 1,386 1,385 1,332 1,280Exports 1,050 1,025 1,025 1,040 950 1,050 Use, Total 2,231 2,425 2,411 2,425 2,282 2,330Ending Stocks 743 717 731 717 639 540Ending Stocks/Use (%) 33.3% 29.6% 30.3% 29.5% 28.0% 23.2%HRW Crop Ins Initial Price ($/Bu)

7.148.62

8.62 8.62 8.78 8.78

Avg. Farm Price ($/Bu) 1/ 7.24 7.65-7.95 7.70-7.90 7.75-8.05 7.00 6.40-8.40Futures-Based Forecast ($/Bu) 2/

7.90 7.90 7.05 7.05

USDA Price Ratio: Wheat/Corn (%)

116% 110% 113% 113% 146% 157%


U.S. Winter Wheat Crop Conditions: 2nd Week of April


US Drought Monitor – 2013 vs 2012

Drought Severity D0 - Abnormally Dry D1 - Drought - Moderate D2 - Drought - Severe D3 - Drought - Extreme D4 - Drought - Exceptional

Apr 10, 2012 Apr 09, 2013

Copyright © 2013 AgResource Company. All Rights Reserved.Copyright © 2012 AgResource Company. All Rights Reserved.

Global Wheat’s Weather Problems Also Include Too Much Rain

“The Summer That Never Was in UK” WillBoost UK’s Imports. Continued Rains Will Reduce 2013 Area Seeded by 12-15%.

14 Mln Ha Affected by Flooding in Arg’sBuenos Aires and Santa Cruz. How MuchMuch Damage Did Wheat Crop Suffer?


Crops in Canada & U.S. N. Plains Will be Planted Late Resulting in Lost Acres and Reduced Yields

Approximate crop yield decline each day Alberta crops’ seeding date is delayed after May 1

Crop % Yield decline/day

Barley - grain 1.3Barley - silage 1.0Triticale - grain 0.8Triticale - silage 1.1Wheat – HRS 0.8Wheat - durum 1.3Canola 1.7Flax 0.6


2013 World Wheat Crop to be 2nd Largest on Record.


Big Crop Compensates for Small Beginning Stocks.


Per Capita Use Has Been Steady Thanks, In Part, to EU Biofuels Use.


More Wheat Fed Next Year But Trade in “Feed Wheat” Will Be Down.


No Growth in World Wheat Trade


Despite Near-Record Crop, Global Stocks/Use Will Slip in 2013/14.


US SRW Now World’s Cheapest Wheat. But Black Sea “New Crop Quotes” Less Than US.


India Has More Wheat to Export But Will They Sell At Prices Below The Govt’s Support Price?


Wheat Prices Seem to be a Function of Exporters’ Stocks/Use and Corn Price


Lowest World Corn Stock/Use Since 1974


Chicago Wheat Nearing Largest Net Short since 2006


A Weekly Close Above The Downtrend Line Signals to Hold Off on Further Sales.


Downside Risk is $6.00/Bu Basis the “Nearby” KCBT Futures History


$.40/Bu “Carry” from Jul ‘13 to Mar ‘14 ($.05/Bu/Month). Farmers With On-Farm Storage May Want to Hedge in KWH14.

KC HRW 13% is 40-50 cents/bu > HRW Ord.Problems with N. American Spring Wheat cropcould push up protein premiums.


Why Are Wheat End Users (Traders) So Calm?

wheat outlook

Documents

world wheat trade copyright

world wheat crop

wheat hrs0

wheat durum1

wheat fed

feed wheat

winter wheat crop conditions

record crop