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U.S. Wheat Outlook Summary

Core Content

The July 2017 USDA Economic Research Service (ERS) Wheat Outlook highlights the impact of dry conditions on U.S. wheat production and outlines the implications for domestic and international markets. The report is approved by the World Agricultural Outlook Board and provides updated projections for the 2017/18 marketing year.

Main Points

Domestic Production and Outlook

• All Wheat Production: Projected at 1,760 million bushels, a decrease of 64 million bushels from the June forecast, representing a 24% drop from 2016/17.
• Harvested Area: Reduced by 0.4 million acres to 38.1 million, the lowest since the 1880s.
• Yield: All wheat yield is lowered to 46.2 bushels per acre, slightly below the 5-year average of 46.6 bushels.
• Durum Production: Down 45% from 2016, to 57.5 million bushels, due to lower harvested area and yields.
• Other Spring Wheat Production: Forecast at 422.9 million bushels, a sharp decline of over 21% from 2016, the lowest since 2002/03.
• Carryin: Increased by 23 million bushels to 1,184 million, due to an upward revision of previous year's ending stocks.
• Ending Stocks: Projected at 938.2 million bushels, a net increase of 13.8 million bushels compared to the previous month, despite reduced production. This is 21% lower than 2016/17 but still above the 5-year average of 844 million bushels.
• Prices: The all wheat price is raised 50 cents to $4.80 per bushel, supported by reduced production and quality premiums.

Winter Wheat

• Yield: Increased to 49.7 bushels per acre, the second-highest yield on record, behind the 2016/17 record of 55.3 bushels per acre.
• Production: Projected at 1,279 million bushels, a 2% increase from June but a 23% decline from 2016.
• Hard Red Winter (HRW): Production is projected at 1,081.69 million bushels in 2016/17 and 757.52 million bushels in 2017/18, a decline of over 30%.
• Soft Red Winter (SRW): Production is projected down 11.5% to 305.6 million bushels, with yields also down by 0.6 bushels per acre.
• White Wheat: Aggregate production of Hard and Soft White Winter wheat is down 28.4 million bushels from 2016, with HWW down over 27% and SWW down about 10%.

International Outlook

• World Wheat Production: Forecast at 737.8 million tons, a decrease of 1.7 million tons from the previous month, with the U.S. being the only major producer with a reduction.
• Russia: Becomes the top world wheat exporter for the first time in history, with production up 3 million tons to 72 million tons.
• Turkey: Production up 1.5 million tons, and exports up 0.2 million tons due to improved conditions and increased export opportunities.
• Australia: Production down 1.5 million tons, with winter rainfall below average and dry weather expected to affect yields.
• China: Production down 1.0 million tons, with poor late season conditions in key provinces reducing yields.
• Ukraine: Production down 0.5 million tons due to ongoing drought, leading to a reduction in exports.
• EU3: Production down 0.8 million tons, with the largest decline in Spain due to persistent dry weather.
• Paraguay: Exports down 0.4 million tons, reflecting a sharp drop in production.

Key Information

• Domestic Supply and Use: Total supply is projected at 3,084.2 million bushels, with a 20 million bushel reduction in feed and residual use due to higher prices and ample feed grain supplies.
• Imports: Increased by 10 million bushels to 140 million, primarily from Canadian spring wheat and Durum to offset U.S. production declines.
• Export Projections: U.S. exports are down 25 million bushels to 975 million, with Russia surpassing the U.S. in export volume.
• Market Share Shifts: Expected due to changes in production and export volumes among major wheat exporters.
• Trade Revisions: Numerous 13-month trade changes and back-year revisions are made, impacting historical data tables and global trade estimates.

Summary Table

Conclusion

The 2017/18 U.S. wheat outlook is characterized by reduced domestic production, primarily due to drought in the Northern Plains, and increased reliance on imports to maintain supply. Despite these challenges, the U.S. remains a significant player in global wheat markets, though Russia is expected to surpass it in exports. International production and trade changes are expected to influence global market dynamics, with notable shifts in supply and demand across major wheat-producing regions.