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Wheat Outlook Summary (WHS-17a, January 17, 2017)

Core Content

The Wheat Outlook report from the USDA provides an analysis of U.S. and global wheat supply, demand, and trade dynamics for the 2016/17 marketing year. It highlights the impact of low prices, weather conditions, and policy changes on planting decisions, production, and market behavior.

Main Points

U.S. Winter Wheat Plantings and Use

• 2017 winter wheat plantings were the second-lowest on record and the lowest since 1909, with an 8-million-bushel decrease in seed use, now projected at 61 million bushels.
• 2016/17 ending stocks are raised by 43 million bushels, reaching 1,143.4 million, the highest since 1987/88.
• Feed and residual use is reduced by 35 million bushels, now at 225 million, due to lower-than-expected demand and higher wheat-corn price ratios.
• Hard Red Winter (HRW) wheat plantings dropped by 3.3 million acres (12%) from 2016, with Nebraska and Utah reporting record-low plantings.
• Kansas alone saw a 1.1 million acre reduction in winter wheat plantings.

U.S. Wheat Production and Prices

• HRW production for 2016/17 is forecast at 1,081.7 million bushels, up 251 million bushels from the previous year.
• SRW production is forecast at 345 million bushels, down 14 million bushels due to reduced harvested area and yields.
• White winter wheat production increased by 60 million bushels, with HWW and SWW showing improved yields and production.
• All wheat prices have risen, with the season average farm price increased by 10 cents to $3.80 per bushel.
• Loan Deficiency Payments (LDPs) have been made for HRW due to decade-low prices, totaling $114.5 million to date, with Oklahoma and Kansas receiving the highest per-bushel payments.

Global Wheat Outlook

• World wheat production is projected to reach 752.7 million tons, up 1.4 million tons from the previous month, and 15.8 million tons higher than the 2015/16 record.
• Argentina increased production by 0.6 million tons to 15.0 million, the highest in 5 years, due to abundant moisture despite delayed planting.
• Russia increased production by 0.5 million tons to 72.5 million, with Crimea's output (0.8 million tons) excluded from the total.
• EU production is slightly up by 0.4 million tons to 144.3 million, based on revised harvest results.

Wheat Use and Trade

• Global wheat consumption increased slightly to 739.9 million tons.
• Foreign feed and residual use rose by 0.5 million tons, with Canada, Vietnam, Brazil, and Bangladesh seeing notable increases.
• World wheat trade is projected to increase by 1.6 million tons to 177.0 million, driven by India's large import increase of 3.7 million tons (up 0.7 million tons).
• U.S. wheat exports remain unchanged at 26.0 million tons, affected by strong competition from Argentina and Australia.

Ending Stocks

• World wheat ending stocks are projected to increase to 253.3 million tons, up 1.2 million tons.
• Foreign ending stocks remain unchanged at 221.0 million tons, as individual country changes offset each other.
• U.S. ending stocks increased by 1.2 million tons to 32.3 million, while Australia, Ukraine, and Argentina saw reductions.

Key Information

• U.S. winter wheat plantings for 2017/18 are expected to be 32.39 million acres, a 3.75 million acre decline from the previous year.
• India's wheat import outlook is uncertain due to policy changes, tariff reductions, and elections in key states.
• Wheat trade is influenced by currency fluctuations, supply levels, and exporter competition.
• Weather has played a critical role in U.S. planting decisions and crop conditions, particularly in Kansas, where conditions are below normal.

Summary Table

Conclusion

The report underscores a decline in U.S. winter wheat plantings, increased ending stocks, and rising global wheat production. India's wheat import surge and Argentina's competitive position are key drivers in the international market. LDPs and price trends are significant factors affecting U.S. farmers and domestic use. Overall, the outlook reflects market adjustments, weather impacts, and policy decisions shaping the global wheat landscape.