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  • From: "Tradingpost" <tradingpost@lobo.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] U.S. 2008/09 Wheat Supplies Are Expected To Increase More Than Use
  • Date: Mon, 07 Apr 2008 11:30:48 -0600

Wheat YEARBOOK--SUMMARY March, 31, 2008
March 2008, ERS-WHS-2008s
http://usda.mannlib.cornell.edu/usda/current/WHS-yearbook/WHS-yearbook-03-31-2008_summary.txt
Approved by the World Agricultural Outlook Board
-----------------------------------------------------------------------------
This SUMMARY is published by the Economic Research Service, U.S. Department
of Agriculture, Washington, DC 20036-5831. The text of the yearbook will be
available electronically about 1 week following this summary release.
-----------------------------------------------------------------------------

U.S. 2008/09 Wheat Supplies Are Expected To Increase More Than Use

U.S. 2008/09 Forecast

Supplies. U.S. wheat supplies for 2008/09 are expected to be up from 2007/08
because of larger acreage and higher
yields. Responding to higher expected returns, producers sowed 1.9 million
more winter acres than a year ago.
Increased seedings of soft red winter (SRW) and white winter wheat more than
offset smaller hard red winter (HRW)
seedings. Excessively dry conditions in the western areas of the central and
southern plains in the fall of 2007, in part,
led to the HRW decline. Area planted to other spring wheat and durum wheat
for 2008 is also up from 2007.

With a return to trend yields, higher winter and spring wheat seedings, are
expected to lead to an year-to-year
increase in production that more offsets the smaller carryin stocks from
2007/08, the lowest since the late 1940s.

Utilization. Total use for 2008/09 is projected down from 2007/08, largely by
an expected 275-million bushel drop in
exports. Global wheat production is expected to expand markedly in response
to high prices. Wheat feeding in the
U.S. is expected to increase year-to-year as the anticipated drop in exports
is expected to shift wheat into domestic
feeding. A larger all-wheat crop is also expected to increase residual
disappearance use, including handling losses.
Food use of wheat is expected to increase in 2008/09 with the increase in
population growth and rising per capita use.

Ending stocks and price. Projected supply and use changes for 2008/09 are
expected to lead to a recovery in
ending stocks from the very low level of 2007/08. The expected season-average
farmgate price is $7.00 per bushel,
above the projected price range of $6.50 – $6.80 for 2007/08. The 2008/09
price is projected at a record as raise the
monthly season average prices at harvest above the cash price. Strong
early-season export demand ahead of
harvests in other major exporting countries and continued strong domestic
milling demand will also support cash
prices into early fall. The previous high was $4.55 per bushel in 1995/96.

U.S. 2007/08 Situation and Outlook

Supplies. Total supplies for 2007/08 are projected 108 million bushels above
those for 2006/07. All wheat production
totaled 2,067 million bushels in 2007, 14 percent above 2006. Planted area
was up and the recovery from the drought
lowered the rate of acreage abandonment and raised yields despite winter
wheat losses from freeze damage and
harvest-time rains. Partially offsetting the increased all-wheat production
were lower beginning stocks and imports
than in 2006/07.

Utilization. U.S. domestic wheat use in 2007/08 is projected to be nearly the
same as in 2006/07 as higher food use
offsets lower feed and residual use. U.S. exports for the 2007/08 marketing
year are expected to be 1,225 million
bushels, sharply above 2006/07 despite record prices. Throughout the past
year, adverse weather events around the
world reduced crops in several major wheat-producing and -exporting
countries. Importing countries turned to United
States for wheat. Demand for U.S. wheat has also been boosted by export
restrictions and taxes imposed by several
major exporting countries. Providing the impetus for rising prices and these
efforts by countries to control internal food
cost is a projected decline in world wheat stocks to a 30-year low as global
consumption exceeds production in 6 of
the last 7 years.

Ending stocks, prices, and price spreads. The ending stocks of wheat for
2007/08, projected at 242 million bushels,
are down sharply from 2006/07. U.S. ending stocks have not been this low
since the late 1940s. These expected low
stocks have led to a price historic run up in prices. The all-wheat monthly
price at the start of the 2007/08 marketing
year in June was $5.03 per bushel. The farm gate monthly price rose to $11.70
per bushel in March, led by a durum
price of $14.50 per bushel.

The price spread between hard red spring (HRS) and HRW has been very volatile
this marketing year. Because of the
abundant moisture supplies on the Central and Southern Plains, supplies of
high-protein HRW were limited. The
weather conditions on the Northern Plains resulted in good supplies of
high-protein HRS. Thus, good protein HRW
market prices were at a premium to HRS on the Kansas City and Minneapolis
exchanges, respectively, causing
millers and bakers to substitute HRS for HRW in their mill grind. Later in
the year, after rapid exports of HRS had
depleted U.S. HRS stocks and supplies in Canada proved smaller than expected,
demand for HRS increased, driving
up prices relative to HRW. This spread reversal then caused the an unusual
late-season substitution of HRW for HRS
in the mill grind.

On a smaller scale, pasta makers with products not made entirely from durum
semolina began changing their mill
grind. With durum selling at a large premium to HRS because of its even
tighter stock situation, there was increased
blending of HRS with durum.

International 2008/09 Forecast

Supplies. Wheat prices during the fall of 2007 in many countries were very
high, and planting conditions for winter
wheat across the Northern Hemisphere were generally favorable, so winter
wheat planted area increased significantly.
Assuming trend yields based on normal weather, average global wheat yields
will increase in 2008/09. Increased
production prospects in the European Union (EU-27), Ukraine, Australia, and
others are expected to more than offset
lower production in countries where growing conditions have been less
favorable. Global wheat production could
reach a record level for 2008/09. The increase in global production is
expected to offset extremely tight beginning
stocks, supporting prospects for some increase in global wheat supplies in
2008/09.

Utilization. World wheat use is expected to increase in 2008/09. Global food
use is likely to grow slowly, mostly due
to population growth. High feed grain prices and increased wheat production
in the United States, EU-27, and the
former Soviet Union (FSU-12) are expected to boost wheat feed and residual
use. With global beginning stocks
projected at their lowest level since 1977/78, growing conditions in 2008
will be crucial for determining available
supplies, the size of the expected increase in global stocks during 2008/09,
and overall price levels.

International 2007/08 Situation and Outlook

Supplies. Global production in 2007/08 is estimated up 11.8 million tons to
605.0 million. This anemic growth follows
the largest year-to-year drop in world wheat production in 12 years, and
leaves production significantly short of use.

Utilization. World consumption is forecast up slightly, only one half of 1
percent. Global use is forecast to be 14.7
million tons greater than production, trimming projected ending stocks to
110.4 million tons, the lowest in 30 years.
World wheat trade is expected to contract 7.0 million tons to 108.1 million
tons, because tight exportable supplies and
record prices will limit imports. Large export reductions are projected for
Canada, the EU-27, and Australia, but U.S.
exports are expected to increase by more than 30 percent.

----------------------------------
NOTE: The Yearbook tables are on the Economic Research Service website. The
33 tables cover U.S. acreage,
production, yield, and farm price; world production, supply, and
disappearance; U.S. supply and disappearance; food
use; government and private stocks; domestic and international prices;
exports and imports; and flour production and
prices. Most of the tables are updated monthly as new data become available.
All of the tables are available in HTML,
Excel, and PDF.




  • [Livingontheland] U.S. 2008/09 Wheat Supplies Are Expected To Increase More Than Use, Tradingpost, 04/07/2008

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