Currently, it is projected that U.S. wheat feed and residual usage will reach 315 million bushels this year, far surpassing the 150 million-bushel average for the last 10 years.
Most of the feed and residual is expected to be feed usage, but since the USDA-NASS does not survey wheat feed directly, it is derived from quarterly disappearance and is combined with other usage and survey variability (residual).
That’s according to World Agricultural Supply and Demand Estimates (WASDE) referenced by Lisa Elliott, a commodity marketing specialist and assistant professor at South Dakota State University.
In an e-mail interview, Elliott reviews 2012 wheat production and looks ahead to next year. To read more wheat projections for the coming year, go to 2013 Outlook: Wheat Prices to Tag Along with Corn.
How would you characterize this year’s wheat crop and the market for the commodity, both in the U.S. and globally? What, if anything, surprised you?
U.S. 2012 wheat production is estimated to be approximately 14% larger than in 2011. Comparing the 2012 wheat production to the latest five-year average, the crop is 31% larger. For the 2012 crop, it is estimated that 1.3 million additional acres were planted as compared to 2011.
In 2012, more of the planted acres were harvested as compared to the previous year, and yield per acre was about 6% higher than 2011. Higher 2012 U.S. wheat production compared to 2011 is estimated to be balanced on the demand side by higher exports and by potentially higher feed usage.
Overall, the U.S. wheat market will be tighter with lower ending stocks at 654 million bushels (October WASDE estimate). The last time the U.S. wheat market was about this tight was in 2008. With the stocks-to-use estimated at 26% using the October WASDE estimates, the U.S. has not been below 30% since 2008, when we were at a stocks-to-use rate of 29%.
2012 world wheat production was about 6% less than 2011 and about 2% lower higher than the five-year average.
This year, the U.S. will make up about 9.5% of the world wheat production versus 7.8% last year. World wheat production is down due to the dryness experienced by Australia, Russia and the EU-27, which are major exporters in the world market. The U.S. world market wheat supplies have not been this tight since 2008; most of the tightness is in exporting countries. As a result, WASDE last month reduced expectations for world wheat trade and world wheat consumption.
The one surprise in the wheat market for me would be the October WASDE feed/residual estimate of 315 million bushels. Over the past 10 years, U.S. feed and residual usage has averaged 150 million bushels and has not been over 300 million bushels since 2000. The Dec. 1 USDA Grain Stocks estimate, released in January, will provide further insight on the projected annual feed/residual estimate.
Walk me through your wheat forecast for 2013. What should producers, sellers and buyers know now about the market? What can they do to be better prepared for the year ahead?
The production for 2013 depends upon the number of acres planted to wheat, which will be influence by the projected futures price of wheat relative to other commodities. Participants in the wheat market should follow the exports and ending stocks figures. The USDA export figure should continue to be monitored to see if we pick up the needed exports to reach the forecasted estimate. In addition, winter wheat emergence and crop ratings should be followed.
Break down the major wheat types grown in the U.S. and talk about the market year ahead. Will there be any significant changes over this year?
U.S. Winter Wheat
Hard red winter (HRW)
HRW production is estimated at 1,004 million bushels, up from last year at about 29%. The feed/residual estimate is at 150 million bushels versus the 2011 at 15 million bushels. Ending stocks this year are about 39% lower than last year.
Soft red winter (SRW)