Feed Demand for Wheat to Soar

October 16, 2012 09:31 AM
Feed Demand for Wheat to Soar

The U.S. wheat supply will dwindle as poultry and livestock producers continue to turn to wheat as an economical feed source.

According to USDA’s World Agricultural Supply and Demand Estimates for October, the 2012-13 carryout for all U.S. wheat is 654 million bushels, down just over 6 percent from September’s estimate of 698 million bushels and substantially lower, off 12 percent, than last year’s 743 million bushels.

USDA estimates that this year’s production of all wheat in the United States will reach 2.269 billion bushels, basically flat from last month’s projection but significantly larger than last year’s 1.999 billion bushels.

"USDA focused the October report on the demand side," says Randy Martinson, executive vice president with Progressive Ag Marketing, in Fargo, North Dakota. "We are not going to export the wheat; we are going to feed it due to the high price of corn." USDA narrowed its projected price range for the 2012-13 wheat crop from its estimated range released in September but left the seasonal average farm price unchanged at $8.10 per bushel.

Increased demand for U.S. wheat in the current crop year is expected to more than offset the growing wheat supply. Wheat export, wheat for domestic food use, and wheat used for seed are expected to remain relatively flat from last year, but feed use will soar, according to USDA.

The department estimates that 315 million bushels of wheat will make its way into the feed sector in 2012-13. That is nearly twice the amount of wheat fed last year when feed use was 164 million bushels. USDA’s feed use estimate is also significantly higher—a 43 percent increase—than September’s projected 220 million bushels.

World Wheat Supply Falling

In the same report, USDA projected a reduction in the global wheat supply. Total world wheat production is now estimated at 653.05 million metric tons, down slightly from last month’s estimate of 658.73 million metric tons and more than 7 percent smaller than 2011-12 world production of 695.69 million metric tons.

USDA lowered wheat production in Australia by 3 million metric tons due to continued dryness there during the critical grain filling and flowering stages. The department also cut Russian wheat production by 1 million metric tons as yield estimates for spring wheat in Russia decline. Production in the European Union was dropped 0.8 million tons on excessive rain in the United Kingdom. Smaller reductions were made in wheat production in Canada, Algeria, Uruguay, and Kyrgyzstan.

"In the last half of the year, the world will have to come to the United States for wheat," says Jerry Gidel, chief feed grain analyst for Rice Dairy, Chicago. "The Black Sea supply is exhausted, and Europe is now filling world demand."


See all of the data, coverage and analysis of today's World Agricultural Supply and Demand Estimates and Crop Production reports.



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