Market News & Headlines >> USDA Sees Modest Rise in Wheat Price
Large carry-in stocks and continued strong export competition in global markets are expected to temper wheat price prospects for 2018/19, USDA said at its annual agricultural outlook conference on Friday.
In its Grains and Oilseeds Outlook, USDA projected the 2018/19 season-average U.S. farm price at $4.70 per bushel, up a modest 10 cents from the midpoint of the forecast 2017/18 price range. U.S. wheat ending stocks for 2018/19 were projected to decline by 78 million bushels, or roughly 8% from 2017/18 to 931 million bushels.
The U.S. wheat crop is expected to rise by 98 million bushels or nearly 6% over last year based on an increase in all-wheat seeding of 500,000 acres to 46.5 million and a 20-year trend-line yield of 47.4 bushels per acre, which would be 1.1 bushels above last year’s actual yield, USDA said.
U.S. all-wheat acreage is seen rising despite a slight decline in winter wheat seedings to 32.6 million acres, the lowest in 109 years, on a 2% decline in hard red winter wheat seedings. Wheat acreage abandonment is forecast to be up from 2017/18 reflecting the potential for increased abandonment in the drought-affected southern Plains.
Higher production is more than offset by a 172-million-bushel drop in the old-crop carry-in compared with 2017/18, leaving total supplies of 2.983 billion bushels, 93 million or 3% lower for 2018/19. Domestic wheat use is seen rising a marginal 10 million bushels in 2018/19 on increased feed and residual use. Food/seed use is expected to be unchanged for 2017/18, while U.S. wheat exports are projected to fall 25 million bushels to 925 million.
“Lower U.S. supplies and continued strong international competition will challenge U.S. wheat exports,” USDA said noting that the European Union is expected to have a larger crop, while Argentina is anticipated to continue to expand wheat area. Also, both Australia and Canada are expected to have ample exportable supplies with larger crops as they rebound from reduced 2017/18 yields and while Russia’s crop is expected to be down from the 2017/18 record high, its exportable stocks will remain “abundant” due to massive old-crop carry-in stocks.
Global 2018/19 wheat trade is anticipated to reach a record-high while global consumption is projected to continue to grow particularly in the net importing countries of Africa and Asia. The U.S. is expected to retain its core markets, but expansion into these growing regions will be limited in light of abundant competitor supplies.