Milling & Baking News - April 11, 2017 - 26

Grain M
Grain
Market
arket RRoundtable
oundtable X

Wheat futures range-bound
despite expected smaller crop
Continued from Page 1

likely will be down a similar amount,
said Paul Meyers, vice-president,
commodity analysis, Foresight Commodity Services, Inc., Naperville, Ill.
"In addition, we're coming off a year,
2016, when we had exceptional yields,
all-time high yields for winter wheat.
We're not likely to match last year's
record yields, so the combination of
less harvested acreage and a return to
trend yields will result in production
this year dropping about 400 million
bus from 2016."
U.S. wheat production in 2016 was
2,310 million bus.
Mr. Meyers noted wheat plantings
in the United States have dropped
nearly 9 million acres in the last two
years.
"I thought even a couple of years
ago we might have been starting to
level off on wheat acres, but with the
decline last year (5 million acres), the
winter wheat seedings for 2017 reported in January and now the planting intentions reported on March 31, I don't
know that we have seen the low in
wheat acreage," he said. "I wouldn't
be surprised if during the next couple
of years wheat loses another 2 million
or 3 million acres."
Mr. Meyers said with corn and soybean yields rising noticeably over the
last 10 years and with wheat yields
increasing only modestly during the
same span, "if you pencil out the returns of growing corn or soybeans
versus wheat, the numbers still generally favor corn and soybeans."
Steve Freed, vice-president, ADM
Investor Services, Chicago, said despite so few acres planted to wheat in
the United States this year, a smaller
crop may not result in a dramatically
lower 2018 wheat carryover compared
with 2017 "because if the Black Sea has
a good crop, the European Union has
a good crop and Canada has a good
crop, we'll just move some of the export demand we gained this year to
the other exporters."
Both Mr. Freed and Mr. Meyers
suggested the U.S.D.A. may raise its
forecast for the carryover of wheat
on June 1, 2017, currently at 1,129
million bus, which would be the
26 / April 11, 2017 XMilling & Baking News

largest since 1988. The quarterly Grain
Stocks report issued by the U.S.D.A.
on March 31 indicated March 1 stocks
of wheat at 1,655 million bus, up 21%
from a year earlier and above trade
expectations. This suggested wheat
feeding last summer fell below earlier estimates, which may result in
the U.S.D.A. lowering its forecast
for 2016-17 feed and residual use of
wheat from the current outlook at 225
million bus. Also, U.S. wheat exports
in 2016-17 may fall below the 1,025
million bus forecast.
Whether the U.S.D.A. raises its 2017
carryover forecast or not, the volume
of wheat carried into the new crop
year will be the largest in decades

U.S. wheat plantings
in million acres
2017
2016
2015

46.1*
50.2
55.0

2014

56.8

2013

56.2

2012
2011
2010
2009
2008

55.3
54.3
52.6
59.0
63.6

Source: U.S. Department of Agriculture *forecast

and will go a long way toward assuring ample, even if smaller, supplies
in 2017-18 despite the expected sharp
drop in production.
The U.S.D.A. estimated total wheat
supplies in the United States in 201617 at 3,400 million bus (a carry-in of
976 million bus, a 2016 crop at 2,310
million bus and imports forecast at 115
million bus). Mr. Meyers said based
on a carry-in of at least 1,129 million
bus, a 2017 crop below 2 billion bus as
suggested by the U.S.D.A. plantings
estimates and imports of about 115
million to 120 million bus, the wheat
supply in 2017-18 may be down about

200 million bus, or 6%, from the current year.
Mr. Meyers and Mr. Freed agreed
U.S. wheat exports in 2017-18 may
fall short of the total forecast for the
current year because other exporting
nations will have large crops, even
if most are expected to have smaller
harvests than in 2016-17. The European Union-28 stood out. Weather
depressed yields and the quality of
its 2016 crop, and the International
Grains Council recently forecast
E.U. wheat production to increase
4% this year and its exports in 201718 to increase 19% from the current
year to about 30 million tonnes.
Also, Australia will be marketing its
record 2016-17 crop for the next several months in competition with new
crop U.S. supplies.
Mr. Meyers said feed and residual
use of wheat in 2017-18 also may be
lower than in the current year because
of an expected smaller hard red winter
wheat crop and ample old crop corn
supplies that will be available this
summer.
Overall wheat disappearance in
2017-18 may be around 2.15 billion
bus compared with a forecast 2.27 billion bus in the current year, Mr. Meyers said. In the end, he suggested the
carryover of wheat on June 1, 2018,
may be about 125 million bus lower
than what will be seen in 2017. But
that still would mean a 2018 carryover
of more than 1 billion bus, roughly the
equivalent of half a crop.
The U.S.D.A. will issue its initial
forecasts for 2017-18 U.S. and world
wheat supply and demand in its May
World Agricultural Supply and Demand Estimates report. In the meantime, the I.G.C. already has issued its
preliminary forecasts for the upcoming year. The I.G.C. forecast world
wheat production in 2017-18 at 734.5
million tonnes, down 3% from a forecast record 753.7 million tonnes in
2016-17. It forecast the United States
and Australia to see the widest production declines.
But even with the projected smaller
world crop, the I.G.C. forecast 201718 world wheat ending stocks at 234
million tonnes, down just 5 million
bakingbusiness.com / world-grain.com

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - April 11, 2017

Table of Contents for the Digital Edition of Milling & Baking News - April 11, 2017