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WMR-2017 U.S. Wheat Supply and Demand Outlook

by Jim Peterson

Break Date: 6/6/2017 2:57:19 PM
Last Edit: 6/6/2017 2:57:26 PM

USDA's first official projection of U.S. wheat supply and demand, reflects significantly lower production against steady demand, and a slight increase in price prospects. Production is pegged at 1.8 billion bushels, the smallest crop since 2006 and 22 percent smaller than 2016. The estimate is based on actual field surveys of winter wheat yields, and historical trend line yields for spring and durum wheat. The major reason for the smaller crop is the lower planted area of 46.1 million acres, a historical low. The initial yield estimate is 47.2 bushels per acre, 10 percent lower than last year's record, but still the second highest. Based on current conditions, the yield estimate seems high with frost and disease concerns impacting portions of the hard red winter crop, and expanding drought in spring wheat regions.

Demand forecasts show stable food use, but slightly lower feed usage in the domestic market. Exports are anticipated to fall back to one billion bushels, just three percent less than the 2016 marketing year. A weaker U.S. dollar in recent months, relative to currencies of key exporters, along with competitive winter wheat prices should allow the U.S. to continue to capture exports in the near term. The EU and Black Sea Regions will likely offer the greatest competition as the marketing year unfolds.

Initial farm level price forecasts are in a range from $3.85 to $4.65 per bushel. This is an average for all classes and qualities of wheat. The mid-point of $4.25 is higher than the $3.90 average in 2016, but still well below the $4.89 attained in 2015.