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WMR-2017 World Wheat Crop Somewhat Smaller

by Jim Peterson

Break Date: 6/6/2017 2:59:34 PM
Last Edit: 6/6/2017 2:59:34 PM

USDA's first official projection of the 2017 world wheat crop, released on May 10, indicates some contraction in production, but still the 2nd largest on record. Production is pegged at 27.1 billion bushels, two percent smaller than the 2016 record crop of 27.7, and slightly above the 3rd and 4th largest crops on record from 2015 and 2014, respectively. The smaller crop is positive for price trends in the world market, considering the unprecedented string of four straight years of record production.

Production in the six major export countries over the past three years is shown in the accompanying chart. The EU and Argentina are the only origins with larger production. The EU harvest is commencing in some southern areas, but Argentina will not harvest until December. The Former Soviet Union, or Black Sea region, is projected to harvest about an eight percent smaller crop. The U.S., Canada and Australia are all expecting 20 to 30 percent smaller crops compared to 2016 due to lower planted area, and a fall back from the record to near record yields attained in each country last year.

A cushioning factor in declining production prospects in any of the major export countries in the next few months is the fact that world wheat carry-in inventories remain record large at 9.3 billion bushels. The majority of those stocks are in China, but the U.S., Canada and Australia also had a notable build up in stocks from 2016 into 2017.

World wheat trade in the upcoming year is projected at 6.5 billion bushels, according to USDA. This is slightly lower than 2016, but if attained would be the second largest on record. World wheat usage is pegged at 27 billion, just below 2016 due to expected lower feed usage of wheat.

World wheat prices have shown some signs of strength in recent months, and appear to be a bit more sensitive to short-term weather issues. While there is still a long ways to go to restore prices to profitable levels, initial production projections at least hint at the probability for somewhat smaller world wheat supplies.