from U.S. Wheat Associates, Wheat Letter

U.S. winter wheat production projected down from 2004/05
by Ann Courtmanche, U.S. Wheat Associates market analyst

Lower U.S. production figures are anticipated for 2004/05, noted USDA commodity analyst Dr. William Tierney at this year's Agricultural Outlook Forum. He projects U.S. wheat production at nearly 58 million metric tons (MMT), a steep drop from an estimated 63.6 MMT in 2003/04.

U.S. winter wheat plantings for 2004/05 were lower due to unfavorable conditions and low new crop prices at planting time last autumn, Tierney said. Wheat plantings are forecast at nearly 61 million acres, down just 2 percent from 2003, but equal to 2002/03 and higher than 2001/02's 60 million acres. Harvested acres are forecast down 4 percent to 51 million in 2004, while the ratio of harvested-to-planted acres is forecast at 84 percent, slightly under the 10-year national average. Wheat yields are projected at 42 bushels per acre for 2004/05, lower than the 2003/04 yield of 44 bushels per acre, but well above 2002/03's yield of 35 bushels per acre.

Meanwhile, the Black Sea countries, and Russia and the Ukraine in particular, are expected to recover from drought and winter frost that hampered wheat production in 2003/04. Their increased wheat production means that they are likely to re-enter the export market with their new crop, providing competition, once again, to the traditional major wheat exporters.

U.S. wheat exports soared in 2003/04 and are expected to top 31 MMT, more than 30 percent share of the world trade. But with lower production in the U.S. and increased production elsewhere, U.S. exports for 2004/05 are projected at 25 MMT, 24 percent of world trade, just below the prior five-year-average U.S. world market share of 25 percent.

U.S. ending stocks are projected at nearly 15 MMT for 2004/05, slightly higher than those projected by the USDA for 2003/04, according to Dr. Tierney. The 2004/05 stocks-to-use ratio is pegged at nearly 25 percent, higher than the 23 percent forecast for 2003/04, but below most levels since 1996/97. Prices received by producers in 2004/05 are projected at $3.35 per bushel, remaining unchanged from 2003/04 projections. Imports by China, said Tierney, will continue to be a source of uncertainty in the world wheat market.

World wheat consumption, production and trade estimates rise
by Ann Courtmanche, U.S. Wheat Associates market analyst

Total world wheat consumption is projected at 589 million metric tons (MMT) for 2003/04 according to the most recent International Grains Council's (IGC) grain market report that was released on February 26. World consumption projections were upped by 2 MMT this month compared to last month's IGC report, largely because the decline in wheat prices relative to other feed grains is making it more competitive in the European Union. Compared to last year, consumption is down just 2 percent, (12 MMT).

World wheat production figures increased by 3 MMT to an estimated 557 MMT for 2003/04, according to the IGC report. Increases in projections came from higher forecasts for Argentina, Australia and Brazil. Argentina's production figures were raised by 1 MMT to 14 MMT, because of higher than expected yields. Production figures for Australia increased to nearly 25 MMT, just below their 2001/02 record, due in part to an excellent crop in both Western Australia and Victoria. Brazil's production is up 12 percent from 2002/03.

World trade is estimated at more than 98 MMT for 2003/04, raised slightly from the previous month's IGC report, while the forecasted exports of the five major exporters was raised by more than 1 MMT to 81 MMT, 25 percent higher than the 2002/03 estimate. U.S. exports are forecast at 31.3 MMT for 2003/04, up 2 percent from last month's IGC projection and 35 percent higher than last year.