Source: US Wheat Associates newsletter
by Joe Sowers, USW market analyst

The USDA Baseline Projections released last week by the Economic Research Service (ERS) show an increase in U.S. wheat consumption and exports over the next decade, leading to a 3 percent increase in wheat acreage by 2015/16 over current levels.

U.S. wheat exports are forecast to grow by 3.4 MMT, or 13 percent. The agency also forecasts a 3 million metric ton (9 percent) increase in U.S. domestic wheat consumption over the next decade, rebounding from a 4 MMT decline since 2000/01.

ERS expects foreign competition in wheat trade to intensify, resulting in a slight decline in the U.S. share of the world market, from 25 percent in 2005/06 to 23 percent in 2015/2016. ERS expects that Australia, Argentina, and the Black Sea region will see larger market shares, while shares for Canada and the EU-25 will likely decline.

By 2015/16, ERS expects total world wheat trade to increase by 21 MMT, 20 percent above current levels. The strongest import growth is forecast for the EU-25 (2.5 MMT), Sub-Saharan Africa (2 MMT) including Nigeria and South Africa, Brazil (1.9 MMT), Mexico (1.4 MMT) and South Korea (1.4 MMT).

Strong growth in ethanol production is expected to drive a U.S. corn acreage increase of 4 percent. Soybean acreage is expected to decline by 2 percent as foreign export competition grows and drives prices down.

Link to USDA Baseline Projections:http://www.ers.usda.gov/Features/baseline/baseline2006/