Tuesday, January 18, 2011
Will New Crop Wheat Be Better Than Old Crop Wheat?
Wheat remains the primary cereal grain for the world, but depending on where you are, there is a different perspective for wheat supply and demand. USDA’s monthly Wheat Outlook says global wheat buyers are still trying to ensure their access to good milling quality wheat, and that has an impact on US stocks. They are being drawn down by increased exports, and US wheat exports should reach 1.3 billion bushels, which would be the greatest since the 1992/93 marketing year. The result of greater demand and lower ending stocks is a higher seasonal average price, which is currently at $5.65 per bushel.
2010 production was 2.208 billion bushels based on 47.6 million acres and an average yield of 46.4 bushels per acre. US domestic use for the old crop will be 1.176 billion bushels because of lower feed use, but food use of 930 million bushels will be up slightly from the last crop. The primary reason is a higher flour extraction rate. US wheat producers will export 1.3 billion bushels of the old crop, 419 million more than the prior year because of lower production in many exporting countries. US ending stocks will be 818 million bushels, 158 million less than last year.
Compared to the 47.6 million acres of wheat produced last year, winter wheat seedings are at nearly 41 million, not including spring wheat. However, the Kansas crop in the ground is not the best says USDA specialists. Only 27% is good to excellent, compared to 69% a year ago. 33% is poor to very poor, well above the 7% a year ago. Oklahoma wheat is about the same, as is Texas wheat. Nebraska is a bit better.
But in other countries, wheat is having problems. The latest global estimate for wheat is down slightly because of problems with the crops in Kazakhstan, Australia, and Egypt. Kazakhstan is dry again. Australia is wet. And yields are down again in Egypt. Other producers, such as Argentina, Brazil, and the European Union are having a better than expected year.
When total wheat supply and demand is measured, USDA says demand will be down slightly and that means stocks will grow slightly. The largest decline in use will be in Europe where less will be fed, a result of livestock producer moving to alternative feed to save money and not buy high priced wheat. To fill in the supply gaps, US wheat is in demand and foreign buyers are looking for high quality wheat. US exporters do not have the typical competition from Black Sea exporters, nor from Canada, where wet and cold weather hurt its wheat crop. Additionally, the US is one of the first countries in the Northern Hemisphere to harvest wheat, so high quality milling wheat will be available at an early date for export business.
Summary:
Globally, some wheat producing countries are still having weather problems, while others will have abundant supplies. Overall, the high prices of last year have forced some consumers away from wheat, and livestock producers are switching to alternative feeds. US wheat is some of the first to be harvested and high quality milling wheat will soon be available from the US.
Posted by Stu Ellis on 01/18 at 11:11 PM | Permalink