U.S. all-wheat production is raised 1.36 million bushels to 1,741 million this month, following updates reported in the USDA, NASS Small Grains Annual Summary on September 29. Production gains for other spring and durum more than offset a reduction in the winter wheat harvest.
The all-wheat feed and residual use is reduced 30 million bushels to 120 million on lower-than-expected first-quarter disappearance. U.S. corn feed and residual is raised this month, dampening wheat feeding prospects through the end of 2017/18.
Domestic Outlook
Domestic Highlights
- The September 29 USDA, NASS Small Grains Annual Summary increased U.S. 2017 all-wheat production estimate by 1.36 million bushels.
- A near-18-million-bushel reduction in winter wheat production is more than offset by increased forecasts for other spring and durum wheat, raised 4.4 million and 14.7 million bushels, respectively.
- The USDA, NASS Grain Stocks report provided updates for wheat stocks for 2016/17 and 2017/18. o Ending stocks for 2016/17 are reduced by about 4 million bushels, lowering carry-in for 2017/18.
- September 1 wheat stocks imply lower-than-expected first-quarter (June-August) 2017/18 disappearance.
- Feed and residual use for 2017/18 is projected 30 million bushels lower on reduced availability of hard red winter wheat and strong competition from other feed grains.
- Forecast ending stocks for 2017/18 are raised 27 million bushels this month to 960 million.
- The all-wheat season-average farm price is unchanged at $4.60 per bushel.
- Historical supply and utilization tables have been updated with the latest NASS data, including revised seed-use data through 2014/15, and are available on the USDA ERS Wheat Data landing page.
- Updated rye balance sheets, reflecting revised seed and industrial use estimates, were released this month and are now available on the USDA FAS Production, Supply, and Distribution (PS&D) database.
- On November 1, USDA, NASS will release the latest Flour Milling Products report. Any related updates to the wheat balance sheet will be reflected in the November 9 WASDE.
Winter Wheat Wanes on Lower Harvested Area
Winter wheat production is lowered nearly 18 million bushels this month from the September projection, largely due to a 14-million-bushel reduction in the soft red wheat (SRW) projection. Hard red winter (HRW) wheat production for 2017/18 is lowered 8 million bushels from the September estimate; the 2016/17 HRW forecast was revised slightly upward. Aggregate winter wheat production for 2017/18 is now projected at 1,269 million bushels, up 17.7 million bushels from the September projection but more than 400 million bushels lower than the 2016/17 estimate.
USDA, NASS estimates winter wheat yields at 50.2 bushels per acre, which compares to the record-setting 55.3 bushels for the 2016/17 marketing year. The winter wheat yield forecast published in the Small Grains Annual Summary is 0.2 bushel per acre higher than the August projection and reflects a 1-bushel-per acre yield increase for Kansas, which more than offsets reduced yield projections in States with more modest winter wheat production.
Harvested wheat area for 2017/18 is projected at 25.3 million acres, down about 500,000 acres from the previous forecast and down about 5 million acres from the 2016/17 estimate.
Sizable declines in winter wheat harvested area (between August and the final projection released in the Small Grains Annual Summary) are evident in the drought-affected States of Montana (down 130,000 acres) and South Dakota (down 130,000 acres). Harvested winter wheat area for Texas is lowered 150,000 acres, which is offset by a 150,000-acre increase in Oklahoma.
Projections for hard red winter (HRW), soft red winter (SRW), and hard/soft white winter (HWW, SWW) are as follows:
2016/17 HRW SRW HWW SWW
Planted area (million acres) 26.593 6.020 0.515 3.024
Harvested area (million acres) 21.870 4.977 0.474 2.916
Production (million bushels) 1,082.005 345.229 25.478 219.869
2017/18
Planted area (million acres) 23.426 5.733 0.589 2.948
Harvested area (million acres) 17.64 4.318 0.522 2.811
Production (million bushels) 750.332 292.156 23.726 203.223
As of October 1, USDA NASS reports that producers had sown 36 percent of the Nation’s 2018 winter wheat crop. In 2016, 41 percent of the 2017 crop had been sown by this date, 2 percentage points behind the 5-year average of 43 percent.
By October 1, 12 percent of the U.S. winter wheat crop for 2018 had emerged, 6 percentage points behind last year’s progress and 4 points behind the 5-year average of 16 percent.
Durum Harvested Area Raised in Drought-Stricken States
After a sharp reduction in August, the final durum production estimate was raised in the NASS Small Grains Annual Summary from 50.5 to 54.9 million bushels. The 4.4-million-bushel lift is attributed to significant production gains in Montana and North Dakota (raised 2 million and 3 million bushels, respectively).
These increases are largely on expanded harvested area, raised 165,000 and 125,000 acres, respectively, from the August forecast. Yields are unchanged at 24 bushels per acre in North Dakota and down 1 bushel per acre to 16 in Montana.
Durum yields in these drought-affected States averaged 40.5 and 41 bushels per acre in 2016.
California is the only State where durum production was revised downward in the Small Grains Annual Summary from the August projection, dropping by nearly 1.5 million bushels to 2.5 million on an 18,000-acre reduction in harvested area, despite a slight increase in yield.
The forecast for other desert durum grown in Arizona is raised 360,000 bushels to nearly 9 million on improved yields, with harvested area unchanged. While 2017/18 durum production is raised in aggregate from the previous forecast, the current estimate is more than 47 percent lower than production in 2016/17.
Durum 2016 2017
Harvested area (million acres) 2.360 2.136
Yield (bushels/acre) 44.0 25.7
Production (million bushels) 103.914 54.909
Despite Lower Harvested Area, Other Spring Wheat Yields and Production Raised
Other spring wheat yields were raised from the August forecast in the Small Grains Annual Summary, offsetting the effects of reduced harvested area on production. Up 3 bushels per acre to 41 bushels, the average 2017/18 other spring wheat yields are supported by gains in Idaho (up 5 bushels/acre from the August forecast), Minnesota (up 6 bushels), North Dakota (up 5 bushels), and Oregon (up 13 bushels).
Since mid-August, drought conditions in North Dakota—where nearly half of the 2017/18 other spring wheat crop was harvested—have steadily improved. According to the U.S. Drought Monitor, in early August more than 44 percent of the State was experiencing D3-D4 level drought; by mid-August, that figure had fallen to 22 percent.
As of October 10, less than 2 percent of North Dakota remains in D3-D4 level drought and nearly a third of the State has emerged from drought conditions altogether. In nearby Montana and South Dakota, other spring wheat yields are lowered 1 bushel per acre each from the August projection, reflecting continued dryness.
2017 HRS HWS SWS
Planted area (million acres) 10.499 0.106 0.404
Harvested (million acres) 9.669 0.102 0.388
Production (million bushels) 385.005 8.727 22.504
Supply and Demand Estimates Reflect Production and Stocks Updates
The combination of back-year and current marketing year updates to stocks, production, and seed use results in a number of changes to the all-wheat balance sheet this month. Production, in aggregate, was little changed and increased just 1.36 million bushels.
With 2017/18 carry-in reduced 3.743 million bushels—based on very slightly higher durum ending stocks, reduced HRW stocks in 2016/17, and no changes to imports—total supplies in the new marketing year are reduced by about 2.4 million bushels.
The balance sheet tightening effects of reduced supplies are more than offset by lower use in the first quarter, as implied by the Grain Stocks report. September 1 stocks for 2017 are 2,253 million bushels and compare to 2,545 million in 2016. In nearly every State, stocks are lower than for the year prior.
Implied first-quarter disappearance of HRW is lower than expected; feed and residual use for this class is trimmed 25 million bushels with a further cut in use of 10 million bushels attributed to exports.
This month’s increase in corn production, and resulting 25-million-bushel expansion in corn feed and residual use, also supports the significant cut in both HRW and all-wheat feed and residual use. Total use for HRW is lowered 35 million bushels this month, which more than offsets the supply reduction, resulting in a 23-million-bushel increase in HRW 2017/18 projected ending stocks.
Production and use updates to other wheat classes combine to support a collective 30 million bushels decline in all-wheat total use and a 27.6-million-bushel increase to all-wheat ending stocks. The U.S. all-wheat export projection is unchanged this month at 975 million bushels.
Exports of HRW wheat are lowered 10 million bushels to 390 million based on the pace of trade to date, reduced domestic production, the recent strengthening of the dollar, and increasing global competition.
HRS and white wheat exports are increased 5 million bushels on robust demand from Asian countries and Mexico (in the first quarter). Exports to Mexico in September were markedly lower than for months in the previous quarter. Reduced production from Australia, a major competitor in the international white wheat market, creates opportunities for expanded U.S. exports of the grain.
Expansive dryness in eastern Australia results in a 1.0-million-ton reduction in wheat production this month to 21.5 million tons, the lowest total in Australia since 2008/09.
As with the local marketing year, the U.S. wheat trade-year-basis (July-June) export forecast for 2017/18 is unchanged this month and remains at 26 million metric tons. Recent modest strengthening of the U.S. dollar tempers potential export prospects, despite opportunities created in spring and white wheat markets.
Increased domestic production of durum and high-protein spring wheat caps demand for Canadian supplies at current levels, despite increased Canadian production and robust U.S. imports of these classes through September.
A later harvest of other U.S. grains supports rail movements of wheat, including shipments to export ports. The pace of shipments of white wheat continues to be brisk.
All-Wheat Price Unchanged, Range Narrowed 10 Cents
The 2017/18 season-average farm price (SAFP) is unchanged at the midpoint but narrowed 10 cents on the high and low end to $4.40 and $4.80 per bushel. The midpoint price is $4.60 per bushel and compares to the 2016/17 SAFP of $3.89.
Last month’s SAFP reduction reflected a drop in cash wheat prices, which have recovered some in recent weeks. Increased supplies of spring wheat reduce tightness in the protein market and support maintenance of the SAFP at the current projection.
