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Wheat Comments After the June 2017 WASDE

Posted By Doane Advisory Services | June 12, 2017 6:22 PM CDT

Wheat

USDA updated winter wheat production from last month, raising production by 4 million bushels from last month to 1.250 billion. The trade was only leaning down 1 million to 3 million bushels, so we view the production estimate as fairly neutral for prices. Harvest progress has been limited, so next month’s production estimate will be more definitive. USDA left harvested acreage unchanged at 25.564 million acres, down 15% from 2016, and if realized, it would be a record low.

The winter wheat yield is 48.9 bushels, up 0.1 bushel from last month, but down from 55.3 bushels a year ago. HRW production was raised 5.5 million bushels to 743 million bushels and the SRW crop was increased 1 million bushels to 298 million. White winter production is 209 million bushels, down 3 million from last month.

All wheat production now totals 1.824 billion, up 4 million from May, reflecting the increase in winter wheat production. The all wheat production figure implies spring wheat production of 574 million bushels, unchanged from last month, but down from 638 million in 2016. 

USDA incorporated the revised production figure into the monthly WASDE forecast. The combination of a 2-million bushel increase in 2016/17 ending stocks, the production increase and higher imports raised 2017/18 US ending stocks by 10 million bushels to 924 million. This compares to trade expectations at 910 million and to 1.161 billion for the 2016/17 crop year that just ended May 31. The 2017/18 midpoint price forecast increased 5 cents from May to $4.30 per bushel and compares to $3.90 in 2016/17.

 

There were only modest changes to the global outlook this month. USDA raised 2016/17 carryover by 1.08 mmt to 256.4 mmt. For 2017/18, global production increased 1.7 mmt to 739.5 mmt. While production is down 14.6 mmt from 2016, with larger beginning stocks, total supply is down less than 1.0 mmt from a year ago to 995.9 mmt. Global use is expected to decline slightly from 2016/17 to 734.8 mmt. As a result, world ending stocks are now forecast at 261.2 mmt, up 2.9 mmt from May and up 4.8 mmt from 2016/17.