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U.S. ending stocks little changed 04-05

Winter wheat seeded area for 2004 was reported by the U.S. Department of Agriculture in January to total 43.5 million acres, down 1.5 million acres from 2003. Acreage declines are reported in the southern Great Plains, where during fall planting moisture supplies were low, and new crop prices were more than 50 cents per bushel less than in the fall of 2002.

With combined spring and durum plantings expected near year-ago levels, total wheat harvested area is projected down 2 million acres. With trend yields, projected production is down 217 million bushels from 2003.

Total U.S. wheat disappearance in 2004/05 is expected to decline 171 million bushels, due primarily to lower exports. Thus, ending stocks are forecast slightly higher than a year earlier, and the season-average price received by producers is expected to be nearly unchanged from 2003/04.

Wheat prices during the fall of 2003 were down from the previous year, but were high enough to encourage increased area in some countries. Elsewhere, high prices for competing crops reduced wheat area.

More global wheat

Barring a repeat of unfavorable weather, such as happened in each of the last two years, global wheat production will increase in 2004/05 because of rebounding yields. World wheat use is likely to grow, with (1) population increases supporting more food use and (2) rebounding production in Russia, Ukraine, Eastern Europe, and the European Union (EU) encouraging increased feed use. Moreover, strong corn prices are expected to boost wheat feeding. Unless global yields are exceptionally good, world use will exceed production for a fifth straight year, further reducing stocks.

In 2003/04, U.S. wheat production is estimated up 718 million bushels from 2002/03 as both area and yield rose. The U.S. yield is a record 44.2 bushels per acre, up 8.9 bushels from a year ago because of more favorable weather.

Total disappearance of U.S. wheat in 2003/04 is projected to rise 377 million bushels from a year ago. Both domestic use and exports are up, 81 and 296 million bushels, respectively. Food use is projected down 18 million bushels from a year earlier because of declining per capita consumption with changing dietary preferences and an improved flour extraction rate. Feed and residual use is projected to rise 99 million bushels year-to-year primarily because of the larger production.

Exports are projected up because of reduced competition.

U.S. ending stocks this marketing year are projected up 53 million from last year. The season-average farm price in 2003/04 is forecast at $3.30-$3.40 per bushel, substantially below the average of $3.56 per bushel received last year.

In 2003/04, foreign production (world minus United States) of wheat is down 38 million tons to 484 million, as production was devastated across most of Europe.

World consumption is forecast down nearly 12 million tons from the previous year, but is still 41 million tons larger than production, dropping stocks to 125 million tons, the lowest level in 22 years.

World wheat trade is declining due to (1) the reduced supply of low-quality wheat used for feeding, (2) larger crops in North Africa and Brazil, (3) high freight rates, and (4) stagnant food-aid shipments. Exports by Russia and Ukraine are plummeting, with Ukraine a net importer of wheat. In 2002/03, Ukraine was a net exporter of 5.8 million tons.

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