The IGC (International Grains Council) has projected 2020/21 world wheat production to be 28.3 billion bushels. Higher wheat production is projected in India, Russia, Kazakhstan, and Australia. Lower wheat production is projected in the United States.
The USDA projects the 2020/21 wheat marketing year (June 1 through May 31) wheat price to be $4.90 compared to $4.55 for the 2019/20 marketing year. The weighted average (adjusted by percent of wheat sold by month) Medford, Oklahoma, wheat price (June 2019 through February 2020) is $4.27. The weighted average Perryton, Texas, price is $4.21.
At USDA’s 96th Annual Agricultural Outlook Forum (www.usda.gov/forum), 2020 U.S. wheat production was projected to be 1.836 billion bushels compared to 1.920 billion in 2019 and a 5-year average of 2.005 billion bushels.
USDA/NASS’s January Winter Wheat and Canola Seedings report estimated hard red winter (HRW) wheat seeded acres to be 21.8 million acres compared to 22.7 million acres for the 2019 wheat crop (down 4%). All wheat-seeded acres were projected to be 45 million compared to 45.2 million acres for the 2019 harvest.
Oklahoma and Kansas wheat-seeded acres were projected to be the same as for 2019. Texas seeded acres were projected to be 9% higher. Colorado and Montana’s seeded acres were projected to be significantly lower than for 2019.
U.S. soft red winter (SRW) wheat seeded acres were projected to be 8% higher than for 2019. Lower U.S. HRW wheat seeded acres relative to higher U.S. SRW seeded acres may imply that the price spread between SRW and HRW wheat may decline. At this writing, the SRW July wheat contract price is 63 cents higher than HRW price.
With a projected 140-million-bushel reduction in 2020/21 U.S. beginning wheat stocks, an 84-million-bushel reduction in 2020 U.S. wheat production, and a 26-million-bushel reduction in total U.S. wheat use, 2020/21 U.S. wheat ending stocks are projected to be 777 million bushels. A 163-million-bushel reduction in ending stocks resulted in a 35-cent increase in the projected 2020/21 average annual price ($4.55 to $4.90).
Black Sea exporters’ total 2020 wheat production may be 127 million bushels higher than in 2019/20. One report projected 2020 Ukrainian wheat production to be 948 million bushels, down 118 million bushels from 2019.
Russian wheat production for 2020 is projected to be between 2.8 and 2.9 billion bushels, about a 150-million-bushel increase from 2019’s 2.7 billion bushels.
Kazakhstan’s 2019 wheat production was 423 million bushels compared to a five-year average of 528 million bushels. If Kazakhstan’s 2020 wheat production is average, the production increase would be 95 million bushels.
Australia’s 2020 wheat production is projected to be 783 million bushels compared to 557 million bushels in 2019. This increase should result in an additional 226 million bushels of wheat in the export market.
During the 2014/15 wheat marketing year, U.S. wheat ending stocks were 752 million bushels, and the 2014/15 wheat marketing year U.S. average annual price was $5.99. The HRW average annual wheat price was $6.02.
USDA’s Outlook Forum projected 2020/21 wheat ending stocks to be 777 million bushels, which is only 25 million bushels higher than for 2014/15.
Reasons for a projected 2020/21 wheat marketing year average price of $4.90 compared to 2014/15 marketing year’s price of $5.99 may be that world wheat production is projected to be a record 28.3 billion bushels, 2019/20 world wheat ending stocks are projected to be a record 10.6 billion bushels, and the world wheat stocks-to-use ratio is projected to be a near-record 38.2%.
Higher wheat production normally produces lower wheat prices.