WASDE report raises U.S. wheat stocks
The July 12 World Agricultural Supply and Demand Estimates report, released by the U.S. Department of Agriculture, projects U.S. wheat supplies for 2018-2019 are raised 74 million bushels. The projection is based on increased beginning stocks as well as higher than expected production figures.
The 2018-1019 U.S. wheat crop is raised to 1.88 billion bushels. Durum and other spring wheat production leads the pack and is expected to increase from last year’s low levels because of improved yields and higher spring wheat planted area.
Winter wheat production is down slightly from the June forecast, on news of Texas, Oklahoma and Kansas wrapping up their winter wheat harvests. Ending stocks for 2018 to 2019 are raised 39 million bushels this month, according to the report, but those are 11 percent below last year’s revised stocks. The 2018-2019 season-average farm price is lowered by a dime per bushel to a projected range of $4.50 to $5.50.
On the world stage, foreign wheat supplies are decreased 9.3 million tons. This, the report states, is due to the lowest production in three years from drought. It’s led by a 4.4 million-ton reduction for the European Union. Australia, Russia and Ukraine are lowered by 2 million, 1.5 million and 1 million tons, respectively.
China wheat production is down 1 million tons because of lower harvested area, according to the Chinese Ministry of Agriculture.
Lower supplies predict lower global exports, by about 1.9 million tons. EU exports will be reduced 1.5 million tons and Australia and Russia each will export 1 million tons less wheat. However, Canada and the United States may offset these export reductions with their production increases. Canada should export 1 million tons more wheat, and the U.S. is predicted to increase exports by 700,000 tons.
Total foreign consumption for 2018-2019 is lowered by 2.3 million tons because of lower feed, food and residual use figures. Global supplies will be declining more than projected use, so world ending stocks are predicted to be down to 260.9 million tons.
U.S. Wheat Associates reports that the reduction in ending stocks puts the global stocks-to-use ratio (excluding China) to just under 20 percent, which is the lowest it’s been in a decade.
This all comes in the midst of a trade war with many foreign purchasers of wheat. Both the USW and National Association of Wheat Growers have urged President Donald Trump to use the World Trade Organization to settle disputes rather than tariffs.
“From March to June over the past three years, Chinese flour milling companies and their importers purchased an average of about 20 million bushels of U.S. wheat, returning well over $145 million to American farm families and grain handlers,” according to a press release from the U.S. Wheat Associates. However, Chinese customers stopped making new purchases of U.S. wheat in March, when the Chinese government threatened to implement a 25 percent import tariff on U.S. wheat as retaliation to the threat of U.S. tariffs on Chinese imports.
In recent years both USW and NAWG have urged the U.S. government to take China to the WTO over unfair Chinese government policies that distort trade and thus hurt US. farmers and industries.
“We urged the U.S. government to challenge China’s domestic price support and tariff rate quota compliance that led to cases disputing these policies within the WTO,” according to the release.
Jennifer M. Latzke can be reached at 620-227-1807 or [email protected].
