Wheat Market Review-Lower Production and Higher Demand for 2010 U.S. Wheat Crop Break Date: 6/25/2010 8:24:18 AM Last Edit: 8/26/2010 8:03:35 AM
Lower Production and Higher Demand for 2010 U.S. Wheat Crop The latest 2010 U.S. wheat production estimate released by USDA on June 10, is 2.067 billion bushels. This is down from 2.216 billion last year, but up slightly from the May estimate due to higher yield reports for the hard red winter crop. The latest yield is 43.9 bushels per acre, up from 43.4 in May but still below the 44.4 reached in 2009. However, the lower production will be offset by nearly 300 million bushels of additional stock carry-in, keeping supplies above 3 billion bushels, the highest since 2000.
The U.S. winter wheat harvest was roughly 20 percent complete as of mid-June. Texas and Oklahoma were one-half complete with Kansas 10 percent complete. Heavy rains have slowed harvest progress but there does not appear to be any serious quality loss yet. The main quality shortfall on the harvest to-date has been below average protein levels with much of the crop in the 10 and 11 percent range, well below the five-year average of 12.5 percent. Significant protein discounts have been prevalent on the early harvest, a rarity for hard red winter wheat. The lack of on-farm storage is exacerbating the situation and forcing much of the harvest into feed channels.
The latest demand projections for the 2010 marketing year are 2.1 billion bushels, up from 2 billion last year. Exports are expected to improve slightly to 900 million bushels compared to 885 million last year. Estimates should move higher in subsequent reports with the recent declines in production prospects in key competitors shifting more export opportunities to the United States.
Domestic demand is projected at 1.2 billion bushels, up 40 million bushels from last year. Both food and feed use are expected to see gains. The stable to slightly higher food use forecast should keep domestic mill grind strong and indicates that wheat products are still seeing good sales at the retail level. Many analysts expect the feed use estimate to increase in subsequent reports, as lower protein hard red winter wheat will account for a greater share of summer feed demand. The significant drop in cash basis levels for hard red winter has made it very competitive with corn.
Further production increases can not be ruled out in future reports, given the good yield reports for hard red winter and a strong looking hard red spring wheat crop. But prospects of higher demand should at least help stabilize stocks which would be supportive for prices.
For more information, contact us at ndwheat@ndwheat.com
North Dakota Wheat Commission - 2401 46th Avenue SE, Suite 104 – Mandan, ND 58554-4829
Phone: 701-328-5111 - Fax: 701-663-5787
Copyright 2010 North Dakota Wheat Commission
design and programming by inet technologies
