US Wheat Associates road trip 2015
by Roger Gilbert, Milling and Grain Magazine, Publisher
ix classes of US wheat is planted and harvested in almost every month of the year and is recognised as being one of the most reliable globally which can fit precisely to almost every end-use product. In early November, the US Wheat Associates, which helps to develop markets for US wheat and is working in over 80 countries undertook its annual ‘road trip’ around Europe to explain the current year’s crop outcome in detail for buyers and users. Rutger Koekoek, US Wheat’s marketing specialist based in The Netherlands, summarised the ‘World Wheat Supply and Demand Situation’ for 2015-16 by identifying global production would reach 733 million tonnes, up eight million tonnes on the previous year with major exporter supplies being up by 11 million tonnes: with major exporter ending stocks increasing by five million tonnes and US ending stock in particular being the largest since 2009-10 at 23.4 million tonnes – or 17 percent above their fiveyear average of 20 million tonnes. He also recorded the world consumption is set to post a new record. While the trade itself will see a decrease from 2014-15 levels, based on consumption in South East Asia expected to increase, and world feed use up by some five million tonnes. “The US farm gate average price is to decline,” he projected and suggested an average price of between US$175-193 per tonne. “The average farm gate price in 2014-15 was US$220 and $252 per tonnes in 2013-14.” The global crop outlook will be impacted by: El Nino; the lingering drought in Australia which has reduced yield potential; floods in Argentina resulting in lost wheat area and despite moisture conditions in the US for HRW and SRW improving due to recent rains the US SW crop remains dry. Finally, lower winter wheat area in the Ukraine and poor early crop establishment with increased risk of winterkill have to be considered alongside improved recent rains in southern Russia that will impact its winter wheat crop, he adds. He told invited delegates that production from the top exporting countries for 2015-16 would be up by
40 | December 2015 - Milling and Grain
three million tonnes over 2014-15 at 377 million tonnes while beginning stocks were significantly higher at 63 million tonnes compared to 54 million tonnes in 2014-15, resulting in total supplies being up by 11 million tonnes. The forecasted change in world wheat production in 2015-16 shows a positive increase of seven million tonnes with RussianUkraine producing an additional seven million tonnes, China four million tonnes and North America three million tonnes. These increases are offset by declines in production in India of seven million tonnes, Canada three million tonnes and Argentina two million tonnes. The forecasted change in world wheat exports in 2015-16 would be down by two percent at 161 million tonnes with Canada down four million tonnes, India down three million tonnes and the EU down two million tonnes. These declines would be compensated for increased exports from RussiaUkraine by five million tonnes and a likely two million tonne addition from Australia. Finally, all major wheat importers are expected in increase their demand: Egypt to 11.5 million tonnes; Indonesia to 7.8 million tonnes; Algeria to 7.7 million tonnes; Brazil to 6.7 million tonnes; EU to six million tonnes and Japan to 5.8 million tonnes. In summary, world wheat production is up between five and seven million tonnes, world wheat consumption up by nine million tonnes and all this supported by a “big supply of better quality wheat than we had last year,” says Mr Koekoek. And this will leave world ending stocks for 2015-16 at a record high of 228 million tonnes which is well above the 10-year average of 177 million tonnes and having 72.6 million tonnes of that buffer available to world markets, when the 10-year average has been 66 million tonnes. Global stocks-to-use ratio stands at 32 percent up from 30 percent in 2014-15 and up on the 10-year average of 27 percent.