2018 US Wheat Outlook

Ian Flagg

Regional Vice President, USW

U.S. Situation and Outlook

• 2018/19 Review

–Planting and harvest conditions

–U.S. Supply and Demand

–Production and quality by U.S. wheat class

• 2019/20 winter wheat outlook

Six Classes; PNW, Gulf, Lakes, Atlantic

U.S. Crop Planted Area Comparison

*Source: USDA Acreage Report June 30, 2018

18.5

19.1

15.0

20.0

25.0

30.0

35.0

40.0

45.0

04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19*

Pla

nti

ng

Are

a (m

illio

n h

ecta

res)

Wheat Corn Soybeans

10-year average– 22 million hectares

U.S. Wheat Plantings by Class

9.6 9.4

4.2 4.9

2.3 2.41.6 1.70.9 0.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19

Pla

nti

ngs

(m

illio

n h

ect

are

s)

HRW HRS SRW SW Durum

October 31, 2017 May 29, 2018

November to March Rainfall (mm) Kansas Winter Wheat

U.S. Situation

16.1

30.0

47.4 51.1

4.3 3.7

24.527.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19

MM

T

Beginning stocks Production Imports Exports Domestic Use

1. Total Supply: 85 MMT, just above 10-year average

2. Exports up 14% from MY 17/18, equal to 10-year average

2018 Comments by Class

• 2018 Crop Quality Report and

by class reports are posted at

www.uswheat.org

• Over 2000 samples collected

and tested

U.S. Hard Red Winter

Quality 2018 2017 5-Year Avg

Protein (db) 14.1 13.0 14.1

TW (Kg/HL) 80.2 79.6 79.1

W-Value 280 199 228

Stability Time 12.2 6.1 8.3

Loaf Volume 901 806 843

16.0 15.8

20.4 18.0

10.1 10.2

0

5

10

15

20

25

30

35

40

45

13/14 14/15 15/16 16/17 17/18 18/19

MM

T

Beginning stocks Production Imports Exports

• Production– Planted area down slightly from 17/18

but 20 percent below 10-year average

– 18.0 MMT, down 12 percent from

previous year

– Best quality in decades!

• Crop Development

– Dry conditions through out the growing

season. June rain saved crop.

Five-Year Avg Supply – 33 MMT

U.S. AVERAGE FARM PRICES

Per Ton Per Bushel

Source: USDA, Annual Price Summary

7/30/2018

$1.36

$4.08

$6.80

$9.52

$12.24

$50

$150

$250

$350

$450

13

-Ju

n

Se

pt

De

c

Ma

r

14

-Ju

n

Se

pt

De

c

Ma

r

15

-Ju

n

Se

pt

De

c

Ma

r

16

-Ju

n

Se

pt

De

c

Ma

r

17

-Ju

n

Se

pt

De

c

Ma

r

18

-Ju

n

Durum Spring

Spring Wheat and Durum Conditions

U.S. Hard Red Spring

Quality 2018 2017 5-Year Avg

Protein (db) 16.5 16.6 15.9

TW (Kg/HL) 81.7 81.0 81.1

W-Value 415 360 361

Stability Time 10.8 10.7 10.8

Loaf Volume 973 968 967

• Production– Planted area up 20% to 5.3 mh

– Record national yield

– Production up 5.5 MMT to 16 MMT

– Crop grades #1DNS for third straight year

• Crop Development– Growing season started dry, but June and early July

brought frequent, above average precipitation

– Above average to record yields

6.45.2

10.5

15.9

6.2

8.0

0

5

10

15

20

25

13/14 14/15 15/16 16/17 17/18 18/19

MM

TBeginning stocks Production Imports Exports

U.S. Durum

• Production– 2.0 MMT

– Production up 33% from MY 17/18

– Grade #1 HAD

– Narrow price premium to hard wheat continues to

discourage increased plantings

1.0 1.0

1.52.0

1.4

1.2

0.5

0.8

0

1

2

3

4

5

13/14 14/15 15/16 16/17 17/18 18/19M

MT

Beginning stocks Production Imports Exports

Quality 2018 2017 5-Year Avg

Protein (db) 16.4 16.5 15.4

TW (Kg/HL) 79.9 79.4 78.6

W-Value 162 180 143

Vitreous Kernel % 90 69 86

Semolina Ext. 69.3 68.5 66.3

Soft White

2.9 2.4

7.0 7.3

5.35.6

0

2

4

6

8

10

12

13/14 14/15 15/16 16/17 17/18 18/19

MM

T

Beginning stocks Production Imports Exports

Quality 2018 2017 5-Year Avg

Protein (db) 10.8 10.9 10.7

TW (Kg/HL) 81.1 80.1 79.6

P/L Ratio 26 60 44

SRC – Lactic

Acid

102/75 95/74 105/79

Cookie Spread 9.4 10.4 9.7

Soft Red Winter

5.9 5.6

7.9

7.9

2.53.3

0

5

10

15

20

13/14 14/15 15/16 16/17 17/18 18/19

MM

T

Beginning stocks Production Imports Exports

Quality 2018 2017 5-Year Avg

Protein (db) 10.8 10.9 10.7

TW (Kg/HL) 76.2 77.7 76.6

P/L Ratio 0.35 0.46 0.40

SRC – Lactic Acid 113/81 130/89 112/81

Cookie Spread 9.3 8.8 9.2

Sales Pace against expectations

0%

10%

20%

30%

40%

50%

60%

70%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

HRW HRS White SRW Durum

MM

T

2018/19 2017/18 % of Expected

U.S. Wheat Ending Stocks by Class

15.8

5.2 5.6

2.4

1.0

11.5

7.1

4.6

1.6 1.2

0

2

4

6

8

10

12

14

16

18

HRW HRS SRW White Durum

MM

T

13/14 14/15 15/16 16/17 17/18 18/19

U.S. Winter Wheat Plantings

Too much Rainfall in

HRW area. Planting

has been slowed after

fast start

Adequate

moisture in

SRW area

• Winter wheat

plantings are

72% complete

• Slightly

behind 5-year

average

Conclusion

• US Wheat Planted area up slightly but well below 10-year average

– Low prices during planting, poor net farm return

• US production up eight percent from MY 17/18

– Current production of 51.3 MMT; 11 percent below 10-year average

– Big increase in Hard Red Spring production

• Generally excellent quality

– HRS quality exceptional; high protein, w-values and stability time all improved

– HRW quality improved from previous year with higher protein and better end-use

performance

• Stability time over 12 minutes

– SRW grade #3

• Low East Coast test weights brought down overall average

• SRW sourcing should be done for Gulf tributary

Conclusion

• US New Crop Plantings expected to rise–HRW panting expectations reduced due to excess moisture and early snowfall in

Kansas; expected to be up 5 percent from MY 18/19

–HRS expected 10 percent or higher; challenges with soybeans, low durum prices

• Evolving China trade dispute–US soybeans under pressure

– Lack of PNW export demand; limited bids since June 2018, no bids through Feb

2019.

–Storage space will be at a premium

–US wheat exports to China are zero compared to 600 TMT over the same period

last year

InfoCasablanca@uswheat.org