EXCERPTS FROM "WHEAT SITUATION" PUBLISHED BY THE U.S. DEPARTMENT OF AGRICULTURE, ECONOMIC RESEARCH SERVICE, CONCERNING WHEAT AND RYE THE WHEAT SITUATION SUMMARY A record pace of exports and prospects of extremely small wheat stocks this spring have pushed wheat prices at the farm to record levels. Mid-month farm prices averaged $2.47 in July, the peak of harvest, then advanced sharply to $4.62 in September. They eased somewhat during the fall, but moved up again in December and early January, topping $5. For the season, farm prices are likely to average around $3.90 per bushel, up from $1.76 in 1972-73. Exports during July-December totaled a record 737 million bushels, 47% above a year earlier, reflecting heavy early-season buying. The pace has eased in recent weeks and is expected to remain moderate for the rest of the season. Fuel shortages pose a threat to maritime trade. But if shipments continue to move near the average of recent weeks, the 1.2 billion-bushel total outgo estimated for 1973/74 will still be fulfilled. Domestic use has not been quite as strong as last season. The increase in wheat prices has far outstripped the price rise in feed grains, slowing down domestic wheat feeding. However, food usage is expected to pick up as the relatively high prices of other foods appear to be halting the downtrend in per capita consumption of wheat. Although total use will ease during January-June, for the season it is expected to exceed the crop, causing old-crop stocks to plummet next July to 178 million bushels. This would be the second year in a row that stocks have been cut in half. Supplies of 1974-crop wheat harvested in June should ease the pressures on what is shaping up as the smallest carryover in 27 years. In addition, some purchases of 1973-crop wheat for export have been deferred and quotas on U.S. imports of wheat have been temporarily lifted. For the second year in a row, U.S. wheat growers are likely to produce a record crop. Winter wheat producers seeded 18% more acreage and spring wheat growers plan to put in 20% more for 1974. If the 70 million planted acres are realized and yields are near trend, a record 1974 crop of 2.1 billion bushels could result. This would compare with 1.7 billion bushels last year. Assuming normal world crop conditions in 1974, export demand could weaken significantly in 1974/75. U.S. crop exports are projected to drop to around 1.0 billion bushels, while domestic use is expected to be about the same as in 1973/74. With demand projected to turn downward and a record crop in prospect, carryover by the summer of 1975 could more than double, rising to around 480 million bushels. Thus, prices may weaken somewhat as the 1974/75 crop year progresses. Hard Red Winter (HRW): The demand for HRW continues strong. Over half the crop moved into export during July-December. Usage will dip during January-June. Stocks by July 1 will drop to around 65 million bushels, smallest since 1947. Farmers have seeded around 15% more HRW, but with yields below last year's excellent level, the 1974 crop could total around 5% above a year ago. Hard Red Spring (HRS): Tight supplies of other wheat classes have swelled the demand for HRS, pointing to a sharp reduction in stocks. Mill grind continues heavy and exports for the year may soar to about 230 million bushels. Year-ending stocks could fall to around 80 million bushels, but will still account for nearly half the total stocks. Farmer intentions as of January 1 show about a 14% increase in 1974 HRS acreage. Soft Red Winter (SRW): Heavy demand in July-December sharply reduced supplies. Usage will ease during the second half of the crop year, but by July 1, stocks will be worked down to pipeline levels. Producers in the SRW area increased plantings last fall 50% from the preceding season's weather-reduced acreage. This could yield a crop nearly double last season's poor harvest. White Wheat: A poor 1973 white wheat crop has thwarted disappearance this season. Usage during the first 6 months lagged behind the year-ago level. But a strong second half export is likely to push total use up to around 185 million bushels, resulting in another cut in stocks. Acreage seeded to white wheat has jumped 18%. If yields are on trend, the crop could top last year's by around 30%. Durum: Demand for durum has been vigorous both at home and abroad. Early indicators showed export sales so large as to endanger domestic supplies. Domestic food use has strengthened, too. Prices soared to over $9 per bushel in August before retreating. Stocks this summer will likely drop to around 10 million bushels. Farmers intentions in January indicated a 47% increase in durum acreage for 1974. HIGHLIGHTS OF THE RYE SITUATION Based on January 1 stocks of 21.2 million bushels, disappearance for the JulyDecember period totaled 38.5 million bushels, almost double the same period a year ago. Exports showed the sharpest rise increasing a 100-fold from their year-ago level. The USSR accounted for the bulk of the July-December movement. Domestic use trailed the year-earlier pace as feeding contracted sharply. The strong demand for other grain food products was also evidenced in rye. Food use this year is being buoyed by the concern over wheat supplies. More rye flour is being utilized by the cracker and snack food industry. Wheat plantings in Argentina were sharply reduced due to low guaranteed prices and wet weather. The harvest may yield a crop of around 6.0 million tons, well below the average of recent years. Without stocks to draw from, export supplies must come from the smaller crop. Consequently, 1973/74 exports may total only around 1 to 1.5 million tons. Wheat production in Brazil has recovered sharply from last year's weather reduced crop. Favorable monsoons enabled India to register an 11 million ton increase in food grain production in 1973. Rice production increased sharply, but wheat production dropped over a million tons. Despite the increased food grain production, India's grain imports are expected to reach 6 million tons in 1973/74. The People's Republic of China's bumper 1973/74 grain crop includes about 27 million tons of wheat. In spite of the apparently good domestic grain production, China's import demand continues strong, reflecting the need to build stocks and meet expanding demand. Total grain imports in 1972/73 came to 6.3 million tons and may move up to 9 million tons in 1973/74. USSR Wheat Crop a Record The 1973 Soviet wheat crop is estimated at 110 million tons, about a fourth larger than the 1972 harvest, but only about 10 million tons above earlier bumper wheat crops. Since wheat area was up only 8% from a year ago, most of the increase was due to a sharp improvement in yields. Another large crop next year, should mean reduced dependence on imported grain. Industrial use appears to be lagging behind last year's low level. Planted acreage may fall from the 1973 level, thus seed requirements will drop. Strong rye prices pared feeding during July-December from the year-earlier level. Usage in the second half of the crop year will drop sharply. Exports are expected to tail off and domestic use will decline seasonally. Total demand for 1973/74 is expected to be almost double the 1973 crop, resulting in a sharp drawdown in stocks by the summer of 1974. Exports alone will exceed the 1973 harvest. At around 7 million bushels, stocks would be the mallest since 1964. Prices of No. 2 rye at Minneapolis, trading around $1.30-1.40 per bushel at harvest, more than doubled by mid-January. This reflected strong export demand plus the general uncertainty about the adequacy of world food grain supplies. Because importers are actively seeking any food grain, rye prices have soared along with those of wheat and rice. Rye prices at the farm in January averaged $2.74 per bushel. European Community to Remove Denaturing Premium on Bread Wheat Effective February 10, 1974 the European Community is to fix the denaturing AGRICULTURAL SUPPLY AND DEMAND ESTIMATES, U.S. DEPARTMENT OF AGRICULTURE HIGHLIGHTS January 23, 1974. Farmers' planting intentions for 1974 show that wheat plantings this spring may rise to over 19 million acres from 15.7 million a year ago. Also, corn plantings may increase a tenth to 78.8 million acres. And cotton acreage may jump 17 percent to 14.5 million. However, soybean acreage may drop 3 percent, failing to increase for the first time since 1958. And rice seedings are indicated to decline 2 percent. These intentions are the first official but still tentative indications of farmers' 1974 plans. Another planting intentions survey will be made as of March 1. The following crop production estimates are based on the planting intentions and assume trend yields and adequate supplies of fuel, fertilizer, and other inputs. Total wheat output (including an earlier forecast of winter wheat production) could reach a new high of 2,060 million bushels. Rice production, reflecting the possibilities of higher yields, could also rise somewhat. The corn crop could jump about 18 percent to 6.7 billion bushels, and the total feed grain crop including corn could amount to 235 million tons, up 30 million from 1973. The soybean harvest is projected at 1,550 million bushels, nearly up to the 1973 volume. Cotton production will probably rise sharply. HUGE WHEAT CROP COMING; STOCKS THIS SUMMER MAY DIP BELOW 200 MILLION BUSHELS Prospective spring wheat plantings of 19 million acres together with winter wheat acreage of 51 million acres indicate a 1974 wheat crop of about 2,060 million bushels, up from 1,711 million in 1973. The 1973/74 export estimate has been raised to 1,200 million bushels because shipments from other exporting countries in recent weeks have lagged somewhat, indicating a slightly smaller outgo for the year for those origins, and hence a somewhat larger requirement for U.S. wheat. Together with some slight adjustments in domestic use, this indicates a July 1, 1974, carryover of 182 million bushels. With the projected total supply at 2,243 million bushels for 1974/75 and utilization at 1,758 million bushels, the July 1, 1975, carryover could rise to about 485 million bushels. RICE OUTPUT TO CLIMB; STOCKS TO STAY LOW Intended rice plantings for 1974 are estimated at 2,134,000 acres, 2 percent below 1973 but 17 percent above 1972. With yields near trend of 4,700 lbs. per harvested acre, a crop of 99.6 mil. cwt. (rough rice) could be produced. Current estimates of domestic use and continued strong export demand would result in ending stocks projected at 4.8 mil. cwt. FEED GRAIN SUPPLIES TO JUMP Farmers may plant 127 million acres of feed grains in 1974, up from 121% million in 1973. Such plantings would produce around 235 million tons of feed grains, up 30 million tons from 1973. Corn acreage intentions of 78.8 million acres are up 10 percent, sorghum and oats virtually unchanged, while barley acreage prospects are down 15 percent. The indicated corn acreage would produce a crop of about 6.7 billion bushels, about 18 percent above 1973. The 1974/75 corn supply would total 7.3 billion bushels, 15 percent above 1973/74. That volume would exceed combined domestic and export requirements projected for 1974/75 and provide a recovery in carryover stocks on October 1, 1975, from the low 600 million bushels expected next October. SOYBEAN SUPPLIES TO RISE DESPITE LESS ACREAGE Soybean planted acreage for 1974 is likely to total 55.4 million. Harvested acreage is projected at 54.4 million which, with an anticipated yield of 28.5 bushels per acre, will produce a crop of 1,550 million bushels. This will result in a total supply of 1,790 million bushels for the 1974/75 crop year, up 163 million from 1973/74. Crush and export estimates for both 1973/74 and 1974/75 are unchanged from the last report. Projected carryout, however, for 1974/75 is increased from 290 to 300 million bushels. HIGHLIGHTS January 25, 1974. The January grain stocks report largely confirms the supply-demand estimates we published in our January 23 issue. The stocks report implies there was more domestic wheat feeding last summer and fall than had been expected. But with a little more old-crop wheat to begin the year with, the prospective year-ending stocks are lowered slightly. Similarly, the feed grain carryover may total a little lower because of a small adjustment in the estimate of oat usage, but the corn carryover a little larger because of an increase in beginning stock levels. Although soybean stocks data reflect the large extent of farmer holdbacks from the market, there is no change from our last report in the basic supply-use data. We have adjusted the table for rice, however, in line with the Department's announcement yesterday raising the national acreage allotment for rice by 27 percent. WHEAT FIGURES ADJUSTED SLIGHTLY January 1 wheat stocks, reported at 934 million bushels, indicate that disappearance for the first half of 1973/74 totaled about 1,215 million bushels. This implies there was a higher level of wheat feeding than earlier anticipated. Hence, we have revised our feeding estimate for the year from 150 to 160 million bushels. A slight revision in projected domestic usage brings total estimated usage for the year to 1,972 million bushels. A revision in the July 1, 1973, stocks estimate raised the total supply for 1973/74 by 8 million bushels. The July 1, 1974, carryover is now estimated to be 178 million bushels. RICE ACREAGE ALLOTMENT BOOSTED The national acreage allotment for rice has been increased 27 percent from 1,652,596 acres to 2,100,000. This increase is to encourage production of a crop that will fulfill export demand and allow for more adequate year-ending stocks. As a result, production of 107.9 million cwt. is projected, resulting in ending stocks of 13.1 million cwt., rough basis. |