U.S. Wheat Associates released its Winter 2021 Wheat Supply and Demand Outlook. The report says the 2020-2021 marketing year set several records. For example, the USDA expects global wheat production to reach 773 million metric tons on increased annual production from some of the world’s top exporters. Steve Mercer, Vice President of Communications for the U.S. Wheat Associates, says world stocks of wheat should grow larger. “If you look at world wheat production and use, we have produced more wheat in the world than we have used in seven of the last ten years. That’s going to lead to a pretty big supply. On the other hand, use like food and feed around the world sets new records every year as well. So, farmers around the world are doing a great job to increase production and the weather has been pretty favorable. Generally speaking, that’s the situation we’re in.”
However, he also says U.S. wheat stocks are getting a bit smaller. “Generally speaking, our supply is going down, but that’s really tied to economics. We’ve had pretty good production years; production was up this year, but generally speaking, it’s economics. Our planted area has gone down, and, as prices go back up, we’ll probably see somewhat of an increase in planted area. And, if the weather cooperates, then we’ll see more supply.” Credit for a recent rise in wheat prices goes in part to increasing demand from China. There may be more export opportunities in the immediate future because of a decision in Russia to limit their wheat exports. “Russia is going to implement what it calls a permanent cap or adjustment on exports because their government is concerned about domestic prices, and they have a history of intervening in the marketplace. That could help increase demand for U.S. wheat, but we won’t know until we see what’s in the market. But it’s a dynamic market, and volatility is probably going to be present for a while. It also looks like some of those bullish factors are not short term, so we’ll have to see.”
Some of the strongest international markets for U.S. wheat include Mexico, the Philippines, and Korea. Mercer says demand for U.S. wheat is growing in other areas like Southeast Asia, including, “Malaysia and Indonesia. It’s largely coming off the Pacific Northwest, including soft white wheat, but spring wheat and hard red winter wheat, as well, because prices have been favorable up to this point. We export half of the wheat we grow in the country. The wheat exports are typically around 27 million metric tons of wheat per year, which is under half of the wheat we generally produce.”
Again, Steve Mercer is VP of Communications for U.S. Wheat Associates.