The world’s wheat market has changed — and the result does not look good for the home team. During the last 10 years, world wheat production has increased 22 percent, and world consumption has increased 21 percent. World exports have increased 46 percent. U.S. production, total use, and exports have declined.
At the beginning of the 2008/09 wheat marketing year (June 1, 2008), the five-year average world production was 22.1 billion bushels. At the beginning of the 2017/18 wheat marketing year, the five-year average world production was 27.0 billion bushels. The increase in world production was 4.9 billion bushel (22 percent).
During this same 10-year period, U.S. wheat production (five-year averages) went from 2.09 billion bushels in 2008/09 to 2.045 billion bushels in 2017/18 — a 45 million bushel (2.2 percent) decline in U.S. production.
WIDESPREAD PRODUCTION INCREASES
Of the world’s 4.9 billion bushel increase in production, a 1.4 billion bushel increase (29 percent) was in the former Soviet Union (FSU-12) countries (Russia, 767 million bushels; the Ukraine, 440 million bushels; and Kazakhstan, 52 million bushels). China’s production increased 1.05 billion bushels (22 percent); production in the EU-28 increased 865 million bushels (18 percent); and production in India increased 788 million bushels (16 percent).
Wheat production also increased in Canada (248 million bushels, 5 percent), Australia (214 million bushels, 4 percent), and Pakistan (163 million bushels, 3 percent). Lower production was reported in Argentina (-73 million bushels) and the U.S. (-38 million bushels).
Production is a function of harvested acres and yields. In the 10-year period between 2007 and 2017 (using five-year averages), world wheat harvested acres increased from 529 million acres to 547 million acres (an 18 million acre increase). Increased harvested acres were reported for the FSU-12 (10.9 million acres), India (10 million acres), and the EU-28 (3.6 million acres). Lower harvested acres were reported for the U.S. (-6 million acres), Argentina (-3.7 million acres), and Australia (-1 million acres).
YIELDS UP SUBSTANTIALLY
On average, world wheat yields increased from 41.8 bushels per acre to 49.4 bushels. No major wheat producing country reported a decline in yields. Canada reported the highest yield increase, 10.4 bushels per acre, followed by the EU-28, reporting 9.2 bushels, and the FSU-12, with 9.1 bushels. The U.S. reported an increase of 4.9 bushels.
Reported yields for the 2017/18 marketing year are 83 bushels per acre for the EU-28, 47 bushels for Argentina, 46 bushels for the U.S., 44 bushels for Canada, 41 bushels for the FSU-12 (the Ukraine-60, Russia-45, and Kasakastan-18), and for Australia, 27 bushels.
At the beginning of the 2008/09 wheat marketing year, the world’s five-year average exports were 4.15 billion bushels. At the beginning of the 2017/18 wheat marketing year, the five-year average world exports were 6.35 billion bushels, a 2.2 billion bushel or 53 percent increase.
Countries with increased exports were the FSU-12 (Russia 27 million bushels; the Ukraine 477 million bushels, and Kazakhstan 46 million bushels), the EU-28 (732 million bushels), Canada (218 million bushels), and Australia (215 million bushels).
Lower exports were reported for the U.S. (-187 million bushels), and Argentina (-61 million bushels).
During the last 10 years, world wheat production and exports have shifted to the FSU and EU countries, along with China and India. Improved production practices and technology may have resulted in higher yields and increased harvested acres.
The facts indicate that the world wheat market has changed; those changes are probably permanent; and the changes are not favorable for U.S. wheat production or prices.