A look at world wheat

Based on USDA July WASDE forecasts

World wheat production without China and a look at the world wheat supply cushion
World wheat production - without China
World wheat supply cushions (days)
640,000 World wheat 120
production –
620,000 without China =
608.26MMT 100
600,000

First decline in 80
580,000
world wheat
production –
560,000
since 2012-13 60

540,000
World wheat
40
supply cushion =
520,000
73 days vs 86
days – the 20
500,000
lowest in the
past decade
480,000 0
China wheat supply cushion – backstop for feed demand on back of reduced soy crush – meal protein?
Feed wheat China wheat supply cushion - building past 400 days
China feed wheat demand - % of dometsic demand
demand = 17MMT 450
30,000 25%
(13.5MMT 2017-18).
400
Account for 14% of
25,000 total wheat
20% 350
consumption
300
20,000
15%
China domestic
supply cushion – 250

15,000 forecast = 407 days!

200
10%
10,000
Why take China out 150
of the world wheat
5%
grid? China holds 100
5,000 136.1MMT of the
50
260.9MMT world –
or 52.2%. China
0 0% 0
does not export
wheat. Bingo,
bango, bongo
A look at wheat demand – feed and food – daily consumption rates
World feed wheat demand - without China 10-year average World wheat consumption – without China
140,000 feed wheat demand 640,000 1,750

= 119MMT. Flat
1,700
120,000 demand. Influenced 620,000

by cost + availability 1,650

100,000 of corn 600,000

1,600
580,000
The world
80,000
consumes an 1,550
560,000
estimated 1.7MMT /
60,000 1,500
day – this is more /
540,000
less unchanged 1,450
40,000 versus 2017-18
520,000
1,400

20,000
For every 1.7MMT
500,000 1,350
of production loss –
the world loses 1
0 480,000 1,300
day of supply (73
days)
 Russian wheat production - 3rd largest in the past decade
Russia’s role in the world wheat export trade flow 90,000
80,000
Russia - the world's largest wheat exporter Russia exports = 34MMT 70,000
60,000
45,000 25% (vs 41MMT)
50,000
40,000
40,000 World trade – 18% vs 30,000

20%
23% last year 20,000
35,000 10,000
0
30,000
The world’s largest
15%
wheat exporter –
25,000 program will be
influenced by Winter
20,000 weather-logistics Russian ending stocks - lowest in a decade
10%
15,000 16,000 12.00%
Key for world wheat flat 14,000
10.00%
10,000 prices – Russian ending 12,000
5%
stocks are forecast to 10,000
8.00%
5,000 drop to the lowest in the 8,000 6.00%
past decade. Limited 6,000
4.00%
0 0%
buffer should any 2019- 4,000
2.00%
2020 production issues 2,000
arise 0 0.00%
 Europe - forecast to be #2 world exporter this year

Europe wheat production hit with drought – heat 40,000

35,000
25%

20%
European wheat production - forecast to decline 6.6MMT Despite decline in 30,000

165,000
production – USDA 25,000 15%
took exports higher 20,000
10%
160,000 = 27.5MMT vs 15,000

23.3MMT (Europe 10,000

5%
155,000 garners large 5,000

portion of 7MMT 0 0%
150,000
decline Russian
145,000
exports)

140,000 European wheat Europe to hold 8% of the world's wheat stocks

stocks – forecast to 25,000 18%
135,000 be 2nd lowest in the 16%
past decade 20,000 14%
130,000
12%
15,000
125,000 World wheat stocks 10%

are drawing down 8%

10,000
6%
120,000 to low levels in key
5,000 4%
exporters – Russia + 2%
Europe 0 0%
As world exporters stocks draw down – the U.S. sits as a transparent, back stop for world wheat buyers
U.S. wheat stocks - ongoing decline but will store 21% for the world U.S. ending stocks – U.S. wheat exports - forecast to account of 14% of world trade
35,000 25% forecast to decline with 40,000 30%
conservative export
30,000 forecasts with U.S. #3 in 35,000
20% the world 25%

30,000
25,000 U.S. ending stocks – will
be influenced by what 20%
15% 25,000
20,000 Russia + Europe does as it
impacts U.S. exports 20,000 15%
15,000
10% U.S. will store 21% of the
15,000
world’s exportable 10%
10,000 supplies – this acts as a
10,000
5%
solid backstop for world
5,000 wheat buyers as the most 5%
5,000
transparent export market
in the world. There is
0 0% 0 0%
value in this – as reflected
by the futures market
Disclosure
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