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U.S. and world wheat prices showed little decisiveness during 1999, but on balance were generally on the defensive. This continued a downtrend that took hold in 1996, although at a much slower rate.World wheat production in 1999/2000 of 578 million metric tonnes compares with 588 million in 1998/99 and the record high 1997/98 crop of 609 million tonnes. Production in the mid-1990’s averaged about 540 million tonnes.Global consumption in 1999/00 of 586 million tonnes compares with the record high 591 million in 1998/99. For the second consecutive season, a draw on carryover stocks will be necessary; the projected ending 1999/00 carryover of 128 million tonnes compares with 136 million a year earlier and the record high 139 million of two years ago. Still, carryover supplies appear adequate, certainly relative to the 106 million tonnes at yearend 1995/96, the lowest since the 1970’s. The 1999/00 world stocks-to-usage ratio of about 21 percent compares with 23 percent a year earlier.Since the late 1980’s, China has been the world’s largest single wheat producer with nearly 20 percent of total production, 117 million tonnes in 1999/00 vs. 116 million in 1998/99. China’s wheat acreage appears to have stabilized near 29.5 million hectares, but average yield improved during the 1990’s. China’s 1999/00 domestic wheat usage was forecast at a record large 117 million tonnes, marginally higher than in 1998/99. Despite the moderate supply/demand imbalance, China’s 1999/00 imports of only 1.5 million tonnes pale relative to numbers earlier in the 1990’s when imports over 10 million tonnes were not unusual. China’s carryover increased during the late 1990’s, but the marketplace tends to view the government’s official totals as suspect: the ending 1999/00 carryover of 27.1 million tonnes compares with 28.1 million a year earlier. What seems more certain is that China’s import needs are very price sensitive and world prices can quickly strengthen on talk, real or otherwise, of Chinese buying which, in turn, brakes their interest.The persistent decline during the 1990’s in the former U.S.S.R.’s wheat production may have been finally stabilized. 1999/00 production totals were forecast in the key republics at: Russia, 31 million tonnes vs. 27 million in 1998/99; Kazakstan at 7.5 million vs. 4.7 million; and the Ukraine at 14 million vs. 15 million, respectively. The larger crops reflect some improvement in average yield amidst little change in acreage.The Russian Federation was once the world’s largest importer. Russia’s 1999/00 imports of only 2.2 million tonnes compare with 14 million tonnes early in the 1990’s, the drop reflecting a chronic lack of foreign exchange and credit. Consumption among the Russian republics has also fallen with Russia’s use estimated at 33 million tonnes in 1999/00 vs. 35 million in 1998/99, and more than 50 million on average early in the 1990’s. The Ukraine’s 1999/00 usage of 12 million tonnes compares with the early 1990’s average of more than 20 million.The 1999/00 world wheat trade is forecast at a near record large 101.2 million tonnes vs. 100.2 million in 1998/99. Four countries generally account for about two-thirds of total exports: Argentina, Australia, Canada and the U.S., with the E.U. supplying much of the balance. The U.S., the single largest exporter, is forecast to ship 30.5 million tonnes in 1999/00 vs. 29 million in 1998/99. Canadian 1999/00 exports are forecast at 17.5 million tonnes vs. 14.5 million in 1998/99; and E.U. exports of 16 million tonnes are about unchanged. Australian exports have soared to 17.5 million tonnes in 1999/00 from a mid-1990’s average of less than 10 million. Importing nations are scattered; among those taking at least 5 million tonnes in 1999/00 are Brazil, Egypt and Japan.The U.S. 1999 wheat crop (June/May) of 2.31 billion bushels compares with 2.55 million in 1998/99, the decline reflecting an average yield of 42.7 bushels per acre vs. 43.2 and, more importantly, a drop in harvested acreage to 54.3 million acres from 59 million, respectively. Winter wheat accounts for more than half of U.S. production: 1.7 billion bushels in 1999/00 vs. 1.9 billion in 1998/99. Kansas is the largest producing state with 432 million bushels in 1999/00. North Dakota is the largest spring wheat and durum producing state. The 1999/00 durum wheat crop of 110 million bushels compares with 138 million in 1998/99. Other spring wheat production was put at 509 million bushels vs. 528 million, respectively.The U.S. imports some wheat, mostly from Canada. Carry-in stocks as of June 1, 1999, of 946 million bushels, compare with 722 million a year earlier. The U.S. wheat supply for 1999/00 of 3.37 billion bushels is about unchanged from 1998/99. Total usage in 1999/00 of 2.38 billion bushels compares with 2.43 billion in 1998/99. Exports generally account for almost half the total disappearance. Food use takes about two-thirds of domestic usage; feed about 20 percent, and seed the balance. If the 1999/00 supply/demand estimates are realized, U.S. ending stocks on May 31, 2000, would rise to at least 986 million bushels, boosting the stock-to-use ratio to 41 percent vs. 39 percent a year earlier. This ratio is often used to forecast prices, the smaller it is the greater the likelihood for higher prices as the crop year progresses.The 1999/00 average price received by farmers was forecast to range from $2.45 to $2.65 a bushel vs. $2.65 in 1998/99 and the 1990’s high of $4.55 in 1995/96.Futures MarketsWheat futures and options are traded on the Mercado a Termino de Buenos Aires (MAT), Sydney Futures Exchange (SFE), London International Financial Futures and Options Exchange (LIFFE), the Chicago Board of Trade (CBOT), the Kansas City Board of Trade (KCBT), the Minneapolis Grain Exchange (MGE) and the Mid-America Commodity Exchange (MidAm). Feed wheat futures and options are traded on the Winnipeg Commodity Exchange (WCE), futures only on the Budapest Commodity Exchange. Milling wheat futures and options are traded on the Budapest Commodity Exchange, futures only on the ParisBourse SA.
Excerpted from the CRB Commodity Yearbook.