Can Wheat Producers Keep Pace with Growing Global Demand?

U.S. wheat export demand is steady for the second straight month in a growing world market according to the World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture (USDA) for March 2010. Producers around the world have responded to growing demand by producing record crops recently. As a result, USDA forecasts that global ending stocks for 2009/10 (June-May) will be 196.8 million metric tons (MMT) up 60 percent from a recent low of 123.3 MMT in 2007/08.

Significantly, though, the March WASDE report calls for world wheat demand to grow again this year. Falling wheat prices since the supply induced shock of 2007/08 are partly responsible, but global demand is growing with population and income in developing countries. Since 1980, in fact, wheat demand in developing countries has grown from 50 MMT to 125 MMT. U.S. Wheat Associates Vice President of Overseas Operations Vince Peterson recently told reporters that at some point only a few years away, demand is likely to exceed production again.

“We know U.S. producers are planting less wheat on average every year,” Peterson said. “Crops like corn and soybeans offer more income, but that trend exists everywhere wheat is grown, not just in the United States.” Unless technology can drive wheat yields up, Peterson said, supply will fall and prices will rise again. Peterson presented "Global Wheat Supply and Demand Perspectives for Grower" at the Bayer CropScience Ag Media Summit on March 3, 2010, in Anaheim, Calif. A link to a summary and short video about the presentation is posted at www.uswheat.org.

For 2009/10, USDA held its U.S. wheat export forecast steady at 825 million bushels22.5 MMT, which included a 10 million bushel (272,800 MT) increase in hard red winter (HRW) exports offset by the same decrease for white wheat. Commercial U.S. HRW sales for 2009/10 are up 19 percent over 2008/09 to North Asia, up 14 percent to Sub-Saharan Africa, and significantly up in North Africa following recent sales to Morocco. U.S. durum and soft white wheat sales this marketing year have also outpaced 2008/09. USDA forecasts total U.S. wheat exports to end 2009/10 18.5 percent lower than in 2008/09, reflecting greater exportable world supplies.

U.S. Wheat Associates is the industry’s market development organization working in 90countries on behalf of America's wheat producers. The activities of U.S. Wheat Associates are made possible by producer checkoff dollars managed by 18 state wheat commissions and through cost-share funding provided by USDA’s Foreign Agricultural Service. For more information, visit www.uswheat.org or contact your state wheat commission.