Crop sector forecasts under different yield scenarios
click image to zoom With a yield 6 percent below the trend of the “normal” weather scenario, production is 3.36 billion bushels. While production still exceeds use, ending stocks stay below 200 million bushels and the stocks-to-use ratio is a very snug 5.5 percent. The season average price under the “poor” weather scenario is $12.00 per bushel. If the national average yield comes in at 46.0 bushels per acre, ending stocks reach 400 million bushels and prices are pressured down to $9 per bushel for the crop year.
The national average wheat yield hit a record high in 2013 even with poor growing conditions in the Plains states. Spring wheat yields were extremely good and the high abandonment rate in the Plains states kept the worst fields from pulling down average yields. A similar scenario may be possible this year, but a yield below the 2012 and 2013 levels is a more likely outcome. If the yield comes in near 45.8 bushels per acre, and farmers harvest about 85 percent of the land planted to wheat, production is estimated at 2.177 billion bushels. But it is clear that the crop size is hard to pin down at this point in the season. USDA will start forecasting wheat yield and production in May.
click image to zoom The U.S. imports a significant amount of wheat, with the current year estimate of 165 million bushels. So even though wheat production is below expected demand in 2014/15 in the “normal” weather scenario, ending stocks still rise to 651 million bushels. This pushes the season average price to $5.90 per bushel, down from $6.85 forecast for this current year. The amount of wheat used for food typically increases at about the same pace as population. The key driver for demand for wheat is exports and exports are down compared to the 2013/14 level in all three of our scenarios for 2014/15.
Production in the “poor” weather scenario is 1.967 billion bushels, down almost 10 percent from the level in the “normal” weather scenario. Under the “poor” weather scenario, ending stocks decline from the 2013/14 level, but with lower demand the stocks-to-use ratio actually edges higher. The season average wheat price holds about steady with the 2013/14 level at $6.80 per bushel.
click image to zoom Yields are important to the cotton sector but the share of acres harvested is an even bigger swing factor. In years when yields are very poor – like 2013 – as much as 25 percent or more of the land planted to cotton is abandoned. Drought conditions in Texas and Oklahoma suggest this could be another year when harvested acreage falls far below planted acreage. In good years we have seen more than 95 percent of the planted acreage get harvested. Under our “normal” weather scenario we use an 85 percent harvested to planted acreage ratio and a trend yield of 815 pounds per acre. Production comes in slightly above 16 million bales, nearly 25 percent higher than in 2013. With higher exports and domestic use, cotton ending stocks increase to 2.9 million bales – which is still very tight.
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