U.S. average wheat prices received by farmers for 2013/14 is projected this month to reach a range of $6.40 to $7.60 per bushel. The midpoint of $7.00 per bushel is down 10 cents from last month’s forecast.

The June farm price and July preliminary prices came in somewhat below expectations, and U.S. wheat prices are expected to face weakness with a record corn harvest this fall. Moreover, foreign wheat price quotes, especially for exporters such as Ukraine, Russia, and the European Union (EU), have dropped sharply recently.

These factors are expected to limit U.S. wheat price rallies during 2013/14. The evolving fundamentals of the U.S. 2013/14 wheat market are for firm demand and a significant reduction in stocks. U.S. wheat exports are projected up 25 million bushels this month to 1.1 billion.

Compared to the previous year, exports are projected up enough to offset most of the decline in expected wheat feed and residual use, leaving total demand almost unchanged. Ending stocks are projected down 25 million bushels this month to 551 million, a 23-percent drop from a year earlier.

Increased wheat production in the EU and the Former Soviet Union (FSU) supports this month’s larger projected world wheat production, use, and trade. Declining wheat prices are encouraging world wheat trade expansion, with 2013/14 global trade approaching the 2011/12 record level at over 150 million tons. U.S. export prospects are projected up despite the intense competition, with a very strong start and better export prospects to China and South America.

Source: Wheat Outlook