Wheat is a cereal grass, but before cultivation it was a wild grass. It has been grown in temperate regions and cultivated for food since prehistoric times. Wheat is believed to have originated in southwestern Asia. Archeological research indicates that wheat was grown as a crop in the Nile Valley about 5,000 BC. Wheat is not native to the U.S. and was first grown here in 1602 near the Massachusetts coast. The common types of wheat grown in the U.S. are spring and winter wheat. Wheat planted in the spring for summer or autumn harvest is mostly red wheat. Wheat planted in the fall or winter for spring harvest is mostly white wheat. Winter wheat accounts for nearly three-fourths of total U.S. production. Wheat is used mainly as a human food and supplies about 20% of the food calories for the world's population. The primary use for wheat is flour, but it is also used for brewing and distilling, and for making oil, gluten, straw for livestock bedding, livestock feed, hay or silage, newsprint, and other products.
Wheat futures and options are traded at the CME Group, ICE Futures U.S., the Minneapolis Grain Exchange (MGEX), the Budapest Stock Exchange (BSE), the JSE Securities Exchange , the Mercado a Termino de Buenos Aires (MTBA), the NYSE LIFFE European Derivatives Market, and the Sydney Futures Exchange (SFE). The CME's wheat futures contract calls for the delivery of soft red wheat (No. 1 and 2), hard red winter wheat (No. 1 and 2), dark northern spring wheat (No. 1 and 2), No.1 northern spring at 3 cents/bushel premium, or No. 2 northern spring at par. Futures are also traded at ICE Futures Canada, the Moscow Exchange, the Multi Commodity Exchange of India (MCX), the National Commodity & Derivatives Exchange (NCDEX), the Rosario Futures Exchange, the Turkish Derivatives Exchange, and the Zhengzhou Commodity Exchange (ZCE).
Prices - CME wheat futures prices (Barchart.com electronic symbol ZW) started 2014 under pressure as they posted a 4-1/2 year low in January at $5.50 a bushel after the USDA in the January WASDE report raised its 2013/14 global wheat production estimate to a record 712.66 MMT. Wheat prices then rebounded sharply into Q2 and posted the high for 2014 in May at $7.35 a bushel, a 1-3/4 year high. Wheat prices surged on concern that escalation of tensions in Ukraine would disrupt wheat exports from Russia and Ukraine, the world's fifth and sixth biggest wheat exporters, respectively. Wheat prices trended lower in Q3 and posted a 4-1/2 year low in September at $4.66 a bushel on abundant global supplies. The USDA in the September WASDE report raised its 2014/15 global wheat production estimate to a record 719.95 MMT and raised its 2014/15 global wheat ending stocks estimate to a 4-year high of 196.38 MMT. Wheat prices in Q4 rallied sharply by $2.00 a bushel to $6.77 a bushel in December on global crop concerns after the driest weather in Russia in 5 years threatened its wheat output, while excessive rains in Australia hindered its wheat crop. Another positive for wheat prices was Russia's levy of a 15% tariff on its wheat exports. The tariff was designed to limit Russian wheat exports after the collapse of the ruble to a record low against the dollar gave Russian wheat exporters incentive to increase exports that were more profitable than domestic sales. Wheat prices finished 2014 down -2.6% at $5.90 a bushel. The USDA currently pegs the U.S. wheat 2014/15 stocks-to-use ratio at 30.5%, above the 10-year average of 28.7%, and the global 2014/54 stocks-to-use ratio at 27.4%, higher than the 10-year average of 25.7%.
Supply - World wheat production in the 2014-15 marketing year rose +1.1% to 723.384 million metric tons, a new record high. The world's largest wheat producers were the European Union with 21.5% of world production in 2014-15, China (17.4%), India (13.3%), Russia (8.2%), the U.S. (7.6%), and Pakistan (3.5%). China's wheat production in 2014-15 rose +3.3% yr/yr to 126.000 million metric tons, but is still below its record high of 123.289 million metric tons seen in 1997-98. India's wheat production rose +2.6% yr/yr to 95.910 million metric tons in 2014-15, a new record high. The world land area harvested with wheat in 2014-15 rose +0.5% yr/yr to 221.8 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). World wheat yield in 2014-15 rose +3.1% to 3.30 metric tons per acre, a new record high.
U.S. wheat production in 2014-15 fell -5.1% yr/yr to 2.025 billion bushels, which was below the record crop of 2.785 billion bushels seen in 1981-82. Ending stocks for U.S. wheat for 2014-15 rose 17% to 691 million bushels. The U.S. winter wheat crop in 2014 fell -10.7% yr/yr to 1.377 billion bushels, which was well below the record winter wheat crop of 2.097 billion bushels seen in 1981. U.S. production of durum wheat in 2014 fell -8.4% yr/yr to 53.087 million bushels. U.S. production of other spring wheat in 2014 rose +11.4% yr/yr to 595.038 million bushels. The largest U.S. producing states of winter wheat in 2014 were Kansas with 17.9% of U.S. production, Montana with 6.7%, Colorado with 6.5%, and Washington with 6.2%. U.S. farmers planted 56.822 million acres of wheat in 2014, which was up +1.0% yr/yr. U.S. wheat yield in 2014-15 was 43.7 bushels per acre, a new record high.
Demand - World wheat utilization in 2014-15 rose +1.4% yr/yr to 714.1 million metric tons. U.S. consumption of wheat in 2014-15 fell -5.7% yr/yr to 1.183 billion bushels, below 2012-13 record high of 1.387 billion bushels. The consumption breakdown shows that 81.1% of U.S. wheat consumption in 2014-15 went for food, 12.7% for feed and residuals, and 6.2% for seed.
Trade - World trade in wheat in 2014-15 fell -3.4% yr/yr to 156.600 million metric tons, below last year's record high of 162.1 million metric tons. U.S. exports of wheat in 2014-15 fell -21.4% yr/yr to 925.000 million bushels, and remained below the record of 1.771 billion bushels of exports seen in 1981-82. U.S. imports of wheat in 2014-15 rose +6.8% to 180.0 million bushels, a new record high.
Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.