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 on the Chicago Board of Trade (CBT), division of the CME Group, ICE Futures U.S., the Kansas City Board of Trade (KCBT), 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 CBT'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 - CBOT wheat futures prices (Barchart.com symbol W) trended lower during the first half of 2013 on signs of ample supplies. The March 2013 USDA Quarterly Grain Stocks showed U.S. wheat stocks on March 1 at 1.234 billion bushels, 67 million bushels higher than consensus of 1.167 billion. Wheat prices weakened further after the USDA in its May WASDE report forecasted that 2013/14 global wheat production would climb by +6.9% to a record 701.1 MMT and estimated U.S. wheat acreage for the year at a 4-year high of 56.530 million acres. Wheat prices fell further in Q3 on foreign demand concerns after Mexico and South Korea cancelled purchases of U.S. wheat in the wake of Japan's suspension of imports of U.S. western-white wheat when an unapproved genetically modified strain of wheat was found in a field in Oregon. Wheat prices posted a 1-1/2 year low of $6.23 a bushel in August after the USDA in the August WASDE report raised its 2013/14 global wheat production estimate to a record 705 MMT. Wheat prices rebounded by nearly +$1.00 a bushel into November on strong Chinese demand after China bought 3.45 MMT of U.S. wheat from June through September, up tenfold y/y. Also, China's National Grain and Oils Information Center predicted that China's 2013/14 wheat imports would climb to 6.5 MMT, a 9-year high. Wheat prices fell back in December and posted a new 1-1/2 year low of $5.99 a bushel and finished 2013 down -22.2% at $6.05 a bushel. The USDA is currently pegging the U.S. wheat 2013/14 stocks-to-use ratio at 22.7%, tighter than the 10-year average of 28.5%, but world wheat supplies are slightly above average with a 2013/14 stocks-to-use ratio of 26.1%, mildly above the 10-year average of 25.3%.
Supply - World wheat production in the 2013-14 marketing year rose +8.5% to 711.885 million metric tons, a new record high. The world's largest wheat producers were the European Union with 20.1% of world production in 2013-14, China (17.1%), India (13.0%), the U.S. (8.1%), Russia (7.3%), and Pakistan (3.4%). China's wheat production in 2013-14 rose +1.0% yr/yr to 122.000 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 +3.6% yr/yr to 92.460 million metric tons in 2013-14, a new record high. The world land area harvested with wheat in 2013-14 rose +1.7% yr/yr to 219.4 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). World wheat yield in 2013-14 rose +6.9% to 3.25 metric tons per acre, a new record high.
U.S. wheat production in 2013-14 fell -6.0% yr/yr to 2.129 billion bushels, which was below the record crop of 2.785 billion bushels seen in 1981-82. The U.S. winter wheat crop in 2013 fell -6.5% yr/yr to 1.534 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 2013 fell -25.2% yr/yr to 61.913 million bushels. U.S. production of other spring wheat in 2013 fell -1.6% yr/yr to 533.529 million bushels. The largest U.S. producing states of winter wheat in 2013 were Kansas with 20.8% of U.S. production, Oklahoma with 6.9%, Texas with 4.3%, and Montana with 5.3%. U.S. farmers planted 56.156 million acres of wheat in 2013, which was up +1.0% yr/yr. U.S. wheat yield in 2013-14 was 47.2 bushels per acre, a new record high. Ending stocks for U.S. wheat for 2013-14 fell -30% to 558 million bushels.
Demand - World wheat utilization in 2013-14 rose +1.5% yr/yr to 696.6 million metric tons. U.S. consumption of wheat in 2013-14 fell -9.4% yr/yr to 1.274 billion bushels, below last year's record high of 1.406 billion bushels. The consumption breakdown shows that 74.5% of U.S. wheat consumption in 2013-14 went for food, 19.6% for feed and residuals, and 5.8% for seed.
Trade - World trade in wheat in 2013-14 rose +5.7% yr/yr to 155.5 million metric tons, a new record high. U.S. exports of wheat in 2013-14 rose +11.7% yr/yr to 1.125 billion bushels, and remained below the record of 1.771 billion bushels of exports seen in 1981-82. U.S. imports of wheat in 2013-14 rose +30.3% to 160.0 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.