ERS Charts of Note
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Friday, April 22, 2022
Beginning in February 2022, already elevated global wheat prices surged in the wake of the conflict between Russia and Ukraine, who together accounted for 28 percent of all wheat exports in marketing year 2020/21. Throughout the current marketing year (2021/22), tight supplies have been forecast for key exporting countries including Argentina, Australia, Canada, the European Union, Kazakhstan, Russia, Ukraine, and the United States. Collectively for these countries, ending stocks are projected at the lowest level since the 2013/14 marketing year. For most of the current marketing year, tight supplies have supported relatively high global wheat prices. Those prices have been driven higher as commodity markets reflect uncertainty about not only the ability of Russia and Ukraine to continue exporting in coming months, but also the implications of the conflict on Ukraine’s spring planting which typically begins in March. Since the conflict began, U.S. export prices have risen for Hard Red Winter (HRW) and Soft Red Winter (SRW)—the two wheat classes that most directly compete with Russian and Ukrainian wheat. Average export prices for HRW were up 78 percent in March from the same month in 2021, and SRW prices were up 64 percent. U.S. Hard Red Spring (HRS), typically the highest priced U.S. wheat, is currently priced lower than HRW and only slightly above SRW. Domestic transportation challenges and dry conditions in major HRW production areas have also underpinned U.S. prices and allowed major competitors to maintain a large pricing advantage. Most HRS exports are shipped out of the Pacific Northwest and are largely destined for Asian markets. Because HRS exports do not compete directly with Russia and Ukraine, the price reaction of this wheat class has been less extreme when compared with the more dramatic price reactions of the other classes. This chart first appeared in USDA, Economic Research Service’s Wheat Outlook, March 2022, and has been updated with recent data from the Wheat Outlook, April 2022.
Monday, January 3, 2022
Wheat prices at the farm level rose substantially in 2021, but these changes did not result in correspondingly higher prices for consumer products made from wheat. This disparity reflects the historical pattern most observable from 2005–12, wherein the degree of movement in prices of wheat products was markedly less than the more dramatic changes in wheat prices. Cash wheat prices in Kansas City, MO—the market price that most closely reflects the prices mills pay for wheat—were up by more than 30 percent in 2021 from the same time in 2020. Similarly, the Producer Price Index (PPI) for flour milling—a measure of how wholesale flour prices change over time—also rose, registering an 18-percent year-on-year increase in 2021. In contrast, prices U.S. consumers paid for wheat-containing products, as measured by the Consumer Price Index (CPI), for cereal and bakery products, is projected up 2 percent. This year-to-year increase is below the overall inflation rate for 2021 and similar to the previous year’s gains. The muted and lagged impact of the wheat grain price surge on consumer product prices is in line with historical precedent in which commodity prices usually represent a small share of the consumer food dollar that is spent on processed foods such as bread and pasta. This chart was drawn from “The Effect of Rising Wheat Prices on U.S. Retail Food Prices,” which appeared in the USDA, Economic Research Service’s November 2021 Wheat Outlook.
Wednesday, October 13, 2021
Companies usually create pasta and couscous with durum, a specific class of wheat. The United States typically consumes about 80 million bushels of durum per year, with pasta accounting for the bulk of this consumption. Toward the end of the 2019/20 (June-May) marketing year, U.S. durum used for food manufacturing expanded sharply as consumer demand for pasta products surged with the onset of the Coronavirus (COVID-19) pandemic. Consequently, more durum was used for food manufacturing in the United States in 2020/21 and total durum food use reached a record high of nearly 88 million bushels. Not only did the domestic milling of durum for pasta increase, imports of pasta and couscous in 2019/20 rose 13 percent from the year prior. These imports surged an additional 21 percent in 2020/21. As the United States emerges from the effects of the COVID-19 pandemic in 2021/22, imports of durum grain and products are expected to remain robust despite slowing consumer demand for pasta products. Widespread drought in key durum-producing regions in 2021/22 has dampened domestic production, thus import demand is expected to remain strong. This chart is drawn from USDA, Economic Research Service’s Wheat Outlook: September 2021.
Friday, September 17, 2021
China is the world’s largest consumer of wheat, accounting for 19 percent of global wheat consumption in marketing year 2020/21 (July–June), more than four times the U.S. share. China also became a leading importer during 2020/21, with purchases estimated at 10.6 million metric tons, China’s highest import total since the 1990s. USDA forecasts China’s 2021/22 imports at 10 million metric tons. Before the 2010/11 marketing year, China’s wheat imports typically totaled 1 million metric tons or less. More recently, wheat imports totaled 3 to 5 million metric tons most years between marketing years 2011/12 to 2019/20. The surge in imports in 2020/21 can be attributed to China’s strong demand for wheat use in animal feed, replenishment of the Chinese Government reserves with high-quality wheat, and efforts to meet import commitments in the U.S.-China Phase One trade agreement. According to China’s customs data, the United States supplied 3 million metric tons of 2020/21 wheat imports—approximately a 28-percent share. This chart first appeared in the USDA, Economic Research Service (ERS) report, Potential Wheat Demand in China: Applicants for Import Quota, August 2021, and includes updated data from ERS’ Wheat Data product.
Wednesday, August 18, 2021
Widespread drought across the northern and western regions of the United States has dampened prospects for projected production and exports in the 2021/22 marketing year of three classes of U.S. wheat: hard red spring, white, and durum. Cultivation of hard red spring wheat, typically the second largest class of U.S. wheat, is concentrated in the Northern Plains, where about 99 percent of production is being grown in an area experiencing drought. Harvest of this class is projected to fall 42 percent from the previous year to the lowest level in more than 30 years, while exports are expected to contract to the lowest volume in more than a decade. U.S. durum production, which is also concentrated in the Northern Plains, is also projected to fall substantially in the 2021/22 marketing year to the lowest level in 60 years. With the United States generally a net importer of durum, larger imports from Canada are expected. Drought has also affected the Pacific Northwest region, where the majority of U.S. white wheat is produced, resulting in a 29 percent year-to-year decline in production of that class. With white wheat production at the lowest level on record dating back to the 1974/1975 marketing year, exports—mainly destined for markets in Asia—are projected down 41 percent from the prior marketing year. This chart is drawn from the USDA, Economic Research Service Wheat Outlook, published in August 2021.
Wednesday, June 2, 2021
Driven largely by the increasing popularity of salads and “mini” or snacking varieties, U.S. demand for fresh cucumbers has been on an upward trend since the 1970s. Reflecting rising consumer demand, import volume has continued on a 50-year upward trend, contributing to the crowding-out of domestic field-grown production (down 62 percent since 2010). Before 2005, domestic fresh cucumber production exceeded the amount imported each year. Imports grew from a 35 percent share of availability in 1990-94 to 80 percent in 2015-20. By 2020, imports accounted for almost 90 percent of the domestic market. The share of imports in the U.S. fresh cucumber market continues to trend higher because of year-round demand for cucumbers and for varieties that tend to be cultivated in greenhouses. Imported cucumbers typically enter the United States during the winter, autumn, and early spring months when domestic supplies are limited. Fresh cucumber imports, largely from Mexico and Canada, totaled nearly 2.2 billion pounds in 2020, and 18 percent of imported cucumbers were grown in protected structures such as greenhouses. To a lesser extent, increased domestic greenhouse production, which now accounts for about 11 percent of U.S.-grown cucumbers, has siphoned off demand for field grown fresh cucumbers over the past two decades. This chart appeared in the Economic Research Service’s April 2021 Vegetable and Pulses Outlook.
Wednesday, February 10, 2021
Futures prices—the price of a contract to deliver a commodity at a certain time in the future—for wheat, corn, and soybeans have been trending upward since August 2020. This 6-month trend of rising prices accelerated in the first weeks of 2021, demonstrating stronger price gains in anticipation of USDA’s revised production forecasts for major U.S. grains in the World Agricultural Supply and Demand Estimates (WASDE) for January 2021. Hard red winter wheat futures prices for the nearby month (e.g., prices associated with an active futures contract with the shortest time to maturity/delivery) rose 72 cents per bushel (13 percent) during the 30-day period just ahead of the January 12, 2021 release of the WASDE. During the same 30-day period, corn and soybean contracts for nearby month delivery rose 98 cents and $2.69 per bushel, respectively (approximately 23 percent each), and the season average farm price of soybeans reached their highest level since the marketing year of 2013-14. The realization of tightening supplies coupled with robust demand from export markets, most notably China, have stimulated steady price increases for the big three U.S. row crops—wheat, corn, and soybeans. Additionally, dry conditions in key areas of corn and soybean production in South America have reduced regional production prospects and the outlook for global supplies, providing further support to associated U.S. commodity prices. This chart is drawn from the USDA, Economic Research Service’s January 2021 Wheat Outlook, Oil Crops Outlook, and Feed Grains Outlook reports.
Friday, December 4, 2020
The farm share of the retail price of all-purpose white flour—the ratio of the price farmers receive for wheat to the price consumers pay for flour in grocery stores—averaged 13 to 14 percent in 2016 and 2017 before reaching 19 and 20 percent in 2018 and 2019. In the latter half of 2017, farm prices rose in connection with lower-than-expected U.S. wheat production. In mid-2018, as the 2017/18 U.S. wheat crop matured, dry conditions in the Northern Plains further trimmed wheat production prospects. In response, domestic wheat prices rose again, despite abundant global wheat supplies. Ultimately, U.S. wheat farmers received an average price of $4.72 per bushel for their 2017/18 crop, up from $3.89 in the previous year. The farm value of the amount of hard red winter wheat needed to make one pound of all-purpose white flour increased from 7 cents in 2017 to 9 cents in 2018 before falling back to 8 cents in 2019. The average retail price of flour fell from 51 cents per pound in 2017 to 46 cents in 2018 and 44 cents in 2019. Costs for milling, packaging, transporting, and retailing also affect what consumers pay for flour at grocery stores. The Economic Research Service (ERS) forecasts higher farm prices for wheat during the 2020/21 marketing season and moderately higher retail prices for cereal and bakery goods, a category of products that includes all-purpose white flour, through 2020 and 2021. This chart is based on the Price Spreads from Farm to Consumer data product on the ERS website.
Monday, November 30, 2020
As part of its response to the economic impacts of the COVID-19 pandemic, India has sharply increased its distribution of wheat and rice to the 800 million Indian citizens (about 58 percent of the population) eligible to receive subsidized rations. Facing major shocks to employment and incomes associated with nationwide measures to control the virus, India announced a relief program in March 2020 worth $22.3 billion. The program, now extended through November 2020, supplements the highly subsidized, standard monthly ration of 5 kilograms per person of wheat or rice with an additional free allocation of 5 kilograms. Implementation of the program led to a 75-percent increase in India’s total wheat and rice distribution from April to September compared with earlier years, with the average monthly distribution of rice more than doubling. India is a major global holder of food security stocks of both rice and wheat, as well as the world’s largest rice exporter—with 2021 exports forecast at 12.5 million tons. While India is currently forecast to maintain large surpluses of wheat and rice in government stocks during the October 2020-September 2021 marketing year, the sharp increase in subsidized domestic distribution has the potential to substantially reduce those food security stocks if the COVID-19 relief program is extended beyond November 2020 into the 2020-21 marketing year. This chart was drawn from the Economic Research Service’s Rice and Wheat Outlooks, November 2020.
Friday, November 20, 2020
Several countries in the “Horn” region of Africa are facing the brunt of what the U.N. Food and Agricultural Organization (FAO) describes as the “worst desert locust crisis in 25 years.” Paradoxically, grain production in those countries is forecast to hit record volumes. The current desert locust outbreak originated in mid-2018 when successive rain events in the arid Arabian Desert spurred vegetation development. The latter, in turn, provided ample feedstock for the burgeoning locust population. Trade winds blew the pests into Africa in early 2019, where the locusts settled into the low-elevation arid to semi-arid grasslands. Regionally abundant rainfall through the end of 2019 and into 2020 supported vegetation growth, which once again aided in the expansion of locust swarms. However, the locusts primarily remained in low-elevation grasslands, largely avoiding the higher-elevation grain production zones. Further, the rainfall that increased feedstock for the locusts also helped increase yields for agricultural crops, such as corn, barley, sorghum, and wheat. Ultimately—and despite a significant locust infestation—grain production in this region is forecast not only above the 2019 levels but also to reach the highest level on record. This situation mirrors that of the less severe locust infestation of 2003-05, during which aggregate grain production rose during the height of the outbreak. This chart is drawn from material included in the Economic Research Service’s Wheat and Feed Outlook reports from August 2020, and has been updated with November data.
Friday, September 11, 2020
Producers of some of the U.S. major field crops have struggled to cover total costs of production over the past decade. The Economic Research Service’s (ERS) Commodity Costs and Returns product estimates this gap or surplus in the calculation of the value of production less total costs, referred to here as net returns. Total costs comprise operating costs, which include expenses such as fertilizer, seed, and chemicals, and allocated overhead (economic) costs, which include unpaid labor, depreciation, land costs, and other opportunity costs. Although revenue from selling crops can typically cover operating costs each year, net returns have often been negative. This suggests that, in some cases, allocated overhead costs are not covered. Corn’s net returns increased early in the decade, primarily due to a boom in the production of corn-based ethanol. Corn yields and acreage remained high after the boom, leaving supply high and leading, in part, to lower prices and returns over time. Net returns for soybeans shadowed those for corn during the ethanol boom, remaining higher than those for corn up until 2018. Wheat prices and returns also declined, due to strong international competition and several high-yield domestic crops. This chart is derived from data collected from the ERS Commodity Costs and Returns data product. Its data can also be viewed via ERS’s interactive data visualization product, U.S. Commodity Costs and Returns by Region and by Commodity.
Friday, June 12, 2020
Wheat and corn prices tend to move in parallel, with cash and futures wheat prices historically being slightly above those for corn. For example, between August 2019 through March 2020, the average difference between futures contract prices of hard red winter wheat and yellow corn was about $0.58 per bushel and similar in size to their typical price spread. However, when efforts to contain the outbreak of COVID-19 brought about widespread stay-at-home orders, this wheat and corn price series began to diverge significantly. The widening spread came at a potentially impactful time for farmers, whose planting decisions could have been influenced by the perceived relative profitability of corn and spring wheat (winter wheat is planted in fall of the prior year and sowing would not be affected by recent developments). From the end of March through mid-May, the price difference for the leading wheat futures contract surged to $1.54 per bushel and well above the comparable average wheat-corn price margin. A spike in domestic retail flour, bread, and wheat-based product sales—related to greatly increased expenditures on food eaten at home—contributed to the observed wheat price increase. In contrast, stay-at-home orders significantly reduced fuel demand—10 percent of which is corn-based ethanol, thereby putting substantial downward pressure on the 2019/20 corn price. In the new marketing year, the margin between wheat and corn cash prices is expected to remain above the 5-year average, in part due to the continuation of COVID-19 related impacts on demand for wheat and corn products, and also due to contrasting supply expectations for each grain. This chart is drawn from the Economic Research Service Wheat Outlook, published in May 2020 and has been updated using data from the Chicago Mercantile Exchange.
Wednesday, January 22, 2020
Brazil is the third-largest global importer of wheat. However, in recent years just one to six percent of U.S. exports have gone to this important South American market on average. In the past ten years, the bulk of Brazil’s wheat imports have originated from Mercosur trading partners (Argentina, Paraguay, and Uruguay) on which Brazil does not impose import duties. Mercosur partner Argentina enjoys proximity benefits and typically supplies about 65 percent of Brazil’s total volume of imports. During periods when Argentina’s exportable wheat supplies have been limited, such as 2013/14, Brazil has removed duties on wheat from non-Mercosur countries, increasing the competitiveness of their exports. As a result, in the 2013/14 trade year (July/June), the U.S. accounted for more than 50 percent of Brazil’s wheat imports. The U.S. has historically been the dominant non-Mercosur wheat exporter to Brazil and is noted for the high quality of its wheat. On November 14, 2019, the Government of Brazil removed a 10-percent duty that applied to the first 750,000 metric tons of wheat imports from non-Mercosur countries. This suggests the U.S. will be increasingly—though mainly seasonally—price competitive with Mercosur-origin wheat. This chart appears and is explained in more detail in the article, “Brazil’s Implementation of a TRQ (tariff rate quota) for Wheat Cracks Open the Door for Expanded U.S. Exports,” in the December 2019 issue of ERS’s Wheat Outlook newsletter.
Tuesday, August 13, 2019
The United States maintained its status as the world’s grain superpower for most of the post-World War II period by being the leading corn and wheat producer and exporter. Before the beginning of this century, the United States annually exported about a third of globally traded wheat and around 70 percent of corn. The emergence of new low-cost producers and exporters in the global wheat and corn markets reduced the U.S. share of grain exports and transformed global grain trade. Competition from Russia, Ukraine, and Argentina has weighed down U.S wheat exports share, while Brazil, Argentina, and Ukraine are driving down the U.S. corn export share. In October 2018, world demand for wheat had been growing at a steady pace, driven mainly by population growth in low-income countries and a switch from rice to wheat consumption in countries that are traditionally heavy rice consumers. This chart appears in the October 2018 Amber Waves article, “Major Changes in Export Flows Over the Last Decade Show the U.S. Is Losing Market Share in Global Grain Trade.” This Chart of Note was originally published October 11, 2018.
Thursday, October 11, 2018
The United States maintained its status as the world’s grain superpower for most of the post-World War II period by being the leading corn and wheat producer and exporter. Before the beginning of this century, the United States annually exported about a third of globally traded wheat and around 70 percent of corn. The emergence of new low-cost producers and exporters in the global wheat and corn markets reduced the U.S. share of grain exports and transformed global grain trade. Competition from Russia, Ukraine, and Argentina has weighed down U.S wheat exports share, while Brazil, Argentina, and Ukraine are driving down the U.S. corn export share. World demand for wheat has been growing at a steady pace, driven mainly by population growth in low-income countries and a switch from rice to wheat consumption in countries that are traditionally heavy rice consumers. This chart appears in the October 2018 Amber Waves article, “Major Changes in Export Flows Over the Last Decade Show the U.S. Is Losing Market Share in Global Grain Trade.”
Thursday, February 8, 2018
Winter wheat seedings—or seeds planted—for the next marketing year are projected to be the lowest in 109 years; however, the USDA estimate, based on 82,000 farmer surveys, generally exceeded industry expectations. Winter wheat seedings for the 2018/19 marketing year are estimated at 32.6 million acres, slightly below the 2017/18 seeding estimate of 32.7 million acres. In Kansas, the leading winter wheat producing State, planted area is up 200,000 acres for the 2018 marketing year. Planted area is also up slightly in Texas, though collectively, gains in these two States are not enough to offset winter wheat acreage losses elsewhere. Reduced profitability and agronomic factors, such as delayed seeding due to a late corn harvest, disease challenges, and below-average soil moisture levels, reduced winter wheat plantings in Colorado and Oklahoma. The current projection for 2018 is down less than 1 percent from 2017 and down 10 percent from 2016. Hard red winter wheat planted area is projected to total 23.1 million acres, a decline of 2 percent from 2017, while soft red winter planted area is forecast up 4 percent, year-to-year, to nearly 6 million acres. This chart appears in the latest ERS Wheat Outlook newsletter, released in January 2018.
Wednesday, October 18, 2017
Until recently, the United States led the world in the pricing and trade of wheat. But over time, a substantial share of world wheat exports shifted to Russia and Ukraine (collectively, the Black Sea region) and the European Union. At the same time, U.S. wheat futures (contracts for the purchase/sale of wheat at a given price on a future date) prices are being supplanted by new price benchmarks that more closely track supply and demand conditions in the Black Sea region and the European Union. While the Chicago Mercantile Exchange Soft Red Winter Wheat futures contract is the most active wheat futures market in the world, futures trading volume has grown substantially for the Euronext Milling Wheat contract traded in Paris. Rising volume indicates a market may be more important for price discovery, the process by which markets determine the value of wheat through trades between willing buyers and sellers. A new study by economists at ERS and Montana State University estimated the relative proportion of price discovery in the Chicago and Paris futures markets between 2008 and 2013. Findings suggest that while U.S. futures markets remain dominant in wheat price discovery, the Paris futures market has gained influence since 2010, moving from a 9-percent share of price discovery to nearly 25 percent. This chart appears in the October Amber Waves article, "Wheat Price Discovery Remains Concentrated in the United States, but Shifting to Europe."
Friday, September 29, 2017
On August 25, Hurricane Harvey made landfall on the Texas coast, bringing record levels of rainfall to the Houston metropolitan area and nearby counties. Rainfall totals in some areas of Texas exceeded 50 inches. Not surprisingly, the resulting widespread flooding reduced rail service along the Gulf Coast and all but halted regional grain exports through the first week of September. Interruptions in grain transportation in the Gulf region have the potential to be particularly impactful on shipments of the U.S. wheat crop. The Federal Grain Inspection Service reports that an average of 46 percent of total U.S. wheat exports ship from Gulf ports in Texas and Louisiana. For the week ending August 31, there were virtually no wheat inspections reported for Gulf ports due to the shutdown of rail and port operations. For the week ending September 7, no wheat was inspected for export at either South Texas or East Gulf ports, while North Texas inspected a relatively modest 50,318 metric tons of hard red winter wheat, down from 160,512 metric tons for the same week in 2016. Wheat export inspections are anticipated to accelerate as rail service that provides access to Gulf loading facilities is restored. Although some railroad repairs may take months, others are expected to be restored more quickly. This chart appears in a special article in the latest Wheat Outlook newsletter released in September 2017.
Tuesday, September 5, 2017
The European Union (EU) is the largest wheat producer in the world. Within the EU, France, Germany, and the United Kingdom are the largest wheat producers. Wheat production in the most important wheat producing nations has been relatively steady since 2006, and these countries have not experienced a very large increase in average output or percentage of EU output. A number of smaller wheat-producing countries, however, have increased wheat output substantially over the last 10 years. These nations include many of the EU’s Eastern European new member states: Poland, Romania, the Czech Republic, Bulgaria, Hungary, and Slovakia. The increases have been particularly pronounced in the Baltic States of Lithuania, Latvia, and Estonia, which increased wheat output by more than 100 percent, since 2006. These countries moved from a 1.3 percent share of EU-28 wheat output in 2006 to a 4.3 percent share in 2016. These increases in the Baltic States are generally due to both increases in area planted to wheat and gains in yield per acre. This chart appears in the ERS Wheat Outlook newsletter released in August 2017.
Tuesday, July 25, 2017
Hard Red Spring (HRS) wheat (the largest class of spring wheat) is predominately grown in the Northern Plains of the United States. This key production region, which includes Montana, North Dakota, and South Dakota, has been greatly affected by a lengthy dry spell that has plunged the area into varying levels of drought, ranging from abnormal dryness to exceptional drought. On July 9, widespread drought conditions were noted for both North and South Dakota as well as Eastern Montana, and the proportion of the HRS crop rated “good” to “excellent” was just 36 percent, 10 percent, and 11 percent, respectively. Challenging weather conditions have reduced projected yields, now forecast at 39 bushels per acre, and contribute to a 22 percent year-to-year decline in HRS production for the 2017/18 marketing year. Expectations for a small harvest have helped to rally spring wheat prices in recent weeks and supports this month’s 50 cent increase in the 2017/18 all wheat price. This chart appears in the ERS Wheat Outlook newsletter, released in July 2017.