Canada Markets

USDA Hikes Estimate for 2017/18 Wheat Imports

By Cliff Jamieson , Canadian Grains Analyst
United States has imported an average 3.4 million metric tons of wheat annually over the past 10 years (2007/08 to 2016/17), while the colored bars represent the estimated imports for 2016/17 as well as the monthly estimates released for 2017/18 crop year. (DTN graphic by Scott R Kemper)

Canada continues to face a growing export opportunity as the USDA continues to trim the potential for the United States wheat crop while hiking estimated for wheat imports over the 2017/18 crop year. Import needs could play an even larger role, given that today's cut in production was less than expected in pre-report surveys.

The U.S. all-wheat production estimate was pegged at 1.739 billion bushels, down 24.7% from 2016, and revised lower from the July estimate. At the same time, this estimate is closer to the higher end of the range of pre-report estimates and well-above the average of pre-report estimates at 1.713 bb.

The largest impacts were felt in the other spring wheat and durum categories. Spring wheat production is estimated to fall to 402 million bushels, down 21 mb from July's estimate and 25% lower than the production realized in 2016/17. This estimate was higher than the average of pre-report estimates at 393 mb, while close to the mid-point of the range of estimates seen in pre-report surveys.

Estimated durum production was the only wheat class to see production estimated below the average of pre-report estimates, while is also estimated to be below the lowest estimate seen in a range of pre-report estimates. Durum production was estimated at 51 mb, down 7 mb from the July estimate, down 51% from 2016 and below the average of pre-report estimates at 57 mb. This would mark the lowest production seen since 2011/12.

Along with the revisions to crop production was a corresponding increase in expected wheat imports. Today's USDA report indicated that wheat imports could reach 4.1 million metric tons, represented by the green bar on the attached chart. This compares to the estimated 3.2 mmt imported in 2016/17 (red bar) and the previous 10-year average at 3.4 mmt. The colored bars (gold, yellow, brown and green) represent the monthly forecasts released by the USDA starting in May, which points to the growing need for imports.

By class, the largest import volumes are expected for hard red spring wheat, with Thursday's report estimating HRS imports at 1.85 mmt, or 45% of the total expected volume imported. This is the largest volume seen since 2014/15 when a similar volume was imported. Durum imports are estimated at close to 1.2 mmt, or 28.5% of total expected wheat imports. This would the largest volume imported in three years.

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DTN 360 Poll

This week's poll asks if you think that spring wheat futures will test the highs reached in early July. You can weigh in with your thoughts on this week's poll, found on the lower right side of your DTN Canada Home Page.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow Cliff Jamieson on Twitter @CliffJamieson

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