+Info Wheat is a cereal grass, but before it was cultivated it was just 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 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, the Mercado a Termino de Buenos Aires (MAT), Sydney Futures Exchange (SFE), London International Financial Futures and Options Exchange (LIFFE), Marche a Terme International de France (MATIF), Budapest Commodity Exchange (BCE), the Kansas City Board of Trade (KCBT), the Minneapolis Grain Exchange (MGE), and the Winnipeg Commodity Exchange (WCE). 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.

Prices - CME wheat futures prices (Barchart.com electronic symbol ZW) moved higher in the first half of 2017 on reduced U.S. wheat acreage. The USDA in January projected U.S. 2017 winter wheat acreage at 32.383 million acres, the smallest winter wheat acreage since 1909, and in March projected total U.S. 2017 wheat acreage of 46.1 million acres, the fewest acres since 1919. Wheat prices surged from June into July and posted a 2-1/2 year high of $5.56 a bushel in July. Insufficient rains in the Great Plains led to the deterioration of the U.S. spring wheat crop as the USDA reported only 35% of the U.S. spring wheat crop was in good-to-excellent condition on July 9, the worst percentage for that time of year since 1988. That prompted the USDA in the July WASDE report to cut its U.S. 2017/18 wheat production estimate to a 15-year low of 1.76 billion bushels. The rally was short-lived as wheat prices tumbled into late August on improvement in the global wheat outlook. SovEcon raised its Russia 2017 wheat crop to a record 81.1 MMT and the USDA in its August WASDE report raised its global 2017/18 wheat ending stocks estimate to a record 264.7 MMT. A slump in the dollar to a 3-year low in September gave wheat prices a boost, but the rally faded, and wheat prices tumbled to a 1-year low in December at $3.8650 a bushel. Robust wheat supplies weighed on prices as the USDA projected global 2017/18 wheat production at a record 758.25 MMT and global 2017/18 wheat ending stocks at a record 266.1 MMT. Increased wheat exports from Russia, the world's biggest wheat exporter, also undercut demand for U.S. wheat as IKAR forecasted that Russia's 2017/18 wheat exports would reach a record 35.3 MMT Wheat prices finished 2017 up +4.7% at $4.27 a bushel.

Supply - World wheat production in the 2017/18 marketing year is forecasted to rise +0.2% to 755.206 million metric tons, a new record high. The world's largest wheat producers in 2017/18 are expected to be the European Union with 20.2% of world production, China with 17.2%, India with 13.0%, Russia with 11.0%), the U.S. with 6.3%, and Australia with 2.8%. China's wheat production in 2017/18 is expected to rise +0.9% yr/yr to 130.000 million metric tons, slightly below the 2015/16 record high of 130.190 million metric tons. India's wheat production is expected to rise by +13.1% yr/yr to 98.380 million metric tons. The world land area harvested with wheat in 2017/18 is expected to fall -1.2% yr/yr to 219.7 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). World wheat yield in 2017/18 is expected to rise +1.4% to 3.44 metric tons per acre, a new record high.

U.S. wheat production in 2016/17 is forecasted to rise by +12.0% yr/yr to 2.310 billion bushels, which will be below the record crop of 2.785 billion bushels seen in 1981-82. Ending stocks for U.S. wheat for 2016/17 are expected to rise by +21.6% to 1.186 billion bushels. The U.S. winter wheat crop in 2017 fell by -24.1% yr/yr to 1.269 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 2017 rose by 23.9% yr/yr to 104.116 million bushels. U.S. production of other spring wheat in 2017 fell -21.8% yr/yr to 416.236 million bushels. The largest U.S. producing states of winter wheat in 2017 were Kansas with 25.5% of U.S. production, Washington with 9.3%, Oklahoma with 7.12%, Colorado with 6.9%, and Montana with 6.0%%. U.S. farmers planted 46.012 million acres of wheat in 2017, which was down 8.2% yr/yr. U.S. wheat yield in 2017/18 is expected to be down by -12.1% to 46.3 bushels per acre, down from the 2016/17 record high of 52.7.

Demand - World wheat utilization in 2017/18 is forecasted to rise +0.3% yr/yr to 742.1 million metric tons. U.S. consumption of wheat in 2017/18 is expected to fall -2.6% yr/yr to 1.136 billion bushels, farther below the 2012/13 record high of 1.387 billion bushels. The wheat consumption breakdown in 2017/18 is expected to be 83.6% for food, 10.6% for feed and residuals, and 5.8% for seed.

Trade - World trade in wheat in 2017/18 is expected to fall by -0.6% yr/yr to 182.1 million metric tons, down from the 2016/17 record high of 183.200. U.S. exports of wheat in 2017/18 are expected to fall by -12.1% yr/yr to 1.000 billion bushels and remained below the record of 1.771 billion bushels of exports seen in 1981-82. U.S. imports of wheat in 2017/18 are expected to rise +27.0% to 150.0 million bushels but remain below the 2013/14 record high of 172.5 million bushels.

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