A fact that may be undervalued in a market fixed on supply news is that trade volume in wheat, the world’s most traded grain, is on a steady increase. In its latest round of estimates, USDA now expects 2016/17 world wheat trade will reach a record large 175 million metric tons (MMT) (6.42 billion bushels). Along with rising global demand and a potential shortfall of milling quality supplies, wheat buyers would do well to watch for any price effects and act quickly to cover their needs at the best value. In its October World Agricultural Supply and Demand Estimates (WASDE) report, USDA noted that, if realized, world wheat trade would be 9 percent greater than the 5-year average of 160 MMT (5.86 billion bushels). The trade volume increase represents availability of large supplies and the continued growth of global wheat consumption. USDA expects total consumption will increase for the fourth consecutive year and reach a record 731 MMT (26.8 billion bushels), compared to the 5-year average of 694 MMT (25.5 billion bushels). That includes estimated feed wheat demand growing 6 percent to a record high 145 MMT (5.32 billion bushels). Rain increased winter wheat yields but also hurt milling quality in many production areas. In turn, lower prices are making feed wheat more competitive with corn. USDA expects 2016/17 world wheat production to reach 744 MMT (27.3 billion bushels), up 1 percent from 735 MMT (27.0 billion bushels) in 2015/16 and 5 percent above the 5-year average. If realized, it would be the fourth consecutive year of record world production. USDA projects production will increase in six of the eight major exporting countries. Record-large world carry-in stocks add to the global surplus, resulting in the largest estimated world wheat supply on record, of which China is now expected to hold 46 percent by the end of the marketing year. USDA estimates 2016/17 world carry-in stocks at 240 MMT (8.80 billion bushels), up 11 percent from last year and greater than the 5-year average of 196 MMT (7.22 billion bushels). Total world supply will reach a projected 984 MMT (36.1 billion bushels), up 24.1 MMT from the record set in 2015/16 and 9 percent above the 5-year average of 903 MMT (33.2 billion bushels). The ample world supply will help meet strong global wheat demand. According to USDA’s trade forecast, the U.S. will end 2016/17 with a 15 percent market share in the world wheat trade. This is up from the 2015/16 figure of 12 percent, the lowest on record, but still below the 5-year average of 17 percent. USDA now expects U.S. wheat exports to reach 26.5 MMT, up 26 percent year over year. USDA predicts the majority of top U.S. wheat customers will import about the same amount or slightly more wheat in 2016/17 than in the prior year. Japan, the top U.S. customer over a 5-year period, will import an estimated 5.80 MMT (213 million bushels), up 1 percent from 2015/16 but 5 percent less than the 5-year average. USDA expects imports by Mexico will decline 4 percent year over year to 4.60 MMT (169 million bushels), but imports to the Philippines will increase by 3 percent to 5.00 MMT (184 million bushels). Imports by Nigeria are expected to remain unchanged year over year, but are up 3 percent from the 5-year average. Korean imports will increase 13 percent to 5.00 MMT (184 million bushels). USDA expects Brazil to import 11 percent less wheat in 2016/17, but the origin of the Brazilian imports will also change. Argentina, Brazil’s top supplier will export 12 percent less wheat in 2016/17, so Brazil will need to shift to other origins. Year to date U.S. wheat exports to Brazil total 995,000 metric tons (MT), nearly double total U.S. sales to Brazil in 2015/16. USDA also expects India and Morocco to import more wheat after drought hurt their domestic production. India is expected to import the largest wheat volume in a decade this year after back to back years of drought. USDA estimates Indian wheat imports will grow to 3 MMT in 2016/17, compared to the 5-year average of 116,000 MT. India is the second largest producer and consumer of wheat in the world behind China, producing an average 91.5 MMT of wheat each year. India’s beginning stocks of 14.5 MMT are 23 percent below the 5-year average of 18.9 MMT. However, Indian wheat production rebounded 4 percent year over year to 90.0 MMT, which is still 1.5 MMT below the 5-year average. According to USDA, Moroccan wheat production will fall 66 percent year over year to 2.73 MMT, compared to the 5-year average of 6 MMT. Consequently, Moroccan’s imports are expected to reach 5.00 MMT in 2016/17, an increase of 13 percent year over year and 25 percent greater than the 5-year average. While global wheat supplies are large, the quantity of milling quality wheat is tightening as discussed in the Aug. 25 Wheat Letter. Continued growth in wheat trade means increased competition for that smaller, high-quality wheat supply, a market dynamic that could push prices higher. Your local USW representative is ready to help ensure you are getting the wheat you need at the greatest possible value.