NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

June 8, 2000

NDSU Ag Economists: U.S., World Wheat Economies Should Improve In Coming Decade

Global demand for common (bread) wheat and durum wheat should grow from 85 million metric tons to 96.8 million metric tons, or 13.9 percent, during the 1999-2009 period, say two agricultural economists at North Dakota State University. Subsequently, they predict that prices for common wheat and durum will increase by 23 percent and 36 percent, respectively. However, the computer simulation model these researchers used for their recent study indicates that prices will recover slowly during the next two to three years.

"The issue of granting China Permanent Normal Trade Relations (PNTR) has gotten a lot of media attention in the United States lately, and the Global Wheat Policy Simulation Model we used for our study indicates import demand for common wheat will grow faster for China than for other importing countries," says Won Koo, a professor of agricultural economics at NDSU and director of the Northern Plains Trade Research Center.

Specifically, China's imports of common wheat may increase by nearly 100 percent, growing from 1 million metric tons annually to a projected 1.9 million metric tons annually during the 1999-2009 period. China may import even more wheat than this projection reflects if it reduces its tariff on wheat to gain membership into the World Trade Organization (WTO), say Koo and the study's co-author, Richard Taylor, an NDSU research associate.

Another region of the world where Koo and Taylor predict imports of common wheat to increase is Africa, with North African imports growing by nearly 25 percent and Egyptian imports growing by nearly 35 percent during the next decade.

As for prices, Koo and Taylor estimate that the export price for common U.S. wheat will increase gradually from the 1999-level of about $125 per metric ton ($3.41 per bushel) to about $153 per metric ton ($4.17 per bushel). Durum prices should increase from about $145 per metric ton ($3.96 per bushel) to nearly $199 per metric ton ($5.43 per bushel).

Durum wheat production is likely to expand faster in Canada than in other countries during the 10-year period, Koo says. Meanwhile, domestic consumption of Canadian western amber durum and Canadian western red spring wheat will increase, but Canadian exports of durum should increase faster than exports of common wheat.

U.S. farmers are likely to increase production of all classes of wheat during the 1999-2009 period, Koo and Taylor predict. The largest increase may come in U.S. white wheat, followed by hard red spring wheat. At the same time, U.S. consumption of durum is expected to grow faster than consumption of other classes of wheat due to the increasing popularity of pasta products.

The following additional highlights come from the NDSU study:

• Common wheat production in the European Union (EU) may increase by only 0.4 percent during the 1999-2009 period. EU durum production may increase by nearly 5 percent, but EU exports of both classes of wheat should decline.
• Australia's wheat production is expected to grow by more than 6 percent during the 1999-2009 period. Both domestic consumption and exports are expected to grow. Australia primarily produces a winter wheat that is similar to the hard red winter wheat grown in the United States in terms of quality and characteristics. Australian wheat production, which averaged 20.7 million metric tons per year during the 1995-1999 period, is concentrated in the eastern states of New South Wales and Victoria.
• Argentine wheat production may grow by nearly 9 percent during the 1999-2009 period and reach about 15 million metric tons per year by 2009. Domestic consumption may grow by about 20 percent while exports increase by perhaps only 0.2 million metric tons. Argentina produces a wheat with characteristics of both soft and hard wheat.

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Sources: Won W. Koo (701) 231-7448
Richard D. Taylor (701) 231-7990
Editor: Dean Hulse (701) 231-6136