| Scope and Method of Study. The purpose of this study was to analyze the supply and demand relationships of the world wheat market and to develop models to assist in forecasting the future price of American wheat. This was accomplished by first dividing the world into major importing and exporting countries and regions. For 12 of the countries chosen for individual analysis, data were collected and estimates were made of each country's major wheat balance sheet components of production, feed use, food use and seed use. For the Soviet Union, the People's Republic of China, and the six regional country groupings of the rest of the world, only aggregate estimates of production and domestic utilization were made.;Finally, a simultaneous model to explain the interaction between the wheat economy of the United States and the wheat economy of the rest of the world was developed. This model was used to determine the impact of both long and short run changes in world wheat supplies in U.S. prices.;Findings and Conclusions. As a rule, the country and regional projections indicated an expansion of demand for wheat imports in developing countries and a decrease in demand in the developed countries, particularly Western Europe. Among the developing countries, Brazil, India and the People's Republic of China were three important exceptions. Each of these countries were projected to be either self sufficient or have wheat available for the export market by 1985. Of the developed countries, only Japan showed a tendency to have increasing imports of wheat through 1985. The three major exporters of wheat excluding the United States--Canada, Australia and Argentina--were projected to have virtually no change in their exportable surplus between 1976 and 1985.;The simultaneous equation model of United States trade with the rest of the world revealed the sensitivity of the world wheat market to small changes in world supplies. A supply shortfall of 6.3 percent of total world production would cause the price of wheat in 1985 to increase 80 percent from ;Next, the equations estimated were used to project the 1985 net import demand for each region and country. The sum of these net import demands, excluding the United States, provided an estimate of the excess demand for American wheat exports in 1985.;The results of this study bring out the importance of fluctuations in Russian grain production as a major destabilizing influence on world wheat prices. The wheat inventories of the United States, on the other hand, are shown to be one of the primary elements of stability in the world wheat market. Future studies in this area should address the problem of how to better predict and respond to changes in Soviet grain supplies. |
