Production Up but New-Crop US Wheat Stocks Down

Projected 2021-22 US all wheat ending stocks are forecast slightly lower this month, as a smaller old-crop carryin and larger feed demand more than offset an expected larger 2021 crop.

US wheat ending stocks for 2021-22 are projected by the USDA at 770 million bu this month, down 4 million from the May estimate and defying analyst expectations for an increase to around 783 million bu. Wheat futures were mixed this afternoon after the report’s release, with Chicago down about a penny and Kansas and Minneapolis up anywhere from 3 to 8 cents.

This month’s lower old-crop ending stocks estimate – down to 852 million bu from 872 million in May and 1.028 billion the previous year – is the result of a 20-million bu increase in the export forecast to 985 million, reflecting larger recent monthly shipments.

On the new-crop demand side, the USDA raised its wheat feed and residual use estimate by 10 million bu from last month to 180 million, “as wheat is expected to be priced competitively with corn in the summer months,” the USDA said.

In terms of the new-crop supply, the USDA raised this year’s average expected yield to 50.7 bu/acre from 50 in May and 49.7 bu last year. With projected harvested area holding steady at 37.4 million acres, the higher yield means production is now estimated at 1.898 billion bu, compared to 1.872 billion last month and 1.826 billion in 2020.

However, the upward revision in expected feed use and the smaller old-crop carryin were more than enough to make up for the larger production estimate, resulting in a slight decline in the 2021-22 ending stocks estimate compared to last month.

The USDA is forecasting 2021-22 world wheat production at a record 794.4 million tonnes this month, up from 788.98 million in May and 775.82 million a year earlier. EU production is up 3.5 million tonnes to 137.5 million on recent beneficial precipitation across northern and central Europe and Russia’s production is raised 1 million tonnes to a record 86 million. Ending stocks are estimated at 296.8 million tonnes, up from 294.96 million in May.

Old-crop wheat ending stocks for June are estimated at 293.48 million tonnes, versus 294.67 million last month.

The projected 2021-22 US season-average farm price for wheat is unchanged at $6.50/bu, compared to $5.05 for 2020-21, which is also unchanged this month.

Source: DePutter Publishing Ltd.

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