Smaller U.S Stocks; Record Global Stocks

U.S Wheat supplies have been reduced following updated production estimates from states dealing with poor harvest conditions.

Updated monthly supply-demand estimates released by the USDA on Friday pegged American all wheat ending stocks for the current marketing year at 1.014 billion bu, down from 1.043 billion in October and 1.08 billion a year earlier. Going into today’s report, most traders and analysts were expecting a drop to about 1.025 billion.

Chicago wheat futures were initially up at the report’s release but closed down 2 cents on the day.

The supply side of the downward revision in stocks was attributed to updated production estimates from resurveyed states that still had significant acreage left unharvested in early September. Reductions were made mostly to Hard Red Spring, White wheat and Durum coming out of North Dakota and Montana. Harvested acres were dropped by 900,000 acres from last month while yield was marginally increased by 0.1bu/acre.

Food, seed and industrial use was also lowered on the demand side. Seed use was reduced by 7 million bushels based on lower projected acreage for 2020-21 and food use was lowered by 5 million bushels from data published in the NASS Flour Milling Products Report.

The season-average farm price is reduced $0.10/bu to $4.60, based on both reported and expected prices for the remainder of the 2019-20 marketing year.

Globally, the USDA’s outlook is for higher supplies and increased use. Poor production numbers coming out of Argentina and Australia are more than offset by increases from the EU, Russia and the Ukraine. Global wheat ending stocks are estimated at a record-large 288.28 million tonnes, up from 287.8 million in October and 277.9 million in 2018-19.

Source: DePutter Publishing Ltd.

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