US, Global Wheat Follow Same Path

The story for 2021-22 US and global wheat is similar this month – lower production, weaker demand and tighter ending stocks.

The USDA’s latest monthly supply-demand estimates on Tuesday lowered US production to 1.646 billion bu from 1.697 billion a month earlier, reflecting the government’s small grains summary which was released late last month. Total supplies were further reduced amid a 25-million bu cut in expected imports, to 125 million bu, based on the pace of imports to date.

On the demand side, the USDA trimmed its feed and residual use estimate by 25 million from last month to 135 million bu, as significantly reduced supplies of drought-hit Hard Red Spring, durum, and White wheat are expected to curtail demand for the remainder of 2021-22, along with the continued large price premium of wheat over corn.

With exports unchanged at 875 million bu, projected 2021-22 US wheat ending stocks are down 35 million bu from September to 580 million, well below 845 million a year earlier and the lowest US ending stocks since 2007-08. However, this month’s reduction in US wheat ending stocks was generally in line with the average pre-report trade guess of 33.5 million bu.

Globally, total 2021-22 wheat supplies were projected 8.6 million tonnes lower at 1.064.2 billion, primarily on the combination of reduced beginning stocks for Iran and reduced production for Canada, Iran, and the US. Meanwhile, projected 2021-22 world wheat consumption was reduced 2.6 million tonnes to 787.1 million with the majority of the reduction for food, seed, and industrial use in India and Canada and feed and residual use for the US.

World wheat ending stocks were cut 6 million tonnes this month to 277.2 million and are now the lowest since 2016-17 with Iran, the US, and Australia accounting for most of the reduction. That was tighter than most traders and analysts had expected, with the range of pre-report guesses from 278 million to 284.5 million tonnes.

Wheat futures were trading anywhere from 3 to 5 cents higher following the release of today’s report at the noon hour.

The projected 2021-22 US season-average farm price for wheat is raised a dime/bu this month to $6.70 on reported prices to date and price expectations for the remainder of 2021-22.

Source: DePutter Publishing Ltd.

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