Less wheat is being used for food, so let’s hope that livestock like to eat wheat. In USDA’s December wheat supply demand report, wheat used for food was lowered 15 million bushels. Ten of the 15 million bushels consisted of hard red winter (HRW) wheat. Five of the 15 million consisted of soft red winter (SRW) wheat.
The USDA report indicates that wheat flour consumption is not down. Flour yield per bushel of wheat is higher. I do not know that it takes that much less HRW wheat to produce the same amount of flour.
U.S. wheat ending stocks for the 2009-2010 marketing year are projected to be 900 million bushels. This figure may be compared to 657 million bushels in 2008-2009 and 306 million bushels in 2007-2008. The five-year average ending stocks is 506 million bushels. Some analysts project ending stocks at 1 billion bushels.
The five-year national wheat price is $4.86. At this writing, Oklahoma and Texas wheat prices are about $4.40. HRW wheat prices are about 20 cents per bushel less than the national average wheat prices.
In June the national average price for all wheat was $5.74. HRW wheat prices averaged $5.89 during June. HRW wheat prices have declined from about 15 cents above the national average price to about 20 cents below.
For the month of June, Oklahoma wheat prices averaged about $5.75, and current prices are about $4.40. The $1.35 price decline is the result of increased wheat stocks and weak demand.
HRW wheat ending stocks are projected to increase from 267 million bushels for 2008-2009 to 384 million bushels in 2009-2010, which is a projected 44 percent increase in HRW wheat stocks.
HRW wheat exports are projected to decline from 445 million bushels in 2008-2009 to 325 million bushels in 2009-2010. This figure is a 27 percent decline in export demand, and some market analysts predict that exports may be even less.
Total U.S. wheat ending stocks are projected to be 900 million bushels compared to 657 million bushels last year. World wheat ending stocks are projected to be 7 billion bushels compared to 6 billion bushels in 2008-2009.
Most U.S. winter wheat is in good to excellent condition. HRW wheat acres may be slightly less than last year. SRW wheat acres are expected to be substantially less than last year.
Planting conditions were favorable in most areas and the seeded wheat is in relatively good condition. We have few reasons to expect below average U.S. wheat production in 2010.
Average or above-average 2010 wheat production is expected to result in wheat prices below $4.50. Yields well above average could result in wheat prices being below $4. Corn could be the saving factor for wheat. Market talk is that corn needs to buy 2 million more acres from soybeans and other crops. Corn demand for ethanol is projected to be 4.2 billion in the 2009-2010 marketing-year and 4.6 billion bushels in 2010-2011.
Also, some market rumors are that China may purchase corn distilled grain. Increased demand for corn and corn products could result in the corn/wheat price ratio becoming favorable for feeding wheat.
The market is currently offering about $4.70 for wheat delivered in June 2010. This price is based on the Kansas City Board of Trade July wheat contract price of $5.55 and a minus 85 cent basis.
At this writing, the Chicago Board of Trade July 2010 corn contract price is $4.30. Using a minus 20 cent basis to ship corn into Oklahoma or Texas, the June 2010 corn price may be around $4.10. Corn prices need to increase about 60 cents or wheat prices fall 60 cents for wheat to be used in a feed ration.