U.S. ending stocks for wheat declined further from last month due to higher exports, although the market for some classes appear to have stalled, according to Tom Willander, analyst for Country Hedging, speaking at a Minneapolis Grain Exchange press briefing on USDA's March 11 World Agricultural Supply and Demand Estimates.
USDA increased estimated food use for wheat by 5 million bushels to 950 million bushels, and increased exports by 25 million bushel to 1.225 billion bushels. That pushed total projected wheat use higher by 30 million bushels, to 2.37 billion bushels, which lowered ending stocks from 272 million bushels last month to 242 million in March.
“That's a fairly significant change,” Willander said. “We were already talking pipeline supplies of wheat below 300 million bushels. The stocks-to-use ratio dropped to 10.2 percent.”
Most observers were looking for a 10-million bushel decline in wheat ending stocks, to 262 million bushels. Meanwhile world ending stocks were raised slightly, from 109.7 million metric tons to 110.4 million metric tons.
By class, hard red winter wheat exports were increased 15 million bushels and ending stocks lowered to 106 million. Hard red spring wheat domestic use and exports were increased 5 million bushels each, dropping ending stocks to 63 million bushels. Soft red winter wheat stocks remained steady at 32 million. White wheat ending stocks dropped to 27 million bushels. Durum exports were increased 5 million bushels to 40 million bushels, dropping ending stocks to 14 million bushels.
Willander noted that the market for white wheat, which is grown in the Pacific Northwest, “might have been the first market to stall. White wheat traded at $16, then the demand went away. Durum sales have stopped too. End users probably have what they need from here on out.”
Another reason for higher wheat exports is that for the last few months, a weaker dollar “has made U.S. wheat cheaper relative to other countries.” The United States has been the primary exporter of wheat in the world.”
USDA raised U.S. soybean exports by 20 million bushels, to 1.025 billion bushels, dropping estimated ending stocks from 160 million bushels to 140 million bushels, a slightly larger drop than the average trade guess, which puts the stocks-to-use ratio at an historically tight 4.6 percent.
World soybean ending stocks increased from 45.82 million metric tons to 47.44 million metric tons. Brazil's production was increased to 61 million metric tons due to favorable growing conditions.
The continuing decline in soybean ending stocks “primes the pump for higher levels,” said Willander. “What the report shows is that we haven't gone high enough to ration use. The funds will buy into this and I would expect higher prices even into next year with the fight for acres.”
There were no changes in U.S. corn supply and demand figures, however world ending stocks increased by a little over 2 million metric tons to 104.3 million metric tons, due to primarily to a 3-million metric ton increase in Brazilian production.