The USDA On Wheat

Amongst a plethora or revised world supply and demand data released yesterday, the USDA had this to say about the wheat market:

"After several years of tight world wheat supplies, stocks are rebuilding on the back of consecutive bumper harvests.

"A key different from other periods of world stock growth has been the dramatic build up in US stocks relative to stocks held by the traditional foreign exporters (Argentina, Australia, Canada and the EU). In just 5 years US stocks have expanded over 50% (8.5 MMT), while traditional foreign export stocks have fallen 30% (14 MMT). With US wheat priced out of many markets and with other exporters unwilling to incur the cost of holding stocks, US stocks have soared."

The report went on to say that the US is at a "competitive disadvantage" to other global exporters, citing freight and other logistical advantages.

Overall they raised world production by 2 MMT to 673.86 MMT. The main adjustments coming from an increase of 2.5 MMT in Canada to 26.5 MMT, and a 1 MMT decrease in Australia to 22.5 MMT.

Argie production was left unchanged at a probably too high 8 MMT, Chinese output was also left unchanged at a questionable 114.5 MMT. EU-27 production was tweaked slightly higher to 138.34 MMT.

Global consumption was also reduced by around 1.6 MMT, mainly in the US, the EU and surprisingly India. That leaves us with a 2.6 MMT increase in world ending stocks to 190.9 MMT.

That puts the world stocks to usage ratio at 29.5%, its highest since 2001/02, and equivalent to more than 3 1/2 months supply. In the US the stocks:usage is highest in at least the last twenty years. Blimey, and only two years ago we were running out of the stuff!