WASDE Wheat: Reduced U.S. Stocks on Increased Demand

Wheat harvest. Photo: K-State Research and Extension - Creative Commons

The outlook for 2019/20 U.S. wheat this month is for lower supplies, higher domestic use, larger exports, and reduced stocks. Supplies are reduced as a smaller carry-in is not completely offset by higher production. Forecast 2019/20 U.S. wheat production is raised 18 million bushels to 1,921 million. The all wheat yield is forecast 1.3 bushels per acre higher at 50.0 bushels. Winter wheat production is raised to 1,291 million bushels with increases in all winter wheat classes this month.

The first 2019/20 survey-based production forecasts for other spring wheat and Durum are both lower than last year, mainly on reduced harvested area at 572 and 58 million bushels, respectively. Domestic use is higher this month on increased feed and residual use as wheat is expected to be more competitively priced with feedgrains in 2019/20. Exports are projected at 950 million bushels, up 14 million from the revised 2018/19 exports.

Exportable supplies for several major exporters are significantly reduced on lower 2019/20 production forecasts. As a result, the United States is expected to improve its export competitiveness, especially in the latter stages of the 2019/20 marketing year. Ending stocks for 2019/20 are projected 72 million bushels lower than last month at 1,000 million. The projected season-average farm price is $5.20 per bushel, up $0.10 from last month on reduced stocks.

Foreign 2019/20 wheat supplies are decreased 10.5 million tons primarily on lower production in several major exporting countries. The production declines are led by a 3.8-million-ton reduction for Russia due to extremely high temperatures and below-average precipitation in June during winter wheat grain fill. Russia’s production of 74.2 million tons is still the second largest on record.

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Both the EU and Ukraine are also lowered on hot and dry conditions during June, which are expected to reduce yields although production in both countries remains well above last year. Australia and Canada are lowered as well, mainly on reduced area, based on recent government reports. Global 2019/20 exports are lowered 2.3 million tons on decreased supplies.

Russia’s exports are reduced 2.5 million tons and Australia and Ukraine are lowered 1.0 million and 0.5 million, respectively. These export reductions are partially offset by a 0.5 million ton increase for the EU and a 1.4 million increase for the United States. World consumption is lowered 2.9 million tons, primarily on reduced feed and residual use.

With global supplies declining more than projected use, world ending stocks are reduced 7.9 million tons to 286.5 million but remain record large.

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