WASDE Wheat: Lower U.S. Demand, Increased Ending Stocks

The outlook for 2019/20 U.S. wheat is for lower exports, reduced domestic use, and increased ending stocks. The NASS Grain Stocks report, issued March 31, implied less feed and residual disappearance for both the second and third quarters than previously estimated.

Total 2019/20 feed and residual use is trimmed 15 million bushels to 135 million. Wheat exports are also cut 15 million bushels to 985 million on a slowing pace and prices that have become uncompetitive in many international import markets.

By class, Hard Red Winter and Soft Red Winter are reduced 10 million and 5 million bushels, respectively. The changes result in a 30 million bushel increase in estimated all wheat ending stocks to 970 million.

Despite the larger ending stocks, the projected season-average farm price is raised $0.05 per bushel to $4.60 on updated NASS data as well as surging nearby cash and futures prices, partially resulting from the global COVID-19 pandemic.

The 2019/20 global outlook is for slightly higher supplies, but reduced trade and utilization. Global production is lowered fractionally with several small mostly offsetting changes.

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Global exports are lowered 0.9 million tons, led by a 1.5-million-ton reduction for Russia, which was directly offset by an equivalent increase for the EU. The Russia change is based primarily on newly imposed government export restrictions. The EU is raised on less competition from Russia as well as expectations of a continued strong pace of exports.

Several smaller export reductions are made; notably a 0.4-million-ton reduction for the United States and a 0.3-million-ton reduction for Pakistan.

Global imports are reduced 0.3 million tons each for Brazil, Japan, and Uzbekistan; a 0.3-million-ton increase for Morocco is partially offsetting. Aggregate world consumption is lowered 5.1 million tons following updates to several countries. The largest reductions are 2.0 million tons for China, 1.9 million for India, and 1.0 million for the EU.

With supplies higher and use down, projected 2019/20 global ending stocks are raised 5.6 million tons to a record high 292.8 million.

Full report.




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