Wheat Outlook: Higher Production & Lower Use Raise Stocks & Drop Prices
10/14/2009 08:57AM
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U.S. wheat ending stocks for 2009/10 are projected 121 million bushels higher this month as increased production and lower expected use more than offset a 10-million-bushel reduction in carryin. Production is raised 36 million bushels based on the Small Grains–2009 Summary report. Feed and residual use is lowered 45 million bushels on lowerthan-expected disappearance during the June-August quarter as indicated by the September 1 stocks. Exports are projected 50 million bushels lower as larger supplies in major export competitors reduce prospects for U.S. wheat shipments. If realized, 2009/10 ending stocks would reach a 9-year high at 864 million bushels. The 2009/10 marketing-year average farm price is projected lower at $4.55 to $5.15 per bushel compared with $4.70 to $5.50 per bushel last month.
U.S. export prospects are reduced this month due to increased wheat supplies in major competitors. Higher-than-expected wheat production and supplies in the main wheat exporting countries of Canada, Russia, EU, Australia, and Kazakhstan will increase competition for U.S. exports, despite the weakening U.S. dollar. Increased global production is offset by higher projected use, leaving 2009/10 world ending stocks nearly unchanged.