WASDE: Wheat ending stocks surpass highest industry expectations

Expectations for 2017/18 wheat ending stocks were increased above the highest industry estimates in the USDA’s January WASDE report released Friday, putting bearish pressure on a market already struggling with global oversupply.

Projected ending stocks were increased 29 million bushels to 989 million bushels, reflecting higher supply and lower consumption.

The figure was notably higher than the average trade estimate of 959 million bushels, and came in 3 million bushels higher than the highest industry estimate.

Seed use was lowered by 4 million bushels to 62 million bushels due to lower winter wheat planted area.

Total exports were unchanged at 975 million bushels, with a 10 million bushel decrease in Hard Red Spring export sales offset by 5 million bushel increases for both Soft Red Winter and White wheats.

Wheat futures tumbled in the immediate aftermath of the WASDE’s release, with the gloomy global picture pairing with a bearish Winter Wheat and Canola Seedings report released at the same time.

On the global stage, total global supply was lowered 0.8 million mt on lower beginning stocks, which more than offset increased production.

“Global exports are lowered 1.3 million tons led by reductions for Australia and the EU that reflect decreased supplies and increase market competition,” the USDA said.

Russian wheat export forecasts were increased 1.5 million mt to 35 million mt, bringing it closer in line with wider industry expectations on the back of massive sales this marketing year.

EU exports were cut by 1.5 million mt to 27 million mt, reflecting the slow pace of sales as record-breaking Russian production has eaten into the EU’s traditional markets.

Australia was also trimmed back by 1.5 million mt to 16 million mt, reflecting recent readjustment to its carryover stocks from the 2016/17 marketing year.

Beginning stocks were cut from 7.1 million mt to 4.37 million mt, bringing the USDA assessment into line with adjustments made by the Australia Bureau of Statistics earlier in the week.