USDA forecasts a nine-year high in wheat ending stocks

Farm and Ranch October 12, 2009 Joe Victor of Allendale Incorporated first looks for surprises in USDA production and supply and demand reports and he found one in this month’s numbers. He says a projected wheat ending stocks number of 864 million bushels for the current marketing year, up 121 million from last month, was a major surprise.

Victor: “And with that 864 million bushel I have to back to the 2000/2001 marketing year to find comparable stocks at 868 million.”

And if that number seems bad, Victor points to the stocks-to-use ratio.

Victor: “Last month we were at 33.5% end-stocks-to-use. Presently, according to this report, we are at 40.6% I have to go back to 1987 to find higher stocks-to-use at 47 percent.”

An increase in production based on the recent Small Grain Summary and a reduction in the export outlook of fifty million bushels contributed to the boost in ending stocks. Victor says the result was a much lower USDA average wheat price forecast.

Victor: “They dropped it 25 cents to a level now of $4.85.”

Victor says tempering the U.S. situation somewhat is a world wheat stocks-to-use ratio of 24%.

Also of note, U.S. ending stocks increased for every wheat class except white wheat, which now has a stocks-to-use ratio of only 15%.

I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on the Northwest Ag Information Network.