Canada Markets

USDA's Global Estimates Behind Wheat's Bullish Report

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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The USDA revised global stocks of all-wheat lower this month to 277.175 mmt for 2021-22, down for a second year and the lowest stocks in five years (green bars). The blue bars represent the share of stocks held by the world's eight largest exporters; at 50.017 mmt, this would be the smallest stocks in 14 years. (DTN graphic by Cliff Jamieson)

The USDA's October World Agricultural Supply and Demand Estimates (WASDE) report estimates global wheat ending stocks for 2021-22 at 277.175 million metric tons, down for a second year and to the lowest stocks reported since 2016-17, or five years. This was below the range of pre-report estimates reported by Dow Jones, shown from 278 mmt to 284.50 mmt, while also below the average of these estimates at 280.9 mmt.

The blue bars on the attached chart indicates the trend in the stocks held by the eight major wheat exporters, or Argentina, Australia, Canada, European Union, Kazakhstan, Russia, Ukraine and United States. This volume is forecast to fall to 50.107 mmt, down for a fourth year and to the lowest volume reported for this group since 2007-08 or 14 years.

Two things jump out from today's report when it comes to this data. First, of the eight major exporters, stocks were revised lower in six of the eight exporters this month. Of these exporters, U.S. stocks were revised 940,000 metric tons lower this month, the largest revision, while Australia was a closed second with an 800,000 mt downward revision. At the same time, Ukraine's stocks were left unchanged while Canada's stocks were revised 80,000 mt higher from last month to 4.49 mmt, the only country to see an upward revision this month. According to USDA data, Canada's exports are forecast to fall by 11.4 mmt or 43% in 2021-22, while stocks will fall only 21% or just over 1 mmt, which bears watching over time.

Secondly, the stocks held by the eight major exporters are forecast to fall by 17% or 10.215 mmt from the 2020-21 crop year, the largest year-over-year drop seen in nine years. On a percentage basis, these stocks account for 18% of global stocks based on current estimates for 2021-22, the lowest percentage for any year shown on the attached chart, while down from a percentage of 48% reached in 2005-06.

While today's USDA report was viewed as bullish when it came to global wheat data, future revisions in the same direction may lead to an interesting situation before this crop year ends.

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