Fundamentally Speaking

Flagging overseas sales heading into the end of this marketing year prompted USDA to pare U.S. wheat exports for this season ending May 31 by 15 million bushels (mb) for the second month in a row as 2019/20 exports are now pegged at 970 mb.

The May WASDE report as usual includes the USDA's first take on the new crop situation and here our wheat exports for the new marketing year 2020/21 beginning June 1 were projected at 950 mb, down 20 mb from this year.

This graphic shows new crop U.S. wheat export sales on the books as of the first week in May in million bushels on the left hand axis and as percent of the first USDA export projection for the new marketing year in May on the right hand axis.

The change in wheat exports in million bushels from that first WASDE report to final U.S. exports actually tallied is also reported on the left hand axis.

This week's weekly export sales report showed 83.9 mb sold as of the first week of May which is 8.8% of the 950 mb 2020/21 export projection.

This is the third lowest pace since the 2009/10 season with 7.7% sold the first week of May 2018 and 7.0% sold the first week of May 2012.

Does a low percent of new crop wheat sold as of the first WASDE export projection imply final wheat exports will come in below what the USDA first estimated?

The evidence is mixed as in 2003/04 and 2007/08 the amount of new crop wheat sold by the first week in May as a percent of the first WASDE projection was less than 4% yet each year final exports topped the original projection by more than 200 mb.

The largest increase over the past 20 years came in the 2010/11 year when U.S. wheat exports were 1.291 billion bushels, 391 mb more than what USDA had projected in the May 2010 WASDE report.

It does look like our overseas sales efforts may struggle given that both global wheat stocks and those supplies as percent of usage are record high with several major exporters including Argentina, Australia, Canada and Russia projected to have larger supplies.

© (c) Copyright 2020 DTN, LLC. All rights reserved.