Fundamentally Speaking

This past week's USDA wheat data was bullish but not unexpected as the 9/30 reports already indicated that wheat production would fall to a 20-year low at 1.646 billion bushels (bb) vs 1.697 bb reported earlier and ending stocks now at 580 million bushels (mb) which is what trade expected vs 615 mb last month.

This is the lowest wheat carryout since 306 mb back in the 2007/08 season though the current stocks-to-use ratio at 28.5% is the smallest since a 24.2% ratio was posted in the 2013/14 marketing year.

A look at the stocks-to-use ratio by wheat class reflects some of the lowest figures in years for the hard red spring and white wheat crops where yields and production took quite a hit from very poor weather that prevailed in those sections of the country that produce these varieties of wheat.

Hard red spring (HRS) stocks-to-use ratio seen for the 2021/22 season at 23.6% is the lowest since the 12.4% ratio in 2007/08.

This class also has the largest negative deviation from the 20-year average stocks-to-use ratio of 34.1% at down 10.5%.

This is why the premium Minneapolis wheat has to Chicago and Kansas City is the third highest in history.

This year's white wheat stocks-to-use ratio at 17.4% is the lowest since the 2013/14 season and the second lowest since 2007/08 and is off 8.8% from the 20-year average.

The largest class of wheat produced, which is hard red winter (HRW), has a stocks-to-use ratio this year of 35.7% which is also the lowest since the 2013/14 season.

Though it has the smallest difference vs the 20-year average at down 5.2% is has the largest drawdown vs the prior year at down 21.7% from the 2020/21 ratio of 57.4%.

The soft red winter (SRW) and durum varieties will also have their lowest stocks-to-use ratios since the 2013/14 season.

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