Today's USDA report could be viewed as mixed for wheat. The forecast for 2016 seeded acres is 49.6 million acres, down 9.2% or 5 ma from 2015 and well-below the average of pre-report estimates. The USDA's Wheat Yearbook shows this to be the lowest acreage of wheat seeded since 48.7 ma were planted in 1970.
Both winter wheat and spring wheat estimates were below last year as well as below pre-report estimates, with winter wheat acres down 3.2 ma or 8.2%, while spring wheat acres were down 1.9 ma. Durum is the only class to see a year-over-year acreage increase, with 2 ma expected to be seeded which is 64,000 acres or 3.3% higher than 2015, higher than the five-year average and equal to the 10-year average for durum.
Today's Quarterly Stocks report, which show stocks as of the end of the third quarter of the U.S. crop year, failed to paint as positive a picture for the wheat market. March 1 wheat stocks were pegged at 1.372 billion bushels, slightly higher than the average of pre-report estimates and 1.9% higher than seen in 2015. This is the highest March 1 stocks reported since 2010/11, and represents the highest volume ever held at the end of the third quarter as a percentage of total crop year supplies of 46.9%, with only 25% of the crop year to go. This also comes at a time when the U.S. export pace remains weak, with year-to-date sales and shipments down 16% from last year as of last week.
The market reacted favorably to today's events, with old-crop wheat across the three markets ending 9 1/2 to 14 1/4 cents higher, although the enthusiasm may not last. In today's post-report webinar, Senior DTN Analyst Darin Newsom showed projections for 2016/17 with the ending stocks/use ratio above 45% and only marginally improved from the most recent USDA estimate of 49.3% for 2015/16.
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Cliff Jamieson can be reached at email@example.com
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