Fundamentally Speaking

In last week's WASDE report, flagging overseas sales heading into the end of this marketing year prompted the USDA to pare U.S. wheat exports for this season ending May 31 by 20 million bushels (mb) as 2020/21 exports are now pegged at 965 mb for the second year running.

The USDA also noted that for the upcoming season, U.S. wheat faces strong competition from several exporting countries as higher U.S. prices are expected to make exports less competitive.

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 2021/22 beginning June 1 were projected at 900 mb, down 65 mb from this year.

This graphic shows new crop U.S. wheat export sales on the books as of the second 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 what final U.S. exports actually tallied is also reported on the left-hand axis.

This week's weekly export sales report showed 131.4 mb sold as of the second week of May which is 14.6% of the 900 mb 2020/21 export projection.

This is the largest volume of new crop wheat sold just two weeks before the next marketing year starts since the 2013/14 season and the third largest over the past 20 years.

This 14.6% sold is the highest percent also since that 2013/14 season and again the third highest percent of the first USDA wheat export estimate of the past 20 years.

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

The two other years of high early season exports was first in the 2013/14 season where sales at 151.2 mb as of the 2nd week of May were 16.3% of the WASDE projection of 955 mb which proved far too low with final exports that year 1.176 billion bushels (bb), more than 250 mb above that.

In the 2008/09 season, sales were 161.3 mb and 16.5% of the WASDE projection of 975 mb but final sales were only 40 mb above that.

The largest increase over the past 20 years came in the 2010/11 year when U.S. wheat exports were 1.291 bb, 391 mb more than what the USDA had projected in the May 2010 WASDE report yet sales were only 10% of the WASDE target.

In 2007/08, final wheat exports were 288 mb higher than first projected even though our sales as of second week of May were only 5.0%.

To be truthful, exports this year may not be as influential on the wheat balance sheet and/or prices as opposed to feed demand where use in this sector is seen the highest in eight years due to a limited supplies of very expensive corn.

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