Fundamentally Speaking

Based on the highest domestic prices in about ten years and a lagging sales pace to date, last week USDA lowered the 2021/22 U.S. wheat export forecast by 15 million bushels (mb) to 860 mb.

As we have detailed in prior posts, the global wheat stocks and stocks-to-use ratio (if one excludes China) is one of the lowest in years and focusing just on the stocks-to-use ratio in the seven major wheat exporting countries and regions of the world that is the lowest since the 2007/08 season.

With the loss of exportable supplies in Canada and Russia among others, there had been ideas that maybe foreign interest in U.S. wheat would increase at some point in the marketing year.

That does not look likely to happen as both hard red spring and white wheat, where we have exported decent quantities in recent years, were decimated this past year by horrific weather in those parts of the country that grow these classes of wheat.

Hence it is possible that additional cuts in our wheat exports may be seen in subsequent WASDE reports even though the final year projection of 860 mb, other than the 778 mb shipped overseas in the 2015/16 season, would be the lowest in 20 years.

This graphic shows our wheat export sales and shipments in million bushels as of the first week of November on the left-hand axis and as a percent of the USDA's November WASDE export projection on the right-hand axis.

This year's 488 mb sold is the lowest total for the first five months of the marketing year (June-May) since that 2015/16 season and what appears to be the second lowest total since at least 1990.

Meanwhile the amount shipped as of the first week of November at 329 mb is essentially tied with 2015/16 as is also the second lowest figure since 1990 other than the 316 mb shipped in the 2018/19 marketing year.

With the total wheat exports seen as the second lowest since 2002, one would expect low aggregate sales and shipped figures but as a percent of last week's WASDE projection of 860 mb, sales are 56.8% of that total vs. the 20-year average of 61.5% and the amount shipped as of the first week of November is 38.3% vs. the 20-year average of 42.6%.

A look at past years that show similar percentages sold and shipped suggest final year exports could be maybe 25 mb lower and we say that for if the final year projection were larger the reduction would also be greater based on years with similar percentages.

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