The wheat market continues to look for ways to catch a break in a world of ample supplies, although unfortunately, today was not the day, given the release of the January USDA report.
The largest adjustments were made to the U.S. crop as well as the crop in China. In the U.S., 2013/14 ending stocks were reported at 608 million bushels, which was above the December estimate and also above the highest pre-report trade estimate as reported by Dow Jones.
Globally, wheat ending stocks were reported at 185.4 million metric tonnes, also higher than the December estimate as well as above the highest pre-report trade estimate. Besides the adjustment made to the U.S. data, a 1-mmt increase was made to the size of China's crop.
After seeing ending stocks fall from a recent high of 201.688 mmt in 2009/10, as seen on the attached chart, to a low of 176.13 mmt in 2012/13, stocks are forecast to move 9.27 mmt or 5.3% higher in the 2013/14 crop year. The ending stocks as a percentage of use is forecast to rebound from 25.9% in 2012/13 to 26.4% in 2013/14. This level is above the average stocks/use ratio as seen over the past 10 years of 25.8%, with the lowest stocks/use seen in 2007/08 at 20.8% and the highest at 30.9% in 2009/10.
Once again this report signals the comfortable supply of wheat in the world and reduces the change of a significant rally. Despite wheat futures being oversold, wheat prices across all three exchanges pushed to new contract lows as the downtrend in all three markets continues. Chicago SRW settled 15 1/4 cents lower, Kansas City HRW closed 13 cents lower while Minneapolis HRS ended the day down 8 3/4 cents lower.
Cliff Jamieson can be reached at firstname.lastname@example.org
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