Canada Markets

Wheat Ends Higher Despite Negative Global Cues

By Cliff Jamieson , Canadian Grains Analyst
The blue bars represent global wheat supplies, the red bars represent global demand, and the difference between these represents global ending stocks, reported to be yet another record according to USDA. The black line, measured against the right vertical axis, represents ending stocks as a percent of use. (DTN graphic by Scott R Kemper)

Wheat markets didn't have a great deal to celebrate today but closed higher just the same, with Chicago soft red winter wheat ending 12 1/4 cents higher (March delivery), Minneapolis hard red spring wheat ending 13 3/4 cents higher and Kansas City hard red winter wheat ending 18 1/2 cents higher.

Ending stocks for both the United States and for the global market were increased, above expectations. U.S. ending stocks for 2015/16 were reported at 941 million bushels (25.6 million metric tons), above pre-report estimates, 25% above year-ago volumes and the largest carryout since 2009/10.

The USDA also once again reported a record global carryout, pegged at 232.04 mmt for 2015/16. Note that this carryout is indicated on the attached chart by the difference in the blue bars (total global supplies) and the red bars (total global demand). This represents 32.4% of annual global use, which is the highest stocks/use ratio calculated in 14 years, since the 2001/2002 crop year. Indicated on the attached chart by the black line, this ratio bottomed at 20.8% in 2007/08 and has trended higher since.

Not shown on the chart, but of interest, is Canada's contribution to global ending stocks. The current forecast of a 4.8 mmt carryout for 2015/16 all-wheat stocks by Agriculture and Agri-Food Canada would account for just 2.1% of global ending stocks, the smallest share of global stocks in the years chosen since 1980. Since 1980/81, the highest Canadian share of the global carryout amounted to 8.6% in 1981/82, while this number has been in decline over each decade. Between 1980/81 through 1989/90, Canada's ending stocks averaged 6% of global stocks. This fell to an average of 4.9% in 1990/91 to 1999/2000, 4.3% in 2000/01 to 2009/10 and so far this decade, has averaged 3.4%.


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