This week's USDA report showed an increase in United States ending stocks of all-wheat to 976 million bushels (26.562 million metric tons), up 29.8% from the previous crop year, tied with 2009/10, with both numbers being the highest stocks carried out since 1987/88. This volume includes 28 mb of durum (762,000 mt) which is forecast to be at a five-year high. The all-wheat carryout in the U.S. represents 50% of estimated total use, a most bearish situation and the highest stocks/use ratio reported since 1986/87 according to USDA data.
Not so in Canada. While Agriculture and Agri-Food Canada left their April estimate of wheat ending stocks (excluding durum) unchanged at 3 mmt, this is 58% lower than the five-year average and according to media reports, the lowest level since the 1930's.
The attached chart shows the trend in the primary elevator wheat stocks (excluding durum) as we move into the final one-third of the 2015/16 crop year. The most recent week 35 stocks, or the week ending April 3, was reported at 1.3771 mmt across the prairie provinces and British Columbia which is down 10.7% from the same date last year and 19% below the three-year average.
As seen in the CGC's 2014/15 data, elevator inventory tightened to reach a crop year low of 1.0346 mmt in week 42, a 32.9% drop from the reported week 35 volume. Over the past three years, inventory has fallen 43.5% between the average week 35 inventory and the average week 43 inventory, also the lowest average inventory seen for any week. Both percentages would suggest stocks will tighten to levels well-below 1 mmt by the end of May as deliveries slow through the spring months.
As seen on the attached chart, current year inventory is falling off faster than seen last crop year or when compared to the three-year average, with aggressive exports seen in recent weeks. Should this trend continue through the end of May as seen in past years, tighter stocks are likely to help support cash bids.
Today's average prairie CWRS basis was calculated at $.92/bu over the May future, after reaching a recent low of $.87/bu over. The next inventory report will be released by Statistics Canada on May 6, which will clarify both the volume and position of stocks.
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