Is the Bleeding Over for Wheat?

January 23, 2010 06:00 PM

by Kim Anderson, Oklahoma State University Professor and Extension Economist

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Since USDA's Jan. 12 wheat seedings, and supply and demand reports, Kansas City Board of Trade March wheat contract prices have declined 64 cents. The KCBT March wheat contract closed today at $5.02. This appears to be near the $5 support price. The KCBT July wheat contract price appears to have support at $5.20.

The 2009/10 US wheat ending stocks are projected to be 976 million bushels (mb). Average annual U.S. wheat ending stocks are about 578 mb and average annual production is 2.14 billion bushels (bb). At the beginning of harvest, about 46% of an average U.S. wheat crop will already be in storage. World wheat ending stocks are projected to be 7.2 bb compared to a five-year average of 5.6 bb. World wheat production averages 23.4 bb. USDA projects world wheat ending stocks to be 31 percent of an average world wheat crop.
The USDA estimated winter wheat planted acres to be 37.1 million acres (ma) compared to a five-year average of 43.3 ma. Using the five-year average winter wheat yield of 44 bushels and 81 percent of the planted acres harvested, 2010 winter wheat production would be 1.32 bb. The five-year average is 1.54 bb. Winter wheat production for 2009 was 1.52 billion bushels. An estimate of spring wheat production is 600 mb and durum is 100 mb. Average yields are expected to result in 2010 U.S. wheat production being 2.0 bb. Add 100 million bushels imports and total 2010/11 wheat supply would be 2.1 bb.
United States wheat use for the 2009/10 wheat-marketing year is projected to be 2.0 billion bushels. The five-year average is 2.16 billion bushels. Using 2.1 bb as wheat use and 2.1 bb as wheat supply, 2010/11 marketing-year wheat ending stocks are not expected to change. Thus, wheat prices are expected to remain relatively low.

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