U.S. and world ending stocks for wheat came in substantially larger than expected this past month at 870 million bushels in the U.S. and 681.43 million metric tons worldwide, according to the Jan. 12, USDA crop report. Analysts had been expecting U.S. ending stocks of wheat of only 831 million bushels.
"There is a continued sizable crop in wheat," says Jerry Gidel of NARMS Future Trading, Livingston, Texas. U.S. wheat producers are expected to only add to the glut this year. USDA’s Winter Wheat Seedings report shows that U.S. producers will seed an estimated 30.1 million acres of hard red winter wheat, compared with 28.48 million acres last year, raising total wheat acres by 287,000 acres.
Despite continued severe drought in Kansas, Oklahoma and Texas, producers there continue to add to their hard red wheat acres.
"The aggressive approach U.S. wheat producers are taking will add to downward pressure in the market when we could use a little less wheat," Gidel says. "But it’s a long way until we get the wheat crop in the bin, especially in the hard red area." He suspects that some of the wheat acreage is being seeded in the hopes of getting livestock forage in a region desperately short.
Gidel isn’t ruling out a rebound in wheat once the initial bearishness of the January reports gets worked into the market. "Hopefully, later this winter there will be some upside," he says, particularly if dryness persists in South America and Europe.