March 12, 2012

The USDA said that global wheat inventories will be 1.7 % lower than forecast a month ago and lesser than expected on increasing livestock feed grain use.

World stockpiles will total a record 209.58 million tonnes as of May 31, down from 213.10 million estimated last month, the USDA said Friday (Mar 9) in a report. In a Bloomberg survey, 21 analysts expected supplies of 212.83 million tonnes, on average.

Global use of wheat in livestock feed will total 131.06 million tonnes, up from 130.66 million estimated last month, the USDA said. Corn futures for May delivery are trading near parity with wheat on the Chicago Board of Trade, compared with an average discount of about US$0.91 in the past year. Global wheat exports may reach 142.93 million tonnes, up from 140.25 million forecast last month.

"Wheat feeding is still an issue," Dale Durchholz, a senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview before the report. Supplies are "going to be a little tighter, and everyone is kind of encouraged about exports."

Wheat prices have tumbled 19% in the past year on the Chicago Board of Trade as global production rebounded from drought the previous year in Russia, Eastern Europe and Australia. Yesterday, futures for May delivery fell 0.7% to settle at US$6.3475 a bushel.

US inventories at the end of May will total 825 million bushels (22.45 million tonnes), 2.4% lower than last month's estimate of 845 million, the USDA said. Analysts expected 837.2 million bushels, on average.