April 9, 2007

 

US 2006/07 wheat carryout seen down on increased feed usage

 

 

The US Department of Agriculture is expected to trim 2006/07 US wheat carryout in its April supply and demand report because of increased feed usage, analysts said.

 

The report is due out at 8:30 am EDT (1230 GMT) Tuesday (Apr 10).

 

The average expectation for April carryout is 449 million bushels, according to a Dow Jones Newswires survey of 12 analysts. Their estimates ranged from 412 million to 468 million bushels.

 

In its March supply and demand report, the USDA pegged carryout at 472 million bushels. In the quarterly grain stocks report later that month, however, the agency lowered its estimate for US wheat stocks, a move analysts saw as an indication of increased feed usage.

 

The USDA estimated wheat stocks on hand as of March 1 at 856 million bushels, down 12 percent from a year earlier. Stocks were 972 million bushels in March 2006 and 1.315 billion bushels last quarter.

 

Shawn McCambridge, analyst with Prudential Financial in Chicago, estimated carryout would drop 30 million bushels in the April supply and demand report because of increased feed use, "reflecting what the grain stocks had indicated".

 

There also have been anecdotal reports of feedyards feeding wheat to livestock, said Bill Nelson, associate vice president of AG Edwards & Sons in St Louis. Nelson pegged carryout at 447 million bushels.

 

The grain stocks report "implied there was greater residual use of wheat," he said.

 

"We have a fairly good handle on the food numbers and export numbers," Nelson said. "It comes down to residual."

 

Terry Reilly, a Citigroup analyst, predicted carryout would decrease to 412 million bushels, the lowest estimate of the analysts surveyed. Feed use should go up 35 million bushels, reflecting the grain stocks report, and exports should increase by 25 million, he said.

 

"Export sales are on pace to surpass USDA projections," Reilly said.

 

The USDA pegs 2006/07 wheat exports at 875 million bushels. On Thursday, the agency reported 2006/07 export sales for the week ended March 29 were 214,000 tonnes. Total commitments for the marketing year to date stood at 22.5 million tonnes, compared with 25.1 million last marketing year.

 

As for international wheat production, analysts said they didn't expect to see many major changes.

 

The USDA could increase its estimate for India's crop by 2 million tonnes to bring it more in line with government and local estimates, McCambridge said.

 

India on Wednesday raised its wheat output estimate for the year to June 2007 to 73.7 million tonnes from 72.5 million tonnes. India's agriculture secretary said increased acreage and favourable weather prompted the increase.

 

In the March supply/demand report, the USDA raised its estimate for Indian production to 69.35 million tonnes from 68 million.