Forecasting a Low in Chicago May Wheat – 11/16/2023

In the November 2023 WASDE report USDA estimated the US wheat 2023/2024 crop year carryout stock at 684 million bushels, a 100 million bushel increase from a year ago, but still  smaller than in the 2020/21 and 2021/22 crop years. USDA projected US wheat disappearance this season at 1.9 billion bushels resulting in a carryout stock to usage ratio of  37% compared to 31 percent in the 2022/2023 crop year.

Chicago wheat prices are off 25% since mid harvest owing to the prospective increase in stocks, exceptionally slow US wheat export sales and a significant increase in soft red wheat supplies (deliverable on the Chicago wheat contract). Increased Russian wheat sales have reduced demand for US wheat in recent years and the situation is continuing this season despite the Ukraine war. 

But reduced wheat supplies in Canada, and especially Australia promise better export demand for US wheat during the second half of the season.  

The accompanying scatter study displays the low for Chicago May wheat as a function of the US wheat carryout to crop year usage ratio. The point marked 24 is the intersection of the USDA’s November carryout to usage ratio and the close for Chicago May wheat futures on 11/16/2023 ($5.96 per bushel). The current price is in line with the historical low-stocks/usage function assuming the USDA’s November 2023 US wheat stocks & usage forecast.