Prospective revisions in the US Wheat balance – 10/02/2021

In the Small Grains report The USDA reduced the 2021 US wheat production estimate to 1646 million bushels from the August estimate of 1697 million bushels. USDA also published the quarterly wheat stocks (September  1) showing a total of 1780 million bushels, the least since the 2007/2008 crop year.

We calculate the June/August feed residual at 265 million bushels. Last month the USDA  forecast crop year feed residual at 160 million bushels. First quarter feed residual is always larger than the crop year total as some wheat is missed in the September stocks census as some wheat is still in the field or is in transit having not yet found a home. 

The crop year wheat feed residual would be expected to be less than 100 million bushels considering the small size of the crop and that wheat is trading $2 plus premium to corn. But since the first quarter calculation does support the 160 million bushel September estimate we have left that estimate in the balance table.

The prospective balance tale easily supports $8.00 plus soft red wheat basis in the Midwest.