U.S. wheat stocks bigger than expected, trade watching weather

CNS Canada — A larger-than-expected wheat ending stocks forecast from the U.S. Department of Agriculture weighed on the country’s wheat futures Thursday, with attention now squarely on weather conditions.

The government agency pegged wheat carryout for the upcoming 2018-19 marketing year at 955 million bushels, about 30 million above average trade guesses. Total wheat production in the country is forecast at 1.821 billion bushels, which would be up from the 1.741 billion grown the previous year.

Tom Lilja of Progressive Ag in Fargo, N.D., said the bigger-than-expected ending stocks were somewhat bearish, as they came despite the ongoing production issues in the hard red winter wheat belt in the southern Plains.

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Dryness in many major wheat-growing areas, including Kansas, western North Dakota, southern Russia and Australia had propped up wheat recently, he added, but “each of those areas is now forecast to get rain (in) the six- to 10-day forecasts.”

Looking at spring wheat, Lilja said the Minneapolis futures would need to close above $6.40 per bushel in the front month before an overall downtrend in place since last summer would be broken (all figures US$). On the other side, support comes in at $6.

“Overall, it will really come down to June rains,” said Lilja. “If we get those June rains, then those $6 support levels are in jeopardy… If we miss out, and if Kansas misses out on some of these rains, and Russia misses out on some of these rains, we could make a run at these $6.40 levels.”

Seeding is running behind normal in the key U.S. spring wheat-growing regions, and Lilja expected the late and wet spring could see preventative-plant acres increase, when all is said and done, at the expense of some intended wheat acres.

USDA, in its report, forecast Canadian wheat production for 2018-19 at 32.5 million tonnes, well above the 30 million grown in 2017-18.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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