Wheat futures hit a three-week high on Monday (Oct. 25) amid tight supplies and drought conditions in the US and other suppliers. The most active wheat futures on the Chicago Board Of Trade were up 0.1% at $7.56-3/4 a bushel by 0126 GMT, near the session high of $7.59-3/4 a bushel – the highest since Oct. 4.
Weather forecast for the next three months in the regions that recently planted the Hard red winter wheat, like Kansas, the biggest producer of the grain used to make all-purpose flour, point to drought in a moment that the seeds require moist soil to get established.
“The seeded wheat will need moisture to get established before going dormant this winter,” Justin Gilpin, chief executive officer of the Kansas Wheat Commission, said in an interview with Bloomberg on Oct. 23.
In addition, news on dry weather affecting the condition of crops in Russia, Argentina, and Ukraine put more weight on the perception that the supply will take longer to match the demand.
The wheat market grapples with strong export demand as stockpiles are expected to decline in major exporting zones this season.
The US Department of Agriculture (USDA) in its World Agricultural Supply and Demand Estimates report (WASDE) issued Oct. 12 said the global wheat outlook for 2021/22 is for reduced supplies, lower consumption, nearly unchanged trade, and smaller ending stocks.
Supplies are projected falling by 8.6 million tons to 1,064.2 million, primarily on the combination of
reduced beginning stocks for Iran and reduced production for Canada, Iran, and the United States.
Projected 2021/22 world consumption is lowered 2.6 million tons to 787.1 million with the majority of the reduction for food, seed, and industrial use in India and Canada and feed and residual use for the United States.
Projected 2021/22 global trade is fractionally lower at 199.6 million tons on lower exports by Canada that are nearly offset by higher exports by Australia, the EU, and India. Projected 2021/22 world ending stocks are reduced 6.0 million tons to 277.2 million and are the lowest since 2016/17 with Iran, the United States, and Australia accounting for most of the reduction.
Meanwhile, USDA said the outlook for 2021/22 U.S. wheat this month is for reduced supplies, lower domestic use, unchanged exports, and decreased ending stocks. Supplies are reduced primarily on lower production from the NASS Small Grains Summary, issued September 30. Supplies are also
lowered on reduced imports, down 10 million bushels, to 125 million on the import pace.
Annual feed and residual use is lowered 25 million bushels to 135 million despite the NASS Grain Stocks
report indicating greater disappearance in the first quarter compared to last year. Projected 2021/22 ending stocks are reduced 35 million bushels to 580 million, which are the lowest U.S. ending stocks since 2007/08, WASDE noted.