Reduced global wheat stocks adequate to meet demand

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Projected 2012/13 world wheat ending stocks are down this month 5.3 million tons, almost 3 percent, to 177.2 million. While foreign ending stocks decline almost 4 percent, or 6.2 million tons, to 158.2 million, the foreign stocks-to-use ratio remains at an adequate 25.6 percent (down from 26.8 percent last month and from 27.9 percent last year).

Though U.S. stocks are projected up 0.9 million tons to 19.0 million this month, they are expected to fall to the lowest level in 4 years, with the stocks-to-use ratio of 28.6 percent. However, stocks are sufficient to meet the expected demand for wheat. Although 20 million tons lower than last year, projected 2012/13 world ending stocks are more than 9 million tons higher than in 2008/09, and almost 50 million tons higher than in 2007/08.

Ending stocks for 2012/13 are projected to decline this month in all major wheat-exporting countries, except the U.S. and Argentina (the latter does not usually carry substantial stocks). The main reasons for these declines are lower expected supplies and higher expected exports reflecting expanded demand for feed-quality wheat, as escalating corn prices encourage a shift to wheat feeding.

The largest reduction in ending stocks is for the EU-27, where ending stocks are forecast down 1.6 million tons this month to 10.9 million. EU stocks decline because of lower production, higher projected exports, and higher feed use (though the decline is partly offset by higher import prospects).

In Australia, ending stocks are projected down 1.5 million tons to 6.1 million, reflecting higher 2012/13 projected exports and lower beginning stocks. In all three FSU wheat exporters –- Russia, Kazakhstan, and Ukraine –- ending stocks are down by 1.1, 1.0, and 0.9 million tons, respectively.

In Russia, a decline in wheat production is only partly offset by lower prospects for domestic consumption and export, while in Kazakhstan lower production is only partly offset by higher beginning stocks. Higher projected wheat production in Ukraine is more than offset by increased consumption and larger exports.

In Canada, stocks are down 0.7 million tons this month, as a projected increase in exports more than offsets production growth. For a number of countries, numerous downward ending stocks adjustments reflect production, trade, and consumption changes.

The projected increases in the ending stocks for various countries are partly offsetting. For foreign countries, the largest are made for India, up 1.5 million tons as a production increase exceeds higher food consumption; and for Argentina, up 0.3 million tons to 0.9 million, because the reduction in projected exports exceeds that for production.

Source: Wheat Outlook

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