U.S. wheat stocks are not tight
Wheat finished the day mixed to lower, today. The USDA Supply and Demand numbers were bearish compared to the trade’s expectation. The average trade guess for the report was 704 million bushels for U.S. carry-out and 176.54 million tonnes for world carry-out. The USDA released 716 million bushels for the U.S., which was an increase from last month’s 691 million bushels. World carry-out was 178.23 million tonnes compared to last month’s 176.73 million tonnes. The majority of the increase came with a revision to India’s ending stocks. India’s stocks were increased by 1.85 million tonnes, which is where the USDA made its largest revision to wheat. India will lose money on export of any more government-sourced wheat. The cost to move the grain is too expensive for the international market, so we may see a slowdown in Indian wheat. India usually harvests much of its wheat starting in late March and lasting until early June. This could help push local prices down and could open the door to more Indian exports. The average farm price the USDA sees for wheat this year is 7.65 to 7.95. The change in the USDA numbers was a decrease of 25 million bushels in exports. Compared to other years, we are not tight for U.S. wheat stocks. The forecast for the next two weeks for many of the wheat-growing areas does appear to look drier and warmer. The next major event the market needs to look at is the quarterly grain stocks report at the end of the month. These markets continue to trend lower and, for the time being, continue to trade the trend and look for lower trade.
Sell May Chicago 708. Changed from 728 to 708. Objective 658.
Today’s lower trade in cattle futures was not a cattle issue. USDA’s monthly supply/demand report added yet again to the 2013 meat supply picture. They added 618 million pounds to the chicken production estimate and 148 million pounds to turkey. In their comments they suggested production was increased due to recently stronger chicken prices and expectations of lower feed costs later this year. As it stands right now, the latest measure of short-term chicken production, egg sets, was 1.3% higher than last year. The breeding herd, layers for broiler hatching, is running 1% higher than last year. There were minimal changes for beef and pork production (+15 and -50 million pounds). As it stands now, chicken production is forecast 2.4% larger than last year, turkey 3.5% larger, pork +0.5%, and beef -3.1%. Total meat production switched from a 0.4% lower forecast to now a 0.4%-higher-than-last-year estimate.