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Issue 31 |
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Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc. and the Minnesota Barley Growers Association. |
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High stocks/use ratio keeping lid on wheat price The stocks-to-use ratio is a good predictor for determining wheat and corn prices. The stocks-to-use ratio—grain supply measured against grain demand—is simply: Ending stocks divided by Total Use. For example, USDA estimated in its July supply/demand report that ending stocks for wheat will be 947 million bushels, and total use 2,346 million bushels, meaning a stocks-to-use ratio of about 40%. World wheat S/U was pegged at 19.2% in July, which is a bit tighter than the 23.4% S/U estimate of a year ago. But the large estimated U.S. wheat S/U of 40%, combined with the 2000/01 projection of flat U.S. wheat exports and large wheat crops in Canada and the European Union, is looming larger over the wheat price than the relatively lower world wheat S/U. One wild card that could lower the S/U yet this marketing year is dryness in China, says NDSU extension crops economist George Flaskerud. It could prompt the Chinese to buy wheat from the U.S. On the other hand, China could also tap into its corn stocks. This chart by Flaskerud illustrates the historical effect of the S/U ratio in the United States. Generally, the lower the S/U estimate, the higher the price.
USDA's Stocks/Use Projections Suggest $2.65 Dec in November
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