US wheat futures jump 7.5% as USDA slashes output, stock figures

30 Sep 2020 | Tom Houghton

US HRW futures burst 35 cents higher Wednesday as the USDA said total wheat output would drop 5% year-on-year while reserves of the grain in the country are down 8% from a year ago.

The 7.5% rally came as the USDA’s quarterly Small Grains Summary report showed 2020/21 wheat production figures for HRW and SRW wheat slipping in at the lower end of analyst estimates.

The US’ total wheat crop is expected to reach 1.825 billion bushels, down from its 1.838 billion bushel estimate earlier this month in the September Wasde report and 1.932 billion in the 2019/20 marketing year.

The total wheat area was down to 44.3 million acres from 44.5 million last year, with the harvested area falling to 36.7 million acres from 37.4 million acres.

Average yields slipped to 49.7 bushels/acre from 51.7 bu/ac last year.

Total winter wheat output was called at 1.171 billion bushels, down from 1.317 billion bushels last year and its previous estimate of 1.198 billion bushels.

That included HRW production at 659 million bushels, down from 845 million bushels last year and a previous 695 million bushels estimate.

And SRW was forecast at 266 million bushels, up from 240 million bushels last year but below a previous 277-million-bushel estimate.

Separately, the USDA’s quarterly stocks report showed wheat stocks down 8% from last year at 2.16 billion bushels.

Its on-farm estimates are 4% lower than at this stage last year at 705 million bushels and off-farm stocks down 10% at 1.45 billion bushels after disappearance through the June-August window was higher than last year.

US wheat futures, which were already trading over 2% higher prior to the report’s release, continued to rally in the aftermath of its publication.

HRW December futures were up 7.5% at $5.1175/bu by 1230 Eastern time, its highest level since September 21.

The December SRW contract was up 5.3% day-on-day at $5.7875/bu.