Monthly Global Wheat’s Stock-to-Use Ratio Drops, but Still Higher YoY

Previously, we saw how the global stock-to-use ratio for corn impacted corn prices. Along similar lines, we’ll analyze how wheat’s stock-to-use ratio compares to other years in this part.

The above chart shows how the global wheat stock-to-use ratio in 2016 moved compared to the past four-year period. On August 12, the USDA (United States Department of Agriculture) reported a decline in the global wheat stock-to-use ratio to 34.7%, compared to 34.9% last month. However, YoY (year-over-year) the global wheat stock-to-use ratio rose from 31% in August 2015.

For each of these four months (April through July) in the past four years, wheat’s stock-to-use ratio has been significantly higher in 2016. You can see this in the above chart.

The drop in monthly wheat’s stock-to-use ratio appears to be primarily driven by a decline in the global wheat inventory. The wheat inventory in August 2016 declined by 0.3% to ~252.3 million metric tons from ~253.7 million metric tons a month ago.

However, year-over-year, wheat’s global inventory was 14% higher, compared to ~221.4 million metric tons in August 2015, according to the USDA (U.S. Department of Agriculture).

Fertilizers played a key role in increasing crop yields over the years. Therefore, companies such as PotashCorp (POT), Mosaic (MOS), CVR Partners (UAN), and CF Industries (CF) play a critical role in the agricultural sector (MOO).

The global wheat inventory has been rising over the past five-year period. The global wheat inventory was the lowest in 2013 at 181 million metric tons, according to the USDA. Naturally, wheat’s stock-to-use ratio was also the lowest in 2013.

In the next part, we’ll see how wheat prices moved recently as well as over the past five years.