uploads///Global Wheat Stock to Use Ratio

What Is Positive about the Recent Wheat Stock-to-Use Numbers?

Adam Jones - Author
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Dec. 4 2020, Updated 10:52 a.m. ET

Wheat’s stock-to-use ratio

So far in this series, we explored how the global stock-to-use ratios for corn and soybean impacted their respective prices. In this article, we’ll analyze how wheat’s stock-to-use ratio compares to other years.

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September levels

Wheat’s global stock-to-use ratio continued its downward trajectory in September. On September 12, the USDA reported a decline in the global wheat stock-to-use ratio to 34%, compared to 34.7% in August. However, the year-over-year global wheat stock-to-use ratio rose from 32% in September 2015.

The current wheat global stock-to-use ratio has been significantly higher for each of the six months from April through September 2016, compared with their respective months over the past four years. The above chart illustrates this trend.

September inventory

In September, the global wheat inventory declined 1.5% to 249 million metric tons compared with 252 million metric tons in August 2016. Year-over-year, the global wheat inventory is 10% higher compared with 226 million metric tons in September 2015.

This increased inventory is primarily a result of an increase on the supply side, which is aided by the use of fertilizers. 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 years. According to the USDA, the global wheat inventory was at its lowest point in 2013, totaling 181 million metric tons. Naturally, wheat’s stock-to-use ratio was also the lowest in 2013.

In the final part of this series, we’ll see how wheat prices moved over the past five years.

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