US: USDA Supply/Demand - Wheat

Highlights

WHEAT:
The June USDA Supply/Demand report estimates 2026/27 wheat ending stocks at 744 million bushels. Below the average estimate of 764 million tonnes, but within the range of 734-804 million. This is slightly higher than 762 in May. All Wheat production for 2026/27 is projected at 1.543 billion bushels, down from 1.561 billion in May. The average estimate was 1.555 billion bushels, with a range of 1.525-1.603 billion. All Winter Wheat production came in at 1.03 billion bushels versus the average estimate of 1.041 billion bushels (1.015-1.071 range) and 1.048 billion in May. Hard Red Winter production is 497 million bushels versus the average estimate of 508 million (485-525 million range) and down from 515 million in May. Soft Red Winter production is 300 million bushels versus the average estimate of 302 million (291-315 million range) and 301 million in May. White Winter production is 233 million bushels, in line with the average estimate of 231 million (222-235 million range) and 232 million in May. World wheat ending stocks for 2026/27 are 275.4 million tonnes, in line with the average estimate of 274.8 million tonnes (272.3-276.8 million range). The May estimate was 275 million tonnes. World wheat ending stocks for 2025/26 came in at 280 million metric tonnes, at the top of the pre-report range and up from the 279.2 million in May.

PRICE OUTLOOK:
US wheat production was cut significantly in the May supply and demand report due to drought concerns and crop abandonment, and today, the USDA made further modest cuts to the all wheat, winter wheat, HRW, and SRW production outlooks. Lower production pulled new crop ending stocks just above the lowest of the analyst range of estimates. The initial market reaction pushed KC wheat up to double-digit gains on the day, but the market has now dropped back, and Chicago wheat is lower on the day. The report was not bullish enough to shift the prevailing bearish sentiment and technical weakness. The sharp downswing since mid-May may not be over.

Definition

The World Agricultural Supply and Demand Estimates (WASDE) report is prepared monthly and includes forecasts for U.S. and world wheat, rice, and coarse grains (corn, barley, sorghum, and oats), oilseeds (soybeans, rapeseed, palm), and cotton. U.S. coverage is extended to sugar, meat, poultry, eggs, and milk. USDA World Agricultural Outlook Board analysts chair the Interagency Commodity Estimates Committees (ICECs) comprising representatives from several key USDA agencies. The nine ICECs- one for each commodity- compile and interpret information from USDA and other domestic and foreign official sources to produce the report.

The ICECs rely on Foreign Agricultural Service (FAS) attaché reports and analysis of foreign commodity developments, Economic Research Service (ERS) domestic and foreign regional assessments, and National Agricultural Statistics Service (NASS) U.S. crop and livestock estimates. For domestic policy and market information, the Board relies on the Farm Services Agency and the Agricultural Marketing Service. WAOB and FAS use weather analysis and satellite imagery to monitor crop conditions. Additional private and public information sources are considered.

This broad information base is reviewed and analyzed by ICEC members who bring diverse expertise and perspectives to the report. To arrive at consensus forecasts, alternative assessments of domestic and foreign supply and use are vetted at the ICEC meetings. Throughout the growing season and afterwards, estimates are compared with new information on production and utilization, and historical revisions are made as necessary.

The WASDE reports a full balance sheet for each commodity. Separate estimates are made for components of supply (beginning stocks, imports, and production) and demand (domestic use, exports, and ending stocks). Domestic use is subdivided into major categories, for example corn for feed and corn for ethanol. Domestic use may be based on data from other Federal agencies: for example, U.S. wheat ground for flour, soybeans crushed for oil, and cotton mill use come from the Bureau of the Census. The demand side of the balance sheet may include a category for “residual” or “unaccounted” disappearance to balance known uses against total supplies.

The WASDE also reports forecast season-average farm prices for most items. Prices tie together both sides of the balance sheet. Market prices aid in rationing available supplies among competing uses. Prices also indicate potential supply responses, for example potential planting decisions for the upcoming year. The process of forecasting price and balance sheet items is complex and involves the interaction of expert judgment, commodity models, and in-depth research by USDA analysts on key domestic and international issues.

Description

These reports present US and world supply/demand outlooks for a wide variety of agricultural products, including grains, oilseeds, cotton, pork and beef. They represent an accumulation of data on production and usage and offer projections for current/upcoming the marketing year.

The reports are released monthly, but the estimates are not necessarily revised every month. For the US data, production numbers tend to be revised during the growing season and into harvest, while demand numbers tend to be adjusted once the harvest is in and the products are marketed. The world data is adjusted every month because the data comes from many countries around the world.

Analysts focus primarily on each year’s ending stocks, as that provides a picture of whether supplies will be “tight” or “ample” at the end of the year. However, as production and consumption have been on a long term growth path for several decades, stock levels that may have been considered “ample” in years past may not be so anymore. With that in mind, analysts often prefer to use the stocks/usage ratio as a way of taking into account long term growth trends.

The world data covers individual countries as well as the entire world. Special attention is paid to the key producers, exporters and consumers. Brazil and the US together represent about 70% of global production and 85% of exports. The US, Argentina and Brazil represent 70% of global corn exports. Wheat is grown all around the world, with the US, Argentina, Australia, Canada, EU, Russia and Ukraine all major producers. India is the world’s largest producer of cotton, but the US is by far the largest exporter.

Traders will also want to keep in mind that marketing years vary from crop to crop, coinciding with the harvest. For example, wheat’s marketing year runs from June through May, cotton’s from August through July, corn and soybeans from September through August, and soybean meal and soybean oil from October through September (one month after soybeans).

The WASDE report also covers US meat production and consumption, including beef, pork and poultry. Annual production, consumption, export and stocks data is presented in the report, similar to the field crops. But this report also presents quarterly production data, which is of interest to cattle and hog traders, who track quarterly changes and compare them to previous years to gain insight as to whether the supply setup in upcoming quarters.

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