December 10, 2019 / 5:59 PM / 2 months ago

UPDATE 1-USDA sees U.S. wheat supplies falling to five-year low

(Recasts, adds details on ending stocks, market reaction, analyst quote, byline)

By Mark Weinraub

CHICAGO, Dec 10 (Reuters) - U.S. supplies of wheat will fall to a five-year low, with exports on the rise due to smaller harvests from key global competitors, the government said on Tuesday.

The U.S. Agriculture Department, in its monthly World Agriculture Supply and Demand Estimate report, kept its outlook for corn and soybean ending stocks steady. It also left its closely watched forecasts for corn and soybean production in Brazil and Argentina unchanged.

The government cut its domestic wheat ending stocks outlook for the 2019/20 crop year to 974 million bushels from 1.014 billion bushels. If realized, that would be the smallest U.S. stockpile since 752 million bushels in 2014/15.

Analysts had been expecting wheat ending stocks of 1.010 billion bushels, according to the average of estimates in a Reuters poll.

But supplies will still be big enough to meet demand, analysts said.

“The stocks are so large that it’s akin to just taking a cup of water out of the lake,” said Craig Turner, commodities broker at Daniels Trading. “It is not a game changer by any means.”

The government bumped up its outlook for U.S. wheat exports by 25 million bushels to 975 million bushels after lowering its wheat harvest forecasts for Australia, Argentina and Canada.

Chicago Board of Trade wheat futures turned higher after the report was released. Soybean futures pared their gains and corn futures remained slightly firm.

Argentine corn production in the 2019/20 crop year will total 50 million tonnes and Brazil corn production will total 101 million tonnes. Soybean production was seen at 123 million tonnes in Brazil and 53 million tonnes in Argentina.

Th USDA also said that U.S. ending stocks of corn will be 1.91 billion bushels, unchanged from its November forecast. Its domestic soybean ending stocks view also was flat at 475 million bushels. (Reporting by Mark Weinraub; editing by Jonathan Oatis)

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