Last week we produced a refresher on the stocks to use ratio, ‘It’s not just size; it’s also how you use it.’ It is always important to look at the headline numbers, but it is also worthwhile to delve into the data to get a better understanding of the marketing situation.
The global picture for wheat is important, but it doesn’t necessarily tell you too much. Not all wheat is available, i.e. >50% of wheat is held in China. This is generally not available to the marketplace (if it exists at all).
One of the most important factors to examine is the situation of the exporters. This is the wheat which will be available to the world. The wheat available through exporters is dropping.
In the first chart, the world stocks of wheat are displayed along with the exporters’ stocks. In the last decade, world stocks have risen to record levels. A large proportion of this (on paper) is within China. The situation with exporters has seen stock levels drop to the lowest level since 2013.
The second chart displays the stock to use of the world and the stocks to use of the top 8 exporters. The stocks to use has dropped a couple of per cent since mid-October (see here). As the stock to use of exporters declines, this is bullish for markets. It reduces the available wheat to meet global import demand.