U.S. Wheat Supplies to Fall as Use Rises, USDA Says

By Tony C. Dreibus

April 9 (Bloomberg) -- U.S. wheat inventories at the end of the current marketing year will be 2.2 percent smaller than estimated last month because of increased domestic demand for use of the grain as livestock feed, the government said.

About 696 million bushels will be in storage on May 31, down from 712 million estimated in March, the U.S. Department of Agriculture said today in a report. Inventories of hard winter wheat were projected at 278 million bushels, down 0.7 from the month-ago forecast. Hard spring supplies will total 173 million bushels, down 4.9 percent from the March estimate, USDA said.

“We really picked up some usage,” said Dennis DeLaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas. “They lowered stocks of hard winter and hard spring so that should get a firm reaction.”

Wheat futures for May delivery rose 5 cents, or 0.9 percent, to $5.37 a bushel at 6 a.m. on the Chicago Board of Trade. The price still is down 12 percent this year, partly on increased global production.

Livestock producers will use 250 million bushels of the grain to feed animals in the year ending May 31, up 8.7 percent from last month’s estimate, the USDA report said. About 79 million bushels will be used as seed, up from 78 million projected last month, the department said.

Domestic use will total 1.254 billion bushels, up 1.7 percent from the March estimate, the USDA said. There were 306 million bushels of unsold wheat on hand on May 31, 2008.

Imports of the grain may total 125 million bushels, up 4.2 percent from the March projection, the government said.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.