Wheat prices didn’t react as negatively to Friday’s USDA Supply and Demand Report as some expected, even though it showed wheat stocks higher at 712 million bushels, as well as higher imports and lower domestic use and exports.

Chicago Board of Trade March futures ended Friday at $5.06/bu., down about 8.6¢. May futures closed Friday at $5.18, down 6.6¢. Kansas City Board of Trade March wheat closed at $5.70, down 4¢, with May futures also closing at $5.70, down 6¢. Minneapolis Grain Exchange March wheat ended last week at $6.30, down 4.4¢, with May closing at $6.09, down 8.4¢.

The report showed that U.S. wheat ending stocks for 2008-2009 are projected 57 million bushels higher this month. Imports are raised 10 million bushels reflecting the strong pace to date, says U.S. Wheat Associates (USW). Food use is projected 25 million bushels lower.

High extraction rates for 2008 crop wheat have reduced the amount of grain needed to produce flour, and lower per-capita consumption is reducing flour demand, says USW, adding that seed use is lowered 2 million bushels reflecting lower expected 2009 crop acreage.

Exports are projected 20 million bushels lower as increased exports by major competitors limit opportunities for U.S. wheat. USW says lower projected exports of hard red winter, hard red spring and durum wheats are only partly offset by an increase for white wheat.

The USDA report says the projected season-average farm price is unchanged at $6.70-6.90/bu.

Globally, 2008-2009 wheat production is projected 1.6 million tons (mt) higher this month to a record 684.4 mt. Production is raised 1.4 mt for Australia with higher harvested area and better-than-expected yields, especially in western Australia. Smaller upward revisions are also made for Morocco, India, Mexico and Bangladesh, USW says, partly offsetting is a reduction for Turkmenistan.

World imports and exports for 2008-2009 are projected higher this month. Imports are raised 1 mt for Iran and 0.3 mt each for Azerbaijan, Turkey and the U.S. Imports are also raised 0.2 mt for Turkmenistan. Partly offsetting are reductions of 0.3 mt each for Indonesia and Morocco and 0.2 mt for the Philippines.

USDA says wheat exports are raised 1 mt for Australia with the increase in production. Exports are also raised 1 mt for Russia based on the strong pace of shipments to date. Exports are raised 0.5 mt for Ukraine based on the pace of sales and shipments and 0.5 mt for EU-27 based on license and shipment data, says USW.

Projected world wheat consumption for 2008-2009 is lowered 3.7 mt, mostly reflecting lower expected feed use in Russia and reduced food use in the U.S. Global ending stocks are raised 5.9 mt with larger stocks in Russia, the U.S., Iran and China accounting for most of the increase. At 155.9 mt, USDA says world ending stocks are projected at a six-year high.