The U.S. Department of Agriculture (USDA) this morning released its monthly World Agricultural Supply and Demand Estimates (WASDE) report for April. The agency lifted its estimate on U.S. wheat stocks by 15 million bushels, due mainly to a sharp decrease in the grain’s use as animal feed. The new estimate for wheat season-average pricing has dropped to $7.70 to $7.90 per bushel.

Wheat prices reacted quickly, dropping to less than $7 a bushel.

Global wheat supplies are now forecast to rise by 2.9 million tons, primarily as a result of revisions to previous totals

The season-average price for corn was lowered to a range of $6.65 to $7.15 a bushel, and corn prices did not move much, currently trading at around $6.45 a bushel. As with the wheat crop, lower use of corn for animal feed is lower and domestic consumption is expected to fall by 100 million bushels. Ethanol production (for motor fuel) offset an even larger decline.

The lower use of corn and wheat for animal feed in the U.S. reflects the lower number of cattle being fed as producers have culled their herds to keep the higher costs for feed from mangling their profits. As a result, stockpiles have grown and prices have dropped. A near-record amount of expected corn planting this spring will put even more pressure on corn prices in the coming months.

The April WASDE report is available here.

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