Sharp increase in the forecast of world wheat production has brought down stock prices

After the USDA experts lowered the forecast of world wheat production in June by 7.44 mln tonnes, in July the estimate was raised by 5.44 mln tonnes, after which wheat prices fell by 1.5-3%, losing 5.5-14.7% for the month. In addition, the forecast of wheat exports from Russia in 2023/24 MY was increased by 1.5 to 55.5 million tons.

Compared to the June estimates, the global wheat balance for 2024/25 MY has undergone the following changes:

• Estimates of beginning stocks increased by 1.43 to 260.99 mln tonnes (271.04 mln tonnes in 2023/24 MY) after revision of the balance for 2023/24 MY.
• The forecast for world production was increased by 5.44 to 796.19 million tons (788.95 million tons in 2023/24 MY and 789 million tons in 2022/23 MY), in particular for the United States – by 3.6 to 54.7 (49, 3) million tons due to high yields and expansion of sowing areas, Canada – by 1 to 35 (32) million tons amid favorable weather, Argentina – by 0.5 to 18 (15.85) million tons, Pakistan – by 1.4 to a record 31.4 million tons. For the EU, the forecast was lowered by 0.5 to 130 (134.15) million tons, and for Ukraine and Russia it was left at 19.5 and 83 million tons, respectively.
• The estimate of world consumption was increased by 1.9 to 799.94 (798.98) million tons due to increased consumption of food products, seeds and industry.
  The forecast for world exports was left at 212.89 (220.61) million tons, as the increase in estimates for the United States by 0.7 to 22.5 (19.24) million tons and Canada by 0.5 to 25 (25) million tons will be offset by a decrease in estimates for the EU by 0.5 to 34.5 (37) million tons.
• The forecast for global imports was lowered by 0.8 to 206.7 (218.8) million tons, primarily for Southeast Asian countries, although it was raised by 1 to 12 (14) million tons for China.
• The estimate of world ending stocks was increased by 4.97 to 257.24 (260.99) million tons, while analysts estimated them at 252.2 million tons. Stocks will increase the most in the United States, China, Argentina, Pakistan and Canada, but will decrease in the EU, Iran and Russia. In the United States, stocks will grow by 22% or 2.64 million tons over the year to a 5-year high of 23.3 million tons.

Based on the report, July futures declined:

• by 3.1% to 197.7 $/t – for soft winter SRW wheat in Chicago (-14.7% compared to the data after the release of the June report),
• by 1.5% to 220 €/t or 240 $/t – September wheat futures on the Paris Euronext (-13.4%).

At the same time, hard winter HRW wheat in Kansas City increased by 2.1% to 221.9 $/t (-5.5%) and remained at 228.2 $/t for hard spring HRS wheat in Minneapolis (-7.6%).

Tags: prices, wheat, USA