USDA raised wheat harvest forecast in 2023/24 MY to a record 800 million tons

In a June report, USDA experts sharply raised their 2023/24 wheat production, consumption and inventory forecasts. Such a “bearish” report could collapse quotations by 3-5%, however, due to a large discrepancy with analysts’ estimates, prices almost did not change. In two months, quotes have fallen 6-8% to their lowest levels since 2021, and US crop forecasts remain at 2021 and 2022 levels.

Compared to the May estimates, the wheat balance for 2023/24 MY underwent the following changes:

• The global production forecast was raised by 10.43 million tons to a record 800.19 million tons (788.5 million tons in 2022/23 FY, 781.3 million tons in 2021/22 MY and 775.72 million tons in 2020/21 MY ), in particular for India – by 3.5 million tons to a record 113.5 million tons (104 million tons in 2022/23 FY) for the EU – by 1.5 to 140.5 (134.4) million tons, Russian Federation – by 3.5 to 85 (92) million tons, Ukraine – by 1 to 17.5 million tons (20.9 million tons in 2022 and 33 million tons in 2021). For the world’s main wheat exporting countries, harvest estimates did not decrease, but their total production will decrease compared to the previous season from 332.6 to 328.5 million tons, so wheat on the world market will not become more affordable, and the export forecast will be lower than last year. In the EU, Ukraine and the Russian Federation, good spring rainfall created favorable conditions for wheat sowing.
• The estimate of world consumption was increased by 4.44 million tons to 796.14 million tons (792.77 million tons in 2022/23 MY and 782.22 million tons in 2021/22 MY), primarily for China, India and the Russian Federation. Due to rains in the Chinese province of Henan during the harvesting of winter wheat, the share of fodder grain will increase.
• The global export forecast was increased by 2.9 to 212.6 million tons (215.56 million tons in 2022/23 MY and 202.98 million tons in 2021/22 MR), in particular for the EU – by 3.5 to 38.5 (34.5 in 2022/23 MY) million tons, India – by 0.5 to 1 (5.32) million tons, the Russian Federation – by 1 to 46.5 (44.5) million tons, Ukraine – by 0.5 to 10 (16) million tons, although UGA estimates exports at 15 million tons due to significant transitional reserves.
• The forecast of world imports was increased by 2 million tons to 209.54 million tons (208.9 million tons in 2022/23 MY and 199.37 million tons in 2021/22 MY), in particular for China – by 1.5 to 12 (14 and 9.6) million tons, although wheat production in China will grow to 140 (137.7 and 136.95) million tons.
• The estimate of world ending stocks was immediately raised by 6.37 million tons to 270.71 million tons (266.66 in 2022/23 MY), which will correspond to the level of the 2021/22 season, although analysts estimated them at 264.65 million tons. Stocks will grow in India, the EU and the Russian Federation, and in the main exporting countries, stocks will decrease compared to the previous season from 65 to 41 million tons, and in the main importing countries – they will grow from 173.8 to 177.31 million tons.

Based on the data of the report, July wheat futures rose:

• by 0.8% to $231.6/t – for soft winter SRW wheat in Chicago (-0.6% compared to the data after the May report),
• by 0.1% to $251/t – for Black Sea wheat in Chicago (-5.9%).
• by 0.9% to €234.5/t or $252/t – September wheat futures on the Paris Euronext.

At the same time, HRW hard winter wheat futures in Kansas City fell by 0.9% to $293.1/t (-10%) and HRS hard spring wheat futures fell by 0.5% to $298.3/t -wheat in Minneapolis (-4.2%).

Tags: Russia, China, EU, prices, USDA Report, wheat, India, USA, crop forecast, Ukraine